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Climate Goal - WRI seminar

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					Transitioning to Renewable Energy : A Developed Country Perspective
Jonathan Pershing World Resources Institute

Financing Sustainable Electricity: Policy and Governance Obstacles Washington, DC Wednesday, April 21, 2004

WRI
J. Pershing, April 21, 2004

Overview
• Energy trends and projections • Drivers for and barriers to promoting
RE – energy security, local pollution, costs, and climate • Policies and practices to promote RE • Looking forward

WRI
J. Pershing, April 21, 2004

Energy Trends – A Quick Overview

WRI
J. Pershing, April 21, 2004

World Primary Energy Demand
6 ,0 0 0 5 ,0 0 0 4 ,0 0 0

Oil

Natural gas
Coal

M to e

3 ,0 0 0 2 ,0 0 0 1 ,0 0 0 0 1 970 1 980 19 90 20 00 201 0

Nuclear power

Hydro power Non-hydro renewables

2 020

2 030

Source: IEA WEO 2002
WRI
J. Pershing, April 21, 2004

Energy Production and Consumption

Source: IEA WEO 2003

WRI
J. Pershing, April 21, 2004

We are not running out of fossil fuels

Source: IPCC, TAR, 2001

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J. Pershing, April 21, 2004

Prices come down as capacity rises
Electric Technologies in EU 1980-1995
10

Electricity Cost (EUR(1990)/kWh)

Photovoltaics
1

1980

Biomass Adv. Coal

0.1

Wind Power

Nat. Gas Combined Cycle
1995

0.01 1 10 100 1000 10000 100000

Source, IEA, 2001

Cumulative Installed Capacity (MW)
WRI
J. Pershing, April 21, 2004

Energy Investment
Projected Energy Investment Worldwide: $16 trillion from 2001-2030

E&D = Exploration and Development ; T&D = Transmission and Distribution

Source, IEA WEO, 2003

WRI
J. Pershing, April 21, 2004

Cumulative installed OECD solar PV capacity

Source, BP Statistical database, 2004

WRI
J. Pershing, April 21, 2004

Cumulative Installed Wind Turbine Capacity
Country/ Region 1997 1998 1999 2000 2001 2002 Change (2002/ 2001) 2002 share of global total 15.4%

Total North America

1639

2226

2573

2752

4462

4947

10.9%

Total Europe
Japan World

4793
17 7636

6553
30 10153

9737
68 13932

13630
142 18450

17813
357 24927

23832
486 32037

33.8%
36.1% 28.5%

74.4%
1.5% 100.0%

Source, BP Statistical database, 2004

WRI
J. Pershing, April 21, 2004

Annual world incremental installed capacity (GW)

Source: IAEA and BTM Consult ApS

Source, BP Statistical database, 2004

WRI
J. Pershing, April 21, 2004

Wind Power Installed in Europe
(End 2003)

WRI
J. Pershing, April 21, 2004

Drivers for and Barriers to Promoting Renewable Energy
• • • • Energy Security Local Pollution Cost Climate Change
WRI
J. Pershing, April 21, 2004

The Security Map: Gas/Oil/Coal Reserves
Proved Reserves, End 2000

66/64/256

82/19/122

558/65/230

585/684/0
117/75/61
Gas: 100 bcm Oil: 1000 m bbls Coal: 1000 m ton

150/44/292

82/95/22

Sources: IEA and BP

WRI
J. Pershing, April 21, 2004

Local Pollution
(Global energy-related emissions, 1995)

900 800

Million metric tons

700 600 500 400 300 200 100 0 N20 SO2 CO
WRI
J. Pershing, April 21, 2004

Source: WRI Earth Trends

Costs of New Technologies
Technology Unit Size (MW) 170 500 300 Plant Size (MW) 170-680 500-2,000 300-1,200 Lead Time (years) 1.4 5.0 5.0 Capital Costs ($/kW) 350 1,180 1,300 O&M Expenses ($US) Fixed (kW-year) 5 20 20 Variable (MWh) 3 1 1

Combustion Turbines Lg Scale Central Stn Supercritical pulverized coal steam cycle Pressurized fluidized bed coal steam cycle

Distributed Generation

Small diesel Large diesel Microturbine PEM Fuel Cell

0.05 2.0 0.05 0.25

-

0.5 0.5 0.5 0.5

400 600 2,000 1,500

25 10 11 9

Renewable

Solar PV cells Wind (onshore) Biomass gasification

0.0002 1.5 25

1-5 kW

0.5 2.0 2.0

4,000 – 10,000 800 – 1,000 1,700 – 2,000 13 45 5 3

Source: CERA, 2003

WRI
J. Pershing, April 21, 2004

Energy-Related CO2 Emissions
40 ,0 00 35 ,0 00

m illion ton ne s of C O 2

30 ,0 00 25 ,0 00 20 ,0 00 15 ,0 00 10 ,0 00 5 ,0 00 0 1 97 0 W o rld 1 9 80 OEC D 19 9 0 2 00 0 2 0 10 2 0 20 20 3 0

T rans itio n e c ono m ie s

D eve lo ping c ountrie s

Source: IEA WEO 2002
WRI
J. Pershing, April 21, 2004

Emissions space for stabilising CO2 concentrations
W RE CO2 S ta b ilis a tio n p ro file s A c c u m u la te d CO2 e m is s io n s 2 0 0 1 to 2 1 0 0 (P g C ) 365 590 735 820 905 – – – – – 735 1135 1370 1500 1620 Y e a r in w h ic h g lo b a l e m is s io n s peak Y e a r in w h ic h g lo b a l e m is s io n s fa ll b e lo w 1 9 9 0 le ve l

450 550 650 750 1000

2005 2020 2030 2040 2065

– – – – –

2015 2030 2045 2060 2090

<2000 – 2040 2030 – 2100 2055 – 2145 2080 – 2180 2135 – 2270

Source: IPCC-TAR Synthesis Report
WRI
J. Pershing, April 21, 2004

Policies and Practices to Promote Renewable Energy

WRI
J. Pershing, April 21, 2004

RE Policy Mechanisms
• Regulations that govern:
– capacity – access to the market/electric grid – production or purchase obligations

• Financial incentives • Industry standards, permitting and building codes • Education and information dissemination • Stakeholder involvement
WRI
J. Pershing, April 21, 2004

Obstacles – and Solutions to the Introduction of RE
Obstacles • High up-front costs • Lack of access to the transmission grid • Lack of information • Constraining or inconsistent government policies Solutions • Production tax credits • Feed-in tariffs • Public awareness campaigns • Consistent longterm government policies
WRI
J. Pershing, April 21, 2004

Renewable Energy Certificates
Figure 1. What is a renewable energy certificate?

Commodity electricity Renewable power generation Environmental & other attributes
• Emissions benefits • Fuel source • Location of generation • Date of generation
1

renewable energy certificate

WRI
J. Pershing, April 21, 2004

Selected OECD REC Markets
Australia Year effective 2001 Wholesale electricity purchaser s 9,500 GWh of new generation by 2010 Biomass, solar, ocean, wind, geotherm al, tidal, hydro 1 MWh 1.8 million MWh Italy 2002 Electricity producers (after first 100 GWh/year ) 2% in 2002 Biomass, solar, wind, geotherm al, tidal, wave & hydro 100 MWh 3.3 million MWh (2002) Sweden 2003 End users <10MW (passed on to electricity suppliers) UK 2002 Retail electricity suppliers Mass. 2003 Retail electricity suppliers Texas 2002 Retail electricity suppliers

Compliance Responsibility

RE generation target

16.9% by 2010

10% by 2010

4% by 2009

2,000 MW of new capacity by 2009

Eligible resource

Biomass, solar, wind, geothermal, wave & hydro 1 MWh n/a

Biomass, solar, wind, tidal, wave & hydro 1 MWh 1.2 million MWh*

Biomass, solar, wind, tidal, & wave 1 MWh 500,000 MWh

Biomass, solar, wind, geothermal, tidal, wave & hydro 1 MWh 1.2 million MWh WRI
J. Pershing, April 21, 2004

1 REC = 2003 market size

Source: Burzynski, R., et al. 2003, Anna Giovinetto, Evolution Markets, March 24, 2004.

REC Markets

WRI
J. Pershing, April 21, 2004

Renewable Energy in the EU : Setting Regional Targets

WRI
J. Pershing, April 21, 2004

Key Policies: Germany
• RE feed-in law: purchase obligation with agreed price for power generated from biomass sources (8,70 to 10.23 €cent/kWh) of 20 MW or lower, and from wind (9.1 €cent/kWh), solar (50.6 €-cent/kWh), or geothermal sources (7.2 €-cent/kWh), as well as from hydro, landfill, sewage or mine gas plants of 5MW or below • 100,000 Solar Roofs Program: supports the installation or extension of PV systems of at least 1kWp, offering special reduction up to -4.5% of market interest rates on loans, with a repayment period of 10 years and a 2 year repayment holiday. The possible share of financing is up to 100% to a maximum sum of 500 000 €. Overall program target of an additional 300 MW PV power
WRI
J. Pershing, April 21, 2004

Key Policies: UK
• Renewable Obligation Plan: requires licensed electricity suppliers to buy specified portions of their purchases from renewable sources. Targets are a percentage of output of 3% between October 1, 2001 and March 31, 2003 (4.3% in 2004, 4.9% in 2005, 5.5% in 2006, 6.7% in 2007, 7.9% in 2008, 9.1% in 2009, 9.7% in 2010) and 10.4% by March 31, 2011. • Offshore Wind Capital Grants Scheme: totals GBP 74 million. Key programme objective is to stimulate early deployment of a significant capacity of offshore wind. the government will seek to ensure swift completion, making output from these projects available for electricity suppliers to respect their renewable obligation.
WRI
J. Pershing, April 21, 2004

Key Policies: Japan
• New Energy Target : 3.1% (or 19.1m kl Oil Equivalent) of new energies in total primary energy supply in financial year 2010 (excluding hydro electric and geothermal energy). In 2000 the corresponding figure was about 1.2%. Targets :
– – – – – PV: 4820 MW (from 330 MW in 2000) Solar thermal utilization: 4,390,000 kl (from 890,000 kl in 2000) Wind: 3000 MW (from 144 MW in 2000) Waste power generation: 4170 MW (from 1030 MW in 2000) Biomass generation: 330 MW (from 69 MW in 2000)

• Regional Introduction of New Energy: NEDO incentive programme for local governments providing subsidy up to 50% of the installation cost to local public organizations, which introduce and promote PV, wind power, solar heat, differential temperature energy, natural gascogeneration, fuel cell, wastes generation, use of waste heat, production of wastes fuel, clean energy car, energy saving measures. Budget - 2000: 8.72 , 2001: 13.79 billion yen.
WRI
J. Pershing, April 21, 2004

Renewable Portfolio Standards (RPS)

Source: CO2e.com, 2004

WRI
J. Pershing, April 21, 2004

Wind in the USA
With today's wind turbine technology, wind power could supply 20% of US electricity demand using only 0.6% of the land of the lower 48 states (and less than 5% of this land would be physically occupied by wind equipment)
Source: Pacific Northwest Laboratory , 1993
WRI
J. Pershing, April 21, 2004

Net Metering Programs
25 kW 50 kW 25 kW 25/100 kW 100 kW

*

100 kW VT: 15/150 kW NH: 25 kW MA: 60 kW CT: 100 kW RI: 25 kW NJ: 100 kW DE: 25 kW MD: 80 kW D.C. 100 kW 25 kW

*
25 kW

*

40 kW 20 kW varies 10/400 kW

*
40 kW

30 kW

*

* 1 MW

25 kW varies

* 1,000 * kWh/mo.
varies

no limit

varies

10/25 kW 25/100 kW 10/100 kW 50 kW 25/100 kW varies

10 kW 10 kW

100 kW

* *
10 kW

State-wide net metering rules for all utilities State-wide net metering rules only for certain utility types (e.g., IOUs only) In these cases, other utilities (e.g., municipal utilities, cooperatives) may have different rules. Net metering offered by one or more individual utilities # kW indicates limit on system size; in some cases, limits vary by customer type. Source: Database of State Incentives for Renewable Energy (DSIRE)

*

WRI
J. Pershing, April 21, 2004

State GHG Summary

Source: AEP

WRI
J. Pershing, April 21, 2004

Looking Forward

WRI
J. Pershing, April 21, 2004

World Non-Hydro RenewablesBased Power Generation
1 ,6 0 0

S h a re in to ta l e le c tric ity g e n e ra tio n (% )
1 ,4 0 0 1 ,2 0 0

4 .4 %

1 ,0 0 0

TW h

3 .4 %
8 00 6 00 4 00

2 .6 %

1 .6 %
2 00 0 1 99 0 B io m a s s 20 00 W in d 2 01 0 G e o th e rm a l 20 2 0 S o la r 2 03 0 T id e /W a ve

1 .4 %

Source: IEA WEO, 2002

WRI
J. Pershing, April 21, 2004

Energy Supply: The Shell Scenario
Sustained Growth Scenario
exajoules
Surprise
1500

Geoth. Solar Biomass
1000

RE Component

Wind N uclear Hydro
500

Gas Oil & N GL Coal

0 1860 1880 1900 1920 1940 1960 1980 2000 2020 2040 2060

Trad Bio.

Source: Shell International Limited.

WRI
J. Pershing, April 21, 2004

2000 0 2000

Enhanced RE Scenario
2005 2010 2015 2020 2025 2030 (G-8 Report, 2001)

Non-OECD On-Grid
Total discounted (5%) system cost cost = 9837 billion Total discounted (5%) system = 4679 billion US$ 14000 35000 12000

US$

Total discounted (5%) system 20000

30000
10000

25000

[TWh] [TWh]

6000 20000

4000

15000
2000

10000
0 2000 2005 2010 2015 2020 2025 2030

[TWh]

8000

geothermal 18000 thermal solar PV/H2/FC 16000 solar PV 14000 wind hydro small 12000 bio fuel cells bio IGCC 10000 bio/waste 8000 gas fuel cells gas CC 6000 coal IGCC conv. coal 4000 oil 2000 nuclear hydro large 0
2000

2005

2010

2015

5000

OECD

Non-OECD O
WRI

Total discounted (5%) system cost = 56 billion US$

Total discounted (5%) 21, 2004 system J. Pershing, April

Conclusions
• Energy demand growth is continuing, and will require significant new investment • RE can fill part of this demand – but prices and regulatory barriers are keeping it from rapid market penetration • Policy mechanisms to overcome barriers are emerging in the developed world, with key players initiating major efforts; RE growth trends mirror these successes • Ultimately, the developed country RE future is bright only if policies can be sustained over a long period

WRI

J. Pershing, April 21, 2004

The Shape of the Future?

WRI
J. Pershing, April 21, 2004


				
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