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Where are we on the road to clean energy?

Caroline Lee

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All around the world, sustainable energy transitions are underway. But how far we have progressed? It’s clear that action needs to be accelerated, but in which priority areas, and by how much?

Tracking energy transition indicators of both outcomes (e.g. CO2 emissions) and underlying drivers (e.g. clean energy investment) is important for developing a clear understanding of how far we’ve come, while additionally propelling further ambition and action. As the adage goes, “that which is measured, improves.

This year, countries around the world are undertaking an important exercise to assess global progress toward achieving the goals laid out in the Paris Agreement. This exercise – the Talanoa Dialogue – is intended not only to take stock of progress, but also to help inform and raise ambition of the next round of nationally determined contributions (NDCs) – commitments made by countries to tackle climate change.

Increased ambition is greatly needed: the IEA estimates that current NDCs will set us on a path consistent with about 2.7°C warming by 2100, greatly overshooting the Paris Agreement goals of limiting temperature rise to well below 2°C and pursuing efforts towards 1.5 °C.

As a key input to the Talanoa Dialogue and broader tracking efforts, IEA will release Tracking Clean Energy Progress 2018 on 22 May, providing the current status of key energy indicators, measuring their progress today against what would be needed by 2030, and highlighting opportunities for further technology development and innovation.

The Talanoa Dialogue is structured around three questions: Where are we? Where do we want to go? How do we get there? The IEA’s full response to these questions can be read in our first official input to the Talanoa Dialogue.

Where are we?

The IEA estimates that in 2017, energy-related CO2 emissions rose 1.4% after remaining flat for three years, reaching a historic high of 32.5 Gt indicating that the stall in emissions from 2014-2016 does not yet reflect a peak. Though the 2017 emissions rise is moderate compared to historical rates, it heightens the already monumental challenge ahead. IEA analysis shows that emissions must peak around 2020 then show a steep decline afterwards to meet Paris Agreement goals.

This increase in emissions reflects strong underlying growth in energy demand, which grew an estimated 2.1% in 2017, double the rate of increase in 2016. While energy intensity – primary energy demand per unit of gross domestic product – has improved over time, this improvement slowed to 1.7% in 2017, compared with an average of 2.3% over the previous three years, and only half the annual improvement rate consistent with delivering the Paris Agreement goals.

The second critical factor is the carbon intensity of energy supply, which tracks CO2 emissions per unit of total primary energy supply. In 2017, the Energy Sector Carbon Intensity Index (ESCII)increased for the first time in three years as fossil fuels met over 70% of the growth in energy demand.

In fact, over the past three decades the ESCII has barely changed, indicating the energy supply has not become any “cleaner” on average over time. While significant progress has been made in deploying renewables, in particular solar PV and wind, the deployment of low-carbon energy has not kept up with energy demand growth. This remains a crucial challenge for the energy sector, as under an IEA scenario compatible with meeting Paris Agreement goals, the ESCII drops 22% by 2030.

Where do we want to go?

The IEA’s Sustainable Development Scenario (SDS) describes a pathway for the global energy sector that is compatible with Paris Agreement goals, while also achieving universal access to modern energy and substantially reducing air pollution. The SDS offers an integrated approach to addressing key energy and other challenges.

Compared to scenarios addressing only the climate mitigation objective, the SDS places a stronger emphasis on decentralised, modular low-carbon technologies (such as solar PV and wind) as a means to achieving multiple objectives. For example, there is roughly 50% more solar PV in this scenario than in previous IEA scenarios focused primarily on decarbonisation.

As low-carbon energy takes center stage in the SDS, fossil fuels step back substantially from their current position. Coal demand peaks very soon, around 2020. In stark comparison, the IEA estimates that coal demand grew in 2017 after a two-year decline and forecasts continued demand growth at least for the next five years, absent a change in policy and market conditions.

In the SDS, oil demand peaks soon after coal, with demand decline coming from transport: electric vehicles make up over 40% of new passenger car sales by 2030.

How do we get there?

As countries drive forward their ambition, a few guiding questions can help guide their paths forward.

First, how do investment patterns need to change? In IEA’s SDS, a modest 13% additional investment in energy is required to 2030 – a net of USD 4 trillion – relative to investment that would be required under the New Policies Scenario (NPS), which accounts only for current and announced policies. Annual supply-side investment to 2030 remains relatively flat from today’s levels, although a substantial shift occurs away from fossil-fuel supply and fossil-fuel power generation, for which investment falls by USD 2.8 trillion through 2030, moving towards toward low-carbon power supply and improving the energy efficiency of end-use sectors.

Second, how much will technology costs decline? As clean technology costs continue to drop, ambition can be further raised. Looking ahead in the next five years, IEA forecasts that costs are expected to drop further by almost a quarter for large, utility-scale solar PV, almost 15% for onshore wind, and a third for offshore wind between 2017-2022 at the global scale. Towards 2030, costs are expected to continue declining. In IEA’s NPS for new utility-scale solar PV and electric vehicle batteries, costs approximately halve from 2016 to 2030.

And finally how can an integrated approach enhance chances of success? A fundamental message emerging from all facets of IEA analysis is the need for an integrated technology and policy approach to drive and accelerate clean energy transitions based on a country’s national context.

For example, the recent declines in upstream fossil fuel investment illustrate the need for policy coordination. Although this change in itself may align with a low-carbon pathway, continued decreases in supply-side investment without commensurate measures to address rising energy demand create significant risks for energy security. As a second example, policies driving electrification can produce greater environmental benefits if implemented alongside ones to decarbonize electricity supply. 

Applying such an integrated policy approach requires significant national coordination and capacity, including domestic technology and policy expertise. The IEA will continue to share international best practice and advice, and support countries as they undertake their own clean energy transitions.

Source: IEA

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Energy

We Need a Global Fund to Ensure a Clean Energy Revolution

MD Staff

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A radical new approach to energy innovation is needed if the sector is to meet the demands placed on it by the Paris Climate Agreement and play a positive role in the fight against climate change. This is the main finding of a white paper, Accelerating Sustainable Energy Innovation, published today by the World Economic Forum.

With energy consumption and production representing two thirds of global greenhouse gas emissions, business as usual is no longer an option. Increasing the pace at which innovative sustainable energy solutions get to market is critical to diversify the energy technology landscape and to meet the Paris targets at affordable costs.

The white paper, produced with analytical support from KPMG, highlights that while technology and innovation policies have been successful in rapidly scaling up some renewable technologies such as solar, photovoltaics and wind power in the past decade, the breadth of innovation and the way it has been coordinated have been disappointing. Because investments in energy technology typically require long investment horizons and entail high technological risks, the sector has struggled to attract sufficient amounts of funding, or to align the investments of those active in the space.

“Unleashing the full power of entrepreneurship and innovation across the energy system is at the crux of delivering global climate goals and spurring new opportunities for growth. We must take advantage of the Fourth Industrial Revolution to bring about a step change in investments and accelerate the pace at which new technologies are brought to market,” says Cheryl Martin, Managing Director and Head of the Global Centre for Innovation and Entrepreneurship, World Economic Forum.

The paper highlights a set of ideas that were identified to channel more investment into R&D and fast-track the road to commercialization, targeting regulatory frameworks and financial mechanisms. At the international level, the paper calls for a new global fund modelled on successful funds in other sectors to provide a secured and focused financing mechanism to tackle some of tomorrow’s most important energy technology challenges.

As well as increasing the energy sector’s contribution to the fight against climate change, the ideas set out in the paper also have the potential to generate significant employment opportunities and spur sustainable economic growth. The six ideas are in a nutshell:

Establish an independent international sustainable energy innovation accelerator fund to finance innovative energy technology projects, blending public and private sources of capital

Develop instruments for public-private co-investment at the national or regional level to support and finance deep-tech energy innovations, reduce risks and improve the effectiveness of available public and private funding; if properly designed, such instruments would not only stimulate more private money into breakthrough energy projects but also would significantly improve the success rate and impact of public RD&D grants

Mainstreaming energy innovation through strategic public procurement to use the power of public procurement to accelerate development and commercialization by providing first markets for innovative energy technologies and solutions

Create strong national institutions for energy innovation acting as a single voice for public support in energy innovation, bundling responsibilities as the main public funding authority, overlooking and steering the overall sustainable energy innovation process

Co-define energy technology roadmaps through public-private collaboration to align global policy and industrial innovation efforts and create a credible road to scale for technology areas of high potential currently advancing slowly

Super-transparency of government RD&D spending to improve the efficiency of the public R&D funding process and increase the transparency of opportunities and volume of public funding available for entrepreneurs and investors

“The opportunities that exist around energy innovation are incredibly exciting and demonstrate that the industry as a whole is focused on imminent change. However, the pace at which innovation occurs requires a deeper sense of collaboration from all of us as energy stewards to drive the agenda forward, including how we go about funding, access to technology, global energy policy, and research and development,” said Regina Mayor, Global Sector Head, Energy and Natural Resources, KPMG. “It is critical that the industry works to accelerate these discussions among industry players, government, entrepreneurs and investors around the world to address systemic barriers and fully develop and commercialize energy technologies that have the power to change the way we access energy in the future.”

One year since the start of their formal collaboration, the World Economic Forum and Mission Innovation continue to strengthen their partnership. In co-designed sessions at Mission Innovation’s third ministerial in Malmö, the collaboration is bringing together government ministers, industry CEOs and innovation pioneers to move to action on innovation challenges, discuss how to implement ideas, and set a precedent for the public-private partnerships that are required to accelerate sustainable energy innovation.

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The bp in Iraq’s Oil Industry: A Comeback to The Historical Role?

Shahriar Sheikhlar

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The official history of the Iraq’s oil began when a well at Baba Gurgur just north of Kirkuk was struck in the early hours of 14 October 1927 by the Turkish Petroleum Company (TPC) however the early negotiations for an oil concession was started with Ottoman Sultan from the late 19th century.

Indeed, the significant proved reserves of crude oil during the steps of new government installation in the Iraq was enough appealing for giant oil companies to own the shares of TPC. In 1928 the composition of TPC was rearranged through a formal agreement and TPC shareholders were formed by Anglo – Persian Company(the forerunner of the British Petroleum), Royal Dutch-Shell, Compagnie Française des Pétroles (which was named later the Total) and NEDC, an American consortium included Standard Oil of New Jersey (The prior name of Exxon which merged to Mobil and formed Exxon Mobil Company in 1999), Standard Oil Company of New York, Gulf Oil, the Pan-American Petroleum and Transport Company, Atlantic Richfield Co and an Turkish American businessman Calouste Gulbenkian.

Meanwhile by the new structure of TPC shareholders, it was renamed the Iraq Petroleum Company (IPC) and its operational territory was expanded to all the Red Line (except of Kuwait), though by establishing the Bahrain National Petroleum Company and later, the ARAMCO (Saudi Arabia) followed by last two U.S companies’ exit from the NEDC in 1948, the IPC was limited to the Iraq country and left the Iraq after nationalizing the country’s oil industry in 1972.

Of course the bp’s roll in IPC’s achievements was significantly different than another shareholders, not only because of Great Britain Government’s supports, but also by its great perseverance from 1928 until 1972 when Iraq’s oil industry was nationalized completely, the historical character of bp in the Iraqi minds.

bp’s comeback to the Iraq’s oil

Regarding to the high dependence of Iraq’s economy and its public budget on the oil’s income which is on the top of world countries’ level, the Iraqi government in the new era (after 2003) made plans to increase the oil production which was followed by inviting the IOCs’ return to the Iraq’s oil industry, after 40 years of divorce.

While the Iraq’s statement in 2007 declared sharp raises in its proven oil reserves up to 115 billion barrels, 26 international oil companies returned to the Iraq’s oil industry, including the Exxon Mobil, Royal Dutch-Shell, Total and bp, the main shareholders of the IPC. Of course some another famous companies expressed their intend and won some projects, such as Chinese National Petroleum Company (CNPC), Malaysian Petronas, GAZPROM, Turkiye Petroleum Anonim Ortakligi (TPAO), Lukoil or Dragon oil.

Whereas the several International Oil Companies participated in the Iraq’s oil projects and development plans but the bp’s comeback was significantly different, especially when the bp’s strong involvement in the giant Rumaila field enhanced its production rapidly while the most of IOCs stay in studying phases yet.

Afterwards, the bp expressed it’s interest in developing the Kirkuk’s oilfields, where was the first entrance of bp to the Iraq’s oil industry. The negotiations with the Ministry of Oil of Iraq resulted in an agreement in 2013 which was a basis for making common operational team in February 2014 but bp’s operations in Kirkuk was stopped until the October 2017 when the Kirkuk was handed over to the Iraqi federal government.

The preliminary Kirkuk’s production target of 750,000 bpd which it’s not only seemed far to be quickly achieved, but also it’s predictable to be increased up to 1,500,000 bpd until 2021.

Meanwhile, if the bp could has the chance to participate in the development of the big Majnoon oilfield, its historical synergy in the Iraq’s oil industry could be revived again. While the bp would be involved in the fields containing 40% of Iraqi Federal reserves, it will influence on producing more than half of Iraqi federal’s oil production.

Despite the bp’s concern for strong participation in the Iraq’s oil industry, the most of IPC shareholders pulled out or limited their activities in the Iraq’s projects such as ExxonMobile which sold the most of its share in the big field of West Qurna#1 or Royal Dutch-shell which left the critical field of Majnoon. Meanwhile, the Total’s participation in the Iraq’s oil industry limited to the Halfaya field by just 18.75%. In the same approach, some another international oil companies limited their actives or shares in the Iraq’s oil projects, such as the Petronas who left the Majnoon recently or Sonangol which is going to resume it’s operation in Qayara and Najma fields that were stopped from 2015.

The next months when the Iraqi government would make decision about the service companies in the Manoomn oilfield, the perspective of bp in Iraq’s oil industry could be clarified whether it will comeback to the historical rail or continuously run in the limited situation.

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Businesses Taking Lead in Climate Response

MD Staff

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Spurred by consumer demand for eco-friendly practices, many businesses across the U.S. are moving aggressively to reduce their carbon footprint, including a major embrace of renewable energy and alternative-fueled vehicles, according to Deloitte’s “Resources 2018 Study – Businesses Drive, Households Strive” released today.

The annual survey shows that businesses see addressing climate change as key to long-term industry resilience. Sustainability seems no longer optional – it has become important to fostering business growth and satisfying a wide range of stakeholders, including customers, suppliers, partners, employees and investors.

Although 86 percent of residential consumers believe government should be active in setting a vision and path for energy strategy, it is the private sector that is advancing the cause to manage resources for cleaner, more resilient, secure and affordable energy supplies.

“Businesses are not waiting for government to act on addressing climate change. They have picked up the gauntlet,” said Marlene Motyka, Deloitte U.S. and global renewable energy leader and principal, Deloitte Transactions and Business Analytics LLP. “They are now driven to double down on their energy management efforts as they view their long-term viability through the climate lens.”

Key findings

  • Of the 87 percent of businesses familiar with the U.S. pulling out of the Paris climate agreement, 4 in 10 are reviewing or changing their energy management policies in response, with 75 percent of those increasing their commitment and investment in energy management.
  • About 70 percent of customers are demanding companies procure a certain percentage of electricity from renewable sources.
  • The number of companies with carbon footprint goals has jumped to 61 percent in 2018, from just over half the year before.
  • Sixty-eight percent of residential consumers say they are concerned about climate change and their personal carbon footprints, outpacing the previous high of 65 percent in 2016.
  • Nearly three-fourths (74 percent) of residential consumers stated that climate change is caused by human action, up six percentage points from 2017.

Renewables rated key to energy independence, millennials tip the scale

More than three-fourths (76 percent) of survey respondents cited renewables as key for achieving energy independence, jumping five percentage points from 2017. This seems to represent a change in mindset with many respondents now seeing a connection that was once widely thought to be implausible.

In addition, many millennials – greener and “techier” than other generations – see renewables as the answer to their environmental concerns. In fact, 64 percent rank utilizing clean energy sources among their top three most important energy-related issues. Also, they are more likely to adopt new solutions, such as electric vehicles, home automation systems and time-of-use rates.

Businesses making EVs an easy choice

Many businesses not only say reducing their electricity consumption is important to staying competitive but they also are helping to transform the transportation sector as more consumers and employees eye electric vehicles and hybrids as a prime pick for their next vehicle.

Business respondents expect gasoline or diesel vehicles will make up less than half (49 percent) of their transportation fleets by 2020. If so, it would mark the first-time vehicles powered by alternative fuels will constitute a majority of corporate fleets. In fact, businesses are accelerating their efforts to support employees who drive electric vehicles, with well over half (56 percent), offering EV charging stations. Fifty-two percent of these businesses own the charging stations themselves, while 41 percent belong to the building owner.

Businesses Turn to Self-Generation for Greater Control Over Energy

On-site generation also is on the rise as distributed resources are increasingly viewed as being realistic and cost-effective, and as businesses desire greater control over their energy supplies in terms of price, quality and reliability. Fifty-nine percent of businesses now generate some portion of their electricity supply on-site, and of those businesses, 13 percent are using renewables, 13 percent use on-site co-generation and 10 percent are using on-site battery storage.

Nearly half of business respondents are working to procure more electricity from renewable sources, and nearly two-thirds (61 percent) said combining battery storage with renewable sources would motivate them to do more. Additionally, businesses are responding to increased power outages by purchasing backup generators, adding battery storage units, and expanding the amount of electricity they self-generate.

Smart home apps not catching on, cyber concerns cooling interest

Despite support for more innovative energy savings, only 20 percent of respondents have automated home functions, such as smart thermostats. In fact, amid growing reports of hacked home devices, 21 percent of respondents cited privacy and security concerns as a barrier to upgrading their thermostats, compared to 15 percent last year. In addition, penetration of smart thermostats and automation systems remains very low with only 4 percent using a home automation system and just 8 percent utilizing a programmable thermostat.

A majority of both businesses and residential consumers want environmentally responsible, reliable assets, preferably close by, that they can control to optimize reliability, flexibility and cost. However, this year’s survey seems to emphasize that privacy and security concerns should be addressed by providers soon to maintain the momentum for a clean secure energy future.

“Utilities are being challenged to get to know their customers better, and the industry has a long way to go,” said Andrew Slaughter, executive director, Deloitte Center for Energy Solutions, Deloitte Services LP. “What appears clear is that the electric utility sector’s transformation will likely be one of decentralization, digitalization, and decarbonization driven by business and residential consumer demand for a cleaner, more resilient, secure and affordable energy supply.”

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