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IEA: Low-carbon must take centre-stage

Surrounded by gloomy reports on the economical situation we all face, I was heartened to read in the International Energy Agencyࢀ™s (IEAࢀ™s) recently published 2008 edition of its World Energy Outlook (WEO 2008) that the current financial crisis is not expected to affect the long-term investment in energy infrastructure including those in the power sector. Although in the shorter term it may lead to delays in bringing current projects to completion, particularly in the power projects à‚— something that would surprise few people.

However, with the post-2012 global climate change policy expected to be established at the Copenhagen Conference at the end of next year, providing an international framework to succeed the Kyoto Protocol, it is not surprising that one of the key issues explored in this yearࢀ™s WEO is the policy options for tackling climate change after 2012. Below Iࢀ™d like to give you a snapshot of the WEO 2008ࢀ˜s main findings as they relate to the power sector.

The projected rise in greenhouse gas (GHG) emissions in the Reference Scenario, which gives the baseline for the analysis, indicates a doubling of the concentrations of those gases in the atmosphere by the end of this century, resulting in a hefty average temperature increase of up to 6 à‚ºC globally.

The WEO 2008 considers two climate change policy scenarios, corresponding to long-term stabilization of atmospheric GHG concentrations at 550 parts per million (ppm) and 450 ppm of carbon dioxide equivalent. The analysis focuses on three of the most commonly discussed elements of a post-2012 climate framework à‚— cap-and-trade, international sectoral agreement and national policies and measure.

Focusing on the impact of the 550 Policy Scenario on the power generation sector, it assumes that OECD+ countries (OECD countries and non-OECD EU countries) will implement policies to encourage the deployment of low-carbon technologies, in addition to a cap-and-trade system, which a carbon price of $90/tonne in 2030. By 2030, the share of fossil fuels in the electricity generation falls to 55 per cent, with the largest reduction seen in coalࢀ™s share, which drops to 32 per cent à‚— although still 26 per cent higher than today.

The adoption of carbon capture and storage (CCS) occurs primarily in OECD+ countries, where it is already by specific R&D programmes. In 2030, the installed capacity of CCS plants totals 160 GW worldwide, with the majority in OECD+ countries. Elsewhere, CCS development may need to be financed through international cooperation. Renewable energy plays a major role in the global electricity mix in the 550 Policy Scenario, projected to supply 30 per cent of total electricity by 2030, with wind and biomass showing the greatest growth. Finally, nuclear power generation exceeds 4000 TWh in 2030, which is approximately 20 per cent more than in the Reference Scenario. This is primarily due to both licence extensions of existing plants over the period 2006à‚—2030 and accelerated new build programmes.

The 450 Policy Scenario is much more aggressive, with the power sector undergoing a dramatic change after 2020, because of stronger and broader policy action, including greater participation in a cap-and-trade system, generating a carbon price of $180/tonne. By 2030, electricity production from conventional coal and gas fired plants falls by 41 per cent, compared to the 550 Policy Scenario. This fall, however, is partly replaced by electricity produced by thermal plants with CCS. Nuclear power capacity reaches almost 680 GW in 2030 and supplies over 5200 TWh or 18 per cent of total electricity generation, while renewables achieve faster deployment, accounting for 40 per cent of total electricity generation in 2030.

How achievable either of these two scenarios are is clearly open to debate, and even the WEO 2008 concedes that the ࢀœscale of the challenge in the 450 Policy Scenario is immense.ࢀ Nonetheless this important analysis is likely to play an important role in helping policy makers distill the key choices that need to be made as they strive to agree in Copenhagen in 2009 on a post-Kyoto climate framework.

In the January 2009 issue of Power Engineering International, we have the pleasure of featuring an interview with Dr Fatih Birol, the IEAࢀ™s chief economist.

Kind regards,
Heather Johnstone,
Senior Editor