The Convenient Truth

Many energy industry executives argue that reducing carbon emissions as rapidly as scientists now urge would risk an economic collapse. According to conventional wisdom, the available alternatives are just too small, unreliable, or expensive to do the job. In 2001, for example, Vice President Dick Cheney described saving energy as a moral virtue but not important enough to play a major role in the national energy policy proposals he was developing at the time. The World Energy Council, which represents the large energy companies that dominate today's energy economy, declared in 2007 that renewable energy has "enormous practical challenges.It is unlikely to deliver a significant decarbonisation of electricity quickly enough to meet the climate challenge."17

Building a Low-Carbon Economy

A thorough review of studies that assess the potential contribution of new energy options, as well as the rapid pace of technological and policy innovation now under way, points to the opposite conclusion. Improved energy productivity and renewable energy are both available in abundance—and new policies and technologies are rapidly making them more economically competitive with fossil fuels. In combination, these energy options represent the most robust alternative to the current energy system, capable of providing the diverse array of energy services that a modern economy requires. Given the urgency of the climate problem, that is indeed convenient.

The first step in establishing the viability of a climate-safe energy strategy is assessing the available resources and the potential role they might play. Surveys show that the resource base is indeed ample; the main factors limiting the pace of change are the economic challenge of accelerating investment in new energy options and the political challenge of overcoming the institutional barriers to change.

Energy productivity measures an economy's ability to extract useful services from the energy that is harnessed. From the earliest stages of the Industrial Revolution, energy productivity has steadily advanced; in the United States, the economy has grown 160 percent since 1973, while energy use has increased 31 percent, allowing the nation's energy productivity to double during the period. Germany and Japan, starting with higher productivity levels, have achieved comparable increases. But even today, well over half of the energy harnessed is converted to waste heat rather than being used to meet energy needs.18

This suggests enormous potential to improve energy productivity in the decades ahead. Light bulbs, electric motors, air conditioners, automobiles, power plants, computers, aircraft, and buildings are among the hundreds of systems and technologies that can be made far more efficient, in many cases just by using already available technologies more widely—such as compact fluorescent light bulbs and hybrid electric vehicles. Further gains can be made by altering the design of cities—increasing the role of public transport, walking, and cycling, while reducing dependence on automobiles.

A global assessment by the McKinsey Global Institute of the potential to improve energy productivity concluded that the rate of annual improvement between now and 2020 could be increased from 1 percent to 2 percent, which would slow the rate of global energy demand growth to just 1 percent a year. If these gains are extended to 2050, the growth in world energy use could be held to roughly 50 percent, rather than the doubling that is projected under most business-as-usual scenarios. This large difference represents the combined current energy consumption of Europe, Japan, and North America.19

The greatest potential turns out to lie in the most basic element of the energy econ-omy—buildings—which could be improved with better insulation, more-efficient lighting, and better appliances, at costs that would be more than paid for by lower energy bills. With technologies available today, such as ground-source heat pumps that reduce the energy needed for heating and cooling by 70 percent, zero-net-energy buildings are possible that do not require fossil fuels at all. All countries have untapped potential like this to increase energy productivity, but the largest opportunities are found in the developing nations, where current energy productivity tends to be lower. Future increases in energy productivity will not only reduce consumption of fossil fuels, they will make it easier and more affordable to rapidly increase the use of carbon-free energy sources.20 On the supply side, one of the post-carbon

Building a Low-Carbon Economy energy sources receiving much attention these days is nuclear power, which already plays a major role in some countries but faces considerable obstacles to its expansion in the decades ahead. (See Box 6-1.) Renewable energy, in contrast, relies on two primary energy sources—sunlight and the heat stored below the earth's surface—that are available in vast abundance. The sunlight alone that strikes Earth's land surface in two hours is equivalent to total human energy use in a year. While much of that sunlight becomes heat, solar energy is also responsible for the energy embodied in wind, hydro, wave, and biomass, each with the potential to be harnessed for human use. Only a small portion of that enormous daily, renewable flux of energy will ever be needed by humanity.21 Several studies have assessed the scale of the major renewable resources and what their

Box 6-i.What About Nuclear Power?

Nuclear power is a largely carbon-free energy source that could in theory help phase out fossil fuels. More than 300 nuclear plants currently provide 15 percent of the world's electricity. But this energy source has been plagued by a range of problems, most fundamentally high cost and the lack of public acceptance, that have halted development for more than 20 years in most of Europe and North America. Over the past decade, global nuclear capacity has expanded at a rate of less than 1 percent a year; in 2006, the world added 1 gigawatt of nuclear capacity but 15 giga-watts of wind capacity.

Major efforts are now under way to revive the nuclear industry—driven by a combination of high natural gas prices, concern about climate change, and a large dose of new government sub-sidies.Technology advances have led several companies to develop modestly revamped plant designs that are intended to make nuclear plants easier to control, less prone to accidents, and cheaper to build. The most important innovations are to standardize designs and streamline regulatory procedures. So far, two nuclear plants are being built in Europe, several are under construction in China, and the United States is expecting as many as 32 plants to be ordered by the end of 2008. Unfortunately for the industry, several different plant designs are being promoted by different companies, limiting the potential for standardization.

It is too early to tell whether these nuclear plants will be economical enough to launch a wave of construction.The first new European reactor has been under construction in Finland and is already two years behind schedule and $1 billion over budget. A study by a Keystone Center panel composed of academics, energy analysts, and industry representatives estimated the cost of new nuclear power at 8-1 per kilowatt-hour—more expensive than natural gas-and wind-powered generators. And because of large capital requirements and long lead times, nuclear plants face a risk premium that other generators do not.

Energy planners will also have to reckon with the scale and pace of construction that would be needed to make a serious dent in the world's climate problem. MIT researchers estimate that 1,000-1,500 new reactors would be needed by 2050 for nuclear to play a meaningful role in reducing global emissions—a construction pace 20 times that of the past decade and five times the peak level in the 1980s.

Many advocates of nuclear power argue that given the urgency of doing something about climate change quickly, it must be pursued. Speed, however, is not one of nuclear power's virtues. Planning, licensing, and constructing even a single nuclear plant typically takes a decade or more, and plants frequently fail to meet completion deadlines. Due to the dearth of orders in recent decades,the world currently has very limited capacity to manufacture many of the critical components of nuclear plants. Rebuilding that capacity will take a decade or more.

Source: See endnote 21.

Figure 6-2. Estimates of Available Energy Resources Using Today's Technology

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Source: UNDP, Johansson et al.

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World Solar Energy Use

Wind

Geo- Biomass Hydro- Ocean thermal power

World Solar Energy Use

Wind

Geo- Biomass Hydro- Ocean thermal power

Building a Low-Carbon Economy practical contribution to the energy economy might one day be. One study by the National Renewable Energy Laboratory in the United States, for example, concluded that solar thermal power plants built in seven states in the U.S. Southwest could provide nearly seven times the nation's existing electric capacity from all sources. And mounting solar electric generators on just half of the suitable rooftop area could provide 25 percent of U.S. electricity. In the case of wind power, the Pacific Northwest Laboratory found that the land-based wind resources of Kansas, North Dakota, and Texas could meet all the nation's electricity needs, even with large areas excluded for environmental reasons.

These reports demonstrate that resource availability will not be a limiting factor as the world seeks to replace fossil fuels. With improved technologies, greater efficiency, and lower costs, renewable energy could one day replace virtually all the carbon-based fuels that are so vital to today's economy. (See Figure 6-2 and Table 6-3.)22

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