If current trends continue and in the absence of determined political action, in 30 years’ time we will be faced with increasingly uncontrollable energy and climate problems. This is the conclusion of the recent WETO study published by European researchers. The ball is now in the politicians’ court.
The study World Energy, Technology and Climate Policy, financed by the Commission as part of its socio-economic research into the energy sector(1), offers one of the first clear pictures of what awaits us if nothing changes. For Domenico Rossetti di Valdalbero, who supervised this study at the Research DG, ‘The approach taken by this research has three strengths: It is scientific. It is rigorous. And it is objective.’ Based on the most reliable assessment possible of available resources and on a realistic and well-documented observation of the current and future evolution of worldwide energy demand, the study proposes a reference scenario and describes the issues at stake in terms of global climate change and, in parallel, energy supply security in Europe, whilst highlighting the role of technology. The study points to the limits that we are inexorably tending towards, and which are in danger of proving unbearable if nothing is not done to induce a trend change, in particular concrete implementation of the Kyoto Protocol. This report has been discussed at the highest level in the Commission and distributed to European energy and environment ministers. From now on, its conclusions should serve as a backcloth for implementing alternative policies.’
Population and growth The path of world energy growth is signposted by demographic and economic reference points. By 2030, our planet’s population will have grown to 8.2 billion (from 6.1 million in 2000). Latin America, Africa and the Middle East will together make up 22% of this number, as against 16% today.
What level of economic development should we expect? The world economy can be expected to continue to grow at its average ‘cruising speed’ (3% a year since 1970). But this speed will vary greatly, rising by just 0.4% a year in EU countries, but increasing by leaps and bounds in Asia, and in particular in China. Industrial countries, which accounted for 70% of GDP in 1990 and 62% in 2000, will ‘fall’ to around 45% in 2030.
Energy demand is projected to mirror these developments, increasing at a global 1.8% a year between now and 2030, with over half the demand coming from developing countries (as against 40% today). Energy will be shared between the various sectors in similar proportions as today: 35% for industry, 25% for transport, and 40% for a more vaguely defined area including residential, services and agriculture. Demand from service industries will grow fastest in developed countries.
The grip of fossil fuels
Oil consumption is growing inexorably. Worldwide production of ‘black gold’ should reach around 120 million barrels a day by 2030.
Fossil fuel resources, which are dominant today (81% of global consumption in 2001), should remain adequate until 2030. Whilst certain supply-side tensions could begin to be felt by then, oil remains the king of fuels. Used variously by industry, transport and the service sector – and still representing a large portion of electricity generation (see box) – consumption seems set to rise by the 1.6% annual rate which it has known since 1990. In this way, global production would grow by around 65% to some 120 million barrels a day by 2030. Three-quarters of this increase would come from OPEC countries, which will then supply 60% of demand (as against 40% in 2000). By then, oil can be expected to cost €35 a barrel – a figure comparable to the current price.
The world’s very abundant exploitable reserves of gas and coal should not cause any problem. Sustained growth in use of these two primary sources will continue over the next three decades. Having risen by 0.9% a year between 1990 and 2000, coal consumption is set to grow by 2.1% between now and 2010, and by 2.5% a year from then to 2030. Encouraged by its competitive price – in energy equivalent terms coal will cost €10 per barrel in 2030 – production will have doubled by then, with over 50% coming from Asia and Africa. This traditional fuel will play a major and growing role in supplying these two continents, as it will in North America (much less in other industrialised countries).
In turn, a ‘dash to natural gas’ will be a key feature of the next three decades. Gas production will grow by 3% a year between 2000 and 2010, slackening off to 2.1% thereafter. In 2030, it will cover 25% of total consumption compared with 21% today.
Three factors explain the interest in this fuel, which is playing an increasingly important role in electricity generation: the very generous reserves existing well beyond 2030 (in particular in the CIS and Middle East), a competitive price compared with oil (around €30 a barrel depending on where it is produced and consumed), and its less harmful impact on the environment. ‘Natural gas gives off 30% less CO2 than coal,’ according to Bruno Lapillonne from French energy data specialists Enerdata. ‘Furthermore, combined cycle gas turbines are offering yields of up to 60% compared with 40% for coal-fired power stations. In all, the carbon content of electricity from gas is half that of electricity from coal.’
Clean energies relegated In the absence of any countervailing action, the ‘natural’ trend of the laws of supply and demand is for fossil fuels to dominate increasingly and to satisfy 88% of world needs in 2030(2). This increase of almost 9% signifies a fall-back in ‘climatically clean’ non-CO2 producing energies.
Highly contested and lacking new technological impetus, nuclear fuel will represent just 5% of world consumption as against 7% today. But the greatest losers will be renewableenergies. In the absence of any genuinely proactive policy to surmount the barriers to their penetration in an economy regulated solely by market interests, in 2030 they will cover just 8% of global demand as against 13% in 2000. Whilst solar, wind and small hydro will have risen (7% a year between now and 2010, and by 5% thereafter), their market share will not exceed 1% in 2030. At the same time, by giving precedence to other energy vectors, urbanisation in developing countries will result in a decline of the renewable resources sector and a significant fall in biomass consumption (meeting just 5% of world needs as against 9% today).
Climate verdict – no appeal When it comes to the climatic consequences of the energy projections contained in this scenario, the verdict is harsh and with no room for appeal. The planet will find itself in an ‘unsustainable’ situation in terms of climate change, with CO2 emissions more than doubling between 1990 and 2030, from 21 to 45 Gt. The forecast also highlights the new regional distribution of the burden of pollution, given changes in the nature of the fuels (and hence the ‘carbon emission intensity’). Industrialised countries, representing just 70% of carbon emissions in 1990, will share only 42% in 2030. Europe will increase its discharges by ‘just’ 18% and North America by 50%.
Their place will be taken by the sustained growth in fuel consumption in developing countries, with China way out ahead in absolute terms. Even if it succeeds in reducing its relative energy intensity by 66% from 1990 levels, its CO2 emissions will rise by 290% from then, due essentially to the substantially reduced use of biomass energy(3).
Potential trend changes What factors could potentially change the WETO projections, defined by its authors as the scenario of ‘harsh reality if nothing is done’. The study examines the sensitivity to two hypotheses, linked to two major uncertainties. The first is a downward revision of estimated world oil and gas resources, the second is greater energy efficiency from accelerated technological developments in the electricity sector.
Falling oil and gas resources (further aggravating Europe’s dependency) would mean higher prices. The resulting reduction in demand would be offset by a greater role for coal (a negative development in pollution terms) and other cleaner renewable energies. But the main effect would be to encourage energy savings, producing a small drop in global consumption. In brief, if oil and gas prices hit €40 a barrel in 2030, world energy demand would fall by 3%. Consumers would turn more resolutely to non-fossil energy sources, and CO2 emissions would fall by 2% compared with the reference scenario (4).
Whilst economically attractive, technological innovations paving the way for greater use of gas and coal would lack any significant environmental impact. On the other hand, technological progress promoting the role of renewable or nuclear energies could reduce the power sector’s CO2 emissions by 10%.
‘We limited ourselves to examining the impact of technological progress on electricity generation, a sector in which we can identify a limited number of generic processes,’ Bruno Lapillonne explains. ‘When it comes to transport, and particularly to heating, matters become much more complex. Motor vehicles can be improved by adapting the propulsion energy and vehicle features, while the number of technology combinations is increasing rapidly without so far our being able to place a figure on the investment cost. We started with the electricity sector because it is easier to model, but very major issues are at stake in the other sectors and will be taken into account at a later date.’
Electricity production from the so-called soft energies (sun, wind, water) will increase by 7% a year from now until 2010 and by 5% a year from then on. Even so, they will represent no more than 1% of the world market in 2030, according to the reference scenario given in the WETO report.
Costing the Kyoto alternative Finally, the report’s authors have refined their scenario by adding a hypothesis which challenges political leaders. What changes can be achieved by the application, shared between the different regions of the world, of the Kyoto provisions aimed at a ‘forced’ reduction of CO2 emissions.
The target taken by the authors is based on one of the ‘reasonable’ scientific modelling exercises undertaken by the IPCC (International Panel on Climate Change), based on limiting the increase in the global atmospheric temperature to 2°C by the end of the 21st century. Achieving this means reducing the worldwide CO2 emissions of the ‘as usual’ scenario from 45 to 36 Gt, or 21%. The WETO report goes on to assess the energy and regional consequences of this ambitious but certainly not excessive objective, which can be estimated by applying the constraints resulting from a strict implementation of the Kyoto Protocol’s ‘carbon tax’.
In this simulation, for the European Union to fulfil its Kyoto commitments, this progressive taxation would produce a levy equivalent to €13.5 per tonne of CO2 emission between now and 2010, rising to €60 a tonne in 2030 if Europe remained determined to set a good environmental example. Carbon emissions would then be 26% lower than under the ‘as usual’ scenario, with the brunt of the reduction being borne by the industrial sector.
According to this hypothesis, the world’s energy landscape would change considerably. Global energy demand would decrease by 11%, with a drastic cut-back in coal consumption (-42%), a smaller fall in the use of oil (-8%), while natural gas consumption would remain stable. Consumption of nuclear and renewable fuels would increase by 36% and 35% respectively. The share of large hydro and biomass would rise further, whilst that of wind, solar energy, and small hydro would jump by a factor of 20.
For Domenico Rossetti, ‘the WETO report sends a strong signal, in particular to European leaders, regarding the efforts to which they have committed, under the Kyoto Protocol, between now and 2010. It is essential that we demonstrate our determination to respect the objectives we have set if we want to get the remainder of the international community – including developing countries – to commit to reducing their own emissions in the future. It is vital that by 2010 the United States and China, the world’s two largest polluters, come to an agreement and sign and implement a Kyoto II aimed at the year 2030.’
(1) This project, coordinated by Enerdata (FR), was undertaken by researchers from the Federal Plan Office (BE), the Institute of Energy Economics and Policy (FR), and the Institute for Prospective Technological Studies of the Joint Research Centre (Seville – EU).
(2) In Europe, oil will remain the primary source of fuel (39%), followed increasingly by gas (27%), and then coal and lignite (16%).
(3) CO2 emissions from biomass fuels are regarded as ‘neutral’, involving the release of carbon stored in them, and not additional carbon, as in the case of fossil energies.
(4) On the contrary, an increase in gas resources would lower the price. This would produce a 21% increase in gas production and a 1.5% global increase in global energy demand.
Natural gas: Europe’s dependency gives cause for concern
Over the past decade the use of natural gas in Europe – mainly from the continent’s own resources – has grown by a record 5% a year. With the gradual saturation of needs – in particular in manufacturing and the service industries ...
Electricity - vital progress
The main change in the coming decades lies in the growth of the electricity sector, in response to the ever-growing demand in developing countries and to further calls for energy from the industrialised world. With average global growth of 3% a year, ...
Contact at the Research DG Domenico Rossetti di Valdalbero email
Natural gas: Europe’s dependency gives cause for concern
Over the past decade the use of natural gas in Europe – mainly from the continent’s own resources – has grown by a record 5% a year. With the gradual saturation of needs – in particular in manufacturing and the service industries – this trend is likely to weaken. The WETO study projects average growth of 0.8% a year over the next three decades, most of it for electricity generation, with power stations 27% gas-fuelled by 2010 as against 12% in 1990 and 20% in 2000.
Two factors are causing concern, even if Europe’s future gas needs remain moderate. First, the manna of its own resources is nearing exhaustion. Second, with a global ‘dash for gas’, Europe will find itself acutely dependent on the two closest gas-producing regions, the CIS and the Gulf zone, which hold over 70% of world reserves. For these essential sources of supply, it will be competing with the entire Asian continent, where demand will be much higher in a similar context of absence of own resources.
‘Can we remain insensitive to the fact that our dependence on external natural gas will rise from 53% today to 80% in 2030?’, Domenico Rossetti di Valdalbero asks. As the Green Paper (1) has shown, it is vital that Europe take steps now to secure its sources of supply, by diversifying potential ‘gas roads’ to African and Middle East resources, and establishing permanent dialogue with producer countries.’
The main change in the coming decades lies in the growth of the electricity sector, in response to the ever-growing demand in developing countries and to further calls for energy from the industrialised world. With average global growth of 3% a year, electrical power will represent almost one-quarter of final demand (22% in 2030 as against 15% in 2000).
We are set to see a significant redistribution in the supply of raw fuels to this sector. Over half the production will be generated by units incorporating technological innovations, such as combined cycle gas turbines, clean coal burning and, to a lesser extent, renewable energies, that have come to maturity after a decade of research. This trend is shown in figures on the development of market share between 2000 and 2030: gas – 16% to 25%; conventional power stations – 36% to 12%; nuclear – 18% to 10%; major hydro – 19% to 13%; and other renewable energy sources – 2% and 4%. Nor should we forget the growth of solar and wind energy sources which will multiply by a factor of 11. With 8% of its electricity market sourced by renewable energies in 2003, Europe should become the leading user of such energies(1).
(1) This figure does not reflect the specific proactive measures the Union intends to take to promote these energies, but only their potential market penetration based on economic performance criteria.