Coal, fossil fuels and thinking the unthinkable

The world can continue burning coal at current rates for 128 years before proven and recoverable coal reserves run out, according to data in the 2010 Survey of Energy Resources published by the World Energy Council in Montreal this week.

Reserves are well distributed among some 75 countries and the price of coal has historically been lower and more stable than that of other fossil fuels, the survey says. For this reason, coal “is likely to remain the most affordable fuel for power generation in many developed and developing countries for several decades.”

Its use is expected to rise 60 percent by 2030, WEC says, meaning that little will change in the global energy mix over the next 20 years.

“Generally, fossil fuels currently account for about 80 percent of primary energy demand and this figure is expected to remain largely the same through to 2030,” according to WEC.

The world’s continued dependence on fossil fuels for the foreseeable future has been a recurring theme at the WEC’s World Energy Congress, so much so that even a panel of executives and government officials asked to “Think the Unthinkable” focused on their efforts to address the current trends of emerging market growth, urbanization, demand for gas, etc.

This prompted a frustrated member of the audience to remark that the panel’s approach recalled Einstein’s definition of insanity: doing the same thing over and over again and expecting different results.

Miguel Martinez, chief operating officer of Repsol YPF, said today’s mission must be to gain time and to pursue all options that make non-renewable fuels less carbon intensive while affordable sustainable alternatives are pursued.

The WEC survey shows that much is already being done. World wind energy capacity has been doubling about every three-and-a-half years since 1990, while the global market for photovoltaic solar panels has been growing at an average of 47 percent per year for the past five years. But there is still a long way to go, it says.

“It will take decades before renewables will be able to provide a sizeable contribution to meeting energy demand,” the survey says. “In the meantime, the world should focus on increasing efficiency across across the entire energy value chain.”

The thorny issue of free energy markets

A consensus has emerged at the World Energy Congress on three goals for the future of energy, Pierre Gadonneix, Chairman of the World Energy Council and honorary chairman of French utility Electricité de France. It needs to support economic growth, reduce pressure on the environment, and reduce social inequality around the world.

These three goals require the development of new, more sophisticated and safer technologies, which in turn requires more investment that is likely to impact costs, he said. Free trade in energy would go a long way to meeting the goals, Gadonneix argued, by making energy more readily available, by promoting economies of scale and reducing costs, and by facilitating the transfer of technology.

Yet, the energy sector is one of the most protected worldwide, and protectionist measures have worsened since the onset of the financial and economic crisis two years ago, he said. Canada, with more energy resources than it needs for itself, is keener than most to maintain open energy markets. Some 20 percent of Canada’s exports are in the energy sector, said Trade Minister Peter van Loan (on right in the photo).

Pascal Lamy (left in photo), head of the World Trade Organization, agreed that more predictable and transparent international rules could benefit both countries which produce and those that consume energy, but warned the industry not to expect too much. There have been previous attempts to liberalize energy trade, at least since the 1970s, and all have failed, he noted.

The WEC’s three main goals of energy accessibility, availability and acceptability require energy solutions that are both long-term and sustainable, and this means that social and environmental concerns must be at the heart of our future energy system, he said, speaking by video from the WTO head office in Geneva.

“The answer can only be energy efficiency, more renewables and changed lifestyles,” Lamy added.

Interview: Improving efficiency through energy management

Reducing energy costs is gaining attention as a strategy for increasing the productivity of industrial production processes. Bashir Ahmad, sales engineer for ABB Energy Management Systems in North America, presented a paper on “The energy efficient enterprise” at the World Energy Congress on Sept. 14. In this interview, he explains what an Energy Management System is and how it enables customers to reduce their energy consumption.

Challenging the notion of an acceptable energy policy

Emissions need to fall by 80 percent by 2020 to secure the future of civilization, according to Lester Brown, President of the Earth Policy Institute in the US. With this dramatic statement, Brown opened discussions on the challenge of the acceptability of energy solutions on the third day of the World Energy Congress.

Brown framed the challenge as an issue of acceptability to nature: if our energy solutions are not acceptable to nature they are by definition unsustainable and will threaten life as we know it. The institute reached its emissions reduction target for the next 10 years by assessing the science rather than what may be politically acceptable, he said.

“When we begin looking at the changes we need to make and the limited amount of time we have to make the changes, what we’re looking at is something approaching a war-time mobilization to restructure the global economy,” Brown said.

He pointed to the very rapid deployment of wind power projects in Texas and in China as evidence that change can happen quickly where there’s a will. He suggested accelerating the transition by creating additional incentives to invest in clean technology by restructuring the tax system to raise taxes on carbon while reducing them by a corresponding amount on labor.

The weak link is probably going to be the food supply, according to Brown. Already about 20 countries are over-pumping aquifers to grow food, while global warming is threatening the glaciers that feed many of the world’s rivers on which so much irrigation depends. Early indicators of a breakdown include a rise in recent years in wheat prices, in the number of hungry people in the world and in the number of failing states, he said.

Speaking after Brown, Yvo de Boer, the former executive secretary of the United Nations Framework Convention on Climate Change, said the targets agreed on at last year’s climate conference in Copenhagen would require a 50 percent reduction in emissions globally by 2050.

Although the parties at the conference failed to agree on binding global targets, more than 100 countries have since pledged to pursue national action plans to reduce emissions. The challenge now, De Boer said, is turning the political ambiguity of the outcome into business reality by developing common metrics for measuring success and reporting guidelines for businesses.

Only then, he said, will it be possible to hold companies and countries accountable for meeting the goals in the action plans.

Interview: reducing ship emissions with power from shore

Ships still consume energy when they are berthed at port, running their diesel generators to power onboard facilities and emitting CO2, nitrogen oxides and sulfur oxides in the process. With growing pressure on the industry to reduce emissions, an increasing number of ports are introducing shore-to-ship power supplies to enable the ships to draw electricity right from the quayside. ABB's Knut Marquart presented a paper at the World Energy Congress on Sept. 15 on "Effectively reducing emissions from ports," and explains in this interview how it works.

Energy efficiency a key theme at WEC 2010

One of the key themes emerging from keynote speakers and roundtable discussion alike at the World Energy Congress is the need to improve energy efficiency. A roundtable dedicated to that topic provided the following facts and highlights:

Improvements in energy productivity have lagged behind material and labor productivity gains in the past 50 years. Energy efficiency offers the most affordable means of delivering energy.

But, energy efficiency:

• requires outlay
• has low mind share
• is fragmented across many devices
• is difficult to measure

Some energy efficiency barriers:

• Structural
• Behavioral (lack of awareness, customer and habit)
• Availability (capital availability)

George Arnold, the National Coordinator for Smart Grid Interoperability at at the US National Institute of Standards and Technology (NIST), spoke about the electrical infrastructure of the United States and what needs to be done to lead to a “smarter” grid in which energy would be used more efficiently. The US has the most extensive infrastructure in the world, he said, with 3,100 electric utility companies, 10,000 power plants, $247 billion in annual revenue and $800 billion in assets. But because this infrastructure has been built over a period of some 90+ years, it has some defining characteristics:

• One-way flow of electricity
• Centralized, bulk generation
• Responsible for 40 percent of human caused CO₂ production
• Limited automation and situational awareness
• Lack of customer-side data to manage and reduce energy use
• Less automation than the telephone networks of 30 years ago
• Customers not usually thought of as being “in the grid”

There are some smart grid goals that NIST has defined:

• Enable customers to manage and reduce energy use
• Enable increased use of renewable resources
• Improve efficiency, reliability, and security
• Facilitate infrastructure for electric vehicles, especially fast-charging and load balancing

What will smart grid look like?

• High use of renewables, 20-35 percent by 2020
• Distributed generation and microgrids
• Net metering - selling local power into the grid
• Distributed storage
• Smart meters - real time usage data
• Dynamic pricing
• Ubiquitous smart appliances
• Energy management in houses as well as communications and independent facilities linked to the grid.

In addition to Arnold, several other members of the roundtable offered insights into energy efficiency. For businesses, energy efficiency across the value chain a good measure of how well-managed a business is. Energy efficiency is not new, but it is underutilized. From 1970 to 2008, energy efficiency gains met 75 percent of new energy demands in the United States. A quote from Steven Chu, US Secretary of Energy, highlights that a lot more can be done: "Most dramatic reductions in greenhouse gas emissions will come from energy efficiency and conservation."

There are two ways of improving energy efficiency: passive (devices, installation) and active (optimizing usage and installation of devices, and monitoring and maintenance). To achieve true energy efficiency requires long-term engagement and a process. It is not just about the installation of new devices; it is also necessary to audit, measure, and manage. Another way to improve efficiency and reduce costs is to make energy visible, that is, to compare energy costs by creating energy dashboards so that consumers and companies can be aware of their energy outlay.

There are several barriers to making energy efficiency more visible, but the consensus of the panel was that we need people with the right skills, knowledge, management and especially leadership.

Technical Papers for Wednesday, September 15

Below are the technical papers being presented by ABB'ers today at the World Energy Congress in Montreal. All papers will be delivered at September 15, 2010, from 3:00 – 4:15 p.m at the Palais de Congres. Please check local listings for room assignments.

Session name: Full life cycle - the only reliable framework for impact assessment

Presenter: Asmund Maeland, ABB

Paper: Powering oil & gas offshore operations from mainland eletrical grid

Session name: Road map to efficient energy policies

Presenter: Knut Marquart, ABB Ltd

Paper: Effectively reducing emissions from ports

Tackle the barriers to energy efficiency, ABB executive says

Using energy more efficiently is the best solution to the triple challenge of increasing the global supply of energy while lowering environmental impact and costs, the head of ABB’s Power Systems division, Peter Leupp, said in a keynote address at the World Energy Congress.

It also offers the biggest opportunity, he said, referring to International Energy Agency data showing that energy efficiency can contribute more of the required CO2 cuts than all the other solutions put together.

“The energy challenges we face today are very real: meeting the expected growth in demand while curbing climate change is daunting enough, and doing it in a cost-effective way even more so,” Leupp said. “Energy efficiency in all its forms is the solution best able to address our three challenges of providing for growth in demand while reducing emissions and minimizing costs.”

However, it is important to recognize the barriers that are preventing societies from seizing the opportunities, he said. For example, consumers are often ill-informed and don’t make rational choices, while the potential for savings is highly fragmented and spread across industries, locations and consumers.

Further barriers are apathy among individuals, who may feel change requires more time and effort than they are willing to make, and the fact that energy is relatively cheap further hinders their willingness to take action, Leupp added. Often, there is little or no incentive to pay extra for more efficient equipment perhaps because, as is frequently the case in industry, the purchasing manager is not the one who pays the energy bill.

The example of Japan shows that the barriers can be overcome, he said. Japan is the most energy efficient economy, using half as much primary energy per $1 of gross domestic product than the US.

“We need to recognize that there are many barriers to the efficient use of energy that will require a concerted effort on several fronts to overcome,” Leupp said. “Japan is the best practice model we have today and we can learn many lessons from what it has done, and adapt them to our own markets where necessary.”

The evolving electricity network

As a producer of renewable energy, you would expect Canadian utility Hydro-Quebec to be a strong supporter of increasing the share of renewables in the global energy mix, and indeed it is. Renewable energy “has to be growing,” Chief Executive Thierry Vandal told delegates at the World Energy Congress. He neverthess said there are other more pressing needs.

“Renewables need to grow in the energy mix, but before we even get to that we need more energy efficiency and a sophisticated transmission grid,” he said. “Energy efficiency has to be No. 1 on everyone’s minds,” he went on. “If you had told me 10 years ago we would get to levels of efficiency we have reached today I would have said you’re mad. There is an ability to go much further in terms of energy efficiency than people thought possible. The potential will only be ‘maxed out’ if we take on the challenge of the transmission grid.”

What the transmission grid challenges are and how they can be tackled by making the grid more sophisticated was explained by Peter Leupp, head of ABB’s Power Systems division, at a meeting of the Young Future Energy Leaders at the congress. One big issue he highlighted is that when traditional grids were built, their designers didn’t think about connecting it to all the remote locations where renewable energy is most plentiful and which are now being developed.

So the first challenge is simply connecting renewable power plants to the grid, but the intermittence of the supply from some sources means that operators face the additional challenge of maintaining balance in the power system, Leupp said. In the power system, supply and demand must be balanced at all times because power cannot be stored, so intermittent power from wind and solar in particular can create real problems with stability.

Leupp explained that since the wind and sun can’t be controlled, supply and demand must be balanced in other ways, for example by managing demand. On top of all this, the grid needs to be strengthened to enable a transition to electric vehicles so that the network isn’t destabilized when large numbers of vehicles are connected to the grid at once, he said. Keeping all these things together requires much more management and control in the electricity grid.

“The future grid will look much more complicated,” Leupp said. “The main discussion is about how we produce electricity, but hardly any attention is focused on how we deliver that electricity.”

Innovation to facilitate the evolution of the grid will concentrate in four areas, Leupp said: AC technology, the backbone of today’s grids; DC technology, which is experiencing a comeback as a technology for low-loss, long distance power transmission; storage; and demand management.

(The image at the top of the story illustrates the transition from a grid with largely unidirectional power flows from large power plants, to a more complex system using a greater variety of power sources.)

ABB Technical Papers

Below is a list of technical papers being presented by ABB'ers today at the World Energy Congress in Montreal. All papers will be delivered at September 14, 2010: 3:00 – 4:15 p.m at the Palais de Congres. Please check local listings for room assignments.

The energy efficient enterprise

Presenter: Bashir Ahmad, ABB in Canada

Energy efficiency: The Italian situation and opportunities

Presenter: Alessandro Clerici, ABB in Italy

Renewable and alternative energies in the global energy mix

Presenter: Qianjin Liu, ABB China Corporate Research

Four factors that will shape the energy future

The International Energy Agency’s annual World Energy Outlook has become a prominent and much-cited reference work on the future of energy. One of its leading authors is Fatih Birol, the IEA’s chief economist, and he told the World Energy Congress that as the organization finalizes its latest report he sees four crucial factors that will be important for the energy future.

1. Energy markets are facing unprecedented uncertainties
The principal driver of energy demand is economic growth, and the outlook for growth is a very important factor in the decision making processes of businesses and governments, yet there is little consensus about the direction it is taking, he said. Views range from expectations of a rapid recovery to a lengthy period of sub-par performance.

One of the biggest changes in energy markets over the past year has been the development of a glut in natural gas, which may continue for longer than many expect, Birol added. The glut is creating losers as well as winners, and how traditional gas producing countries that are losing out will react will be important for the gas market and for competing fuels overall, he said.

Further, after missing the boat to have a legally binding agreement at the Copenhagen climate conference in 2009, there is uncertainty on the way forward for climate action, the IEA’s chief economist said. Although some 100 countries have made pledges since then on emissions reductions, many of these targets are difficult to measure, and in some cases the reduction targets are much more modest that a business-as-usual trend, he warned.

2. Growing insensitivity of oil demand and supply to price
While oil used to be used by almost every sector of the economy, 90 percent of the growth in past five years has come in the transportation sector where few alternatives to oil exist. In addition, demand has stalled in OECD market economies and is mostly growing in emerging markets where prices are often so heavily subsidized that an increase in the price of oil on international markets has little impact on behavior in these markets, Birol said.

3. Evolution of China’s energy system
The scale and speed of change in China will be a key determinant of the future of the global energy system, Birol said. In 2000, China was consuming half as much energy as US but has now already caught up. And despite this growth, China’s per capita energy consumption remains just one third of the OECD average. So the policies China follows will have an impact on the energy systems of every other country. As an example, Birol said the province of Xinjiang has 40 percent of the country’s coal reserves but accounts for just 5 percent of national production. Plans to tap more of this could have a major impact on global markets, just as Chinese imports of coal totaling about 3 or 4 percent of global production had a big impact on prices.

Since China’s market is so huge, its investments in new technologies might help to considerably bring down their price and thereby accelerate their adoption worldwide, Birol added.

4. Role of public policy
Finally, Birol said that some challenges, such as climate change, are so complex and so urgent that there is a greater role for public policies, whose main goal should be to provide stable and clear signals to enable the deployment of advanced technologies.

Saudi Aramco CEO weighs in on energy accessibility

Nearly 2 billion people have no access to adequate energy, more than six times the population of the United States. For Khalid Al-Falih, President and CEO of Saudi Arabian Oil Company (Saudi Aramco), it’s important to remember this fact to avoid treating the issue of availability to energy as an abstract concept.

In addition, population growth and rising prosperity will contribute significantly to the world’s growing energy needs, he told the WEC delegates..

But Al-Falih noted that access to energy and access to sources of energy are intimately linked. The world will continue to rely on fossil fuels, to which we have easy and plentiful access for the next few decades, he said. Fossil fuels provide 80 percent of the energy we consume, and will remain our main source of energy for the foreseeable future.

Even when alternative sources of energy become viable, it will still take a long time to displace the established petroleum-based resources, he said. For this reason, it is necessary to continue investing in access to hydrocarbons, and to improve performance because of our reliance on it in the next decades.

There are opportunities to make petroleum more environmentally friendly, and it is incumbent on the industry to do its utmost to find these enhancements, he argued. Al-Falih said it can reduce its emissions by investing in new plant technology, which cuts costs and conserves energy, and that enhanced energy efficiency is another way to provide access to energy. Natural gas has half the carbon emission of a similar energy unit of coal, so using more of this for power generation could further reduce carbon emissions.

Al-Falih said that consumer acceptability of energy also needed to be added to the availability equation, and that this transcends environmental issues alone. Safety, dependability, and affordability play a role, which is why coal has recently done so well, he said.

Global coal consumption remained flat in the 1990s but grew by 4.5 percent annually in the 2000s, even as environmental awareness increased. In the same period, oil consumption grew by just 1.5 percent. So consumption is not only driven by environmental policy, but also by economic growth, resource endowment and the economics of competing resources.

The world needs to recognize the interplay between increased access and acceptability, Al-Falih concluded.

Interview: Improving energy accessibility with HVDC

High-voltage direct current, or HVDC, is a mature power transmission technology experiencing a second youth. Developed by ABB in the 1950s, this versatile technology is not only highly efficient – minimizing the amount of electricity lost during transmission – it also improves the stability and reliability of power networks. In addition, HVDC makes a lot more energy more accessible, as Olof Heyman, head of marketing for ABB’s HVDC business, explained in a paper called "A key solution in future transmission systems," which he presented at the World Energy Congress on Sept. 13. In this interview, Heyman explains how the technology improves energy accessibility.

Accessibility and urgency

Each day of the World Energy Congress is devoted to an energy challenge and “accessibility” is the focus of day 1. Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, set the scene on this issue by outlining work his organization has done on the outlook for energy demand over the next two decades. They have developed three scenarios, the most pessimistic of which is characterized by continued economic turbulence and a low-level of international cooperation. However demand is set to increase by 2030 in all scenarios, at rates between 30 percent and 42 percent. This means that meeting energy demand will be a “big job,” Yergin said. “It is sobering to realize that much of the infrastructure needed to meet demand in 2030 has not yet been built.”

Having set the scene in those terms, the panel discussion that followed focused not so much on accessibility but on the urgency of addressing the demand. There was broad agreement among the speakers from government and from the oil and power industries that a broad energy mix will be required, but also recognition that technology available today will have to do a large part of the job. Johannes Teyssen, chairman of German utility E.ON, summed it up by pointing out that there is a limited amount that can be done to expedite the development of energy technologies, and just as nobody planned the first two industrial revolutions, a third one is not going to happen simply because it is desirable.

Benjamin Contreras Astiazarán, undersecretary of electricity in the Mexican ministry of energy explained that his country sees energy efficiency as the best short-term opportunity. Since the Mexican government subsidizes electricity bills for the poor, it has decided to also subsidize purchases of energy efficient fridges and light bulbs to reduce power consumption. The country is currently replacing refrigerators at a rate of 2,400 per day (and destroying the old ones to ensure they aren’t kept in operation), he said.

Interview: how cement makers can use energy more efficiently

Andrew Wilson, sales manager for CPM software packages in ABB's global Minerals business, explains in this interview how the energy-intensive cement industry can reduce its consumption and emissions.

Wilson will present a technical paper at the congress entitled "Energy optimization and reduction of carbon footprint in cement manufacturing." He will speak at a session from 3 p.m. to 4:15 p.m. on Sept. 13.

Introducing the bloggers

The bloggers are Scott Bornkessel (right) and Malcolm Shearmur, members of the communications team at ABB, a leading global company in the power and automation sectors. For the duration of the four-day World Energy Congress, we will report on the discussions of the energy challenges at the event, with a particular focus on ABB’s contributions in three areas: speeches and panel discussions by ABB executives; presentations of technical papers; an exhibition of technologies for a sustainable energy future.