Recent and future trends in (bio)energy

Jakob Donner-Amnell 5.2.2016

Outline

Why is there a need for foresight in bio (and other) energy developments?

What is foresight and how can it be made?

Tell the future! A short foresight exercise

Factors affecting bio energy developments in the longer term

- and a bunch of open questions

Recent global energy-related trends (main source: IEA)

An energy transition is under way in many parts of the world Renewables stand for 13,5 % of total supply, 21,7 % of electricity generation and

50 % of new power generation (with solar PV and wind in key roles). Grid parity (as cheap as any other forms) has been reached by renewables in a growing number of countries.

Energy use and carbon emissions are still growing Energy efficiency, decarbonising end use sectors (transport etc), securing sufficient investment (in low-carbon capacity) and robust policies remain as big challenges – and the same applies to really cutting emissions. (JDA: The climate pledges (for COP21) are positive, but far from sufficient steps – and not binding. )

Oil prices have been falling sharply and coal´s momentum is gone Low price level (below 100 USD/bl) is predicted to prevail at least until early 2020s or even much longer – possibly holding back the energy transition (especially in transport).

Bio-based energy has been growing only modestly 1990-2014 Solid biofuels are still the biggest area in renewable energy, but liquid biofuels and biogases have long been the only clear growth segments in it. In advanced biofuels, development has been bleak and the future pathway is unclear (despite high hopes attached).

Recent trends challenge many bio energy-related beliefs

EU´s, China´s and some other actors´ targets for renewable energy have long been assumed to be met by massive use and import of bio mass. This trend has lost strength.

Global demand of woody bio mass has been assumed to be on the rise, due to increasing production of pulp, advanced biofuels, bio chemicals, and bioenergy. The evidence is only scattered, it is no strong and general trend.

The amount of industrial plantations (eucalyptus, pine, oil palm) has continued to increase since 1960s, partly replacing natural forest or agricultural use of land. This trend exists, but many factors threaten it.

Since 1990s, a growing part of plantation produce and land use has been used in energy production, as chips/pellets, in production of bio fuels or through use of sidestreams. The trend exists, but has not gained much more pace in recent years.

MANY TRUTHS/BELIEFS RELATED TO BIO ENERGY AND FORESTS HAVE TO BE CHANGED, CHECKED OR UPDATED

Some clear reasons to present trends can be easily found

- Uncertainty concerning policies and subsidies

- Low(er than expected) prices for fossil fuels after 2008 (low demand, new sources, no restrictions of production)

- Carbon trade has not offered any strong incentive since long

- Production costs for bio energy have stayed roughly the same, but decreased for many other forms of renewable energy

- Fear of rising feedstock prices and sustainability issues keeps investments in bio-based energy on a modest level

The role of bio energy in the future is far from clear and can be affected by many factors and unprecedented developments.

Two different bio energy futures – how come?

In recent years, the future of bio energy and forest/land use has been described in two very different ways:

1. ”Maximum use”. Land/forest will be used much more than today for present and new purposes. It is important to establish more plantations and to speed up productivity in land/forest use. Bio energy is a very central product/function.

2. ”Balanced, efficient and sustainable use”. Arable land is a scarce resource and its volume/productivity can be threatened by over-use, drought and floods, lack of fertilizers etc. Therefore, the most important task is to work for a good balance between different uses (food, fuel, fiber etc) and to avoid over-use of land/forests. Bio energy is one product/function among others.

To plan for the future, to imagine or explore it is not a new thing

The human race has always prepared for the future in some way

Planning has been an element in most organised societies,

calculating present and future resources has been one typical part

To know and to take care of the resource base has been seen important (agriculture, forests, minerals…)

In forestry, long time spans are typical (10, 50, 150 years or more)

To imagine what might happen in the future has also been typical

Many methods in use also before, from oracles and art to science

As a distinct activity, future studies started after WW2

Big changes had taken place, ”normal science” had not foreseen them

Therefore, there was a clear need for wide understanding of the future

Different themes, methods and approaches have been in use since then

Future studies is an own academic discipline, but most of its methods come from social sciences

Also states, companies, economic sectors, international organisations etc.

do and use future studies to inform their planning and decision-making (policy)

- usually foresight is the expression for studies/exercises of different kinds

Science and policy need each other, but there is also some tension in this relation

A shift has taken place: from ”knowing/predicting the future”

to ”exploring and preparing for unknown futures”

This is because the world is more complex, interconnected and surprising than before – also exact predictions and experts anyway get some important factors wrong

Nobody really knows the future, but everybody can gain from preparing for it, both for the ”typical future” and for the more surprising alternatives (”Plan B”)

The present world contains many features that nobody imagined 10, 20 or 50 years ago – this implies that also the future will contain features that seem ”impossible” today

The decisions/choices we make influence the future to some extent

– we should remember this

Modelling

Extrapolation

Indicators

Benchmarking

Quantitative

Cross-impact

Bibliometrics

Creativity – Strongly influenced by imagination In

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Evidence – Strongly influenced by facts and data

Science fiction

Scanning

Brainstorming

Essays / Scenario writing

Conferences / Seminars

Wild cards

SWOT analysis

Expert Panels

Genius forecasting

Scenario workshop

Morphological analysis

Interviews

Literature review

Citizen Panels

Relevance trees / Logic charts

Backcasting

Role Play/Acting

Roadmapping

Quantitative Scenarios/SMIC

Delphi

System/Structural analysis

Voting / Polling

Gaming-simulation

Stakeholders Mapping

Key/Critical technologies Multi-criteria

Patent analysis

Qualitative

Semi-quantitative

Some typical methods in future studies and foresight

Forecasting/extrapolating

Backcasting

Scenarios

Delphi inquiries

Literature reviews

Interviews with experts

These methods have been widely used also when focusing on forest, energy etc

EXAMPLE: WORLD FUTURE SCENARIOS In 2005-6, it was possible to find many signs indicating that the fast process of

globalization of the last 15 years might not continue,

at least not in the same way as before

In a study made by Future Forum on Forests a multidisciplinary group of experts

constructed

four different world future scenarios

on the basis of six factors - economy, international politics, energy, environment,

culture, and technology

For every factor, 2 main themes were picked and 2 alternatives for each = 4 outcomes

Then, the separate outcomes were combined into 4 ”possible worlds”,

containing both upsides and questions causing tension

Homestead (isolationism) - might appear as a result of big conflicts - a return to nation-based development - tradeflows might slow down - less concern for global problems - regulation mainly national

World parliament (global consensus) -might appear as a reaction to global problems - global regulation of many issues on the basis of sustainable development - strong public sector - partly even too much control

McWorld (free market) - close to the neoliberal ideology - economy rules, politics and environment have to adjust - regulation is market-based and does not restrict the economy

Zapatista (”stormy weather”) - unpredictable development: trade wars, strange and changing coalitions, big differences - global regulation does not evolve because big conflicts of interest

What might the future look like? Different scenarios might come true at the same time with different

strength in different parts of the world

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W o r l d P a r l i a m e n t

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DEVELOPMENT CAN TAKE MANY DIFFERENT DIRECTIONS IN THE FUTURE

- There are always many alternatives – despite the dominating rhetoric in economy and

politics

- Our interpretation of the future has a strong influence on the decisions and plans

we make: WHAT KIND OF FUTURE ARE WE PREPARING FOR?

-Any one future is unsufficient as a basis for planning or decision-making.

- Also the forest sector/use of natural resources should be studied in a broad perspective

Succesful foresight is… • innovative

• multidisciplinary

• utilises both scientific and tacit knowledge

• client oriented and participatory

• autonomous and independent

• international

• When the criteria are met,

foresight offers a valuable tool for

strategic planning and decision

making.

• Potential pitfall: lack of

independency!

How could foresight be used to study bio energy developments?

Bio energy is often studied as a separate theme, and the (forest) resource base is a typical focus

Some other questions are typically touched upon: other uses of forest/land, technology, demand, policy, prices, costs, attitudes, obstacles etc

Still, bio energy is typically studied from ”inside”. The ”outside world” is considered mostly through separate factors that might either speed up or slow down bio energy development

As a big part of the dynamics is missing, numerous studies and forecasts have ended up in numbers, projections and conclusions far from reality, resulting in weak impact on debate/policy

If studies on bio energy are to have real impact, they have to be broad enough in scope and avoid being trapped in too narrow perspectives and assumptions

Bio energy is one part of renewable energy, which is one part of energy production, which is one part of economy and human life…

All these are affected by a big amount of different economic, political, social, ecological, and cultural factors, developments, and events, which should be taken into account

WORLD DEVELOPMENT CAN TURN INTO MANY DIRECTIONS Examples of different outcomes in certain questions

World economy Indebtness and resource Growth triggered by new economies, prices as hindrances population growth and bioeconomy

World trade Globalisation deepens Trade blocs/regional solutions

Geopolitics Own interests dominate Common interests dominate

Climate policy Rapid development Modest progress

Energy Low price, old forms of High price, renewables dominate production dominate

Land use No scarcity, no price hike Scarcity and conflicts between uses, land price hikes

Food security Guaranteed by effectivity Endangered by many factors

Technology Incremental development Breakthroughs and /or failures

Consumption Direct consequence Active process, surprises possible

The future of bio energy and the key factors affecting it

Your turn to tell the future! What kind of world in 2036?

Discuss 10 minutes in groups of 4-5 people:

1) Which factors might have the strongest impact on the future of bio energy?

- Make first a list of factors with notable impact (think of surprises, too)

- Try then to agree on the 3-4 most important factors, and their impact

2) What is the role of bio energy in the future?

You can give one answer or present two different scenarios

3) Each group describes the future for the audience (time: 2 minutes/group)

Background factors and bio energy futures Summary of foresight exercise during the lecture

Background factors

- Population growth

- Price of oil

- Climate changes

- Technological developments, in bio energy and/or in nuclear energy (fusion energy)

- Food production/competition concerning land use

- Energy and climate policies

Bio energy futures

- Its role gets stronger than at present (at least in some countries)

- Its role stays at the same level as today

- Its role gets less important than now

- Independency of import of fossil energy gains strength

Background factors and bioenergy futures A summary of the group reports during the lecture (in 2015)

Factors affecting bioenergy developments:

- Shortage of fossil fuels

- Competition about land/feedstock prices; wars/conflicts arising partly from resource scarcity

- Climate change

- Financing bio energy

- Technology developments (renewables, fusion, nitrogen etc) and new energy sources

- Population growth; emigration; where the population lives (urban/rural division)

- Shift of power (between Europe, Asia, North America, South America, Africa)

Futures

Decrease of fossil fuels; wind, solar and bioenergy in a stronger position

Technology developments help renewebles to gain strength

Urbanization increases energy demand

”Bad extreme”: Conflicts/competition versus ”Good extreme”: Technology helps to solve many challenges and shortages

Small, concentrated nutrition and bioenergy pills (instead of big piles of food and biomass…)

What might evolve until 2050: Super cycle, Zero sum game - or something different?

The direction of many factors and their impact are loaded with unsecurity

Predictions and views about the future get often some numerical things right

– but often they do not catch political and cultural change/dynamics

Futurists can at present be divided into two very different ”camps”

- The optimistic ”Super cycle” leans strongly on bio economy and mankind´s ability to learn/change

- The pessimistic ”Zero sum game” stresses conflicts of interests and the absence of functioning international mechanisms for steering development

But some factors having a great impact in 2050 can be stated:

population growth, the growing importance of renewable resources

– and surprises (in technology, economy, culture, politics, climate etc)

The resource prices have been on the rise since 2002 (Source: Jeremy Grantham/GMO 2011)

What can be said about the future with some certainty?

Mankind is facing very big challenges this century World population is growing, more energy and food is needed, also other human needs

exist – demand is growing Oil will get expensive at some point and the use of fossil fuels should be decreased To increase energy and food production a lot can prove to be difficult, because important

resources such as oil, phosphate, water and arable land are scarce Industry, agriculture, traffic/transport, construction/housing should be transformed into a

low carbon, energy efficient direction - this is a huge task! Renewable resources are essential in the future and products based on them have very

good prospects in the long run The biocapacity of the globe does not suffice to meet all present or future needs The ”coping capacity” of world´s ecosystems might be endangered, if use is too big and

harsh This poses big challenges for economic, political and cultural institutions: how govern such

a development? How strike a balance between different interests and needs? How secure well-being and trust of citizens?

Future of bio energy?

Investment in bio energy depends strongly on:

1. Price level of other forms of energy production (fossil, nuclear, solar, wind etc)

2. Price level of feedstock

3. The efficiency of the production technology

4. The volume of public/state support and the political incentive structures

These factors depend in turn on other factors, such as:

- energy supply and demand

- other forms of land use (especially food production)

- the need for climate policy measures (especially cutting carbon emissions)

- political/ideological goals: energy security, food security, economic interests

Some tentative conclusions:

In land use, food might be a more central function than fiber or energy

If land prices rise a lot, bio energy based on land gets expensive

Renewable energy in other forms can more easily keep its costs down

Scenarios and plans built on large use of biomass for energy contain a big price risk

What will the next long wave be based upon?

Never be too sure: what if these or some other signals grow strong or stay weak?

If quick growth of renewable energy production continues, it might cause big effects:

- energy prices will decrease a lot all over the place

- many present energy assets (oil, coal, and other) might lose much of their value and turn into ”stranded assets” affecting actors with big stakes in them

Food production might be a potential cause for concern and conflict.

What if population growth is not continuing as predicted lately?

What if legitimacy of states, politics, authorities, market actors etc

decreases substantially?

The biggest open question might e whether mankind has sufficient skill and trust to agree on and implement solutions for the common good.