a low carbon future - challenges for the energy system nick eyre lower carbon futures programme...
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A Low Carbon Future - Challenges for the Energy System
Nick Eyre
Lower Carbon Futures Programme
Environmental Change Institute
University of Oxford
Challenges for the Energy System
• Global challenges
• The role of carbon markets
• Decarbonising energy
• The role of energy demand
Challenges for the Energy System
• Global challenges
• The role of carbon markets
• Decarbonising energy
• The role of energy demand
1. Climate change
Source: IPCC, 2007
IPCC, 2007
2. Rising World Energy Demand
3. Energy Inequality
Source: UNEP
4. Carbon resources
Oil
Gas
Coal
Non-conventional
4700 Gt
600 Gt
Carbon in fossil fuel reserves
Based on IPCC, 2007
Carbon as CO2 in the pre-industrial atmosphere
A Summary of the Global Challenges
• Radical reductions in carbon emissions from fossil fuels are required, but– World energy use is rising– There is a development imperative to increase energy
use in many countries – Energy use is dominated by fossil fuels– Fossil fuels are not about to run out
• A low carbon future requires systemic change in the energy sector
• and this will have to be a purposeful choice
Challenges for the Energy System
• Global challenges
• The role of carbon markets
• Decarbonising energy
• The role of energy demand
1. Carbon pricesRetail fuel costs
0
100
200
300
400
500
600
700
Petrol Gas Electricity
Eu
ro/t
CO
2
1. Carbon pricesRetail fuel costs and the EUETS price
The big international challenge is the capacity of the atmosphere to absorb CO2, not the capacity of the Earth to supply carbon. Prices don’t reflect this!
0
100
200
300
400
500
600
700
Petrol Gas Electricity EUETS
Eu
ro/t
CO
2
2. EU ETS scope
• Only power generators and large energy users are covered by the cap – use of the atmosphere is free to other users.
• Small and medium energy users – light industry, commerce, public sector and transport - are not incentivised at all.
• Although electricity prices are affected, electricity users are not directly involved.
3. Pricing carbon is insufficient -There are other energy market failures
Based on UK Energy Review, 2002 and Stern, 2006
Market failure Intervention required
Free use of atmospheric sink
Price carbon through taxation or trading
Benefits of innovation not captured
Support new technologies with targeted mechanisms
Cost effective technologies not fully used
Regulation and incentives to change in energy user investment
Likely effects of existing carbon markets
• Will deliver incentives to– [Reductions in deforestation]– Transfer energy technology to developing countries– Switch from coal to gas in power generation– Adopt renewables that are ‘nearly cost effective’– Develop nuclear power (possibly)
• Will not (alone) deliver sufficient incentives for– Carbon capture and storage– Most renewable sources (e.g. offshore wind, marine, solar PV)– Energy efficiency (outside energy intensive industry)– Build new infrastructure
• Modest price changes do not deliver systemic change
Challenges for the Energy System
• Global challenges
• The role of carbon markets
• Decarbonising energy
• The role of energy demand
Zero carbon electricity – the potential and the problems
• Nuclear– well established – but with known problems: waste, security, cost and
timescales• Fossil fuels with CO2 capture
– Technically feasible– Not demonstrated at a commercial scale
• Renewables– Huge resource and some good UK potential– Scaling to significant contribution is non-trivial
An optimistic view of a renewable future
Source: IIASA/WEC Ecologically driven scenario
Are we asking the right questions?
The normal political and media discourse is around questions like:
• How fast can we substitute for coal in power generation?
• How much electricity can we get from low carbon sources – nuclear, renewables, carbon capture and storage?
• Which of these should we prefer?• But…
An energy user perspectiveUK energy use by fuel
solid2%
gas33%
electricity19%
other1%
oil45%
An energy user perspective UK carbon emissions
solid2%
gas21%
electricity38%
other1%
oil38%
How can energy policy that focuses on electricity supply deliver a 60% or 80% carbon emissions reduction?
A better set of questions might include
• How do we reduce oil use (in transport)?• How do we reduce gas use (in heating)?
…..and there are only two possible answers• Reduce total demand • Substitute fossil fuels with a low carbon fuel at the point of
use, or • Plausible low carbon scenarios indicate that both are
needed• Both involve thinking about energy from a user
perspective
Carbon emissions reduction to 2020
Contributions to UK Carbon Emissions Reductions by 2020
Carbon trading
Renewables
Transport energy efficiency
Business and public energy
efficiency
Household energy efficiency
Based on UK Climate Change Programme 2006
Changes required in global investment to deliver a low carbon economy
-150
-100
-50
0
50
100B
uild
ings
Tra
nspo
rt
Indu
stry
Ene
rgy
R&
D
Ren
ewab
les
Nuc
lear
Car
bon
capt
ure
and
stor
age
Pow
er tr
ansm
issi
on
Fos
sil f
uel s
uppl
y
Coa
l gen
erat
ion
bill
ion
US
$ in
203
0
Source: UNFCCC, 2007
Challenges for the Energy System
• Global challenges
• The role of carbon markets
• Decarbonising electricity
• “Carbon realism”
• The role of energy demand
Developed world energy consumption by sector
Back to first principlesWhat is energy use for?
• Energy services (e.g. warmth, illumination, mobility) are the fundamental demand, not energy.
• Carbon emissions, C ≡ Σ (C/E) x (E/S) x S all S where
• C/E is the carbon intensity of energy• E/S is energy intensity (inverse of energy efficiency)• S is energy service demand.
• The ‘demand side’ is about the first and second
Demand side carbon reduction
Low carbon optione.g. car, boiler, lights and
appliances
Discretionary investment
e.g. insulation, solar panels
Good housekeepinge.g. switching off lights, turning
down thermostats
Lifestyle changee.g. cycling, not flying,
vegetarianism
Efficiency improvement “investment behaviour”
Service demand reduction“in use behaviour”
Minor change Major change
Energy efficiency investment – can reduce climate change profitably
Composite
-500
0
500
1000
1500
0 5 10 15 20 25 30 35 40
Carbon abatement potential (MtC/year)
£/tC
Source: UK Energy Review, 2002, excluding transport
Tackling the trio of market failures -by market transformation
Research
Early adoption
Mass adoption
Late adoption
Support for innovation
Incentives and good information
Regulation
An example from the past – UK fridge/freezer sales
Source: EST, 2008
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-6
2006-7
2007-08
G
F
E
D
C
B
A
A+
A++
An ongoing example -lighting energy use in UK homes
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1990 2000 2010 2020 2030 2040 2050
Year
GW
h
LED
Halogen
Fl Strip
100W GLS
60W GLS
40W GLS
CFL
A possible future example – a scenario for energy use in UK homes
• Household energy supply moves to ‘on site’ technology – demand side change catalyses supply side change
0
100
200
300
400
500
600
700
En
erg
y S
ou
rce
s (
TW
h)
Oil and solid fuel
Mains gas for boilers and cooking
Grid electricity
Gas CHP
Renewable heat
Micro-CHP
Renewable power
What about ‘in use behaviour’?
Low carbon optione.g. car, boiler, lights and
appliances purchase
Discretionary investment
e.g. insulation, solar panels
Good housekeepinge.g. switching off lights, turning
down thermostats
Lifestyle changee.g. cycling, not flying,
vegetarianism
Efficiency improvement “investment behaviour”
Service demand reduction“in use behaviour”
Minor change Major change
Does behaviour make a difference?
• “In use behaviour” is a major determinant of energy use
• Behaviour does change!• Timely provision of good information
can reduce energy use by up to 15%• Technology can help, in particular new
metering and feedback technologies• Engagement of people, at home and
work, is crucial to delivering change
Lifestyle change
• Cycling to work• Not flying to go on holiday• Vegetarian diet
What have they got in common• Policy makers are reluctant to
advocate them• Lots of people already do them
Can policy makers support behaviour change?
Encourage• Taxation• Incentives
ExemplifyGovernment leadership
Action
Enable• Give information• Provide capacity
Engage• Community support• Personal contact
Models of citizen engagement
Based on Jackson, 2005
Energy use as a socio-technical system
• Technology shapes our behaviour• and vice versa• People are more than just
‘consumers’. Social, institutional and political change influence technology and individual behaviour– Social acceptability affects all technology– Small and medium scale technologies
offer new potential for citizen engagement
or