Climate Change and Energy Pathways for the Mediterranean: Workshop Proceedings, Cyprus (Alliance for Global Sustainability Bookseries)

CLIMATE CHANGE AND ENERGY PATHWAYS FOR THE MEDITERRANEAN

ALLIANCE FOR GLOBAL SUSTAINABILITY BOOKSERIES SCIENCE AND TECHNOLOGY: TOOLS FOR SUSTAINABLE DEVELOPMENT

VOLUME 15 Series Editor

Dr. Joanne M. Kauffman 6–8, rue du Général Camou 75007 Paris France [email protected]

Series Advisory Board Professor Dr. Peter Edwards Swiss Federal Institute of Technology – Zurich, Switzerland Dr. John H. Gibbons President, Resource Strategies, The Plains, VA, USA Professor David H. Marks Massachusetts Institute of Technology, USA Professor Mario Molina University of California, San Diego, USA Professor Greg Morrison Chalmers University of Technology, Sweden Dr. Rajendra Pachauri Director, The Energy Resources Institute (TERI), India Professor Akimasa Sumi University of Tokyo, Japan Professor Kazuhiko Takeuchi University of Tokyo, Japan

Aims and Scope of the Series The aim of this series is to provide timely accounts by authoritative scholars of the results of cutting edge research into emerging barriers to sustainable development, and methodologies and tools to help governments, industry, and civil society overcome them. The work presented in the series will draw mainly on results of the research being carried out in the Alliance for Global Sustainability (AGS). The level of presentation is for graduate students in natural, social and engineering sciences as well as policy and decision-makers around the world in government, industry and civil society.

Climate Change and Energy Pathways for the Mediterranean Workshop Proceedings, Cyprus

Edited by

Ernest J. Moniz Massachusetts Institute of Technology, Cambridge, MA, U.S.A.

Library of Congress Control Number: 2008920051

ISBN 978-1-4020-4858-6 (HB) ISBN 978-1-4020-5774-8 (e-book) Published by Springer, P.O. Box 17, 3300 AA Dordrecht, The Netherlands. www.springer.com

Printed on acid-free paper

All Rights Reserved © 2008 Springer Science+Business Media B.V. No part of this work may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording or otherwise, without written permission from the Publisher, with the exception of any material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work.

Chairman: Mr. Lars G. Josefsson, President and Chief Executive Officer, Vattenfall AB AGS University Presidents: Prof. Hiroshi Komiyama, President, University of Tokyo Dr. Susan Hockfield, President, Massachusetts Institute of Technology Prof. Karin Markides, President, Chalmers University of Technology Prof. Ralf Eichler, President, Swiss Federal Institute of Technology, Zürich

Members: Mr. Eiichi Abe, Managing Director, Nissan Science Foundation Dr. Thomas Connelly, Chief Science and Technology Officer, DuPont Prof. Jakob Nüesch, Honorary Member, International Committee of the Red Cross Mr. Kentaro Ogawa, Chairman of the Board & CEO, Zensho Co., Ltd. Mr. Kazuo Ogura, President, The Japan Foundation Mr. Dan Sten Olsson, CEO, Stena AB Mr. Motoyuki Ono, Director General, The Japan Society for the Promotion of Science Mr. Mutsutake Otsuka, Chairman, East Japan Railway Company Mr. Simon Pitts, Executive Director, Ford-MIT Alliance, Ford Motor Company Mr. Alexander Schärer, President of the Board, USM U. Schärer Söhne AG Dr. Stephan Schmidheiny, President, Avina Foundation Ms. Margot Wallström, Vice President, European Commission Prof. Hiroyuki Yoshikawa, President, National Institute of Advanced Industrial Science and Technology Dr. Hans-Rudolf Zulliger, President, Third Millenium Foundation, Board of Directors, Amazys Ltd.

Table of Contents

Preface

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1. A Global Perspective on Climate Change R.K. Pachauri, M. Chand

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2. Current Understanding of Environmental and Water Resource Impacts in the Eastern Mediterranean ¨ E. Ozsoy

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3. An Outlook on the European Gas Market J. Kj¨arstad, F. Johnsson

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4. Sequestration – The Underground Storage of Carbon Dioxide S. Holloway

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5. Climate Change and Energy Pathways for the Mediterranean O. Sch¨afer

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6. Global Bioenergy Resources and Utilization Technologies H. Yamamoto

101

7. Perspectives in Nuclear Energy B. Frois

113

8. Efficiency in Oil Use and Alternatives to Oil M.K. Eberle

127

9. An Overview of H2 Fuel for Use in the Transportation Sector R.J. Allam

145

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10. European Transportation in the Greenhouse – System and Policy Indicators H. Gudmundsson

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11. European Automobile CO2 Emissions: From Forecasts to Reality T. Zachariadis

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12. Implications for the Oil and Gas Industries W. Khadduri

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Author Biographies

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Preface

Ernest J. Moniz, Editor

The Alliance for Global Sustainability (AGS) – comprised of Chalmers University, ETH-Zurich, MIT, and the University of Tokyo − and the Cyprus Research and Educational Foundation (CREF) jointly hosted a workshop in Nicosia, Cyprus on Climate Change and Energy Pathways for the Mediterranean. Participants came from fourteen countries. This workshop is intended to be the first of many that engage Cyprus, through CREF and its Cyprus Institute, as an important convenor for discussions that bring science, technology, and analysis to bear on critical issues facing the region – the eastern Mediterranean, northern Africa, the Middle East. Climate change is a fitting topic for this initial discussion. It clearly ranks as an issue of overarching importance for the 21st century because of its centrality to global environmental, energy, economic, and security concerns, and this region faces major challenges in each of these areas. The workshop agenda was designed to initiate dialogue in several of these dimensions. There is little doubt that human activity materially impacts the atmosphere. Annual carbon dioxide emissions from fossil fuel combustion alone equal roughly a percent of pre-industrial atmospheric CO2 content, and these emissions are likely to grow rapidly as developing economies mature. This is of concern since long-standing expectations of the consequences of, say, doubling pre-industrial greenhouse gas concentrations are for average global temperature rise of several degrees over a relatively short period. We are on track for such a doubling around mid-century. A major response of the global energy infrastructure to dramatically decrease CO2 emissions over this time period must begin in the very near term because of the high degree of inertia of the capital-intensive energy industry. The specific regional consequences of global warming are less understood but crucially important for the realities of public policy evolution. This workshop aims to contribute to a discussion for the eastern Mediterranean. For example, this region is clearly very sensitive to any shift in ix

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water resource availability. Global warming may exacerbate an already volatile situation. The workshop discussion served to emphasize how uncertainty about regional impacts may be of such consequence that prudent actions are called for in the near term, rather than serving as an excuse for inaction. The second question is then what to do about it. Climate risk mitigation has three major pathways: mitigation through significant greenhouse gas reductions, with profound implications for the global energy system; adaptation measures tailored to different situations, both physical and economic; active large-scale re-engineering of the atmosphere (and potentially the oceans and biosphere as well) to compensate for both anthropogenic and natural drivers. These pathways are listed in an order that is generally thought to correspond to increasing risk. The workshop focused on mitigation pathways involving new “carbon-free” (or at least carbon-light) technologies and associated EU policy in the electricity and transportation sectors. The electricity sector in particular is likely to be the target of early action since it has large point sources of carbon dioxide emissions. These sectors may become increasingly linked if electricity use grows as a transportation “fuel”, thereby somewhat exacerbating the challenge of carbonfree electricity at the multi-terawatt scale. A third question is that of regional economic dislocation as developed nations, a significant fraction of which make up the EU, implement climate risk mitigation policies. The workshop focused on the implication for the oil and gas industries, which clearly represent the majority of economic activity in many states in the Middle East and northern Africa. Here, climate policy aligns with security policy, as many developed nations attempt to diminish their oil dependence. This is reflected in the strong emphasis growing on automotive efficiency, biofuels development, and revival of full or partial electric car concepts, all of which would serve to lower oil demand and to introduce elasticity into the transportation fuels market. One consequence is to have calls for reliability of supply by the oilconsuming countries answered by calls for reliability of demand by the oilproducing countries. The workshop addressed this issue through a distinguished panel including, among others, representatives from OPEC and from Greenpeace. This last workshop panel exemplifies the aspirations of CREF and the Cyprus Institute: to serve as a gateway between the EU and the eastern Mediterranean, north Africa, Middle East region for dialogue on important issues with strong scientific and technical content. This is done in the hope that analytically-based dialogue can lead to solutions in a critical part of the world that has many issues to resolve collectively. Perhaps the response to climate change can serve as a model.

1 A Global Perspective on Climate Change

R.K. Pachauri1, Madhavi Chand2 1 2

Director-General, TERI and Chairman, IPCC Research Associate, TERI

The relationship between human activities and climate change, involving both causes as well as impacts, has become a major issue of concern and interest all over the world. The Fourth Assessment Report (AR4) of the Intergovernmental Panel on Climate Change informs us that the atmospheric concentration of CO2 has increased from 280 ppm in the period 1000–1750 AD to 379 ppm in the year 2005. The terrestrial biospheric exchange had been a cumulative source of about 30 Gt C for the past two centuries but acted as a sink in the 1990s. The concentration of methane in the atmosphere has more than doubled from 700 ppb in the period 1000–1750 AD, to reach a concentration of 1774 ppb in the year 2005. The concentrations of hydrofluorocarbons, perfluorocarbons, SF6 and N2O have also increased. The tropospheric concentration of ozone has increased even though its stratospheric concentration has decreased. The rising emissions and concentrations of all these gases have led to numerous changes in global climate variables. The global mean surface temperature is very likely to have increased by 0.74±0.18°C during the hundred year period 1906−2005. Although the increase is spread out all over the globe, it is greater in the northern hemisphere, and land areas have warmed faster than the oceans. It is very likely that the number of hot days and hot nights has increased and the number of cold days, cold nights and frost has decreased for nearly all land areas. The continental precipitation has increased in the eastern parts of North and South America, northern Europe and central Asia. However, it has decreased in some regions of Africa, southern Asia and the Mediterranean. It is also likely that the area affected by drought has increased since 1970. The global mean sea level has increased at an average annual rate of 1.8±0.5 mm from 1961 to 1993 and 3.1±0.7 mm from 1993 to 2003. HowE.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 1–14. © 2008 Springer.

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ever, it is unclear whether this latter increased rate should be attributed to a decadal variation or to an increase in the long term trend. The snow cover has decreased by 10% since global observations through satellites became available in the 1960s. Arctic sea ice extent and thickness has thinned by 40% during the late summer and early autumn seasons. El Niño events have become more frequent, persistent and intense in the last 20 to 30 years compared to the previous 100 years. There has been a poleward and higher elevation shift for plant, insect, bird and fish ranges. In fact, there are many biological and physical indicators that show that they have been affected by the changes in greenhouse gas concentrations and weather conditions. Thus we cannot deny that the climate is changing and that human activities are partly, if not largely, responsible. In fact, the IPCC’s Third Assessment Report has assessed that “there is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities.” Figure 1 shows a comparison between modelled and observed temperature rise since 1900 from AR4, which verifies that the anthropogenic influence on the climate is indeed extremely significant, because when we explicitly account for natural as well as anthropogenic forcings, observations track extremely close to modelled changes.

Fig. 1. Verification of anthropogenic influence on rising temperatures through a comparison between modelled and observed temperature changes (Source: IPCC AR4 Synthesis Report)

Over and above explaining changes in the global climate from the past to the present, it is necessary to attempt projections of corresponding changes in the future. A number of projections were carried out in the IPCC Special Report on Emission Scenarios (SRES) for different sets of assumptions about the demographic, social, economic and technological developments in this century, without any climate policy interventions.

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The CO2 concentration in the year 2100 is projected to range from 540 to 970 ppm, which is substantially higher than the 280 ppm in the preindustrial era and 379 ppm in the year 2005. This increase in CO2 concentration will result in a global average temperature rise of 1.4 to 5.8°C (range over all different scenarios) during the period from 1990 to 2100. This is over two to almost ten times larger than the warming in the 20th century and is very likely to be without precedent in the last 10,000 years. It is also very likely that nearly all land areas will continue to warm more than the global average. The globally averaged annual precipitation is likely to increase during this century, though at the regional level there will be both increases and decreases of 5 to 20%. The glaciers in the northern hemisphere will continue their widespread retreat. The Antarctic ice sheet is likely to gain mass and the Greenland ice sheet will lose mass. The increase in global precipitation and reduction of ice caps will cause the mean sea level to rise. The global mean sea level is projected to rise by 9 to 88 cm during the 21st century. Figure 2 shows the projected curves for increasing CO2 emissions and average temperature rise from 2000 to 2001.

Fig. 2. Projections for the 21st century for the different SRES scenarios. (Source: IPCC AR4 Synthesis Report)

The SRES reviews existing literature, most of which is based on market exchange rates (the traditionally preferred measure for GDP growth, as opposed to purchasing power parity, which is currently the preferred measure for assessing differences in economic welfare). Major sources of estimates used come from the World Bank, the International Energy

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Agency (IEA) and the US Department of Energy (USDoE), among others. Some IPCC scenarios are also based on purchasing power parity. Contrary to claims, IPCC scenarios are consistent with historical data, including those from 1990 to 2000, and with the most recent near term (up to 2020) projections of other agencies. Long-term emissions are based on multiple, interdependent driving forces, and not just economic growth. In addition to the steadily rising temperatures, precipitation and sea level, the increasing concentrations of greenhouse gases also lead to an increase in climate variability and extreme weather events. There are likely to be higher maximum temperatures and a larger number of hot days and heat waves over almost all land areas. The minimum temperatures are likely to increase more rapidly and a decrease in the number of cold days, frost days and cold waves is projected. This would lead to increased heat stress and decreased cold stress on the human population, wildlife and livestock. More intense precipitation events are projected, which would increase floods, landslides, avalanches and mudslide damage, and also increase soil erosion. However, increased runoff could increase recharge of some floodplain aquifers. Increased summer drying over most mid-latitude continental interiors would intensify the risk of drought, cause damage to building foundations due to ground shrinkage and increase the risk of forest fires. Intensification of tropical cyclones, etc., would be particularly detrimental for coastal areas and small island states. It is evident that projected climate changes will have some beneficial and some adverse effects. However, as these changes become larger and more rapid, the adverse effects will predominate. Changing climate impacts many aspects of civilisation and natural ecosystems. Figure 3 indicates, in broad terms, this range of impacts. Climate change can affect human health directly through morbidity as well as loss of life in floods and droughts and indirectly through changes in heat stress, cold stress, ranges of disease vectors, water quality, air quality and water and airborne pathogens. The actual health impacts in different parts of the world will depend on the local environmental conditions, and on the social, economic, technological and institutional measures implemented to minimise the adverse effects. Agriculture is the biggest employer and a very large contributor to GDP in many developing economies. The ultimate role of agriculture in Asian and African regions is to provide food and fibre to the human population. The effects of climate change on agriculture are widespread and serious. Crop yields and patterns are susceptible to changes in precipitation, temperature and CO2 concentration and indirect effects like soil moisture and infestation of pests and diseases. Thus climate change poses a serious threat to global food security, especially as it has the potential to lower the

A Global Perspective on Climate Change

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Source: GRID Arendal

Impacts

Fig. 3. The widespread impacts of a changing climate

incomes of vulnerable populations and increase the absolute number of people at risk of hunger. Freshwater has been an extremely important aspect of civilisation throughout human history. It is essential for health, food production and sanitation, as well as for industrial processes and sustenance of ecosystems. The quality of water is likely to be degraded by higher temperatures, but this may be offset in some areas by increased flows. There are several indicators of water-related stress applicable to different parts of the world. If withdrawals are greater than 20% of the total resources, these could easily be a limiting factor for development. Withdrawals of 40% or more represent high stress. Similarly, water stress could be a problem if a country or region has less than 1700 m3/year of water per capita. In 1990 approximately 33% of the people lived in countries using more than 20% of their water resources and by 2025 this fraction is likely to increase to 60%, simply due to growth in population. In addition, higher temperatures could increase such stress conditions. Thus climate change will exacerbate water shortages in many parts of the world, particularly the areas that are already water-scarce. Populations inhabiting small island states and coastal areas are at particular risk of social and economic effects from sea level rise and storm surges. Human settlements in deltas, low-lying coastal areas and small is-

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lands will face increased risk of coastal flooding, erosion and displacement. The areas at greatest risk are South and Southeast Asia, East Africa, West Africa and the Mediterranean, from Turkey to Algeria. Significant portions of highly-populated coastal cities are vulnerable to permanent land submergence and frequent coastal flooding. Essential resources like beaches, mangroves, freshwater, fisheries, coral reefs, etc., would also be at risk. Thus it is imperative that coastal areas and small island states explore and implement suitable adaptation measures. Figure 4 connects adaptation to the average number of people flooded by coastal storm surges annually.

Fig. 4. The two bars on the left show the average number of people flooded by coastal storm surges annually by 2080 for the present sea level and for a rise in sea level of ~40 cm, assuming that coastal protection is unchanged from the present. The two bars on the right show the same projections but assume that coastal protection is enhanced proportional to GDP growth. (Source: IPCC TAR Synthesis Report)

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Ecological productivity and biodiversity will be altered by climate change, with an increased risk of extinction for some vulnerable species. The increasing concentration of CO2 will initially increase productivity of some plants but climate change and disturbance regimes associated with it will eventually offset this initial increase. Some models project that the net uptake of carbon by terrestrial ecosystems will increase during the first half of the century and then level off or decline. The impacts of climate change will fall disproportionately upon the developing countries and the poorer sections of society in all countries. Hence it would accentuate levels of inequity between the developed and the developing countries as well as between the rich and the poor in all countries. Poverty and low income levels, lack of infrastructure, lack of training and education, inaccessibility to technological improvements, fewer job opportunities, misplaced incentives, inadequate legal systems and a degraded resource base are some of the problems faced by developing countries, which make it difficult for them to exercise choices and implement adaptation and mitigation options, thus rendering them more vulnerable to the impacts of climate change. Thus, in order to reduce the vulnerability of certain societies to climate change, it is necessary to eradicate poverty. Research on the vulnerability of different societies and the socioeconomic dimensions of climate change, therefore, becomes urgent and important. It is difficult to determine how much of the economic decline of sub-Saharan Africa can be ascribed to the impacts of climate change, but similar climate effects in other vulnerable regions have been withstood by societies with higher incomes. An important preemptive strategy against the threat of climate change is the elimination of poverty, a subject on which fresh thinking and initiatives are required, particularly in rural areas. One such approach, which holds great promise, is the INSTEP strategy, which can be implemented in poor regions of the globe with local adaptation to suit existing conditions. Box 1 shows a schematic representation of INSTEP Global, TERI’s pioneering step in the direction of poverty alleviation and economic growth in the developing world.

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Box 1.

INSTEP Global (Integrating New and Sustainable Technologies for Elimination of Poverty) was conceptualised because of the limited success of poverty alleviation programmes and the lack of globally replicable models targeting major aspects of poverty. INSTEP recognises the relationship between poverty, environment and economic growth and aims to use a three-pronged technological approach comprising: Biotechnology, for food/nutritional security and ecological sustainability; information technology for market access, education, health care, participative and transparent governance; and rural energy technology for sustainable fuel systems, better lighting, benefits to women and environmental advantages. INSTEP assesses new and sustainable technologies for poverty alleviation; areas for technology adaptation and technology gaps; and operates through policy frameworks, financial and market mechanisms promoting these technologies, model projects and their replication at the grassroots level, conferences and publications. INSTEP’s stakeholders are national governments, scientists and civil society (NGOs, etc.) At this point it is relevant to refer to the basic concept of sustainable development. According to the Brundtland Commission report of 1989, sustainable development can be defined as “that form of development which meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” The concept of sustainable development can also be understood in terms of Kenneth Boulding’s ‘Spaceship Economy’: “For the sake of picturesqueness, I am tempted to call the open economy the ‘cowboy economy’; the cowboy being symbolic of the illimitable plains and also associated with reckless, exploitative, romantic, and violent behaviour, which is characteristic of open societies. The closed economy of the future might similarly be called the ‘spaceman economy’; in which the earth has become a single spaceship, without unlimited reservoirs of anything, either for extraction or for pollution.” Another important concept, which we can borrow from the physical sciences, is that of entropy. If the accumulation and increasing concentration of greenhouse gases in the earth’s atmosphere are leading to humaninduced climate change, and if the impacts of climate change are indeed negative for the well-being of several living systems and human activities, then climate change can be associated with increasing entropy in the eco-

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nomic process. Nicholas Georgescu-Roegen put forward this simple but powerful argument in many of his writings, and went further in highlighting the logic of greater use of renewable resources, which would not result in increasing emissions and concentration of greenhouse gases in the earth’s atmosphere. One of his statements articulated as far back as 1971 said, “Automobiles driven by batteries charged by the sun’s energy are cheaper both in terms of scarce low entropy and healthy conditions — a reason why I believe they must, sooner or later, come about.” In some sense this statement was prophetic, and the growing interest in renewable energy technologies bears testimony to his logic and foresight. Just as, in physics, the increase of entropy is an irreversible process, it is also possible that some of the effects of rising greenhouse gas concentrations could become irreversible if climate change is not limited in both rate and magnitude before the associated threshold levels, the “points of no return”, are reached. This is particularly challenging because the positions of these threshold lines are blurred. As it is, even after the greenhouse gas concentration and global surface temperature are stabilised, the sea level will continue to rise long after emissions of greenhouse gases are reduced. Figure 5 illustrates this inertia in the climate system.

Fig. 5. Indications of time taken by CO2 concentration, temperature and sea level to reach equilibrium after reduction of CO2 emissions. (Source: IPCC TAR Synthesis Report)

Human-induced climate change is as much the result of unsustainable forms of production and consumption, and at the same time the impacts of climate change in particular impact on opportunities and conditions permitting the pursuit of sustainable development. Hence, along with an un-

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derstanding of the geophysical aspects of climate change, we need to comprehend their nexus with sustainability and the equity dimensions of development. The inertia of the climate system is such that the impacts of climate change can be spread over decades and centuries if not millennia. This fact combined with the possibility of irreversibility in the interacting climate, ecological and socioeconomic systems are the main reasons why anticipatory adaptation and mitigation are beneficial. It is, of course, true that these adaptation and mitigation measures could be costly to the global economy, particularly in poor countries with low-income levels and weak infrastructure. However, the faster they are implemented and the more ambitious their magnitude, the greater will be their benefits to the environment and the higher their immediate costs. Globally, a consideration of both mitigation and adaptation measures, therefore, becomes essential. Figure 6 shows the reduction in GDP in 2050 due to mitigation activities. These do not indicate a very heavy burden in terms of relative costs.

Fig. 6. Global average GDP reduction for different levels of CO2 stabilisation in 2050 (Source: IPCC TAR Synthesis Report)

Significantly, by capturing synergies, greenhouse gas mitigation actions may yield ancillary benefits for other environmental problems. For example, the technological improvements of energy efficiency and use of renewable energy sources would be beneficial for reducing local pollution levels as well as for reducing carbon emissions. In the land-use sector, conservation of biological carbon pools not only prevents carbon from being emitted into the atmosphere, but it can also have a favourable effect soil productivity, the protection of biodiversity and the reduction of local

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pollution problems from biomass burning. Conversely, addressing environmental and equity problems other than climate change can also have ancillary benefits through reduction of GHG emissions. A very useful formula that projects the CO2 emissions as a function of various multiplicative factors is the Kaya Identity, which can be stated as follows: CO2 Emissions = Population × (GDP/Population) × (Energy/GDP) × (CO2 /Energy)

The terms (Energy/GDP) and (CO2 /Energy) are called energy intensity and carbon intensity, respectively. They are important indicators of the state of the economic system and its sustainability in the context of climate change. Figure 7 shows the acceleration of energy system change for different mitigation scenarios. Technological options for reducing net CO2 emissions to the atmosphere include: • Reducing energy consumption, by increasing the efficiency of energy conversion and/or utilisation. • Switching to less carbon-intensive fuels, for example natural gas instead of coal. • Increasing the use of renewable energy sources or nuclear energy, each of which emits little or no net CO2. • Sequestering CO2 by enhancing biological absorption capacity in forests and soils. • Capturing and storing CO2, chemically or physically. Ironically, the impacts of climate change are most severe for those countries that have contributed the least to the causes of the problem. For example, the developing countries have low per capita energy consumption and low contribution to global emissions and pollution, but have high local pollution levels and vulnerability to climate change. In contrast, the OECD countries have the highest per capita energy consumption and the highest contribution to global pollution, but they have less local pollution. The developed countries also have greater technical and economic resources for change than the poorer economies, particularly as the latter need to focus on development. Hence there is a need for joint technology development and deployment between north and south and the development of mechanisms to facilitate this. The transfer of technology between countries would widen the choice of options for energy mixes and associated technologies, and the economies of scale and learning will lower the cost of their adoption.

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Fig. 7. (a) The required rate of decrease in energy intensity (energy per unit GDP) in order to meet given CO2 concentration stabilisation targets is within the range of historically achieved rates for stabilisation above 550 ppm, and possibly even at 450 ppm, but (b) the required rate of improvement in carbon intensity (carbon emissions per unit energy) to stabilise at levels below about 600 ppm is higher than the historically achieved rates. As a consequence, the cost of mitigation rises as the stabilisation level decreases, and does so more steeply below a target of about 600 ppm than above. (Source: IPCC TAR Synthesis Report)

Specific mitigation options can be well understood in terms of the mitigation potentials/barriers as shown in Figure 8. The IPCC TAR identified five categories of increasing mitigation potentials: market, economic, socioeconomic, technological and physical. At any given time, the market potential represents the actual use of a technology or practice. Overcoming the barriers of market and institutional imperfections would help the adoption of more cost-effective mitigation options thus realising the full economic potential of a set of options. The next step is changing consumer

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behaviour and preferences leading to more climate-conscious and climateresponsible lifestyles. This expands the horizon to the socioeconomic potential. Technological improvement and cost reduction provide access to the technological potential; and finally, the physical potential represents the theoretical upper bound, which may become achievable through innovation. Physical Potential

Theoretical upper bound, may shift over time

Technological Potential

Implementing technology that has already been demonstrated

Socioeconomic Potential

Change in behaviour, lifestyles, social structure and institutions

Economic Potential

Creation of markets, reduction of failures, financial and technology transfers

Market Potential

Actual use of environmentally sound technologies and practices

Fig. 8. Concepts of mitigation potentials.

The boundaries between these potentials are not clearly defined or fixed, but are continuously varying as a consequence of changing policy, relative costs, human behaviour and technological innovation. The realisation of these potentials can only come about through effective policy-making and implementation. The economic and socioeconomic potentials inherent in a set of measures require the assistance of international cooperation initiatives like the Kyoto Protocol, mechanisms of Joint Implementation, Emissions Trading and the Clean Development Mechanism. Technologies designed for improvement in energy efficiency and in the utilisation of alternative/cleaner fuels are possibly the most important means for reducing emissions and mitigating climate change. Development of technology requires substantial investments and proactive R&D policies. However, recent trends in funding of energy R&D do not appear satisfactory in this regard. Figure 9 shows the government expenditure on energy research and development in IEA countries, which indicates the inadequacy of government spending on technological improvement and

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Fig. 9. Government spending on Research and Development of Energy Sources

development of renewable energy sources. This could prove to be a serious deterrent for climate mitigation efforts. xxxxglobal challenge today is to utilise the mitigation potentials to their The fullest, to overcome the technical, economic, political, cultural, social, behavioural and institutional barriers that prevent the successful implementation of the mitigation options. There is an unprecedented need for global vision and commitment towards adaptation and mitigation options and to address the equity implications of climate change effectively. Technology is the key, but the social and economic context is of critical relevance in bringing about change in the required direction. Scientists, technologists and economists, therefore, share a common agenda that requires a much higher level of collaborative activity in the future.

2 Current Understanding of Environmental and Water Resource Impacts in the Eastern Mediterranean (A subdomain of the greater Euro-Mediterranean MiddleEastern Seas region)

Emin Özsoy Institute of Marine Sciences, Middle East Technical University PK 28, Erdemli, Mersin 33730, Turkey e-mail: [email protected]

2.1 Preamble While this presentation in its title aims to review the environmental and water resource impacts in the eastern Mediterranean, in the subtitle emphasis is given to the fact that regional issues are inseparably linked with the environment/climate of a greater area. The mid-latitude water bodies extending from Gibraltar eastwards to the Aral Sea can be identified as a true “medi-terra”nean complex of seas locked between continents increasingly isolated from the world ocean, which together form an interconnected climatic unit. The climates of the “downstream” water bodies, i.e., the Eastern Mediterranean, and Black and Caspian seas, are linked with the climates of the adjoining continents of Europe, Africa and Asia, which in turn are affected by the climates of the adjoining Atlantic and Indian oceans. Ocean-atmosphere-land interactions and consequent feedbacks between regional and global climate systems could be disproportionately large in this region of contrasts between marine and continental climates, and complex land/sea bottom topography (Özsoy 1999). High gradients in physical characteristics, as well as in soE.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 15–31. © 2008 Springer.

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cioeconomics, make the region prone to impacts of climate change, implying possible changes in hydrology and ecosystems. On the basis of our present understanding, it is not clear how the global climate system is projected onto the region, or how the region contributes to the global system. Unexpectedly large impacts could occur, as they have done in the past, in such a complex system, in response to global change. On the other hand the typically delayed human response to environmental emergencies can result in irreparable damage.

2.2 Climatic and Anthropogenic Impacts in Interconnected Seas Although the region where we live turns out to be interconnected and dependent on neighboring areas of the globe, we often focus our attention on local problems of direct consequence. While nature as a function of the sun’s inclination and geography seems to favour some of us more than others on Earth, through the ages differences in our common inheritance have been tolerated by human settlement and adaptation. In the age of global change, inequalities in the distribution of resources, energy and people are extremely demanding for human adaptation, let alone their sharing. The situation implies a serious geo-potential for conflicts that in turn could result in further environmental damage. The well-being of the region’s inhabitants is affected by the particular patterns of climate, transport of atmospheric or marine pollutants or by the distribution of resources. While some of the effects such as the North Atlantic Oscillation (NAO) or the long-range transport of atmospheric pollutants from industrial Europe may originate west of the region, others, such as the Indian Monsoon, can have their origin in the east, being in reality a

Fig. 1a. Oil and gas pipelines in the Euro-Asian-African junction Fig. 1b. Transport effects of the Caspian Sea oil and gas

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Figs. 2a, b. Shipping accidents in the Bosphorus — the Nassia accident spilled more than 1000 tons of oil in the Turkish Straits in 1994

Fig. 2c. Baku-Tblisi-Ceyhan pipeline terminal in the Gulf of İskenderun

part of the global pattern. Similarly, the distribution of water, food or energy, and their exploitation have regional impacts. While oil and gas pipeline transport networks (Figure 1) and shipping redistribute the hydrocarbon resources, they can give rise to environmental threats in regions remote from the source, for example in the Turkish Straits System, and the Gulf of İskenderun in the eastern Mediterranean, as shown in Figure 2. The Turkish Straits System connects the Eurasian hinterland to the Mediterranean through the Black and Caspian seas. Among the 264 straits used by shipping worldwide, the narrow Bosphorus with rapid currents (a 30km long winding channel with a minimum width of 700m and a navigable section of 200m, current speeds of up to 4 m/s, and ship lengths occasionally greater than 200m) is currently four times busier than the Panama Canal, already congested by local traffic serving İstanbul, a world heritage city of 10 million people. The ship traffic has increased by about 20 times by weight in the last 70 years, carrying more than half the Russian oil exports, and the load is further expected to triple by export of hydrocarbons from Caspian/Eurasian fields in the next decades. The saturation of its traffic-carrying capacity makes the Turkish Straits extremely predisposed to accidents involving collision, grounding, fires and explosions. The second sensitive area with potential to be affected by the same traffic, but different

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route, is the Gulf of İskenderun, where the recently finished Baku-TblisiCeyhan pipeline terminates (Figure 2). An important natural resource of regional significance is water. Again, the distribution is determined by geometry, but also by socioeconomics. In some cases there are fewer people where the water resources are poor (or vice versa). In general there is a north-south gradient of water availability, though the population increase is faster in the south where there is a shortage of water (Figure 3). In some other countries that appear to be rich in water, the population increase is so fast that the per capita share is comparable to water-poor countries (Figure 4). It should also be noted that the general rule of inequality also applies in the way water is consumed. Globally the production of meat in the second half of the last century increased by more than fourfold, and preferentially in the developed world. The production of meat requires 7 times more land and 10–20 times more energy and water compared to the production of grain. The side effects are disturbed marine and land ecosystems due to over-grazing, over-fishing, and the use of fertilizers and pesticides, etc.

Fig. 3a. Comparison of urban populations in the Mediterranean during the second half of the last century (The Blue Plan http://www.planbleu.org)

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Fig. 3b. The change in population in the Mediterranean’s northern and southern coasts (The Blue Plan http://www.planbleu.org)

Fig. 4. Per capita internal and external water resources in the Mediterranean countries (The Blue Plan http://www.planbleu.org)

There have been important changes in the use of water for irrigation. The surface area of irrigated land has doubled or tripled in most Mediterranean countries in the last 50 years. A large number of dams for irrigation and energy production have changed runoff patterns and have had significant effects on land and marine ecosystems. For example, the 90 percent decrease in water as well as nutrients carried by the Nile River in the eastern Mediterranean after the construction of the Aswan high dam in the 1960s (Figure 5a) reduced the primary and fish productivity near the Egyptian and eastern Levantine coast up to the 1980s, after which waste dis-

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Fig. 5a. Surface and ground water inputs into the Mediterranean (The Blue Plan http://www.planbleu.org) showing old and new transports from catchments in each country, and cross-border transports of water

Fig. 5b. The watersheds of the rivers discharging into the Mediterranean

charges from major population centers and drainage seems to have more than made up for the losses, and once again have increased eutrophication in the 1990s (Nixon 2003). With the recent decline of the Nile discharge, the Turkish rivers in the north (Figure 5a) presently constitute the only available runoff water into the entire oligotrophic eastern Mediterranean, concentrated in the relatively small area of the Cilician Basin (between Cyprus and Turkey). Because of the significant inputs of these rivers the region has all the characteristics of the ROFI (regions of freshwater influence) but in an oligotrophic deep water environment. The Cilician Basin coastal system including the wide continental shelf of the bays of Mersin and İskenderun occupies the northeastern part of the eastern Mediterranean Levantine Basin between Cyprus and Turkey. Perennial rivers such as Göksu, Lamas, Tarsus, Seyhan, Ceyhan and Asi, and smaller rivers account for a significant total freshwater flux of 27km3/yr,

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Fig. 5c. The watersheds of the rivers discharging into the Black Sea

Fig. 5d. The watersheds of the rivers discharging into the Caspian Sea (after Rodionov, 1994)

or about half of all rivers along the Turkish Mediterranean and Aegean coasts, which is still greater than the present discharge of the Nile in the eastern Mediterranean. The Cilician Basin coastal system embodies important natural resources of strategic importance, presently experiencing rapid growth in population, industry, agriculture and tourism, resulting in significant environmental stresses.

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The watershed areas of rivers discharging into the Mediterranean and, Black and Caspian seas (Figures 5b, c, d) make up different ratios when compared to the target sea areas. For the Mediterranean, the rivers are spread over watersheds limited to coastal margins and plains (except for the Nile which is now dammed), while the catchments of the major rivers of the Black and Caspian seas cover much larger areas of continent compared to the destination sea. The balance between evaporation, runoff and precipitation, combined with the geometrical constraints determine the vertical structure of these seas, with the Mediterranean being a better ventilated concentration basin, and the Black Sea being a poorly ventilated and therefore an anoxic dilution basin. Interestingly, the Caspian Sea, with evaporation almost balancing the river runoff has been observed in the past apparently to switch between poorly ventilated and ventilated states depending on the relatively much larger sea-level changes on the order of several meters in the last decades, and tens of meters in the ancient past. Physical characteristics determine the state of the ecosystem in each individual basin and its various eco-zones (Figure 6). Riverine and atmospheric supply of nutrients into the sea provide the fuel with which the ecosystems run. The Caspian and Black seas and especially their shelf areas influenced by large rivers are therefore extremely productive, while the eastern Mediterranean appears as a “blue desert”, apart from limited coastal stretches near river mouths. The establishment of the fluxes of water, nutrients and other materials into each of the basins and that are transported between them is essential to

Fig. 6. Satellite derived mean CZCS chlorophyll pigments (mg/m3) based on NASA/GSFC data

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Fig. 7. Results from the Black Sea Transboundary Diagnostic Analysis showing source contributions to total nitrogen (TN) and total phosphorus (TP) (http://www.grid.unep.ch/bsein/tda/main.htm)

evaluate the present state of the ecosystems of individual seas. Transboundary Diagnostic Analyses have been performed for the Black Sea (Figure 7) and the Caspian Sea, but the gathering of such information appears largely incomplete for the Mediterranean Sea basins. It should also be remarked that the mean fluxes obtained by such analyses is a starting point, but largely insufficient, because of the need to better assess the seasonal, interannual and long-term changes in the sources, as a result of agricultural/industrial activity. In the case of the Black Sea, the nutrient inputs carried from continental Europe by large rivers such as the Danube multiplied by several factors, before the changes in economics of Eastern Europe in the mid-1990s put a halt to the trend, and had a positive impact. An understanding of the sinister threat of eutrophication in semienclosed basins and the coastal ocean is not sufficiently developed, although scientific awareness has improved over the years. In the Mediterranean, eutrophication in coastal seas advances against an oligotrophic deep sea background. In comparison, the Black Sea and Caspian Sea are mesotrophic seas which are under greater risk of eutrophication. The environmental crisis in the Black Sea has resulted in major loss of fisheries and habitats, increased occurrence of harmful algal blooms (red tides) and altered food web and community structure. It appears that climatic oscillations, fishing pressure and eutrophication processes all had their fair shares

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in the resulting crisis (Oğuz 2003), which appears to go through a partial recovery until the present. One of the culprits in the Black Sea ecosystem collapse was the introduction of the foreign species Mnemiopsis Leidyi brought by ships from the Atlantic. The opportunistic organism occupied a new link in the food web, competing with anchovy larvae for food, and therefore had a drastic effect. Similar changes are now being observed in the Caspian Sea, as a result of the introduction of the same organism through the Volga-Don canal connecting the two seas.

2.3 Internal Variability of Euro-Mediterranean MiddleEastern Seas The sensitivity (i.e., response to an incremental change in forcing) of an ocean basin is a function of its system characteristics and internal processes. The inability to separate natural variability of the system from man-induced changes, confounded by incomplete observations makes it difficult to understand extreme conditions that often arise unexpectedly in a system. With today’s global warming expectations it is somewhat unclear if we have already started to see measurable effects in our environment. Yet, in the last few decades we have become increasingly aware of previously unobserved extreme conditions. One example of such events is the “Eastern Mediterranean Transient”, which has led to massive replacement of the eastern Mediterranean by a rapid series of events in the early 1990s (Roether et al. 1996). Another case is the anomalous warm summer season of 2003 which primarily affected the western Mediterranean (Beniston 2004), heating up the surface waters (Figures 8a, b, c) to rare levels in the available record. It is expected that such warm events would take place with increasing frequency and variability, as a result of global warming.

Fig. 8a. Winter sea surface temperature average for individual basins

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Fig. 8b. Surface temperature of the sea on 28 July 2002

Fig. 8c. Surface temperature of the sea on 28 July 2003 (http://www.mercatorocean.fr/html/produits/buoc/buoc_n04/buoc_n04_en.html)

Despite their isolated appearance, the internal machinery of each individual marine basin is both a significant driver and participant of regional climate. The mean residence time varies considerably from 7 years for the Marmara, to 25 years for the Caspian, 100 years for the Mediterranean, and up to about 2000 years for the deeper part of Black Sea, resulting in widely differing characteristics of these basins.

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Cretan Sea

Figs. 9a, b. Average salinity, potential temperature and log number of observations in the depth interval of 1000–2000m in the Cretan Sea and of 2000–4000m in the western Levantine Sea areas. The error bars denote standard deviation. The averages are obtained from individual data sets contained within the combined MODB/POEM data and grouped into 1 year intervals falling within the specified depth range (Özsoy and Latif, 1996).

The Mediterranean thermo-haline circulation (i.e., western and eastern basin cells, with a “conveyor belt” partly connected to the North Atlantic) has undergone recent abrupt changes (Figure 9), with previously unfore-

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seen deep water renewal of the entire eastern basin from the Aegean Sea in the 1990s (Roether et al. 1996), and recurrent deep water formation at the Rhodes Gyre core observed in 1987 and 1992 (Sur et al. 1992). Shelf processes and episodic events of deep water renewal are also evidently important in the north Aegean Sea (Zervakis et al. 2000). Abrupt changes in the surface circulation and water masses have been repeatedly recognized on decadal time scales in the eastern Mediterranean (e.g., MalanotteRizzoli et al. 1999). In the relatively stable Holocene period there have been significant changes in climate with repeated periods of enhanced productivity associated with surface water budgets (especially in relation to dramatic changes in the Nile outflow) reflected in the hydrographic structure of the eastern Mediterranean (Schilman 2001). In comparison, the Black Sea is considerably less mixed. Wind and boundary mixing processes control the permanent pycnocline in the Black Sea (Özsoy and Ünlüata 1997). Below the pycnocline, both the temperature and the salinity increase towards the bottom, their competing effects on static stability leading to double diffusive convection driven by lateral sources of Mediterranean water entering from the Bosphorus and modified along the continental shelf. The present day penetration of anomalous waters is limited to the upper 500m and does not reach the bottom of the Black Sea. Saline water intrusion from the Aegean Sea fills and ventilates the three interconnected deep basins of the Marmara Sea, which could otherwise become anoxic as there is little exchange across the sharp interface separating the main water body from the surface layer (Beşiktepe et al. 1993, 1994). The surface water injected into the northern Aegean from the Dardanelles Strait is thought to have a similar function in controlling windinduced mixing there. The Black Sea is the largest anoxic basin of the world, with a Holocene history of transformation from a freshwater lake to a sea with low salinity. Recurrent plankton productivity events have occurred at intervals of a few hundred years within the last millennium (Figure 10), recorded in bottom sediments when the basin has evolved to sufficiently saline conditions allowing Emiliana Huxleyi blooms (Hay and Honjo 1989). A series of recent ecosystem changes has occurred as a result of the freshwater and increased nutrient supplies and poor ventilation (Özsoy and Ünlüata 1997). The sea level, besides being a good indicator of climatic fluctuations, is a sensitive measure of climate in enclosed and semi-enclosed seas driven by large rivers. In the Black Sea, sea level is controlled by atmospheric pressure and the total water budget, which are both highly variable themselves (Özsoy and Ünlüata 1997; Özsoy et al. 1998). Basin hydrometeorology driving sea level appears linked to ENSO and Monsoon regimes in

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the Caspian Sea (Bengtsson 1998; Arpe and Roeckner 1999) and to NAO in the Black Sea (Stanev and Peneva 2002). The recent sea-level change in the neighboring Caspian Sea is demonstrative of the magnitude of problems that could occur. The abrupt sea level drop in the 1930s and rise in the 1980s, by more than 2m each time, flooding the surrounding flat lands, is perhaps an isolated decadal event within the observed past (Radionov 1994) and forecasted future changes (Arpe and Roeckner 1999) of even greater magnitude. Sea-level fluctuations have been linked with subsequent changes in ventilation and biochemical cycles alternatively leading either to anoxia or well-mixed conditions (Kosarev and Yablonskaya 1994; Dumont 1998; Kosarev and Toujilkine 2002). It is not known whether the Holocene periods of increased productivity in Figure 2 were a consequence of sea level variations, but much greater impacts on both the Aegean and the Black seas are known to have occurred in the Quaternary (Ryan et al. 1997; Aksu et al. 1999). Exchange through straits and transports between basins play significant roles in short-and long-term modulation of climate in each basin and the coupling between them. It is implied that the hydrological and biogeo– chemical cycles also depend critically on sub-basin-scale, meso-scale and

Fig. 10. Ca/Al ratio of core samples from the eastern and western Black Sea, representing the ratio between biologically produced/terrigenous deposition of particles, as a function of core depth and time in years (top scale) (after Hay and Honjo, 1989)

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inter-basin exchanges and land-ocean-atmosphere interactions including the effects of coastal processes. The Turkish Straits System (the Straits of Dardanelles, Bosphorus and the Sea of Marmara) is a highly stratified (fjord-like) two-layer system, acting as a buffer for waters flowing in both directions between the Black and Aegean seas. Mixing and turbulent entrainment processes in the two straits and at their junctions dominate the evolution of the salinity of waters transported away from their original reservoirs (Beşiktepe et al. 1993, 1994; Gregg and Özsoy 1999; Gregg et al. 1999; Özsoy et al. 2001). Straits conveying waters of foreign origin, as well as freshwater from large rivers act as buoyancy sources for the adjacent basins of the Aegean, Marmara and Black seas. The complex topography of the straits, continental shelf, slope and abyssal regions play important roles in channeling and the subsequent transformation of waters of different origin. The complexity of the marine and atmospheric climate processes, and the scarcity of some resources in the region, calls for integrated scientific investigations. Networks of observing systems, shared databases and models integrated through supporting institutions are essential for answering key questions with respect to the impact of climate change in the region, and to enable environmental prediction and management from the perspective of global change.

References Aksu AE, Hiscott RN, Yaşar D (1999) Oscillating Quaternary water levels of the Marmara Sea and vigorous outflow into the Aegean Sea from the Marmara Sea-Black Sea drainage corridor. Marine Geology 153: 275–302 Arpe K, Roeckner E (1999) Simulation of the hydrological cycle over Europe: Model validation and impacts of increasing greenhouse gases. Advances in Water Resources 23: 105–119 Bengtsson L (1998) Climate modeling and prediction: Achievements and challenges. WMO/IOC/ICSU Conference on the WCRP Climate Variability and Predictability Study (CLIVAR), UNESCO, Paris, 2–4 December 1998 Beniston M (2004) The 2003 heat wave in Europe: A shape of things to come? Geophys Res Lett 31: L02022 Beşiktepe Ş, Özsoy E, Ünlüata Ü (1993) Filling of the Sea of Marmara by the Dardanelles Lower Layer Inflow. Deep-Sea Res 40: 1815–1838 Beşiktepe Ş, Sur Hİ, Özsoy E, Latif MA, Oğuz T, Ünlüata Ü (1994) The Circulation and Hydrography of the Marmara Sea. Prog Oceanogr 34: 285–334 Gregg MC, Özsoy E, Latif MA (1999) Quasi-Steady Exchange Flow in the Bosphorus. Geophysical Research Letters 26: 83–86

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Gregg MC, Özsoy E (1999) Mixing on the Black Sea Shelf North of the Bosphorus. Geophysical Research Letters 26: 1869–1872 Gregg MC, Özsoy E (2002) Flow, Water Mass Changes and Hydraulics in the Bosphorus. J Geophys Res 107(C3): 10.1029/2000JC000485 Hay, BJ, Honjo S (1989) Particle Deposition in the Present and Holocene Black Sea. Oceanography 2(1): 26–31 Kosarev AN, Tuzhilkin VS (1995) Climatological thermohaline fields of the Caspian Sea. Moscow University Press and State Oceanographic Institute, Moscow (in Russian) Kosarev AN, Yablonskaya EA (1994) The Caspian Sea. Backhuys Publishers, Haague, 259 pp Malanotte-Rizzoli P, Manca B, d’Alcala MR, Theocharis A, Brenner S, Budillon G, Özsoy E (1999) The Eastern Mediterranean in the 80s and in the 90s: The Big Transition in the Intermediate and Deep Circulations. Dyn Atm Oceans 29: 365–395 Nixon SW (2003) Replacing the Nile: Are anthropogenic nutrients providing the fertility once brought to the Mediterranean by a great river? Ambio 32(1): 30– 39 Oğuz T (2003) Climatic Warming Impacting Pelagic Fish Stocks in the Black Sea Due to an Ecological Regime Shift During Mid-1990s. Globec International Newsletter 9(2): 3–5 Özsoy E, Beşiktepe S (1995) Sources of Double Diffusive Convection and Impacts on Mixing in the Black Sea, pages 261–274. In: Brandt A, Fernando HJS (editors), Double-Diffusive Convection, Geophysical Monograph 94, American Geophysical Union, 334 pp Özsoy E, Latif MA (1996) Climate Variability in the Eastern Mediterranean and the Great Aegean Outflow Anomaly. International POEM-BC/MTP Symposium, Molitg les Bains, France, 1–2 July 1996, pp 69–86 Özsoy E, Ünlüata Ü (1997) Oceanography of the Black Sea: A Review of Some Recent Results. Earth Sci Rev 42(4): 231–272 Özsoy E, Latif MA, Beşiktepe S, Çetin N, Gregg N, Belokopytov V, Goryachkin Y, Diaconu V (1998) The Bosphorus Strait: Exchange Fluxes, Currents and Sea-Level Changes. In: Ivanov L, Oğuz T (editors), Ecosystem Modeling as a Management Tool for the Black Sea. NATO Science Series 2: Environmental Security 47, Kluwer Academic Publishers, Dordrecht, vol 1, 367 pp + vol 2, 385 pp Özsoy E (1999) Sensitivity to Global Change in Temperate Euro-Asian Seas (the Mediterranean, Black Sea and Caspian Sea): A Review. In: Malanotte-Rizzoli P, Eremeev VNT (editors), The Eastern Mediterranean as a Laboratory Basin for the Assessment of Contrasting Ecosystems. NATO Science Series 2, Environmental Security 51, Kluwer Academic Publishers, Dordrecht, pp 281–300 Özsoy E, Di Iorio D, Gregg M, Backhaus J (2001) Mixing in the Bosphorus Strait and the Black Sea Continental Shelf: Observations and a Model of the Dense Water Outflow. J Mar Sys 31: 99–135

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Roether W, Manca BB, Klein B, Bregant D, Georgopoulos D, Beitzel V, Kovacevich V, Lucchetta A (1996) Recent changes in Eastern Mediterranean deep waters. Science 271: 333–335 Ryan, WBF, Pitman III WC, Major CO, Shimkus K, Maskalenko V, Jones GA, Dimitrov P, Görür N, Sakinç M, and Yüce H (1997) An abrupt drowning of the Black Sea shelf. Mar Geol 138: 119–126 Schilman B, Almogi-Labin A, Bar-Matthews M, Luz B (2001) Late Holocene productivity and hydrographic variability in the eastern Mediterranean inferred from benthic foraminiferal stable isotopes. Paleoceanography 18 (3): 1064, doi:10.1029/2002PA000813 Sur Hİ, Özsoy E, Ünlüata Ü (1992) Simultaneous Deep and Intermediate Depth Convection in the Northern Levantine Sea, Winter 1992. Ocean Acta 16: 33– 43 Stanev EV, Peneva EL (2002) Regional sea level response to global climatic change: Black Sea examples. Global and Planetary Changes 32: 33–47 Zervakis V, Georgopoulos D, Drakopoulos PG (2000) The role of the North Aegean Sea in triggering the recent Eastern Mediterranean climatic changes. Journal of Geo-physical Research, 105 (C11): 26103-26116

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3 An Outlook on the European Gas Market*

J. Kjärstad**, F. Johnsson Department of Energy and Environment, Energy Conversion Chalmers University of Technology SE-412 96 Göteborg, Sweden **Corresponding author: Phone: +46 31 772 1454 E-mail: [email protected]

Abstract: This chapter discusses prospects for increased consumption of natural gas within the European Union (EU). Particular emphasis is on the power generation sector where the main growth in demand is expected to occur, on supply and infrastructural constraints and on the future price of natural gas. It can be concluded that EU gas-import needs will increase substantially up to 2010, driven by a combination of rapid increase in demand in southern Europe and declining production in northern Europe. As a result there will be an increased import dependency which will affect security of supply, not only in the gas sector but also in the electricity sector. However, supplies of gas are plentiful, at least in the medium term, and a number of new countries will emerge as substantial suppliers to the European gas market, increasing competition and possibly leading to a situation of oversupply between 2008 and 2012, which in turn may create a downward pressure on spot market gas prices. In addition, the US market may experience considerable oversupply between around 2008 and 2015, reducing the possibilities of conducting arbitrage between the two main markets in the Atlantic basin. On the other hand, the oil price will continue to be a major determinant of the gas price and a tight oil supply/demand balance will create an upward pressure on the gas price. Large investments will be required in order to extract and transport the gas to the markets and, in particular, it can be questioned to what extent Russia will manage to raise production capacity in the short term. Also, the producing countries are prone to invest according to national interest rather than to supply an increasing global demand. Problems related to gas production capacity together with abundant supply to the EU markets and increased competition points to Russia losing market share in the short run. In the long run, it can be expected that the EU’s dependency on gas from Russia and the Middle East will increase.

* This chapter was written and submitted in 2005. E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 33–60. © 2008 Springer.

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3.1 Introduction Restrictions on CO2 emissions, the nuclear phase-out announced by some member states, high emissions from coal-based generation and barriers to rapid development of renewable generation, are factors that seem to force the EU into a high dependency on natural gas. The EU is facing a growing dependency on foreign, often politically unstable “closed” regions, not only for the supply of oil but also for the supply of gas. As a consequence, the European electricity and heat supply will be increasingly dependent on the supply of gas from these regions. Various papers related to the development of natural gas market globally and within Europe are available (e.g., ECN 2003). Still, there is a lack of studies that are based on a detailed description of the current and planned natural gas infrastructure combined with an analysis of the energy system with infrastructural limitations and possibilities, such as location and age structure of the power generation plants. This chapter is part of a broader study with the aim to develop a methodology for a detailed analysis of possible development paths for the European energy system. As basis for this work, a comprehensive database of the European power generation system has been developed, including fuel infrastructure and CO2 storage options (Kjärstad and Johnsson 2004). Thus, part of the work deals with mapping the international fuel market. Of special importance is the natural gas market since, as mentioned above, a substantial growth in demand for natural gas can be foreseen over the coming decades (e.g., IEA 2004a). There are no up-to-date review papers on the European gas market, covering demand and supply as well as issues on price and financing the expansion in the natural gas infrastructure. In order to understand the prospects of increased use of natural gas in the EU and thereby to evaluate various pathways for the EU energy system, the global gas market must be understood with respect to development of the power generation sector (where the main growth is expected to occur), infrastructural constraints, financing and future price of natural gas. The aim of this chapter is to discuss these issues in the context of an expected increased use of natural gas within the EU. A detailed mapping of the current gas infrastructure forms the basis of the work.

3.2 Demand IEA (2004a) expects primary gas demand in EU-25 to increase by 1.8% on average over the period 2002 to 2030, reaching 649 Mtoe in 2030 and in-

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creasing the share of gas in Total Primary Energy Consumption (TPEC) from 23% to nearly 32%. The report “European Energy and Transport Trends to 2030” (EC 2004) suggests an average annual growth rate within EU-25 of 1.7% over the same period, while for Europe and Central Europe Cedigaz (2002) estimates an annual growth rate of around 3% up to 2010. Similarly, ExxonMobil (2004) projects European gas demand to increase by 2.5% per annum (p.a.) between 2002 and 2020, yielding a demand of around 735 bcm in 2020. BP (2004b) projects European gas demand to increase by some 2.7% p.a. from 2003 to 2015, yielding a demand of around 740 bcm in 2015, although it is not clear what countries ExxonMobil and BP include in “Europe.” Global annual demand for natural gas increased on average by 2.2% between 1990 and 2004, reaching 2420 Mtoe in 2004, of which North America and the former Soviet Union together accounted for 51% of the total demand. The largest growth was noted in the Middle East and Asia Pacific regions where consumption on average increased by more than 6% p.a. over the period. Corresponding growth in the EU amounted to 3.5% p.a. over the period reaching 420 Mtoe in 2004. Gas consumption in the UK and Germany, which are the largest consumers in Europe, was 88 and 77 Mtoe, respectively, while Spain noted the fastest growth rate, almost 12% p.a. between 1990 and 2004 (BP 2005). The share of natural gas in global hydrocarbon production (marketed) has increased from 30% in 1980 to 39% in 2003 indicating the increased importance of gas. Globally, marketed production increased by 2.1% p.a. between 1990 and 2004, reaching 2420 Mtoe. As for demand the largest annual increase in production was noted in the Middle East, with an annual increase of 7.5% on average over the period. There was also a considerable growth in Africa and Latin America over the period (1990–2004), with annual growth rates just below 6% on average while production in North America grew more moderately, with a growth rate of 1.2% p.a. Production in the EU was 194 Mtoe in 2004, corresponding to 8% of the world total and with an average annual growth of 2.2% over the same period. Annual gas production decreased rapidly in the former Soviet Union between 1990 and 1997, from 685 to 565 Mtoe, but has since then recovered and reached 667 Mtoe in 2004 (BP 2005). The bulk of the increased demand for natural gas in the EU is expected to come from increased use of gas for power generation. IEA (2004a) projects that gas-based generation will increase by 3.7% on average per year over the period 2002 to 2030, from 521 TWh in 2002 to 1458 TWh in 2030, increasing the share of gas in power generation from 15% to 34%. The EE&TT report expects a similar growth in gas share as primary fuel for power generation (an increase from 18% in 2000 to almost 35% in 2030).

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J. Kjärstad, F. Johnsson 180 160 140 67.5

GWe

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Fig. 1. Capacity distributed by fuel and age for existing and planned thermal plants in EU-25 (biomass/waste not included) as obtained from the Chalmers Power Plant database (Kjärstad and Johnsson 2004)

3.2.1 Power Generation The increased use of gas as a fuel in the power generation sector over the last decade can be observed from the capacity of existing and planned thermal power plants distributed by fuel and age as shown in Figure 1 (thermal plants fuelled by biomass/waste are not included). The data in Figure 1 has been taken from the Chalmers Power Plant database (Kjärstad and Johnsson 2004), which contains all existing and planned power plants within EU-25 with a capacity of at least 100 MW. The database lists all power plants down to block level with respect to fuel, age, capacity, technology and current status (e.g., in operation versus in reserve). There are currently 105 GW fossil fuelled power plants either under construction or planned within EU-25, of which 88 GW will be fuelled by natural gas. In Figure 1 planned Italian thermal plants are shown as a separate bar in large part because few of these are actually expected to be commissioned. For instance, only around 8 GW additional gas capacity seems feasible in Italy up to 2010 and another 16 GW between 2010 and 2020. Furthermore, a number of large gas plants have been planned for several years, but without any indication of actual implementation (e.g., the 1.2 GW Lubmin CCGT in Germany and the 1.6 GW Staythorpe CCGT in the UK). Some additional projects will probably emerge from now and up to 2010, adding more GW gas capacity but at the same time around 5 GW will have reached 40 years, lifetime. Thus, it seems as if only 40 to 45

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GW net gas capacity will be added up to 2010, which is fairly equal to the IEA’s assumption (2004a) of 46 GW additional gas capacity. However, the IEA’s projections are for the period between 2002 and 2010 and another 14 GW gas capacity entered into commercial operation in 2003/04. Assuming 59 GW of additional gas-fired units between 2005 and 2010 (45 GW between 2005 and 2010 plus the 14 GW put into operation in 2003/04) and exemplifying with two average load hours at maximum ratings, 4380 and 6000 hours, give, respectively, 258 and 354 TWh of additional gas-based generation in 2010 relative to 2002. Applying an average conversion efficiency of 57% yields a corresponding increase in gas demand of 42 and 57 bcm, assuming an average heating value of natural gas of 39 PJ/bcm (Eurogas 2005). Most of the 59 GW gas-fired plants expected to be commissioned between 2003 and 2010 are located in Italy (13.2 GW), Spain (20.5 GW) and the UK (12.2 GW). Applying the same parameters as above for these plants implies an additional annual gas demand for power generation of 9 and 13 bcm in Italy, 14 and 20 bcm in Spain and 9 and 12 bcm in the UK. Total gas consumption in 2004 was 78.4 bcm in Italy, 29.5 bcm in Spain and 98.3 bcm in the UK, according to Eurogas (2005). After 2010 at least three factors will have a decisive influence on the continued growth in gas demand in Europe:1 • EU decisions on CO2 emission restrictions from 2013 onwards; • The nuclear phase-out in some member states; and • Storage of CO2 in subsurface reservoirs. The European Council set a possible guideline for further greenhouse gas emission restrictions in the EU after 2012 at the 2005 spring session in Brussels, indicating 15 to 30% reductions relative to 1990 (EC 2005). At the same time four member states, Belgium, Germany, Spain and Sweden,2 have decided to phase out 43.4 GW net nuclear capacity generating some 325 TWh (net) CO2-free electricity. Two member states, Belgium and Germany, have decided upon a timeframe for the phase-out with the bulk of their plants to be decommissioned between 2010 and 2025. Additionally, some 80% of aging UK nuclear capacity will be phased out by 2015 1

2

Based on the current market situation there are no clear indications that renewables will reach a market penetration high enough to significantly influence the growth in demand for gas over the next decades as discussed in this chapter (i.e., until 2030). Sweden has already closed two nuclear reactors, each with a capacity of 600 MW. However, there are plans to increase capacity on the remaining reactors by nearly 1 GW by 2008/2010.

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without any decisions yet being taken on new installations. In other words, including 80% of UK nuclear generation, some 400 TWh CO2-free electricity will have to be replaced. Assuming the nuclear plants being replaced by state-of-the-art coal plants increase CO2 emissions with 300 Mt while being replaced by state-of-the-art gas combined cycles increases emissions with 120 Mt. If instead assuming the replacement equally distributed between coal, natural gas and renewables the emissions will increase by some 140 Mt. The above indicates that (i) the nuclear phase-out may be reconsidered, and (ii) if the nuclear phase-out is being carried out it will most probably lead to a further increase in natural gas-based generation. Storage of carbon dioxide in subsurface reservoirs such as gas and oilfields and aquifers will allow for coal-based generation under stricter emission restrictions, and increase security of supply through increased diversification of fuels and through the use of an abundant indigenous fuel source. It has been estimated that Europe has a large storage potential in oil and gas fields and aquifers although the bulk of the known storage potential is located in the North Sea with substantial storage potential also in Germany, Italy and the Netherlands. Main barriers to storage are the high cost of separating CO2 from the flue gases, storage security and lack of a legal framework. In addition, for onshore storage public acceptability may be an issue. CO2 injected into an oil reservoir will, under certain conditions, cause the oil to swell and increase its mobility and thus enhance oil recovery which, in turn, may offset some of the costs. CO2 Enhanced Oil Recovery (CO2 EOR) has been successfully applied in onshore oil fields in the USA for many years but appears to be more complicated offshore. Several feasibility studies have been carried out on CO2 EOR in North Sea oil fields but in all cases the costs have been found to be prohibitive; in particular detailed studies have been done for the Forties and the Gullfaks field in the UK and Norway respectively, and in both cases the costs were found to be too high for commercialisation (BP 2002; Statoil 2004). Furthermore, for optimal oil recovery, the CO2 needs to be injected some years ahead of depletion and most oil fields in the North Sea are now being rapidly depleted, which implies that time is running out for CO2 EOR as an option for cost reductions. In particular, lignite is being seen as a strategic indigenous fuel source in Germany, Greece, Hungary, Poland and the Czech Republic, with total proven lignite reserves of around 52 Gt by the end of 2003, of which 83% is located in Germany (BP 2004a). Aggregated, these five countries generated close to 300 TWh lignite-based electricity in 2002, representing between a quarter and 66% of total country-specific generation (Eurostat 2004). Since lignite is considerably cheaper to extract than hard coal and production in Europe has remained competitive so far, it seems likely that

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lignite-based generation will continue in the foreseeable future depending however on the future cost of CO2 emissions and whether capture and storage of CO2 will be applied. Reserves of hard coal of considerable size are located in the Czech Republic, Germany, Poland and in the UK, with total reserves amounting to some 46 Gt by the end of 2003. Three countries, Germany, Poland and the UK have a considerable domestic production, which amounted to 95 Mtoe in 2002 while the rest of the EU produced some 31 Mtoe. However, the EU also imported 123 Mtoe of hard coal in 2002 and in total EU-25 generated 616 TWh coal-based electricity in 2002, of which 338 TWh was in Germany, Poland and in the UK (Eurostat 2004). In other words, coal is important as a fuel for electricity generation in countries other than those that have large indigenous supplies, and although subsidies for domestic production are set to gradually decline, the option of importing the coal remains. Continued use of hard coal will depend on future CO2 emission restrictions and the option of subsurface storage of CO2 together with the nuclear phase-out, considered both from an environmental as well as from a security of supply perspective. Thus, in a CO2 constrained system, the rate of success of application of CO2 capture and storage will influence the amount of coal and lignite being used, depending on the cost of CO2 emissions. This will in turn influence the demand for natural gas. 3.2.2 Demand Gap The EU produces only around 46% of its gas consumption. Around 230 bcm was imported by pipeline in 2004, 53% from Russia, 32% from Norway and almost 15% from Algeria. Another 36 bcm was imported as liquefied natural gas (LNG), mainly from Africa (85%) while a smaller share (15%) was imported from the Middle East (BP 2005; NPD 2004). It is expected that natural gas production will fall within Europe and further enhance the supply gap over the coming decades, although the current high gas prices may extend reserves slightly and thus prolong production. Main gas-producing countries within the union are the UK and the Netherlands but Germany, Italy, Denmark, and Poland also produce substantial amounts of gas. Total EU gas production was around 240 bcm in 2003 of which the UK (108 bcm) and the Netherlands (73 bcm) accounted for 76%. The IEA (2004a) expects EU gas production to fall to 225 bcm in 2010 and further down to 147 bcm in 2030, increasing the supply gap from 233 bcm in 2002 to 342 bcm in 2010 and further to 639 bcm in 2030. The EE&TT report (EC 2004) expects no decline in gas production up to 2010

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but a 40% decline between 2010 and 2030 and a supply gap in 2030 slightly lower than that projected by the IEA. The IEA’s projections of demand, indigenous production and supply gap are illustrated in Figure 2. In 2002, the six largest gas-consuming countries within the union, i.e., Germany, France, Italy, the Netherlands, Spain and UK, accounted for almost 92% of gas production, 80% of primary gas consumption and 80% of electricity generated by natural gas within EU-25 (Eurostat 2004). Preliminary figures from Eurogas (2005) suggest that the share in primary gas consumption from these six countries has increased even further, to 89% in 2004. Additionally, it is expected that gas production in Germany, Italy and the UK will decline substantially over the next two decades. It can be concluded that the major growth in gas demand in EU-25 that can be expected over the next decades is concentrated to two zones, here termed the northern and southern gas zones. The UK and the Netherlands together with Belgium and Germany constitute the northern gas zone for which the forecasted supply gap is primarily driven by declining production (also increase in demand), mainly in the UK but also to some extent in Germany. As indicated previously, substantial increase in demand of gas is almost certainly to depend on the development within the power sector, i.e., nuclear phase-outs and stricter CO2 emission constraints, after 2010. It is for instance expected that 16.8 GW net nuclear capacity will be phased out in Germany and in the UK between now and 2015. In the southern 900

Demand: +1.8% p.a. on average

800 700

bcm

600

Supply Gap 2030:

500 400

639 bcm

233 bcm

300 200 100 0 2002

240 bcm

147 bcm 2010

2020 Production

2030

Net Imports

Fig. 2. Forecasted natural gas supply gap in EU-25 between 2002 and 2030. Data from the IEA (2004a)

An Outlook on the European Gas Market 41

gas zone, which includes France, Italy, Spain, Portugal and Greece, the supply gap is foremost demand driven and mainly related to the power sector in Italy and Spain, although Greece, France and Portugal are also expected to gradually increase the share of gas in power generation. Common for all of the above mentioned member states, except for Greece, is the lack of indigenous resources and thus fewer incentives for using other fuels than gas in a liberalized market under CO2 emission constraints as long as the price of CO2 emissions remains low. In Spain, the demand for gas may pass through a second period of increased growth if the nuclear phase-out is being carried out. This will not occur until after 2020, however, when the bulk of Spanish nuclear plants is expected to be decommissioned. In Italy, the demand for gas in the power sector may slow down if the nuclear option is reconsidered,3 which in turn may be induced by stricter CO2 emission restrictions after 2012. During the winter season 2004/05 shortages in gas supply occurred in Italy, France and Spain and supplies were cut to interruptible customers in both France and Spain, mainly power plants. But according to Gas de France (GdF 2005) and Enagas (2005), generation was never affected as the power plants switched fuel to distillate oil. Enagas in Spain had to cut supplies twice during the winter. The first time in December 2004 was caused by a failure in the Asco nuclear plant as well as a failure on a compressor station on the Algerian pipeline connection. And the second time in March 2005 was caused by much higher demand than expected. In Italy the shortage was caused by problems in bringing the Greenstream pipeline up to its full capacity, a cut of interruptible supply in the TENP pipeline from Germany and exceptionally cold weather (MAP 2005; Platts 2005). GdF said the disruptions in supply were due to the cold weather alone, claiming that it was an exceptional winter with respect to the temperature. Nevertheless, the supply disruptions during the winter season 2004/05 clearly demonstrate the vulnerability in the natural-gas infrastructure system, particularly in Spain and France. Although Spain had an import capacity in 2004 of around 1.7 times 2004 imports, the limited pipeline import capacity, the poor domestic gas storage potential and the rapid increase in demand are apparently not sufficient to cover peak demand if a major failure occurs on one of the main import connections. During the winter 2004/05 new peak records in de3

According to the IEA (2003b), the Italian government acknowledges the role nuclear power could play to diversify the energy mix. And although the likelihood of local authorities clearing the way for additional nuclear sites is limited in the near future, the IEA recommends that Italy consider reopening a public debate on the nuclear energy option.

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mand were noted on five occasions, reaching its highest level of 1503 GWh on January 27th (2005), which is very close to the Enagas maximum nominal daily supply capacity of 1526 GWh. Additionally, the regasification terminal in Bilbao has a nominal daily capacity of 220 GWh but supplies from the Bilbao plant are partly allocated to a nearby industrial complex. Also, the situation may worsen further during 2005 and 2006 when import capacity will decline to around 1.5 and 1.6 times projected demand. From 2007 to 2011 the supply situation should ease considerably with two new LNG terminals entering into operation plus possibly the Medgaz pipeline from Algeria from 2009. The French import capacity is equivalent to around 1.5 times 2004 imports, which amounted to almost 46 bcm. In contrast to Spain, France has a high storage potential with fifteen underground storage sites having a working gas capacity of 11 bcm, equivalent to 85 days of average supply and a daily peak deliverability rate of 214 mcm. The maximum daily supply rate exceeds 400 mcm, more than three times average daily demand, but French gas consumption is characterized by high seasonal variation with winter demand almost six times that of summer demand (IEA 2004b; MEFI 2005).4 Direction Générale de l’Energie et des Matière Premières (DGEMP 2004) projects primary gas demand to increase by 2% annually between 2000 and 2030 in a so-called “trend” scenario, reaching 55 bcm in 2010 and 79 bcm in 2030. In spite of the the new LNG terminal currently being erected at Fos-sur-Mer, the ratio of import capacity to import (assuming no domestic production) will decrease to 1.4 times projected imports in 2010 or average daily demand will increase by 18% while maximum daily supply capacity will increase by less than 5%, from 404 mcm to 423 mcm. Nevertheless, in the short term up to 2010–2015 there are several signs indicating that the EU may be oversupplied with gas. For instance, if demand evolves as forecasted by the IEA (2004a) annual import need may amount to around 340 bcm in 2010 compared to 233 bcm in 2002 (see Figure 2). Algeria, Norway and Russia are the main suppliers to the EU and supplied around 240 bcm of gas to EU-25 in 2003. In total the three countries have targeted exports to reach 385 bcm in 2010 of which the bulk is expected to be supplied to EU markets. Norway has for instance targeted exports to reach 120 bcm by 2010, secured long-term contracts for annual supply of more than 80 bcm by 2007, and additionally the Langeled pipeline with a capacity of around 20 bcmpy will start supplying the UK with gas from 2007. Russia has targeted 180 bcm in annual supply to Eu4

Maximum daily supply rate based on an import capacity of 186 mcm/day plus a peak deliverability rate of 214 mcm/day from storage sites (IEA 2004c).

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rope by 2010. Applying the same proportion for gas supplied to the EU and the rest of Europe as in 2003 implies that Russia will supply around 150 bcm to the EU in 2010, up from 114 bcm in 2003. Algeria has targeted 85 bcm in total exports by 2010 and supplied around 53 bcm to the EU in 2003. The Medgaz pipeline will increase annual exports to the EU by 8 bcm and BP has together with Sonatrach booked the entire capacity on the Isle of Grain LNG terminal in the UK (4.4 bcmpy) for 20 years, implying that Algeria at least will supply some 65 bcm annually to the EU in 2010. Thus it can be expected that the three main suppliers will supply around 315 bcm to the EU market in 2010, around 25 bcm below the above mentioned import need projected by the IEA. However, at the same time EU member states have signed long-term contracts with other suppliers for an annual supply of at least 73 bcm of LNG as well as 8 bcm of piped gas from Libya. It should be noted however that Take or Pay (ToP) obligations are likely to be considerably lower than the Annual Contracted Quantity (ACQ), e.g., ENI (2005) quotes a ToP obligation of 85% of ACQ. UK gas production forecasts have been revised upwards several times recently due to high gas prices. According to the latest projections from the Department of Trade and Industry (DTI, March 2005) gas production will range from 85 to 100 bcm annually in the period 2005 to 2007 and then gradually decline to between 55 and 70 bcm per year in 2010. Applying demand projections by DTI (+ 0.5% p.a.) and National Grid Transco (NGT) (+ 1.4% p.a.), excluding producers’ own use, implies that UK gas demand will increase to 106 to 116 bcm in 2013, not including exports to Ireland which by NGT has been estimated to range between 5 to 6 bcm annually over the same period (JESS 2004; NGT 2004). At the same time, several new import projects are either under construction or at an advanced stage of development. This may take UK gas import capacity up from the current around 20 bcm per year to more than 120 bcmpy (technical capacity) by 2010, of which more than 40 bcmpy is LNG. Assuming the Ormen Lange pipeline will run at 80% of its technical capacity and that the LNG terminals will have a ToP obligation of 75% of ACQ, this will create a significant oversupply between 2008 and 2010, possibly extending up to 2012 depending on domestic production. Brattle (2005) suggests that the Italian market will be considerably oversupplied from 2004, and extending up to 2015. However, this is partly based on lower demand projections (Brattle) than the demand projected by MAP (2005) and Edison (2005) and partly based on a high level of contracted annual deliveries of 122 to 125 bcm from 2008 to 2012. According to the Chalmers Fuel database (Kjärstad and Johnsson 2005) ENI, Edison and Enel together have an ACQ of just above 100 bcm annually from 2008. Additionally, smaller companies have contracted around 10 bcm

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from suppliers other than the three mentioned above, which gives a total ACQ of 110 bcm in 2010. Applying a ToP level of 85% of ACQ on the contracts recorded in the Chalmers database gives 94 bcm minimum contracted annual supply in 2010, very close to the demand projected by MAP (2005) and Edison (2005). Assuming the Galsi pipeline plus two LNG terminals entering into operation by 2010 will bring import capacity up to around 350 mcm/day, i.e. a total technical capacity of 128 bcmpy, which is very close to the ACQ claimed by Brattle (2005) as well as import capacity required by 2008 as forecasted by Snam Rete Gas (SRG 2005). As suggested above, the main growth in import need up to 2010 is expected to come from the UK and Italy/Spain. Norwegian gas is competitive on the northern gas market with break-even costs for gas supplied from the Ormen Lange field to the UK market estimated at US $ 1.75/mmbtu by ExxonMobil (2004) while gas from North Africa is competitive on the Spanish and Italian markets, indicating that Russia may have difficulties in increasing its exports to the EU in the short term (there are several other factors indicating that Russia will encounter problems in maintaining its short-term market share in Europe — see below).

3.3 Supply 3.3.1 Resources Proven global gas reserves as reported by BP (2005) have increased by 37% since 1990 and stood at almost 180 Tcm on the first of January 2005, in spite of a global withdrawal over the same period of more than 34 Tcm.5 Current reserves are equivalent to 67 years of 2004 consumption. The Middle East and the former Soviet Union together hold 73% of proven reserves, mainly divided between three countries: the Russian Federation with almost 27% of global reserves, and Iran and Qatar, each with around 15%. The European continent altogether holds around 3% of proven reserves, of which 50% is located in two non-EU countries: Norway (45%) and Romania (5%) (BP 2005). United States Geological Survey (USGS) periodically conducts worldwide petroleum assessments estimating the amount of conventional gas that remains to be found. Their latest assessment (USGS 2000) estimated an ultimate recovery of 436 Tcm divided into cumulative production of 50 5

According to Cedigaz (2005) proven gas reserves are likely to be almost 15% lower if all countries based their reserve assessments on international definitions.

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Tcm, proven reserves of 136 Tcm,6 104 Tcm as reserve growth in existing reservoirs and 147 Tcm that remains to be discovered. Cedigaz (2005) estimates remaining ultimate conventional resources to range from 500 to 550 Tcm while IHS Energy (2005) estimates 335 Tcm for the same. Most estimates of undiscovered resources are of course highly uncertain and should be treated with great care. For instance the Norwegian Petroleum Department (NPD 2005) estimates undiscovered resources in Norway to be 1.9 Tcm, i.e., only around 37% of the USGS mean estimate. Specifically, NPD has reduced previous estimates of potential additional reserves in the Norwegian Sea by 30% to 0.8 Tcm. This was caused by increased geological knowledge of the best explored areas together with reduced expectations for the deepwater areas. 3.3.2 Import of Gas Although Algeria, Norway and Russia will continue to be the main suppliers to the EU well into the next decade, substantial volumes can be expected to be supplied from a number of additional countries in Africa and the Middle East. In addition, the Caspian states may emerge as suppliers, but most probably not until after 2010. While Russia will likely struggle to increase its share in total exports to Europe over the next decade, North African suppliers and Norway will have every possibility to increase their market share taking into consideration their proximity to markets with large growth potential (Italy, Portugal, Spain, and Greece for North Africa and Germany and the UK for Norway). After 2020 it seems probable that the Middle East will emerge as a main supplier (together with Russia), mainly through increased imports from Iran and Qatar. In addition, Saudi Arabia and Iraq may by that time have started exports to Europe. It seems unlikely that Russia will be able to increase exports to the EU substantially in the short term. There are several reasons for this: • The rapid decline in production from the super giant fields of Urengoi, Yamburg and Medvezhye; • Large investment requirements in existing gas infrastructure; • Increasing gas production costs; • Expanding to the Far East and North American markets; and • Russian gas is not competitive on main European growth markets.

6

USGS uses 1996 proven reserves and production data taken from IHS Energy, formerly Petroconsultants.

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It is striking that the world’s largest gas company, Gazprom, currently has to purchase gas from its Caspian neighbours in order to meet its supply obligations. One key factor for Russian exports to Europe may be production from independent producers but these producers will need incentives making it worthwhile to increase production levels.7 Nigeria emerged as a substantial supplier to the EU in 2003, supplying some 9 bcm of gas, mostly to Spain and Italy, the latter through a swap deal with Gas de France. Supplies to the EU will increase in the short term as Nigeria has long-term gas contracts for annual supply of around 14 bcm to EU markets from 2006 and extending beyond 2020. Additionally, a number of new LNG projects have been proposed like the four train Olokola LNG plant, the ExxonMobil plant on Bonny Island as well as the Brass River LNG project which together will boost Nigerian LNG capacity to around 80 bcm by 2011 if all projects are realized.8 The Greenstream pipeline from Libya to Italy was inaugurated in late 2004, boosting Libya’s export capacity from 1 bcm to 9 bcm annually. Greenstream has an annual capacity of 8 bcm and the entire capacity has already been contracted by Edison, GdF and Energia Gas. Libya intends to expand gas export capacity and has recently (May 2005) signed an agreement with Shell for an upgrading of the liquefaction plant at Marsa El Braga. The agreement also grants Shell exploration rights in five blocks (20,000 km2) as well as development of a second LNG terminal subject to gas availability. Large parts of Libya remain unexplored and the country is believed to have considerable undiscovered gas reserves in addition to the current proven reserves of 1.3 Tcm. Egypt shipped its first cargoes of LNG in late 2004 when the first unit at the Damietta liquefaction plant entered into operation. The Damietta LNG plant has an annual capacity of 7.6 bcm and is partly owned by Union Fenosa Gas (Spain), which will take 60% of the plant output for 25 years starting in late 2004 to feed its combined cycle power plants in Spain. A second unit with a capacity of around 7 bcmpy is being planned. The first production train at the Idku LNG plant will enter into operation in 2005 with the entire output of 5 bcmpy contracted to Gas de France for 20 years while the second unit of the same size will enter into operation in 2006. Initially, the gas from the second unit will be shipped to the Lake Charles 7

8

Nevertheless, Russia will at least export a volume equal to minimum ToP obligations under existing contracts. Gazprom increased annual production by 5 bcm in 2004 relative to 2003 reaching 545 bcm, and a number of new fields were commissioned which, including increased production at the Zapolyarnoye field, will add around 90 bcm in annual production capacity relative to 2003. Includes the sixth train on Shell’s, ENI’s, and Total’s Bonny Island plant.

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LNG terminal in Louisiana, USA, but starting in 2008 at least 3.2 bcm per year will be shipped to the Brindisi regasification terminal in Italy under a sales contract with Enel. Qatar holds the third largest gas reserves in the world (after Russia and Iran), estimated by BP (2005) to be 25.8 Tcm by the end of 2004. A major part of these reserves is in the world’s largest known gas field, the North Field with estimated reserves of 23 Tcm (IEA 2004c). Qatar currently has two liquefaction plants, Rasgas and Qatargas, each with three production trains and a total capacity of nearly 28 bcmpy. Expansions and a fourth train at the Rasgas plant will take total capacity up to 35 bcmpy by the end of 2005. Another eight trains with a total capacity of 71 bcmpy are being planned which, if all commercialized, will make Qatar the largest LNG supplier in the world. Long-term gas contracts have been signed with Spanish and Italian buyers for annual supply of 6 and 6.5 bcm respectively from 2007 and Qatargas (ExxonMobil/Qatar Petroleum) has also purchased almost 5 bcm of annual capacity rights for 20 years starting in 2007 at the Zeebrugge regasification terminal in Belgium. Finally, ExxonMobil and Qatar Petroleum are together developing the South Hook regasification terminal at Milford Haven, in Wales, which will have an annual capacity of 10.3 bcm and with expected commissioning in 2007. The terminal capacity is expected to be expanded to nearly 21 bcmpy by 2009. Exemption from third party access has already been secured for both units and an EPC contract was awarded in late 2004. An agreement has been signed between the South Hook terminal and ExxonMobil Gas Marketing for sale of the entire output over 20 years. Hence, Qatar may export some 37 bcm annually to the EU starting in 2010. In the long term it seems as though Qatar will considerably increase exports to Europe from a security of supply perspective and also because of its large reserves, which make major long-term investments in bulk pipelines economically attractive. Iran has the second largest gas reserves in the world estimated by BP (2005) to be 27.5 Tcm by the end of 2003. USGS (2000) estimates undiscovered resources to amount to around 9 Tcm, a low estimate according to the IEA (2001) in view of the limited exploration effort carried out so far. Iran has made a number of significant gas discoveries in recent years. According to EIA (2005) 62% of Iranian gas reserves are located in nonassociated fields and have not been developed, indicating that Iran has a significant production potential. Iran produced nearly 122 bcm gas in 2003, of which 28 bcm was reinjected into oil fields and 3.5 bcm was exported, all to Turkey (OPEC 2004). The country is targeting an annual export of around 9 bcm to Europe via Turkey by 2007 (EIA 2005) which seems optimistic given the slow development of export projects so far. On the other hand, Turkey

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seems interested in transiting gas to Europe as the country appears to be considerably oversupplied having entered into several major gas purchasing contracts with Russia, Iran, Azerbaijan, Algeria and Nigeria.9 Several Iranian export pipelines connecting to Turkish lines have been suggested; the Nabucco pipeline through Bulgaria and Romania to Austria; the West Balkan pipeline through Greece and the Balkans; and the Greece-Italy interconnector. The Nabucco pipeline seems to have reached farthest in development with a feasibility study finalised in 2004 and with the start-up of a detailed technical design and environmental assessment study to be carried out in 2005/06. Total pipeline length from the Turkish/Iranian border to Austria will be around 3400 km with an estimated investment cost of € 4.4 billion. Design capacity is 25 to 30 bcm in Turkey and between 17 to 20 bcm in Austria with possible commissioning in late 2009 (OMV 2004). Additionally, an interconnector from Turkey to Greece with an annual capacity of 2 bcm will be commissioned in 2006. Iran is also planning four LNG projects, each with an annual capacity of 10 to 14 bcm and with feed gas to be taken from the South Pars field. The South Pars field is the extension of the North field, the world’s largest gas field, and has estimated reserves of 12 to 14 Tcm. South Pars is due to be developed in some 30 phases and all of the gas produced from the first 10 phases will be for domestic consumption or reinjection into oil fields while phases 11 to 14 are slated for LNG export and possibly a GTL (gas-toliquid) plant. Until recently the development of the various LNG projects has moved slowly and with little real progress. In order to get the LNG projects to move forward and to sell the gas, Iran has offered stakes in some of their oil fields in return for long-term sales agreements. According to Gas Matters (May 2004) Iran’s problems in implementing its various gas projects have been related to bureaucracy, political disagreements and poor commercial terms. Nevertheless, in late 2004 and early 2005 numerous press releases announced that Iran had made large LNG gas deals with India and China.10 European gas companies are involved in all of the four LNG projects but it seems unlikely that any of the gas will be supplied to European markets before 2010 given the slow development of the projects and the apparently good supply prospects to European markets up to 2010. The EIA also questions Iran’s near-term ability to export gas from the 9

Contracted annual supplies will exceed projected consumption by around 10 bcm in 2010. However, contracts for 10 bcmpy will expire in 2011 (BOTAS 2004). 10 In June 2005 Global Insights (2005) and other sources reported that India and Iran had signed a deal for the annual supply of 6.9 bcm over 25 years starting in 2009.

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South Pars field saying that declining Iranian oil fields will need up to five times larger gas injections than what the National Iranian Oil Company (NIOC) has estimated, i.e., this will allocate most of the gas produced at the South Pars field slated for LNG exports (EIA 2005). Azerbaijan will start exporting gas to Turkey in 2006 when the South Caucasus pipeline (SCP) enters into operation. However, as mentioned above, Turkey is oversupplied with gas and will need to re-export some of its gas. But no major export projects are expected to be finalised before 2010 apart from the 2 bcmpy interconnector to Greece. According to the IMF (2003) further gas exports from Azerbaijan seem unlikely given the large share of Production Sharing Agreements (PSA) that have been abandoned. The possibility of increasing the capacity of the SCP in the future with gas from Kazakhstan, Turkmenistan and Uzbekistan with a pipe running across the Caspian Sea exists but it seems more likely that the above mentioned countries will focus on exports to the Far East, most notably China and possibly Pakistan. The IEA 2004 World Energy Outlook projects the construction of both a western as well as an eastern gas pipeline originating in Turkmenistan and carrying gas to Turkey and China respectively between 2020 and 2030. The western pipeline is based on the provision that Turkmenistan lines up additional discoveries between now and 2030. Finally, both Saudi Arabia and Iraq with combined reserves of almost 10 Tcm and large unexplored areas may emerge as suppliers after 2015– 2020. However, for the current decade Saudi Arabia seems to be fully occupied with the Saudi Gas Strategy launched in 2001, which is entirely focused on developing a growing domestic gas industry, foremost in the power sector and in the desalination and petrochemical industry (APRC 2005, Saudi Aramco 2003, 2004a). 3.3.3 EU Gas Import Capacity Current annual (technical) EU import capacity is around 360 bcm, which relative to 2002/03 imports gives an import capacity-to-import ratio of 1.5. In order to keep the ratio at 1.5 relative to the supply gap as projected by the IEA (2004a) the EU will need an import capacity of around 510 bcm by 2010, and then increase the import capacity by around 22 bcm on average annually between 2010 and 2030. Table 1 shows existing and planned import projects that are expected to have been entered into operation by 2011. Pipeline capacity is shown by dispatch country while LNG capacity is shown according to exit country. Only three of the suggested Italian regasification terminals have been included under the assumption that these

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terminals are the ones most likely to have been commercialized by 2011 (planned to be put into operation in 2010 at the latest); the Brindisi terminal and the GNL Adriatico terminal, which have both been approved, together with one of the three terminals proposed by Shell and Gas Natural. The Galsi and the Nabucco pipelines from Algeria and Turkey/Iran respectively have been included while the NEGP pipeline from Russia is assumed to enter into operation after 2010. From Table 1 it can be concluded that EU import capacity will exceed 510 bcm with good margin by 2011. However, another 170 bcm import capacity will still have to be added to the 560 bcm between 2010 and 2020 in order to maintain the capacity ratio at 1.5. Also, as illustrated above, problems may still occur within the individual markets. Table 1. Existing and planned pipeline/gasification capacity (technical) into EU25, bcm/yr Existing

Under Construction

Planned Total Entry points pipes: Algeria 35.3 – 24.0 59.3 Libya 8.0 – – 8.0 Norway 108.2 25.5 4.0 137.7 Russia 154.0 13.0 19.0 186.0 Turkey – – 22.0 22.0 Total Pipes 305.5 38.5 89.0 413.0 Exit points LNG: Belgium 4.6 – 4.6 9.2 France 15.5 – 8.2 23.7 Greece 1.9 – 3.4 5.3 Italy 3.7 – 24.2 27.9 Netherlands – – N/A 0.0 Portugal 4.1 – – 4.1 Spain 26.7 9.4 3.6 39.7 UK – 14.8 25.9 40.7 Total LNG 56.5 24.2 69.9 150.6 Total Pipes + LNG 362.0 62.7 138.9 563.6 Source: Chalmers Fuel Database. Planned Pipelines Algeria: Includes expansion on existing pipes plus Medgaz/Galsi. Planned Pipelines Norway: The Statfjord field linked to the UK FLAG system. Construction Pipelines Russia: Installation of remaining compressors on Yamal 1. Planned Pipelines Russia: New pipe through Ukraine. Planned Pipelines Turkey: The Greece-Italy IC plus Nabucco. Planned LNG Italy: Includes GNL Adriatico, Brindisi and Taranto LNG terminals. Planned LNG Spain: Includes Sagunto and Reganosa plus two smaller terminals on Canary Islands.

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Security of supply on a company basis is maintained partly through long-term sales and purchase contracts and recently also partly through vertical integration along the gas supply chain. Utilities move upwards in the chain; most notable is Eon’s and EdF’s takeover of Ruhrgas and Edison, respectively, while the oil companies are moving downwards in the chain building regasification terminals on all three continents, primarily to secure access to the markets.

3.4 Financing and Prices 3.4.1 Financing Large investments will be required in order to extract and transport gas to markets, and although financing has not yet become a major issue, the large and consistent need of investments that have to be carried out in the future raises concern. The IEA (2004a) has estimated that global investments in the gas sector will amount to nearly US $ 100 billions annually between 2003 and 2030.11 Almost half of all investments are expected to be made in the OECD region illustrating the likelihood of an increase in costs of producing the gas. Average annual investments in Russia and the Middle East will have to increase by 70 to 80% compared to current levels and to more than double in Africa (IEA 2004a). In particular, the authors are concerned with Russia’s and Iran’s ability to finance the expected growth required in future investments in the gas sector. Investments in the gas sector will have to compete with investments in other parts of the energy sector, like the oil and power sector, and it cannot be expected that the supplying countries will direct their investments according to increased demand for gas (and oil) in other parts of the world, but rather these countries will direct their investments according to national interests. Also, investments will have to be made in a timely manner and at appropriate locations along the entire supply chain which for instance according to IHS Energy (2005) may move liquids (oil, NGLs, condensates) production from being demand driven to being supply limited. Foreign Direct Investments (FDI) are today the main source for capital flows to developing countries and transition economies, contributing some 96% to private financing in 2002 and 73% to net long-term capital flows (IEA 2003a). As the need for capital increases it is expected that countries 11

Some energy experts consider that the IEA estimates are far below what is needed, see for instance WoodMac (2005) on Russian investment needs and Simmons (2005b).

5 2 J. Kjärstad, F. Johnsson

will open more, allowing for greater foreign involvement as was recently the case in Libya, Saudi Arabia and Algeria. FDI inflows are expected to increase dramatically in the near future in most countries involved in the export of gas to Europe as major new projects enter into the construction phase. Russia may encounter severe problems in raising the necessary capital. Gazprom’s returns are prone to decline as a result of increased costs for producing the gas and as a result of increased competition, and apart from the large investments required to increase the current production level which is declining rapidly, Gazprom will also have to make large investments to upgrade its current gas infrastructure. Investors’ confidence in Russia is currently low, partly because of recent announcements from the Ministry of Natural Resources, which effectively excludes majority-owned foreign companies from bidding on some major resource projects, and partly due to the events surrounding Yukos and the Rosneft/Gazprom merger. As mentioned above, Iran, together with Russia and Qatar, will probably become major suppliers of gas to the EU in the long term. However, Iran has encountered several problems in realising the various gas export projects and according to the United Nations Conference on Trade and Development (UNCTAD 2004) FDI is very low, on average US $ 92 million per annum between 1998 and 2003, which can be compared to average annual investments of US $ 700 to 800 million in Algeria and Egypt or to US $ 1900 million in Kazakhstan over the same period. This reflects the low interest from foreign oil companies caused by the poor commercial terms being offered through the so-called buyback deals.12 The foreign companies will direct their investments towards the sectors and regions that offer the highest returns and as long as there is a sufficient number of more attractive projects it seems reasonable to believe that investments in Iran will have a low priority. IHS Energy has developed a so-called Petroleum Economics and Policy Solutions (PEPS) risk module software, specifically fitted for the oil and gas industry. The PEPS module is a software programme that identifies, analyses and quantifies (through ratings) political and commercial risks in-

12

Under a buyback contract the foreign company finances the entire cost of developing a field within a specified time period and hands it over to Iran when the field starts producing. In return the foreign company recovers investments made up to an agreed maximum amount plus interest and an additional remuneration, all paid in field output.

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fluencing exploration and production.13 According to a report from the World Bank (2004) who used a PEPS module, Nigeria has considerably higher risk ratings than most other countries and for instance twice as high ratings as Iran. Nigeria has nevertheless managed to initiate a number of large LNG projects (see comments on Nigeria above) as well as start contracting procedures for the WAG (West African Gas) pipeline, implying that the oil companies may invest large amounts of money in spite of high risks, provided the commercial terms are sufficiently good. 3.4.2 Gas Prices Historically the gas price has been closely linked to the oil price through long-term ToP contracts. Although it is expected that the oil price linkage will become less significant in the future as gas-to-gas competition increases, oil products become less relevant as a competing fuel as is now the case in the power sector; and as LNG continues to expand with increased possibilities for arbitrage, oil will still be a major determinant of the gas price in the near and medium term since the majority of existing long-term contracts is linked to the oil price. The oil price is driven by the demand/supply balance, in particular spare production capacity and limited spare refinery capacity in OPEC, geopolitical tensions, weather affecting production and demand and the more recent fear that global oil supply is approaching its peak. The recent surge in oil prices deviates from previous episodes of high oil prices in being partly demand driven. According to BP (2005) global oil demand in 2004 increased by more than 3% from 2003 compared to an average of 1.7% annually over the last decade. Looking at estimates from OPEC (2004b, 2005) as well as from the IEA (2004a) the OPEC and global production capacity appears to be sufficient up to 2010. This is further confirmed by looking at projects that are expected to enter into the production phase over the same period. However, future geopolitical events may abruptly change this situation. The main factor for the development of the oil price seems to be whether global production capacity will take up pace in the short term to develop a sufficient production capacity surplus relative to demand to ease the pressure and then increase at least at the same rate as demand. Taking into consideration proven global oil reserves as quoted by a number of sources (BP, World Oil, Oil & Gas Journal, IHS Energy), un13

A brochure on the PEPS module can be downloaded from: http://www.ihsenergy.com/products/peps/downloads/pepsbro_1104.pdf

5 4 J. Kjärstad, F. Johnsson

discovered oil resources as estimated by the USGS (2000), as well as unconventional resources, remaining global oil reserves appear to be more than sufficient to accommodate demand up to 2020. However, over the last few years several observers have claimed that production from conventional reserves will peak as soon as in 2010, most notably the Association for the Study of Peak Oil (ASPO) and Simmons & Company, a US-based investment banker to the energy industry. It is a well-known fact that six OPEC members revised oil reserves upwards by some 320 bbls between 1981 and 1988 in spite of the fact that very little exploration activity was carried out in the same countries during that period.14 Furthermore, apart from a second upgrade of 32 billion barrels by Iran in 2002 and by 12 bbls by Iraq in 1996, the reserves of the six OPEC members (as well as in other countries) have remained essentially unchanged since the mid 1980s in spite of an accumulated production of some 132 bbls since 1990. In particular, Simmons (2005a) raises concerns over Saudi Arabian oil reserves and future production capacity, underlined by the fact that Saudi Arabia by the end of 2003 accounted for 23% of global reserves (263 bbls) and 13% of global production (9.8 mbls/day). Simmons and ASPO claim that Saudi Arabia is over-producing its main fields and that its reserves may already have reached a peak in production on a sustainable basis, which would mean also that the global production has peaked given Saudi Arabia’s large share in global production. Saudi Aramco (2004b), on the other side, claims that Saudi Arabia may keep a sustained production level of up to 15 mbls/day well beyond 2050. Even though there may be additional undiscovered and unconventional reserves it should be noted that reserve accumulations from new oil discoveries are dropping rapidly; while around 420 bbls in new discoveries were added to the reserves between 1963 and 1972 only around a third (140 bbls) were added between 1993 and 2002 (IEA 2004a). To some extent this has occurred as a result of reduced exploration activity in the regions with the highest reserves where the largest remaining undiscovered resources are also expected to be found. In addition, 20% of current global oil supply comes from 14 super-giant fields which each have an average age of more than 50 years, implying that production will decline rapidly as soon as these fields have passed plateau production making it hard to maintain global production capacity (Simmons 2005b).

14

According to the IEA (2004a), parts of the increase can be attributed to BP changing source of data and Venezuela including parts of heavy crude reserves in conventional reserves.

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A factor that most probably will result in an upward pressure on average gas prices in the short term is the increasing proportion of LNG, which generally is more expensive than piped gas although costs have decreased significantly over the last decades. The share of LNG will be substantial in Spain and in the UK and according to ExxonMobil (2004) break even costs of piped Norwegian gas supplied to the UK market are in the range of US $ 0.90 to US $ 1.75/mmbtu while break even costs for LNG supplied from Africa are between US $ 2.25 and 2.65/mmbtu with even higher costs for LNG supplied from the Middle East. Likewise, OME (2001) has estimated supply costs of piped gas from Algeria and Libya to Italy and Spain to fall in the range of US $ 1.08 to US $ 1.68/mmbtu, while LNG from the same countries will have a supply cost in the range of US $ 2.42 to US $ 2.60/mmbtu. Spanish LNG import capacity will constitute between 65 to 75% of total Spanish import capacity between 2007 and 2010. Spanish buyers have already signed long-term contracts for annual supply of 28 bcm LNG from 2007 (of which 22 bcm in contracts extend beyond 2017) constituting 78% of demand in 2007 as projected by the Ministry of Industry. Similarly, LNG capacity in the UK will constitute around one third of total UK import capacity in 2010 assuming all currently planned import projects are being carried out but not including a second unit at the Dragon LNG site. On the other hand it seems as if the gas price will remain competitive as long as the number of suppliers increases and as long as supply is plentiful. Apart from Algeria, Norway and Russia, which will continue to be main suppliers for the foreseeable future, a number of countries will either emerge as new suppliers or substantially increase their exports to Europe, in particular Egypt, Libya, Nigeria and Qatar. Additionally, Abu Dhabi, Angola, Equatorial Guinea, Oman and Trinidad and Tobago (T&T) may all supply spot cargoes or smaller amounts while Azerbaijan, Iran and Turkmenistan are expected to emerge as suppliers after 2010, followed by Iraq and Saudi Arabia, possibly from 2015–2020. Hence, a number of additional suppliers will emerge from now until 2015–2020, indicating increased competition and plenty of supply, which most probably will contribute to a downward pressure on prices. As stated above, the European market may be oversupplied with gas from around 2007/08, in particular this seems to be the case in the UK. According to Brattle (2005) an oversupply of 7 to 12 bcm should result in a major downward adjustment in National Balancing Point (NBP) gas prices leading to nominal prices possibly falling by as much as 40%. An oversupply on the UK market will lead to re-export to the Netherlands,

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Belgium and possibly also to the rest of Europe which may cause renegotiations of existing contracts. The increased competition on regional and local levels is also likely to exert a downward pressure on European gas prices. However, as noted above, demand may evolve quickly on the northern gas market after 2010 when the decommissioning of nuclear plants picks up speed. Also the US gas market may be oversupplied. In 2004 the US imported 18.5 bcm LNG (BP 2005) and current LNG import capacity is 27 bcm. Planned expansions on existing terminals together with five terminals already approved will take US LNG import capacity (technical) up to around 135 bcm. Including approved terminals in Mexico, Canada and the Bahamas, the regasification capacity will be up to around 185 bcm. However, the Energy Information Agency (EIA 2004) and the National Petroleum Council (NPC 2003) have projected gas import needs in 2010 to be 61 and 83 bcm respectively and to rise further to 136 (EIA) and 155 bcm (NPC) in 2025. This suggests not only that most of the 35 remaining proposed LNG projects will not be carried out but also that the US market will be considerably oversupplied in 2010. Since the European market also may be oversupplied there will be little or no possibility to conduct arbitrage between the two markets.

3.5 Conclusions This chapter summarizes prospects for the natural gas market in Europe. It can be concluded that EU gas demand can be expected to increase rapidly up to 2010, driven foremost by the power sector in southern Europe. At the same time EU gas import needs will increase at a faster rate than the demand caused by declining production in northern Europe, most notably in the UK. The evolvement of gas demand in the power sector after 2010 will to a large extent depend on further CO2 emission restrictions after 2012, the nuclear phase-out announced by some member states and the possibility of storing carbon dioxide in subsurface reservoirs. It seems that these factors together with barriers to rapid deployment of renewable technologies force EU member states into a high dependency on natural gas, counteracting security of supply. Still, there will be ample supplies of natural gas in the foreseeable future. Although Algeria, Norway and Russia will continue to be main suppliers in the short term, a number of countries will substantially increase gas exports to the EU, both in the short and medium term. The increased competition, signs indicating that the EU gas market may be oversupplied between around 2007 and 2012, the competitiveness of Algerian and Nor-

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wegian gas on the main growth markets as well as a number of problems in the Russian gas industry will most probably result in Russia losing market shares at least in the short and medium term. In the longer term, i.e., after 2020, it is expected that Qatar and Iran will emerge as major suppliers together with Russia. The large, consistent need of investments to supply global gas demand is a serious concern, in particular in Russia where large investments are required which, in combination with low investor confidence, illustrates one of the above mentioned problems that may lead to a decreasing Russian market share in the short term. Investments will have to be carried out in a timely manner and at appropriate locations along the entire supply chain and will have to compete with large investment needs in other parts of the energy sector, such as in the oil and power sector. Also in the future, the oil price is expected to continue to be a major determinant of gas prices. A crucial factor is the evolvement of global oil production capacity relative to global oil demand. The dependency on the Middle East not only for oil but also for gas and, thereby indirectly for electricity and heat supply, will increase. The increased share of LNG in gas supply can be expected to lead to increased price volatility and to create an upward pressure on average local gas prices, while increased competition both on the supply and the demand side (importers, transmission and distributors) should create a downward pressure. If the European market is oversupplied by gas the downward pressure on prices should increase and possibly spread throughout most of the continent. Also, the US market may experience considerable oversupply around 2010, reducing the possibilities for conducting arbitrage between markets in the Atlantic basin.

Acknowledgements Financial support from the Chalmers Environmental Initiative and Vattenfall AB is greatly appreciated.

References APRC (2005) Arab Petroleum Research Center “Natural gas survey Middle East & North Africa 2005” BOTAS (2004) Downloaded from BOTAS website: www.botas.gov.tr BP (2002) British Petroleum, paper submitted at IEA GHGT6 conference in Kyoto, 2002: “Obstacles to the storage of CO2 through EOR operations in the North Sea”

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BP (2004a) British Petroleum 2004 Annual Statistical Review BP (2004b) British Petroleum, Gas, Power & Renewables, presentation at Lehmans 2004 Energy Conference: “Getting gas to market, maximising value, the impact of LNG” BP (2005) British Petroleum 2005 Annual Statistical Review Brattle (2005) The Brattle Group Ltd., presentation at the 5th Doha Conference of Natural gas: Stretching Frontiers, February 2005: “Arabian Gulf LNG in North West Europe: Managing risks” Cedigaz (2002) “Prospects for the growth of the gas industry, trends and challenges” Cedigaz (2005) Presentation at Institut Français du Pétrole (IFP) conference June, 2005 on Hydrocarbon Reserves: Abundance or Scarcity: “Natural gas, the fuel of choice for decades to come” DGEMP (2004) Direction Générale de l’Energie et des Matière Premières, DGEMP-OE (2004): “Scénario énergétique tendanciel à 2030 pour la France” DTI (2005) Department of Trade and Industry oil and gas websites EC (2004) European Commission DG Tren: “European Energy and Transport Trends to 2030” EC (2005) Presidency Conclusions Brüssel European Council 22 and 23 March, 2005 ECN (2003) Energy Research Center of the Netherlands, final report on the ENGAGED project, December 2003: “Long-term gas supply security in an enlarged Europe” Edison (2005) Presentation AAPG APPEX Expo and Forum conference London March 2, 2005: “Integration along the energy chain” EIA (2004) US Energy Information Agency, January 2004: “Annual Energy Outlook 2004, with projections to 2025” EIA (2005) US Energy Information Agency, “Iran Country analysis briefs.” downloadable from EIA website: www.eia.doe.gov Enagas (2005) Various Enagas press releases between December 2004 and March 2005 ENI (2005) ENI 2004 Annual Report EREC 2004 Renewable Energy Scenario to 2040, EREC — European Renewable Energy Council, Brussels 2004. Available at http://www.erec-renewables.org/ default.htm Eurogas (2005) “Natural gas consumption in Europe in 2004” Eurostat (2004) “Energy: Yearly Statistics” 2004 edition ExxonMobil (2004) Presentation Flame 2004 Energy Conference, March 2004 GdF (2005) Gas de France press release March 23, 2005 Global Insights (2005) Downloaded from Global Insights website: http://www.globalinsight.com/SDA/SDADetail2017.htm IEA (2001) International Energy Agency World Energy Outlook Insights 2001: “Assessing today's supplies to fuel tomorrow’s growth” IEA (2002) International Energy Agency: “World Energy Outlook 2002” IEA (2003a) International Energy Agency World Energy Outlook Insights 2003: “World Energy Investment Outlook”

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IEA (2003b) International Energy Agency: “Energy Policies of IEA Countries, Italy 2003 review” IEA (2004a) International Energy Agency: “World Energy Outlook 2004” IEA (2004b) International Energy Agency: “Energy Policies of IEA Countries, France 2004 review” IEA (2004c) International Energy Agency: “Security of gas supply in open markets” IHS (2005) Presentation at Institut Francais du Pétrole (IFP) conference June, 2005 on Hydrocarbon Reserves: Abundance or Scarcity: “World oil and gas resource and production outlook” IHS (2005b) Personal communication with Ken Chew, IHS Energy IMF (2003) International Monetary Fund Country report 03/130: “Azerbaijan Republic: selected issues and statistical appendix” JESS (2004) Joint Energy Security of Supply working group Fifth Report, September 2004 Kjärstad J, Johnsson F (2004) Simulating Future Paths of the European Power Generation — Applying the Chalmers Power Plant Database to the British and German Power Generation System, Proc. 7the Int Conf on Greenhouse Gas Control Technologies (paper to appear in pre-reviewed proceedings due 2005) Kjärstad J, Johnsson F (2005) unpublished material (to be submitted) MAP (2005) Ministry of Productive Activities Emergency Communication February 23, 2005 MEFI (2005) Ministère de l’Économie des Finances et de l’Industrie: “Bilan énergétique de la France en 2004” NGT (2004) National Grid Transco: “Transportation ten year statement 2004” NPD (2004) The Norwegian Petroleum Department: “Facts 2004, the Norwegian sector” NPD (2005) The Norwegian Petroleum Department: “Facts 2005, the Norwegian sector” NPC (2003) National Petroleum Council, 2003: “Balancing Natural Gas Policy, fuelling the demands of a growing economy” OME (2001) Observatoire Mediterraneen de l’Energie: “Assessment of internal and external gas supply options for the EU, evaluation of the supply costs of new natural gas supply projects to the EU and an investigation of related requirements and tools” OPEC (2004a) Organisation of the Petroleum Exporting Countries 2004: “2003 Annual Statistical Bulletin” OPEC (2004b) Organisation of the Petroleum Exporting Countries 2004: “Oil Outlook to 2025” OPEC (2005) Organisation of the Petroleum Exporting Countries monthly oil market report May 2005 Platts (2005) “European Natural Gas Report,” volume 10, issue 45, March 7, 2005 Saudi Aramco (2003) Presentation downloaded from Saudi Aramco’s website: “The Kingdom's gas industry”

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Saudi Aramco (2004a) Presentation downloaded from Saudi Aramc’s website: “Kingdom’s gas development, Saudi Aramco’s role” Saudi Aramco (2004b) Saudi Aramco presentation to Center for Strategic and International Studies (CSIS), February 2004: “Fifty year crude oil scenarios: Saudi Aramco’s perspective” Simmons (2005a) Matthew R. Simmons, Simmons & Company, presentation to Boston committee on foreign relations, April 2005: “The coming Saudi oil and the world economy” Simmons (2005b) Matthew R. Simmons, Simmons & Company, presentation to the Aspen Institute, April 2005: “The status of future energy sources” SRG (2005) Snam Rete Gas 2004 Annual Report Statoil (2004) Statoil presentation at CO2 for EOR conference, Oslo 2004: “Gullfaks: vurderinger av CO2 injeksjon for ökt oljeutvinning,” in Norwegian UNCTAD (2004) United Nations Conference on Trade and Development 2004: “World investment report 2004: the shift towards services” USGS (2000) United States Geological Survey: “World Petroleum Assessment 2000” WoodMac (2005) WoodMac press release February 22, 2005 World Bank (2004) “Strategic gas plan for Nigeria”

4 Sequestration — The Underground Storage of Carbon Dioxide

S. Holloway British Geological Survey, Keyworth, Nottingham NG212 5GG, UK

Abstract: Underground storage of industrial quantities of carbon dioxide in porous and permeable reservoir rocks has been taking place for the last 11 years at the Sleipner West gas field in the North Sea. A further commercial-scale CO2 storage project has recently begun at In Salah, Algeria, and the Snohvit field, Barents Sea, is to begin injecting CO2 underground in late 2007 or early 2008. A monitored CO2-EOR project is underway at Weyburn, Canada and research scale injection projects have been undertaken at Nagaoka (Japan), Frio (USA) and K12-B (offshore Netherlands). This demonstrates that CO2 can be successfully injected into underground storage reservoirs on a large scale. Natural analogues (natural fields of CO2 and other buoyant fluids) demonstrate that under favourable conditions gases can be retained in the subsurface for millions of years. Although there is still very significant uncertainty in the actual figures, it appears that globally there is enough underground storage capacity for CO2 storage technology to make a significant impact on global emissions to the atmosphere. Some other major issues that must be addressed if this technology is to spread to power stations, and thus make a significant impact on global CO2 emissions, are the cost of CO2 capture, further demonstrations of safe and secure storage and public acceptance that long-term storage will be successful.

4.1 Introduction The major contributor to carbon dioxide (CO2) emissions to the Earth’s atmosphere is the burning of fossil fuels, which results in the emission of about 23 × 109 tonnes CO2/year. One way to reduce our CO2 emissions to the atmosphere whilst continuing to use fossil fuels is to retain a proportion of them in another domain of the planet rather than the atmosphere, for example the geosphere, via a process known as carbon dioxide capture E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 61–88. © 2008 Springer.

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and storage (CCS). If CCS with underground storage is to significantly reduce CO2 emissions to the atmosphere, it will have to be carried out on a very large scale, safely and economically, with minimal trans-generational impacts on man or the global environment. There is considerable interest in the potential for CCS as a greenhouse gas mitigation option, e.g. the IPCC produced a Special Report on Carbon Dioxide Capture and Storage [103].

4.2 Required Storage Period If it is to make a contribution to reducing CO2 levels in the atmosphere, it would be desirable to retain any CO2 stored underground permanently. After the end of the fossil fuel era, atmospheric CO2 levels might begin a slow decline as ocean/atmosphere CO2 levels re-equilibrate [98]. Clearly it would not be desirable for stored CO2 to be released until there has been a significant decline in atmospheric CO2 levels. Thus the next most desirable time frame for storage might be at least thousands of years [46]. Nevertheless, short-term storage of a few hundred years could be valuable in shaving the expected peak levels of CO2 in the atmosphere that might occur towards the end of the fossil fuel era.

4.3 Practicality of the Underground Storage of CO2 At the Sleipner West gas field in the Norwegian sector of the North Sea, approximately 1 × 106 tonnes CO2 per year are being stored underground [56]. Some 10 million tonnes has been stored to date. CO2 is also being injected underground in enhanced oil recovery (EOR) operations worldwide. The greatest concentration of such projects is in the Permian basin of west Texas, USA, e.g. [50, 88, 91], but the best monitored is at Weyburn, in Saskatchewan, Canada [96]. More recently, commercial-scale CO2 storage projects have been started at In Salah, Algeria [78, 79] and reached the construction phase at the Snohvit field in the Barents Sea, off the shore of Norway [66]. Moreover, smaller demonstration projects have been undertaken at Nagaoka, Japan [53], Frio, Texas [49] and the K12-B gas field off the shore of the Netherlands [93]. Thus it is clear that it is technically possible to store CO2 underground. However, this does not mean that underground storage can be carried out everywhere — a geologically suitable location is essential.

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Short-term underground CO2 storage is already being demonstrated at Sleipner. Long-term storage by man cannot be directly demonstrated but there are analogies in nature. There are many natural underground CO2 fields around the world [e.g. 89]. These are identical to natural gas fields in every respect apart from their gas composition. Furthermore many natural gas fields contain varying quantities of CO2 mixed in with the hydrocarbon gases [11]. Many of these fields of both pure CO2 and CO2/hydrocarbon mixtures have existed for thousands to millions of years. This proves that under favourable circumstances CO2 can be retained underground for geological timescales. The process of storing CO2 underground can be divided into three major steps: capture, compression and transport, and injection into the subsurface.

4.4 Capture of CO2 from Flue Gases The most obvious places to capture CO2 are at large industrial point sources such as power plants, cement plants and oil and gas refineries. Fossil fuel-fired power plants are the dominant industrial point sources in most countries. The CO2 may be captured by pre-combustion techniques, such as the steam reforming of methane into CO2 and H2, with the H2 being combusted and the CO2 sent for storage [1]. Alternatively the fossil fuel may be combusted in an oxygen/CO2 atmosphere, which results in a very CO2-rich flue gas [52], or it may be captured post-combustion, from the flue gases of the industrial plant [4], for example by amine stripping. Even in coal-fired power plants the flue gases contain only a maximum of about 15% CO2 and in natural gas-fired plant they commonly contain 3% CO2 or less. It is necessary to separate CO2 from the other components of flue gas before storing it because the available storage space beneath the ground would not be big enough to cope with the vast quantities of untreated flue gas that need to be stored to make a significant impact on global CO2 emissions. Also, the work needed to compress flue gas would be too great a proportion of the total power output that could be obtained from the power plant. By contrast, pure CO2 is relatively easy to compress.

4.5 Cost of CO2 Capture Costs for CO2 capture from power plants (including compression for pipeline transport) are of the order of US$18 – US$72 per tonne CO2 avoided,

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= $66 – $264/t C avoided [25, 41, 42, 80]. However, there is great potential for technological improvements that can significantly lower costs and also the possibility of developing new types of power plants and power cycles [42]. Major joint industry projects are examining ways to reduce capture costs [e.g. 43]. Costs of CO2 capture in other industries vary widely depending on the source and the percentage of emission reduction obtained [32, 34]. For example, in the cement industry, emission reduction costs are estimated to range between US$50 and US$250 t/CO2 avoided (US$183 – US$917/t C avoided).

4.6 Energy Requirements for CO2 Capture, Separation and Compression The energy penalty associated with CO2 capture and compression at power plants varies between 9% and 34% [42], depending mainly on the type of power plant considered. Given that a small percentage of the CO2 emitted by the modified power plant is not captured, this results in the “net CO2 avoided” being around 75% to 89% of the emissions of a base case plant that has not been modified for CO2 capture.

4.7 Transport of CO2 Because of the large volumes involved, the most likely means of transport for CO2 between a large point source and a storage site would be by pipeline, as a liquid. However, it would be possible to use a ship to transport CO2 to a sequestration site offshore [14] and this might be desirable for enhanced oil recovery operations because it would allow the CO2 supply to the offshore installation to be intermittent. CO2 transmission pipelines already exist in the USA. These connect sources of CO2 with EOR projects in the Permian basin, Texas. The longest is the McElmo Dome pipeline, which is some 800 km long [27]. For a 500 km delivery pipeline, assuming an infrastructure, costs are estimated at US$7.82/t CO2 [27]. For all pipeline systems, drying is necessary to prevent corrosion and the formation of CO2 hydrates, and sulphur reduction may also be required.

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4.8 Underground CO2 Storage Concepts The main concepts that have been put forward for underground storage sites for CO2 fall into four categories: natural and man-made caverns, unused porous and permeable reservoir rocks, depleted oil and gas fields, and coal beds. Realistically, storage in caverns and mines cannot make a significant impact on the greenhouse effect. The majority of mines are not leakproof, especially at pressures much greater than atmospheric. Most abandoned mines gradually fill with water, and any gas within them will eventually be forced out. The leakproof mines have alternative uses — for example, storage of documents, natural gas and chemical waste. Solution-mined salt caverns are also unsuitable as they are not stable in the long term because rock salt is a ductile substance that can creep and rupture under the in situ stresses within the Earth’s subsurface. 4.8.1 Storage in Porous and Permeable Reservoir Rocks CO2 can be stored in geological formations by filling the intergranular pore space within rocks with CO2. This is how oil, natural gas and indeed carbon dioxide, occur in the subsurface in nature. Porous and permeable sedimentary rocks (known as reservoir rocks) commonly occur in major accumulations known as sedimentary basins that may be up to a few kilometres thick and may cover thousands of square kilometres. However, although very common, sedimentary basins do not occur in every country in the world. Nor are all sedimentary basins suitable for CO2 storage. Pressure — Temperature conditions underground

The average temperature in many sedimentary basins increases by about 25–30 °C km-1 below the ground surface or seabed as a result of heat flow from the inside to the outside of the Earth. However there is considerable variation in such geothermal conditions, both locally within basins and between basins worldwide [6]. Pressure also increases downwards within the subsurface. Pressure in the pore spaces of sedimentary rocks is commonly close to hydrostatic pressure, that is, the pressure generated by a column of (commonly saline) water of equal height to the depth of the pore space. This is because the pore space is mostly filled with water and is connected, albeit tortuously, to the ground surface or seawater. However, under conditions where the pore space is either not connected to the surface, or not equilibrated to the

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surface, pressure may be greater than hydrostatic. Underpressure may also exist, either naturally, or as the result of abstraction of fluids such as oil and gas from a reservoir rock. Physical properties of CO2 underground

The physical properties of CO2 define the density at which it can be stored underground [5, 6]. They are also relevant because large volume changes are associated with CO2 phase changes. When CO2 is injected underground, there is a sharp increase in its density and corresponding decrease in volume at depths between approximately 500 m and 1000 m depending on the precise geothermal conditions and pressure [30] (Figure 1). This is associated with the phase change from gas to supercritical fluid. Consequently, CO2 occupies much less space in the subsurface than at the surface. One tonne of CO2 at a density of 700 kg/m3 occupies 1.43 m3, or less than 6 m3 of rock with 30% porosity if 80% of the water in the pore space could be displaced. At 0°C and 1 atmosphere one tonne of CO2 occupies 509 m3. Storage of large masses of CO2 in shallow reservoir rocks is not so practical, because the physical conditions at shallow depths underground mean that relatively small masses of CO2 would occupy relatively large volumes of pore space. Also, shallow reservoir rocks commonly have a more important use — groundwater supply. 900

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4.8.2 Principles of Storage in Underground Reservoir Rocks CO2 can be injected into the porosity of a reservoir rock via a well or wells. CO2 permeates the rock, displacing some of the fluid (commonly saline water) that was originally in the pore spaces. In order for injection and displacement of the native pore fluid to occur, the injection pressure must be greater than the pore fluid pressure. If the permeability of the rock is low or there are barriers to fluid flow within the rock (for example faults that compartmentalize the reservoir) injection may cause a significant increase in pressure in the pore spaces, especially around the injection well [92]. This may limit both the amount of CO2 that can be injected into a rock and the rate at which it can be injected. For example, in Alberta, the maximum allowable injection pressure is 90% of the fracture pressure at the top of the reservoir [58]. This factor could make heavily compartmentalised reservoirs unsuitable for CO2 injection. Once injected into the reservoir rock, the processes of migration and trapping begin. The injected CO2 is buoyant and migrates towards the top of the reservoir until it reaches the cap rock. A fraction of it may be retained in traps formed by internal permeability barriers within the reservoir, and these also make the migration path of the CO2 through the reservoir more tortuous. The cap rock at the top of the reservoir retains the CO2. Cap rocks can be divided into two categories: essentially impermeable strata such as thick rock salt layers (known as aquicludes) and those with low permeability such as shales and mudstones, known as aquitards, through which fluids can migrate, albeit extremely slowly [8]. The effectiveness of homogeneous cap rocks (or seals) is dependent mainly on their capillary entry pressure, which is essentially a function of the size of the pore throats connecting the pores within the rock and the fluid attempting to enter the rock. However, in real situations they also may contain faults or fractures that could cause them to leak. Methods for assessing the risk of imperfectly sealing cap rocks in petroleum systems are given in [90]. Providing the reservoir is big enough, it may not be necessary to inject CO2 into a single large closed structure such as a dome, analogous to an oil or gas field, to ensure its safe and stable containment in the long term. When CO2 is injected into a relatively flat-lying subsurface reservoir and rises to its top, it will be trapped in any small domes or other closed structures that occur on the underside of the cap rock. Once one of these structures becomes full, the CO2 will spill from it and migrate to the next such structure along the migration path and fill that. Thus, as the CO2 migrates within the reservoir, it may become divided into many small pools in many small closures.

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Over time, depletion of these accumulations is likely to take place as a result of CO2 dissolution into the contacted water in the pore spaces of the reservoir rock. Moreover, CO2 will be trapped by capillary forces in pores and by adsorption onto grain surfaces along the migration path of the CO2 within the reservoir. This “residual” CO2 saturation along the migration path could be in the order of 5–30% [30]. The solubility of CO2 in water depends on temperature, pressure and salinity [24]. For typical subsurface conditions, solubility of CO2 in 1 M brine plateaus at about 41–48 kg/m3 below 600 m depth. Increasing the salinity to 4 M decreases the maximum solubility to around 24–29 kg m3 [30]. The solubility under typical reservoir conditions at a salinity of 3% will vary between 47 and 51 kg/m3, corresponding to a volume of free CO2 of 6.7 to 7.3% of the pore volume [61]. Thus, potentially, this is a very important storage mechanism if a large proportion of the formation water becomes saturated with CO2 — the challenge is to achieve this. The rate of dissolution will depend on how well the CO2 mixes with the formation water once it is injected into the reservoir. Once a CO2 accumulation has reached a stable position within the reservoir, diffusion of CO2 into the water will be faster if it is a thin but widespread accumulation, with a high surface area to volume ratio [24, 30]. However, for many accumulations, dissolution could be slow, on the order of a few thousand years for typical injection scenarios [5], unless there is some form of active mixing induced by fluid flow within the reservoir [61]. Even so, if a relatively small amount of CO2 is injected into a very large reservoir, the combination of a series of small traps and dissolution of the CO2 into the formation water means it is unlikely ever to reach the edge of the reservoir, even if there are no major structures to trap it [e.g. 62]. This is the situation with the CO2 from the Sleipner West gas field that is being stored in the Utsira Sand [101]. In other circumstances, the CO2 may be hydrodynamically trapped [7, 8, 68]. Once outside the radius of influence of the injection well, the CO2 will migrate in the same direction as the natural fluid flow within a reservoir rock. If it is a free gas within the reservoir, it will migrate faster than the brine (the native pore fluid) because it is less viscous. However, if it is dissolved it will migrate at the (commonly very low) rates at which natural fluid flow occurs within reservoir rocks. If the migration of the CO2 is very slow and the proposed injection point is a very large distance from the edge of the reservoir, the CO2 may not reach the edge of the reservoir for millions of years. Some of the CO2 may also become trapped by chemical reaction with either the formation water or the reservoir rock (the latter will take place only over long timescales), the amount depending on the

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pore water chemistry, rock mineralogy and the length of the migration path [24, 35, 36, 82]. Thus, in the long term, the interaction of five principle mechanisms will determine the fate of the CO2 in the reservoir. These are: immobilization in traps, immobilization of a residual saturation of CO2 along the CO2 migration path, dissolution into the surrounding formation water, geochemical reaction with the formation water or minerals making up the rock framework and, if the seal is not perfect, migration out of the geological storage reservoir. Escape of CO2 from the storage reservoir may not necessarily be important, providing there is no adverse impact on man, the natural environment or other resources such as groundwater, and the required storage period is exceeded. The amount of CO2 that can be injected during a particular project or into a particular reservoir is limited by the undesirable effects that could occur. Some of these might be important in the short term, others may occur in much longer timescales, as the result of migration of the injected CO2. They include: an unacceptable rise in reservoir pressure, conflicts of use of the subsurface (e.g., unintentional interaction with coal mining, or the exploitation of oil and gas), pollution of potable water by displacement of the saline/fresh groundwater interface, pollution of potable water by CO2 or substances entrained by CO2 (e.g., hydrocarbons), escape of CO2 to the outcrop of a reservoir rock and escape of CO2 via an unidentified migration pathway through the cap rock. 4.8.3 CO2 Storage at the Sleipner West Gas Field The Sleipner West gas field [19, 56] is in the centre of the North Sea approximately 200 km from land. The Sleipner West natural gas reservoir is faulted, with different pressure regimes and different fluid properties in the various fault blocks. The natural gas in the reservoir (mainly methane) includes between 4% and 9.5% CO2. To get the natural gas to sales quality, the amount of CO2 has to be reduced to 2.5% or less. In order for the gas to be exported under the Troll gas sales agreement, mainly via the Zeepipe export pipeline to Zeebrugge, which passes through Sleipner, this operation is carried out offshore. The gas is produced via 18 production wells drilled from a wellhead platform (Sleipner B) and transported to a process and treatment platform (Sleipner T) located next to and with a bridge connected to the main Sleipner A platform (Figures 2 and 3). Around 1 x 106 tonnes of CO2 are separated from the natural gas annually. This amounts to some 3% of total Norwegian CO2 emissions. Rather than vent this CO2 to the atmosphere, Statoil and partners made the decision

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Fig. 2. The Sleipner T CO2-processing platform (left) and Sleipner A platform (right) in the North Sea (Courtesy of Statoil)

Fig. 3. Schematic cross section through the Sleipner CO2 injection facility (Courtesy of Statoil)

to store it underground in the Utsira Sand. This is a sandstone reservoir approximately 150–200 m thick, at a depth of between 800 and 1000 m. At the injection site, the cap rock consists of two parts: firstly a lower sedimentary unit consisting of more than 100 m of shale, the so-called “Shale Drape” that immediately overlies the reservoir, and secondly the remainder of the strata above the Shale Drape, which also appears to con-

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Fig. 4. Detailed time-lapse seismic images of carbon dioxide stored in the Utsira Sand at the Sleipner West field. The 1996 image was pre-CO2 injection. The 1999–2002 images show successive increases in the amount of CO2 stored in the Utsira Sand. The CO2 is imaged as bright reflections corresponding to layers of sand with high CO2 saturations accumulated beneath thin shale layers within the sand reservoir (Courtesy of the CO2STORE partners and Andy Chadwick)

sist predominantly of mudstones or silty mudstones. These strata effectively prevent the CO2 from leaking back to the seabed and thus to the atmosphere. CO2 injection started in August 1996 and will continue for the life of the field (estimated to be approximately 20 years). Additional costs of the operation are about US$15/tonne of CO2 avoided [42]. A demonstration project, acronym SACS, jointly funded by the EU, industry and national governments, and its successor, acronym CO2STORE, is currently evaluating the geological aspects of the subsurface disposal operation [2, 3, 12, 20, 64, 74]. This involves assessing the capacity, storage properties and performance of the Utsira reservoir, modelling CO2 migration within the reservoir and monitoring the subsurface dispersal of the CO2 using time-lapse seismic techniques. It is clear from Figure 4 that the underground situation is well-imaged; the CO2 is currently trapped within the reservoir above and around the injection point. It has reached the base of the cap rock and is migrating horizontally beneath it. Seismic and reservoir modelling is now being carried out to further quantify and constrain the CO2 subsurface distribution and predict its future behaviour. The Utsira Formation appears to be an excellent repository for CO2. It acts as essentially an infinite aquifer; fluid is being displaced from the pore spaces above the injection point without a significant measurable pressure increase at the wellhead. 4.8.4 Storage in Depleted or Abandoned Oil and Gas Fields Oil and gas fields are natural underground traps for buoyant fluids. In many cases there is geological evidence that the oil or gas has been trapped in them for hundreds of thousands or millions of years. In such cases, they

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will not leak in the geologic short term (a few hundred to a few thousand years) providing their exploitation by man has not damaged the trap and the cap rock is not adversely affected by the injection of CO2. CO2 is widely used for enhancing oil recovery in depleted oil fields [91] so it should be possible to sequester CO2 in such fields and increase oil production at the same time [e.g. 9, 17, 48]. The production of additional oil would offset the cost of CO2 sequestration. Approximately 2.5 to 3.3 barrels of oil can be produced per tonne of CO2 injected into a suitable oilfield. Some of the CO2 used in EOR projects is anthropogenic; e.g., at Encana’s Weyburn field in Saskatchewan anthropogenic CO2 from a coal gasification plant in North Dakota [96, 97] is used. The progress of this CO2 flood will be monitored from a CO2 sequestration perspective. It is expected to permanently sequester about 18 million tonnes of CO2 over the lifetime of the project. The Rangely EOR project in Colorado has also been monitored to determine whether CO2 is leaking from the reservoir to the ground surface [54]. Further opportunities for EOR abound, especially if recent increases in the price of oil are maintained. There is undoubtedly significant potential in many of the world’s major onshore oil provinces, for example the Middle East, and there may be potential in offshore areas such as the North Sea [16, 31]. The small amounts of CO2 sequestered in such projects indicate that EOR would have to take place on a massive scale to have a significant impact on global CO2 emissions to the atmosphere [88]. When natural gas is produced from a gas field, the production wells are opened and the pressure is simply allowed to deplete, usually without any fluid being injected to maintain the pressure. Thus, depending on the rate of water inflow into the porosity that comprises the gas reservoir, a large volume of pressure-depleted pore space may be available for CO2 storage. In many cases there is little or no water flow into a gas reservoir. Therefore it may be possible to store underground a volume of CO2 equal to the underground volume of the gas produced. Furthermore, there is a possibility that CO2 injection could enhance natural gas production towards the end of field life.

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4.9 What Is the Global Geological CO2 Storage Capacity in Oil and Gas Fields and Saline Water-Bearing Reservoir Rocks? The availability of sufficient storage capacity is one of the critical parameters that could decide whether the underground sequestration of CO2 can be a major contributor to solving this century’s greenhouse problem. The storage capacity of oil and gas fields is relatively well-defined, being based on the principle that a proportion of the pore space occupied by the recoverable reserves of a field is, or will be, available for the storage of CO2. As the pore volume of the field is well-known, the mass of CO2 that could be stored in the total pore volume provides an upper bound, which can be discounted to take account of factors that might reduce the storage capacity of oil or gas fields. The global CO2 storage capacity of oil and gas fields has been estimated to be 923 Gt [18, 86], equivalent to about 40 years of current global anthropogenic CO2 emissions. The storage capacity of saline water-bearing reservoir rocks for CO2 can best be estimated on a site-by-site basis using reservoir simulation. This can take account of the main short- to medium-term storage mechanisms (physical trapping, either in a dome or similar closed structure or as residual CO2 saturation along the migration path of a CO2 plume, and dissolution) and of the potential for migration out of the storage reservoir. Unfortunately a sufficient density of appropriate data is commonly only available in oil and gas provinces, and large resources are needed to process it. Therefore high-quality estimates tend to be confined to relatively small areas such as a single closed structure in an individual formation. There are great difficulties in upscaling such estimates to obtain meaningful regional or global CO2 storage capacity estimates because the CO2 storage capacity of saline water-bearing reservoir rocks in individual sedimentary basins does not appear to be related to their area [85] or pore volume. Consequently, global capacity estimates have been calculated using simplifying assumptions that could easily be inappropriate. Region-, country- and basin-specific estimates are more detailed and precise, but affected by the same limitations. Estimates of global or regional underground CO2 storage capacity e.g., [13, 15, 38–40, 44, 47, 55, 92, 94] have produced a wide range of figures, indicating the existence of great uncertainty. This was recognised by Hendriks and Blok [47] who estimated world underground storage capacity to range between 400 and 10,000 Gt CO2. Van der Meer [92] estimated a global capacity of 425 Gt CO2 and Koide et al. [55] estimated 320 Gt CO2.

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Although there are many uncertainties with regard to global underground storage capacity for CO2, it is likely to be large. Given that oil and gas fields occupy only a very small part of the saline water-bearing reservoir rocks in the world’s sedimentary basins, it would be highly unlikely that the storage capacity of the latter would be less than the former. Thus total global storage capacity is likely to be sufficient for at least 80 years and probably much longer. In real situations, only a small amount of the theoretically available storage capacity will be used. For example, given a single or limited number of injection points, the migration path of CO2 within a reservoir formation will determine how many of the traps within the reservoir rock can be filled with CO2 [19] as those traps not on the migration path(s) will not be filled. Also, safety and stability of storage will have to be demonstrated, and economics, socio-political issues and issues relating to alternative uses of the subsurface will be involved.

4.10 Storage in Coal Beds Coal beds (otherwise known as coal seams) can be reservoirs for gases. Coal contains a natural system of orthogonal fractures known as the cleat, which imparts some permeability, and although it does not contain significant conventional porosity it contains micropores in which a natural gas known as coalbed methane (CBM) can occur. This usually consists of >90% methane plus small amounts of higher hydrocarbons, CO2 and N2. The gas molecules are adsorbed onto the surfaces of the micropores. They are very closely packed and so bituminous coals can adsorb up to about 20 m3 methane/tonne of coal [23]. The gas molecules in the coal micropores are held in place by electrostatic forces. These are much weaker than chemical bonds and sensitive to changes in temperature and pressure. If the temperature is raised, or the pressure lowered, gas will desorb from the coal [26]. Thus, if there is sufficient permeability within a coal bed, CBM production can be achieved by drilling a well into the coal bed, sealing it off from the surrounding strata and pumping water out of the cleat to lower the pressure within the coal bed. Commercial CBM fields exist in the United States, e.g. in the San Juan basin (Colorado/New Mexico) and Warrior basin (Alabama) and also in Australia, e.g., in the Bowen basin. However, only a minority of coalfields are suitable for commercial CBM recovery using present technology, because economic production is only possible from coal beds with excep-

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tional permeability. This could be a barrier to the coal seam sequestration option. CO2 has a greater affinity to be adsorbed onto coal than methane. Thus, if CO2 is pumped into a coal seam, not only will it be stored by becoming adsorbed onto the coal, it may displace any methane at the adsorption sites [37]. Any methane recovered could have an economic value and offset some of the costs of CO2 sequestration. Once adsorbed, the CO2 is held in place and will not leak to the surface unless the pressure on the coal is reduced or the temperature increased. Experiments have been conducted in the San Juan basin by Burlington Resources [77, 87, 99]. Over 100,000 tonnes of CO2 have been injected into the Fruitland coal seams since 1996. The results of these experiments were encouraging (CO2 injection does appear to have enhanced CBM production) [77] but inconclusive. Nitrogen can also be used to enhance coalbed methane production. Nitrogen injections reduce the partial pressure of methane and thus encourage methane to desorb from the coal matrix. N2 injection experiments by Amoco in the San Juan basin were highly successful, producing a large increase in methane production in a relatively short time. So it may be possible to enhance coalbed methane production by injecting flue gas (principally a mixture of N2 and CO2 with small amounts of nitrogen oxides and sulphur gases) into the coal beds. Controlled experiments to test enhanced coalbed methane (ECBM) production using CO2 [71] as a stimulant are under way in Europe [100], Alberta [37] and Japan [84]. However, the methane in coal represents only a small proportion of the energy value of the coal, and the remaining energy would be sterilised if the coal was used as a CO2 storage reservoir; i.e., the coal could not be mined or gasified underground without releasing the CO2 to the atmosphere.

4.11 Safety and Security of Storage The question of whether safe and stable storage of CO2 in the subsurface can be assured is probably the most important issue facing the underground storage of CO2 at present, because this is likely to have a high impact on public acceptability and regulation. To ensure safe and stable containment of the injected CO2, a rigorous risk assessment process is required. One approach is to identify all the Features, Events and Processes (FEPs) that could affect the storage site [83]

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and then assess the risks associated with these. Prior to injection, detailed geological characterization of the selected site and surrounding area is needed. This should be used to help with the risk assessment process, for example by building geological models of the site, to provide information about the volume of the storage reservoir and any potential migration paths out of it. The geological data and models should also be used to construct numerical reservoir models that can be used to simulate the injection of CO2 at the site and determine the likelihood, potential magnitude, timing and location of any CO2 migration out of the storage reservoir or to the ground surface or seabed. This in turn should provide the basis for a monitoring plan and, if considered necessary, a remediation plan. Baseline monitoring surveys should also be acquired prior to injection. Once injection starts, long-term monitoring would be needed to validate storage. Some types of data, such as the mass of CO2 injected, need to be monitored continuously whereas other data, such as the distribution of CO2 within the reservoir as imaged by seismic surveys, may only need to be acquired intermittently. Seismic reflection surveys, seismic attribute studies, gravity surveys, infra-red CO2 detection equipment and data and samples acquired from wells are amongst the techniques being used for monitoring at present [e.g. 28, 68, 96]. Monitoring data should be history matched to predictions from the models to check whether the site is performing as predicted. If significant discrepancies are found, more geological data should be acquired and/or the models adjusted as necessary. Once injection ends, it is considered likely that monitoring would continue for a significant period, until the operator and regulator are satisfied that the site is performing, and will continue to perform, as predicted. Site closure would then follow.

4.12 Impacts of CO2 Leakage from Underground or SubSeabed CO2 Storage There are many places in the world where CO2 naturally emanates from the subsurface [10, 45, 51, 72, 73, 76, 85] and many of these do not appear to pose a danger to man as long as the CO2 does not build up in confined spaces such as housing. In general, natural CO2 emissions in sedimentary basins are distinct from, and smaller than, those from volcanic and hydrothermal areas, where large amounts of CO2 are sometimes present, and are commonly associated with high temperatures and steam at shallow depths. Natural emissions from sedimentary basins are therefore more likely to be useful as analogues for leaks from man-made CO2 storage facilities than

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those from volcanic or hydrothermal areas. Studies of dispersion of CO2 in the vadose zone and atmosphere [69, 70] also help to frame issues of potential impacts of leakage from underground storage sites. Cox et al. [22] noted that a major well failure in the injection period, when reservoir pressure was relatively high, could theoretically pose the danger of the development of a major cloud of CO2 at the ground surface. However, a well blowout in a natural CO2 field has occurred, was successfully controlled and did not cause significant damage to man or the natural environment [65]. Insights into safety and security of storage should also be gained from the study of engineering analogues for CO2 storage and leakage such as natural gas storage facilities in aquifers [75]. Methodologies exist for determining storage security in natural gas storage projects, but these are generally significantly smaller than conjectured CO2 storage schemes, and always confine the gas within a structural trap. The Lake Nyos disaster [57, 59, 95] is probably the most infamous example of a major natural CO2 emission. A description of it is included here not because it has great relevance to putative leakage from man-made underground CO2 storage sites, rather to illustrate the low likelihood of such an event occurring as a result of purposeful storage, and the successful remediation that has taken place at Lake Nyos. Sometime during the late evening of August 21, 1986, a huge mass of concentrated CO2 was emitted from Lake Nyos, a volcanic crater lake in Cameroon. A lethal concentration of the gas reached a height of 120 m above the lake surface, and the total volume of the lethal gas cloud may have been up to 0.63 km3, equivalent to a mass of 1.24 Mt CO2. It flowed out of the spillway at the northwest end of the lake and down the topographic slope, along two valleys. It killed more than 1700 people in a thinly populated area, and all animal life along its course as far as 14 km from the crater. This disaster was caused by a “limnic eruption” — a sudden release of CO2 caused by the overturn of the 220 m deep lake, the lower part of which became saturated with CO2 of volcanic origin, caused by a slow leak of CO2 into the lake waters from below. The CO2 dissolved in the water in the lower part of the lake, increasing its density. This resulted in the lake becoming stratified. The lake overturn may have been triggered by a long period of cool days that allowed cold surface water to build up and then sink, disturbing the density stratification. Clearly the likelihood that an accident comparable to the Lake Nyos disaster could occur as a result of leakage from a man-made underground CO2 storage facility must be considered. However, it should be noted that the topography around Lake Nyos appears to provide ideal conditions for the emitted CO2-rich gas cloud to remain concentrated rather than disperse.

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The CO2 held in the lake waters was probably released in a few hours and would have hugged the ground rather than dispersing. High crater walls surround the lake on the east and west sides, and the natural water spillway in the northwest corner of the lake provides a natural outlet for the CO2 into a valley system, where it would remain confined. The sudden emissions of concentrated CO2 from crater lakes in Cameroon are the result of slow emissions of carbon dioxide into relatively small, deep lakes. It would be relatively simple to determine whether any such lakes occur in the vicinity of a proposed CO2 storage site and, if necessary, monitor them. Most lakes outside the tropics overturn seasonally, as a result of temperature changes in the surface waters, and so there may be less potential for stratification outside the tropics. Thus the possibility of an analogous event resulting from the leakage of CO2 from a storage reservoir could easily be excluded. Furthermore, Lake Nyos is being degassed at the moment, precisely to prevent a recurrence of the tragedy [102]. A similar strategy could be adopted for any lake into which carbon dioxide leaked from a man-made CO2 storage facility. Finally, little is known about the long-term storage issues. The required storage period is greater than the likely lifetime of any corporation. This raises issues of ownership, monitoring and liability for leaks or man-made breaches of the storage integrity into the distant future. Because of the longevity of storage, it seems inevitable that ownership and liability would, at some stage, be transferred to the state.

4.13 Public Perception A further major issue is whether people will find CO2 sequestration underground an acceptable alternative to emitting CO2 to the atmosphere. Research on perceptions of CCS is challenging because of: a) the relatively technical and “remote” nature of the issue, meaning that there are few immediate points of connection in the lay public’s frame of reference to many of the key concepts; b) the early stage of the technology, with very few examples and experiences in the public domain to draw upon as illustrations [84]. In a UK survey of public perceptions [84], it was found that on first hearing about carbon storage in the absence of information as to its purpose, the majority of people either do not have an opinion at all or are somewhat sceptical. Once (even limited) information is provided on the role of carbon storage in reducing CO2 emissions to the atmosphere, opinion shifts considerably towards slight support for the concept. Support depends, however, upon concern about human-caused climate change, plus

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recognition of the need for major CO2 emission reductions. It also depends upon CCS being seen as one part of a wider strategy for achieving significant cuts in CO2 emissions. A portfolio including renewable energy technologies, energy efficiency and lifestyle change to reduce demand, was generally favoured. CCS can be part of such a portfolio but wind, wave, tidal, solar and energy efficiency were generally preferred as options. As a stand alone option, it was felt that CCS might delay more far-reaching and necessary long-term changes in society’s use of energy. The notion of CCS as a “bridging strategy” to a hydrogen-based energy system was welcomed. It was felt that uncertainties concerning the risks of CCS had to be better addressed and reduced, in particular the risks of leakage, of accidents, or environmental and ecosystem impacts, and any human health impacts. Lenstra and van Engelenburg [60] pointed out that the current paradigm for environmental policy causes a negative reaction towards end-of-pipe solutions such as CO2 removal when they are presented as a dedicated single technology. The authors suggest that CO2 storage could be raised most appropriately as part of a wider debate along the lines of: “What do we the public think should be done about CO2 emissions to the atmosphere?” Clewes [quoted in 60] indicates the following perceived barriers to CO2 capture and storage technology: The technology is in its infancy and unproven, it is too costly, not enough is known about the long-term storage of CO2, the capture and storage of CO2 are seen as being energy intensive, the option presents an enormous engineering and infrastructure challenge, and it is not a long term solution. Both Lenstra and van Engelenburg [60] and Clewes [quoted in 60] conclude that these barriers can only be overcome by R & D and effective demonstration of the technology. It will not be possible to overcome them by communication alone.

4.14 Conclusions The underground storage of industrial quantities of carbon dioxide is technically possible, and CO2 storage both in saline water-filled reservoir rocks and in oil and gas fields has reached the demonstration stage. However, it is important to bear in mind that the Earth’s subsurface geology is an extremely variable natural system. So the question of whether important issues such as the long-term safety and stability of storage can be satisfactorily resolved is a site-specific one. Nonetheless, the indications are that underground CO2 storage could have a significant impact on our greenhouse gas emissions, perhaps acting as a bridging technology to ease the

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transition from our fossil-fuel fired energy system to a low- or no-carbon energy system in the future. Consequently, this technology is being taken extremely seriously, for example by the UNFCCC through its subsidiary body the IPCC. Finally, for the UK, an international agreement to limit the rise in atmospheric CO2 concentration to 550 ppmv would imply cuts in CO2 emissions of around 60% by 2050 and perhaps 80% by 2100 [81]. The enormity of this proposition is illustrated by the fact that even the complete abandonment of power generation from fossil fuels would only result in about a 30% cut in emissions. However, it does suggest that the underground storage of carbon dioxide should be advanced urgently by both research and further effective demonstration projects.

Acknowledgements This paper is published with the permission of the Chief Executive of the British Geological Survey (NERC). The author thanks Erik Lindeberg for permission to show Figure 1, Statoil for Figures 2 and 3, and the SACS project consortium for Figure 4.

References 1.

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5 Climate Change and Energy Pathways for the Mediterranean

Oliver Schäfer Cyprus Research and Educational Foundation The Cyprus Institute

5.1 Renewable Energy: A Definition The world’s energy supply is largely based on conventional energy sources. Most of these sources of energy, however, will not last forever and have proven to be one of the main causes of our environmental problems. Environmental impacts of energy use are not new but they are increasingly well known. They range from deforestation to local and global pollution. It is clear therefore, that in due time renewable energies1 will dominate the world’s energy supply system, due to their inherent advantages such as mitigation of climate change, generation of employment and reduction of poverty, as well as increased energy security and supply. Renewable energy technologies are well suited to respond to the limitations of current energy patterns and contribute to the further modernisation of the energy sector. Renewable sources of energy are in line with an overall strategy of sustainable development. They help reduce the dependence on energy imports, or do not create a dependence on energy imports in countries with 1

Any energy resource naturally regenerated over a short time scale that is derived directly from the sun (such as thermal, photochemical and photoelectric), indirectly from the sun (such as wind, hydropower and photosynthetic energy stored in biomass), or from other natural movements and mechanisms of the environment (such as geothermal and tidal energy).

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increasing energy needs, thereby ensuring a sustainable security of supply. Furthermore, renewable energy sources can help improve the competitiveness of industries and have a positive impact on regional development and employment. Renewable energy technologies are suitable for off-grid services, serving those in remote areas of the world without having to build or extend expensive and complicated grid infrastructure. The earth receives solar energy as radiation from the sun, in a quantity far exceeding mankind’s use. By heating the planet, the sun generates wind. Wind creates waves. The sun also powers the evapotranspiration cycle, which allows water to generate power in hydro schemes — currently the largest source of renewable electricity in use today. Plant photosynthesis, which is essentially a chemical storage of solar energy, creates a wide variety of so-called biomass products ranging from wood fuel to rapeseed, which can be used to generate heat, electricity and liquid fuels. Inter-actions with the moon produce tidal flows, which can be intercepted and used to produce electricity. Renewable energy sources (RES) are based on the natural and interconnected flows of energy of our planet Earth. Though humans have been tapping into all renewable energy sources (wood, solar, wind, geothermal and water) for thousands of years for their needs (such as cooking and heating), so far only a tiny fraction of the technical2 and economic potential of renewable energy has been captured and exploited for energy usage. Yet, with existing and proven technologies, renewable energy offers safe, reliable, clean, local and increasingly costeffective alternatives for all our energy needs. Combined with the improvement of energy efficiency and the rational use of energy, renewable energy can provide everything fossil fuels currently offer in terms of energy services: • Heating and cooling — Solar water heating, solar passive and biomass-based space heating for buildings, geothermal heat and geothermal heat pumps are entering the market as mainstream technologies. Active solar space heating and cooling for buildings and industry are under development. • Electricity — Electricity from wind power, small-scale hydro and biomass are a market reality. Geothermal electricity has existed for 2

A study shows that the total available global wind resource technically recoverable is more than twice as large as the projection for the world’s entire electricity demand in 2020. Similarly, theoretical solar energy potential corresponds to almost 90,000,000 Mtoe per year, which is almost 10,000 times the World Total Primary Energy Supply (IEA 2003).

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decades and supplies electricity for 30 million people worldwide. Photovoltaics are already cost-effective in niche markets worldwide, while tidal and wave power as well as concentrated solar power will need further research and development before they can be commercialised. • Transport fuels — Liquid biofuels, like bioethanol and biodiesel produced from agricultural crops, will require better recognition of their low-carbon benefits and their rate of progress will be influenced by decisions taken in other areas of policy such as taxation policy and agricultural policy.

5.2 Integration of Renewable Energy The rapid deployment of renewable energy technologies and their larger deployment in the near future, raise challenges and opportunities regarding their integration into energy supply systems. Energy systems aim at meeting the demands for a broad range of services (such as household and industry needs, transportation and storage). Energy systems include an energy supply sector and the end-use technology to provide the aforementioned energy services. In the EU and other industrialised countries, the existing energy supply system is mainly composed of large power units, mostly fossil fuelled and centrally controlled, with average capacities of hundreds of MW. Renewable energy sources are geographically widely distributed and if embedded in distribution networks are often closer to the customers. Locating renewable and distributed generators downstream in the distribution network is known as distributed generation. Distributed generation involves the use of small, modular energy conversion units close to the point of consumption by a wide variety of producers. In the power sector, utilities have limited experience of interconnecting numerous small-scale generation units to their distribution networks and the possible level of renewables penetration depends mostly on the existing electrical infrastructure considered. Bringing on land the power produced from a large offshore wind farm is (economically) only possible when a strong electric grid exists and sufficient electricity grid capacity is available. Other cases exist where a completely new energy infrastructure with the specific purpose of allowing very high penetration levels, up to 100% electricity from renewables, has been established. This decentralised energy generation, close to the end customer, differs fundamentally from the traditional model of energy system of large power stations generating centrally-controlled power. This approach is new, re-

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placing the concept of economy of scale for large units by economy of numbers (production of small units in large quantities).3 Far from being a threat, distributed generation based on renewable energy offers opportunities. It can: • Reduce the transmission and distribution losses as well as transmission and distribution costs;4 • Provide customers with continuity and reliability of supply;5 • Stimulate competition within renewable technologies to improve their competitiveness; and • Be implemented in a short time due to the modular nature of renewable energy technologies. Distributed generation is based, to a large extent, on the development and integration of renewable energy. This concept also involves energy efficiency and demand-side management measures at the customers’ end. Renewable energy development and increase of energy efficiency are strongly interdependent. The European Union has always stressed the pressing need to renew commitment both at the community and member state levels to promote energy efficiency more actively. In the light of the Kyoto agreement to reduce CO2 emissions, only improved energy efficiency with increased use of renewables will play a key role in meeting the EU Kyoto target economically. In addition to a significant positive environmental impact, improved energy efficiency will lead to a more sustainable energy policy and enhanced security of supply, as well as to many other benefits. The experience in some successful states in terms of RES electricity deployment shows that some minimum requirements are needed, such as: • An attractive long-term, stable and effective financial framework; • A coherent market support mechanism adapted to each renewable energy technology; • Removal of administrative barriers through the implementation of uniform planning procedures and licensing systems; • Guarantee of a fair grid access and non-discriminatory tariffs; and • Least-cost network planning. 3 4

5

Weinberg 1995; Ianucci et al. 1999; World Energy Council 2001. The IEA alternative scenario (WEO 2002; WEIO 2003) predicts savings of about 40% for the transmission grid and 36% for the distribution due in particular to the increased use of distributed generation energy. This argument is a major driver when you take into account the recent blackouts in the United States and Italy.

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The European Union has to follow up the implementation of existing supportive legislative or non-legislative measures that are already adopted on the European level. They have to be transformed into national policy as foreseen by the EU. If necessary, additional measures on the EU level have to be taken. For the heating sector the situation is different. The administrations should take framework initiatives — if necessary, legislative proposals — to accelerate the fulfillment of the potential of three key technologies: modern biomass heating, solar heating and geothermal heat. These initiatives could include targets for specific technologies, or requirements for suppliers of heating oil and gas to supply wood pellets and biogas as well as non-discriminatory market access for heat and cold from renewable energy sources and a financial compensation for the macro-economic benefits of renewable energies. The installation of suitable financial support schemes in Europe, which creates a high level of security of investment, thus enables a broad supply of heat and cold from renewable energies and stimulates the regional creation of value. For the EU, the adoption of future financial perspectives for 2007–2013 is the opportunity for the enlarged EU to express its political determination to change course and direct its efforts towards sustainable energy. This is the moment at which the EU can allocate the resources needed to achieve its goals in this field.

5.3 Necessary Policy Measures at the International Level To make a significant increase in the share of renewable energy-to-energy supply become reality, advanced policy measures have to be adopted globally. Governments from all over the world need to implement necessary minimum policy measures to guarantee the further deployment of renewable energy technologies and additional commitments on the international level have to be made. Minimum requirements are as follows: Establishment of legally binding RES targets

The states that are currently actively promoting renewable energy sources should set up legally binding targets for renewable energy sources in their governing areas. The mandatory targets can also be complemented by financial incentives in the respective countries. This too would be an effective policy to address security of supply, technology development, employment and climate objectives.

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Awareness of RES

Many decision makers and politicians are not aware of the many results that can be derived by renewables. Therefore, information campaigns are necessary as a tool to provide first-hand information and increase awareness about the advantages of RES in the climate change debate. Additionally, governments should be informed about how RES projects can help them to reach their binding targets of CO2 reductions under the Kyoto Protocol. More emphasis on RES projects in development policy

In the current development policy, the developing countries’ governments put little emphasis on RES. One of the main aims should be to create sustainable development in developing countries (access to energy in order to fight the vicious circle of poverty, which two billion people are still in at the moment, and to foster economic development without this putting pressure on the environmental equilibrium). The target can only be achieved with the use of renewable energy sources. Support from International Financial Institutions

A special focus needs to be set on financial institutions, such as the World Bank, international export credit agencies or regional development banks. Financial resources should be mobilised to help developing countries carry out their obligations in the field of sustainable development. Funds (smalland medium-sized funds) should be provided for projects in the field of renewable energy sources. A significant part of financial institutions’ resources should go to the funding of RES projects for climate change purposes. Change of subsidies policy

The social and environmental costs of polluting energy are not internalised in current prices of conventional energy. A lot of countries worldwide pay (direct or indirect) subsidies to conventional energy. If this kind of policy is changed, renewable energy sources will be even more competitive. Research and development

The direct public spending on research and development in the energy sector in the industrialized countries should be increased significantly. Energy research and development priorities should be shifted rapidly away from

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fossil energy and energy from nuclear fission towards renewables and efficiency. Ratification of the Kyoto Protocol

All efforts should be made to ratify the Kyoto Protocol and set targets for the period after 2012. After having the Kyoto Protocol in place, additional measures and targets for reducing greenhouse gases need to be established. Renewable energy should be set as a priority for all CDM projects. 5.3.1 The Question Is: How Fast Can the Transformation into a Carbon Neutral Energy Supply System Based on Renewable Energy Sources Happen? Some existing projections neglect the possibilities of renewable energy technologies being available worldwide quickly and easily. In most cases renewables are more cost effective than traditional centralized energy structures, at least where no infrastructure is yet built. 5.3.2 Fifty Percent by 2040 is Feasible Assumptions made by the EREC – European Renewable Energy Council — together with its member associations (EPIA, ESHA, ESTIF, EUBIA, EUREC Agency, EWEA, AEBIOM and EGEC) based on experiences and cumulative knowledge lead to assumptions about expected annual installation growth rates for different technologies. They show that by 2040 a share of renewable energy up to 50% worldwide is possible. To reach such a share, advanced, intelligent and reliable policy measures have to be implemented at least in the majority of countries worldwide. Policy measures such as the implementation of the Kyoto Protocol, internalisation of external costs for conventional energy supply, ending subsidies to conventional, polluting energy sources and other initiatives have to be adapted to make the assumptions a reality. If these measures are not adopted in significant parts of the world, the deployment of renewable energy sources will be much slower. But even then the natural needs and benefits of renewables will be used to supply 27% of the world’s energy needs. Scenarios are images of alternative futures. Scenarios are neither predictions nor forecasts. Each scenario can be interpreted as one particular image of how the future could unfold. Scenarios are useful tools for investi-

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gating alternative future developments and their implications, for learning about the behaviour of complex systems and for policy-making. 5.3.3 Advanced International Policies Scenario (AIP) The assumptions in this scenario are based on ambitious growth rates for renewable energy sources that need additional support measures in order to be reached. It is assumed that regions already active in the promotion of renewables will increase their efforts and that other regions will follow these examples. Higher prices for conventional energy supply are anticipated as well as growing support for electrification of the poor regions by renewables. Implementation of the Kyoto Protocol as well as additional measures on the international level for climate protection and for the promotion of renewables is also needed to reach the assumed growth rates. International cooperation on all levels has to be strengthened. The assumptions for total energy consumption are based on a scenario from IIASA. It is optimistic about technology and geopolitics; it assumes unprecedented progressive international cooperation focused explicitly on environmental protection and international equity. It includes substantial resource transfers from industrialised to developing countries, spurring growth in the south. Nuclear power proves a transient technology that is eventually phased out entirely by the end of the 21st century. Nevertheless, these measures seem to be ambitious but realistic. Energy is the key theme for future world development. The energy demand worldwide is increasing rapidly, especially in the developing countries and transition countries, which seek to catch up with the economic development attained by industrialized countries during the last century. The great challenge now is to meet this energy demand in a sustainable manner. Without a sustainable reinforcement of the global energy supply system, sustainable development will not be possible. It is absolutely certain that without major changes in energy supply systems, climate change will have a significant impact on human life. The costs of climate change will not only burden economic development worldwide, but will also lead to natural catastrophes, which remain as yet unknown. Every year that we delay in tackling climate change will make efforts even more cost intensive. Another goal for the international community must be to overcome poverty in developing countries. More than two billion people have no access to modern forms of energy supply and thus have no opportunities to overcome poverty. Poverty alleviation was one of the main goals of the summit in Johannesburg in 2002, but no major effects will be reached without giv-

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ing the two billion energy-poor access to modern energy supplies. Renewable energy sources, due to their inherent decentralised nature, can contribute significantly to this goal. However, without rapid and resolute international policy support, the expansion of renewable energy sources will not be able to develop the necessary dynamics in time. Nevertheless, it is imperative for many reasons that additional efforts are made: Climate protection

A mean global temperature change of more than 2 degrees Celsius relative to pre-industrialised levels and a mean long-term rate of global temperature change exceeding 0.2 per decade are intolerable parameters of global climate change. It will only be possible to remain within this climate window if energy systems are converted from the present use of fossil fuels to climateneutral energy sources. Renewable energies will need to play the main role in this context.6 Keeping risks within a normal range

A sustainable energy system needs to build upon technologies whose operation remains within the normal range of environmental risks. Energy by nuclear fission fails to meet this requirement, particularly because of its high accident risk and unresolved waste management, but also because of the risks of proliferation and terrorism. Security of supply

Humankind is approaching the exhaustion of conventional energy reserves. Renewable sources of energy have considerable potential for increasing security of supply worldwide. Developing their use, however, will depend on extremely substantial political and economic efforts. In the medium term, renewables are the only source of energy in which the world has a certain amount of room to aim at increasing supply in the current circumstances. In the long run renewable energy sources will be the only energy source available. Intensified efforts to improve efficiency are an indispensable element of global energy system transformation at all levels.

6

WBGU — German Advisory Council on Global Change, Policy Paper 3.

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The assumptions

Based on past experiences within the renewable energy sector, the EREC scenario believes that with supportive policy measures the following growth rates can be achieved. Table 1. 1996– 2001

2001– 2010

2010– 2020

2020– 2030

2030– 2040

Biomass

2%

2.2%

3.1%

3.3%

2.8%

Large hydro

2%

2%

1%

1%

0%

Small hydro

6%

8%

10%

8%

6%

Wind

33%

28%

20%

7%

2%

PV

25%

28%

30%

25%

13%

Solar thermal

10%

16%

16%

14%

7%

Solar thermal electricity

2%

16%

22%

18%

15%

Geothermal

6%

8%

8%

6%

4%

Marine (tidal/wave/ocean)

–

8%

15%

22%

21%

In Table 1, one can see the different growth scenarios for the different technologies during the decades up to 2040. It also shows the complementarities of the different renewable energy sources. Some renewable energy technologies will grow more quickly than others during the next 20 years, but will then face a significant reduction in terms of market growth. Others still need some years to reach the break through, but will then — mainly due to cost reductions or technical innovations — grow quickly and steadily. Also in terms of technical restraints these different growth rates show the complementarity of all renewable energy sources. Intermittency of wind power or PV will not cause any problems to electricity supply until a significant share is reached. But by that time other renewable energy sources such as small hydro or marine technologies will complement the system and by that cover the necessary base-load. If the advanced cumulative growth rates explained in this paper are reached, renewable energy sources will have a contribution to total primary energy consumption of nearly 50% by 2040.

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Fig. 1.

W orld Prim a ry Ene rgy Consum ption Biomass Large Hydro Small Hydro W ind PV Solar Thermal Solar Thermal Electricity Geothermal Marine (tidal/wave/ocean) TOTAL RES RES Contribution

2001

2010

2020

2030

2040

10038.3 1080 222.7 9.5 4.7 0.2 4.1 0.1 43.2 0.05 1364.5 13.6%

10549 1313 266 19 44 2 15 0.4 86 0.1 1745.5 16.6%

11425 1791 309 49 266 24 66 3 186 0.4 2694.4 23.6%

12352 2483 341 106 542 221 244 16 333 3 4289 34.7%

13310 3271 358 189 688 784 480 68 493 20 6351 47.7%

Fig. 2. The contribution of renewable energy sources to the world energy supply in 2040 — projections in Mtoe — Advanced International Policy Scenario (IIASA figures for WPEC)

5.4 Exemplary Detailed Scenario for Electricity — Advanced International Policies Scenario If only electricity supply is assumed for the years up to 2040, the contribution of renewable energies in this field is much higher compared to total energy supply in 2040. The higher penetration of renewables in electricity supply has different factors. On the one hand, some renewable techniques for electricity supply

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T o ta l C o n su m p ti o n (I E A ) L a rg e H y d ro S m a ll H y d ro B io m a s s W in d PV G e o t h e rm a l S o la r T h e rm a l M a rin e TO TA L R E S R E S C o n tr i b u ti o n

2001

2010

2020

2030

2040

15578 2590 110 180 54.5 2.2 50 1 0.5 2988.2 1 9 .2 %

19973 3095 220 390 512 20 134 5 1 4377 21.9%

25818 3590 570 1010 3093 276 318 40 4 8901 3 4 .5 %

30855 3965 1230 2180 6307 2570 625 195 37 17109 55.4%

36346 4165 2200 4290 8000 9113 1020 790 230 29808 82.0%

Fig. 3.

are already more mature now compared to, for example, the conversion of renewables into fuels for transport. On the other hand, there are limiting factors for heating and cooling applications that are more difficult to overcome. Therefore, the assumptions for electricity supply of renewables by 2040 are that renewables will contribute more than 80% to the total global electricity supply in 2040, as shown in Figure 3. In the electricity supply, the share of large hydro in terms of percentage will significantly decrease, because there is no major growth expected. From its current status as the number one renewable electricity supply, it will only be in fourth place in 2040. Conversely, PV will then be the largest renewable electricity source with a production of more than 9000 TWh, followed by wind and biomass. Scenarios help us understand the limitations of our “mental maps” of the world — to think the unthinkable, anticipate the unknowable and utilise both to make better strategic decisions for future generations.

6 Global Bioenergy Resources and Utilization Technologies

Hiromi Yamamoto The University of Tokyo and Central Research Institute of Electric Power Industry

Abstract: The author explains global bioenergy supply potential and economic bioenergy uses in the future calculated by a multiregional global land use and energy model (GLUE). Concerning the bioenergy supply potential, the following results were obtained. (1) Supply potential of energy crops produced from surplus arable land will be available in North America, Western Europe, Oceania, Latin America, and the former USSR and Eastern Europe. However, the potential of energy crops will be strongly affected by variation of parameters of food supply and demand such as animal food demand. (2) Bioenergy supply potential of biomass residues will be stable against a change of a food demand parameter. The ultimate bioenergy supply potential of biomass residues will be 265 EJ/year in the world in 2100. (3) CO2 emission constraints will be advantageous to bioenergy, the CO2 intensity of which is close to zero. In 2050 the bioenergy used economically in the world is 74 EJ/year in no CO2 constraint case (FREE case), 131 EJ/year in COP3 forever case (CP3F case) and 337 EJ/year in a case where the CO2 emissions will be 30% less than that in CP3F (C30R case). (4) Biomass gasifier and biomass-gasifier-combined-cycle (BGCC) will be used on a large scale in any cases in 2050. Synthesis gas (H2 and CO) produced by biomass gasifier will be used mainly to make synthesized liquid fuel such as methanol and syn-oil.

6.1 Introduction Bioenergy is expected to become one of the key energy resources in the future because bioenergy maintained adequately is renewable and free from net CO2 emissions. The author evaluated global bioenergy supply potential and bioenergy-related costs. Global bioenergy supply potential was evaluated using a global land use and energy model (GLUE) that considers E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 101–111. © 2008 Springer.

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land use competitions and overall biomass flows (Yamamoto et al. 1999, 2000, 2001a). Bioenergy-related costs were evaluated using a combined model (GLUE 2.0) of a global land use and energy model (GLUE) and an optimization model of global energy supply system costs with a linear programming technique. Using the model of GLUE 2.0, the author calculated the optimal energy supply systems with or without constraints of CO2 emissions and evaluated the importance of various bioenergy resources and various bioenergy conversion technologies (Yamamoto et al. 2001b).

6.2 Multiregional Global Land Use and Energy Model (GLUE) 6.2.1 Outline of GLUE In this section, the author explains the outline of the multiregional global land use and energy model (GLUE). In the model, the world is divided into eleven regions (Table 1) in order to analyze land-use competitions and bioenergy supply potential regionally. The model consists of two sectors (a food sector and a forest sector) and describes land-use competition among various uses for biomass products such as paper, timber, food, feed and energy. The model covers a wide range of land uses and biomass flows including paper recycling and food chains from feed to meat (Figure 1). The model calculates bioenergy supply potential from 1961 to 1990 using the past data and simulates that from 1990 to 2100 using the data in the Table 1. Regions in the model (GLUE) No.

Regions

1 2 3 4 5 6 7 8 9 10 11

North America Western Europe Japan Oceana Centrally Planned Asia Middle East and North Africa Sub-Sahara Africa Latin America Former USSR and Eastern Europe Southeast Asia South Asia

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Fig. 1. Wood biomass flow in the model (a). The widths of the arrows are not representative for the magnitude of the flow

future with a one-year time step. The data in the future were based on literatures such as FAOSTAT 1995, Bos et al. 1993, Pepper et al. 1992, Johansson et al. 1991, and Alcamo 1994. The author assumed a reference case where the data in the future were based on middle or base scenarios of the above literatures. The details of the model and the data were explained in Yamamoto et al. 2001b. 6.2.2 Simulation Results The author conducted simulations using GLUE and the data in the reference case, and analyzed the simulation results of bioenergy supply potential considering land-use competitions. Supply potential of energy crops

There will be supply potential of energy crops produced from surplus arable land in North America, Western Europe, Oceania, Latin America, and FSU and Eastern Europe. The bioenergy supply potential in the world will be 110 EJ/year in 2050 and 22 EJ/year in 2100 (Figure 2). The reasons for the decrease of the potential between 2050 and 2100 are as follows. It was assumed that crop productivity would mature in the world

Hiromi Yamamoto 120 120 100 100 80 80 60 60 40 40 20 20

2100 2100

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Energy crops supply potential Energy crops supply potential （EJ/yr） (EJ/yr)

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SouthAsia Asia South SoutheastAsia Asia Southeast FSU Europe FSU and andEast E. Europe Latin Latin America America Sub-Sahara Sub-SaharaAfrica Africa Middle East and Middle East andN.N.Africa Africa China, China etc. etc. Oceana Oceania Japan Japan Western WesternEurope Europe North NorthAmerica Americal

Fig. 2. Supply potential of energy crops

after 2050 (Alcamo 1994) but animal food demand per capita would grow continuously in the developing regions after 2050 (Yamamoto et al. 2001a). Therefore, the increase of the food demand will exceed the increase of the food supply in the world, and the supply potential of energy crops will decrease between 2050 and 2100. Supply potential of biomass residues

It was defined that ultimate bioenergy supply potential of biomass residues was all discharged biomass excluding that of material such as timber and paper recycling. The ultimate potential that is larger than the realistic potential can be a kind of yardstick of biomass resources. Ultimate bioenergy supply potential of biomass residues will increase from 84 EJ/year in 1990 to 265 EJ/year in 2100 in the world in the reference case, following the increase of biomass consumption in the future. The potential will be large in North America, Centrally Planned Asia, Latin America and South Asia where there will be major consumers or exporters of biomass (Figure 3). The numbers of the potential in those regions will be larger than 30 EJ/year in 2100. Cereal-harvesting residues will take the highest share at 42% of the total residue potential in the world in 2100. Besides, industrial roundwoodfelling residues, timber scrap and animal dung will take shares above 10%, respectively (Figure 4).

6.3 An Optimization Version of a Global Land Use and Energy Model (GLUE 2.0) In order to evaluate economy of bioenergy as well as the bioenergy supply potential, the author developed an optimization version of the multiregional

105

South AsiaAsia South

300 300

Southeast Asia Asia Southeast

250 250

residues （EJ/yr）

FSU andand EastE.Europe FSU Europe

200 200

Latin America Latin America

150 150

Sub-Sahara AfricaAfrica Sub-Sahara

100 100

Middle East andand N. Africa Middle East N. Africa China, etc.etc. China

5050

Oceana Oceania 2100

2100

2090

2090

2080

2080

2070

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1990

00

1990

Ultimate supply potential of biomass residues (EJ/yr) Ulitimate supply potetial of biomass

Global Bioenergy Resources and Utilization Technologies

Japan Japan Western Europe Western Europe America North North Americal

1.00

Human feces

0.90

Kitchen refuse

0.80

Animal dung

0.70 Bagasse

0.60

World

South Asia

Southeast Asia

Former USSR & Eastern Europe

Black liquor

Latin America

Sawmill residues

0.00 Sub-Sahara Africa

Paper scrap

0.10 Middle East & North Africa

Timber scrap

0.20

Centrally Planned Asia

Cereal harvesting residues

0.30

Oceania

0.40

Japan

Sugarcane harvesting residues

Western Europe

0.50

North America

Share of ultimate energy potential of biomass residues

Fig. 3. Ultimate bioenergy supply potential of biomass residues a) Ultimate means all discharged biomass excluding biomass of material recycling such as timber and paper recycling

Fuelwood felling residues

Industrial roundwood felling residues

Fig. 4. Share of ultimate bioenergy supply potential of biomass residues (in 2100)

global land use and energy model (GLUE 2.0). The author explains the outline of the model and the data. The data includes economic data of bioenergy concerning bioenergy resources and bioenergy utilization technologies. 6.3.1 Outline of an Optimization Version of a Global Land Use and Energy Model The optimization model is described using a liner programming (LP) technique. The model consists of two parts: an energy systems part and a land use part. The energy systems part is based on a global energy systems

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model named New Earth 21 (NE21) (Fujii and Yamaji 1998) and the land use part is base on a global land use and energy model (GLUE) explained in the previous section. NE21 includes a detailed description of energy resources and energy utilization technologies. The author added data of bioenergy resources and bioenergy utilization technologies to NE21 (see the following sub-section). The objective function of the model is the summation of the energy system costs. 6.3.2 Costs of Biomass Resources Kinds of biomass resources can be used not only for energy but also for material or food. The costs of bioenergy in the model included opportunity costs of biomass for material or food. If the supply cost of a kind of bioenergy is less than the price of the biomass for material or food, the bioenergy cost includes the opportunity cost for material or food. On the other hand, if a kind of biomass residue has no use except for energy, there may be a disposal cost; the bioenergy resource cost may be negative when the supply cost is less than the disposal cost. The principle to set bioenergy resource costs is as follows. • When an opportunity cost occurs: (Bioenergy resource cost) = (supply cost) + (opportunity cost) • When a disposal cost occurs: (Bioenergy resource cost) = (supply cost) − (disposal cost) • In the other cases: (Bioenergy resource cost) = (supply cost) The supply cost comprises costs of harvest, transportation and processing of the bioenergy. As an example, the author explains market prices of roundwood, timber, wood chips (for wood pulp) and sawdust in Japan. An average price of roundwood is about $84/m3 (about $7/GJ). Prices of timber and wood chips for wood pulp are about 45,000 yen/m3 (about $31/GJ) and about 8,000 yen/m3 (about $5/GJ), respectively. A market price of sawdust for energy or manure is about 1,000 yen /m3 (about $0.7/GJ) (Yamamoto et al. 2001b). The wood prices for non-energy are higher than (or equal to) the wood prices for energy. Figure 5 shows the first-grade (or the lowest) costs of bioenergy resources in the model. The bioenergy resource costs were assumed to increase in proportion to the resource utilization ratios (that are resource uses per ultimate resource supply potentials) (Yamamoto et al. 2001b). The modern fuelwood cost is the most expensive because it includes the oppor-

107

6 4 2 0 -2 -4 -6 -8 (Oil)

(Coal)

Human feces

Kitchen refuse

Animal dung

Bagasse

Sugarcane harvesting residues

Cereal harvesting residues

Timber scrap

Paper scrap

Sawmill residues

Modern fuelwood

Roundwood harvesting residues

Black liquor

-10 Energy crops

Costs of bioenergy resources ($/GJ)

Global Bioenergy Resources and Utilization Technologies

Fig. 4. Costs of bioenergy resources in the model

tunity costs of material use. The cost of energy crops is the third mostexpensive because it includes cultivation costs. Some kinds of biomass residues that are discharged at the factory or are collected by public garbagecollection systems can be used for energy at zero cost. Furthermore, some kinds of biomass residues with disposal costs such as animal dung and human feces can be used for energy at negative costs. 6.3.3 Costs of Bioenergy Utilization Technologies The author considered costs and efficiencies of bioenergy utilization technologies such as power generation (steam power and gasified combinedcycle), and biomass gasification, biogas (anaerobic digestion) power generation and ethanol fermentation using cellulosic biomass. Synthesis gas (H2 + CO) made through biomass gasification processes are used for gaseous fuel (H2), methanol synthesis and syn-oil synthesis. 7000

5000 4000 3000 2000 1000

Ethanol fermentation

Methanol synthesis(indirect)

Methanol synthesis(high pressure)

Methanol synthesis(low pressure)

(Coal power)

Biogas power

Gasifier combinedcycle(2030)

Gasifier combinedcycle(1997)

Cofiring(retrofitting)

Steam power(2020)

0 Steam power(1997)

Costs of bioenergy plants($/GJ)

6000

Fig. 5. Costs of bioenergy utilization technologies in the model

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The author summarized the costs of the bioenergy utilization technologies using the costs per unit outputs ($/kW) (Figure 6). Consequently, biogas power generation is the most expensive because the power output is small compared with the facility size. However, the biogas power generation improves the cost condition when it uses biomass resources with disposal costs such as animal feces. Steam power, gasified combined-cycle and gasified methanol synthesis are developing technologies and the expected costs contain large uncertainty. Co-firing of biomass and coal is the cheapest among the power generation technologies. However, the co-firing system is the system of retrofitting the existing coal power plant without increase in the plant capacity, and the cost of the co-firing cannot be compared with that of the other power plant technologies in a simple way. Therefore the author excludes the co-firing system from the model analysis. 6.3.4 CO2 Emission Scenarios Below are three CO2 emission scenarios the author used for the simulation: 1. FREE FREE is no CO2 constraint scenario. 2. CP3F CP3F is COP3 forever scenario (UNFCCC 2005). In CP3F, the greenhouse gas constraints on the developed regions (including the former USSR) between 2008 and 2012 in COP3 will continue to be the same forever. There are no CO2 constraints on the developing regions. Tradable CO2 permits are allowed among the developed regions. 3. C30R CO2 emissions in C30R in all the regions in the world will be 30% less than those in CP3F in and after 2020. Tradable CO2 permits are allowed among all the regions in the world. 6.3.5 Simulation Results When CO2 emission constraints are imposed, it will be advantageous to bioenergy the CO2 intensity of which is close to zero. In 2050 the bioenergy used economically in the world is 74 EJ/year in no CO2 constraint scenario (FREE), 131 EJ/year in COP3 forever scenario (CP3F) and 337 EJ/year in CP3F where the CO2 emissions will be 30% less than

100 90 80 70 60 50 40 30 20 10 0

109

FREE CP3F C30R

human feces

kitchen wastes

FREE CP3F C30R

Black liquor modern fuelwood Sawmill residues wood harvest residues Paper scrap black liquor Waste wood sawmill residues Energy crops paper scrap Cereal harvest residue waste wood Sugarcane harvest residue energy crops Bagasse cereal harvest residue Animal dung sugarcane harvest residues Kitchen waste bagasse Human feces animal dung

Bioenergy uses (EJ/yr)

Modern fuelwood

100 90 80 70 60 50 40 30 20 10 0

Wood harvest residues

Bioenergy Uses (EJ/yr)

Global Bioenergy Resources and Utilization Technologies

Fig. 6. Bioenergy uses in primary energy (by resources, in 2050). a) Modern fuelwood uses in C30R is 196 EJ/yr. The world bioenergy uses in primary energy is 74EJ/yr in FREE, 131 EJ/yr in CP3F and 337 EJ/yr in C30R

Beanery uses (EJ/yr)

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250 250 200 200 FREE FREE

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of coal

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power

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Waste incineration waste power incineration

BGCC

BGCC

power

fermentation

Conv. Thermal power conv. thermal

Ethanol fermentation ethanol

gasifier

Pyrolized gasifier pyrolized

0 0

Fig. 7. Bioenergy uses (by utilization technologies, in 2050) (a). The bioenergy uses in C30R in Latin America is 127 EJ/yr. The world bioenergy uses in primary energy is 74EJ/yr in FREE, 131 EJ/yr in CP3F and 337 EJ/yr in C30R

those in CP3F (Figure 7). Biomass residues that can be used at low costs will be introduced even in FREE. Bioenergy plantation such as energy crops and modern fuelwood will be used on a large scale in CP3F. Biomass gasifier and biomass-gasifier-combined-cycle (BGCC) will be used on a large scale in any case in 2050. Synthesis gas (H2 and CO) pro-

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duced by biomass gasifiers will be used to make liquid fuel such as methanol and syn-oil (Figure 8). Anaerobic digestion power generation using animal dung and human feces, and waste incineration power generation using kitchen refuses, will be used even in FREE since the utilized biomass resources cost zero or negative. Ethanol fermentation using cellulosic biomass will not be selected since the ethanol fermentation is more expensive than the system of biomass gasification and syn-liquid production in the data in the model. However, both the ethanol fermentation using cellulosic biomass and syn-liquid production from biomass are developing technologies and the former might be less expensive than the latter in the future.

6.4 Conclusions In this study, the author shows global bioenergy supply potential and economic bioenergy uses in the future using a multiregional global land use and energy model (GLUE). The following results are obtained. (1) Supply potential of energy crops produced from surplus arable land will be available in North America, Western Europe, Oceania, Latin America, and the former USSR and Eastern Europe. However, the potential of energy crops will be strongly affected by variation of parameters of food supply and demand such as animal food demand. (2) Bioenergy supply potential of biomass residues will be stable against a change of a food demand parameters. The ultimate bioenergy supply potential of biomass residues will be 265 EJ/year in the world in 2100. (3) Biomass gasifier and biomassgasifier-combined-cycle (BGCC) will be used on a large scale in any case in 2050. Synthesis gas (H2 and CO) produced by biomass gasifiers will be used to make synthesized liquid fuel such as methanol and syn-oil.

References Alcamo J, editor (2004) IMAGE 2.0; Integrated Modeling of Global Climate Change. Kluwer Academic Publishers Bos E et al. (1993) World Population Projections; 1992–93 Edition. The John Hopkins University Press FAOSTAT (1995) (Food and of the United Nations) FAO, Rome Fujii Y, Kaya Y (1993) Assessment of technology options for reducing CO2 emissions from man’s global energy system. Transactions of the Institute of Electrical Engineers of Japan, 113-B(11):1213–1222 Johansson et al. (1991) Renewable Energy. Island Press, Washington DC

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Pepper W et al. (1992) Emission Scenarios for IPCC: An Update. IPCC Working Group 1 UNFCC 2005 http://unfcc.int/essential_background/Kyoto_protocol/items/3145.php, accessed on July 20 in 2005 Yamamoto H, Yamaji K, Fujino J (1999) Evaluation of bioenergy resources with a global land use and energy model formulated with SD technique. Applied Energy, 63(2):101–113 Yamamoto H, Yamaji K, Fujino J (2000) Scenario analysis of bioenergy resources and CO2 emissions with a global land use and energy model. Applied Energy, 66:325–337 Yamamoto H, Fujino J, Yamaji K (2001a) Evaluation of bioenergy potential with a multi-regional global land use and energy model. Biomass and Bioenergy, 21(3):185–203 Yamamoto H, Fujino J, Yamaji K (2001b) Bioenergy in Energy Systems Evaluated by a Global Land Use and Energy Optimisation Model. Research Report Y01005, Central Institute of Electric Power Industry

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7 Perspectives in Nuclear Energy

Bernard Frois CEA − Saclay, F-91191 Gif sur Yvette, France [email protected]

Nuclear energy is an important source of electricity in many countries. It produces approximately 7% of the world’s primary energy consumption. There are in total 440 reactors in operation around the world [1]. The first generation of nuclear reactors was designed in the 1950s and ’60s. The second generation began in the 1970s in the large commercial power plants that are now in operation. The future of nuclear power involves difficult issues: economics, waste disposal, safety, proliferation and an energy policy that is specific to each country. A general review can be found in the MIT interdisciplinary study [2]. The conclusions of the IAEA Ministerial Conference, held in Paris in March 2005, indicate a strong evolution of the worldwide perception on nuclear energy. Ministerial delegations from 30 countries, and representatives from 74 countries and from 10 international organizations discussed the perspectives of “Nuclear Power for the 21st Century.” There was no unanimous view, but a significant majority proposed that the contribution of nuclear energy should be increased to meet future world energy needs. Many delegations have expressed the urgent need to make decisions and take measures to make easier the implementation of new nuclear production systems, in particular for developing countries. Nuclear power does not contribute to greenhouse gas emissions. With the development of a new generation of fast reactors, nuclear energy would become a truly sustainable energy source. One of the important conclusions of the European Union Green Paper “Towards a European strategy for the energy security supply” [3], published in 2000, was that the goal is no longer to replace nuclear energy, but to develop new energy technologies to satisfy the continuous increase in energy demand. E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 113–125. © 2008 Springer.

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To give some perspective, the world consumption of primary energy is approximately 10 billion tons of oil equivalent (TOE) per year. Electricity demand is increasing much more rapidly than overall energy use, and is projected to grow at 2.8% per year to 2010, and substantially to 2020. This corresponds to an average value of 1.7 per capita. However, there are large differences among countries. The International Energy Agency (IEA) published a report two years ago in Johannesburg, showing that 1.6 billion people today have no access to electricity. 2.4 billion people rely on primitive biomass for cooking and heating, with concomitant health damage (mostly to women and children) and environmental degradation. What is more shocking is that, in the absence of radical new policies, 1.4 billion people will still have no access to electricity in 30 years time; and the number reliant on primitive biomass for cooking and heating will actually rise, to 2.6 billion. Furthermore, the two countries with the largest populations, China and India, are below one ton per capita and their energy consumption is growing at a fast pace. Several organizations, such as the International Energy Agency of the OECD and the World Energy Council are issuing predictions of the future needs. They all agree that the world population growth will go from the present 6 billion to some 10 billion in 2050. The goal of 2 tons per capita and per year would imply a strong policy of energy savings in the industrialized countries to compensate for part of the increase in developing countries. This would nevertheless lead to a doubling of world energy consumption within the next 50 years, on the order of 20 billion TOE per year. Fossil fuels, coal, oil and gas currently meet more than 85% of world energy needs and will continue to dominate for some time. There is no longer any doubt that the increase in atmospheric is due to our growing use of these fuels without any containment of the CO2 waste. The report of the Intergovernmental Panel on Climate Change (IPCC) predicts that the effect of a continuation of this increase in CO2 on the Earth’s climate will be significant and often damaging, with rising sea levels, more storms, floods and droughts and the destruction of precious habitats. Large quantities of additional energy will be needed to fuel economic growth, especially in developing countries with large populations like China, India and Brazil. If recent trends in energy use continue, as most economic analysts expect, then worldwide demand will grow by about 50% by 2020 and will double by 2050 [1, 4]. The growth will be even larger for electricity since, more than any other form of energy, it is an essential ingredient of economic development. Yet this growth with the present mix of fuels can only lead to more ecological problems. Providing more energy, while limiting the use of fossil fuels, is difficult. There is no simple solution. All available options must be considered with

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an open mind [1]. Conservation and improved energy efficiency are the most effective options for the next few decades, but these will not be enough on their own. The rate of improvement in efficiency over the last few decades has been smaller than the rate of growth in economic activity, so that energy demand has continued to rise. For the developing world, whose population is fast growing and starts from a small economic base, economic growth is faster and, in the normal course of events, energy use will actually grow faster still for some time to come. The world as a whole, therefore, needs to develop carbon-free energy sources. Most popular at present is the increased use of natural gas. Because of the so-called “dash to gas,” the OECD expects it to supply a larger share of the larger energy demand expected in the future (26% predicted for 2020; up from 22% at present). The new renewable sources of energy, such as solar power, wind power and biomass, are also carbon free and there is a widespread hope that they will supply higher and higher percentages of our energy mix; but it will not happen easily. In the longer term, from 2050 on, nuclear fusion may prove a very attractive contributor, and R&D on it should be actively pursued. Considerable progress has been achieved in particular in Europe at the JET European fusion facility (Culham, UK), at Tore Supra (CEA Cadarache, France) and at Naka in Japan. These machines have shown the path to the future. The goal of the next machine “ITER” is to be the last scientific demonstration before building the prototype for a commercial plant. China, Europe, Japan, Korea, Russia and the United States have announced at the beginning of July at the IAEA meeting in Vienna that ITER will be built at Cadarache in France. This is a great success for world scientific cooperation. ITER will allow for the understanding of nuclear fusion at the right scale. Before building a commercial nuclear fusion reactor, it will be necessary to study radiation damage in materials with a very intense source of neutron (IFMIF). The last step will be the building of the prototype of a commercial power plant (DEMO). A reasonable estimate of the time scale for commercial nuclear fusion energy would be on the order of 50 years, corresponding to the second half of this century.

7.1 Nuclear Energy Nuclear fission is one of the few large-scale carbon-free energy sources and currently provides 7% of global primary energy (17% of electricity) without any CO2 waste. Its costs are now well known and are unaffected

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by increases in oil and gas prices. It supplies 35% of the electricity generated in Europe, i.e., 75% of its CO2-free power. The nuclear industry has continuously improved the safety of nuclear power plants. In the United States for example, the accident rate of industry has decreased from 2.1 accidents per 200,000 workers hours in 1980 to 0.24 accidents in 2001; the average availability factor has continuously increased in the same period from 72.9% in 1990 to 83.4% in 2001 [5]. Currently, 10,000 reactor years of experience have been accumulated all over the world. However, the large-scale ordering of nuclear power stations that occurred in the two decades up to 1985 has been much reduced since then because, in 1986, fossil fuel prices fell dramatically, making it very hard for new nuclear plants to compete with modern, gas-fired ones. The accident at Chernobyl raised around the world the fear that nuclear power was not safe enough to use and made the licensing process much more difficult and uncertain. Fully amortized, operating nuclear plants remain very competitive and have built a good safety record since, so that even countries that had decided to abandon nuclear power have not closed these. Indeed, in many cases life extension is being pursued, but orders for new plants have dried up. If gas prices were to remain at their former low levels, and no CO2 controls were required, nuclear power would continue to have a hard time to competing in deregulated markets with up-to-date combined-cycle gas turbines. But recent price increases have demonstrated that such long-term price stability of oil and gas is unlikely and that prices will probably increase as demand continues to grow. It should be emphasized that the cost of nuclear power does include its “externalities,” including the cost of disposal of the radioactive waste it generates. In contrast, the use of hydrocarbon fuels does not include any charge for disposing of CO2. For example, the cost of gas power does not yet incorporate the cost of CO2 sequestration. Factoring in these costs would significantly improve the relative competitiveness of both nuclear and renewable energy sources. Conventional nuclear power would then become a competitive alternative for large-scale electricity generation [6] and society may wish to reconsider its other concerns about nuclear power. Last but not least, the price of fossil fuels is continuously ramping up. A few years ago, the standard prediction for the price of a barrel of oil today was of the order of $25; it is now around $80.

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7.2 The Future of Nuclear Power China is planning to increase the number of its nuclear reactors in the near future. Finland and France have recently decided to build the first European pressurized reactor (EPR) designed by French-German collaboration. A significant extension of the life of existing reactors, between 10 to 20 years, is now likely. The German government may wish to reconsider this year its decision to begin shutting down its nuclear power plants. The possible German decision would be a first step to extending the life of the existing nuclear power plants. Thus, if the present trend continues, the number of nuclear reactors in the world should increase. The development of nuclear power would follow a two-step process: • The first step would be to progressively replace the old reactors between now and 2040 with reactors of the third generation. These reactors are essentially ready to be built. Safety and their overall performance have been significantly increased. They are designed to last 60 years. • In a second step, starting around 2040, reactors of the fourth generation using new advanced technologies would be built. The goal of their design is to be more competitive from an economic point of view, to be much safer and burn a significant part of their waste. The fuel cycle should be designed to avoid the possibility of nuclear proliferation. These reactors are at the R&D stage.

Fig. 1. A possible scenario for the installation of future nuclear reactors in France proposed by the EDF company. In this scenario, the EPR generation replaces the present generation, and reactors of the future generation, “Generation IV” appear around 2040

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Between 2020 and 2040, advanced new reactors of the third generation will begin to take over the power plants of the present generation. Construction of the first EPR (European pressurized water reactor) in France will start in 2007. This reactor will produce its first electricity in 2012. It is an example of advanced design of the pressurized water technology of the “third generation.” It is designed to provide electricity more efficiently and more safely than the existing nuclear reactors. It will generate 1,600 megawatts of electricity — compared to 900 for most current reactors — need less regular recharging and should have a life span of 60 years. The reactor is designed to reduce the risk of accident by a factor of 10 and its double casing should withstand the impact of an aircraft. In the event of a disaster, the reactor core is designed to avoid the type of accident that occurred in Chernobyl. The reactors of the third generation are advanced designs of the existing reactors, ready to replace the existing generation. Preparation for the future sustainable development of nuclear energy will involve a new generation of nuclear power generation systems, in an inclusive approach covering all the aspects of the reactor and fuel cycle. Today, overall, only 4% of the initial quantity of fuel is consumed in a reactor, i.e., less than 1% of the quantity of natural uranium needed for the production of enriched uranium. The spent fuel removed from the reactors contains 95% uranium, 1% plutonium and 4% fission products. Only fission products constitute waste. Uranium and plutonium can be reused to produce energy. With the dual aim of economizing natural resources and optimizing waste management, some countries, such as France, process the spent fuel to separate the energy-yielding materials from the waste. The recycled uranium is stored with the prospect of its use at a later date in fast breeder reactors, and the plutonium is recycled in today’s reactors in the form of MOX fuel, a mix of uranium and plutonium. If the use of nuclear energy is to be greatly expanded to reduce man-made greenhouse gases, some such system will be needed. To continue the development of nuclear energy, we must provide effective and acceptable technical solutions for the long-term management of the radioactive wastes produced by current reactors; solutions do exist and could be gradually implemented [7]. The concept of deep geologic disposal of high-level wastes has been studied extensively in many national and international research programs for several decades. Considerable technical progress has been made over this period. Although practical experience in building and operating geologic repositories for high-level waste is still mainly limited to a few pilot-scale facilities, there is today a high level of confidence within the scientific and technical community that the geologic repository approach is capable of safely isolating the waste from the bios-

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phere for as long as it poses significant risks. This view has been stated and supported in several recent national and international assessments [9– 13]. These conclusions are discussed in ref. [2]. They are based on: • An understanding of the processes and events that could transport radio nuclides from the repository to the biosphere; • Mathematical models that enable the long-term environmental impact of repositories to be quantified; and • Natural analog studies that support the models and their extrapolation to the very long time scales required for waste isolation. Natural analogs also provide evidence that key processes important to modeling the performance of geologic systems over long time periods have not been overlooked [10]. A geologic repository must provide protection against every plausible scenario in which radionuclides might reach the biosphere and expose the human population to dangerous doses of radiation. Various possibilities must

Fig. 2 Comparison of three fuel cycles. On the left side is the once-through cycle in which only 1% of the natural uranium is used. The process used in Europe and Japan where plutonium is recycled once is shown in the middle of the figure. The right side of the figure schematically describes an advanced multi-recycling system. Actinides and plutonium are first separated from fission products and then reprocessed. An accelerator-driven system would be the final step to burn the remaining waste

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be considered, including the risk of volcanic activity and the possibility of human intrusion into the repository, either inadvertent or intentional. Of the possible pathways to the biosphere, those receiving most attention involve the entry of groundwater into the repository, the corrosion of the waste containers, the leaching of radio nuclides into the groundwater and the migration of the contaminated groundwater towards locations where it might be used as drinking water or for agricultural purposes. Although the details vary among national programs, the basic approach to repository design in every case is based on a multi-barrier containment strategy, combining a suitable geologic, hydrologic and geochemical environment with an engineered barrier system that takes advantage of the main features of that environment. A well-chosen geologic environment will support and enhance the functioning of the engineered barrier system, while protecting it from large perturbations such as tectonic activity or fluctuations in groundwater chemistry due to glaciations or other climate changes [9]. Studies are underway on multiple recycling of plutonium in power reactors, thus destroying it and leaving the fission fragments and minor actinides for geological storage. Also under study are transmutation systems that convert the long-lived component of spent fuel to a form only requiring isolation for hundreds to a thousand years — a time span of already existing man-made structures.

7.3 The Generation IV International Forum Beyond 2030, the prospect for innovative advances through renewed R&D has stimulated worldwide interest in a fourth generation of nuclear energy systems. Ten countries — Argentina, Brazil, Canada, France, Japan, the Republic of Korea, the Republic of South Africa, Switzerland, the United Kingdom and the United States — have agreed on a framework for international cooperation in research for a future generation of nuclear energy systems, known as Generation IV [8]. These ten countries have joined together to form the Generation IV International Forum to develop futuregeneration nuclear energy systems that can be licensed, constructed and operated in a manner that will provide competitively priced and reliable energy products while satisfactorily addressing nuclear safety, waste, proliferation and public perception concerns. The objective for Generation IV nuclear energy systems is to have them available for international deployment around the year 2030, when many of the world’s currently operating nuclear power plants will be at or near the end of their operating licenses.

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The Generation IV initiative aims to develop, for deployment around 2030, new types of nuclear reactors that are simpler, completely free from core meltdown and competitive with the best fossil-fired plants, as well as fuel cycles more resistant to proliferation. Comprehensive assessment studies have already demonstrated that these objectives are achievable. A complete list of the new reactors proposed in the roadmap of the Generation IV International Forum can be found in ref. [8]. The signing of the Generation IV Intergovernmental Framework Agreement in Washington took place on February 28, 2005. Globally, the processing of spent fuels, the consumption of the plutonium in light water reactors and the transmutation of long-life radiotoxic wastes (minor actinides) in the new generation reactors, could reduce the long-life radiotoxicity of the waste by a factor of 100, leaving a residual radioactivity that would then be comparable to that of the initial natural uranium after several hundred years. The development, in an extended international perspective, of a new generation of nuclear power production system offers attractive opportunities for meeting the challenges for the development of carbon-free sustainable energy sources. The characteristics of this technology are promising (cost, safety, environmental protection) and offer the possibility of implementing several configurations, suited to the economic and technical context in question, thereby enabling a gradual deployment on the international market.

7.4 Nuclear Fuels and Sustainability There are basically four general classes of fuel cycles: • • • •

A once-through cycle without reprocessing; A cycle with partial recycle of plutonium; A cycle with full plutonium recycling; and A closed cycle with full recycling of transuranic elements.

The once-through fuel cycle option is the most uranium resourceintensive and generates the most waste in the form of used nuclear fuel. However, the amounts of waste produced are small compared to other energy technologies. One of the most important conclusions of the Generation IV group is that the limiting factor facing an essential role for nuclear energy with the once-through cycle is the availability of repository space. This becomes an important issue, requiring new repository development in only a few decades. In the longer term, beyond 50 years, uranium resource availability also becomes a limiting factor. One of the important conclu-

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sions of the roadmap proposed by the Generation IV Forum is that five of the six proposed new reactor designs are based on the design of a fast reactor in combination with a closed fuel cycle. Systems that employ a fully closed fuel cycle hold the promise to reduce repository space and performance requirements. Closed fuel cycles permit partitioning the nuclear waste and management of each fraction with the best strategy. Advanced waste management strategies include the transmutation of selected nuclides, cost effective decay-heat management, flexible interim storage and customized waste forms for specific geologic repository environments. These strategies hold the promise to reduce the long-lived radiotoxicity of waste destined for geological repositories by at least an order of magnitude. This is accomplished by recovering most of the heavy long-lived radioactive elements. These reductions and the ability to optimally condition the residual wastes and manage their heat loads permit far more efficient use of limited repository capacity and enhance the overall safety of the final disposal of radioactive wastes. The advanced separations technologies for Generation IV systems are designed to avoid the separation of plutonium and incorporate other features to enhance proliferation resistance and incorporate effective safeguards. In particular, to help meet the Generation IV goal for increased proliferation resistance and physical protection, all Generation IV systems employing recycling avoid separation of plutonium from other actinides and incorporate additional features to reduce the accessibility and weapons attractiveness of materials at every stage of the fuel cycle. In the most advanced fuel cycles using fast-spectrum reactors and extensive recycling, it may be possible to reduce the radiotoxicity of all waste such that the isolation requirements can be reduced by several orders of magnitude (e.g., for a time as low as 1000 years) after discharge from the reactor. This would have a beneficial impact on the design of future repositories and disposal facilities worldwide. However, this scenario can only be established through considerable R&D on recycling technology. This is a motivating factor in the roadmap for the emphasis on crosscutting fuel cycle R&D. The studies also established an understanding of the ability of various reactors to be combined in so-called symbiotic fuel cycles. For example, combinations of thermal reactors and fast reactors are found to work well together. As shown in Figures 3 and 4, they feature the recycling of actinides from the thermal systems into the fast systems, and exhibit the ability to reduce actinide inventories worldwide while using the nuclear fuel in a sustainable way. Improvements in the burn-up capability of gas- or water-cooled thermal reactors may also contribute to actinide management in a symbiotic system.

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Fig. 3. Comparison of waste produced using either a once-through cycle or a combination of LWR and fast reactors, from [8]

Fig. 4. Comparison of resources available using either a once-through cycle or a closed cycle from [8]

Thermal systems also have the flexibility to develop features, such as hydrogen production in high-temperature gas reactors or highly economical light water reactors, which are part of an overall system offering a more sustainable future. This is a motivating factor in the roadmap for having a portfolio of Generation IV systems rather than a single system — realizing that various combinations of a few systems in the portfolio will be able to provide a desirable symbiotic system worldwide.

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As a final note, the FCCG observed that nuclear energy is unique in the market since its fuel cycle contributes to only about 20% of its production cost. This provides flexibility in separating the approach for meeting the economics and safety goals from the approach for meeting sustainability and safeguards goals. That is, adopting a fuel cycle that is advanced beyond the once-through cycle may be achievable at a reasonable cost.

7.5 Conclusions Providing the energy needed to satisfy the ambitions of a growing world population for a decent living standard will not be easy. Doing it without greatly increasing the already worrying risks of climate change will be exceptionally difficult. Nuclear power is available now and is an option for the future as long as there is no proven alternative with the required potential. No other energy source is available for large-scale production at the multi-gigawatt scale.

Acknowledgements I would like to thank first the organizers of this workshop in Cyprus for their kind invitation and their warm hospitality in Nicosia. I am grateful to my colleagues from Cea, Areva and Edf. I would like to thank in particular B. Richter for illuminating discussions.

References 1. World Energy Outlook, OECD/IEA, Paris, 2004 2. The future of nuclear power, an MIT interdisciplinary study, 2003 3. European Commission (2000) Towards a European strategy for the energy security supply. Green Paper COM 769 4. WEC-IIASA (1998) Global Energy Perspectives. Cambridge University Press 5. WANO 2001, Performance Indicators for US Nuclear Industry 6. The economic future of nuclear power, a study conducted at the University of Chicago, August 2004 7. Bouchard J et al., GLOBAL 2001 8. A technology roadmap for Generation IV nuclear energy systems, December 2002 9. Nuclear Energy Agency (1999) Geologic Disposal of Radioactive Waste: Review of Developments in the Last Decade. OECD, Paris

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10. International Atomic Energy Agency (2003) Scientific and Technical Basis for Geological Disposal of Radioactive Wastes. IAEA Technical Report No 413, February 2003, Vienna 11. National Academy of Sciences Board on Radioactive Waste Management (2001) Disposition of High Level Waste and Spent Nuclear Fuel: The Continuing Societal and Technical Challenges. National Academy Press, Washington, DC 12. Nuclear Energy Agency (1995) The Environmental and Ethical Basis of Geologic Disposal of Long-lived Radioactive Wastes: A Collective Opinion of the Radioactive Waste Management Committee of the OECD Nuclear Energy Agency. OECD, Paris 13. Oversby VM (2000) Using Information from Natural Analogues in Repository Performance Analysis: Examples from Oklo. Materials Research Society Symposium Proceedings vol 608, pp 545–550

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8 Efficiency in Oil Use and Alternatives to Oil

Meinrad K. Eberle

Abstract: As a first priority we have to reduce primary energy use dramatically for reasons well known (finite resources, climate change, political instability). For decades to come, fossil fuels will be the primary source of energy, with gas and coal playing a much more important role. Sequestration will be a must. And nuclear energy quite likely will see a comeback; the problems regarding waste disposal can be solved today — terrorism is much more of a concern. Home heating should be done with heat pumps; liquid fuels reserved for transport. And let’s introduce alternatives at a faster pace — we need to gain much more experience; a lot of proposals need verification. It is too early to tell which are the winners and losers. A responsible energy policy is doable and payable. Universities have to develop more leadership — we have to win over the young generation. Universities have to act as honest brokers.

8.1 Introduction Efficiency in oil use and alternatives to oil are topics that have been talked about for decades. Long before the first oil crisis struck at the beginning of the seventies, one was aware of the fact that fossil fuels would not be available forever. Energy demand, particularly for fossil fuels, is on the rise due to the economic development of countries like China, India and others. Today, it is not only the issue of finite resources, but other concerns that are coming up: climate change due to anthropogenic greenhouse gas emissions and the fact that the big oil reserves lay in politically unstable world regions. All these elements taken together spell trouble. The reactions vary quite a lot: from laisser-faire all the way to sensible programs curbing energy use and developing alternatives — even military intervention is considered. Energy and water quite likely will be the prevailing problems regarding sustainable development in the decades to come. Transport is the fastestgrowing energy user in the industrialized world. It might be worthwhile to E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 127–144. © 2008 Springer.

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remember a couple of numbers: 80% of energy used today depends on fossil fuels, 25% of the world population uses 75% of the world energy, energy consumption quite likely will double over the next 30 years and the world population draws on average 2,000 Watt of power (China less than 1,000, Europe some 6,000 and the USA in excess of 11,000). In 2004 primary energy consumption increased by 4.3% with coal the fastest growing fuel at 6.3%, followed by hydroelectric by 5%, nuclear by 4.4%, oil by 3.4% and natural gas by 3.3% (PB Statistical Review of World Energy, June 2005). Today’s trend in energy consumption with particular reference to fossil fuels is by no means sustainable. Amazingly enough, there are still people who do not want to understand that there is a need for action that would confront the problems we are facing head-on.

8.2 Energy Demand, Reserves and Kyoto It can be argued that perhaps 2,000 Watt per person and year might be a good number to lead a decent life. The World Bank came up with the Human Development Index (HDI). The HDI is a summary measure of human development. It measures the average achievements of a country in three basic dimensions of human development: • A long and healthy life, as measured by life expectancy at birth; • Knowledge, as measured by the adult literacy rate and the combined primary, secondary and tertiary enrolment ratio; and • A decent standard of living, as measured by GNP per capita. Figure 1 shows a relation between energy and economic growth (i.e., GNP) — there is no development without energy. However, the amount of energy needed for a decent life must certainly not be in the neighbourhood Energy & Economic Growth (GNP) 2kW 1'000

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Fig. 2. Fundamental Energy System Dynamics

of 10,000 Watt per person and year — 2,000 Watt might after all not be too bad a figure when it comes to human development. This figure is close to the world average. Figure 2 gives some indications about energy system dynamics. The higher the GDP of a country, the more energy goes into transport — as is the case for some 40% of the industrialized world; the automobile is the dominant energy user in transportation. Air transport shows the biggest increases in energy use, followed by road transport. Figure 3 shows in a convincing way Switzerland’s energy consumption patterns being dependent on the first oil shock in the early seventies. As a consequence, heating oil consumption went down, electricity use went up. Quite clearly, there is a substitution effect. There is a point to be made, namely: one should not consider oil alone but in combination with electricity. There is the possibility for substitution. Certainly, one question is how electricity is produced. In the case of Switzerland, 60% is hydraulic and 40% nuclear. If one wants to reduce CO2-emissions, one might seriously consider substituting heating oil with heat pumps driven by electricity. This makes sense if even the electricity is produced by a combined-cycle power plant fired with natural gas. The automobile, as mentioned earlier, is the biggest user of fossil fuel, and is an extremely complex system when it comes to powertrain, fuels, fuel infrastructure, emissions, costs, etc. What

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does this all mean? As a first priority, one should reserve liquid fuels for transport and substitute heating oil. It might be a good idea to look at energy consumption for passenger transport. Figure 4 shows that trains are an effective method of transport, provided the capacity is well used. The same holds for cars and air trans-

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port. This means, without talking about load factor, comparisons are not too valid. Now let’s have a look into the future. Without any doubt primary energy consumption will increase dramatically over the next couple of decades. Scenarios vary quite a bit, but one could imagine energy demand doubling within the next 30 years. And the majority of this energy demand will be covered by fossil fuel. Even without all the facts in, climate change due to anthropogenic greenhouse gas emissions appears to become more and more a reality. There will be winners and losers; we are still not in position to differentiate clearly who they are. It is, however, a fairly safe bet that the poor countries will be the losers. The USA, stretching over different climate zones and being rich, might not be too much affected. If we do not want the CO2-concentration, the major greenhouse gas, to more than double to 550 ppm by the year 2100 (compared to the pre-industrial time), one would have to reduce fossil energy consumption by up to 50% relative to today’s consumption — an extremely ambitious undertaking. This reduction figure is only a rough estimate, depending on the CO2-emissons over the remaining part of this century. At this point one has to talk about reserves of fossil fuels. Measured in 2004 production, the proven reserves are 164 years for coal, 40 for oil and 67 years for gas (BP Statistical Review of World Energy, June 2005). The ultimate reserves are in excess of 1000 years for coal, in excess of 100 years for oil and 200 years for gas. These data are quite unreliable due to confidentiality, poor reporting practices and for financial and political reasons. There is quite a bit of concern oil production might reach its maximum in the time frame 2015–2030 with the consequences being steeply rising oil prices. At this point mankind will do all the things one ought to do already now, namely reduce dramatically our consumption of fossil fuels and substitute them with renewables. We all know the majority of oil reserves lay is the Middle East — a politically unstable region. The outlook for changing this for the better anytime soon is bleak. From all the arguments given emerges the following picture. We do have to reduce our dependence on fossil fuels dramatically over the next couple of decades for the following reasons: • Today’s energy supply is dependent on fossil fuels to the tune of some 80%; • Fossil fuels are finite but still sufficient for the next decades; • The large oil supplies lie in a politically unstable world region; and • The danger of climate change as a result of greenhouse gas emissions is increasingly getting bigger.

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Even without climate change, we do have to act now in a more decisive way.

8.3 Internal Combustion Engines, Hybrid Powertrains and Fuel Cells The following section primarily discusses passenger car engines and fuels. The internal combustion engine is more than 100 years old, yet full of life. Further development regarding increased efficiency (or reduced fuel consumption) has by no means been reached. The internal combustion engine will be the primary power plant for decades to come in spite of what might be said otherwise. Admittedly, the internal combustion engine, in particular the gasoline engine, is fairly bad at low loads typical for passenger car applications. The gasoline engine can be improved by applying variable valve timing, cylinder deactivation, downsizing and supercharging, startstop automatic, gasoline direct injection and reduced friction. All told, the potential might end up in excess of over 30%. Some of these elements are already used today, however, on a too-limited basis. For instance, it is hard to understand why downsizing and supercharging are not used much more — the benefits in fuel consumption are some 10%. Or why do we not use start-stop automatic devices much more? The benefits can also reach 10%. The diesel engine, being better in fuel economy when compared to the gasoline engine, can also be made more efficient by improving supercharging, start-stop automatic, combustion characteristics and reduced friction. The potential might reach some 20% or more. The picture is not complete without talking about exhaust gas emissions. Today, the passenger car engine, provided it incorporates the latest technologies, is no longer polluting the environment — it is in fact an air cleaning device (SULEV-standard, gasoline). These excellent results were achieved because of exhaust gas emission regulations implemented in California. Compared to 1970 (when legislation got started), nitric oxides were reduced by 99%, hydrocarbons by 99.8% and carbon monoxide by 93% (SULEV-standard). It is interesting to note that these improvements were not achieved because of an initiative of the automotive industry — this industry said it would not be necessary and that it would be very expensive to reduce emissions! The next step to reduce CO2-emissions is to switch to natural gas. Natural gas is definitely a transition fuel on the long way to a sustainable energy future. ETH Zurich, together with the Swiss Federal Laboratories for Materials Testing and Research (EMPA) and others developed a novel

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passenger car gas engine with supercharging, high compression ratio, exhaust gas recirculation and a new gear box leading to a reduction of 33% in CO2 emission when compared to a sister engine of the same power fuelled with gasoline. Next, with more complexity comes the hybrid powertrain. As mentioned earlier, internal combustion engines, particularly the gasoline engine, do show average driving cycle efficiencies of below 20%. With a hybrid powerplant, low loads are covered by an electric motor with efficiencies far higher than those of the internal combustion engine. This motor can be reversed to operate as a generator to recover brake energy and thus further enhance cycle efficiency. All told, hybrid powerplants, depending on driving the cycle considered, can improve the fuel consumption by 20% or more. Figure 5 shows a schematic of a hybrid powertrain. parallel hybrid engine

battery electric motor

- CI or SI engine - engine with start/stop automatic - electric motor for deep part load - no ZEV-operation - recuperation trans- different types of batteries mission wheel - NiMH - supercap - no battery charging from grid - 5-speed transmission for engine - 1-speed for electric motor

Fig. 5. Scheme of hybrid powertrain

Fig. 6. Scheme of ETH Zurich Hybrid III

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Constant vehicle speed

ƒ

30 km/h

ƒ

50 km/h

Measured Simulation Measured Simulation

3.46 l/100 km 3.39 l/100 km (+ 2.1 %) 3.35 l/100 km 3.48 l/100 km (- 3.7 %)

ECE-Cycle fuel consumption Measured Simulation Reference vehicle

4.72 l/100 km 4.53 l/100 km (+ 4.2 %) 8.90 l/100 km

Improvement in fuel consumption: 47 % ETH Zurich in 1998 demonstrated a hybrid powertrain with still unsurpassed gains in efficiency. One has to add, however, that the concept chosen is not fit for the road — the idea was to demonstrate what can be done in the most extreme case. This kind of thinking is reserved for universities; the industry has to be closer to reality. However, it makes sense to see what can be done by going to the limit. Figure 6 shows the scheme of the ETH Zurich Hybrid III, Table 1 the main results for the ECE driving cycle. The hybrid technology is gaining ground – the Japanese are showing the way. In the nineties, auto manufacturers in Europe and the USA developed hybrid systems; unfortunately, not too much came out of it. Particularly for heavy vehicles such as SUVs, hybrids are a way to go (or perhaps the love for SUVs is shifting to more reasonable cars with ultra-low energy consumption). In the context of hybrid powertrains (or fuel cells), electrical energy storage systems are required. Traditionally one talks about batteries: up to now they did not live up to expectations in spite of great efforts (such as a battery consortium in the USA). Batteries are power limited, meaning, a battery can only transfer limited amounts of power per unit of weight unlike a super-capacitor which is capacity limited per unit of weight. In case of a steep braking manoeuvre or a heavy acceleration, a battery cannot take the power –— a super-capacitor can. Consequently, super-capacitors are a means for future hybrid applications, as demonstrated with fuel cell powertrains by the Paul Scherrer Institute (PSI), a national lab in Switzerland. Figure 7 shows the characteristics of batteries and super-capacitors.

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Source: PSI

Fig. 7. Main characteristics of energy storage systems

After hybrids, fuels cells might be an option. Fuel cells do have superior efficiencies; however, they cannot be run directly on fossil fuels. Commonly, one is talking about hydrogen, which has to be produced based on natural gas, electrolysis or biomass. An alternative is methanol, which is presently not looked at with too much enthusiasm — considering the problems with hydrogen (low density), there is a chance methanol will come back. Figure 8 shows a scheme of a low-temperature polymer fuel cell, the type most likely to be used in cars in a decade or two. Load

eH2 O

H+ H2

O2

O2 - electrode (cathode) H2 - electrode (anode)

electrolyte catalyst

Fig. 8. Scheme of a polymer fuel cell (PEM)

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Source: IMRT ETH Zurich, 2005

Fig. 9. The ETH Zurich PAC-Car

Polymer fuel cells, operated with hydrogen and air, achieve at lower loads efficiencies in excess of 50% — the best values of gasoline engines at higher loads are around 35%. But as mentioned earlier, hydrogen needs to be produced. ETH Zurich together with a number of partners produced a new world record with the PAC-Car: on 1 litre of gasoline equivalent the car shown in Figure 9 travelled 5385 kilometres. The fuel cell, produced by the PSI, was run on hydrogen. Here again, the idea is to stretch the limits to the extreme as pointed out with the ETH Zurich Hybrid III. The PAC-Car data are as follows: length 2.78 M, width 0.57 M and height 0.61 metres. Drag coefficient: 0.09, frontal area: 0.254 m2 and rolling resistance: 0.0015. Weight: 30 kg, power: 900 Watt. Figures 10 and 11 show efficiencies of powertrains, tank-to-wheel and well-to-wheel. These data do have to be taken with a grain of salt — they give rough indications and do not pretend to be very accurate. Most important is the observation that a fuel cell, compared to an advanced hybrid powertrain in the context of well-to-wheel efficiency (taking into account the energy needed to produce hydrogen based on natural gas), is losing quite a bit of its glamour. This means hydrogen and fuel cells hardly make sense, if the hydrogen is not produced in a sustainable manner. At this point a general remark about the energy consumption of cars is due. More and more, the psychology of the driver is a very important factor when it comes to fuel consumption. The customer asks for a fun-to-drive car and a car is more and more an expression of lifestyle — how to impress the neighbour. Fun-to-drive as a first priority translates into power per unit of weight. With a given car weight and the time envisioned to achieve a car

effective thermal efficiency, %

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4)

35

Hybrid III (ETH/VW)

3)

30

1) Original SIengine

2)

25

2) Hybrid III

20 15

HY. POWER (PSI/ETH/VW)

1)

3) w/o Supercaps

10

4) w Supercaps (recuperation)

5 0

SI CI CH2 Fuel Cell Hybrid today 2010 2010

SI CI 2010

SI CI today

effective thermal efficiency, %

Fig. 10. Efficiencies of different powertrains, tank-to-wheel 30 25 20 15 10 5 0

SI CI today

SI CI 2010

SI CI Hybrid 2010

CH2 Fuel Cell today 2010

Fig. 11. Efficiencies of powertrains well-to-wheel

speed of, say, 100 kilometres per hour starting from rest, defines the power needed with a given engine type. Figure 12 gives an indication of what the consequences are of “fun to drive.” Vehicle B is a standard European car of the upper-middle class with the same specific power as car C, being a sports utility vehicle (SUV). Both have about the same acceleration of 0–100 km/hour; the fuel consumption of the SUV is double that of reference car B. The empty weight of the SUV

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Mass kg

Power kW

Spec. power kW/100 kg

Consumpt. l G,D/100 km

A

1250*

107

8.6

4.3

B

1320*

110

8.3

7.4

C

2480*

220

8.9

14.9

D

12‘000*/40‘000

330

2.8/0.8

35

A: Hybrid; B: reg. Car; C: SUV. (A, B, C: All cars with 5 seats) Accel.: 8.9-10.9 s for 0-100 km/h D: Heavy truck (Diesel). *: weight empty G: gasoline; D: diesel

Fig. 12. The consumer decides about fuel consumption

is 2480 kg; the total weight with a passenger is some 2’550 kg. This means, with one person, one moves basically the wrapping only. A look at car D, a truck, illustrates what it means to move goods in a most economical way: the empty weight is 12,000 kg; fully loaded it is 40,000 kg. The acceleration is certainly not breathtaking. Now let’s have a look at fuel consumption: it is amazingly low. All of this means that “fun to drive” and psychology result in high energy consumption figures. The situation can be improved by using a hybrid powerplant, demonstrated with car A, a Prius by Toyota. Or in other words, “fun to drive” is possible by applying advanced hybrid technology, which results in lower energy consumption.

8.4 Alternative Fuels Powertrain technologies and the types of fuels discussed, which are partly realized today, give a picture of utmost confusion. At times the picture is one of brain storming — we are in search of the optimum solutions. There will be many different possible combinations, driven by local (country) conditions. Figure 13 gives an overview of the different fuels. SynFuel is a fuel that is produced based on natural gas. SunFuel, as the name indicates, is a fuel based on biomass converted into gas, forming the basis for other fuels. Not all fuels indicated in Figure 13 make sense everywhere. Again, this depends very much on local conditions. It certainly makes sense to convert natural gas into a diesel-like fuel of very high quality (gas-to-liquid process (GTL)), if this gas would otherwise be flared off. There is no doubt, for decades to come, that fossil fuels will be the primary

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source of energy, with a gradual phase-in of more natural gas and finally followed by SunFuel. By the way, natural gas with very big reserves in the Middle East, Europe and Eurasia are also problematic due to political unrest. Figure 14 shows schematically the different pathways from biomass and natural gas to different products. The charm of natural gas is the possibility to use the existing infrastructure to feed into gas produced based on biomass. This scheme is being used in Switzerland. The different processes shown in Figure 13 are quite well understood today — various plants are in operation or planned.

Non-renewable CNG LPG DME Naphtha Kerosene Diesel Gasoline

Source: ETHZ

SynFuel

SunFuel

Natural Gas

Gas

DME GTL Naphtha GTL Kerosene GTL Diesel Gasoline Methanol Hydrogen

DME GTL Naphtha GTL Kerosene GTL Diesel Methanol Ethanol RME Hydrogen

GTL: Gas-to-liquid

Fig. 13. Different kind of fuels

Natural gas pipeline

HT-FC

SunFuel Methan Gasification

SynthesisGasGas purification

Methanation

Shiftreactor

Gas engine

Biomass Fermentation

Biogas FischerTropsch

Natural gas (Methan)

Gaspurification

H2-Sep. SunFuel Methanol, Aethanol, …

SynFuel/SunFuel diesel, ..... Reformer SynFuel hydrogen, ....

Fig. 14. Energy conversion chains, biomass and natural gas

LT-FC

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GTL Process Natural Gas

Syngas Manufacture

Synthesis

Hydrocracking

SynFuel

LT-FC

Electric power

Electrolysis

Diesel

LT-FC

SynFuel/SunFuel

Fig. 15. Energy conversion chains, GTL process and electrolysis

Figure 15 shows the GTL process and the production of hydrogen by means of electrolysis. Again, these processes are well understood and in operation. As mentioned before, not everything makes sense everywhere — there is by no means only one way to go. A word about GTL fuels. They are of extremely high quality with no sulphur, no aromatics, a narrow boiling range and they can be mixed with ordinary fuels. These fuels show an excellent trade-off between NOx and particulate emissions. The well-to-wheel CO2 emissions are better than those for gasoline but somewhat worse compared to diesel. The costs are higher than diesel, but lower than biomass based fuels. And plants are already in operation in Malaysia and the US. Figure 16 gives an indication about well-to-wheel CO2-equivalent emissions of different fuels, expressed per unit of distance travelled on one hand with a car equipped with an internal combustion engine and on the

LT-FC

ICE

Rel. CO2-aeq. emissions per unit of distance, FTP-Cycle 1)

Gasoline (reference) Diesel GTL-Diesel Natural gas Methanol Gasoline/Hybrid Methanol (natural gas) Methanol (short rotation forestry) Methanol (waste wood)

Hydrogen (natural gas) Hydrogen (nuclear energy) Hydrogen (photovoltaic) 1) conventional conventional Sources: ETHZ, rces: PSI PSI, ETHZ Opel Opel, etc etc.

0

20

40

60

80

100

% 120

Fig. 16. Relative well-to-wheel CO2-equivalent emissions of cars equipped with internal combustion engines (ICE) and low temperature fuel cells (LT-FC)

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Gasoline unleaded, Rotterdam, 13.02.03 Gasoline with taxes (CHF 1.40/l): 100 % Fuel gas (organic garbage) Methanol (natural gas) Methanol (short rotation forestry) Methanol (waste wood) Hydrogen (natural gas) Hydrogen (short rotation forestry) Hydrogen (waste wood) Hydrogen (nuclear energy) Hydrogen (photovoltaic CH) Hydrogen (photovoltaic Spain) Hydrogen (solar chemistry North Africa) Sources: PSI, Kompogas PSI K

0

100

200

400

600 %

Fig. 17. Relative fuel costs without taxes related to unity of energy

other hand with a car equipped with a low temperature fuel cell (LT-FC). These data have to be considered with a lot of caution — they give just a rough estimate. Here again, the assumptions that go into these calculations vary quite a bit from author to author. Nevertheless, the use of biomass, all elements included, makes definite sense. Be reminded that the reference gasoline engine (Figure 16) is a standard one, not including all the possible improvements mentioned earlier. Quite often it is said alternative fuels would be much more expensive compared to fossil fuels today. This is true to a certain extent. As indicated in Figure 17, the use of waste wood and biogenic garbage (Switzerland) are definitely valid options. If one would not levy a tax on gasoline or only at a reduced rate, alternatives are competitive today. And they will be even more so in the future, assuming further increases in cost of gasoline or diesel fuel. Without going into much further discussions, biomass is definitely a source that has to be used much more. If in Switzerland all biogenic garbage (grass, household, not wood) would be fermented, about 10% of all passenger cars could be driven with methane. I personally do not believe one should use crops that can be used to feed people to produce fuel. Furthermore, in Switzerland, if fully-integrated internationally, conditions regarding climate, topography, remuneration and structure do not justify in an economically-viable way the production of fuel based on crops. Now for some comments about hydrogen. I do believe hydrogen is being talked about with far too much enthusiasm. Hydrogen is certainly a clean fuel with numerous applications. However, as pointed out earlier, hydrogen has its drawbacks because of its very low density and its having to be produced in a sustainable manner in order to make sense. Hydrogen is

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Sources: H.Michelet, l'Inventeur Issac de Rivaz, Martigny 1965 E.Schmid, Schweizer Autos, Edita SA., Lausanne 1978

Fig. 18. The first “mechanical wagon” ever run on hydrogen, designed by Isaac de Rivaz

not a new idea. The Swiss Isaac de Rivaz (1752–1829) designed in 1805 the first “mechanical wagon” run on hydrogen. Figure 18 shows the concept. Distribution and storage of hydrogen are obstacles still difficult to overcome. And the cost of a fuel cell is still far too high per kW. Much more research and development is needed to make hydrogen a viable option. Hydrogen is not going to save us in the decades to come. In other words, we have to do everything to reduce primary energy use — this is the most cost-effective way to go. It is not very exciting, but it is the most sensible thing to do. And secondly, we do have to phase in alternatives based on solar energy and geothermal sources. Keep in mind we will need much more electricity in the future to provide options to reduce our dependence on fossil fuels. In general, electric home heating as well as home heating with oil should be the exception.

8.5 Fundamentals of Energy Systems Each country has its own set of priorities – hardly a common denominator can be found outside of reducing primary energy consumption (not so in the US) and energy diversity. A closer collaboration between governments, the public (the user) and energy industries would be needed. Table 2 lists some of the more important factors influencing energy policy.

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Table 2. Factors influencing energy policy

Each country has its own set of priorities – hardly a common denominator Cost of energy Security of supply Strategic diversification Global warming Availability of local energy resources ƒ Local air pollution ƒ Agricultural surplus ƒ ƒ ƒ ƒ ƒ

ƒ Availability of sufficient amounts of energy ƒ Balance of payment ƒ Renunciation of nuclear energy ƒ Job creation ƒ Ability to pay ƒ Ecological conscience ƒ Social equity

Source: ETHZ

8.6 Conclusions Energy policy is a mind-bogglingly complicated matter. It is very difficult to define the right way to go. However, a number of things appear very clear. As a first priority, we do have to reduce primary energy use dramatically for reasons well known. It is extremely cheap to say others, such as China, would have to reduce their greenhouse gas emissions before one would move for action in one’s own country. For decades to come, fossil fuels will be the primary source of energy, with gas and coal playing a much more important role. Sequestration will be a must. And nuclear energy quite likely will see a comeback; the problems regarding waste disposal can be solved today; terrorism is much more of a problem we have to get under control. Home heating should be done with heat pumps, liquid fuels reserved for transport. And let’s introduce alternatives at a faster pace — we need to gain much more experience. A lot of the proposals made today need verification. It is too early to tell which are the winners and losers. Regarding energy pathways for the Mediterranean, the energy of the sun has to be used much more, be it in the form of solar, active or passive. Photovoltaic electricity in remote areas without grids needs to be researched and one ought to revisit the idea of solar collectors with steam

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turbines. And one has to find base load sources as well. In this context one might think of geothermal power. Since this conference is held under the auspices of the Cyprus Research and Education Foundation a couple of remarks about the role of universities seem appropriate. These days we witness an alarming loss of credibility of both industries and governments. I believe academia has to play a much more important role as honest brokers. We from academia ought to be in a situation where we can stick to the facts in a most independent way — we do not have to play politics. We also tell the interested parties what we do not know. And we certainly will teach the young generation and stimulate them to play a more active role in the shaping of our common future. To turn things around we need the young generation. All told, universities should develop more leadership — a high score in the citation index is good but not good enough.

8.7 Affiliation From 1983 up to 2002 Dr. Meinrad K. Eberle was professor of internal combustion engines and combustion technology at the Swiss Federal Institute of Technology in Zurich (ETH). From 1992 up to 2002 he was also the director of the Paul Scherrer Institute (PSI), a national lab active in particle physics, material sciences, life sciences and energy research.

9 An Overview of H2 Fuel for Use in the Transportation Sector

R.J. Allam Air Products PLC Hersham UK

9.1 Introduction The steady rise in atmospheric CO2 levels (Figure 1) has been identified as the major cause of global average temperature rise, which has occurred since the start of the industrial revolution early in the nineteenth century and has accelerated in the last 50 years. The world population growth in the last 50 years has been from about 2.6 to 6.2 billion, mostly in the less developed countries (Figure 2). All these people naturally aspire to a more prosperous lifestyle and this inevitably leads to more pollution and more rapid consumption of fossil fuels and emission of greenhouse gases, principally CO2.

Fig. 1. CO2 concentration in the atmosphere: Mauna Loa Curve E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 145–161. © 2008 Springer.

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Fig. 2. Global population growth

The US currently emits about 25% of the world total of CO2. About one third of these emissions are from the transportation sector (Figure 3), and this proportion is approximately the same as emissions from electrical utilities. Growth in the numbers of vehicles in developed countries has been phenomenal in the last 50 years (Figure 4) and this trend is likely to be repeated in the developing countries with even more rapid growth rates. In order for mankind to continue to enjoy the standards of living we currently experience and satisfy all people’s aspirations for the future, we must solve the problem of greenhouse gas emissions to the atmosphere. Much research and development is being undertaken on CO2-free electric power generation using renewables, nuclear power and fossil fuel derived power with CO2 capture and storage. The electric power section, with its very large point source CO2 emissions, is amenable to CO2 capture technology. The challenge we have is to implement a CO2 capture method that can be applied to the huge number of vehicles, each of which generates CO2 emissions from the combustion of hydrocarbon fuel. The only possibility is either electric drive with storage batteries, which can be recharged from the electrical supply system or to use a fuel that is not going to produce any significant net greenhouse gas emissions.

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on Emissions otal) Residential Commercial Industrial Transportation Electric Utilities

Fig. 3. US carbon emissions (25% of world total)

Fig. 4. Growth of vehicle numbers in the UK

The fuel of choice must be hydrogen, which produces only water when combusted with air. The type of engine used will be either an internal combustion engine, which will need to be designed to limit NOX emissions, or a fuel cell generating electricity, which is then used in the electric motor drive system. Primary fossil fuels will be used to generate the bulk of the hydrogen, which should be regarded as an energy carrier. Some hydrogen could be available from renewable and nuclear energy sources via electrolysis, particularly in off-peak periods, but for the next 50 years or so, fossil fuels will be the main source of hydrogen for the transportation sector. When using fossil fuels it will be necessary to capture CO2 during the hydrogen manufacturing process and dispose of the CO2 by, for example, storage in geological formations. This will result in a largely CO2-emissions free fuel base for the ground transportation sector.

9.2 Hydrogen Production from Fossil Fuels Hydrogen production from fossil fuels such as natural gas, liquid hydrocarbons, coal, tar and petroleum coke are well established industrial processes. The principle reaction mechanisms are shown in Figure 5. Hydrogen is produced on a very large scale, principally for ammonia and me-

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thanol synthesis and for hydrogenation and desulphurisation in refining and in petrochemicals. 9.2.1 Steam/Hydrocarbon Reforming A preheated mixture of steam and hydrocarbon, usually natural gas, is passed through tubes containing a nickel-based catalyst, which are heated in a furnace primarily by radiant heat transfer. Typical conditions would be 30 bar pressure, a 3 to 1 steam-to-carbon ratio and a tube outlet temperature of about 900°C. The reaction products are primarily CO and H2 together with steam, CO2 and a little unconverted methane. The gas mixture is passed through a waste heat boiler, which cools the gas to about 350°C to 400°C. The gases then pass through a catalytic reactor where the shift reaction converts CO and steam to CO2 and H2. The gases are cooled and H2 is separated in a pressure swing adsorber (PSA). The CO2 can be separated before hydrogen purification, using an amine scrub system or a more complex PSA system can be installed that produces pure CO2, pure H2 and a waste gas stream. The hydrogen purity can be >99.99% with a typical recovery of 90% from the feed gas. CO2 recovery from the feed gas would be >95%. The waste combustion products from the furnace, which are at a temperature of about 1000°C, pass through a convection heat exchange section where they are used to preheat the reformer feed and produce steam. The disadvantage of this system is that the furnace waste gases, which are derived from the PSA waste gas together with additional natural gas as fuel, contain CO2 that would need to be removed before discharge into the atmosphere with a separate amine scrub unit. Reforming With Steam - Catalytic Natural gas and light hydrocarbons

Partial Oxidation - Non Catalytic Any hydrocarbon or carbonaceous feedstock

CH4 + H2O ↔ CO + 3H2 CO + H2O ↔ H2 + CO2

+ ΔH - ΔH

C + ½O2 → CO CO + H2O ↔ CO2 + H2

- ΔH - ΔH

Thermal Decomposition Only limited application as co-product CH4 → 2H2 + C in carbon black manufacture

Fig. 5. Hydrogen production reactions

+ΔH

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Natural Gas Oxygen

POX

Steam

Catalyst

Fig. 6. Autothermal reformer

9.2.2 Autothermal Reforming The autothermal reformer process (ATR, Figure 6) is a closed system in which a hydrocarbon fuel is partially oxidised in an exothermic process, with pure oxygen in a burner converting part of the hydrocarbon feed to CO and H2. The high temperature gases then pass through a nickel-based catalyst bed where the endothermic steam/hydrocarbon reforming reaction takes place converting most of the remaining hydrocarbon to CO and H2. The downstream units are then identical to the steam hydrocarbon reforming plant. The advantage of a closed system is that it allows all of the CO2 to be removed at high partial pressure from the high pressure product gas stream. The reactor exit conditions are typically 1000°C and 30 bar pressure. The ATR can be scaled up to very large sizes. It is currently being used to generate the (CO +2H2) synthesis gas required for the new Fischer — Tropsch hydrocarbon synthesis plants being constructed in Qatar for the Oryx project (SASOL/Kuwait Petroleum). 9.2.3 Partial oxidation (Figure 7) Some hydrocarbon feedstocks such as coal, bitumen or petcoke are too dirty to use in a catalytic system. The partial oxidation process (POX) takes place in a refractory lined reactor using a burner with pure O2 at a reaction temperature of about 1500°C and at pressures of typically 40 to 70 bar. Ash is removed followed by shift conversion and then by selective CO2/H2S separation to produce a crude H2 stream that can be further puri-

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Fig. 8. Convective reformer

fied in a PSA unit. The high-temperature gases produced in the partial oxidation reactor are either quenched by direct contact with water, or passed through a waste heat boiler for efficient heat recovery. There are a number of partial oxidation processes available.

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9.2.4 Heat Integration — Convective Reformer (Figure 8) The high temperature H2 + CO rich product gas from either a POX or an ATR reactor can be used as a heating medium in a tubular steam/hydrocarbon catalytic reformer to replace the radiant heat transferred from a burner. This greatly increases the overall thermal efficiency of the process and systems for both ammonia (ref) and methanol (ref) that have been demonstrated. 9.2.5 Multichannel Plate-Fin Hydrogen Plant There have been a number of small plants designed to produce H2 for use in a fuel cell electric power system, either for power production or as a pure hydrogen supply for a demonstration fuel cell powered vehicle fuelling system. One of the most interesting of these is proposed by Heatric (ref) and is based on the use of a high temperature diffusion bonded heat exchanger consisting of etched channels. The process is based on steam/natural gas reforming with catalyst inserts in the heat exchanger feed passages where endothermic steam-methane reforming reactions take place and alternate catalyst filled passages in which there is exothermic catalytic combustion of fuel gas with air (Figure 9). Additional sections of the heat exchange blocks are used for steam production, shift reaction, natural gas purification and heat recovery. The crude product hydrogen stream can be purified in a small PSA unit. Plates have chemically etched channels and are stacked then diffusion bonded Grain growth occurs between plates during the diffusion bonding process Catalyst can be a surface coating or a porous insert. Need to match the heat release rate with the steam hydrocarbon reforming rate. Very compact and potentially low cost system

Fig. 9. Production of hydrogen in a plate-fin reformer

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• Use of an ITM membrane system diffusing oxygen into a H2/CO gas generation reactor Natural Gas Air • ITM Syngas Methane – Chemical Potential Driven – Methane Partial Oxidation – CO/H2, H2 Syngas CH4+ 1/2 O2

CO + 2H2 2e-

O2-

ITM membrane

Oxygen

ITM Ceramic Membrane

Oxygen Passes Through Membrane

Air Nitrogen Hydrogen

Synthesis Gas Carbon Monoxide

Depleted Air

Fig. 10. Hydrogen production using an ion transport membrane

9.2.6 H2 Production Using an Ion Transport Membrane Certain mixed metallic oxides can be used to produce a ceramic membrane, which has the ability to simultaneously diffuse O2- ions and electrons at temperatures above 700°C. The oxygen ions are formed on the surface from an air feed and electrons pass counter-currently through the ceramic from the other surface where the oxygen ions leave as oxygen molecules. The oxygen ion transport membrane diffuses oxygen when there is a difference in oxygen partial pressure across the membrane. If the O2ion transport membrane is placed in a stream of preheated natural gas and steam, in the presence of a catalyst, the diffusing oxygen will be consumed in an exothermic combustion reaction with the heat release being used in the endothermic steam — natural gas reforming reaction. The system is, in effect, an autothermal reformer with internal oxygen generation. This system is currently under development by a consortium led by Air Products. 9.2.7 Sorption Enhanced Reactions (Figure 11) The production of hydrogen in a catalytic process can be carried out with the simultaneous removal of CO2 from the reaction system by adsorption using a high temperature adsorbent such as a modified hydrotalcite (ref.). The combined reaction and CO2 adsorption can be used to simultaneously produce substantially pure H2 and pure CO2. The process, which is under

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development, is carried out in a multibed high temperature pressure swing system. 9.2.8 Membrane Hydrogen Reformer (Figure 11) A similar enhancement of the steam/hydrocarbon reforming or shift reactions can be achieved by introducing a H2 diffusion membrane into a reformer catalyst tube so that the hydrogen produced is continuously removed as a pure product at a lower partial pressure. The diffusion process can be assisted by using a sweep gas such as steam to lower the hydrogen partial pressure on the downstream side of the membrane. The preferred material for the membrane is a thin palladium and silver alloy deposited on either a porous ceramic or stainless steel carrier. Systems are under development in many countries.

9.3 Timing of Future Hydrogen Production Technologies The HYNET project, which is part of the European Union 5th Framework programme, is considering the whole subject of the future of the hydrogen economy in Europe (ref). They have produced a projection of the future

Fig. 11. Separation enhanced reactors

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Fig. 12. Timeline for hydrogen production technologies

sources of hydrogen based on a classification of systems into those based on renewable or sustainable or fossil fuel based technologies (Figure 12). The important message is that any of the fossil fuel based technologies with carbon capture and storage are sustainable in the future as long as the fossil fuel reserves remain.

9.4 The Hydrogen Supply Chain (Figure 13)

9.4.1 Delivery Systems One of the major challenges for the use of H2 as a vehicle fuel is to consider the hydrogen supply chain from production to the point of fuelling a car in a filling station. The first part of this process involves the production of hydrogen mainly from natural gas or hydrocarbons with CO2 capture and storage using one of the technologies described in Section 9.2. The distribution of hydrogen to the filling station can be in the form of gaseous or liquid hydrogen. Delivery of hydrogen as liquid or high pressure gas by road or rail is a very well-established procedure, which has been practised by the industrial gas companies for 50 years. The latest tube trailers, using lightweight high pressure cylinders, can deliver up to 600 kg of hydrogen. The largest liquid hydrogen tankers have a capacity of about 4 tonnes. The delivery of liquid hydrogen is, and always has been, a very safe operation.

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Fig. 13. Hydrogen supply modes for transportation

The container consists of an inner aluminium tank with an outer thick armoured steel jacket. The space between the tanks is insulated with wrapped super insulation and kept at a high vacuum to minimise heat leak and boil-off of the liquid hydrogen. The experience of one company, Air Products, is shown below. • 75 trailers with armoured type construction —inner aluminium tank with outer thick steel jacket • 70 million gallons of liquid H2/year • 8 million miles/year • 160 million miles since inception without loss of liquid hydrogen onto the road • 1996 NASA safety award winner —200 million pounds of liquid H2 over 25 year period without a significant incident In this entire period, although there have been a number of incidents, none has been the cause of a significant fire or explosion related to the release of hydrogen. Other methods of hydrogen supply would be by pipeline or, in the immediate future for demonstration projects, from small hydrogen production units sited at a filling station or from mobile filling units supplied with compressed gaseous hydrogen. The safe operation of a hydrogen production and delivery infrastructure has been developed by Air Products. In general, the important criteria which we apply are:

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• • • • • •

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Attention to detail; Multiple layers of protection for a given hazard; Inherent safety in the design; Quantified risk analysis; Training and periodic retraining of personnel; and Experimental verification of research and calculations appropriate.

where

9.4.2 Comparative Economics for Hydrogen Supply The comparative costs for hydrogen delivery to a vehicle in a filling station for different production and supply options is shown in Figure 14, based on the work presented by HYNET. Note the high cost of the electrolysis options for hydrogen production and the high cost of hydrogen liquefaction. There is an incentive to develop lower cost liquefaction technology for hydrogen. Currently, the power consumption for a hydrogen liquefier is in the range 9 to 11 kWhrs electrical energy per kg of H2. There

Fig. 14. Comparative economic analysis of various liquid and compressed hydrogen supply

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is a possibility to reduce this to the range of 2 to 4 kWhrs/kg. H2 by integration of the hydrogen liquefier with a liquid natural gas (LNG) terminal making use of the low temperature heat sink available when compressed LNG is heated to ambient temperature for delivery in a natural gas pipeline.

9.5 Properties of Hydrogen Important to Its Use as a Transportation Fuel The important properties that must be considered when we use hydrogen as a transportation fuel, in comparison with compressed natural gas and petrol, are shown in Figure 15. It has a very low density relative to air and will disperse rapidly if released. The saturated vapour density at -215°C is close to that of normal ambient air. The density of the liquid is also very low. The heat of combustion per volume of liquid is low. The gas is odourless, colourless and burns with a non-luminous flame. Its limits of flammability in air are very wide and its ignition energy is very low (Figure 16). Its burning velocity is very high. The important factors in designing a safe, reliable vehicle fuelling system are: • The need to prevent H2 leakage in a system designed to dispense either liquid or H2 gas at pressure up to 700 bar. • The necessity of ensuring that both the vehicle and the person filling the vehicle are properly grounded so that there can be no ignition of a leak during filling. • The necessity of detecting the pressure and temperature in the vehicle fuel tank to properly control the filling operation. • The need to be able to deal with fuel tanks rated for different maximum hydrogen fill pressures. • The need to regulate the rate of filling, particularly to control maximum temperature rise in the tank. Normal Boiling Point Density at Normal Boiling Point Density relative to air Hear of combustion (liquid) Limits of flammability in air Minimum ignition energy Burning velocity in air at NTP

Hydrogen Methane Gasoline -253 -162 35 to 210 0.071 0.423 ~0.7 0.07 0.65 3.30 MJ/kg (LHV) 119.9 50.0 45.5 MJ/litre 8.5 21.1 31.9 Vol % 4 to 75 5.3 to 15 1 to 7.6 mJ 0.02 0.29 0.24 cm/s 265 to 325 37 to 45 37 to 43 °C kg/litre

Fig. 15. Some properties of transportation fuels

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• The necessity to deal with boil-off gas vented from a liquid hydrogen tank during the filling process. • The provision of an overall safety control and monitoring system with multiple levels of redundancy both in the system design and in the safely interlocked valves and control features. • The siting of the liquid hydrogen tank (if used). The latest designs incorporate a below-ground tank. • A careful programme of defined testing of all components and instruments used in the system at regular intervals. There is a considerable ongoing effort to refine all these features important in the safe operation of vehicle filling at the filling station.

9.6 Design of On-board Vehicle H2 Fuel Tanks Because of its very low density, both as a gas or as a liquid, the design of the vehicle fuel tank for a range of >300 miles from one fill is a real challenge. The systems proposed are: • A high pressure composite tank with pressure up to 700 bar; • Liquid hydrogen storage tank which is vacuum super insulated; • A metallic hydride storage that requires heat transfer during the filling and H2 fuel use cycles; • A chemical agent that will release hydrogen but then will require regeneration; and • Carbon-based adsorbents used as a storage medium. 100

Flammability Limits Ignition Energy mJ)) (mJ

50

0

20 40 60 80 Fuel (% Volume)

Automotive Spark Plug

20 10

0.02 100

Human Spark Brush Discharge Common Static CH4 H2 Gasoline

Fig. 16. Ignition energy of H2, CH4 and gasoline with air

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The first two systems are most likely to be used in practice. Figure 17 shows the characteristics of the various storage methods expressed as MJ/litre of tank volume and wt% H2. The US Department of Energy goal of 6 wt% hydrogen can be achieved with a well designed liquid hydrogen tank. Figure 18 shows an example of a liquid hydrogen tank from a BMW car.

Fig. 17. Gravimetric and volumetric storage densities of on-board hydrogen storage vessel systems

Fig. 18. Passenger Car Liquid H2 Tank (BMW Clean Energy Car)

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R.J. Allam 100 bar CO2 Steam Coal Gasification

Oxygen

Shift reactors and steam generation

CO2 Recovery

Water

Steam

Coal

Power

380 MW

H2

220,000 Nm3/hr

CO2 @ 4,000 100 bar tonne/day

Water H2 Product

H2 Steam N2 Power Air Feed

Steam

Heat Recovery Gas Turbine

Steam Turbines

Power

Water

Fig. 19. CO2-free power and hydrogen from coal-fuelled system

9.7 Large Scale H2 Production in the Future A major factor in facilitating the use of hydrogen as a vehicle fuel will be the building of fossil fuel electric power stations with CO2 capture, which are designed to run with hydrogen fuel. A coal fired power station, shown in Figure 19, produces hydrogen that is used to fuel a gas turbine combined cycle power station. The hydrogen is diluted with nitrogen and steam to control nitrogen oxide emissions. The coal is converted to hydrogen in a partial oxidation reactor followed by a CO shift converter and a CO2/H2S selective removal system. The very large hydrogen generation capacity required for this type of power station makes it possible to produce low cost incremental H2 for vehicle fuel, particularly when power demand on the system is low.

9.8 Conclusion The necessary technology for a viable hydrogen infrastructure of production, distribution and storage exists today and is based on 50 years of safe,

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reliable systems operated by the industrial gas companies. Hydrogen production from fossil fuels with carbon dioxide capture and storage will provide the bulk of the H2 used in the transport sector in the next 50 years. More research is required in all parts of the H2 supply train to reduce costs. The important immediate objective is to facilitate demonstration projects in all parts of the world, since climate change is a global problem. In order to focus on the needs and opportunities for the eastern Mediterranean region, a road map for hydrogen use in both the transportation and power generation sectors should be developed.

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10 European Transportation in the Greenhouse — System and Policy Indicators

Henrik Gudmundsson Senior Researcher National Environmental Research Institute, Denmark E-mail: [email protected]

10.1 Introduction The transport sector in Europe1 is growing in both absolute and relative terms. Not only because the number of European Union states has increased — 10 new members, including Cyprus were welcomed in 2004 — but also because transport is a highly expansive sector in both old and new member countries. Current transport growth does not help the EU in meeting its Kyoto Protocol obligation to reduce GHG emission by 8% from base year to 2008–2012, and the predicted future mobility trends severely challenge the achievement of possibly more significant reduction objectives in the longer run. There are currently no “sector specific” GHG targets for European transport as a whole, but it is a widely shared political ambition in the EU and its member states that this sector must “contribute” to fulfil the overall climate policy objectives, an ambition that has been taken on board in the Unions’ Common Transport Policy (CTP). Its present master document, the White Paper “Time to Decide” (CEC 2001a), 1

By “Europe” is implied here the member states of the European Union and its institutions. Sometimes references are to “EU-15” comprising the 15 EU members up to May 2004 and sometimes to “EU-25,” with the 10 new members added. Data for GHG emission and targets sometimes refer to “EU-23,” which excludes Cyprus and Malta that are not Annex 1 parties to the UNFCCC. In either case where it matters the unit country number is included.

E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 163–191. © 2008 Springer.

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specifies a number of objectives and measures, several of which are meant to help reduce the environmental impacts of European transport, while other documents provide additional initiatives on energy and climate. But will these frameworks and actions suffice to make room for European transport in the restricted global greenhouse of the future, and if not, what are then likely areas for future efforts and interventions? The purpose of this paper is to give a brief overall account of the present situation and outlook in terms of transport energy use and GHG emissions in the context of European Union transport policy. This topic is a huge one, and no attempt at comprehension is claimed. Instead the assessment will be based on a selection of a few key indicators, which the author believes are important to evaluate the present situation and identify challenges for future action and research. The indicators are all drawn from official sources or scholarly studies, while the ways in which they are interpreted and presented here are those of the author alone. During 2006 the European transport policy White Paper will undergo an official mid-term review by the European Commission. This will provide an opportunity for further reflections and possibly new directions for some of the issues to be discussed here. The present paper will first (in Section 10.2) present what we call system indicators, with the aim to highlight some critical aspects of the European transport systems’ standing in terms of volume, growth, energy use and GHG emissions. Then the paper moves into policy. Section 10.3 highlights a few fundamental conditions for transport policy-making in the European Union, while Section 10.4 will go through some of the relevant targets and measures that have been adopted, evaluating them one by one with simple policy indicators. After summing up performance, Section 10.5 will address the outlooks for European transport beyond the present Kyoto agreement period, and some research issues related to policy implementation in that context will be identified. Finally a few conclusive statements are proposed, not about how much European transport, exactly, there will be room for in the common greenhouse of the future, but rather on the kinds of discussions that need to be faced in dealing with this sector’s climate impact in the coming years.

10.2 System Indicators of European Transport in Terms of Energy and Climate Change It is widely recognised that transport, as a major contributor to energy consumption and GHG emissions on a worldwide basis, represents a growing

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“headache” for policy makers. Globally, the sector represents 26% of final energy demand (34% for the OECD) and 57% of oil demand (IEA 2004). The International Energy Agency warns of a likely 50% increase in transport CO2 emissions from 2000 to 2030 in the OECD as a whole (IEA 2003). In the European Union the transport sector is also a very significant oil consumer, and it is among the fastest growing sectors in terms of energy demand and GHG emissions. Transport in EU-15 emitted 845 million tons of CO2 in 2003 (921 million if the 10 new member states are counted). This corresponds to a rise in the transport share of the total GHG emission aggregate from around 21% to around 25% between 1990 and 2003 (all excluding emissions from international aviation and marine bunkers). Transport growth over the last decade has resulted in transport GHG emissions in the EU-15 increasing by 20% since 1990, while other sectors have decreased their emissions by 10%.

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Fig. 2. Transport growth in EU-15 (Source: DG TREN 2004)

Drivers behind these trends are to be found in a pattern of economic growth that is tightly linked to increasing demand for movement of both people and goods — and in a techno-economic system increasingly “locked in” to fossil fuel use and motor vehicle dependence. Between 1979 and 2000, freight transport volumes (in tonne/km) in Europe grew by 90% in the EU-15; for passengers it was more than 130% in the same period (DG TREN 2004). Almost all of the growth took place in road transport (lorries and passenger cars, respectively). Growth trends have continued in the last decade and energy efficiency has not improved in any significant way to counter their effects. The European Transport GHG emissions originate in both passenger and freight transport presently (in 2000) at a ratio of around 60 to 40 (Samaras et al. 2002). Transport growth draws heavily on oil reserves and imports. European “domestic” oil production is likely to have peaked around 2000, and is set to fall by almost 50% from 2000 to 2030 in the baseline scenario (CEC 2003). Meanwhile oil demand will continue to go up, suggesting a further increase in dependence on imported oil. Already in 2004 EU import dependence (ratio imported to domestic production) was more than twice that of the US. While overall oil demand may “flatten out” somewhat towards 2030 due to diversification to natural gas in other sectors, transport is projected to increase its share of oil demand from 64% in 1990 to around 80% in 2030.

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Oil EU-15 700 600

MToE/year

500 400 300 200 100 0 1990

2000

2010

Primary production

Gross inland demand

2020

2030

Net import

Fig. 3. Projected oil production demand and import in the EU 1990–2030 (CEC 2003) Table 1. Oil dependence Mio T/year Oil imports Indigenous production Ratio

OECD North America 619.958 666.248 0,9305

OECD Europe 657.782 286.388 2,2968

While the general growth trends in transport, energy demand and emissions in Europe are akin to what has happened in much of the developed world, the structural composition of the European transport systems compared with the US and Japan is noteworthy. On the passenger side, Europe stands out almost as car- (and hence oil-) based as the US, while Japan has a very significant share served by rail (with mixed fuel basis). For freight it is the other way around where the US has a very large share in rail (diesel fuelled), while EU freight trade is dominated by sea and road (and hence also oil), quite similar to Japan. Rail transport (with flexible fuel potential) plays only a small (and diminishing) role in European transport for both passengers and freight. Europe relies more on road transport than either the US or Japan. The 25 EU member states have (except for Cyprus and Malta, which are not Annex 1 countries) individual target commitments for the Kyoto Protocol under the UNFCCC. The individual targets differ widely according to national circumstances and outlooks. In addition the EU-15 has a joint

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6

80%

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Road

Rail

Bus / coach

Waterborne

Inland w aterw ays

Oil pipeline

Air (dom estic / intra-EU)

Japan

Sea (dom estic / intra-EU)

Fig. 4. Model composition of passenger and freight transport in EU-25 US and Japan (DG TREN 2004)

target that represents the weighted sum of the (negotiated and agreed) individual national commitments of these “old” member countries. Progress towards the targets can be noted. According to the most recent review by the European Environment Agency (EEA 2005) the EU-15 has so far taken strides towards its Kyoto commitment to reduce GHGs by 8% compared to a base year around 1990 (Figure 6). In 2002 emissions had fallen to around 3% below base year. 2003, however, (not shown in Figure 5) saw a slight increase again, mainly due to increased coal use for electricity and heating, with GHG emissions ending at ca 1,7% below base year and only 1,3% below 2003. The performance of individual states differs widely, but we will not discuss this aspect here. However, as already mentioned, transport trends were moving in the opposite direction, with the 20% growth for transport representing more than 85% of the negative drag upwards on the GHG emission totals in 2002. This is not necessarily a problem in itself, since neither the individual Kyoto commitments nor the agreed burden sharing among EU states are differentiated across sectors. However, the “behaviour” of the transport sector obviously increases the share of the commitments to be borne by other sectors such as industry, energy and agriculture, or by the use of flexible Kyoto mechanisms for transfer of emission obligations. Countries (and the EU-15) are also requested to report expected (baseline) outlooks towards achieving their Kyoto commitments between 2008– 2012, with already adopted policies, and also with likely new ones (right hand of Figure 6). The baseline outlook is not too favourable, with GHG

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emissions projected to rise slightly again, to hit a target only 1% and not 8% under base year. However, with what is described as “additional measures”— considered likely for implementation in the member states — the 8% target is almost in range. Counting also projected use of the EU GHG emissions trading, in operation now since January 1, 2005, and other flexibility mechanisms the target can be considered as within reach (EEA 2004a). EU Kyoto Commitments

Luxem bourg

-28

Germ any

-21

Denm ark

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-12,5 -8

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% change compared to base year

Fig. 5. Individual Kyoto targets of 23 EU member countries (excluding Cyprus and Malta) and the EU-15

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Towards Kyoto EU-15 102

w. adopted measures 2010 = 99

100

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Fig. 6. Projected change in EU-15 GHG emissions with adopted and “additional” measures compared with base year, Kyoto target and actual progress to 2002 (Source: EEA 2004)

Considering again transport only, this sectors’ GHG emissions are projected to rise by as much as 34% from the base year to 2010 if counting only already adopted measures, indicating that transport has so far not been severely “hit” by climate policies, to say the least, while the “additional” measures proposed could stabilise the share of transport at its present +22% above base year, indicating that transport will have to be given much more attention already over the next few years. However, the EEA’s review reveals that only three or four countries at this stage plan to implement what is called “integrated transport policy” (EEA 2004a, p 36). Most countries appear so far to rely much on initiatives taken at EU level (see Section 10.4). While transport is a growth sector in most EU member states, the specific climate policy implications could well differ substantially among them. It could be speculated that a push for new initiatives in this sector will soon emerge in countries where the transport contribution to GHG emission burdens are most strongly felt. That could for instance include

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Largest transport shares of GHG emissions Luxemburg

51%

Sweden

30%

France

26%

Latvia

26%

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25% 0%

10%

20%

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40%

50%

60%

Largest transport GHG growth rates Ireland

127,1%

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100,0%

Portugal

91,8%

Czeck

76,2%

Austria

61,5% 0%

20%

40%

60%

80%

100%

120%

140%

Fig. 7. Five EU members with highest transport GHG share and highest transport GHG growth rate, respectively. Data are for 2002 and the 1990-2002 period respectively. (Source: EEA 2004a)

countries with a large transport share of the overall GHG budget, such as “nuclear electricity” states like Sweden and France, or countries with extreme transport GHG emission growth rates, such as Ireland and Portugal (see Figure 7)2 or countries likely to “overshoot” their general Kyoto tar2

This speculation draws from what has been dubbed the “problem pressure” hypothesis in environmental policy research. Another hypothesis (dubbed “Innova-

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gets with a big margin. We will not pursue such speculations further in the present paper but simply note that (more detailed) system indicators could be used as tools for explorative policy research. Summing up, the transport system indicators for Europe selected here do not at all point towards sustainability if such a vision would imply reductions in GHG emissions or in the dependence on non-renewable energy resources. While several countries may safely reach their present targets under the Kyoto Protocol without a need to further “disturb” the transport sector, the widely perceived unsustainability of the transport situation in Europe, together with the particular transport predicaments of at least some member countries, suggest that the sector will continue to attract political attention, even in the short run.

10.3 European Transport Policy As already indicated, European transport policy has not been immune to the challenges posed by the climate change agenda. Indeed, the first comprehensive document of the European CTP — the 1992 White Paper — flashed the suggestive subtitle: “A Community Framework for Sustainable Mobility” (CEC 1992), indicating its early concern for the long-term environmental impacts. The 2001 White Paper followed up with a program of some 60 proposed measures of action (CEC 2001a), including several to promote “greener” transport systems and policy frameworks. What was not included in either document was any precise definition of what “sustainable mobility” for Europe should actually look like, and — perhaps more important still — any specific objectives or targets with timelines for reducing the emission of transport GHGs, oil dependence or the other environmental impacts.3 The approach taken to pursue “sustainability” in the context of the European CTP has been so overlaid with other agendas that some scholars have questioned the viability or even the sincerity of such efforts at the European level of policy making at all (see, e.g., Robinson 2004; Tengström 1999; Haq 1997).

3

tion Capacity”) might suggest an “epicentre” of proactive action rather forming in countries or regions with the capacity to nurture a socioeconomic environment favourable for the emergence of profitable (or protected) low- or noncarbon transport industries. For excellent introductions to this literature see e.g., Andersen and Massa (2000) and Mol and Sonnenfeld (2000). Even if such targets were promised for later (CEC 2001, p 18), this has since been abandoned.

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Three general conditions for European transport policy making could be noted here: 1) First of all the CTP must still be seen as a new invention, even if its mandates reach back to the Treaty of Rome in 1957. In many ways this policy is still in the making, some of its basic frameworks (e.g., competitive markets, shared networks, uniform fiscal structures) are still struggling to materialise. This means that the conditions for an “activist” policy approach have been less than optimal, at least so far. 2) Second, European transport policy forms a somewhat incoherent “superstructure” on top of national, regional and local policies. To mention a few items, transport system investments and operation are largely national/regional matters (even if the markets are governed by EU rules), while vehicle and fuel standards are matters of European harmonisation. Taxation reforms require full member state consensus, a severe restraint on pushing forward key “green” elements of the CTP. The uneven division of responsibilities for various parts of essentially the same transport system complicates the understanding of what may be achieved by action at the EU level and what not, and also of whom to hold accountable for eventual policy failures. 3) Third, it is as clear in the EU as anywhere that transport is a derived demand from other economic activities, further implying that actual transport policy very often reflects, serves or directly materialises broader policy objectives, for which transport is but one instrument. Hence, it is obvious that the CTP has been shaped primarily to help realise the idea of the single market in Europe, and secondly to support regional integration and cohesion via the construction of trans-European links. Surely, environmental and social dimensions have been incorporated in the general legal frameworks, as well as in its overall political priorities, but practical measures have still mostly catered to the perceived role of transport as a tool to overcome restrictions and friction on trade and economic expansion (Schmidt and Giorgi 2001). Taken together these factors suggest that initiatives to influence developments in the transport sector would often originate in one “nontransport” policy context (market, cohesion, taxation, agriculture, energy, etc.), and then stall in another, before or under implementation, making it very difficult to achieve in practice any coherent strategy for the CTP, let alone materialise such a thing as “Sustainable Mobility.” Still, any attempts to explicitly abandon these highly profiled aims again would likely introduce considerable cacophony into the current European policy climate. The EU is often torn between bold vision and limited steering capacity.

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Leaving political theorizing aside, the following analysis will focus on the performance of a few key objectives and programs in the existing policy frameworks, which do in fact attempt to bear more or less directly on the climate change and oil “headaches” caused by current transport trends. 10.3.1 Decoupling The primary strategic policy objective to promote more sustainable mobility and transport in Europe has been defined as a need to decouple economic growth from growth in transport volumes. In the spirit of the influential “Brundtland Report” (WCED 1987) thinking on sustainability, this objective aims to reconcile economic and environmental baselines: If economic growth could be stimulated especially in sectors or businesses with low physical transport intensities, new opportunities could open for earlier stabilisation or even reduction of GHG emissions. The decoupling objective has been backed by all major political entities of the EU on several occasions,4 and it has been chosen as one of the very few environmental parameters to be monitored closely as part of the EU’s high profile “Lisbon” strategy for (sustainable) growth and jobs. What would it require to achieve such a “decoupling” (curbing transport growth without putting the economy to a halt)? Basically a substantial shift in the relative prices for transport versus other (presumably equivalent) factors of production and consumption. How could that be achieved? In several ways, theoretically, while the (at least verbal) attention in the EU so far has been directed mostly to the pricing instrument, more specifically a strategy known as “Fair and Efficient Pricing.” This means a regime where transport system users pay the full cost for the use of the infrastructure and eventually for all externalities, which is obviously not the case today. Would such a scheme ensure decoupling? Yes, according to the European Commission, at least if done together with whole package of measures proposed in the White Paper (CEC 2001 Annex II p 110 ff.). Looking at the relations as they actually develop reveals, however, that so far little “decoupling” has occurred. In fact, ironically, inland freight transport growth in the EU has started to overtake GDP growth since 2001. For passenger transport some might interpret the last few years as weak signs, but according the European Commission’s own most recent assessment of the structural indicators, “...hardly any decoupling of transport growth and GDP growth has occurred” (CEC 2005b). The simple explanation is that so far there has been limited actual progress in implementing 4

Adopted by European ministers of transport in 1999 and heads of state in 2001.

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the “Fair and Efficient” pricing regime (EEA 2004b; Vickerman 2004; Liana and Tandon 2001). No policy, no effect. In fairness, it must also be added that the indicators come with a time delay that only marginally overlaps with policy developments since adoption of the objective, if any, had indeed taken place.

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Fig. 8. Indexed growth in GDP, Freight transport and passenger transport in EU15 since 1995 (Source: EUROSTAT and DG TREN 2004)

10.3.2 Stabilising Modal Split Much the same story can be told for the other, “grand” European sustainable mobility objective, that of returning the modal split between road transport and other modes to their 1998 levels by 2010. Presently, almost the full weight of the increasing transport demand falls on road transport, which (together with aviation, another growing concern) is the most GHGintensive mode, both on the freight and on the passenger side. This takes place at the expense of market shares for rail, inland water, etc. Turning this trend around represents a no less daunting task than “decoupling”, but

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it could potentially have very favourable implications for climate and other environmental concerns. In the White Paper, again, the Commission presented figures suggesting that road transport on average produces more than four times the external costs of rail transport (CEC 2001a. Annex II, p 110 ff.). The actual benefits of achieving the objective in 2010 would, however, obviously depend on the specific environmental performance characteristics of the transport flows eventually being “switched,” as well as the environmental impact from any additional supporting infrastuctures needed to achieve this.

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Fig. 9. Modal split for freight and passenger inland transport in the EU (Source: EUROSTAT and DG TREN 2004)

Looking at the figures, again we see no sign so far that the trends are reversing, and hence one can not count any positive effects on GHG emissions either. The European Environment Agency states in its “TERM 2004” indicator report: Contrary to the aim of the Common Transport Policy, the shares of aviation and road transport continue to grow, while the shares of rail, bus, and inland shipping are gradually decreasing. However, because the environmental performance of road transport is improving faster than other modes, the consequences of its growth are not as bad for the environment as might be expected. (EEA 2004b, p 16)

In the case of the modal split target, a range of policies to substantially reinforce the alternative modes has in fact been launched over the last few years. Examples include railway liberalisation policy packages to improve

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the effectiveness and competitiveness of this mode; initiatives to stimulate inland waterway and canal transport with a similar purpose; and in 2004 the much advertised MARCO POLO program that directly supports Europe-wide investments in intermodal transport facilities and operations. Again, however, these policies are too new and too few to have affected transport patterns in any discernible way (considering also indicators come with a three-year time delay). Moreover it could also well be asked (and remains to be seen) if reinforcements of the alternative modes in themselves would do much to slow down road transport growth.

10.3.3 CO2 from Passenger Cars The most specific measure in place to address transport CHG emissions is not even a policy measure at all. It is a series of voluntary commitments by the automaking industry associations in Europe (ACEA), Japan (JARA) and Korea (KAMA) to reduce the average CO2 emissions per kilometre for new passenger cars sold on the market to an average of 140 g/km in 2008 (2009 for KAMA). These commitments are part of a broader EU policy strategy with two other elements as well: • Initiatives to make information of vehicle fuel use more readily available to consumers; and • The use of economic instruments to further promote purchases of fewer CO2-emitting vehicles. The overall objective of the combined strategy is to reach 120 g CO2/km no later than 2010. As can be seen from Figure 10, progress has been made towards the objective, as average emissions from new cars is down from around 186 g in 1995 to 164 g in 2003, a near 12% drop (CEC 2005d). A significant part of this drop is due to consumers increasingly shifting from petrol to diesel cars. Progress seems to have slowed down and the present curve does not appear to lead to the 140 g target. In terms of the two other elements in the strategy (labelling and incentives), initiatives have been most advanced in the former case, but no evidence of the effects of this measures have been provided. Hence the 120 g target is not likely to be reached by 2010. The overall effect of the strategy on the average fuel efficiency of the EU vehicle fleet has been modest, and so far not deep enough to reverse the trend towards higher emissions each year in absolute terms (EEA 2004b). Car manufacturers have strongly opposed a further tightening of the limits beyond 2008/9 citing cost grounds. They advocate a so-called “integrated

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CO2 from passenger cars 220 200

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approach” that would address vehicle emission controls together with fuel alternatives, infrastructure design and driving patterns. This idea has been met with some support (Dutch Presidency 2004) and the further elaboration of it may attract attention in the coming years.

10.3.4 Biofuels The European Commission’s White Paper on Renewable Energy Sources from 2000 set out a general objective to double the share of these sources in gross inland energy consumption from 6% to 12% by 2010. The main concern was energy security. The separate ambition for the transport sector was a minimum 20% penetration of alternatives to oil by 2020 (CEC 2000). The Commission identified biofuels as the most viable alternative option in the short run, with natural gas and hydrogen as medium-range and long-term options. Biofuels had been promoted earlier through changes in the Common Agricultural Policy (CAP). Specific targets for the share of biofuels in transport energy supply were defined in the 2003 Biofuels Directive as 2% in 2005 and 5.75% by 2010. Member states are not bound by these figures but were requested to use them for setting their own

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indicative targets (CEC 2001b). Progress towards the objectives is monitored based on annual national reports to the Commission and the EU-wide “Biofuels Barometer.”

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There are some discrepancies in the statistics, but despite high growth rates in the production of biodiesel and bio-ethanol over the last several years, the EU will not likely meet the 2005 or 2010 targets (Biofuels Barometer 2005).The delay arises due to various political, economic and technical reasons. Member states have reacted very unevenly to the call to set indicative targets. Some countries have adopted the Commission’s recommended values, while several others have not provided any response at all. Others again are in explicit disagreements with the approach. Denmark, for example, declared a zero biofuels target referring to their low costeffectiveness as a CO2-abatement measure at present.5 Concerns are also raised over the considerable land take required to produce necessary (in 5

See the European Commission’s website on Member States Reports in the frame of Directive 2003/30EC. URL: http://europa.eu.int/comm./energy/ res/lesislation/biofuels_members_states_en.htm.

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the range of 5–15% of all arable land in Europe to reach the 5,75% target) and over possibly deteriorating air quality if a higher bioethanol supplement to petrol is allowed (see e.g., Tzimas et al. 2004). All in all the strategy for introducing biofuels in transport is in progress but it remains controversial and will likely suffer delays in reaching its objectives.

10.4 Summing Up Performance None of the four examples display performance fully according to policy objectives. While some are doing better, most notably the voluntary CO2 agreements, their combined impact on overall emission levels will so far have been almost negligible. The low rate of achievement can of course be partly explained by the short history of the policies, but the present outlooks do not suggest significant change on the horizon. These are no secrets being revealed here. There is widespread awareness and concern over the poor results so far, as expressed here by the European Environment Agency: “At the moment, it appears that, if greenhouse gas emissions from transport are to be reduced, more effective policies are needed, such as taxation measures tied to CO2 performance or a stronger focus on biofuels. The feasibility of introducing CO2 emission limits, similar to the successful EU limits for polluting emissions, could also be looked at.” (EEA 2004b)

In even more compressed language, this was expressed at a former high level conference: “Reducing CO2 emissions is considered to be the most persistent and most urgent long-term problem for the transport sector, not to be solved by existing policies.” (Dutch Presidency 2004)

Critical awareness and reflexivity within the EU polity seems to co-exist with a propensity to strive for “bold” policy commitment. When this contradiction plays out in a complex, multi-level institutional structure still under construction like the EU and its CTP, it is bound to be difficult to make linear progress, or indeed find someone to blame for shortfalls in performance. Indicators to measure also the capacity of the policy system to make progress could perhaps be a useful addition to the overly simple, “first order” policy indicators used here.

10.5 Outlooks beyond Kyoto Notwithstanding limitations to efforts and accomplishments so far, present European transport policies have yet to start taking into account the even

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more demanding trajectories that may be defined beyond the present Kyoto commitment period, after 2012. A major prompt to do so is the landmark political decision by the European heads of state (confirmed in spring 2005) that the European Union will aim for a stabilisation of the average global temperature at max. 2 de grees above pre-industrial levels.6 Much work is presently being done to analyse the GHG concentrations levels, emissions scenarios, burden sharing arrangements and subsequent mitigation policies that may enable this limit to be respected, and what costs and benefits this may involve (a recent overview by the European Commission from February 2005 (CEC 2005a) is already partly outdated). Some general implications of the studies can be highlighted: • Concentrations: A consensus seems to be emerging among scientist and policy makers in Europe that to secure the 2 degree limit with reasonable certainty, a stabilisation of atmospheric concentrations of CO2 equivalents at or even below 450 ppm will be necessary (den Elzen and Meinshausen 2005; Hare and Meinshausen 2004; Criqui et al. 2004). • Time frames: The timeline to break present emission trends in order to achieve future stabilisation at or below 450 ppm CO2 equivalent is very short, possibly less than two decades, after which global emissions will have to be substantially reduced (den Elzen and Meinshausen 2005). • Burden sharing: The strategies that countries in the various regions of the world will make (or not) to mitigate emissions are extremely important for what would be required of Europe (Hare and Meinshausen 2004; Torvanger et al. 2004). In one baseline projection, Europe’s contribution to global GHG emissions will drop from around 14% today to just 8% in 2050 (CEC 2005a). • Costs: Cost figures to reach 2 degree target show substantial variations among studies. Achieving lower concentration levels (e.g., 400 ppm rather than 550 or 650) is generally considered to involve substantially increased costs. However, avoided damages by reducing other externalities (so-called co-benefits) may compensate for a significant part of the costs (Torvanger et al. 2004). Early turnarounds may also be favourable compared with late ones: Allowing emissions first to rise, and then facing annual emission cuts above 2,5% could be extremely costly (den Elzen and Meinshausen 2005). 6

In reference to the obligation in Article Two of the UN Climate Convention to pursue “…stabilisation of greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system.”

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• Emission targets: Based on the existing evidence, heads of state of the EU have politically agreed to aim for a reduction in the range of 15– 30% by 2020 compared with 1990 as average for the developed world, while a specific European target will depend on the post-2012 commitment regime. EU environment ministries further proposed an indicative target value for 2050 at 60–80% reductions for the developed countries, which so far has not been endorsed by the heads of state. Some individual states have already made political commitments to specific targets, notably a 60% reduction for the UK by 2050 (UK Government 2003).

10.5.1 Challenges to the Transport Sector This general setup clearly implies that the transport systems and policies in Europe will come under increasing pressure to turn its present growth in GHG emissions around more strongly. The exact mitigation requirements cannot be deduced, however. One the one hand these will depend strongly on how the “post 2012” framework will end up looking (for example, according to one recent UK study, the reduction burden on the transport sector in 2050 could increase by 100%, if a 450 ppm concentration level is chosen as a target over 550 ppm, Bristow et al. 2004). One the other hand the mitigation requirements will depend on associated real, perceived and political costs of implementation in that sector vis à vis other sectors. As the indicators review has shown, transport so far has not been targeted very strongly in the present European climate policies. One reason is that GHG mitigation options in transport are generally found to be less cost-effective than measures in many other sectors (e.g., Blok et al. 2001; Ministry of Finance 2003). This is again associated with the already relatively high levels of taxation in Europe (e.g., on transport fuels or vehicles purchases). However this understanding may well change when the vision reaches beyond 2012 and “only” an –8% reduction, or, as it has been put “...considering deeper cuts to 2050, transport would have to play a role” (Bristow et al. 2004). Figure 12 illustrates this predicament in a purely speculative fashion. A change in the general understanding could emerge from looking at transport system trajectories over longer time frames. A new impetus could also be sparked by steeply rising mitigation costs of (or growing opposition to) further cuts in other sectors.

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Numerous studies of sustainable transport options, scenarios and impacts in Europe have been undertaken over the last decade or so with support from the European research programs and other sources. Opportunities to continue and expand this work substantially will exist, considering the outlook for significant increases in research funding in the upcoming Seventh Framework Programme of the European Community for Research, Technological Development and Demonstration Activities (2007 to 2013) (CEC 2005c) — see Table 2. We will make no attempt here to review the vast research literature on sustainable transport7 but will highlight a few of the issues that are likely to feature prominently on the European transport research agenda over the coming years.

7

For systematic overviews of EU funded research into sustainable transport see e.g., the work of the EXTRA teams (EXTRA 2001).

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Table 2. Breakdown of proposed European Research Budget 2007–2013 (Source: CEC 2005c) Health Food, Agriculture and Biotechnology Information and Communication Technologies Nanosciences, Nanotechnologies, Materials and New Production Technologies Energy Environment (including Climate Change) Transport (including Aeronautics) Socioeconomic Sciences and the Humanities Security and Space Total (cooperation part)

M/EURO 8317 2455 12670 4832 2931 2535 5940 792 3960 44432

10.5.2 Technology and Fuel Efficiency Improvements Obviously, there are considerable potentials for reducing transport GHG emissions simply by making existing transport technologies (engines, vehicles, equipment, etc.) much more energy efficient. Passenger cars is one area where the technical potential for efficiency improvement is very far from being exhausted; freight vehicles represent additional options (e.g., reduced rolling resistance), while technical opportunities for air transport and other modes may be somewhat more restricted (Blok et al. 2001). While the main thrust of technical R&D work is likely to come from the industries themselves, there will be a need for studying how these efforts could be effected by different types of regulation and incentive regimes. Another issue for scientific enquiry may be to investigate to what extent pushing existing transport systems towards still higher technical efficiencies will always be the best way to reduce GHG emissions. One controversial view is that since transport GHG emissions are already substantially overtaxed compared with other sectors, the technology is already “over efficient” (Proost 2000), and some countries even “undermotorized.” Another critical view is that benefits of technical efficiency improvements may largely be negated by negative effects (congestion, accidents, air pollution) of induced extra driving (Litman 2005).

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10.5.3 Alternative Fuel Technologies As already discussed there is much concern over oil dependent transport systems and considerable interests in promoting various alternatives — especially biofuels, natural gas and hydrogen. Each alternative represents unique sets of advantages, costs and drawbacks (Tzimas et al. 2003). Biofuels can take off in the short run, since they require limited new infrastructure. One major R&D area here is improving the industrial processing of lignocelluloses materials (wood, etc.) as a potentially abundant feedstock for bioethanol. Still, the main barrier is likely to be the limitations of available resources considering both competing land use issues and other possibly more efficient usages of the bioenergy. Natural gas is an intermediary, possibly transitional option, with a limited potential based on proven technologies. Investments needed to supply just 10% of road transport in Europe (an indicative EU objective) are likely to be very substantial (Tzimas et al. 2003). Hydrogen for ICE and especially fuel cell driven vehicles is considered an option for the very long term (20–30 years expected before any substantial penetration). The challenges and unsolved problems in this area are manifold (technical, economic, institutional, cultural, etc.). Hence hydrogen as a transport fuel is likely to become a rich area for multi- and interdisciplinary research interest. A cross-cutting research issue in the area of alternative fuel systems could be how to overcome technological lock-in, of which current fossil-based transport systems is a classic example. One aspect of this could be to explore the conditions for the emergence of “strategic niches” where alternatives are allowed to enter practical use on a small scale, partly protected from the market pressure. Examples could be publicly owned fleets, special purpose vehicles or dedicated “communities” of users.

10.5.4 Mobility and Transport Demand Management Several scenario studies have argued that feasible technological alternatives (be they within or beyond an oil context) will hardly suffice to reach emission reductions of the magnitude of 60–80% over the next 30–40 years, should such targets become adopted (see e.g., Thaler et al. 2000; Banister et al. 2000). Measures to influence passenger transport behaviour and freight flows and even overall demand for mobility will most likely also be necessary. Demand for transport appears to be relatively insensitive (inelastic) to policy measures, but most policies so far have focused on increasing the range of choices (e.g., providing new rail links) rather than on implementing restraints. Directly reducing vehicle kilometres travelled

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would of course give immediate GHG reductions while also providing for attractive side benefits in terms of reduced congestion, accidents, local pollution, etc. The challenge is how to achieve this without sacrificing access and mobility (trips, opportunities, quality of movement). Such policies are usually considered highly controversial, due to risks of welfare loss, social regression and interference with entrenched lifestyles. However, there are studies (e.g., IEA 2005) as well as very many local examples (London, Groningen, Lund, etc.) indicating that under the right circumstances, transport demand may be successfully managed and even restrained without substantial controversy or excessive costs.

10.5.5 Aviation and CO2 Aviation is bound to attract more attention in the near future. It is the fastest growing mode of transport, its climate impact may be around three times that of other transport modes per litre of fuel, due to the atmospheric chemistry at high latitudes; it is virtually exempt from any climate or energy regulations today, and soon the impacts of air market liberalisation in Europe will boost demand for travel even further. Today, aviation stands for ca 3,5% of total GHG emissions. In 2050 this share will likely have risen to 5%, both figures without considering the significant additional contribution from flight contrails and formation of cirrus cloud (Penner et al. 1999). One academic exercise (Bows et al. 2005) suggests that unchecked aviation by 2050 would consume as much as 85% of the EU-25’s entire “carbon budget” assuming all other sectors would adjust according to the objective. Unchecked aviation does not seem to be a realistic scenario. While emissions from domestic air traffic are covered by the present Kyoto obligations, few states have undertaken any action in that area so far.8 International aviation, emitting almost five times the CO2 amount of domestic air, is entirely exempt even if the protocol does oblige signatory countries to “...pursue limitation or reduction of emissions of greenhouse gases (...) from aviation (...), working through the International Civil Aviation Organization...” (Kyoto Protocol, Art 2.2). In this process an international kerosene tax has been proposed as a theoretically preferred option, but this idea has met massive opposition from some countries and the airline industry. A more widely accepted solution seems to be inclusion of the sector in the EU’s Emission Trading scheme by 2008 or (more likely) 2012. This would provide at least some incentive for GHG housekeeping 8

In the UK, British Airways has joined the national voluntary emissions trading system.

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in the air over Europe. However, the actual design of a fair and workable system may require considerable research. Just to mention one item, the full climate impact of flights is much dependent on the time, place and meteorology, as apposed to CO2 emissions, from ground-based industrial sources (Cames and Deuber 2004). Again, how to devise an effective policy framework is a key question.

10.6 Conclusion That European transport is not on a sustainable track is nowhere more clear than with respect to energy and climate. It seems that dependence on imported oil grows deeper while emissions of CO2 rise higher. Current trends point towards further change in the wrong directions, and the transport sector is set to contribute much of the excitement as deadlines for reaching Kyoto targets draw nearer. Decided policies have only been partially implemented, and implemented policies have only been partially effective. Is the European Union really up to meeting the real transport challenges to be faced during the next couple of decades? The indicators presented in this paper do not prove that European transport is doomed, nor that the European Unions transport policy is simply a failure with regard to energy and climate change. First of all they illustrate that problems are well recognised and action is being tried out at different levels and in different settings. Substantial amounts of learning are bound to ensue. Secondly, they illustrate seminal types of limitations to the EU’s capacity to act in a strategic and coordinated fashion: Deprivation of proper instruments, high inertia, incoherent policies, potential “capture” by industry interests, member state defection, limited accountability and perhaps the worst one of all — self-inflicted fatigue in the wake of collapsing visions. The coming years will likely see a need for more research in transport and climate change. This research should not be restricted only to the study of technical options, economic impacts and optimal policy designs. It should also aim to consider which institutional preconditions need to be established for the CTP to become a tool for inventing the future sustainable transport systems of Europe.

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References Andersen MS, Massa I (2000) Ecological Modernization—Origins, Dilemmas and Future Directions. Journal of Environmental Policy & Planning vol 2, pp 337– 345 Banister D, Stead D, Steen P, Äkerman J, Dreborg K, Nijkamp, SchleisherTappeser R (2000) European Transport Policy and Sustainable Mobility. Spon Press, London and New York Biofuels Barometer (2005) EurObserver 39. June 2005. URL: http://www.energies-renouvelables.org/observ-er/html/baroSom.asp Blok K, de Jager D, Hendriks C (2001) Economic Evaluation of Sectoral Emission Reduction Objectives for Climate Change. Summary Report for Policy Makers. Updated. ECOFYS Energy and Environment—Netherlands. March 2001. URL: http://europa.eu.int/comm/environment/enveco/climate_change/sectoral_objecti ves.htm Bows A, Upham P, Anderson K (2005) Growth Scenarios for EU & UK Aviation: contradictions with climate policy. Tyndall Centre for Climate Change (North). University of Manchester, Manchester, England Bristow A, Pridmore A, Tight M, May Tony (2004) How Can We Reduce Carbon Emissions From Transport? Tyndall Centre for Climate Change Research Technical Report No. 15, June 2004 Cames M, Deuber O (2004) Emissions trading in international civil aviation. ÖkoInstitut e.V. Institute for Applied Ecology, Berlin. URL: http://www.umweltbundesamt.org/fpdf-1/2605.pdf CEC (2005a) Winning the battle against global climate change. Background paper. Commission Staff Working Paper. European Commission, Brussels CEC (2005b) Report to the Spring Council 2005 Commission Working Document. Commission of the European Communities, Brussels CEC (2005c) Proposal for a decision of the European Parliament and of the Council concerning the seventh framework programme of the European Community for research, technological development and demonstration activities (2007 to 2013). COM(2005) 119 final. Commission of the European Communities, Brussels CEC (2005d) Communication from the Commission to the Council and the European Parliament: Implementing the Community Strategy to Reduce CO2 Emissions from Cars: Fifth annual Communication on the effectiveness of the strategy. COM(2005) 269 final. Commission of the European Communities, Brussels CEC (2004) Implementing the Community Strategy to Reduce CO2 Emissions from Cars: Fourth annual report on the effectiveness of the strategy (Reporting year 2002). COM(2004) 78 final 11.02.2004. European Commission, Brussels CEC (2003) European Energy and Transport Trends Towards 2030. European Commission, Directorate-General for Transport and Energy, Brussels

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CEC (2001a) European transport policy for 2010: time to decide. White Paper. COM(2001) 370. Commission of the European Communities. Brussels, 12/09/2001 CEC (2001b) Communication of the European Commission of 07/11/2001 on an Action Plan and two Proposals for Directives to foster the use of Alternative Fuels for Transport, starting with the regulatory and fiscal promotion of biofuels COM(2001)547final CEC (2000) Green Paper. Towards a European strategy for the security of energy supply in process. 29 November 2000 (COM(2000) 769 final) CEC (1992) The Future Development of the Common Transport Policy—a global approach to the construction of a Community framework for sustainable mobility. Commission of the European Communities, Brussels Criqui P, Kitous A, Berk M, den Elzen M, Eickhout B, Lucas P, van Vuuren D, Kouvaritakis N, Vanregemorter D (2003) Greenhouse Gas Reduction Pathways in the UNFCCC Process up to 2025. Technical Report for the DG Environment. URL: http://europa.eu.int/comm/environment/climat/pdf/pm_summary2025.pdf DG TREN (2004) Pocket Book of Transport Statistics. European Commission, Directorate-General for Transport and Energy, Brussels den Elzen MGJ, Meinshausen M (2005) Meeting the EU 2°C climate target: Global and regional emission implications. Report 728001031/2005. Netherlands Environmental Assessment Agency, Bilthoven, The Netherlands. URL www.mnp.nl EEA (2005) Annual European Community greenhouse gas inventory 1990–2003 and inventory report 2005. Submission to the UNFCCC Secretariat. Revised final version, 27 May 2005. European Environment Agency, Copenhagen EEA (2004a) Analysis of greenhouse gas emission trends and projections in Europe 2004. EEA Technical report No 7/2004. European Environment Agency, Copenhagen EEA (2004b) Ten key transport and environment issues for policy-makers. TERM 2004: Indicators tracking transport and environment integration in the European Union. EEA Report. No 3/2004. European Environment Agency, Copenhagen EXTRA (2001) Integrated policy aspects of sustainable mobility. Thematic synthesis of transport research results. EXTRA\THEMATIC PAPER 1\3 European Commission, Transport RTD Programme, September 2001. URL: www.europa.eu.int/comm/transport/extra/sustainable_int.pdf Haq G (1997) Towards Sustainable Transport Planning. A Comparison between Britain and the Netherlands. Avebury, Aldershot Hare B, Meinshausen M (2004) How much warming are we committed to and how much can be avoided? PIK Report No. 93. Potsdam Institute for Climate Impact Research (PIK) Potsdam. URL: http://www.pik-potsdam.de/publications/pik_reports IEA (2005) Saving Oil in a Hurry: Measures for Rapid Demand Restraint in Transport International Energy Agency, Paris IEA (2004) Key World Energy Statistics. International Energy Agency, Paris

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IEA (2003) Transport Technologies and Policies for Energy Security and CO2 Reductions. IEA Energy Technology Policy & Collaboration Papers, International Energy Agency, Paris, March 2003 Litman T (2005) Efficient Vehicles Versus Efficient Transportation—Comparing Transportation Energy Conservation Strategies Transport Policy, vol 12, Issue 2, March 2005, pp 121–129 Mol APJ, Sonnenfeld DA (2000) Ecological Modernisation Around the World: an Introduction. Environmental Politics, vol 9, No. 1 (Spring), pp 3–14 Ministry of Finance (2003) A Cost-effective Climate Strategy. Ministry of Finance, Denmark, Copenhagen [in Danish]. URL: http://www.fm.dk/db/filarkiv/7489/web.pdf Penner JE, Lister DH, Griggs DJ, Dokken DJ, McFarland M (eds) (1999) Aviation and the Global Atmosphere. IPCC Special Report. Summary for Policymakers. Intergovernmental Panel on Climate Change, Geneva. URL: www.grida.no/climate/ipcc/aviation/index.htm Presidency Conclusions (2004) Conference on a Clean and Climate Neutral Road Transport System, Amsterdam 19–20 October 2004 Proost S (2000) Climate change, urban air problems and transport policy in the European Union. Integrated Assessment 1 (2000) 145–156 Robinson N (2004) Still the Great Green Saviour? Transport, the Environment and the European Union. POLIS Working Paper No. 14 March 2004, University of Leeds, Leeds Schade B, Rothengatter W (2004) The economic assessment of environmentally sustainable transport. European Journal of Transport and Infrastructure Research, vol 4 Issue 1, pp 147–172 Samaras Z et al. (2002) Development of a Database System for the Calculation of Indicators of Environmental Pressure Caused by Transport. Transport and Environment Database System (TRENDS). Main Report. Project funded by the European Commission. Schmidt M, Giorgi L (2001) Successes, Failures and Prospects for the Common Transport Policy. Innovation, vol 14, No. 4 Tengström E (1999) Towards Environmental Sustainability? A Comparative study of Danish, Dutch and Swedish transport policies in a European context. Ashgate, Aldershot Torvanger A, Twena M, Vevatne J (2004) Climate policy beyond 2012. A survey of long-term targets and future frameworks. CICERO Report 2004:02 Oslo, Norway, May 2004. URL: www.cicero.uio.no Tzimas E, Soria A, Peteves SD (2004) The introduction of alternative fuels in the European transport sector: Techno-economic barriers and perspectives. European Commission, DG Joint Research Centre, Seville UK Government (2003) Energy White Paper. Our energy future—creating a low carbon economy. Presented to Parliament by the Secretary of State for Trade and Industry by Command of Her Majesty, February 2003. URL: http://www.dti.gov.uk/energy/whitepaper/ourenergyfuture.pdf

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11 European Automobile CO2 Emissions: From Forecasts to Reality

Theodoros Zachariadis Economics Research Centre, University of Cyprus

Abstract: The voluntary agreement between the European Commission and the automotive industry to cut new car CO2 emissions by 25% between 1995 and 2009 is probably the most important EU initiative to curb carbon emissions as it addresses the road transport sector, whose growth may cancel out all other attempts to meet the EU’s Kyoto commitment. The paper evaluates progress in automobile fuel economy and CO2 emissions observed since 1995, examines the issue within the international context and attempts to assess whether further improvements are possible after 2010 in Europe. Based on data available up to mid-2005 it seems that, in the absence of strong technical progress and remarkable changes in consumer behavior until 2009, the industry’s commitment can only be met with some years’ delay. Moreover, it is most likely that technical progress will not persist in the future unless a policy mix of regulations and economic instruments is implemented.

11.1 Introduction Energy consumption is probably the most challenging transportationrelated problem that policy makers and the automotive and petroleum industries are faced with. As more than 75% of transportation energy demand goes to road vehicles in the United States and Europe (EIA 2004; Eurostat 2004), fuel consumption of cars and trucks plays the most important role in this issue. Thanks to very significant technological breakthroughs in the last two decades, motor vehicle emissions of air pollutants such as carbon monoxide, sulfur dioxide, lead, nitrogen oxides and hydrocarbons have been abated to a very large extent in OECD countries, even despite considerable growth in total vehicle kilometers traveled. TechnoloE.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 193–206. © 2008 Springer.

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gies have also been developed for the effective control of particulates emitted from diesel vehicles, which are increasingly employed in new models. Reducing fuel consumption and the resulting carbon dioxide (CO2) emissions, however, is a problem of a different nature: it requires interventions in the total demand for transportation, improvements in the fuel efficiency of new vehicles entering the market and eventually a shift to alternative propulsion systems that use low-carbon or zero-carbon energy sources. Under the Kyoto Protocol, which was agreed upon in 1997 but came into force only in February 2005, the 15 old European Union member states (EU-15) must reduce their greenhouse gas (GHG) emissions by 8% from 1990 levels by 2008-2012. According to official EU data and projections shown in Figure 1, the slight downward GHG emissions trend that was observed in the early 1990s is being reverted so that, if no additional measures are taken, GHG emissions in 2010 will only be 1% lower than in 1990. The current EU picture does not change much if the 10 new member states are included (most of which have similar reduction targets). As Figures 2 and 3 illustrate, transport accounted for 21% of total GHG emissions in the EU in the year 2002, and its share is continuously rising.

Fig. 1. Evolution of GHG emissions in the EU (15 member states before the enlargement of May 2004), 1990-2012 (Source: EEA 2004)

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Moreover, it is the only sector that has demonstrated an emissions increase since 1990: transport-related GHG emissions were 22% higher in 2002 than in 1990 and, in the absence of further abatement measures, they are projected to reach 34% higher levels by 2010 compared to 1990. In short, attainment of the EU’s Kyoto target will depend critically on its ability to control transportation GHG emissions, primarily CO2. As demand for mobility is steadily rising despite the widely stated EU policy objective to decouple transport from economic growth, there are two remaining options for reducing CO2 emissions from motor vehicles: increase their efficiency (usually measured as fuel economy1) and shift to alternative fuel/propulsion systems that emit less CO2. With the exception of biofuels, which are regarded as CO2-neutral and whose production is gradually increasing and encouraged by EU legislation, other fuel/engine combinations are still not mature for mass production, and even commercially available hybrid powertrains are experiencing slow penetration rates. It therefore becomes imperative for the EU, if it is to meet its Kyoto commitment, to succeed in improving the fuel economy of conventional gasoline and diesel fuelled internal combustion engines.

Fig. 2. Share of different sectors in total EU-15 GHG emissions in 2002 (Source: EEA 2004)

1

The equivalent terms fuel economy (expressed in miles per gallon) and fuel consumption (expressed in litres per 100 kilometres) are linked with the following relationship: fuel consumption (l/100 km) = 235.2 / fuel economy (mpg).

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Fig. 3. Evolution of sectoral GHG emissions in EU-15 compared to 1990 levels (Source: EEA 2004)

11.2 Fuel Economy in the United States In the United States, Corporate Average Fuel Economy (CAFE) standards have been implemented since the late 1970s, requiring that the salesweighted average fuel economy of newly registered cars does not exceed a limit value, which was set at 18 miles per gallon (mpg) in 1978 and reached 27.5 mpg in 1990. A similar standard was adopted for light duty trucks (including sport utility vehicles, pickup trucks and minivans), which was set at 17.5 mpg in 1982, reached 20.7 mpg in 1996 and only changed recently to 21.0 mpg in 2005, 21.6 mpg in 2006 and 21.7 mpg for 2007 and beyond. Figure 4 shows the evolution of these standards. As a result, the average on-road fuel economy of new cars and light trucks increased from about 14 mpg in the mid-1970s to 21 mpg in the mid-1990s and has slightly deteriorated since then. The improvement was less remarkable than initially expected due to the increase in the share of light trucks in the fleet, which has reached 48% of new light duty vehicle sales in 2003, compared to 20% in 1975 (Hellmann and Heavenrich 2004), and since light trucks are still faced with more relaxed fuel economy standards. Since the mid-1990s, automobiles in the U.S. have continuously become heavier, larger and more powerful; this should be attributed to rising income, increasing safety standards and technical progress towards energyefficient engines. This clearly means that, in the absence of stricter fuel effi-

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ciency standards, technical progress has been almost exclusively used to increase vehicle performance and accommodate more amenities instead of further improving fuel economy. This shows that, although CAFE proved to be cost-effective and has saved hundreds of billions of gallons of fuel in the U.S. since 1980 (Greene 1998), fuel economy improvements would have been even greater if standards had not stagnated after 1995 — particularly those of light trucks. In fact, there is evidence that up to 50% improved fuel economy levels can be achieved up to 2010-2015 and in a cost-effective manner if CAFE standards are raised or a similar program is adopted (De Cicco et al. 2001; NRC 2002; Plotkin 2002).

11.3 Fuel Economy and CO2 Policies in the European Union In 1995, the EU adopted a strategy to reduce CO2 emissions from passenger cars comprising three inter-related policies that would help reduce CO2 emissions to an average level of 120 g/km for newly registered cars by 2012. The three policies were:

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• a Voluntary Agreement (VA) with automotive manufacturers to “commit the industry to make a major contribution” to the 120 g/km average standard and a related monitoring system for identifying the CO2 emissions from new cars; • a CO2 information and labeling scheme for cars; and • an increasing use of fiscal instruments for fuels and vehicle fuel economy. In 1998, the European Commission (EC) and the European Automobile Manufacturers Association (ACEA) finally reached an agreement on the reduction of CO2 emissions from new cars. In this agreement, ACEA committed itself: • to achieve an average sales-weighted CO2 emissions figure of 140 g/km by 2008 for all new passenger cars sold in the EU (compared to 187 g/km of model year 1995); • to bring to the market by the year 2000 individual car models emitting no more than 120 g/km; • to reach an indicative intermediate target in the order of 165–170 g/km in 2003; and • to review the potential for additional improvements with a view to moving the new car fleet average further towards 120 g/km by 2012. One year later a similar agreement was concluded between the EC and the Japanese and Korean Automobile Manufacturers Associations (JAMA and KAMA, respectively), with the only difference being that the target year for achieving 140 g CO2/km was 2009 in that case. Implementation of these commitments is monitored jointly by the Commission and the three automobile organizations.

11.4 Evaluation of the EC — Industry Voluntary Agreement As a result of the VA, fuel economy of new cars in Europe as measured in the official driving cycle has improved considerably since 1995. According to progress reports published by the EC and the industry each year, CO2 emissions of new ACEA cars per kilometer dropped by 12–13%2 be2

Starting with model year 2002, the EC has established its own monitoring mechanism for vehicle emissions data, so that EC and industry associations publish separate data since then. Although deviations are small, the exact CO2 figures

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tween 1995 and 2003, i.e., a 1.6% annual improvement. Although both gasoline and diesel cars have become more fuel efficient, the increasing share of diesel car sales has further enhanced the average picture as diesel CO2 reductions were greater. However, as shown in Figure 5, there is still a long way to go to achieve the 2008 target: for ACEA, a 2.8–3% annual CO2 reduction is necessary for model years 2004-2008, while for JAMA and KAMA the required annual reductions up to 2009 are approximately 3.4% and 3.6%, respectively. In view of the progress made so far, the 140 g CO2/km target seems to be “extremely ambitious” for all three industry associations, as the latest report states (EC 2005). New Car CO2 Emissions (g/km) 220 200 ACEA JAMA KAMA Composite

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Regarding the initial EU target for 120 g CO2/km by 2012, the industry has fulfilled its commitment to introduce some models emitting no more than 120 g/km by 2000. The industry brought to market more than 25 models that meet this requirement, most of which were from ACEA members. Their share in total new registrations rose to about 7% in 2003, exceeding 900 000 cars. It is interesting to observe how this fuel economy improvement has been achieved up to now. The main driver was the adoption of improved techare somewhat different between data sets, which explains why some numbers are given in ranges in the paper.

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nologies that have reduced vehicle mass (related to power output) and enhanced thermodynamic engine efficiency as well as rolling and aerodynamic resistance. The second driver was dieselization: compared to 23% of new cars sold in 1995, the share of diesel car sales climbed to 47.6% in 2003 (EC 2005). A third factor was a slight change in the shares of different car segments. According to an independent analysis performed for JAMA (2003), about 30% of the improvement in ACEA cars is attributable to dieselization (11% for the JAMA fleet) and almost 70% to technical progress (80% for the JAMA fleet). Diesel cars have experienced a faster progress in fuel efficiency than their gasoline counterparts, but part of this achievement may be a result of faster diesel penetration of the small and medium segment after 1995 (Kågeson 2005). ACEA EU-15 New Car Mass (kg)

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During the same period, vehicles have become on average heavier, faster and more powerful. Increases in engine size and vehicle mass should mainly be attributed to dieselization: as shown in Figure 6, engine size of gasoline and diesel vehicles has remained essentially constant since 1995

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and mass of gasoline vehicles is almost stable since 1999, while the composite figures are still rising as the share of diesel vehicles (which have a lower power/mass ratio) increases. Conversely, demand for more powerful cars has not halted: average power output of both gasoline and diesel vehicles becomes higher every year. It is therefore evident that, like in the U.S., greater reductions in fuel consumption would have been achieved if consumers had not opted for more powerful and theoretically safer cars. Each year since 2000, the EC monitors the progress towards attainment of the VA targets jointly with the automotive industry. It is noteworthy that, until 2003, the relevant EC-ACEA report ended with the statement that the two parties “have no reason to believe that ACEA would not live up to its Commitment.” In the report of year 2004, however, it is stated that “ACEA no longer wishes to confirm the concluding statement made in earlier reports” (EC 2005). Although JAMA still believes that it can achieve the targets, the fact that ACEA (whose sales amount to about 85% of the European market) is not that optimistic anymore provides yet another indication of the difficulties faced by the industry in meeting the targets. Judging from the information available up to mid-2005, one can conclude that the automobile industry will most probably not achieve the VA 2008/2009 target. Kågeson (2005), noting that “only a dramatic change in consumer preferences or a major technological break-through could significantly change the outcome,” estimates an average CO2 figure of about 150 g/km for 2008/2009, while Zachariadis (2006), considering the 1995-2002 improvement rate and taking a 52% diesel share, assumes 143 g/km. In view of the overall progress made so far, it seems that the 140 g/km target can be met with some years’ delay. Nevertheless, and irrespective of attainment of the targets, whether the VA should be regarded as a success story remains an open question. Jensen (2003) cites a relevant OECD (2003) report on worldwide environmental VAs and argues that, although current fuel economy improvements are not negligible, the observed technical progress until 2001 would have been achieved anyhow since the VAs came into force in 1999/2000 and because of the time lag between technological development and market introduction of fuel-saving technologies. Furthermore, there are concerns that fuel consumption of specific car segments (e.g., subcompact cars, cars with engine size less tan 1.4 liters, etc.) has not improved substantially since 1995, so that reductions in average CO2 may be much more attributed to a shift in the segment mix than initially thought. An in-depth analysis of data from individual car models would be necessary for an appropriate examination of this issue.

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11.5 Autonomous Technical Progress beyond 2009 Although the fraction of new cars emitting less than 120 g CO2/km is not negligible today, the target for a sales-weighted average of 120 g CO2/km seems to be much more ambitious. Jensen (2003) argues that this target is achievable only under optimistic assumptions (and not merely by gasoline and diesel direct injection engines, which are clearly a priority area for the industry) and a diesel sales share of 84% in 2012, which is far higher than today’s 48%. The automotive industry, which has recently published its opinion on this issue in response to the VA’s requirement to review the 2012 target in 2003, asserts that this “over-ambitious” target cannot be achieved without very high societal costs and unless dramatic changes in technology availability and consumer behavior are observed (ACEA 2003; JAMA 2003). Based on earlier industry statements, however, Kågeson (2005) claims that “120 g/km in 2012 seems perfectly feasible” provided that consumers do not continue to ask for more powerful cars and the industry stops promoting minivans and luxurious sports utility vehicles. He stresses that “a return to the demand for acceleration, top speed, etc. that pleased customers in 1995, only ten years ago, could potentially reduce specific fuel consumption by at least another 15 g/km.” The difference of the two approaches can probably be explained through the distinction between technical potential and real-world consumer behavior as will be described later in this section. Irrespective of these considerations it is widely assumed in Europe that, as a result of the current VA and the increasing awareness of European citizens to climate change issues, the significant potential for improved automotive technologies will be primarily exploited to the benefit of fuel efficiency in the future, even without additional regulatory steps. Several recent studies funded by the European Commission and conducted by leading experts in energy and transport issues reflect this fundamental assumption. Zachariadis (2006) provides details about three such studies which, already in their “business as usual” scenarios that do not include mandatory standards or further VAs, forecast fleet-wide fuel economy improvements of the order of 1–1.5% per year up to 2020 or even 2030, as well as a significant penetration of alternative fuelled vehicles (AFV) already in 2010. It is difficult to identify similarly optimistic assumptions in the U.S., where long-term studies assume consistently that the “business as usual” development will be characterized by: a) a very small increase in new vehicle fuel economy, mainly due to the recently-adopted CAFE standards

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for light trucks; and b) a negligible penetration of AFV such as hybrid and fuel cell vehicles up to 2020 (EIA 2004; Greene and Plotkin 2001; Landwehr and Marie-Lilliu 2002; MacLean and Lave 2003). The same principle was applied by Fulton and Eads (2004) in their reference case projections in the international WBCSD study (WBCSD 2004): taking past trends of IEA countries, they assumed a mere 0.4% annual improvement for OECD Europe after 2010 — much lower than the above mentioned European models. These assumptions should not be viewed as contradictory to the conclusions of technology assessment studies, which point out that there is a very significant potential for fuel economy improvements in the near future and at almost today’s costs: forecast studies take into account consumer preferences and the overall regulatory environment, whereas technology assessment studies focus only on the technical potential and the associated direct costs. This may also provide an explanation for the above mentioned divergence in estimates of Jensen (2003) and Kågeson (2005) with regard to the potential for achieving the European 120 g CO2/km target. Extrapolating past trends is one way to simulate future developments in a world without further mandatory measures. Nevertheless, one has to be aware of ongoing fundamental changes both in public attitude and in the behavior of key market players. Global energy and environmental concerns are increasingly important for public opinion and in the political agenda, and fuel economy standards or agreements are currently applied in an increasing number of countries including China (An and Sauer 2005). As energy and global warming are now at the centre of discussions worldwide, policy makers cannot ignore these issues, nor can the automobile industry remain unaffected even in the absence of regulations. Therefore, it seems that an extrapolation of past fuel economy trends may not be appropriate for future baseline scenarios; one can reasonably assert that in a “business as usual” future long-term fuel consumption trends will not revert to the rates observed in the past. On the other hand, the expectation that technical progress per se and market competition will reduce automobile fuel consumption does not seem to be justified either. All relevant data show that, without more stringent requirements and even with oil prices around 50 US$ per barrel, consumers will still opt for bigger and more powerful vehicles or will travel more with their more efficient cars, thus canceling out much of the fuel economy improvement potential. As Segerson and Miceli (1998) have shown through economic modeling, the industry will not attempt to produce more energy efficient automobiles — even through voluntary agreements — unless there is a great likelihood for stricter regulatory measures.

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In Switzerland, authorities seem to be aware of this ambiguity and are currently applying a dual approach consisting of both VAs and regulations: According to the Swiss “CO2 law” of 2000, VAs were concluded with key stakeholders, among others with the car industry, with the provision that if voluntary measures (covering inter alia fuel consumption of new cars) are not sufficient regulations will follow (IEA 2003). Since the goals of this law are ambitious (-10% in total CO2 and -8% for automotive CO2 emissions in 2010 compared to 2000), it was realized in 2004 that targets cannot be met by non-mandatory measures alone. Hence the Swiss government proposed by mid-2005 to impose a tax on heating oil and a levy on petrol and diesel imports.

11.6 Concluding Remarks The voluntary CO2 agreement between the European Commission and the automotive industry is probably the most important EU initiative to curb carbon emissions, as it addresses the rapidly growing sector of road transport that almost cancels out other attempts to meet the EU 8% GHG reduction target under the Kyoto Protocol. Until the end of 2003 the industry had achieved about half of its target, which means that, in the absence of strong technical progress and remarkable changes in consumer behavior in the coming years, the commitment can only be fulfilled with some years’ delay. Although it seems that the VA has induced (or accelerated) technological improvements in automobiles, some analysts question whether it has made a great difference. They contend that progress has been mainly based on technologies that were already mature and would have been brought into the market anyhow. The rapid increase in the sales shares of diesel cars has also played an important role, and shifts between car segments may have had a stronger effect than initially thought; the latter point requires a more detailed analysis to provide a reliable answer. Despite some optimistic forecasts produced by authoritative European experts, there is currently little evidence that fuel economy improvements will persist after 2009. As climate change is now an important issue worldwide, one can reasonably expect that some autonomous improvements will take place, but they will not be remarkable under “business as usual” conditions. To accomplish further progress will probably require a combination of regulations (for the automotive and oil industry to be legally committed) and economic instruments (for consumers to prefer more

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fuel efficient cars). VAs can also be effective provided that regulations are clearly stated to be the next best alternative. In order to make real progress in curbing CO2 emissions, however, policy makers need to keep in mind two more risks. One is the “rebound effect”: as fuel consumption lowers and cars become cheaper to run, drivers may purchase bigger cars and travel more with them, thus diminishing expected fuel savings by 20–40% (Greene et al. 1999; IPCC 2001). The second risk is associated with the well-documented discrepancy between car fuel consumption as measured in the official driving cycles and that on the road under real-world driving. According to national and international studies, this “gap” has been estimated to be on the order of 10–20% in Europe and may increase in the future (Landwehr and Marie-Lilliu 2002). This, however, remains to be confirmed by ongoing experimental studies such as the European research project ARTEMIS3 as well as national projects.

References4 ACEA (2003) ACEA’s Statement on the potential for additional CO2 reduction, with a view to moving further towards the Community’s objective of 120 g CO2/km by 2012. (Note to the European Commission of 27 November 2003, Brussels) An F, Sauer A (2005) Comparison of passenger vehicle fuel economy and greenhouse gas emission standards around the world. (Report prepared for the Pew Center on Global Climate Change, Arlington, VA). Also at http://www.pewclimate.org/global-warming-in-depth/all_reports/fuel_economy/ index.cfm DeCicco J, An F, Ross M (2001) Technical Options for Improving the Fuel Economy of U.S. Cars and Light Trucks by 2010-2015. American Council for an Energy-Efficient Economy Report T012. Also at http://www.aceee.org/pubs/t012.htm EC (European Commission) (2005) Monitoring of ACEA/JAMA/KAMA Commitment on CO2 Emission Reductions from Passenger Cars. Working Paper COM(2005) 269 final, Brussels. Also at http://europa.eu.int/comm/environment/co2/co2_monitoring.htm EEA (European Environment Agency) (2004) Greenhouse gas emission trends and projections in Europe 2004. EEA Report No. 5/2004, Copenhagen EIA (US Department of Energy, Energy Information Administration) (2004) Annual Energy Outlook 2004. Report No. DOE/EIA-0383(2004), Washington, DC. Also at http://www.eia.doe.gov/oiaf/aeo/index.html 3 4

For more details see http://www.trl.co.uk/artemis/index.htm. Internet sites mentioned in this section were last visited in July 2005.

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Eurostat (2004) NewCronos database. (Available in CD-ROM and on the World Wide Web at http://europa.eu.int/newcronos), Luxembourg Fulton L, Eads G (2004) IEA/SMP Model Documentation and Reference Case Projection. Paris, France. Also at http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId =MTE0Njc Greene D (1998) Why CAFE Worked. Energy Policy 26:595-613 Greene DL, Plotkin SE (2001) Energy futures for the US transport sector. Energy Policy 29:1255-1270 Greene DL, Kahn JR, Gibson RC (1999) Fuel Economy Rebound Effect for U.S. Household Vehicles. The Energy Journal vol 20, No 3, pp 1-31 Hellmann KH, Heavenrich RM (2004) Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 2004. Report EPA420-R-04-001, U.S. Environmental Protection Agency, Ann Arbor, Michigan. Also at http://www.epa.gov/otaq/fetrends.htm IEA (International Energy Agency) (2003) Energy Policies of IEA Countries — Switzerland. Paris, France. Also at http://www.iea.org/textbase/nppdf/free/2000/switzerland2003.pdf IPCC (Intergovernmental Panel on Climate Change) (2001) Climate Change 2001: Mitigation. Geneva. Also at http://www.grida.no/climate/ipcc_tar/wg3/index.htm Kågeson P (2005) Reducing CO2 Emissions from New Cars. Progress Report, European Federation for Transport and Environment, Brussels. Also at http://www.t-e.nu/Article90.html Landwehr M, Marie-Lilliu C (2002) Transportation Projections in OECD Regions — Detailed Report. International Energy Agency, Paris. Also at http://www.worldenergyoutlook.org/presentations.asp MacLean HL, Lave LB (2003) Evaluating automobile fuel/propulsion system technologies. Progress in Energy and Combustion Science 29:1-69 NRC (US National Research Council) (2002) Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards. National Academy of Sciences, Washington, DC. Also at http://www.nap.edu/catalog/10172.html OECD (2003) Voluntary Approaches for Environmental Policy - Effectiveness, Efficiency and Usage in Policy Mixes, Paris Plotkin SE (2002) Boosting U.S. Auto Fuel Economy: What Could We Achieve by 2015? Available at http://transtech.anl.gov/v1n5/fuel-economy.html Segerson K, Miceli TJ (1998) Voluntary Environmental Agreements: Good or Bad News for Environmental Protection? Journal οf Environmental Economics and Management 36:109-130 WBCSD (World Business Council for Sustainable Development) (2004) Mobility 2030: Meeting the challenges to sustainability, Geneva. Also at http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId =NjA5NA Zachariadis (2006) On the baseline evolution of automobile fuel economy in Europe. Energy Policy 34:1773-1785

12 Implications for the Oil and Gas Industries

Walid Khadduri (Panel Moderator) Editor, Dar Al-Hayat

The purpose of this panel is to identify implications of the papers and discussions of the past two days on the oil and gas industry. We heard that oil is being produced by unstable countries that cannot assure security of supply for a strategic commodity, and that it causes environmental degradation. However, the public needs a more balanced picture when the question of future energy supplies is being discussed. The world oil industry is meeting a huge task today. It produces around 82 million barrels a day (mn b/d), with a large part of it serving the transportation sector. There are today more than 500mn vehicles on the road worldwide. Replacing oil, or substituting other sources of energy in its place, will need more than what today’s technologies can provide, and at much lower cost. Gas-to-Liquids (GTL), for example, is not forecast to grow more than 500,000 b/d by the end of decade. Moreover, demand for oil is not static. It is, in fact, rising by 1.5–2.0% annually. Global demand is forecast to reach 120mn b/d at the end of the next decade. In order to produce the 82mn b/d and to find new oil to substitute for what is being consumed and to meet future demand, the world oil industry invests around $100bn annually on exploration alone. What is complicating the picture is the fact that prices today stand at around $60/B. Most producing countries are at capacity. Nonetheless, there are no shortages today. What worries the markets are future problems, particularly during the fourth quarter of this year when demand usually rises and the fear of industrial accidents, natural disasters or political upheavals that could shut some supplies. There were expectations in 2003 that Iraq and Russia would substitute for Saudi Arabia. The fact of the E.J. Moniz (ed.), Climate Change and Energy Pathways for the Mediterranean, 207–223. © 2008 Springer.

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matter is that average Iraqi production today is lower than what it was under the previous regime, and Russian production appears to have stabilized at around 9.4mn b/d. What is aggravating the situation is the fact that despite the doubling of prices from $30 to $60/B during the past 12 months, demand is rising and at historical rates. There is also fear that global refineries, particularly in the US, may not have sufficient capacity to process the crude. There has not been a new grassroots refinery built in the US since the mid-seventies. The US refineries are now working at around 98% capacity. This makes them vulnerable to accidents and disruptions. To meet the expected high demand in 4Q05, OPEC has been supplying the market more than its needs in order to provide for storage so that this surplus crude can be used later this year. What does this tell us? We all have responsibilities. We need to have a balanced debate. Fossil fuels are with us until we can substitute for these 82mn b/d. It is imperative that the world focuses more on climate change, cleaner energy and sustainable development. However, there should not be any illusions where we are heading in the foreseeable future. World population is rising, global standards of living are steadily moving higher, and people are not ready to give up the many small but significant things that make up their way of life. What is necessary is to have a balanced debate and a more pragmatic agenda. On one hand, the dialogue that should take place is one that draws out the problems at hand and those forthcoming while at the same time acknowledging the challenges ahead in moving away from fossil fuels and the costs to be incurred by the producers. On the other hand, all the plans and research reports about the alternatives should indicate more clearly how much volume they can actually contribute to the energy basket, at what price and in accordance with a more detailed time agenda.

12.1 Professor Richard Cooper (Harvard University, USA) I want to start by talking more generally about climate change. I am going to start with an observation from Dr. Rajendra Pachauri to which I took exception. His major argument is that climate change policies would have a disproportionate impact on the poor. As a result, and for reasons of eq-

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uity, the rich companies should bear more of the burden about climate change. The important point to remember is that climate change will creep up on us over decades. By the time we have big changes, we will be beyond 2100. Meanwhile, the rest of the world is not sitting still. Many who are poor now will not be poor in the future. Hence, it is not appropriate to compare the impact of climate change on the poor in 2080 with the world today. So far, global economic performance has been on average fantastic. I see no reason for the world economy to perform less well in the coming years than in the past. One of the desirable by-products is that people who would have trouble adapting today will have easier time after 2050, because they will be richer. What are the structural features of public policy to deal with climate change? First, this is a genuinely global issue in that greenhouse gases diffuse throughout the world. Second, it has the politically disadvantageous character that any costs to mitigate are incurred in the next decade but benefits come only 4-5-6 decades from now. This naturally creates a very difficult political calculus. Third, unlike many areas where governments are the actors where they can make treaties, this is an area where the real decision makers are over a billion households and firms. If you think about the universe of treaties, most of them impact the behaviour of governments (e.g. reduce tariffs). Here governments are making commitments on behalf of their publics. If we are going to have an impact, we must ask how implementation will impact local households and firms. As for China, it is a matter of practical reality that this is where the cutting edge is in climate change. It will install about 500GW of power capacity in the coming two decades. It is moving as rapidly as it can to use natural gas, including in its power industry. There is a program to roll out approximately 40 nuclear plants in the coming decades. Giant dams are being constructed and there is a program to have biomass fuelling 10% of power by 2025. There is no question that China is looking at alternatives, but the reality is that China is abundant with coal and knows how to deal with it. They are going to build a large number of coal-fired power plants in the coming two decades. As a matter of fact, their plans call for building several times the number of coal-fired powerplants than the US and Europe combined. We all have a great interest in the character of these long-lived plants because they will affect the atmosphere over the next century. The Kyoto Protocol

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not only does not assign an emission target to China (and other developing countries), but actually prohibits them from accepting targets within the Kyoto framework. The Kyoto Protocol is a huge diversion of attention from effective action. We need a program to ensure the highest efficiency possible, and experimentation with CO2 sequestration. What do I conclude? Since it’s a global problem, we need a comprehensive global framework that covers all countries important for emissions − including China, India, Brazil – going well beyond the limited coverage of the Kyoto Protocol. And we need to know what the implementation mechanism is going to be so we are assured that the behaviour of households and firms will be affected. To do this, economists say, “raise prices.” That is the way to reach all decision makers. You need to have a program that reflects social costs of various activities in prices, such as the recent congestion tax implemented by the City of London. We need a CO2/GHG tax by international agreement. Pragmatically, the revenues of such a tax would accrue to the governments levying them. Ministers of Finance in every country will be potential allies for such a tax, since most of them need the revenue. In the USA, a deal would have to be made to reduce other taxes, but might include financing new technologies. The USA is doing much energy research, including some programs that are very promising. The money that would become available from an emissions tax could be used to beef up research budgets. What is the implication of all of this for the oil and gas industry? A carbon tax falls exceptionally heavily on coal. It would induce everyone to shift away from coal (especially energy-intensive industries/power plants), but to what? This depends on what is on the menu. I think nuclear should be on the menu because its problems can be solved at least as easily as the climate change problem can. Natural gas is a transition technology. The Chinese are building two liquefied natural gas (LNG) ports with five more planned, with the fuel to be used mainly for household use, but also for electricity generation. Accordingly, in the medium run of 2-3 decades a carbon tax is strongly favourable to the gas industry. Oil falls somewhere in between for stationary uses but the main use of oil is transport. However, a carbon tax would encourage both conservation and the exploration of less-emitting alternative engines. All fossil fuels would be covered by a carbon tax. I conclude on the note that with an appropriate climate change strategy, natural gas would be favoured for the next several decades.

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12.2 Dr. Peter Mombaur (Beiten Burkhardt, Belgium) I would like to come back to the title of the workshop and make some introductory remarks. In the European Union (EU), we have a common policy that is the work of the European Parliament, the Commission and the 25 member governments. Experience has shown us that the challenge is the same but the answer may differ from one member state to another according to the specific regional advantages and conditions. What this tells us is the following: it is necessary to diversity to reduce fossil fuel consumption; it is important to act within the regional/local possibilities; and, it does not help to have one solution to all the challenges. In the Mediterranean and North African region (MENA), there are five European policies at work that are relevant to our discussions here. These include: climate change directives; energy supply policy; the Barcelona process; move towards a Wider Europe of good neighborhood; and, the EU-Gulf Cooperation Council (GCC) cooperation policy. This leads to the Commission Communication of February 2005 on climate change. There is a lot one can say here. What is relevant, however, is to note that doing nothing is not a sensible option. The more action is postponed, the more likely irreversible damage will occur. What we know is that signs of climate change continue to develop, possibly faster than apparent today. Therefore, a long term climate strategy should be based on ‘keeping the door open policy.” Therefore, I would like to introduce a very interesting report concerning solar power for the Mediterranean region. This study was made in April 2005 by the German Aerospace Center/Institute of Technical Thermodynamics with contributions of researchers from Jordan, Morocco, Egypt, Oman, Bahrain and Algeria. A summary of their report is as follows: 1- In the MENA region economic and social development is the first priority. 2Although climate change is a serious concern, sustainability must also be achieved in terms of economy, affordability, technology, health and social compatibility. A strategy for power and water security must match the time horizon of all sustainability considerations, which is 50 to 100 years and more. 3- By 2050, fossil fired plants will only be used for what they are best suited for: peaking demand. Because of this reduction to their key function their use will become environmentally compatible, and their availability will be prolonged for centuries. The expensive and energy consuming sequestration of carbon dioxide from flue gases becomes obsolete.

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4- Electricity must be delivered on demand. Fluctuations of wind and photovoltaic electricity must be compensated by sources that can deliver power on demand, like biomass, hydropower and solar thermal plants that can operate on base-, intermediate- and peak load demand. 5- By far the biggest resource in MENA is solar irradiance, with a potential that is by several orders of magnitude larger than the total world electricity demand. 6- This resource can be used both in distributed PV systems and in large central solar thermal power stations. 7- Business-as-usual strategies for energy and water would lead to a depletion of fossil fuel and natural water resources within a few years. 8- The strategy requires an initial investment in the frame of a concerted action of all EU-MENA countries, as recommended by the Commission, the European Parliament and the Council for reasons of climate policy, energy policy and cooperation for development. 9- MENA countries will benefit by reducing their energy subsidies. Oil and gas exporting countries will be relieved from burning their export product number one. 10- The Water supply situation in MENA is very critical. A solution can only be seen in using large amounts of energy for seawater desalination.

12.3 Mr. Ramiro Ramirez (Environmental Policy Analyst, OPEC) Eight of the 11 OPEC Member Countries have now embraced the Kyoto Protocol. The UNFCCC is a historical landmark. It represents the international communities recognition that cooperation must be sought in tackling large-scale problems that concern us all. Pollution is part of the price of industrialization as we know it. It is clear that our current patterns of production and consumption are unsustainable but developing countries have no real alternatives to attain economic development other than those by which industrialized countries today used. Plentiful and cheap energy has provided industrialized countries with the necessary platform to achieve economic development and thereby raise living standards. Hence, if we look around us, it is clear that not all nations have contributed to rising atmospheric GHG concentrations in the same proportion. Historically and quantitatively it has been those that have made greater use of the planets energy resources that have contributed more to rising atmospheric GHG concentrations. Paradoxically they are also in a better position to contribute the most in resolving this dilemma.

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In a world of great contrasts in living conditions, we can not expect to have the same priorities or concerns. Developing countries regard poverty eradication as their most pressing and immediate concern and it is ludicrous to think any other arguments could have similar weight. Three billion people − about half the world’s population – still have to survive on less than two US dollars a day. Poverty and environmental degradation, which are intrinsically related, have grown. This rapid population growth and a lack of appropriate agricultural technologies and know-how have led to a depletion of scarce natural resources. An estimated US$100 billion will be required annually to fight poverty and move toward accomplishing the MDGs. However, only 50% of this amount is currently available in the form of official development assistance (ODA). We know for a fact that fossil fuels will continue to provide the lions´ share of our energy needs for decades to come. This is a fact recognised by many international organisations. Therefore, if we really wish to find realistic, near-term solutions we must come to grips with that fact and the fact that developing countries will demand more energy, most of which will also be supplied by fossil fuels for the foreseeable future. Technology will continue to provide many of the solutions that are consistent with the needs of developing and industrialised countries but it is not the complete answer, for example it is not at all clear whether these technologies will be widely available (and affordable) to developing countries. In a carbon constrained world, not having access or not being able to afford such technology could represent yet another barrier to economic development. That is why we believe that the only way to make rapid progress in meeting the conventions’ objective of stabilizing GHG concentrations is through cooperation through a multilateral process. What we can foresee of this new carbon constrained world is the creation of new markets: one for renewable energy technology and the other for carbon emission permits. However, none of these address the concerns of developing nations because they have nothing to gain from such a market at least in the way they are conceived today. Policies and measures currently adopted by many industrialised countries rely on a suit of measures in which oil taxation is prominent as it is singled out from other fuels with higher carbon content (such as coal). The argument being that there are other policy concerns such as energy security which weigh heavily and therefore justify the adoption of this discriminatory policy toward oil as well as subsidies for other energy sources. Inci-

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dentally, the same argument could be used by China today as a reason for not curbing its CO2 emissions from its coal burning power generation plants. But these arguments do not contribute to find solutions. The Kyoto Protocol envisaged the use of the flexibility mechanism as a means to reduce the cost of implementing commitments of industrialised countries while providing a vehicle for investment, technology transfer and “clean development” for developing countries. Nevertheless, due to the small scale of projects and its emphasis on obtaining cheap emission reduction permits with minimum risks for investments, the scope for effective technology transfer is indeed limited to the transfer of equipment and not technological know-how. Also due to their small scale their impact on developing countries emissions is very small and does not help them to make any headway in exploring alternative production and consumption patterns. So far, the needs of industrialized country Parties have been met by 1providing them a means to reduce the costs of implementing commitments 2- based on very preliminary outcomes from the use of the flexibility mechanisms to ask developing countries to take on carbon dioxide emissions limits and use this argument to try to divide G77 and China as a negotiating block. However, the effective de-linking of economic growth from rising CO2 emissions has not been possible. The countries that have experimented the highest economic growth in Europe over the last 15 years are also those that have experimented sharpest increases in CO2 emissions. A balanced approach in executing decisions that address the negative effects that certain policies and measures have on fossil fuel exporting developing countries versus actions to mitigate and adapt to climate change is only fair. So far this has not been the case. Article 4 of the UNFCCC convention deals with implementation of commitments by industrialized countries. In states in paragraph 8 that “Parties shall give full consideration to what actions are necessary under the Convention, including actions related to funding, insurance and transfer of technology, to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change and/or the impact of the implementation of response measures”, and furthermore in letter ‘h’ it specifically refers to countries whose economies are highly dependent on income generated from the export of fossil fuels and associated energy intensive products.

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Furthermore, Article 2, paragraph 3 of the Kyoto Protocol reasserts the negative effects that implementation of policies and measures may have on fossil fuel exporting countries. In conclusion, the future of the process lies in the hands of industrialized countries. Credibility of the process is pending on the effective implementation of industrialized countries commitments.

12.4 Dr. Gabriela von Goerne (Greenpeace, Germany) Climate Change: A Selection of Impacts During recent decades, there have been notable changes in the global climate. Temperatures are rising, precipitation patterns are changing and weather extremes show an increasing frequency in some regions.1 The Mediterranean is one of them, where small climate changes can cause large impacts, especially when it comes to the supply of water. Portugal for example is currently suffering the worst drought in six decades. According to the national water institute, as of mid-June 50 percent of mainland Portugal is suffering from extreme drought, and another 30 percent is witnessing a "severe" drought. Water availability is thus key in many of the Mediterranean countries and the changing climate is expected to negatively affect this availability. Temperature, precipitation and sea level changes are most relevant for the region: Temperature increase in Europe over the last 100 years is about 0.95°C, which is higher than the global average of about 0.7°C. It is expected that temperatures will further increase by 2.0-6.3°C in Europe by the year 2100.

1

IPCC (20012a): Climate change 2001: The scientific basis, Cambridge University press, Cambridge, UK

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The global average sea surface temperature is also increasing. The western Mediterranean Sea shows a warming of about 0.5°C over the past 15 years.2 Change in summer precipitation: The annual precipitation trends over the last 100 years show that southern Europe has become up to 20% drier. The reduction in southern Europe and the Mediterranean is expected to have severe effects, e.g. more frequent droughts, with considerable impacts on agriculture and water resources. Sea levels rise in southern Europe is around 1.0 and 1.3 mm per year. The projected rate of sea level rise between 1990 and 2100 is 2.2 to 4.4 times higher than in the 20th century, and it is projected to continue. Those changes have great relevance for coastal erosion and the loss of flat coastal regions. Rising sea levels enforces landward intrusion of salt water and endangers coastal ecosystems and agricultural areas at the coast. Climate change: Anthropogenic input The main greenhouse gas (GHG) attributable to human activities is carbon dioxide, derived from burning fossil fuels – coal, oil, gas. Anthropogenic emissions have increased the atmospheric concentration of CO2 from 278 ppm (pre-industrial levels) to over 380 ppm at present, which exceeds the highest concentration in the last 400.000 years by 70 ppm. Increasing GHG in the atmosphere result in global temperature increase. Up to now earth has heated by an average of 0.7°C. There is agreement in the European Union that a further heating above 2°C must be prevented by any means. It is assumed that above this threshold the ultimate objective of the UNFCCC to achieve a “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system” is in danger.3 However, temperature increase below 2°C will already cause serious climate impacts, threatening the health of people, disturbing food production or the economic development. What does this mean in terms of the allowable CO2 concentrations over time? Elzen & Meinshausen have shown that for achieving the 2°C target 2

EEA (2004): Impacts of Europe's changing climate – an indicator-based assessment. EEA Report No. 2/2004 3 WBGU (2003): Über Kioto hinaus denken – Klimaschutzstrategien für das 21. Jahrhundert. ISBN 3-936191-03-4

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with a probability more than 60%, GHG concentrations need to be stabilized at 450 ppm CO2-equivalent or below. This requires global emissions to peak around 2015, followed by substantial overall reduction in the order of 30-50% (=80% for industrialized countries) compared to 1990 levels in 2050.4 The necessary reductions could become even higher if new data show evidence that the 2°C target is posing too many dangerous impacts. 12.4.1 Corporate responsibility Nearly 42% of the worldwide emissions are related to oil consumption. Combustion of oil products releases CO2 and is the largest source of GHG emissions. In the past, the so-called “golden age of oil”, oil companies netted considerable profits at the cost of environmental, social and climate destruction. The run for oil accrued a mortgage that has not been paid off. ExxonMobil for example was sentenced to pay $4.5 billion compensation for the Exxon Valdez wrecking 15 years ago. 40.000 t of oil destroyed large areas of the Prince William Sound in Alaska. Until today oil remnants from the oil spill can be found along the coast. ExxonMobil still rejects responsibility and payment of the $4.5 billion. Compensation for climate change and its impacts has not even been touched so far although all oil companies contribute to them. This might change in the future. Climate change litigation appears increasingly likely, with actions taken by several state Attorneys General, and the filing of the first climate-related legal case in the United States. Climate protection is a strategy for economic survival. Oil companies will need to adapt to the implications of climate change and related international climate policies: they must prepare for a shrinking oil product market, mainly in industrialized countries who are taking measures to reduce their oil consumption; and they must implement strategies to diversify their energy portfolio towards renewable energies. 12.4.2 What has been done so far Crude oil is a finite raw material. Since the beginning of the oil era, there has always been concern that reserves would run low. Oil is still running and will run in the next future, although at much higher costs due to in4

Elzen & Meinshausen (2005): Meeting the EU 2°C climate target: global and regional emission implications. NEAA

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creasing demand mainly in fast developing countries like China and India. The worldwide increasing demand on fossil fuels will cause severe environmental, social and economic problems. However, it has become more and more clear that it is the climate problem, the limit to the atmosphere's ability to safely accommodate the products of fossil fuel combustion, which is crucial for the people’s future. Millions are at risk due to a changing climate. Fossil fuel combustion must be significantly reduced in the future. Renewable energies must replace fossil fuels in the long run. The International Energy Agency (IEA) assumes that supply and demand in renewable energies will increase strongly in the coming decades. Oil corporations that are foresighted and that assume responsibility for the longterm development of global economics should adapt on time to the foreseeable end of the oil age. Only a few companies are investing into renewable energies so far. The supermajor oil companies BP, Shell and ExxonMobil have a market share of 57%, with a total sales volume of $170 to $210 billion in 2002. They invest billions of dollars to destroy natural reserves e.g. in Alaska or Sakhalin. Shell and BP have energy strategies that include incorporating “carbon pricing” into future planning scenarios and decisions, setting emissions reduction targets, developing emissions trading experience, and investing in renewable energy. ExxonMobil is not reporting the use of any of these strategies, and little that the company has done suggests it is preparing to manage the risks of climate change.5 ExxonMobil declines not only to invest in renewable energies, they are also playing down the role of human induced climate change and are actively influencing information and decisions. President George Bush's decision not to sign the United States up to the Kyoto global warming treaty was partly a result of pressure from ExxonMobil. And recently, in June 2005, a White House aide who softened scientific warnings about global warming in government documents was hired by ExxonMobil. Shell and BP are pro-active in climate protection and furthest along in investing. However this is only a drop on a hot stone. Less than one percent of their investments are spent for renewable energies. Within the portfolio of energies, renewables are still almost invisible.

5

Mark Mansley (2003): Sleeping tiger, hidden liabilities. Claros Disc.Paper

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12.4.3 Much more needs to be done Corporations that are active in producing, processing and distributing crude oil and petroleum products are a major contributor to the humaninduced greenhouse effect and bear special responsibility for avoiding the threat posed by climate change. Transnational oil companies must share responsibility like industrialized countries, who agreed to sign the Kyoto Protocol. Self-commitment: replacing 5% of oil consumption with renewable energy by 2012. It follows from the Kyoto analogy that like industrialized countries, 5% of annual oil consumption should be compensated by all oil companies. Compensation should be fully realized by 2012. Compensation goals Post2012 could be linked to future international climate treaties. How much is 5%? If we take for example four companies − ExxonMobil, Shell, BP, and Total – 5% corresponds to emissions of 120 million tons of CO2 equivalents per year (data from 2002). To reach the goal of eliminating these emissions, compensatory energy use from a portfolio of renewable energy sources is proposed. A compensation strategy must be chosen that balances the use of cheaper renewable technology with sufficient use of renewable technology that is now more expensive but that holds more promise in the long run. Depending on the mixture of newly installed technology, investments of about $56 billion to $143 billion (€62 billion to €159 billion) would be needed. If started in 2002 for a period of 10 years it would have meant between $5.4 billion to $14.4 billions (€6 billion to €16 billions) per year, and just 3-8% of the sales volume of the four companies in 2002.6 Starting now, in 2005, the annual spending account to around $7 billion to $18 until 2012. The compensation is to be seen as a first step to product liability and compensation for increasing damages caused by climate change.

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Wuppertal Institut (2003): Oil corporations and the destruction of the climate. Study for Greenpeace Germany

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12.4.4 Chance for the Mediterranean Most Mediterranean countries show a strong economic growth that will lead to an approximation to the northern European economies by the middle of the century. Business-as-usual strategies for energy and water would lead to a depletion of fossil fuels and water resources in many countries within short time. Natural water resources are already exploited beyond their sustainable yield. Climate change will increase the problem. A fossilfuel based economy increases dependency and emissions are expected to rise from 770 million tons/annually today to roughly 2000 million t/a in 2050.7 Solution − Renewable energy: The biggest resource in the Mediterranean is solar energy, with a potential more than twice the world electricity demand. This resource can be used both in distributed photovoltaic systems to heat - for example water in Cyprus, and in large central solar thermal power stations. Next to the sun, wind energy is a major source in e.g. Morocco and Egypt, while geothermal energy is available in Turkey. Start-up investment: To change the energy system from fossil-fuel based to a more renewable-based energy system, political will and money is needed. Renewables are often said to be expensive and not able to fulfill the energy needs. This is not the case. Renewable energies will only require a transient initial support in order to be established in the power market. They become steadily cheaper due to learning and economies of scale. A study from the German Aerospace Center (DLR)7 calculates the initial costs for the Mediterranean to a total amount of $75 billion needed to bring the renewable energy mix in the Mediterranean to cost break-even with fossil fuels before the year 2020. After 2025, electricity from most renewable energies will be cheaper than electricity from fossil fuels. Investments into renewables are key for socio-economic development, reduce dependency on fossil fuel imports and decrease emissions in 2050 far below the values of today.

7

DLR (2005): „Concentrating Solar Power for the Mediterranean Region“. Study commissioned by BMU, Germany

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12.4 5 Summary and conclusion Double benefit $75 billion needed − $75 billion to spend: By compensating 5% of oil consumption with renewables to 2012, oil companies start taking responsibility for their products and contribute to sustainable development in the Mediterranean. Solar power, especially, will be able to not only provide large amounts of electricity, it can also be used to deliver electricity for desalination technologies needed for the growing water demand. 2012 is only a first step – 80% GHG reduction in 2050 is the target for industrialized countries and for oil companies. In addition, with the peak of oil exploitation nearing, oil companies must change their core business to renewable technologies. Climate protection is a chance to prepare for the future – the time BP names “beyond petroleum”. And there are far more places in the world for Post-2012 compensation strategies.

12.5 Questions and Comments Q- How could renewables break even in 2020? Von Goerne: The cost per kWh from wind is very expensive for a small installation. However, large installations are much less expensive. It is expected that the learning curve would drive down costs. Mombaur: I agree with Cooper that we, the public, are all decision makers. However, we need political decision makers. My question is how do we get what you say is necessary for a worldwide tax? Cooper: We need treaties between governments. This is their domain. However, governments are only intermediaries. They are not executing mechanisms. Governments need to impose taxes to affect market behavior. This is the way to reach the decision makers, households and firms. Mombaur: How much taxation?

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Von Goerne: We should have fixed taxes for specific purposes. If taxes on petroleum products are not uniform, then people would drive across the border to get the cheaper fuel, as happens now in some European states. Also some European taxes on gasoline go into the treasuries of retirement funds instead of renewable energy. Cooper: My proposal would be a uniform incremental tax on carbon emissions. It would apply to coal as well as to oil and gas. The German tax system has very stark differences between rhetoric and reality. A uniform emissions tax would prevent distortion and movement of industries from one country to another to evade the tax. In terms of dedicated tax revenues, I would leave it up to each country. Ramirez: I just want to add that a number of OPEC countries would not be opposed to a carbon tax based on the carbon content of the fuel. What we have today is no tax on coal in some coal-rich countries. There needs to be a level playing field. Q: How can one ensure that tax on current energy use is dedicated to promote research and use of renewables? Moniz: Tax per carbon atom is the most logical thing to do. It would be very interesting if there was coalescence around this idea by several countries. Khadduri: Something Gabriella said this morning: Can we control our energy use if we continue this way of life? Suburbs do not have local grocery shops within walking distance. We need to drive to get food. If we maintain these standards of living, and improve on them, and have them spread to developing nations, even the addition of alternatives will not help meet future energy demand at current prices. We will require very significant resources that are not here today. Cooper: My own view is that if you start talking about $200/ton carbon tax, this will go no place. You need to start talking at much lower levels. There are also macro reasons for moving slowly. We want to change behavior but we don’t want to cause a recession. I would start at say $20 a ton, partially a political judgment, partially we can learn while we go. Climate change is an important issue, so we must start to deal with it, but it is not an urgent issue in that we can learn as we go. We are going to have to do that in any case. Regarding lifestyle change, we have changed lifestyles

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enormously over last half century. Some rural people have not because incomes have not gone up. Human beings are enormously adaptive if they have time and see something coming. If there is a $0.5/gallon tax on petrol, we will walk more unless it is raining. People will change without finding it terribly difficult. Q: Between 1960 and 1990 nearly every world city has seen densities and size and sprawl increase. In the US, people have spread everywhere because of cheap gas, cars, and roads. Can that be brought back? To the extreme, is there a point where the US might have a political revolt on its hand? Can the US move on carbon tax when its citizens would be so damaged by it. Cooper: The damage has to do more with pace of change than magnitude of change. The office environment in 25 years will be different. Employees will need to come to the office two days per week. What you don’t want to do is require quick unpleasant changes. Von Goerne: The run for more and more oil causes a lot of problems, e.g. in the Middle East. We need to pull away from oil as soon as possible not only for safety concerns but also because of climate change reasons. The oil industry, making a big profit out of oil, should compensate for their contribution to climate change and its increasing impacts. Ramirez: The problem is not oil. It’s not the resource. It is the way we deal with the problem.

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Author Biographies

Rodney Allam is a Consultant with Air Products plc. Meinrad Eberle is former Director of the Paul-Scherrer Institute and is Professor emeritus at ETH Zürich where he was Professor for Internal Combustion Engines and Combustion Technology. He was especially interested in ecology and economy of the internal combustion engine and its applications with an emphasis on the problems of sustainable mobility. Bernard Frois is Director at CEA. He is in charge of the New Energy Technologies Program of the French National Research Agency. He served previously as Director of the Department of Energy, Transport, Environment and Natural Resources at the French Ministry of Research. He is a physicist. Henrik Gudmundssson is a Senior Researcher with the Danish Transport Research Institute in Lyngby, Denmark. He has a background as an environmental planner and holds a Ph.D. in sustainable transport management from the Copenhagen Business School. His main research and teaching areas are sustainable transport policy analysis and policy monitoring. Sam Holloway is a geologist with the British Geological Survey. He has worked on the underground storage of carbon dioxide since 1991 and has been involved in major European projects in the field, particularly the monitoring of CO2 storage at the Sleipner field in the North Sea. Filip Johnsson is Professor of Sustainable Energy Systems at Chalmers University of Technology, where he received his Ph.D. in Energy Conversion. His research concerns evaluation, use, and development of new technologies and energy systems in order to reduce greenhouse gas emissions from the stationary energy system (heat and power), with a particular focus on clean coal, biomass, CO2 capture technologies and heating systems in buildings. 225

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Jan Kjärstad holds a B.A. from the Göteborg University with focus on energy and environment. As a research engineer at Chalmers University of technology he has developed the Chalmers databases on the European energy infrastructure. Jan Kjärstad is now on a PhD program with his research focused on energy infrastructures and international fuel markets. Walid Khadduri is an Editor at Dar Al-Hayat. He was previously Editor of Middle East Economic Survey, a weekly newsletter providing a comprehensive source of news and analysis of energy, economic, and political developments in Middle East countries. He also worked as Director of Information and International Relations at the Organization of Arab Petroleum Exporting Countries in Kuwait. Ernest Moniz is Professor of Physics and Co-director of the Laboratory for Energy and the Environment at the Massachusetts Institute of Technology. He has served as Under Secretary of the Department of Energy and as Associate Director for Science in the Office of Science and Technology Policy. His research interests are energy, science and technology, and national security. Emin Özsoy is a Professor of Physical Oceanography at the Institute of Marine Sciences, Middle East Technical University, Erdemli. He holds an M.S. degree in Ocean Engineering from the University of Miami, Rosenstiel School of Marine and Atmospheric Science and a Ph.D. in Engineering Sciences from the University of Florida. His research interests include ocean and atmospheric dynamics, transport, and regional climate processes. Rajendra K. Pachauri is Director-General of TERI (The Energy and Resources Institute) and Chairman of the Intergovernmental Panel on Climate Change. He is active in international forums on climate change and its policy dimensions. He obtained an MS and a Ph.D. in industrial engineering and a Ph.D. in economics from North Carolina State University. Oliver Schäfer is a Policy Advisory with the European Renewable Energy Council, an umbrella organization of the leading European renewable energy industry, trade and research associations. He is also Assistant to Mechtild Rothe, MEP, in Brussels and is responsible for energy policy and related matters.

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Hiromi Yamamoto is Senior Researcher of Socioeconomic Research Center at Central Research Institute of the Electric Power Industry (CRIEPI) and Visiting Associate Professor of Department of Advanced Energy of School of Frontier Sciences at The University of Tokyo. Theodoros Zachariadis is a Postdoctoral Research Associate in the Economics Research Center at the University of Cyprus. He received a Ph.D. in Mechanical Engineering from Aristotle University of Thessaloniki, Greece. His academic interests include engineeringeconomic modeling of energy systems and the energy and environmental impact of transport in Europe.

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