A global shift toward low-carbon energy sources would be unlike any other in history and would create new challenges, as the world attempts to actively influence a major energy transition for the first time, according to a new study by IHS and the World Economic Forum. The findings of the study were presentedat IHS CERAWeek 2013, the world’s premier energy conference, in Houston.
Since the beginning of this century deep concern about climate change coupled with a continued growth in energy demand led by developing countries—including 1.3 billion people that still do not have access to modern sources of energy—have stimulated debate on a new energy transition, the study says. In response to this challenge, policy-makers are looking towards low-carbon and renewable sources of energy.
The report, Energy Vision 2013 – Energy transitions: Past and Future provides a framework for understanding the potential changes in the energy mix and how an energy transition could unfold. The report examines major energy transitions over the past 250 years and analyzes the factors that may drive changes in the energy mix in the coming decades.
Expectations must take into account present realities, the study says. A transition to a low-carbon and renewable energy future will take time—as all previous energy transitions have—given the energy sector’s capital-intensive nature and long gestation periods. Some 87 percent of total world primary energy demand is currently met by oil, coal and natural gas (92 percent counting nuclear power). Wind, solar, geothermal, biofuels and other non-hydro renewable resources, while growing rapidly, provide at this time just 1.6 percent of total world energy.
“Although overall consumption will grow and the share of low-carbon and no-carbon sources will also grow significantly, the energy mix in 2030 will not be too different from what it is today,” said Daniel Yergin, IHS Vice Chairman and author of The Quest. “Beyond 2030, the impact of innovation and research and development, as well as prices and government policies, will have an increasingly large impact in terms of altering the mix.”
“The general assumption is that we will gravitate towards a world dominated by renewables,” said Roberto Bocca, senior director, head of energy industries, World Economic Forum. “Surprisingly, though, this transition will be different than in the past where the energy mix moved from one fuel to another, like from wood to coal. What we’ll see in the future instead will be a transition from some energy sources to many energy sources, i.e. from a diverse energy mix to a set of diversified energy mixes.”
The transition toward low-carbon and renewable sources would still need to overcome significant challenges that would require a fundamental shift in the nature of the electricity system, the study says.
Sources such as wind, solar and biomass have less energy density than other sources. The current electricity system consists mostly of generation plants built near demand centers with raw fuels shipped to the generation plant. Shifting to renewable sources of power—which have less energy density and are more geographically dispersed—would require turning this system on its head toward one based on more local production of energy with significant investments in transmission required to get power to where it is needed, the study says.
The intermittency of wind and solar also poses challenges. Whereas traditional power plants can run nearly continuously and ramp up and down to follow demand, wind and solar require other sources of power to compensate when the wind does not blow or the sun does not shine.
“Reducing power generation from fossil fuels when intermittent sources are available is good for reducing greenhouse gas emissions, but means that the fossil fuel plants will produce less power to cover their fixed costs,” said Samantha Gross, IHS director, integrated research. “Some fossil fuel plants also run less efficiently when they cycle up and down, adding costs to the power system as a whole. Accounting for these system wide costs is a subject that will gain greater attention as the share of renewables grows.”
Utility-scale electricity storage is a potential solution to the challenge of intermittency, but it has so far proved elusive, the study says. A storage system that would allow power to be stored—in a battery, flywheel or other device— and retrieved at low cost would be the “holy grail” in this endeavor, making intermittent sources steady and reliable.
However, the pattern of future energy demand growth—coming almost entirely from developing countries—could be an advantage for the transition to renewables, the study says. The distributed nature of renewable power sources is a natural fit for providing modern energy to areas with minimal infrastructure, if challenges of cost can be overcome.
“Rapidly developing countries have the opportunity to leap-frog to new technologies and build low-carbon infrastructure right away,” Gross added. “Such a leap-frog effect occurred in the telecommunication industry where mobile phone service became available in areas that never had wired service.”
Energy Vision 2013 – Energy transitions: Past and Future includes insights and perspectives from high-level representatives of industry, government, nongovernment organizations and academia, including:
- Mohamed Al Hammadi, chief executive officer, Emirates Nuclear Energy Corporation
- Oleg Deripaska, president EN+ Group
- Steven Koonin, director, Center for Urban Science and Progress, New York University
- Ginni Rometty, chairman, president and CEO, IBM
- Christof Rühl, group chief economist and vice president, BP
- Prashant Ruia, group chief executive officer, Essar Group
- Vaclav Smil, distinguished professor emeritus, University of Manitoba
- Darlene Snow, executive director, Wind Energy Foundation
- Daniel Sperling, professor of civil engineering and environmental science and policy director, Institute of Transportation Studies, University of California, Davis
- Michael Stoppard, managing director, IHS CERA
- Levi Tillemann, special adviser for policy and international affairs, United States Department of Energy
- Rex Tillerson, chairman and CEO, ExxonMobil Corporation
- J. Craig Venter, founder and CEO, J. Craig Venter Institute Synthetic Genomics Inc.
- John Watson, chairman and CEO, Chevron Corporation