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Steven E. Koonin March 2007

Energy trends and technologies for the coming decades. Steven E. Koonin March 2007. key drivers of the energy future. GDP & pop. growth urbanisation demand mgmt. Demand Growth. Supply Challenges. Technology and policy. Security of Supply. Environmental Impacts.

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Steven E. Koonin March 2007

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  1. Energy trends and technologies for the coming decades Steven E. Koonin March 2007

  2. key drivers of the energy future • GDP & pop. growth • urbanisation • demand mgmt. Demand Growth Supply Challenges Technology and policy Security of Supply Environmental Impacts

  3. energy use grows with economic development energy demand and GDP per capita (1980-2004) US Australia Russia France Japan Ireland S. Korea UK Malaysia Greece Mexico China Brazil India • Source: UN and DOE EIA • Russia data 1992-2004 only

  4. demographic transformations Oceania Oceania N-America N-America Africa Africa S-America S-America Europe Europe 8.9 billion 6.3 billion source: United Nations Asia Asia

  5. energy demand – growth projections Global energy demand is projected to increase by just over one-half between now and 2030 – an average annual rate of 1.6%. Over 70% of this increased demand comes from developing countries Global Energy Demand Growth by Region (1971-2030) Energy Demand (Mtoe) Notes: 1. OECD refers to North America, W. Europe, Japan, Korea, Australia and NZ 2. Transition Economies refers to FSU and Eastern European nations 3. Developing Countries is all other nations including China, India etc. Source: IEA World Energy Outlook 2006

  6. annual primary energy demand 1971-2003 Source IEA, 2004 (Excludes biomass)

  7. - industry - transport - other sectors - power growing energy demand is projected Global Energy Demand Growth by Sector (1971-2030) Energy Demand (bnboe) Key: • Notes: 1. Power includes heat generated at power plants • 2. Other sectors includes residential, agricultural and service Source: IEA WEO 2004

  8. US Autos (1990-2001) • Net Miles per Gallon: +4.6% • - engine efficiency: +23.0% • - weight/performance: -18.4% • Annual Miles Driven: +16% • Annual Fuel Consumption:+11% energy efficiency and conservation • Demand depends upon more than GDP • Multiple factors - geography, climate, demographics, urban planning, economic mix, technology choices, policy • For example, US per capita transport energy is > 3 times Japan • Efficiency through technology is about paying today vs tomorrow • Must be cost effective to be attractive • May not reduce demand through misuse or in supply-limited situations

  9. key drivers of the energy future • significant resources • non-conventionals • GDP & pop. growth • urbanisation • demand mgmt. Demand Growth Supply Challenges Technology and policy Security of Supply Environmental Constraints

  10. US energy supply since 1850 Source: EIA

  11. global primary energy sources Nuclear Oil Hydro Oil Coal Coal Gas Natural gas Hydro Nuclear

  12. Nuclear 14Mboe/d 14 Renewables 5 5Mboe/d 2 Biomass 33 3 8 23Mboe/d 17 Coal 16 10 2 12 43Mboe/d 1 Gas 6 11 10 38Mboe/d 1 Oil 35 63Mboe/d global energy supply & demand (total = 186 Mboe/d) Industry Power Generation 45Mboe/d 76Mboe/d Buildings 56Mboe/d Transportation 37Mboe/d Source: World Energy Outlook 2004

  13. Nuclear Industry 14Mboe/d 14 Power Generation 11 Renewables 5 5Mboe/d 45Mboe/d 76Mboe/d 2 Biomass 33 3 Buildings 8 16 23Mboe/d 17 Coal 16 10 2 12 43Mboe/d 56Mboe/d 1 Gas 6 11 10 38Mboe/d Transportation 1 Oil 35 63Mboe/d 37Mboe/d Source: World Energy Outlook 2004 global energy supply & demand (total = 186 Mboe/d)

  14. BAU projection of primary energy sources ’04 – ’30 Annual Growth Rate (%) 6.5 1.3 2.0 0.7 2.0 1.3 1.8 Total 1.6 Note: ‘Other renewables’ include geothermal, solar, wind, tide and wave energy for electricity generation Source: IEA World Energy Outlook 2006 (Reference Case)

  15. substantial global fossil resources Yet to Find Unconventional Unconventional Reserves & Resources (bnboe) R/P Ratio 164 yrs. Proven Yet to Find Yet to Find R/P Ratio 67 yrs. R/P Ratio 41 yrs. Proven Proven Source: World Energy Assessment 2001, HIS, WoodMackenzie, BP Stat Review 2005, BP estimates

  16. oil supply and cost curve Availability of oil resources as a function of economic price Source: IEA (2005)

  17. key drivers of the energy future • significant resources • non-conventionals • GDP & pop. growth • urbanisation • demand mgmt. Demand Growth Supply Challenges Technology and policy • dislocation of resources • import dependence Security of Supply Environmental Impacts

  18. FSU Gas Europe North America Resource Potential (bnboe) Resource Potential (bnboe) Oil Gas Coal Middle East AsiaPacific Oil Gas Coal Resource Potential (bnboe) Africa Resource Potential (bnboe) South America Oil Oil Oil Oil Gas Gas Gas Gas Coal Coal Coal Coal Oil Gas Coal Key: - unconventional oil - conventional oil - coal - gas significant hydrocarbon resource potential Oil, Gas and Coal Resources by Region (bnboe) Resource Potential (bnboe) Resource Potential (bnboe) Resource Potential (bnboe) Source: BP Data

  19. dislocation of fossil fuel supply & demand Source: BP Statistical Review 2006

  20. key drivers of the energy future • significant resources • non-conventionals • GDP & pop. growth • urbanisation • demand mgmt. Demand Growth Supply Challenges Technology and policy • dislocation of resources • import dependence • local pollution • climate change Security of Supply Environmental Impacts

  21. climate change and CO2 emissions • CO2 concentration is rising due to fossil fuel use • The global temperature is increasing • other indicators of climate change • There is a plausible causal connection • but ~1% effect in a complex, noisy system • scientific case is complicated by natural variability, ill-understood forcings • Impacts of higher CO2 are uncertain • ~ 2X pre-industrial is a widely discussed stabilization target (550 ppm) • Reached by 2050 under BAU • Precautionary action is warranted • What could the world do? • Will we do it?

  22. crucial facts about CO2 science • The earth absorbs anthropogenic CO2 at a limited rate • Emissions would have to drop to about half of their current value by the end of this century to stabilize atmospheric concentration at 550 ppm • This in the face of a doubling of energy demand in the next 50 years (1.5% per year emissions growth) • The lifetime of CO2 in the atmosphere is ~ 1000 years • The atmosphere will accumulate emissions during the 21st Century • Near-term emissions growth can be offset by greater long-term reductions • Modest emissions reductions only delay the growth of concentration (20% emissions reduction buys 15 years)

  23. Concentration Emissions some stabilization scenarios

  24. social barriers to meaningful emissions reductions • Climate threat is intangible and diffuse; can be obscured by natural variability • contrast ozone, air pollution • Energy is at the heart of economic activity • CO2 timescales are poorly matched to the political process • Buildup and lifetime are centennial scale • Energy infrastructure takes decades to replace • Power plants being planned now will be emitting in 2050 • Autos last 20 years; buildings 100 years • Political cycle is ~6 years; news cycle ~1 day • There will be inevitable distractions • a few years of cooling • economic downturns • unforeseen expenses (e.g., Iraq, tsunamis, …) • Emissions, economics, and the priority of the threat vary greatly around the world

  25. CO2 emissions and GDP per capita (1980-2004) US Australia Ireland Russia UK S. Korea Japan France Malaysia Greece China Mexico India Brazil • Source: UN and DOE EIA • Russia data 1992-2004 only

  26. DW E IW t implications of emissions heterogeneities • 21st Century emissions from the Developing World (DW) will be more important than those from the Industrialized World (IW) • DW emissions growing at 2.8% vs IW growing at 1.2% • DW will surpass IW during 2015 - 2025 • Sobering facts • When DW ~ IW, each 10% reduction in IW emissions is compensated by < 4 years of DW growth • If China’s (or India’s) per capita emissions were those of Japan, global emissions would be 40% higher • Reducing emissions is an enormous, complex challenge; technology development will play a central role

  27. Current global average CO2 emissions and Energy per capita (1980-2004) • Source: UN and DOE EIA • Russia data 1992-2004 only

  28. greenhouse gas emissions in 2000 by source Source: Stern Review, from data drawn from World Resources Institute Climate Analysis Indicators Tool (CAIT) on-line database version 3.0

  29. historical and projected GHG emissions by sector Source: Stern Review from WRI (2006), IEA (in press), IEA (2006), EPA (forthcoming), Houghton (2005).

  30. key drivers of the energy future • significant resources • non-conventionals • GDP & pop. growth • urbanisation • demand mgmt. Demand Growth Supply Challenges Technology and policy • import dependence • competition • local pollution • climate change Security of Supply Environmental Impacts

  31. some energy technologies • Primary Energy Sources: • Light Crude • Heavy Oil • Tar Sands • Wet gas • CBM • Tight gas • Nuclear • Coal • Solar • Wind • Biomass • Hydro • Geothermal • Extraction & Conversion Technologies: • Exploration • Deeper water • Arctic • LNG • Refining • Differentiated fuels • Advantaged chemicals • Gasification • Syngas conversion • Power generation • Photovoltaics • Bio-enzyimatics • H2 production & distribution • CO2 capture & storage • End Use Technologies: • ICEs • Adv. Batteries • Hybridisation • Fuel cells • Hydrogen storage • Gas turbines • Building efficiency • Urban infrastructure • Systems design • Other efficiency technologies • Appliances • Retail technologies There are no “silver bullets” But some have a larger calibre than others !

  32. evaluating energy technology options • Current technology status and plausible technical headroom • Budgets for the three E’s: • Economic (cost relative to other options) • Energy (output how many times greater than input) • Emissions (pollution and CO2; operations and capital) • Materiality (at least 1TW = 5% of 2050 BAU energy demand) • Other costs - reliability, intermittency etc. • Social and political acceptability we also must know what problem we are trying to solve!

  33. CTL GTL Heavy Oil Ultra Deep Water Enhanced Recovery CNG Arctic Key: - supply side options - demand side options two key energy considerations – security & climate Carbon Free H2 for Transport High Capture & Storage Conv. Biofuels Hybrids Adv. Biofuels Capture & Storage Vehicle Efficiency (e.g. light weighting) C&S Concern over Future Availability of Oil and Gas Dieselisation Low Low High Concern relating to Threat of Climate Change

  34. the fungibility of carbon Primary Carbon Source Syngas Step Conversion Technology Syngas (CO + H2) Syngas to Liquids (GTL) Process Natural Gas Diesel Naphtha Lubes Coal Syngas to Chemicals Technologies Methanol Biomass Hydrogen Others (e.g. mixed alclohols, DME) Extra Heavy Oil Syngas to Power Combined Cycle Power Generation

  35. what carbon “beyond petroleum”? Fuel Fossil Agriculture Biomass ↑ 1000 Annual US Carbon (Mt C) 15% of Transportation Fuels

  36. what carbon “beyond petroleum”? Fuel Fossil Agriculture Biomass ↑ ↑ 5300 Big! Annual World Carbon (Mt C) 15% of Transportation Fuels

  37. biofuels today Food Crops for Energy • 2% of transportation pool • (Mostly) Use with existing infrastructure & vehicles • Growing support worldwide • Conversion of food crops into ethanol or biodiesel • US Corn ethanol economic for oil > $45 /bbl • Brazilian sugarcane economic for oil > $22/bbl Flex Fuel Offers in Brazil

  38. key questions about biofuels • Costs • Biofuel production costs • Infrastructure & vehicle costs • Materiality • Is there sufficient land after food needs? • Are plant yields sufficiently high? • Environmental sustainability • Field-to-tank CO2 emissions relative to business as usual? • Agricultural practice – water, nitrogen, ecosystem diversity and robustness, sustainability, food impact • Energy balance • More energy out than in? • Does it matter?

  39. corn ethanol is sub-optimal • Production does not scale to material impact • 20% of US corn production in 2006 (vs. 6% in 2000) was used to make ethanol displacing ~2.5% of petrol use • 17% of US corn production was exported in 2006 • The energy and environmental benefits are limited • To make 1 MJ of corn ethanol requires 0.9 MJ of other energy (0.4 MJ coal, 0.3 MJ gas, 0.04 MJ of nuclear/hydro, 0.05 MJ crude) • Net CO2 emission of corn ethanol ~18% less than petrol • Ethanol is not an optimal fuel molecule • Energy density, water, corrosive,… • There is tremendous scope to improve (energy, economics, emissions)

  40. Harvest/Transport Germplasm Cultivation Processing A real fuel Transport Exploration Production Refining Blending Petroleum Value Chain: Agricultural Value Chain: Harvest Germplasm Cultivation Process Distribution Biofuels Value Chain: optimizing biofuels requires fusing the petroleum and agricultural value chains • Cellulose (bugs/ enzymes/ chems) • Microbial engineering • Plant integration / optimization • Co-products • Role of gasification • Tillage • Planting • Fertilizer • Water • Pest control • Crop rotation • Sustainability • Blends • Additives • Distribution • Engine mods • Species • Yield / Morphology / Development • Chemistry • Unnatural products • Stress tolerance • / Bio-overhead • Safety • Optimal catchment • In-field processing (e.g., pelletizing) • Transport energetics • Storage • Waste utilization

  41. BP Energy Biosciences Institute to pursue these opportunities • Dedicated research organization to explore application of biology and biotechnology to energy issues • Sited at University of California – Berkeley and it’s partners, University of Illinois Urbana-Champagne and Lawrence Berkeley National Laboratory • Open “basic” and proprietary “applied” research • Initial focus on the entire biofuels production chain • Smaller programmes in Oil Recovery, hydrocarbon conversion, carbon sequestration • Involvement of BP, academia, biotechnology firms, government • $500M, 10-year commitment; operations commencing June `07

  42. Key: - power generation options - supply option evaluating power options power sector High Solar Unconventional Gas Hydrogen Power Nuclear Wind Biomass Concern over Future Availability of Oil and Gas Coal Hydro Geothermal Gas CCGT Low Low Concern relating to Threat of Climate Change High

  43. electricity generation shares by fuel - 2004 Source: IEA WEO 2006

  44. levelised costs of electricity generation Cost of Electricity Generation 9% IRR ($/MWh) Fossil energy source Low/Zero carbon energy source Renewable energy source Source: BP Estimates, Navigant Consulting

  45. Solar PV ~$250 $0.35/gal or 5 p/l impact of CO2 cost on levelised Cost of Electricity

  46. potential of demand side reduction Urban Energy Systems Low Energy Buildings • Buildings represent 40-50% of final energy consumption • Technology exists to reduce energy demand by at least 50% • Challenges are consumer behaviour, policy and business models • 75% of the world’s population will be urbanised by 2030 • Are there opportunities to integrate and optimise energy use on a city wide basis?

  47. likely 30-year energy future • Hydrocarbons will continue to dominate transportation(high energy density) • Conventional crude / heavy oils / biofuels / CTL and GTL ensure continuity of supply at reasonable cost • Vehicle efficiency can be at least doubled (hybrids, plug-in hybrids, HCCI, diesel) • local pollution controllable at cost; CO2 emissions now ~20% of the total • Hydrogen in vehicles is a long way off, if it’s there at all • No production method simultaneously satisfies economy, security, emissions • Technical and economic barriers to distribution / on-board storage / fuel cells • Benefits are largely realizable by plausible evolution of existing technologies • Coal (security) and gas (cleanliness) will continue to dominate heat and power • Capture and storage (H2 power) practiced if CO2 concern is to be addressed • Nuclear (energy security, CO2) will be a fixed, if not growing, fraction of the mix • Renewables will find some application but will remain a small fraction of the total • Advanced solar a wildcard • Demand reduction will happen where economically effective or via policy • CO2 emissions (and concentrations) continue to rise absent dramatic global action

  48. necessary steps around the technology • Technically informed, coherent, stable government policies • Educated decision-makers and public • For short/mid-term technologies • Avoid picking winners/losers (emissions trading) • Level playing field for all applicable technologies • For longer-term technologies • Support for pre-competitive research • Hydrates, fusion, advanced [fission, PV, biofuels, …] • Business needs reasonable expectation of “price of carbon” • Universities/labs must recognize and act on importance of energy research • Technology and policy

  49. Questions/Comments/Discussion

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