Mounting concerns about climate change and the challenges of increasing oil prod ...

Mounting concerns about climate change and the challenges of increasing oil production are prompting the energy industry to dramatically increase its efforts to broaden the energy mix, according to a round-table discussion at the World Energy Congress in Montréal in September. The round table of five industry experts, chaired by Fatih Birol, Chief Economist and Director of the International Energy Agency, discussed the energy mix prospects and concurred that a hard reassessment of the various alternative energy sources is needed to realistically project how much each can contribute to the mix, and how quickly. The group discussed major conventional sources of energy, including the potential of coal to remain a leading source of energy to produce electrical energy, and to do so in an environmentally friendly way. Despite its impact on the environment, coal will continue to play a major role in the development of India’s economy. Noting that 54% of the country’s energy requirements are generated by coal, Vinay Kumar Singh, Chairman-cum-Managing Director, Northern Coalfields of India, said India’s position as the fastest-growing economy in the world is due to its huge coal reserves. ‘Other resources have volatile prices, whereas coal in India is priced at 50% less than the world price,’ he noted. India will require 1,000mn tonnes of coal by 2030 to improve its standard of living and both government and industry are looking for clean mining technology to lessen coal’s impact on the environment. ‘Coal mining has to be done on a sustainable and environmental basis. With the growing demand for coal, environmental issues will go a long way in sustaining mining operations in India,’ Singh concluded. Meanwhile, Ssang-Su Kim, President and CEO, KEPCO, Republic of Korea, noted that while Korea is expanding both its coal and nuclear generation, its nuclear power capacity will increase from the current 28% of power generation to 42% by 2030. ‘Nuclear energy is not the only solution for the reduction of carbon dioxide (CO2) emissions, but nuclear power offers an attractive alternative [to other energy sources]. In Korea, we will have no problem operating nuclear power stations safely for the next 30 years,’ said Kim. For European utilities, the starting point is challenging. ‘If we think about future energy mix, it is all about politics. Utilities can only achieve this if society wants it,’ stated Leonhard Birnbaum, Chief Strategy Officer, RWE, Germany. Policies need to be consistent, which is not the case currently. Capacity is being added that doesn’t make any sense. But it is being added because it is opportunistic for the parties involved to develop this capacity.’ Government is not the right entity to make resource allocation at a detailed level, he said, leave it to the market to work it out. ‘Expanding the energy mix is still a great idea and we believe this is the only thing that achieves acceptable emission reduction targets. However, in Europe we now have a number of committees, regulators, politics, all working in an inconsistent environment. There is no consistency in the approach. We are achieving emission reductions in Europe at a much higher cost than I think is necessary. We need to get the highest return from investment. We have lots of regulation that is trying to produce energy efficiency, but we have to be sure we can achieve the highest returns from this. However, we don’t have the power grids and don’t have the regulation in place to build these grids and add to them.’ There is no silver bullet that can address all the constraints in the power generation field, stated Patrick Kron, Chief Executive Officer, Alstom of France. To address constraints, there are two routes to consider, namely the portfolio of energy selections - the non CO2 technologies will grow substantially (nuclear and renewables such as hydro, wind and solar, the latter if it becomes economical); and efficiency - this is of massive importance. The best way to limit emissions is to burn less fuel, while the vast part of power will continue to come from oil, gas and coal. So how can this be produced efficiently and with less environmental impact? Kron asked. ‘The solutions will differ among regions. These will depend on availability of fuel, the technology level and the nature of the needs.’ The role of renewable energies in the global mix is important, suggested Theirry Vandal, President and Chief Executive Officer, Hydro-Quebec. It has to be a growing role to deal with the global warming issue. ‘What do we pull out of the energy mix? Energy efficiency is number one. Clearly we can do more with this. Then we have to max out renewables. There will be very little renewables growth if we don’t take on the challenge of improving the grid. It is antiquated and this it is not a good starting point to capture things like large wind farms. We see number of areas in the grid that are in great need of reinvestment.’ On the plus side, each year technology improves and costs come down and at some point these costs will reach parity with other energy types,’ he noted. ‘We have a tremendous opportunity, but it will take public policy support. In terms of renewables, it is fantastic what has been accomplished, such as what is happening in China now with battery technology. The quicker we get at technology, the faster renewable energy production costs will come down,’ Vandal concluded.