The International Energy Association’s (IEA) World energy Outlook 2011 had only just hit the deck when it generated a political stoush, this time between Labor and The Greens.
Greens deputy leader Christine Milne told The Age the report showed that there was no longer time to use gas – which is a cleaner-burning fuel than coal – as a stepping stone to renewable energy such as wind, solar and geothermal. ”[The outlook] is basically saying to the investment community, ‘You are going to be gambling on how long gas has got as any kind of transitional fuel’.”
However, Mr Ferguson told The Age: ”The flexibility of gas-fired technology and the fact it is the cleanest fossil fuel make it an attractive investment option.
”In addition to gas, the message I am getting firsthand out of China and India … is that coal-fired power will increase and Australia is well placed to supply coal to fuel their growing economies.”
I picked that one up in Queensland Country Life, a Fairfax paper in which they reprint articles from The Age and the SMH.
But who’s right?
Not Christine Milne, I’m afraid. She has her eye on the IEA’s 450 Scenario, but even here we find this in the IEA Factsheet:
The share of fossil fuels in the global energy mix falls from 81% in 2009 to 62% in 2035. Global demand for both coal and oil peak before 2020, and then decline by 30% and 8% respectively by 2035, relative to their 2009 levels. By contrast, natural gas demand grows by 26%, though it plateaus by around 2030.
Ferguson has his eye on what the world is actually doing.
In the Current Policies Scenario, demand [for coal] carries on rising after 2020, increasing overall by nearly two-thirds to 2035. But in the 450 Scenario, coal demand peaks before 2020 and then falls heavily, declining one-third between 2009 and 2035.
Under the New Policies Scenario (see below) coal increases to the early 2020s and then remains broadly flat. Nevertheless the increase in 2035 over 2009 is a healthy one quarter.
I’ll outline some basic concepts first, then link to some sources, followed by some discussion.
Basic concepts
First, the report contemplates three broad scenarios. The first of these is the Current Policies Scenario. It assumes we carry on with business as usual. This, they say, will give us CO2 concentrations of 1000 ppm and a temperature rise of 6C. While this makes for startling headlines it barely gets a mention in the literature I’ve seen. The assumption is that the world will act.
After the Copenhagen conference in 2009 some 120 countries made commitments to restrain or lower emissions. These commitments will not give us the 450 ppm which the conference adopted as an aim. Rather they will give us 650 ppm and 3.5C. This the IEA calls the New Policies Scenario, termed “central” in the Executive Summary.
The third scenario details what the world will need to do if it takes the necessary action to achieve 450 ppm. That is the 450 Scenario which gives us a 50% chance of remaining within the 2C guard rail.
I’ve commented here on the inadequacy of these targets and won’t bang on about it. We should assume, however, that Treasury in its modelling has in mind the New Policies Scenario. We will do ‘our share’ of what the world is attempting to do.
Second, a fundamental concept of the report is what could be termed ‘infrastructure lock-in’. Under the 450 Scenario, 80% of all allowable emissions to 2035 are already locked in with existing capital stock, including power stations and factories. By 2017 everything new that causes emissions will have to be matched by decommissioning existing stock. The bottom line is that:
for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions. (Emphasis added)
Third, in using the term “allowable emissions” they do understand that everything we emit now and in future on the way to stabilisation counts. All emissions leave an airborne fraction the effect of which persists. So the sooner we act the better.
Fourth, the report appears to assume that whatever the demand for energy in the future, it will be supplied. In the New Policies Scenario, world primary demand for energy increases by about from one-third to 40% between 2010 and 2035, with 90% of the increase coming from non-OECD economies. It’s not clear whether this changes under the 450 Scenario; it appears that the supply simply switches to renewables.
Sources
I’ve already linked to the main page for the IEA World energy Outlook 2011. The full report costs €120, which I can’t afford. The main free sources are the Press Release, the Factsheet and the Executive Summary.
The Guardian was perhaps the first cab off the rank. Posts appeared at Climate Progress and Washington Post Blog.
Giles Parkinson at Climate Spectator is a must read, and relates the report to the Australian situation.
After writing this post and just before publishing I found this excellent post at Skeptical Science, obviously with access to the full report. It also links to the World Energy Model which the IEA uses and I’d missed.
Discussion
Parkinson says that the IEA is a deeply conservative organisation, whose annual Outlook is keenly followed by the energy industry. It is highly significant therefore that they have dropped a bombshell urging immediate action.
“Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies. If fossil fuel infrastructure is not rapidly changed, the world will lose forever the chance to avoid dangerous climate change.”
It spells out the path for a 450ppm scenario, and if we don’t act until 2015 then half of the world’s existing coal and gas-fired energy plants will need to be shut down by 2035. If we leave it until 2017, then, from the Factsheet:
If internationally co-ordinated action is not taken by 2017, we project that all permissible emissions in the 450 Scenario would come from the infrastructure then existing, so that all new infrastructure from then until 2035 would need to be zero-carbon, unless emitting infrastructure is retired before the end of its economic lifetime to make headroom for new investment. This would theoretically be possible at very high cost, but is probably not practicable politically.
The 450 Scenario would simply kill the coal export industry which has a bright future under the New Policies Scenario. In any real world scenario concerted international action will be delayed by at least two years. The implication domestically is that new gas-fired power stations built then will need to close early. So in the real world, Christine Milne is right about the uncertainty of investing in gas.
The report couldn’t be clearer about where future investment and business and job opportunities lie:
The most dramatic change is in non-hydro renewables, whose share increases phenomenally – from just 4 per cent in 2009, to 34 per cent of global electricity capacity in 2035. Wind capacity grows 10-fold to 1,685GW, sending Landscape Guardians across the globe completely barmy. Solar PV rises 40-fold to 901GW from 22GW in 2009; solar thermal leaps from just 1GW to 226GW; geothermal from 11GW to 60GW; marine from zero to 23GW, and biomass grows six-fold to 329GW. In terms of generation, non-hydro renewables soar to 28 per cent from just 2 per cent in 2009, nuclear and hydro have a 20 per cent share each, while coal drops from 41 per cent to 15 per cent, and gas from 21 per cent to 17 per cent.
In practical terms significant international action before 2015 is to me unimaginable. The IEA says initiating action after 2020 will become politically impossible. Joe Romm at Climate Progress disagrees. By then he thinks “most policymakers will realize that we are on path to the self-destruction of modern civilization.”
So we are in a squeeze, but there are two little factors in there that some will find unpalatable. One is that the IEA sees nuclear energy output increasing by 70%. The other is that it assumes the deployment of CCS (carbon capture and sequestration) technology. CCS is assumed to be available in the early 2020s and accounts for 18% of emissions savings in the 450 Scenario relative to the New Policies Scenario. Without those two we’ll have to crank up renewables even harder. Closing down nuclear completely looks impossible.
The report does highlight that any meaningful global action is going to have to fully include the major developing countries.
Maybe we should be looking for a new paradigm. This one does seem unworkable. Perhaps the future lies in cheaper decentralised production of power by means of emerging technologies. Creative destruction would then make dinosaurs out of fossil fuel-based grid power.
In other aspects of the report, by 2035 they think that electric vehicles or plug-in hybrids will account for one third of all vehicle sales, and power for those who lack grid power or rely on biomass for cooking can be had for a mere $48 billion per annum.
Update: I’ve added here the IEA energy projections in Mtoe (million tonnes oil equivalent):
Good post. The CCS is strongly linked to gas. The expensive option in not acting is the cost of retiring fossil fuel-based infrastructure early. It’s actually cheaper in the long run to finance alternative energy sources, but more expensive in the initial project phase. This is an extraordinary blind-spot in the current political economy.
This ties in with the politics-economics disjunct pointed out in Rob’s post of yesterday.
Good post Brian. The practical problem I have with Christine’s view is that, in Aus:
1 Geothermal is a maybe with lots of development to be done.
2. Solar PV and wind lack the reliability to provide the amount of on demand power we think we need unless we go for massive power storage.
3 The Greens would have a heart attack if we added nuclear to the mix.
So the only pure green starter that we could get on with now is solar thermal with thermal storage.
It might not be ideal but my policy choice would be a rapid, massive investment in CCGT starting right now combined with steady investment in renewables. This gives us time to sort out some practicalities associated with the alternatives as well as allowing much higher penetration of solar PV/wind before storage becomes essential.
Part of the problem with the purist approach so far is that it has scared the horses actually held up the progress that could have been made.
http://en.wikipedia.org/wiki/File:World_Energy_consumption.png
Doubling of nuclear power generation will have a very small impact on GG emissions (see link above).
What is needed is a completely new approach to energy production and consumption (The Yanks use about twice the energy per capita as any-one else including the Europeans).
Huggy
#2 John D,
Yes, a dash for gas is the inevitable consequence of the anti-nuke position. The piece on SkepticalScience reproduces an IEA chart showing the economic lifetimes of various energy infrastructure. Median for CCGT is 30 years. A program of replacing coal with CCGT would see the new infrastructure in place until at least 2050, or paying to get rid of it.
All for what gain other than ticking some boxes on nominal CO2 emissions? How much effect it would have on temperature when fugitive emissions and reduced aerosols are taken into account remains an open question.
quokka said:
We can replace the aerosols easily enough, and in a better distribution, if that’s what is needed, so I’m not sure about that part of the objection. In any event, that objection would certainly apply to nuclear power (or any other non-fossil HC or non-thermal source.
Fugitive emissions are a more serious objection of course. Again though, it depends. There are fugitive emissions from coal. Transporting coal is also fairly energy intensive.
On a related note: with the moves to sell uranium to India, is there any moderately independent Australian foreign policy line that Gillard wont trash to fall in step with the US? This is getting bloody tiresome.
Huggy is right in that the assumption that we can and will increase our electricity consumption here in the first world by 10 percent has got to be seriously questioned. On the other hand, electric cars…
Really, if the ALP were consistent, it wouldn’t sell uranium to any state supplying any state that was not compliant with NNPT, or that was in turn supplying any state that was not compliant with NNPT and so forth.
It seems that if Gillard has her way on this one, she ought also to move for abandonment of so much of the NNPT treaty as relates to supply of weaponisable materiel as she clearly thinks bilateral agreements are a better way to go.
@wilful,
In Scotland, for example, 20% of end use of energy is electricity and 49% is heating. If you want to radically cut emissions from heating, heat pumps are mandatory. That means a big increase in electricity consumption. Similar situations must exist in many cold climate countries.
The prospects for dramatically lower electricity consumption are remote.
On my reading of the Executive Summary of the Report Christine Milne is dead right. In terms of the scenarios used in the report Milne is arguing from a 450ppm point of view about what must occur if we are to have a future worth having, while Ferguson is arguing from a New Policy point of view about what is likely to happen regardless. As Ferguson’s argument entails an estimated 3.5º C average temperature increase almost certainly enough to trigger runaway climate change his viewpoint should not be countenanced. If he’s right it’s probably game over. If this seems extreme read http://thinkprogress.org/romm/2011/06/07/238578/iea-golden-age-of-natural-gas-scenario-warming-climate-change/
Some other thoughts:
Given the existing situation in Australia we are not likely to move much before 2017 – only five years away. It will be 2015 before the ETS ends its fixed price period. The fixed price of $23 per tonne is only marginally more than half what is thought necessary to drive the shift from coal to to gas. It seems logical that without additional intervention not much new gas will be developed by the ETS before 2015. According to the IEA World Energy Outlook 2011 under these circumstances after 2017 the only viable option (if WE are to remain viable) will be renewables. Therefore unless I’m misunderstanding something, if we are to remain environmentally viable, the ‘Golden Age of Gas’ predicted by IEA can only last between two and five years. More of a ‘Golden Moment’.
With the exception of one technique Carbon Capture and Storage seems as far off now as ever. The one exception it seems to me is cleaning power plant flue gas with algae which might then themselves be combusted and passed back through the system. Other more conventional CCS – capturing CO2 and burying it, is too beset with technical and economic difficulties to ever be able to be deployed on the scale that will be required.
The evidence is stacking up that the lifecycle GHG emissions from gas, particularly unconventional gas extraction, transport and combustion are only marginally better than best practice coal combustion.
So:
The commercial deployment of some form of carbon capture (essential to the IEA scenarios) soon enough is somewhere between unlikely and unknown.
The period in which added gas capacity, (even CCGT) is environmentally acceptable, is probably not more than five years.
The GHG emissions advantages of gas combustion are increasingly seen to be marginal.
and
According to Parkinson ‘new gas’ will be additional to rather than replace ‘old coal’ in the developing world so will add to rather than slightly decrease emissions
Milne is dead right but presumably for reasons of retaining political credibility states the case too conservatively.
Let’s get our terminology straight to start with, so we can be clear what we are talking about.
There is no “energy crunch of 2017”. Earlier this year the IEA doubled its estimate of gas reserves, on the back of recent discoveries of just how much shale gas there is around, to about 250 years worth at current usage rates. There is plenty of coal too, renewables are substantially increasing, and as per the previous thread even oil supply will keep trending up to past 2035 at least.
What you are talking about is a climate policy crunch. This is not the same thing at all.
I’m with quokka. What is clearly going to happen is a dash for gas. Partly because there is suddenly so much more of it which will (as it already is in eg the US) drive prices down. Partly because it is well-distributed (not least with a lot in Europe) which helps combat growing energy security concerns in regard to dependence on external sources of dubious political reliability. And partly (admittedly not greatly) because, despite attempts for some unfathomable – well, I could speculate, but it would be unconstructive – reason to talk it down on the part of deep and even medium Greens, it makes a significant if not game-changing contribution, if it replaces coal, to reducing CO2 emissions.
That’s the real world. Those who are concerned with its climate policy implications are going to have to work with it somehow, not deny it. A main reason why there is such a push-back against climate change concerns in public opinion, imho, is that people draw the obvious conclusion from those who scream about the need to change energy policy to reduce emissions instantaneously and voluminously – but as long as it’s not by nuclear, not by hydro, and now, it appears, not by gas either. This does not give the impression of being either practical or serious – merely of being ideological.
For mine, the key new factor is shale (and other unconventional) gas. I mean, doubling gas reserve estimates – by 130 years worth – virtually overnight is just incredible. How should policy makers react to that? Ignoring it is not an option.
Tom Wigley’s paper modelling the global temperature effects of a transition from coal to gas is here: http://www.springerlink.com/content/b430681263425q64/fulltext.pdf
It does take into account methane emissions from coal mining.
The net effect on global temperature this century is minimal and he concludes that while there may be reasons for choosing gas over coal, mitigating climate change is not one of them.
If this is largely correct, then what is the point of building a whole lot of CCGT?
And, quokka, there has been a subsequent study released alleging that Wigley fiddled the evidence by not comparing like with like (“however, the WorleyParsons study found coal could compete with gas on greenhouse emissions only when the cleanest coal technology was compared with the dirtiest gas-fired plant”).
http://www.weeklytimesnow.com.au/article/2011/11/04/402765_latest-news.html
Yes, that study is not from a wholly disinterested source, but Wigley has form too. He is out of UEA, and indeed was the author of one of the more incriminating climategate e-mails, describing how he had reduced a temperature “blip” by 0.15C for no other reason than that he wanted to.
One of the tragedies of the current mess is that there are almost no unequivocally credible sources any more, anywhere.
Anyway, I still think that the point is that the dash for gas is going to happen, whatever Wigley thinks, and policy needs to be based on that reality.
@Wozza
Not interesting in arguing with innuendo and nonsense. If you have a criticism of Wigley’s paper, then present it. Otherwise, please desist.
Not interested in arguing either.
I have provided a link which enables you to trace a study disagreeing with yours. If you wish to believe that your link is true and pure, and mine is innuendo, your privllege. I have an open mind and merely note that there are competing views. Tribalism is not compulsory.
Funny thing but it is the bankers who might save us. Investment in fossil fuel fired power generation will only take place if finance can be arranged. Arranging finance for fossil fuel will become more and more difficult as bankers perceive that there is a real chance that they will be caught with a dud loan to a company that was too stupid to see where the future was leading to.
Rudd was able to go into the 2007 election with a climate action policy as a key argument for supporting him because of the long drought. Think record temperatures, more extreme weather and we could well see a rush to action. In a crisis situation there isn’t going to be spare money to compensate companies who didn’t give a stuff about the effect of their decisions on the world environment.
#15 Wozza,
You really do have a nerve, don’t you. Slandering individual scientists and then concern trolling about “tribalism”.
You have also entirely managed to avoid the point of the Wigley paper which models and quantifies effect on climate of a transition from coal to gas. The WorleyParsons report does no such thing.
Thanks, Roger and John D.
On nuclear, the actual report (don’t ask) has nuclear capacity going from 393GW to 633GW under the New Policies Scenario. That’s an increase of 61%. (One of the annoying facets is that the figures such as percentages are not consistent across all their literature.) The increase would be led by China, India and South Korea.
The IEA then contemplates a
Under this case nuclear capacity reduces to 335GW leaving 298GW to be picked up by other means. They see an increase of 80GW in coal, 122GW in gas and 260GW in renewables. Don’t ask me why this adds up to 442GW. I imagine it has to do with the difference between nameplate capacity and actual production in TWh.
In this case I’m just the messenger. I’m not commenting in any way.
That would be the climategate emails which were found to incriminate no-one – yes?
zoot, I second that.
Doug Evans @ 10, the whole 450ppm argument is to me a bit tedious, as a 50:50 chance of 2C does not add up to a safe climate, as I pointed out here. I’d prefer a 350 ppm scenario.
Two comments. First, the way I understand the 2017 crunch point is that after 2017, if we don’t act significantly before then, new capacity has to be either zero-emissions, or replace existing dirty capacity. We can build no new dirty capacity without retiring old.
That’s what I think the IEA is saying.
Secondly, and Wozza and quokka please note, we looked at the life-cycle emissions of coal v gas in the last item of Climate clippings 52 with the help of this piece from Climate Spectator.
In short, yes it would appear to be a problem, which the IEA as far as I can see has not addressed, in particular if you are liquifying the stuff and shipping it around the world.
Wozza @ 11, I’ll ignore your usual lecturing.
What you have to deal with is that the New Policies Scenario gives us a 50:50 chance of 3.5C of warming. That’s according to now rather old science quoted in the Stern Review in 2006. In fact you get into a zone where tipping points are likely to be triggered which will take the temperature much higher.
That’s apart from what would happen to sea level rise (think 70 plus metres eventually).
I’ve added at the end of the post a table showing the IEA’s estimates of energy demand under the various scenarios. Under the 450 scenario, the only ones to reduce in absolute terms are coal and oil. For increases in specific non-hydro renewables, I refer you to the paragraph from Climate Spectator quoted in the post.
John D @ 16, I’ve been banking on the bankers for a while now.
OK, Brian, I don’t think I lecture any more than a number of others, but fair enough.
So it appears, then, that it is considered unnecessary to discuss here the implications of the sudden realisation of the amount and potential of unconventional gas developments, in favour of a purist position that energy policy and markets should be determined by solely by and within the framework of IPCC climate change models. Again, fair enough, that at least is a position with arguable intellectual consistency (if, without wanting to lecture, in my view some rather head in the sand aspects as well), and it is your blog which I know is heavily focused on climate change.
There are plenty of other blogs on which energy policy is discussed more broadly and in greater depth, so I won’t bother you here with issues like shale gas again.
Wozza, I certainly will take on face value your statement that we have lots and lots of ‘unconventional’ (soon to be labelled conventional) gas. Meanwhile Victoria has 750 years of brown coal reserves, probably more if we could be bothered looking for it.
The entire point of the IEA report from my reading of it is that we have absolutely no time at all to stop building new polluting power plants if we want to avoid a climate crisis. If people do build them in the next few years, then they will have to expect that they will be shut down early, and can’t come whinging to government when their claimed 50 year asset is shut after 15 years.
For me, the only feasible answer at this point in time is a lot of new build nuclear power plants (gen 3+, we can’t wait for gen 4) – along with a lot of renewables, they’re complementary not competing. I cannot see another answer that doesn’t involve breaching likely climate tipping points, or radical (fanciful) societal change. But I realise that this debate is somewhat tired around here.
Wozza @ 23, I hoped that you would refer back to the table I put at the end of the post and do some arithmetic. Here I’ll do it for you. I’m comparing in descending order the increases in demand identified by the IEA in the 450 Scenario (the other scenarios being too awful to contemplate.)
Biomass & waste – +1099 Mtoe
Renewables – +1062
Nuclear – +703
Gas – +669
Hydro – +240
Oil – -316
Coal – -978
So you can nominate it as the “golden age of gas” if you wish, but on the facts I don’t see why you would.
Sorry, I hit the “preview” button last night but not the “update”. It’s there now.
Brian, yes, but that is exactly my point. You keep going back to the 450 scenario for your “facts” because “the other scenarios being too awful to contemplate”.
That is your privilege as I said, in terms of what you think the the framework for discussion should be. But there are other scenarios and frameworks, which other people actually do contemplate, believing that fingers in ears may not always be the best position to construct policy from.
Brian
Yes 450ppm is too high. It has been accepted for ages that 350 or less is what must be achieved. Milne understands this perfectly. I have heard both her and Adam Bandt acknowledge this more than once. So far they have been constrained by what they deem to be possible. In the MPCCC negotiations Giles Parkinson commented on Radio National that The Greens wanted a start price well above $40 per tonne – presumably trying to leapfrog the ‘golden age of gas’ and head straight to renewables. I guess the CEFC is the trade-off that enabled the two Greens to sign off on the package.
Again on the report I also understand that the IEA is saying that unless immediate action is taken to reduce the amount of dirty new generating capacity all new capacity after 2017 must be clean renewables or replacement for existing dirty capacity. Assuming that we acknowledge that gas is dirty not clean (as my local member Martin Ferguson seems to believe) I was trying to speculate on what that meant for Australia. It occurred to me that the ETS is unlikely to prompt much of a move even to gas with a three year fixed price of $23 per tonne. I was suggesting that this took us at least to 2015 without much action. I still think this is right.
41% of Australian new energy investment is in renewables (wind mostly) and 36% is in gas. The so called ‘golden age of gas’ has already started. Presumably the remaining 23% is coal’s hopefully shrinking share. Parkinson noted in the Climate Spectator piece you linked to, that in China gas was additional to existing coal fired capacity rather than its replacement. He does not note that the same applies to Australia. New gas-fired generation emits almost as much as coal fired generation. What this means is that so far only 41% of new capacity – which is additional-to rather than replacement-for existing capacity is clean renewables. The other half is the same old same old.
So no gain there – our emissions continue their upward trend albeit at a slightly reduced rate of growth.
As far as I know no coal fired plant has yet been replaced by ‘clean’ gas or anything else. If it occurs Victoria’s Hazelwood and the smaller South Australian plant will be the first, courtesy the $2 billion buy out in the Clean Energy legislation. But even if this happens phasing out and replacement of this capacity will take us almost to 2017. Worse; construction of Australian coal fired capacity is continuing apace. A short time ago there were more than a dozen new coal fired power plants in the pipeline for Australia.
It appears at the moment that, together with most of the rest of the world’s developed economies, Australia will hit the wall and be forced to change very rapidly around 2017. If the change can’t be managed at that point, the message of the IEA report is that the future is bleak. Either way it looks as though it will be a white knuckle ride. Better hold on tight.
Doug @ 28, I’m cool with all that. I think the IEA doesn’t see its role as entering the fray as to how the energy policy ought to relate to the science. Rather it looks at adopted policy positions and works out the implications. In this case it starts by noting that nations collectively have adopted 450ppm as an aim, but their enunciated policy positions when aggregated imply 650ppm.
I didn’t know what The Greens actually thought, but you’ve confirmed what I’d guessed.
Wozza @ 27, my position is based on a rational understanding of the science. As best I can. I’ll just leave it at that.
quokka
thanks didn’t know about Wigley paper I’ve downloaded it and I’ll have a look.
Wozza, the only person with his fingers in his ears is you, if you think that even 450ppm (let alone higher levels) is safe.
Wilful @ 24:
Agreed re Gen 3+ nuclear. It seems to me that something has to give – either the opposition to nuclear or a whiole lotta social realignment. Speaking only for myself and not wishing to start a flaming session, I’m travelling the the conservation pathway, but I’m not optimistic that industrial users will have much success. Commercial electricity customers don’t appear to give a fig except for one hour per year on World Environment Day for the photo op, then its back to business as usual.
It’s not encouraging to perceive that many are firmly dug into their own foxholes re climate change. We are leaving the next couple of generations a difficult challenge.
Has there ever been a war of this magnitude that has been met by such a blase attitude? Perhaps next year, when the barbarians are at the gates…