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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

Energy trends and technologies for the coming decades

Steven E. Koonin

March 2007


Key drivers of the energy future
key drivers of the energy future

  • GDP & pop. growth

  • urbanisation

  • demand mgmt.

Demand Growth

Supply Challenges

Technology and policy

Security

of Supply

Environmental Impacts


Energy use grows with economic development
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


Demographic transformations
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


Energy demand growth projections
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


Annual primary energy demand 1971 2003
annual primary energy demand 1971-2003

Source IEA, 2004 (Excludes biomass)


Growing energy demand is projected

- 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


Energy efficiency and conservation

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


Key drivers of the energy future1
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



Global primary energy sources
global primary energy sources

Nuclear

Oil

Hydro

Oil

Coal

Coal

Gas

Natural gas

Hydro

Nuclear


Global energy supply demand total 186 mboe d

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


Global energy supply demand total 186 mboe d1

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)


Bau projection of primary energy sources
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)


Substantial global fossil resources
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


Oil supply and cost curve
oil supply and cost curve

Availability of oil resources as a function of economic price

Source: IEA (2005)


Key drivers of the energy future2
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


Significant hydrocarbon resource potential

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


Dislocation of fossil fuel supply demand
dislocation of fossil fuel supply & demand

Source: BP Statistical Review 2006


Key drivers of the energy future3
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


Climate change and co 2 emissions
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?


Crucial facts about co 2 science
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)


Some stabilization scenarios

Concentration

Emissions

some stabilization scenarios


Social barriers to meaningful emissions reductions
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


Co 2 emissions and gdp per capita 1980 2004
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


Implications of emissions heterogeneities

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


Co 2 emissions and energy per capita 1980 2004

Current

global

average

CO2 emissions and Energy per capita (1980-2004)

  • Source: UN and DOE EIA

  • Russia data 1992-2004 only


Greenhouse gas emissions in 2000 by source
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


Historical and projected ghg emissions by sector
historical and projected GHG emissions by sector

Source: Stern Review from WRI (2006), IEA (in press),

IEA (2006), EPA (forthcoming), Houghton (2005).


Key drivers of the energy future4
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


Some energy technologies
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 !


Evaluating energy technology options
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!


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


The fungibility of carbon
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


What carbon beyond petroleum
what carbon “beyond petroleum”?

Fuel

Fossil

Agriculture

Biomass

1000

Annual US Carbon (Mt C)

15% of Transportation Fuels


What carbon beyond petroleum1
what carbon “beyond petroleum”?

Fuel

Fossil

Agriculture

Biomass

5300

Big!

Annual World Carbon (Mt C)

15% of Transportation Fuels


Biofuels today
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


Key questions about biofuels
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?


Corn ethanol is sub optimal
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)


Optimizing biofuels requires fusing the petroleum and agricultural value chains

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


Bp energy biosciences institute to pursue these opportunities
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


Evaluating power options

Key: opportunities

- 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


Electricity generation shares by fuel 2004
electricity generation shares by fuel - 2004 opportunities

Source: IEA WEO 2006


Levelised costs of electricity generation
levelised costs of electricity generation opportunities

Cost of Electricity Generation 9% IRR ($/MWh)

Fossil energy source

Low/Zero carbon energy source

Renewable energy source

Source: BP Estimates, Navigant Consulting


Impact of co 2 cost on levelised cost of electricity

Solar PV opportunities

~$250

$0.35/gal or 5 p/l

impact of CO2 cost on levelised Cost of Electricity


Potential of demand side reduction
potential of demand side reduction opportunities

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?


Likely 30 year energy future
likely 30-year energy future opportunities

  • 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


Necessary steps around the technology
necessary steps around the technology opportunities

  • 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



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