Current and Future Challenges to Energy Security

News from the 3rd AIEE (Italian Association for Energy Economics) Conference in Milan, Italy, 10-12 Dec 2018

Working for the IEA Clean Coal Centre makes for an interesting life. And certainly an interesting travel schedule. In the last two weeks I have been in Edinburgh, debating the potential for affordable carbon capture in the EU, and in the relatively remote town of Paipa, Colombia, teaching control options for mercury emissions. But this week I am in Milan learning about energy security from an association of economists.

Unless you have also spent your time off-line in a small village in Colombia, you will be aware of the UNFCCC’s recent “1.5 degrees centigrade report” which suggests that, even with the most ambitious of emission control strategies, the world is heading towards a minimum 1.5 degree rise in global temperature. Although the USA has not signed up to the new global GHG reduction commitments, and the previous restriction on new coal plants without CCUS has been lifted, at the same time, there has been a call by the US Federal Government for development of “coal plants of the future”. These are HELE (high efficiency low emission) technologies that could be an option for coal to remain a viable option in a carbon-constrained future. It is this balance of ensuring that a country can continue to provide affordable power for its population whilst at the same time complying with the global concern over emissions of greenhouse gases that was the focus of the meeting in Milan this week. However, since the conference was run by and for economists, the presentations and discussions were very different from the more technical talks one would expect at a coal/engineering meeting on the same topic. But it was interesting to step back and see the situation from a wider viewpoint. Some of the main take-home points, for me at least, were:

  • In developing regions such as Tanzania, there may be a move towards increased use of renewable energy in the expanding energy mix. However, the overall growth in population and the increased accessibility to modern living standards (power, transport and so on) will mean any reduction in new emissions is actually offset to such an extent that there is no overall reduction in emissions.
  • Whilst countries such as Switzerland may have very low CO2 emissions for “home-grown” power (78% hydro, 22% nuclear), the actual “real-time” carbon emissions can be 8 times higher when the actual inflows of energy from surrounding countries (Germany, Italy, France and Austria) are taken into account. These neighbouring countries are far more reliant on fossil fuel for power than Switzerland. Europe, and the countries within it, should acknowledge that they are part of a larger communal energy grid and that their actual national energy consumption no longer equates simply to their national energy production.
  • Action within the EU is a vital part of the 1.5 degree challenge. However, it is important to look at wider, global issues. Over 2/3 of farming in Africa is based on human manpower – this approach to farming is unsustainable and the use of additional farming machinery, with the associated emissions, could lead to substantial new transport emission sources. Conversely, 40% of the world population uses traditional biomass for cooking/heating – electrification could reduce emissions significantly.
  • Electrification of the transport sector is inevitable. It was suggested by one speaker that, if 10% of the current EU car fleet were to become electric, total electricity consumption for the region might only increase by around 3%, depending on the source of this new power. However, should all these cars require fast and simultaneous charging (unlikely), the additional load could be as much as 991 GW – a value that is simply not achievable. Although this was an extreme extrapolation, it does highlight that there needs to be a balance between new, cleaner power as well as energy storage and increased availability, to cope with the proposed electrification of the transport sector.
  • The G20 have agreed on the need to phase out fossil fuel subsidies. Current programmes focus on peer-reviewed analysis of each member state’s current status with respect to subsidies and taxation. Countries such as China have identified subsidies totalling $15 bn which could be cut effectively over a short time period. Similarly, the US could cut $8.2 bn, including reducing capital gains on royalties for coal and corporate tax exemptions for coal companies. The funds saved from these subsidies would not only discourage cost-ineffective uses of fossil fuel but would also potentially create new funds for renewable energy investments.
  • Perhaps as a reflection of the current political crisis in the UK, one of the papers looked at the potential negative effect of Brexit on the UK electricity market – “Elecxit”. The results of the referendum 2 years ago resulted in electricity prices in the UK increasing by 18% almost overnight, largely due to an immediate drop in the value of the £. Since Britain currently imports 8% of its energy supply from Europe, a value which may double in the next decade, the cost of electricity in the UK will be very dependent on the nature of the new, post-Brexit, electricity market. Decoupling of the UK from the current EU system could lead to trading losses in the order of hundreds of millions of £ on an annual basis, a cost that will be passed on to UK consumers.

For me, the meeting did not provide the answers I was after in terms of practical solutions to the energy security issues nations face in meeting the 1.5 degree target. However, it was a useful thought-starter on how the energy security challenges faced in one region may be very different from those faced in another. This complexity and variability within the “energy trilemma” – the three way balance of energy security, energy affordability and environmental sustainability – is the topic for the current draft I am preparing, due out in May next year. I would be grateful for recommendations for reports and publications that would help ensure that my coverage of this subject area is full and balanced. Email me here.