Low-carbon energy transition ‘needs to go much faster’
The global energy transition needs to speed up in order to tackle climate change, according to industry experts.
The energy revolution will also not be “smooth” and will be driven largely by disruptive consumers as they run towards decentralised generation.
That was the overall conclusion theme reached by energy professionals during the first session of yesterday’s (24 May,2017) Financial Times Energy Transition Strategies event in London. Speakers included Engie UK & Ireland’s Wilfrid Petrie and Energy Transition Commission’s Lord Adair Turner.
James Basden, partner and head of global utilities at Oliver Wyman, said renewable energy was pushing ahead and much had been achieved. However, “we have not solved the issue of climate change”. He said 86% of “our energy consumption comes from oil, gas and coal”.
“I think we need to be going faster if we going to deliver on our COP21 goals,” Basden said. “We need to pollute less and waste less…”
He said many households are now consuming and producing their own power. He also said that Mayors of major cities have pledged to ban diesel cars from their roads to tackle air pollution and the use of Lithium-ion batteries for electric vehicles was growing.
“Battery storage is going to allow us to address the issues of intermittency from renewables and improve energy efficiency,” he added.
He said China was pushing ahead with its plan to have five million electric vehicles in the country by 2020 and will be part of the “winners” on the energy revolution front as it deploys low-carbon technologies. “The energy transition has been fast, but we need to go much faster”.
Cheap power - bioenergy and biofuels
Speaking on a panel debate, Energy Transition Commission’s Lord Adair Turner said: “If you ask the question, ‘Can you build a 100% renewable-based electricity system?’ The answer is infinitively yes. “
Turner said that even if you had two technologies, including lithium ion batteries and gas turbine, “you could get a renewables system down to 7cents/Kwh”.
“In the last few years, there has been a revolution about what you could achieve in the power sector.”
He said the world could have complete decarbonised systems over the next 25 years at low cost.
Although he praised electric vehicles, he questioned “what are we going to do about long-distance trading and cement and steel production”.
Turner explained: “There are candidate technologies for this - bioenergy, biofuels, hydrogen and carbon capture and storage.
“The cost of wind, solar and batteries are coming down. However, the cost of bioenergy, biofuels and carbon capture and storage has come down much more slowly or in some cases not at all.”
Elsewhere, Good Energy founder and CEO, Juliet Davenport, said consumers would help to drive the energy transition by helping to decarbonise power systems. Responding to Turner’s comment that public policy had been a “huge” success in driving costs reductions in renewables, Davenport said: “Consumers can transform but they can also disrupt policies and government ... drivers [of the transition’ will be factors like clean air…”
Speaking as a keynote speaker, Wilfrid Petrie, CEO at Engie UK & Ireland, said: “This energy transition to clean energy has not been smooth and will not be smooth. Over the last six years, European utilities have had to wipe off 100 billion worth of assets. We have to stop or mothball 50GW of gas-fired power plants. It has been a significant transition and it feels more like a revolution.
“None of this is new. We have a transition from wood to coal over a few centuries and coal to oil and gas and electricity. What is new today is the speed of change. We can expect the rising of renewables to happen more quickly.
“Engie has decided to embrace the low-carbon economy. By 2019, 90% of our earnings before interest, tax, depreciation and amortisation (EBITDA) will come from low-carbon businesses. This means tough decisions will be made.”
“We have decided to focus our businesses on non-merchant businesses. Businesses that are less exposed to changes in policies
“I believe there is more value today in reducing consumption than supplying energy itself.”
He also said that Engie had decided to enter the “domestic market” recently. “Most people I talk to have said that it is a highly competitive market, there is a high amount of scrutiny and a huge amount of reputational risk and it’s hard to make money. When you do make money/profits, you are punished.”
However, he said it was the “right” thing to get into the domestic market because it was a natural extension of the business.
“The energy we are seeing today in the energy sector will transform the world for the better,” Petrie said.
This story was written by Liz Gyekye, editor of Bioenergy Insight and Biofuels International.