Global Energy Conversation II_report

8/2/2019 Global Energy Conversation II_report

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SolutionS

to 2050


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contents 2Preface

8 new behavioursAlex Laskey, Opower

11 what role for biofuels?Allan Kardec Duailibe, Brazilian National Agency of Oil, Natural Gas and Biofuels

4 energy solutions to 2050 by the numbersFindings from a worldwide EIU surve y on energy solutions

12 why economic growth is the new Priority for energyReg Platt, Inst itute for Public Policy Research

16 the case for Power storageTim Weiss and Ed Whit tingham, Pembina Institute

3 introductionFrom the Economist Intelligence Unit

10 how can we use energy more efficiently?Gregory Kats, Capital E

15 the future of fossilsWim Thomas, Royal Dutch Shell

6 overcoming the energy trilemmaJoan MacNaughton, World Energy Council

13 new Policies for new energy demandsJohn Norris, Federal Energy Regulatory Commission

17 the nuclear oPtionJos Goldemberg, University of So Paulo

19 aPPendixSurvey results

Part ii: solutions to 2050

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the global energy conversation

Panelist articles

energy solutions to 2050by the numbers

PanelistQuotes

onlinecontributionsA selection of the

experts who participatedin this debate havewritten articles for thefollow-up report. Thesearticles are highlighted bya green bar in the text.

To support the event, the EconomistIntelligence Unit conducted a survey of790 people around the world. The surveywas carried out bet ween September andOctober 2011 and respondents were drawnfrom the Americas (41%), Europe (20%),the Middle East and Africa (20%)and Asia-Pacic (19%).

Where points made by panelists during the eventare relevant to articles written for the follow-up

report, these are noted in the text.

More than 1,600 people registeredto watch the event live online and more

than 400 contributions were received via theevents live feed. Where online contributions are

particularly relevant to the topic being addressedin an article, these are noted in the text.

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It invites the same group of experts who participated in the debate to explain theirviews on the most challenging questions that came up during their discussion, andit also highlights some of the best contributions made in the online debate thatsurrounded their conversation.

We would like to thank all of those who participated in the research.

If you would like to view the event, you can access it online by registering athttp://live.economistconferences.co.uk

Preface


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Research carried out for this report underlines how difcult it will be to achieve these two objec tives. The lates t gures showthat nearly 90% of global energy comes f rom fossil fuel s and that renewables (including hydro, solar, wind and others) still onlyaccount for a combined 8% of the total. The clear problem w ith this is that, while it might be possible t o meet the worlds long-term energy supply challenge with this kind of energy mix, large-scale emissions reduct ions will not be achievable with suchheavy use of fossil fuels.

To achieve both of its energy objectives, therefore, the world needs to sw itch to low-carbon sources of energy. According to anEconomist Intelligence Unit poll of 790 business execut ives, however, that will be a slow process. Nearly two-thirds of respondents(65%) stated t hat they believe fossil fuels will s till be the worlds primary energy source in 2030. If true, that will be a major sourceof concern for those w ishing to prevent or at least limit the extent of dangerous climate change because it will see emissionscontinue to rise over the next couple of decades.

Against this difcult backdrop, the experts contr ibuting to this report have been set the task of art iculating their energysolutions to 2050. For the World Energy Councils Joan MacNaughton (p. 6) the answer lies in a combination of innovation,partnership working between the public and private sectors and robust monitoring of impacts so that practitioners havemore reliable evidence on what works and what pitfalls to avoid.

Alex Laskey (p. 8), president of Opower, a US rm which helps utility companies engage wit h their consumers to manage energyuse, highlights how much energy is wasted by users and argues for the adoption of information tools that can support behav iour

change and improve energy ef ciency. Gregory K ats (p. 10) a clean energy advisor and investor, agrees with the need to boostenergy efciency, suggesting that it is the largest, most cost-effective way we have of meeting energy needs and reducingcarbon emissions.

Moving on to other possible sol utions, Allan Kardec Duailibe (p.11), Director of the Braz ilian National Agency of Oil, Natural Gasand Biofuels, explains how Brazil has become a world leader in biofuels. Wim Thomas (p.15), Shells Chief Energy Advisor, arguesthat fossil fuels w ill remain a key part of the energy mix and makes the point that states can reduce emissions by switching fromcoal to gas and investing in carbon capture and stor age. Jos Goldemberg (p.17), Brazils former secretary of st ate for scienceand technology, argues that the expected revit alisation of nuclear energy over the next few decades is now unlikely to happenin the wake of the Fukushima disaster in Japan last year and ris ing concerns about both the safet y and cost of nuclear energy.Meanwhile, Tim Weiss and Ed Whitt ingham (p.16) of the Pembina Instit ute, a Canadian think-tank, suggest that power storage is akey technological innovation that requires development and deployment t o allow renewable energy to become t he backbone of

energy sys tems.

On policy, Reg Plat t (p.12), research fellow at the Institut e for Public Policy Research, a Brit ish think-tank, argues thatgovernments should start making low carbon energy investments on the basis of the growth and jobs potential that theseinvestments of fer, not merely on account of which is cheapes t. Finally, John Norris (p.13), Commissioner at the Federal EnergyRegulatory Commission in the US, expl ains that one of the biggest roles for government is to regulat e energy markets moreeffectively by taking action to eliminate unnecessary barriers and level the playing eld for participation by different players andtechnologies in the market .

As Joan McNaughton rightly points out in her article, there is no silver bullet for dealing with the worlds energy challenges,so on its own none of these indiv idual ideas would be capable of meet ing the worlds need for both more energy and reducedemissions. If states are to deliver on the demands being pl aced on them, therefore, an intelligent and pragmatic mixture of

policies and investments will be required. This report helps dec ision-makers and other interested parties understand more aboutwhat this policy mix might look like.

introduction


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TECHNOLOGIES AND RESOURCES

BEHAVIOURS

Unless otherwise indicated, infographics depict the results of a survey of 790 people conducted by the Economist Intelligence Unit in September 2011.

ENERGy SOLUTIONS TO 2050 By THE NUmBERS

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Source: World Bank. Source: World Bank.

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are very concerned

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think the worlds governments

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with climate change

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Who should taKe the most resPonsibilityFor dealing With climate change?

NATION STATES: 41%

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THE UNITED NATIONS: 20%

INDIVIDUALS: 17%

BUSINESSES: 13%

OTHER/DONT kNOw: 9%

Source: BP Statistical Review 2011.

Due to rounding, the gures in this chart do not sum to 100%.

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COAL

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Until growth in energy demand canbe uncoupled from economic growth,we will continue to see global energydemand rising, especially in emergingand developing countries. In the latter,a key prior ity will be expanding accessto electricity for the 1.3bn who lackaccess today. As the outcome of the 17thConference of the Parties (COP17) to theUN Framework Convention on ClimateChange in Durban has shown, thereremains broad commitment to globalemissions reductions and indeed, 2012has been declared the Year of SustainableEnergy for All.

The challenges are numerous. Energymust be accessible and affordable,contribute to the well-being of peopleand the environment, and enhance

economic growth now and for the future.Policymakers must accommodate thesemultiple requirements while reducing thecarbon intensity of energy and addressingthis trilemma of energy sustainability.

There is no silver bullet of policy thataddresses all needs simultaneously -

though carbon pricing is probably themost important single measure and

more national or regional moves

to encourage low carbon investment byvaluing carbon are needed. This articleaddresses four key drivers of low carbongrowth, applicable in both developed anddeveloping countries.

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Governments set the frameworks thatenable markets to deliver and they alsoplan strategically for national or regionalinfrastructure needed to deliver it, andthereby keep costs lower than they wouldotherwise have been. It is important forgovernments to bear in mind that theirintervention may create uncertainty andunintended consequencesstable, long-term, transparent policymaking can helpto reduce this risk.

As highlighted in the 2011 Assessment by

the World Energy Council (WEC) of countryenergy and climate policies, policy mustbe evidence-based and rooted in robust,independent analysis of the objectives ofthe policy intervention and the contextin which it is made. Transparency isvital to help business and consumers tounderstand the trade-offs that may beinvolved in adopting specic policies andtheir broader implications.

This should also imply high standards of

consultation and public engagement.This is to ensure that draft policies aresubjected to rigorous and broad-basedassessment, as well as giving those whowill be affected by them enough notice toprepare themselves to adapt and comply.

Above all, implementation of the policymust be monitored to ensure that it isdelivering as intended, including ensuringconsistency across policy dossiers. Hereit is vital that governments are able to

balance the need to provide markets withlong-term policy stability against the

necessary exibility to adapt andchange policies that may be failing.

UN mechanisms - such as NationallyAppropriate Mitigation Activities , theTechnology Mechanism and the GreenClimate Fund, among others willplay vital roles in assisting developingcountries to adopt the cleanesttechnologies and where possible toleap-frog to lower-tech solutions.

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Policy needs to be tailored to support the

whole innovation chain, from educationin mathematics, science and engineeringin schools to the competitive environmentfor businesses. This includes supportinginvention through funding supportfor basic research in universities andthe encouragement of internationalcollaboration; supporting collaborativeresearch by encouraging links betweenresearch organisations and the privatesector to take inventions out of the laband turn them into products and services;

and supporting competition throughprotection of Intellectual Property Rights

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overcoming the energy trilemmaJ mn, e c 2011 e P a rp w e c, p .

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John NorrisCommissioner

Federal Energy

Regulatory Commission

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Reg PlattResearch Fellow

IPPR


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(IPR), and through putting in place theright regulatory frameworks to driveproduct development and lower costs.

IPR is important because it enablescompanies to place a value on innovation.This is critical not just for companies, butfor emerging and developing economies,as they build knowledge-driven, highvalue-added economies and industries.It is also critical to achieving climatechange and energy security goals,which cannot be accomplished withoutmassive private-sector engagement andcontinuing innovation.

For example, the WEC policy assessmentreport highlighted the role of energyefciency programmes, including labellingschemes such as the US Energy Starprogramme. This voluntary labellingscheme for household products andcommercial building equipment is widelyconsidered to be a success. Not only doesit deliver substantial energy savingsand emissions reductions, but it is alsoa considerable driving force behindimportant technological innovations, such

as efcient uorescent lighting, powermanagement systems for ofce equipment,and low standby energy use.

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Innovation can help us deliver both loweremissions and broader access, specicallyvia two transformational technologies:carbon capture and storage (CCS) andsmart grid technology.

The World Energy Outlook 2011 of the

International Energy Agency (IEA) placesheavy reliance on CCS, which it estimatescould deliver 18% of the emissionssavings needed to stay within the 450ppmatmospheric limit. The IEAs CCS Roadmapprojects that 3,400 CCS plants will beneeded globally by 2050 and expects that,by that time, developing countries willaccount for 64% of all captured carbondioxide emissions. If these nations arenot encouraged and assisted to adopt thecleanest technologies at this crucial stage

of their development, they will lock-insources of carbon dioxide emissions for

decades to come. To avoid thisrequires developing supportivepolicy frameworks and providingcapital funding support as well asongoing support through feed-in tariffsor similar measures.

Good energy policy should also enhanceand increase mechanisms that incentiviseenergy efciency in the power generation,transmission, and distribution context.In particular, regulators should considerthe substantial capabilities of smart-grid technologies for achieving theseobjectives.

Smart grids help to manage electricitysupply reliably and efficiently.Without them we will neither be ableto maximise the use of renewablepower nor achieve effective demandmanagement. Smart grids canalso support act ion to reduce CO2emissions. They help to manageintermittency and can facilitateconnection in remote areas and forsmaller generation sources. Throughtheir enhanced data and information

flows to end-users and networkoperators, they also offer greaterflexibility in balancing electricitydemand and supply maximisingefficiency in dispatching generation,and minimising network losses.

When applied together withsmart generation, electricityinterconnectors, back-up capacity,storage options and demand-sideresponse, smart grids can open up new

possibilities in managing power supplyand demand.

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These solutions will only be deliveredthrough unprecedented levels ofpublic-private partnership, basedon clear commitments, transparentpolicies, agreed outcomes and, cr ucially,efcient and effective deployment ofnancial resources.

This means engaging business in thepolicy discussion to gather feedback and

benchmark against global policy bestpractice. It also means collaborating todeliver, using public-private partnerships(PPPs) to attract private investment inmajor public infrastructure projects. PPPsoffer the benets of exibility in securingdiverse sources of up-front nance andfunding, and help mitigate risk throughsharing it between those partners bestable to bear it. PPPs help most whereprojects are hard to nance on purelycommercial terms, for example where

technology is deployed for the rst time ina country (especially where it can supportcapacity building), or where a governmentfaces the challenge of simultaneouslydeveloping infrastructure, policyframeworks and supply chains.

The important thing is that governmentsshould be active participants, co-funding projects, ensuring that theyare aligned with national developmentpriorities and implementation plans and

encouraging early dialogue with private-sector partners.

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Wim ThomasChief Energy Advisor

Royal Dutch Shell

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As we discuss the world in2050, it is important to rememberwhere we will see the biggest

population and demographicchanges. Policies must thereforebe designed with the appropriatedegrees of exibility taking intoconsideration some insights aboutpopulation, water, and otherresources that are required tosecure universal access to energy.

Lawrence Jones,Alstom Grid Inc,UNITED STATES


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Most people spend less time thinkingabout their energy use every year than itwill take you to read this article aboutsix minutes for an average consumer inthe industrialised world.1

Those six minutes largely go towards

checking and paying utility bills.As a result, consumers are completelyin the dark about their inefcientenergy use, leading to massive amountsbeing wasted every year. According toa recent McKinsey and Company study,this waste amounts to an estimated260bn (or US$400bn) a year globally,which equates to enough energy topower more than 330m homes. McKinseyalso estimated that the US alone couldreduce energy consumption by 23% and

save families and businesses more than130bn (or US$260bn) on their energ ybills in the next ten years throughincreased energy efciency.2

There is an immediate, cost-effectivesolution to this wastefulness: behaviourchange. It can not only have a drast icimpact on our environment, but canalso accelerate the adoption of otherimpactful energy improvements suchas deriving more power from renewable

resources or making structural changesto peoples homes. Still, behaviour

change is often overlooked for severalreasons.

Energy is relatively inexpensive. In theUS, only 1.7% of an average householdincome is spent on energy bills. Mostconsumers arent motivated to make

changes to save enough for an extrafast-food meal once a month. Evenin the environmentally progressiveUS cities of Berkeley, California andBoulder, Colorado, a recent studyfound that only 0.18% and 0.64% of thepopulation, respectively, participatedin available energy ef ciencyprogrammes.3

Energy data generally arent interesting.Research shows that 90% of people say

saving energy is important to them4

,yet its a subject that most peoplespend very little t ime thinking about.Presenting an overwhelming amountof numbers and charts on energy usagewont inspire change.

Energy is confusing and ambiguous.Most average consumers dont knowwhat a kilowat t hour (or therm) is, suchthat when they receive their bill, theydont have the context to determine

whether using 200 kwh per month is ahigh or low amount.

There are a lot of misconceptions aboutusing energy. For example, researchalso shows that 81% of people leavetheir heating or cooling system runningwhen they arent at home. They believeit takes more energy to turn the systemsoff and power them on again than it

does to leave the systems running foran extended period of time, whichsimply isnt true for most households.Similarly, 48% leave their lights on,thinking that the same phenomenonapplies there as well.5

So the question is, how do we getconsumers to think more about theirenergy usage and motivate them tomake changes in their everyday lives?

In 2005 the world-renownedbehavioural economist Dr RobertCialdini, who is also the author ofInuence, set out to answer thisquestion. Dr Cialdini and his studentsat San Diego State University ran eldtests during a hot summer in California,going door to door and putting noticeson households door handles. Thehouseholds received notices with oneof four different messages printed onthem. One group of homes received a

notice that said: Turn off your AC [airconditioning system] and turn on a fan

new behaviours

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As mentioned earlier, there are nosingle silver bullet instruments. Butthere are opportunities to learn frombest practice policy. In order to doso, we need more rigorous evaluationsof energy-policy instruments to bringto light more reliable evidence on whatworks and what pitfalls to avoid. It isnecessary to translate global ndingsabout successful policy instruments intolocal arrangements and settings thatwork. This translation works best as a

dialogue between international energy-policy experts, industry executives,and stakeholders and policymakersfrom relevant jurisdictions. The 2012WEC Assessment of countries energyand climate policies will aim tocontribute further to the betterunderstanding of what constitutessuccessful policy and to deepen thepolicy dialogue between businessand policymakers.

author biograPhy

Joan MacNaughton is ExecutiveChair of the 2011 Energy PoliciesAssessment Report from theWorld Energy Council. She is aninuential gure in the energyand climate policy debate andholds a variety of UK, EU andinternational roles.


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you can save mone y. Another group ofhomes received a notice that said: Turnoff your AC and turn on a fan you cansave the environment. The third groupof homes received a notice that said:Turn off your AC and turn on a fan itsyour civic duty.

After three weeks, Dr Cialdini andhis team analysed the homes energyconsumption and found there was zeroimpact on any of the three groupsconsumption from receiving thesenotices. However, there was a fourthgroup. Their not ice said: 4 in 10 ofyour neighbours turned off their AC andturned on a fan. Homes that receivedthis message used on average 6% lesselectricit y than the control group.

This discovery of the impact of socialnorms was a catalyst for the creation ofOpower. Since then, our work now withmore than 60 utilities, including nineof the ten larges t in the US, and 10mhomes across the country and in theUK has led us to have a much deeperunderstanding of the mechanisms

needed to harness the power ofbehaviour change to have a profoundimpact on energy usage, and therefore,the environment.

As Dr Cialdinis study identied,normative comparisons (like thefourth example above) work well, asdo other tools such as goal setting,usage ranking, and historical usagecomparisons that tap into humansinnate competitive nature. But

it is the insights and actionablerecommendations not just the data that must be presented.

While this is a relatively new conceptin the utility industry, the generalconcept is not completely foreign.Personal nance tools like Mint.comprovide users with reports on theirspending and investments that arebeyond the numbers. The service hasevolved into personalised insights and

recommendations on services and stepsthat people can take to save money.

At Opower, we have rst-handexperience of the results thistype of energy reporting can

achieve. In the mid-western stateof Minnesota, we work withten regional utilities, and our homeenergy efciency reports have savedindividual customers more than 4m(or US$6m) on their energ y bill s andmore than 110 gigawatts of electric itysince 2009.

Providing contextualised and actionableenergy usage information stimulatesbehaviour change, but must be coupled

with continuous engagement strategies.Similarly to how speed limit notices arestrategically placed every few miles onthe roadway, the best way to sustainchanges in energy behaviour is to useregular and subtle feedback loops.The new smart metering technologiesbeing deployed now allow utilities theopportunity to prompt act ion when itcounts; not at the end of the billingcycle, but in real time. Like the lowbalance account notice you might

receive from your bank or the over usealerts you might receive from your

mobile service provider, utilitiescan now alert a customer if the home ison track for an irregularly high chargefor that billing period and offer tips toavoid that outcome.

Energy-related behaviour change is acomplex challenge and a global problemthat creates an opportunity to activateenergy users of all ages, interests anddemographics by delivering the rightmessages at the right time across allcommunication channels. Social mediaare a particularly interesting mediumto harness the power of networkingand stimulate a global dialogue aboutenergy consumption. While peoplespend six minutes a year thinkingabout their energy use, they spend onein every six minutes online accessingsocial media to share, comment, andengage with others. If even secondsof that minute were spent on energy-related topics, the impact would betremendous.

As the international communitycontinues to grapple with

sustainability, energy securit y andconcerns over global warming, enablingand empowering consumers to makesimple behavioural changes can resultin a windfall of savings. The impacton the economy and the environmentis truly exciting now, and for futuregenerations to come.

1 Accenture. Engaging the Ne w Energy Consumer.2010

2 McKinsey & Company. Unlocking Energy Efciency inthe US Economy. July 2009

3 Bailey, Mark and Johnson, Claire B. Innovative

Energy Efciency Financing Approaches. 1 June 20094 Research conducted by Opower. Summer 20105 Research conducted by Opower. Summer 2010

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The issue ofinefcient energy use is a

critical one in developingcountries, particularlywhere grid supplies areintermittent, unreliable andoften very expensive. Theanswer requires a mixtureof consumer behaviouralchange, improvement ofthe quality of grid supplyand a more developed off-

grid response, particularlyfor the poorest and mostisolated consumers.

Neil JefferyRenewable WorldUNITED KINGDOM

author biograPhy

Alex Laskey is president of Opowerand responsible for engaging utilityand government partners withOpowers purpose and products. Hewas invited to the White House tomeet with President Obama to discussinnovation and job creation in the

green economy.


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How big a role do you think energy

efciency can play in helping the world

reduce carbon emissions and meet the

growing demand for energy?

Energy efciency is the largest, mostcost-effective way we have of meetingenergy needs and reducing carbonemissions. It decarbonises the energysystem in that it allows us to switchto lower energy intensity and reducethe amount of waste. The explosionin energy efciency funded by venturecapital, in green building, smart gridand renewables technologies means thatwe can cut energy use/CO

2by half cost-

effectively today in most buildings.

Many questions have been raisedabout the cost-effect iveness andmerit of investing in energy efc iency.

Corporations, cities and states thathave adopted energy-efciencyfunding strategies have had a positivereturn from a cost-effectiveness andjob-creation perspective. For example,Californias sust ained energy-efciency strategy over the last three

decades has allowed householdsto save US$56bn in energy over

1972-2006, thus reducing the statesenergy import dependence.

Where are we making the most

progress in being more efcient and

which areas do we need to pay most

attention to?

The industry and owner-occupiedbuildings tend to be more energyefcient but we should be doing alot more in terms of cogenerationand on-site generation to buildenergy-efcient buildings. We needto design our buildings better byharvesting daylight and reducing thearticial amount of lighting, throughan integrated design approach.Energy efciency provides buildingowners with the opportunity tolower operating costs, increase

occupancy, enhance building qualityand increase nancial returns. Thevery rapid growth of green designstandards that address health as wellas energy and water are making greenenergy an important branding issueand a differentiation strategy forcorporations, cities and universities.

What are the obstacles to

fully realising the benets of

energy efciency?

We need to be a lot more transparenton the cost of energy. An individualwho rents space and doesnt paythe energy bill has no incentive ininvesting in energy efciency. Thereare currently 15 to 20 Americanstates that have no energy efciencyrequirements, whereas we need toadopt standards for buildings andmeter energy use more effectively. Weare switching more to renewables and their limits in terms of reliability

and availability can be offset by

intelligent building monitoringand management systems such asTendril and Building IQ.

Which measures, if any, should

countries adopt to encourage

energy efciency?

Countries should adopt deeper energy-efciency standards, both for newconstructions and retrots. Companiesshould harness the power of socialmedia by going through social mediacontacts and sharing information aboutenergy use. Banks should structurelarge energy-efciency fundingthat enables large-scale funding.Increasing energy-efciency nancingrepresents one of the largest and mostimportant opportunities not only to

meet our energy needs and reducecarbon emissions, but also to expandeconomic growth and job creation.

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Joan MacNaughtonExecutive Chair of the 2011 Energy

Policies Assessment Report

World Energy Council

how can we use energy more efficiently?g K, P cp e, q p p p p .

Demand-side management is

key to increasing energy efciency.Clear incentives and policy decisionstowards higher effciency, will helpbring about the convergence ofintroducing clean technologies andreducing waste. This is true in theresidential as well as the commercial,services and transport sector, whichwill be the main areas of energy

growth.

Mourad Belguedj,World Bank,UNITED STATES

author biograPhy

Gregory Kats is President of CapitalE, a national clean energy advisor yrm, and is also Venture Partnerat Good Energies, a billion-dollarglobal clean energy investor, wherehe leads investments in energyefciency and high performance

buildings.


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The world faces a double challengeof guaranteeing energy supply to itspopulation and providing a clean andsustainable environment for generationsto come. To reach these objectives, theworlds energy mix must be diversied.Countries such as Braz il have appliedtechnology to biofuels to addressthis challenge.

In the 1970s, after the rst oil priceshock, Brazil strategically investednot only in exploring oil in the deepsea water, but also in clean energies.After three decades, the pre-salt oilreservoirs turned the country into amajor oil exporter. However, investments

in hydraulic energy and biofuels havepositioned Brazil as a reference

in clean energy. In the biofuels

area, sugarcane mills have been turnedinto bioenergy complexes, producingethanol, sugar, electr icity, carboncredits and, in some cases, biodieseland green diesel fuel.

How did Brazil reach this point? Theanswer is an agenda that combineseconomic, energy, social, env ironmentand technology policies, along withregulatory transparency and politicalleadership. According to Empresa dePlanejamento Energtico EPE (a state-controlled enterprise that subsidises theplanning of the energy sector), 43.9% ofBrazilian domestic energy is generatedfrom renewables, compared with theworld and OECD average of respectively14% and 6%. Currently, accordingto EPE, biomass-derived electrical

energy accounts for 4.7% of electric ityconsumed in the country.

In this context, an important innovationin Brazil was the ex fuel or dualfuel vehicle in 2003, which is capableof running on ethanol, gasoline or

any mixture of the two f uels in anyproportion. This innovation, which

let the consumer rather than

the state decide which type of fuel thecar consumes, has boosted e thanolconsumption in Brazil enough to balancethe domestic consumption of gasolineand ethanol. In 2009 Brazilian vehiclesconsumed more ethanol than gasoline,and it is estimated that more than 50%of the entire automobile eet in Brazil ismade up of ex fuel vehicles.

Two signicant results of thedevelopment of the biofuel industry inBrazil must be emphasised. First, thesignicant reduction of the countr ysdependency on foreign oil. Ethanolproduction has saved over US$60bnin the foreign trade balance, withoutconsidering the earnings from ethanolexports. Second, the decrease ofgreenhouse gas emissions (specically

CO2), since a great part of the carbonemitted when ethanol is burned iscaptured from the atmosphere duringsugarcane photosynthesis.

Biofuels (ethanol, biodiesel and biomass)have the competitive advantage ofbeing produced in various regions inBrazil, meeting local needs and reducingtransport and distribution costs.These strengths are key to a country ofcontinental dimensions like Brazil. But

although it is possible to grow sugarcaneand oleaginous plants almost anywherein Brazil, the Ecological Zoning Lawapproved by the National Congressprohibits agricultural and industry-relatedactivities in protected areas such as forestsand marshlands. Meeting the demand forethanol by 2017 will require the use of only2.56% of Brazils arable land.

The investment in research anddevelopment of new technologies is

another important issue for biofuelpolicies in Brazil, which include the


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Marcos Sawaya Jank,President and Chief

Executive Ofcer,

UNICA

Affordable and sustainableenergy solutions for emergingmarkets hold the key to elevatingthe standard of living for billions.This can reduce their dependence onfossil fuel imports, provide greatereconomic independence, and showa path to the developed world onhow to move towards a sustainable

energy infrastructure.

Prof Deepak Divan,Georgia Institut e of Technology,UNITED STATES


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training of professionals working in thebiofuel industry. The Science GrowthAcceleration Programme (PAC) l aunchedby the federal government has a budgetof around US$22bn funded by public andprivate resources. The objective is toinvest more than 1.4% of the countrysGDP in R&D, compared with currentinvestment of 1.1% of GDP.

Biofuels have been a key component todiversify Brazils energy mix, and thecountry is widely recognised as a biofuelindustry leader. However, Brazilianbiofuel companies have suffered in 2011from poor margins owing to rising pricesfor corn and sugarcane and will need toscale back their growth ambit ions for thecoming years.


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Last year closed on the back of t wounusually optimistic pieces of news:rst, the surprising, albeit limited,progress made at the internationalclimate negotiations in Durban; second,the growth of clean energy investmentbeyond US$1trn worldwide. The lowcarbon transition has stepped up agear, and with it the internationalrace to develop and deploy low-carbon

technologies is well and truly under way.Given the perilous state of the globaleconomy, this timely shift provides hugeopportunities for jobs and growth.

Clean energy sectors are already growingfast. In November 2011 Bloomberg NewEnergy Finance1 recorded the trillionthdollar of investment by governments,

corporate and private investors intorenewable energy, energy ef ciency

and smart energy technologies

since its records started in 2004.Annual clean energy investment hasrisen nearly ve-fold, from US$52bn in2004 to US$243bn in 2010, a compoundannual growth rate of 29%. However, asrecent experiences in the solar sectorshow, countries w ishing to benet fromthese growth industries will need to beboth strategic and bullish. This meansidentify ing sectors where they have a

comparative advantage and enteringthese sectors with bold ambitions.

In recent years, as governmentsworldwide have piled support into theirdomestic solar industries, the priceof panels has plummeted. The price ofpolysilicon, a core material, fell by 63%in 2011. While such transformational costreductions are welcome, they mask howover, supply of panels has caused havocin the sector - many companies have gone

bust as a result. The most high-prole ofthese was Solyndra, whose bankruptcyinvolved defaulting on a US$528m loanfrom the US government2.

At the end of 2011 a number of US-basedsolar rms lodged a complaint with theUS International Trade Commission (ITC)alleging that China was driving downprices by subsidising its solar exportsand dumping panels on the US market(i.e. selling at prices below the costs

of making and marketing panels) . InDecember the ITC found a reasonable

indication that a US industry is materiallyinjured by the import of solar panelsfrom China that are allegedly subsidisedand sold in the United States at lessthan fair value3. The vote clears the wayfor additional steps by the commissionand the Commerce Department that

could result in heavy tarif fs on Chineseimports4. The Ministry of Commercein China has launched a retaliatoryinvestigation into whether Americansubsidies and other policies in the solar,wind and hydroelectric sectors haveunfairly hurt the industrial developmentof Chinas renewable energy industries.

Putting potential breaches of WorldTrade Organisation (W TO) rules to oneside, these events show the signicance

with which clean energy markets areincreasingly viewed and how hard

An international dealcould provide a global economicstimulus by providing greenbusiness with a clear commitmentto emission reduction for theforeseeable future, helping boostthe green economy.

Juliet Davenport,Good Energy,UNITED KINGDOM

Re Durban, thedanger is that policy ismoving too slowly. We havepolitical consensus on a 2 temprise (above pre-industrial levels)limit but continue to move furtheralong a 4-6 degree pathway.

Brian Gallachir,

University College Cork,IRELAND

why economic growth is the new Priority for energyr P, r f i P P r (iPPr), p

p p k p p

author biograPhy

Allan Kardec Duailibe is currentlyDirector of the Brazilian NationalAgency of Oil, Natural Gas and

Biofuels. He is a researcher andProfessor of Electrical Engineeringat the Federal University ofMaranho (UFMA).


13/29


countries are going to ght for thespoils. However, governments thatare bound by outdated views of theenergy sector may fail to capit alise onthe opportunities.

Energy policy is regularly seen throughthe prism of a trilemma - that is, how tobalance the needs for an energy sys temthat is at once low-cost, low-carbon andsecure. A new approach to this problemis required. Governments should makeinvestments to create a low-carbon andsecure energy system on the basis of thegrowth and jobs potential that theseinvestments offer, not merely on accountof which is the cheapest.

Forthcoming research from the IPPR willargue the case for countries like the UKto develop modern sectoral industrialpolicies. These policies should includethe public and private sectors workingtogether to identify opportunit ies insectors where the UK has a comparativeadvantage and overcoming barriers todevelopment. The report argues that, inthe new global economy, characterised

by the rise of Asia and decline of a singleparadigm to organise our economicthinking, an activist government is

essential for returning the economyto a period of sustained growth.

What this means for energy policy isthat governments, working withprivate-sector partners, must rstidentify sectors in which their countryis likely to have a comparative advantageand then put in place the appropriatesupport. This could include investing inskills, training and R&D, providing taxcredits and low-interest loans to supportstart-ups and the commercialisationand market breakthrough of newtechnologies. Comparative advantagewill arise from a mixture of factors,including resource availability andthe nature of the technologies. Itwill vary bet ween countries - hence,while offshore wind is likely to be a keyopportunity for the UK, concentratedsolar power may be more appropriate inSpain. China with its cheap labour forcehas clear advantages in manufacturingbut for emerging technologies whichrequire high level engineering andscientic expert ise, such as carboncapture and storage, the UK may be

better placed. A complementarystrategy for the UK would also be toplay to its current strengths in

carbon nance, serv ices and projectmanagement.

Prospects for the global economy in2012 look bleak, but clean energyoffers countries worldwide majoropportunities. Not all countries canbe winners from clean energy, butgovernments that adopt ambitious andstrategic policies with growth at theirheart are likely to end up on top.

1 http://bnef.com/PressReleases/view/1762 http://www.nytimes.com/2011/11/25/opinion/the-

solyndra-mess.html3 http://www.usitc.gov/press_room/news_

release/2011/er1202jj1.htm4 http://www.nytimes.com/2011/11/26/business/

energy-environment/china-looking-into-us-

policies-in-renewable-energy-trade.html?_r=1&scp=3&sq=solarworld&st=cse

The energy industry is facingunprecedented and rapid change.From a US and international perspective,two of the most marked challengesthat are driving this change stem fromthe need to e xpand our energy supplyand the need to grapple with climatechange. Meeting these challenges willincrease costs to consumers as we lookto replace cheap but carbon-intensiveenergy sources and also moderniseageing infrastructure that was designed

to transport and utilise these oldenergy sources, all within the context

of meeting the energy needs for morepeople in the world than ever before.

And so a key question becomes, how do wespend money wisely? How do we ensurethat increases in energy costs are no morethan necessary to establish a clean andreliable supply of energy?

In an industry as capital-intensive asenergy, governments cannot meet thesechallenges alone. This is particularly

true in the current context of spirallinggovernment decits and mounting

new Policies for new energy demandsg p k pp , c J n f e r c

|13|

author biograPhy

Reg Platt is a research fellowat the Institute for PublicPolicy Research (IPPR). He hasresponsibility for developingpolicy positions across a wide rangeof domestic climate and energyissues including micro-renewables,energy efciency, behaviour change,

community-led initiatives, cleantech and corporate sustainability.

c . t

k

k

p p

k

.

Gregory KatsPresident, Capital E

Venture Partner, Good Energies


14/29


|14|

calls for scal discipline. While

government action will be one driverof the coming change in our energyindustry, private investors, marketparticipants and technology developerswill also need to answer the call.

Any basis for action must begin byaddressing climate change. The sciencesurrounding climate change is notgoing to suddenly change, nor will theissue of climate change suddenly solveitself. The US and other governments

must address this issue head-on,because market action alone willnot be able to stop or reverse climatechange. Once governments establishthe ground rules that require everyoneto pay the full env ironmental cost oftheir energy usage, markets can berelied upon to make the ex traordinary,long-term investments needed toreduce carbon emissions from theenergy sector.

In the US, the lack of a national climatechange policy has created a great

deal of uncertainty and inefciency,which ultimately leads to higher costsfor consumers. In some instances,policy uncertainty could lead entitiesto continue running older and lessefcient plants unt il they are certaincleaner and more efcient generatorswill be required. While this could becheaper in the short term and delaythe investment in new infrastruc ture,in the end it will result in dirtier andless efc ient units running longer at acost both to consumers and to humanhealth. While some are waiting until anational policy is established beforeacting to address the issue, otherindustry leaders are changing theirpractices in anticipation that Congresswill eventually act to est ablish cleanenergy standards and a national climatechange policy. In the interim, theonly clear requirements are variousstate renewable energy standards andclimate change initiatives. This hasmade states, rather than the federalgovernment, a major driver of nat ionalenergy policy. While states should beapplauded for their leadership, the

different rules that each state developsprevent markets from investing inefcient and cost-effective solutionsthat only a national policy on climatechange can support.

While rm government action isneeded to enable the markets todevelop solutions to climate change,the appropriate role for governmentin expanding energy supply may bemore subtle, but no less important.

Here, government act ion is needed toeliminate unnecessary barriers andlevel the playing eld for participationby diff erent players and technologiesin the market.

In the US, the Federal EnergyRegulatory Commission is doing itspart to remove barriers and ensure alevel playing eld in the electricit yand natural gas wholesale marketsand transmission networks that it

regulates. On the network side, wecontinually work to remove barriers

to infrastruc ture development andensure open access to the networks.On the markets side, we regularlyreview the rules and regulations thatgovern participation to ensure robustcompetition. For example, electricitymarket rules were largely designed withtraditional thermal and hydroelectricgeneration units in mind. These rulesmay need to be re-ex amined in order toaccommodate new market entry fromintermittent renewable resources,electric storage providers, energyefciency and demand resources,among others, that will all be needed tohelp expand energy supply and replaceageing infrastructure. Simply put, weneed to modernise market rules tokeep pace with the new realities of ourexpanding energy supply.

It is important to emphasise that effortsto expand energy supply will be all themore difcult in the absence of adequateaction to address climate change. Clearlyit is possible to expand energy supplyin a way that is at odds with addressingclimate change in fact, it is happening

every day. The investments needed toexpand energy supply typically involvelong-lived and capital-intensive assetsthat cannot be changed or replacedovernight. We need to make

It is absolutely vitalthat governments have a clearpolicy on energy strategy and

this is communicated in a waythat allows industry and capitalto respond favourably and ina way that does not prejudicecommitments already made.We recognise we are living ina time of limited governmentfunding and concerns for thecost of energy, but capital isscarce and is subject to globalcompetition. Those governments

which do not create a workablepolicy framework that recognisesthis will see their energyinfrastructure programmeounder.

Michelle Davies,Eversheds,UNITED KINGDOM

An importantrequirement for policies tohave the desired effect is fortheir actions to have tlc -

transparency, longevity andcertainty/consistency. It makesit very hard for businesses toinvest when policies changerelatively frequently - andthats happening or hashappened recently in a numberof countries.

David Elmes,Warwick Business School,UNITED KINGDOM


15/29


|15|

What role do you see for fossil fuels in

the energy mix in 2050?

Fossil fuels will remain a very importantpart of the energy mix. ShellsBlueprint scenario predicts that by2050 renewables will account for 30%of the energy mix and fossil fuels 60%.The reason that fossil fuels will remaindominant is that the developing world

needs energy to fuel its rapid economicgrowth, and fossil fuels are availablenow, whereas it takes decades to buildnew infrastructure for renewablesat scale.

Of course, people will ask why we cantswitch to renewables even faster.Empirical evidence has shown thatit takes about three decades for newtechnologies such as wind or solarto reach 1% of market share. Thats

the level when government can stopsubsidising them because it means thatrenewables have become competitivewith the rest of the energy industry.It then takes another three decadesbefore these technologies reach their fullpotential, that is say, 10% or 20% of themarket share.

This really underlines the point thattheres a very long lead time for thesetypes of investment. The decisions we

make now will determine the energy

systems used by our children andgrandchildren. That means if we trulywant to move to a low-carbon energysystem, we should make the decision nowand not postpone it for a couple of years.

Do you think governments are prepared

to invest in the expensive infrastructure

required for a cleaner energy system?

We need to distinguish whats desirableand doable. You may desire to switchvery fast to a low-carbon system buthow much can you afford to acceleratethat process? At the moment, its verydifcult for countries with budgetdecits to give a stronger stimulus forinvestment in renewables.

Is there a strong economic

argument for retaining fossil fuels in

the energy mix over the next 40 years?

Are we sacricing environmental goalsfor economic benet?

Not necessarily, we need to bepragmatic. Switching from coal togas for example is very affordable,and reduces carbon emissions at thesame time but a solution on carboncapture and sequestration is alsoneeded in the near future. In themeantime, we still have to buildwind and solar parks, with enoughincentive for the industry to grow, but

at a measured pace so that it doesnt

overheat the market. So theres abalance we need to play there.

Are energy industries investing enough

in carbon capture and storage (CCS)

technologies to make fossil fuels

cleaner?

Such technologies are very expensiveto implement, so we need to learn moreabout how to make them cost-effective.How much as a company can you affordto spend your shareholders money on

that investment for the greater good?We need public-private partnershipsto make it happen. So far, thereare precious few CCS projects aroundthe world, and we will need more ofthese to gain experience and bringcosts down before moving to alarger scale.

Will a transition to gas enable us

to reduce carbon emissions quickly

enough?

Its part of the solution. Gas is

the future of fossilsw t, c e a s, q

author biograPhy

Commissioner John Norr is wasnominated by President Barack Obamato the Federal Energy Regulatory

Commission and conrmed by the USSenate for a term expiring in June2012. Mr Norris, a lawyer, has yearsof experience in energy policy andregulatory affairs.

Even if oil spikes, carbonemissions from coal in the US,China and India must be addressed.

Jud Virden,Pacic NorthwestNational Laboratory,JAPAN

sure these investments are done right the rst time.

The US Congress needs to establish anational energy policy, clearly setting outthe requirements that the energy industrymust meet. Unfortunately, this does notseem likely in the foreseeable future. Asa result, even without a clear nationalenergy policy, government regulators must

continue to act to level the playing eldto allow a greater diversity of resources toparticipate in energy markets. Once theplaying eld is more level and barriersare mitigated, the market can begin toefciently allocate the capital that willbe necessary to address the unprecedentedchallenges facing todays industry.Private investment will be key tomeeting these challenges.


16/29


Aiming to generate one-fth of ourelectricity demand from renewable energymay have seemed impossible a decadeago now its becoming the norm inNorth America. With almost half of theUS states and Canadian provinces settingtargets of at least 20% of their electricitycoming from renewable resources by the

year 2020, North America has joined therenewable energy revolution.

As long as renewable energy technologieswere marginal players, the variabilityof their output was a manageable issue.However, as clean energy targets increase,this variability will start to pose moresignicant challenges for system operatorsand regulatory bodies more familiarwith traditional sources of power,such as coal, natural gas and nuclear.

Left unaddressed, variable outputtechnologies like wind and solar will startto encounter barriers to high levels ofmarket penetration.

Fewer and fewer technical challengesremain as obstacles to reachingrenewable energy targets in NorthAmerica and Europe. With experienceand changes to the operating framework,electricit y system operators in countrieslike Scotland and Denmark which have

remarkable targets of 100% renewables have found that they can integrate

more variable output supply than theyoriginally thought possible.

t p

Large-scale power storage is widelyaccepted as one key technologicalinnovation that requires development anddeployment to allow renewable energy to

become the backbone of power systems.In many cases, current renewable energytargets require very little change to theoverall system. Modest increases in targetswill at rst require only minor upgrades totransmission, smart grid investments andadditional peaking power, while movingcloser to a 100% renewable grid willrequire large-scale energy storage.

Numerous technologies exist to storeelectricity, including pumped hydro,

compressed air, fuel cells and simplybatteries, some of which are alreadyin commercial operations around theworld. In addition to improving technicalintegration, the ability to store largevolumes of electricity generated fromthe wind, sun, tides and other variableoutput sources can also improve theeconomics. Storage systems can enableproponents or system operators tochoose the timing, and therefore theprice, of feeding renewable power into

the grid. While it depends signicantlyon the local electricity market structure,

Alberta Innovates, a Canadian provincialgovernment research arm, recently foundthat storing wind power generated at off-peak times can improve the economics ofthese wind projects by as much as 42%.Storage abilities will also increase andimprove power quality and reliability,potentially reducing transmission

requirements as well as peaking costs.

w

Many questions about power storageremain unanswered, including whichtechnologies are most appropriate inwhich markets, what scale of systemsare optimal for different electricitysupply systems, and what policies

Among all energy resources,

solar energy is the most abundantone and compared to the rate atwhich all energy is used on thisplanet the rate at which solarenergy is intercepted by the earth isabout 10,000 times higher. There isa whole family of solar technologieswhich can deliver heat, cooling,electricity, lighting, and fuels for ahost of applications.

Arnulf Jger-Waldau,Institute for Energyand Transport,

ITALY

|16|

the case for Power storagel- p k ,

t w e w P i

available, whereas CCS will take at leastanother ten years to take off on a largescale. But we will need to invest in otherthings such as energy efciency andbehavioural change as well.

Is there any role for energy producers

to support people in changing their

behaviour around energy?

A very broad group of people have to

get involvedgovernments, companies,peopleto change behaviours. I seea great role for built-in solutions incity design. About half of the worldpopulation now lives in cities, andmany big cities will need to be built inthe future. I think people will get onboard with high-efciency homes, aclever public transport system and so onbecause theyre more convenient.

author biograPhy

Wim Thomas is Chief Energy Advisor atShell and heads the Energy AnalysisTeam in Shells Global Scenario Group,

which is part of the Corporate StrategyDepartment. He and his team areresponsible for worldwide energyanalyses, long-term global energyscenarios, and advise Shell companieson a wide range of energy issues.


17/29


will help push these technologiesto wide-spread commercialisation.

What is clear, however, is that tomove storage technologies beyond their

current relatively limited levels of marketpenetration, some form of governmentsupport is required. This support whichis likely to be focused on technologydemonstration and commercialisation will still take years to result insignicantly improved markets for theintegration of renewables.

That said, waiting for these technologiesshould not be a reason to slow currentdevelopment of clean energy. Manyelectricity grids can already accommodateadditional renewable power using existingload-balancing measures, and often muchmore than originally expected, as shownby the Western Danish system operator

ELTRA. According to ELTRAs chairmanwhen presenting their 2003 annual report:

[We] said that the electricity system couldnot function if wind power increased above500 MW. Now we are handling almost vetimes as much. And I would like to tell theGovernment that we are ready to handleeven more, but it requires that we areallowed to use the right [policy] tools tomanage the system.

c

The storage technologies that will cometo lead will depend signicantly on localmarket structure. As a Canada-basedthink-tank, the Pembina Institute believesthat Canada has an opportunity to play aleading global role given its expertise inkey storage technologies including fuelcells, hydro-power (pumped storage), aswell as drilling and geology (compressedair storage). Just as Canada currentlystores natural gas for seasonal demandvariations, storing electricity willbecome increasingly important for supplyvariations.

The Canadian government has taken someinitial steps to foster this developmentthrough its Clean Energy Fund that hasrecently given support to individualelectricity storage projects, such asElectrovayas demonstration project withautomotive-scale lithium ion batteries,and New Brunswick Powers research onload control in four Maritime communities.

However, there is still a need to move thisdevelopment into widespread adoption.

Building on lessons from Canadas CleanEnergy Fund investments and the Canadiangovernments success in catalysing windenergy through its production incentives,strategic investments in energy storagecan help build Canadas participation inthe global clean energy economy, andprovide federal support for all Canadianprovinces toward achieving Canadas goalof generating 90% of its electricity fromnon-emitting sources by 2020. Overall, thePembina Institute thinks that Canadais well positioned to lead this bigidea and to foster the next phase ofthe renewable energy revolution that isalready underway.

There are currently 443 nuclear reactorsoperating around the world, providingapproximately 15% of the worldselectricity supply. The great majorityof these reactors were installed inOECD countries 30-40 years ago to

improve energy security by reducingor eliminating the need for natural

gas or other fossil fuel imports usedfor electricity generation. There hasbeen talk of a renaissance of nuclearpower as a cost-effective means ofdecarbonising energy systems. However,a reconsideration of risks in the light

of the Fukushima accident in Japan lastyear, combined with the rising cost s

of nuclear reactors and the increasingattractiveness of alternative energysources for developing countries,means that the resurgence of nuclearwill be limited.

t p The declining cost of oil and gas and

authors biograPhies

Dr Tim Weiss is a professional engineerand the director of renewableenergy and efciency policy atthe Pembina Institute, a leadingCanadian environmental think-tank.He specialises in clean energy policydesign, research and strategic decision

making.

Ed Whittingham is the ExecutiveDirector of the Pembina Institute.Through his work, Mr Whittinghamregularly advises governments,transnational companies, NGOs andresearch networks on energy issues.

c p

(ccs) p

. t iea p ccs 18%

2050,

10

us$1.

Joan MacNaughtonExecutive Chair of the 2011 Energy

Policies Assessment Report

World Energy Council

the nuclear oPtionJ g, P e u s P, p k k p

|17|


18/29


|18|

high-prole nuclear disasters at ThreeMile Island (1979) and Chernobyl (1986)signalled the end of nuclear energyexpansion some 20 years ago. Morerecently, however, concerns about risinggreenhouse gas emissions (GHG) andeffective lobbying by energy companieshas sparked a government-subsidisedrevival of nuclear power. By the end of2010 there were 64 new reactors underconstruct ion around the world, including28 in China and Taiwan alone (see chart).

r k

This mini-revival of nuclear investmentwill be short-lived. One of the mainreasons is that the Fukushima disas ter,with its es timated cost of US$257bn,has severely dampened enthusiasm fora nuclear power and has directly led to anumber of countries, including Germany,Japan, Belgium and Italy, taking thedecision to phase out existing orplanned nuclear reactors.

Another concern is that the cost ofnuclear power has risen sharply in recentyears. Nuclear power plants come with

a price t ag of around US$6-$10bn each,so are already much more expensiveto build than plants powered by fossilfuels. Added to this, new reactors underconstruct ion in Finland and France havegone billions of dollars over budget,casting further doubt over affordability.Similarly, new regulation will inevitablyincrease the cost of nuclear power.Plants approaching the end of theirinitial 40-year license period andlacking certain modern safety features

will face additional scrutiny in havingtheir licenses extended. Little wonderthat the International Energy Agency(IEA) has already reduced its projectionfor the number of new reactors to beinstalled up to 2035 by 50%.

a p p

Of the 52 countries - which include 40developing countries - that expressedinterest to the International Atomic

Energy Agency (IAEA) in 2009 inacquiring their rst nuclear power plant,

it is unlikely that countries wit h a GDPsmaller than US$50bn would be able topurchase a nuclear reactor wort h at leasta few billion dollars. In addition to that,electr ic grids must have a minimum sizeto accommodate a l arge nuclear reactor,

for technical reasons. Excluding thecountries that do not meet these criterialeaves a shortlist of 16 countries thatcould be considered serious candidatesfor purchasing large nuclear reactors,including Kuwait, United Arab Emirates,Malaysia, Saudi Arabia, Greece, Chile,Portugal, Singapore and Poland.

A close examination of the potentialresources of these 16 countries inoil, gas, biomass or hydroelectricity

indicates that they have a number ofother options to generate the electricitythey need. In all of them, the costof nuclear-generated electricity issignicantly higher than other options,depending on the availability of gasor hydroelectric sites. Malaysia, forexample, is the worlds second-largestproducer and largest exporter of palmoil, and is therefore a strong advocateof biomass-derived energy.

Elsewhere, the IEA expec ts Chinas gasdemand to rise from about the level

of Germany in 2010 to match that ofthe entire European Union in 2035.Meanwhile, the Middle Easts demandfor gas is expected to almos t double to alevel similar to that currently consumedby China. It is thus likely t hat nuclear

energy will be a last-resort opt ion forthe supply of electricity, rather than apriority in economic terms.

The future of nuclear energy hingeson its expansion in developingcountries, mainly China and India.However, the rising costs of nuclearpower plants and alternative cost-effective sources of energy in developingcountries mean that it is ver y unlikelywe will see a w idespread resurgence

of nuclear energy.

author biograPhy

A member of the Brazilian Academy ofSciences, Jose Goldemberg is presentlyProfessor Emeritus of the Universityof So Paulo. Between 1990 and 1992he was Brazils Secretary of State forScience and Technology and Ministerof State for Education. More recently,between 2002 and 2006, he wasSecretary for the Environment of the

State of So Paulo.

Argent

ina

Source: International Atomic Energy Agency 2012

Brazil

Bulg

aria

China

Finl

and

Fran

ceIn

diaJa

pan

South

Korea

Paki

stan

Russia

Slov

akia

Taiw

an

Ukraine US

0

5

1 1 1 11 12 2 2 22

6

10

5

26

10

15

20

25

30

nuclear reactors under construction in 2012


19/29


t

e i u pp s. t

sp 2011.

aPPendix: survey results

|19|

1 Largest share 2 3 Smallest share Dont know

Fossil fuels

Renewable energy

Nuclear energy

12

10

2

2

102465

4344

33552

(% respondents)

Rank the following energy sources according to how great a share of the world's energy you think they will be providing in 2030?Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.

Fossil fuels

Renewable energy

Nuclear energy

21

49

21

33838

21435

43639

(% respondents)

Rank the following energy sources according to how great a share of the world's energy you think they will be providing in 2050?

Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.1 Largest share 2 3 Smallest share Dont know


20/29


|20|

Solar

Wind

Nuclear

Hydrogen

Geothermal

Hydro

Biofuels

Gas

Oil

Coal

Other

Don't know

68

44

35

27

25

23

20

14

3

2

5

2

(% respondents)

Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over thetime period of 2031-2050? Select three.

Solar

Wind

Nuclear

Gas

Hydro

Biofuels

Geothermal

Oil

Hydrogen

Coal

Other

Don't know

48

46

44

34

30

20

15

11

7

6

1

2

(% respondents)

Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over thetime period of 2011-2030? Select three.


21/29


|21|

Not at all suppor tive Somewhat unsuppor tive Neit her suppor tive nor unsuppor tive Som ewhat suppor tive Ver y suppor tive

Nuclear

Biofuels

Natural gas

Unconventional gas (eg gas which is accessed through fracking)

Wind

Solar

Oil

Coal

Geothermal

Hydro

Hydrogen

2032

2532

3041

122336

131816

18179

1991

1613

6026932

7516621

420263218

514172935

39

46

36

37

36

1861

1251

282664

(% respondents)

How supportive are you about increased use of the following energy sources?

Yes

No

Don't know

52

32

16

(% respondents)

Do you think improved access to "unconventional" gas supplies will slow the growth of renewable energy sources?

Yes No Dont know

Research and development into renewable energy

Large scale deployment of renewable energy technologies

Nuclear power

Making fossil fuels cleaner (eg through carbon capture and storage)

Increasing access to fossil fuels

Other, please specify

560

766

860

1064

1241

35

28

32

26

47

562815

(% respondents)

Is your government investing enough in the following technologies?


22/29


|22|

1 Hostile 2 3 Neither hostile nor supportive 4 5 Very supportive Don't know

No change in real income

Up to 1% decrease

Between 1-3% decrease

Between 3-5% decrease

More than a 5% decrease

5 3 11 6

6 6 14 22

8 10 23 24

16 19 20 20

273

152

134

224

31533 18 20 11

(% respondents)

Please indicate how hostile or supportive you would be of reforms aimed at combating climate change if they had thefollowing impacts on your real income:

Highly significant

Significant

Not significant

Dont know

58

37

4

0

(% respondents)How significant a role do you think energy efficiency can play in reducing carbon emissions?

Not at all suppor tive Somewhat unsuppor tive Neit her suppor tive nor unsuppor tive Somewhat suppor tive Ver y suppor tive

Information and advice

Regulation (eg of light bulbs or building standards)

Loans for energy efficient investments

R&D investments in energy efficient technologies

Rewards for energy efficient behaviour (eg tax breaks)

Energy efficient procurement policies


553 10 275

446 8 9 33

376 8 16 32

553 5 9 28

455 8 12 30

383 7 19 33

377 7 35 13

(% respondents)

How supportive are you of governments using the following tools to improve energy efficiency?Rate on a scale of 1 to 5 where 1 = Very supportive and 5 = Not at all supportive.


23/29


|23|

Already taking Would consider taking Would not consider taking

Switching off lights when not in use

Switching off electrical appliances when not in use

Turning down heating in winter

Buying more energy efficient appliances

Installing renewable domestic energy sources (eg, solar panels or wind turbines)

Flexible working (including working from home and using teleconferencing)

Driving less

Use public transport more

Taking fewer flights


1595

21385

142858

23068

1273

135136

144243

214237

3044

15

26

144838

(% respondents)

Which of the following steps are you taking to conserve energy and reduce carbon emissions? Which would you consider taking?

Yes

No

Don't know

15

79

7

(% respondents)

Do you expect the international community to reach a meaningful deal on climate change at the UNs climate changeconference in Durban later this year?

Nothing Up to 2% 2.1% - 5% 5.1% - 10% > 10%

You

Your company

5

5

12313319

11302826

(% respondents)

How much extra, if anything, would you be willing to pay for goods and services to cover the cost of CO2

emissions related totheir production? How much do you think your company would be willing to pay?


24/29


|24|

(% respondents)

Who should take most responsibility for dealing with climate change?

20

United Nations

41

Nation states

4

Regional organisations

1

Non-governmental organisations2

Don't know

1

Other

17

Individuals

13

Businesses

Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree

Democracy stands in the way of the world making headway with climate change policy.

Politicians should ignore citizens who do not agree with policies combating climate change.

Democratic states should reconsider their form of government to deal with climate change more ef fectively.

Some nation states, depending on size and pollution levels, should have more control over environmental policy making.

International organisations hold enough power to steer nation states toward effective climate change policy implementation.

2217183111

2123142913

3410142517

1212143230

2429151913

(% respondents)

To what extent do you agree or disagree with the following statements?


25/29


|25|

United States of America

Brazil

India

United Kingdom

South Africa

Canada

Mexico

Nigeria

Australia

Singapore

United Arab Emirates

Germany

Argentina

Switzerland

Chile

Kenya

Spain

Italy

Netherlands

China

France

Ghana

Other

15

7

7

6

5

5

5

4

3

3

3

2

2

2

1

1

1

1

1

1

1

1

24

(% respondents)

In which country are you personally located?


26/29


|26|

Latin America

Middle East and Africa

North America

Asia-Pacific

Western Europe

Eastern Europe

21

20

20

19

18

2

(% respondents)

In which region are you personally based?

Financial services

Professional services

IT and technology

Energy and natural resources

Manufacturing

Education

Healthcare, pharmaceuticals and biotechnology

Government/Public sector

Entertainment, media and publishing

Construction and real estate

Agriculture and agribusiness

Telecommunications

Automotive

Chemicals

Consumer goods

Transportation, travel and tourism

Logistics and distribution

Retailing

Aerospace/Defence

25

13

8

8

2

2

2

1

7

5

4

4

4

3

3

3

2

2

2

(% respondents)

What is your primary industry?


27/29


|27|

$50m or less

$50m to $100m

$100m to $250m

$250m to $500m

$500m to $1bn

$1bn to $5bn

$5bn to $10bn

$10bn or more

Dont know

Not applicable

37

7

6

3

7

13

7

19

0

0

(% respondents)

What are your company's annual global revenues in US dollars?

While every ef fort has been taken to verif y the accuracy of the information in this report, neither The Economist Intelligence Unit Ltd. nor the

sponsor of this report can accept any responsibility or liability for re liance by any person on this white paper or any of the information opinions orconclusions set out in the white paper.

Board member

7

CEO/President/Managing director

29

CFO/Treasurer/Comptroller

4CIO/Technology director

3

Other C-level executive

5

SVP/VP/Director18

Head of business unit

5

Head of department

9

Manager

16

Other

3

(% respondents)

Which of the following best describes your job title?


28/29

notes

|28|



29/29

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