In 2018 energy use grew 2.9% and emissions 2%. That means renewables are not keeping up with energy’s growth: it will need a four-fold increase in wind and solar’s growth to do so, says Schalk Cloete. There’s more: to cut global CO2 emissions by the 3% per year we need to meet the Paris goals wind and solar growth rates must increase by over an order of magnitude. He reviews the evidence and concludes that current technology-forcing policies – picking and supporting the “best solutions” – are not working. He says the fastest way to maximise innovation and efficiencies in existing and new technologies is to stop picking winners, be completely technology-neutral and focus on taxing the problem: emissions.
- 2018 saw 2% growth in annual CO2 emissions as fossil fuels accounted for 71% of primary energy growth.
- A five-year forecast shows that wind and solar could account for half of electricity growth, but only 17% of final energy consumption growth.
- Encouraging all solutions through technology-neutral policies is the only viable pathway to achieving climate goals.
Renewables growth isn’t enough
There was a distinct air of political correctness in the presentation given by Spencer Dale, BP Chief Economist, at the live launch of the 2019 BP Statistical Review of World Energy. As CO2 emissions climbed 2% and fossil fuels once again accounted for the majority (71%) of annual energy growth, Mr. Dale carefully acknowledged the impressive growth of wind, solar and electric car technologies, but reaffirmed that these popular solutions are not enough to achieve climate targets.
Another interesting finding from the 2018 data was the significant increase in energy consumption caused by more extreme weather. In this respect, Mr. Dale was also careful to point out that this may or may not be due to climate change, but that climate change could create a vicious cycle where more extreme temperatures lead to higher energy consumption, leading to more emissions.
Poverty alleviation v the Transition
Regardless, the slim hopes that a CO2 plateau had been reached following a cyclical energy slowdown in China and the coal-to-gas switch in the US were well and truly dashed by this year’s data. It was once again confirmed that we cannot lift 6 billion (and counting) developing world citizens to decent living standards without strong energy growth, and that renewables cannot grow fast enough to meet this growing demand.
In this article, I will illustrate this very important point more concretely.
2023: short term predictions are not good
Long term energy forecasting is very difficult, particularly when there are as many uncertainties as there are today. The near-term is more certain though. Also, when looking at climate change, the 1.5 degrees scenario is very much a near-term issue, given that we only have about 8.5 years of our 1.5 degrees carbon budget left. For these reasons, a 5-year analysis of the ability of wind and solar to stop emissions growth will be presented here.
Near-term estimates for wind power deployment are quite uniform around an average of 61.5 GW per year (IEA, MAKE, GWEC). Solar forecasts are more uncertain, spanning a range of 96-220 GW/year (IEA, SPE). Here, I took the average of the four scenarios in these two forecasts at 135.5 GW/year.
Wind, Solar growth v electricity demand growth
Using this data and assumed capacity factors of 32% for wind and 17% for solar (current global average capacity factors are 27% for wind and 15% for solar based on BP data), the growth in wind and solar generation can be estimated. This is an optimistic estimate since no performance degradation or retirements of the existing fleet is assumed.
Wind and solar growth can then be compared to electricity demand growth, which was a whopping 3.7% in 2018, but a more reasonable 2.6% over the past 5 years. Assuming 2.6% annual growth over the next 5 years yields the graph below.
It is shown that projected annual electricity demand will be 3600 TWh greater in 2023 than it is today and that wind and solar will be able to cover about half of this increase.
Transport, industry and heat
But electricity is just one area of global energy growth. To get the full picture, we must add other energy growth (primarily transport, industry and heat). This could be estimated from BP data by subtracting primary energy demand for power production from coal, gas and oil from total primary energy consumption of these fuels. Primary energy demand for power production from each fuel was estimated using global average power plant efficiencies derived from data in the latest IEA World Energy Outlook. Primary energy was then converted to final energy with conversion factors for coal, gas, oil and electricity derived from IEA data.
Final energy consumption excluding electricity grew on average by 1.4% over the past 5 years, with a strongly accelerating trend since the oil price crash in 2014/2015. If we assume 1.4% growth over the next 5 years, we see that wind and solar can account for less than a fifth of total final energy growth:
Wind, Solar growth needed: x4? x10? More?
To reach a situation where renewables can stop CO2 emissions growth, wind and solar growth will need to quadruple from today’s rate and we will need a major step-change in the rate of electrification. But our real challenge is much steeper still: cut CO2 emissions by 3% per year to avoid the growing emissions gaps illustrated below. To achieve this, wind and solar growth rates will need to increase by over an order of magnitude from the averages assumed in this assessment.
These results suggest that Mr. Dale will give five rather similar talks over coming years, possibly with gradually diminishing degrees of political correctness. The message will be the same: wind, solar and electric cars are great, but insufficient. We need all solutions, including nuclear and CCS. We need technology-neutral policies.
With current complex and inefficient technology-forcing policies, we will break through the 1.5 degrees carbon budget in the mid-2020’s while still on an upwards trajectory. By that point, the task at hand could start to look truly insurmountable, bringing the complex ethical questions of climate change into much sharper focus, primarily the fact those least responsible will be impacted most.
In a previous analysis of cumulative emissions, I found that the average developed world citizen currently owes a CO2 debt of over 500 tons to the developing world ($50,000 at $100/ton). As the balance of power continues to shift from West to East and climate change impacts become more severe, developing countries might eventually work up the nerve to demand repayment. The resulting sanctions and trade-wars will undoubtedly make it even harder to combat climate change.
Technology-neutrality: no more subsidies = maximum innovation
I see only one possible solution for avoiding these major global problems: technology-neutral policy.
Here is a quick clarification on what I mean by technology-forcing and technology-neutral policies. Technology-forcing promotes certain technologies over others through mechanisms like subsidies, tax-breaks, mandates, portfolio standards, low-interest financing, accelerated depreciation, guaranteed prices, etc.
Technology-neutral policies target the real issue and alter the competitive landscape in favour of any technology that can address this issue. Examples include a carbon tax to combat climate change, fuel taxes to limit congestion and oil dependence, and vehicle/plant emissions taxes to improve air quality.
Fossil fuels must pay for their emissions and other pollution impacts, wind and solar must be directly exposed to their actual market value and pay for the grid expansions, redispatch and other balancing services they require, and nuclear must pay for full insurance against possible black swan events.
This universal levelling of the playing field will send the right market signals to all actors, unleashing a new wave of innovation, not only in solar PV and batteries, but in all clean technologies as well as a wide range of “soft-science” solutions. I, for one, would love to live in such a world.
Schalk Cloete is a Research Scientist at Sintef.
Under the current market competition fossil fuels, whose external costs are not, or not sufficiently, accounted for, are the biggest competition for renewables . A fair tax on CO2 and other emissions would help renewables tremendously.
Fossil fuels with CO2 storage is still a pipedream and looking to be costly. Nuclear is costly although it gets free insurance of the government (this indirect subsidy should be removed as well to have a level playing field).
Overall, renewables will flourish under a subsidy-free, externalities-accounting market. Bring it on!
I agree that renewables will do well in a technology-neutral market, but I don’t think they will dominate. The integration costs of wind and solar increase too strongly with increasing deployment. Note that, as mentioned in the article, true technology neutrality will expose wind and solar to their true market value and require them to pay directly for the grid expansions, redispatch and other grid services they require to achieve higher market shares. In parallel, energy from dispatchable generators will become more valuable as their role in security of supply expands.
But if you are very confident that technology neutrality will boost your preferred technologies, please advocate for it! We need more voices pushing this agenda, regardless of their motivation.
Helmut Frik says
The grid expansions will be fueled by price differences – arbitrage business. Wind and solar will “pay” indirectly by the price variations.
But to finance nuclear a continuous premium of roughly 6-8ct/kWh towards renewables would have to be available for nuclear – as a average. This means when a lot of power must be transported the arbitrage availabe for the grid could be twice this price or more at the border when nuclear could become economical reasonable. For a 500km subsea-cable + 2 converter stations on stll small scale ( so uneconomical in the context of economy of scales) 1-2ct arbitrage let the grid operator already earn a good premium, and most of the money is in the converter stations in such a connector – so balancing out wind and solar over disances >3000km is quite sure significant cheaper than building new nuclear instead.
What distances ar really neccesary to balance out wind and solar and follow the load of a future grid?
Entso-e came to the result that it is possible to follow the load in the EU-grid wit 100% renewables with a reasonable expansion of the grid and mainly using existing hydropower storages (E-highways2050, Szenario 100% renewable), which means much smaller distances are neccesary to balance wind and solar in pratice.
So it is not likely that nuclear will be economical reasonable in the future against wind and solar even with all balancing costs included.
Also germany has above 47% of the net power production from renewables so far. And no problem with balancing and and no extreme curtailments, as many other writers thought neccesary with this share of renewables. Looks like the neccesary grid extensions to reach the same share of renewables as France has nuclear share will not require significant more grid extensions than the french built to accomodate their nuclear fleet. (It requires more, but not much more)
Helmut Frik says
A technology netutral support will till be identical to a renewable power support given the extremely high cost and very slow development of nuclear.
The plateau of wind power is mainly due to the phase out of support for wind power – some years ago each kWh from wind power was supported by a substantial amount of money, while today new developments have to come along with little or no support per kWh. So the sining prices per kWh of wind power was compensated by the lowering of support.
Since it is unlikely that support will drop below zero, any cost added on fossil fuels, e.g. like a carbon tax, will give a lot of incentives to install more wind power (and solar power). Nuclear will not profit from this, needing decades to develop a project and having priced itself out of the market.
As mentioned in my reply above, if you feel that technology-neutrality will support your preferred technology, please advocate for it! Such a market environment will be the true test of whether you are right in you unwavering support for renewables.
About nuclear, this article is not about Germany or even Europe. It is mainly about the developing world where ~80% of future energy infrastructure will be built. There, nuclear does not face such so many administrative and political hurdles and can be constructed within reasonable budgets and timeframes. But before I trigger the same old nuclear vs. wind/solar debate again, I should clarify that I’m not saying nuclear is better than wind/solar, only that it is also a realistic option in a tech-neutral environment.
Helmut Frik says
The environment of developing countries with so many specialists and special equipment comming from far abroad make such projects (complex nuclear power stations) in tendency even more expensive than in developed countries.
On the other hand it takes weeks to train a simple woman to erect simple solar power stations, and months to train for simple repair – and not much more for most work and smaller wind power generators.
I do projects in ethiopia and botswana at the moment – many things are simply not available from local suppliers, no matter how low lokal labor costs are. And imported things are significant ore expensive than in the country of their origin.
I do not see a usecase for nuclear e.g. in Ethiopia, while wind and solar and hydro (geothermal is also available) could power the contry easily evenif it is fully industrialised.
At todays level of development this is true even more. In Ethiopia at the moment all that is relevant is to generate more kWh, no matter at what time of day or within the year. Perfect for low cost solar, but local people just start to learn this.
I would have liked to read more about enforcement issues in this article. And other constraints that are part of the political environment.
In (economic) theory, I have no doubts that the proposed actions are the most efficient way to achieve the desired CO2 emission reduction outcome. However, I see high risks of political capture and insufficient/suboptimal enforecment. This risk will exist everywhere and will be even higher in countries with weak institutions and rule of law.
By putting all eggs into one basket (carbon tax) with one – still difficult to estimate – parameter (price per tonne of CO2), the risk of political capture seems to be disproportionately high. If there is only one parameter that needs to be changed, lobbyists will know exactly where to put their money.
A more diversified policy portfolio (including forcing of possibly suboptimal but otherwise “fine” technologies) could mitigate those risks which are inherent to an imperfect political and institutional environment. And in our current post-truth world, there are no indications that political environments are becoming more stable or more “rational”. The higher political robustness of such a policy portfolio might ultimately lead to higher efficiency.
As a final question: why stop at technology neutral policies for emission reduction? Our ultimate goal could be limiting global warming or even to ensure the survival of our species. In this case, the most efficient/cost-effective option might be to invest in geoengineering solutions. Or invest more money into adaptation than on mitigation. I am not at all advocating for this but it shows that the proposals are already “forcing” a certain approach (reducing CO2 emissions) over others. Where to draw the line between forcing and non-forcing is therfore less clear than it seems in the article.