Towards a sustainable energy system - A long term transition strategy
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- CICERO Reports 
The scope and the format of this report was developed in cooperation between CICERO and the Ministry of Oil and Energy and the financial support from the ministry funded the project. The analysis presented in this report is an attempt to evaluate the development of the energy system and what realistically can be achieved by aggressive policy initiatives and promotion of new technology to change the current trends in a more sustainable direction. The current trends are determined by the combined development objectives for the nations of the world and while each one of these objectives are justified in its own right, the sum does represent an intolerable environmental stress to the global environment as highlighted by one representative example, the potential climate destabilization and accumulation of greenhouse gases in the atmosphere. Rather than developing in the direction of a sustainable energy system, the predominantly carbon based energy system is year by year widening the gap to a sustainable system, and in doing so makes it progressively more complicated to turn around, with a set of new objectives in mind. It is a growing international recognition that business as usual is not a sustainable option. Even with a political will to change, the current initiatives are too few and too small to have a meaningful impact, and the inertia of the current system so enormous that the transition challenge is exceeding whatever mankind ever has encountered. The project objective is to analyze the conditions required to change the direction of development toward sustainability. With this objective in mind the instruments required to make things happen has to be focused as well as the technological options sufficiently developed to be part of a realistic strategy. In this report no attempt to include "science fiction" alternatives is made, although the very real possibility exists that "science fiction" type technologies well may be realistic alternatives from 2025 onwards. The project addresses resource constraints and other supply/demand related issues. It is not the purpose of the project to collect information and present an updated list of other studies. However, in order to have a basis for a meaningful analysis it is obvious that authoritative documentation of other system analyses has to be studied to ensure that major conclusions from expert groups were part of the data base. The concept "realistic" can be approached in different ways. Some observers and analysts will claim that the forces determining the dynamic growth of the energy system are essentially untouchable and beyond political capacity and capability to change. The change process can only be triggered by major incidents demonstrating the need to change (i.e. Chernobyl and Three Mile Island impact on the nuclear industry). The author is of a different opinion. The knowledge base is so extensive, the technical options so attractive, the policy instruments so effective, and the public acceptance of change so mature that the only essential component lacking in a program of change is leadership. The ambition of the report is to suggest elements of a national strategy which can be locally implemented, and also demonstrate the effective use of some policy instruments currently without international implementation experience. However, the energy policy in one country cannot be developed without examining the global energy issues and understanding both the need for change and the opportunities created by the transition to a sustainable energy system. Norway may well have an international role in the energy world, but only through effective and visionary management of its own energy strategy can this influence be translated into an international impact with the environmental concerns included. The national energy situation in Norway is unique and the constantly improving trade balance and the easy access to energy resources makes a transition towards a sustainable, non-carbon energy system extraordinarily demanding. But Norway has the financial freedom to act, and being recognized as one nation with an environmental conscience, our responsibility is to take one major step in the direction of sustainability. We are aware that the environmental concerns we are facing are global more than national. To test the ability of international cooperation in this field a strong political initiative is recommended to make a joint Scandinavian energy policy/environmental policy project capitalizing on extensive expertise also in Sweden and Denmark and with a liberalized power network serving all these countries. Another very important initiative which could be supported by the Nordic group of countries is a green tax on jet fuel, to demonstrate an international willingness to use this policy instrument on a truly international product with a very limited number of tax collectors. A 12 cent/gal tax on jet fuel could finance the entire UN operation at 8 billion US$/yr. Green taxes need to find an effective introduction to the international community and have removed the negative reputation still attached to the concept. It is worth recording that the Danes have claimed, after a numbers of years with experience, that they have not damaged their competitiveness because of green taxes. In addition they claim they have developed new export activities in the environmental area. The main conclusions in this report can be summarized as follows:Current energy trends are not sustainable. A productivity improvement for energy use equivalent to 6 GTOE/yr is required by 2020 to bring worldwide energy demand on a development path towards sustainability. Of the remaining demand New Renewable energy resources should cover 1.3 GTOE/yr in 2020 and 4.3 GTOE/yr in 2050, out of which 2.5 GTOE/yr is solar based. Carbon based energy carriers are declining in total, but natural gas is expanding its role in the supply picture for many decades. Conventional oil resources are limited and without any environmental concerns for carbon based energy use, production will peak around 2030 with a subsequent rapid decline. A more ecologically oriented strategy could result in conventional oil production peaking in the first decade of the next century. It is noteworthy that there only is 20-25 years difference between peaking with so vastly different scenarios. However, in the business as usual scenario, conventional oil will be replaced by synthetic oil based on coal and oil shale/tar sand, while in the ecological scenario new renewables will be replacing conventional oil and stretching the depletion curve for conventional oil. An argument is put forward in chapter 2.4 demonstrating that a fall in the oil price is not an unavoidable consequence of reduced oil demand and the introduction of green taxes. In a market where 25 MB/D is produced by a cooperative with constantly stronger position due to declining reserves, unwillingness to make producing capacity available is a high probability scenario. The price consequence could easily be a price increase up to the 30 $/B level. Higher prices will be a desirable and even necessary development to encourage and accelerate higher energy productivity and development of renewable alternatives. However, remarkable progress has been recorded as to commerciality of renewable options. Wind power is a success story and may shortly be the most economic supply alternative in the whole energy field. Solar energy is coming of age and unit costs are coming down with an impressive rate. Solar energy will be the major contributor in the future energy system. Biomass will be expanded with modern technologies, but will be limited by area availability and other factors. One transition challenge identified in this study is the impact of very high growth rates for the renewables in the first several decades of the transition. The energy needs to develop the new energy systems are exceeding the energy output under certain growth conditions, thus making net contribution during the growth period negative. Since the only energy available to fuel the development of competing energies is carbon based, this phenomena will extend the fossil period. The suggested Norwegian energy strategy is as follows: A. InstrumentsDevelop a price strategy/taxation strategy encouraging demand side efficiency improvements Introduce mandatory efficiency requirements for automobiles and appliances Reform building codes with visionary long term targets B. Technology Develop an active program for heat pumps aiming at 10 Twh net contribution by 2010 Develop an active wind power program aiming at 10 Twh by year 2010 C. International initiativeHarmonization of instruments is more important than harmonizing goals These are headlines in a national strategy aiming at stabilizing demand and introducing a new renewable alternative to the supply system. These strategies are elaborated on in the report, but not to a great deal of detail. Concrete proposals and programs could be a followup to this report.