Global leaders re-think energy strategy
Also some readers might find some hard truths of this article not in line with their ideas or expectations about the renewable energy outlook, but I am more bent on understanding and sharing the facts, makes for a more objective and balanced approach. The talk about a solar bubble is very real, although there is nothing wrong with the bubble phenomenon, that is how people make money, and that is one of the driving forces for solar presently like it or not.
If you enjoy this article as much as I did, you might be interested in looking at this other article untitled "Insider Talk, Renewable Energy From the Utilities Perspective" that provides insight into how utility execs approach renewable energy. The two combined make for a comprehensive outlook.
By MYRNA M. VELASCO (SPECIAL FEATURE)
PARIS, France – The Fukushima nuclear disaster in Japan and the
apprehensions of protracted debt-triggered economic slump in the
Eurozone have been moving global policy leaders to re-think the
future’s energy mix.
As the cards are being re-dealt, many believe that green technologies
– primarily renewables – would be the trumps. Understandably so as the
whole world keenly deal with the worsening climate problems.
But there is a firm word of caution from the energy leaders: To be
very careful with the planning processes and in pursuing technology
options because blindly following what’s in vogue can be misleading –
and at times, dangerous.
The pace of economic recovery, it was similarly emphasized, will
generally set investment timeframes. Project deferrals will likely
happen as investors face the dilemma whether they should wait until
clear signals of economic rebound are there or would they stake
capital but with delayed prospects of recovery on their investments.
Low nuclear case
According to Mr. Richard H. Jones, deputy executive director of the
Paris-headquartered International Energy Agency (IEA), nuclear will
remain a significant component of the future energy mix – that despite
a ‘deviation from the course’ earlier set by some countries, primarily
While other jurisdictions momentarily backpedaled on their nuclear
investments, momentum is still expected to build up in the future
because the technology remains a low-cost, low-carbon option for the
long term. In fact, based on IEA’s assessment, despite the high
upfront capital cost for nuclear, its economics still thrive most
Across technologies, he pointed out that the levelized cost of energy
drawn from nuclear still offers better succour for the wallet – it,
emerging one of the cheapest among the choices in the mix.
Yet in the World Energy Outlook (WEO) 2011 to be unveiled in London
this week, the IEA hints of a “low nuclear case” because of the “rapid
slowdown in the use of nuclear power” following the Fukushima
For countries with sustained nuclear ambitions, including the United
States, the obstacle course ahead will include re-thinking of
technology improvements – something that is heedful of the tragedy
that has befallen Japan’s nuclear path.
Based on data laid down by the International Atomic Energy Agency
(IAEA), the low- to high growth forecasts for nuclear reactors to be
in use until 2030 will account for 6.2-percent to 13.5-percent in the
energy mix. The general trend, however, will be a ‘slow growth’ as
compared to the earlier projections.
High-carbon infrastructure ‘lock-in’
Separately, at the B20 Business Summit on the fringes of the G20
summit in Cannes, Dr. Fatih Birol, IEA chief economist, disclosed that
based on their updated WEO, “$38 trillion of investment is required to
meet projected energy demand through 2035.” The breakdown will be:
$16.9 trillion for power generation; $10 trillion for oil; $9.5
trillion for natural gas; $1.1 trillion for coal; and $0.3 trillion
Dr. Birol albeit warned that “investors in energy projects are facing
a multitude of risks.” The defining factors for the energy outlook set
sharp focus on: worldwide access to energy; fossil fuel subsidies and
investment in energy infrastructure.
Although they are jealously guarded by competitors in the technology
front, it appears that the role of fossil fuels in the energy mix –
primarily “Big Oil” and “King Coal” -- might still be far from over.
Experts nonetheless acknowledged that the “high carbon infrastructure
lock-in is making the 2-degrees centigrade climate challenge goal more
challenging and expensive to meet.”
That as a given, world energy investors are putting faith in
technology improvements as well as in “human ingenuity” to level up to
the expectations of de-carbonized energy choices – be it with
renewables or in bringing to market fossil-fuel based clean energy
choices, such as gas.
Conversely, the role of coal in driving economic growth is prescribed
for re-examination, fundamentally within the context of an
Ahead of the United Nations (UN) climate negotiations in Durban, South
Africa later this month, the IEA bared that carbon emissions have
bounced back last year after a temporary decline following consumption
reduction during the 2008-2009 economic crisis.
With 7.0 billion people now inhabiting the planet, the investment
challenges are similarly getting trickier – not only in terms of
meeting growing energy demand but also in providing access to those
who are still not quite part of the global energy equation. By 2050,
the level of population will explode to unprecedented 9.0 billion.
The IEA thus roped in, in its outlook, “the scale and type of
investment needed to provide modern energy to the billions of the
world’s poor that do not have it.”
Dr. Birol noted that around 20-percent of global population, or around
1.3 billion people, still lack access to electricity; and roughly
40-percent or 2.7 billion people don’t even have clean cooking
facilities. Such scenarios, the IEA chief economist emphasized, must
be fully integrated in the scale of future investments required of the
The capital outlay components intended to address the woes of the
energy-deprived population will be $48 billion, he said, further
stressing that “while this is more than five times the current level
of investment to expand energy access, it only represents around
3.0-percent of projected global energy investment.
Onward to 2030, the other major concern that deserves its place in the
solution front would be on scaling down, or total phase-out, of fossil
fuel subsidies. The continued existence of fossil fuel subsidies in
many markets, the IEA enthused has been resulting in “an economically
inefficient allocation of resources and market distortions” and it
similarly triggers failures in intended objectives.
The case for renewables and gas
With unconventional shale gas flourishing in North American
jurisdiction, perceptions prevail that the world may already be
reaching the “golden age of gas.”
In fact, for the envisaged slowdown of nuclear investments in Japan
and with Germany’s shutdown move on the technology, the choices being
peddled to these two countries are either renewables or gas.
It is worth noting though that in Germany’s case, it has already gone
too heavy with its renewable investments (primarily for solar and
wind). Yet, despite its ambitious touch on RE, supply reliability
remained its major concern. For the replacement of capacity to be
voided by its scrapping of nuclear as a technology choice, the country
must either embrace gas as alternative, or revert to coal to ensure
its longer term energy supply, experts surmised.
Mr. Jones noted that in contrast to the ‘gas revolution’ overwhelming
the United States, “shale gas is not much of a European story.” Hence,
this will pose some challenges as to where the supply would be coming
from if Germany’s or other European countries’ preference would be
There are already projections of “possible delay in oil and gas sector
investment in the Middle East and North Africa (MENA) region”, and
their impacts on energy supply are cautiously being re-assessed.
Russia is another energy market being monitored vigorously, as it is
viewed that developments in this domain will have “implications on
Meanwhile, renewables continue to present ‘exciting twists’ in the
energy future narrative. Sustainability and subsidy issues, however,
may persistently hound pace of developments.
The ‘solar energy bubble’, particularly in Spain and Germany, might in
part be a harbinger of things to come. Energy planners however are
willing to place higher bets on the more sustainable RE sources, such
as hydro and geothermal, as compared to the intermittent ones – which
they likened to “separating the men from the boys.”
Asia’s renewable energy story is also being closely watched – with
China already surpassing the US on that investment sphere; while Japan
is also prodded on more RE deployments at its energy mix, in addition
to liquefied natural gas.
Source : http://www.mb.com.ph
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