Steven E. Koonin

1
Energy trends and technologies for the coming
decades

• Steven E. Koonin
• March 2007

2
key drivers of the energy future

• GDP pop. growth
• urbanisation
• demand mgmt.

Demand Growth
Supply Challenges
Technology and policy
Security of Supply
Environmental Impacts
3
energy use grows with economic development
energy demand and GDP per capita (1980-2004)
US
Australia
Russia
France
Japan
Ireland
S. Korea
UK
Malaysia
Greece
Mexico
China
Brazil
India
Source UN and DOE EIA Russia data 1992-2004 only
4
demographic transformations
Oceania
Oceania
N-America
N-America
Africa
Africa
S-America
S-America
Europe
Europe
8.9 billion
6.3 billion
source United Nations
Asia
Asia
5
energy demand growth projections
Global energy demand is projected to increase by
just over one-half between now and 2030 an
average annual rate of 1.6. Over 70 of this
increased demand comes from developing countries
Global Energy Demand Growth by Region (1971-2030)
Energy Demand (Mtoe)
Notes 1. OECD refers to North America, W.
Europe, Japan, Korea, Australia and NZ
2. Transition Economies refers to FSU and
Eastern European nations 3.
Developing Countries is all other nations
including China, India etc.
Source IEA World Energy Outlook 2006
6
annual primary energy demand 1971-2003

• Source IEA, 2004 (Excludes biomass)

7
growing energy demand is projected
Global Energy Demand Growth by Sector (1971-2030)
Energy Demand (bnboe)
Key
Notes 1. Power includes heat generated at power
plants 2. Other sectors includes residential,
agricultural and service
Source IEA WEO 2004
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energy efficiency and conservation

• Demand depends upon more than GDP
• Multiple factors - geography, climate,
  demographics, urban planning, economic mix,
  technology choices, policy
• For example, US per capita transport energy is gt
  3 times Japan
• Efficiency through technology is about paying
  today vs tomorrow
• Must be cost effective to be attractive
• May not reduce demand through misuse or in
  supply-limited situations

9
key drivers of the energy future

• significant resources
• non-conventionals

• GDP pop. growth
• urbanisation
• demand mgmt.

Demand Growth
Supply Challenges
Technology and policy
Security of Supply
Environmental Constraints
10
US energy supply since 1850
Source EIA
11
global primary energy sources
Nuclear
Oil
Hydro
Oil
Coal
Coal
Gas
Natural gas
Hydro
Nuclear
12
global energy supply demand (total 186
Mboe/d)
Industry
Power Generation
45Mboe/d
76Mboe/d
Buildings
56Mboe/d
Transportation
37Mboe/d
Source World Energy Outlook 2004
13
global energy supply demand (total 186
Mboe/d)
14
BAU projection of primary energy sources
04 30 Annual Growth Rate ()
6.5
1.3
2.0
0.7
2.0
1.3
1.8
Total
1.6
Note Other renewables include geothermal,
solar, wind, tide and wave energy for electricity
generation
Source IEA World Energy Outlook 2006 (Reference
Case)
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substantial global fossil resources
Yet to Find
Unconventional
Unconventional
Reserves Resources (bnboe)
R/P Ratio 164 yrs.
Proven
Yet to Find
Yet to Find
R/P Ratio 41 yrs.
R/P Ratio 67 yrs.
Proven
Proven
Source World Energy Assessment 2001, HIS,
WoodMackenzie, BP Stat Review 2005, BP estimates
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oil supply and cost curve
Availability of oil resources as a function of
economic price
Source IEA (2005)
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key drivers of the energy future

• significant resources
• non-conventionals

• GDP pop. growth
• urbanisation
• demand mgmt.

Demand Growth
Supply Challenges
Technology and policy

• dislocation of resources
• import dependence

Security of Supply
Environmental Impacts
18
significant hydrocarbon resource potential
Oil, Gas and Coal Resources by Region (bnboe)
Resource Potential (bnboe)
Resource Potential (bnboe)
Resource Potential (bnboe)
Source BP Data
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dislocation of fossil fuel supply demand
Source BP Statistical Review 2006
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key drivers of the energy future

• significant resources
• non-conventionals

• GDP pop. growth
• urbanisation
• demand mgmt.

Demand Growth
Supply Challenges
Technology and policy

• dislocation of resources
• import dependence

• local pollution
• climate change

Security of Supply
Environmental Impacts
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climate change and CO2 emissions

• CO2 concentration is rising due to fossil fuel
  use
• The global temperature is increasing
• other indicators of climate change
• There is a plausible causal connection
• but 1 effect in a complex, noisy system
• scientific case is complicated by natural
  variability, ill-understood forcings
• Impacts of higher CO2 are uncertain
• 2X pre-industrial is a widely discussed
  stabilization target (550 ppm)
• Reached by 2050 under BAU
• Precautionary action is warranted
• What could the world do?
• Will we do it?

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crucial facts about CO2 science

• The earth absorbs anthropogenic CO2 at a limited
  rate
• Emissions would have to drop to about half of
  their current value by the end of this century to
  stabilize atmospheric concentration at 550 ppm
• This in the face of a doubling of energy demand
  in the next 50 years (1.5 per year emissions
  growth)
• The lifetime of CO2 in the atmosphere is 1000
  years
• The atmosphere will accumulate emissions during
  the 21st Century
• Near-term emissions growth can be offset by
  greater long-term reductions
• Modest emissions reductions only delay the growth
  of concentration (20 emissions reduction buys 15
  years)

23
some stabilization scenarios
24
social barriers to meaningful emissions reductions

• Climate threat is intangible and diffuse can be
  obscured by natural variability
• contrast ozone, air pollution
• Energy is at the heart of economic activity
• CO2 timescales are poorly matched to the
  political process
• Buildup and lifetime are centennial scale
• Energy infrastructure takes decades to replace
• Power plants being planned now will be emitting
  in 2050
• Autos last 20 years buildings 100 years
• Political cycle is 6 years news cycle 1 day
• There will be inevitable distractions
• a few years of cooling
• economic downturns
• unforeseen expenses (e.g., Iraq, tsunamis, )
• Emissions, economics, and the priority of the
  threat vary greatly around the world

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CO2 emissions and GDP per capita (1980-2004)
US
Australia
Ireland
Russia
UK
S. Korea
Japan
France
Malaysia
Greece
China
Mexico
Brazil
India
Source UN and DOE EIA Russia data 1992-2004 only
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implications of emissions heterogeneities

• 21st Century emissions from the Developing World
  (DW) will be more important than those from the
  Industrialized World (IW)
• DW emissions growing at 2.8 vs IW growing at
  1.2
• DW will surpass IW during 2015 - 2025
• Sobering facts
• When DW IW, each 10 reduction in IW emissions
  is compensated by lt 4 years of DW growth
• If Chinas (or Indias) per capita emissions were
  those of Japan, global emissions would be 40
  higher
• Reducing emissions is an enormous, complex
  challenge technology development will play a
  central role

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CO2 emissions and Energy per capita (1980-2004)
Source UN and DOE EIA Russia data 1992-2004 only
28
greenhouse gas emissions in 2000 by source
Source Stern Review, from data drawn from World
Resources Institute Climate Analysis Indicators
Tool (CAIT) on-line database version 3.0
29
historical and projected GHG emissions by sector
Source Stern Review from WRI (2006), IEA (in
press), IEA (2006), EPA (forthcoming), Houghton
(2005).
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key drivers of the energy future

• significant resources
• non-conventionals

• GDP pop. growth
• urbanisation
• demand mgmt.

Demand Growth
Supply Challenges
Technology and policy

• import dependence
• competition

• local pollution
• climate change

Security of Supply
Environmental Impacts
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some energy technologies

• Primary Energy Sources
• Light Crude
• Heavy Oil
• Tar Sands
• Wet gas
• CBM
• Tight gas
• Nuclear
• Coal
• Solar
• Wind
• Biomass
• Hydro
• Geothermal

• Extraction Conversion Technologies
• Exploration
• Deeper water
• Arctic
• LNG
• Refining
• Differentiated fuels
• Advantaged chemicals
• Gasification
• Syngas conversion
• Power generation
• Photovoltaics
• Bio-enzyimatics
• H2 production distribution
• CO2 capture storage

• End Use Technologies
• ICEs
• Adv. Batteries
• Hybridisation
• Fuel cells
• Hydrogen storage
• Gas turbines
• Building efficiency
• Urban infrastructure
• Systems design
• Other efficiency technologies
• Appliances
• Retail technologies

There are no silver bullets
But some have a larger calibre than others !
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evaluating energy technology options

• Current technology status and plausible technical
  headroom
• Budgets for the three Es
• Economic (cost relative to other options)
• Energy (output how many times greater than input)
• Emissions (pollution and CO2 operations and
  capital)
• Materiality (at least 1TW 5 of 2050 BAU energy
  demand)
• Other costs - reliability, intermittency etc.
• Social and political acceptability
• we also must know what problem we are trying to
  solve!

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two key energy considerations security
climate
Carbon Free H2 for Transport
High
Capture Storage
Conv. Biofuels
Hybrids
Adv. Biofuels
Capture Storage
Vehicle Efficiency (e.g. light weighting)
CS
Concern over Future Availability of Oil and Gas
Dieselisation
Low
Low
High
Concern relating to Threat of Climate Change
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the fungibility of carbon
Primary Carbon Source
Syngas Step
Conversion Technology
Syngas (CO H2)
Syngas to Liquids (GTL) Process
Natural Gas
Lubes
Naphtha
Diesel
Coal
Syngas to Chemicals Technologies
Methanol
Biomass
Hydrogen
Others (e.g. mixed alclohols, DME)
Extra Heavy Oil
Syngas to Power
Combined Cycle Power Generation
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what carbon beyond petroleum?
Fuel
Fossil
Agriculture
Biomass
?
1000
Annual US Carbon (Mt C)
15 of Transportation Fuels
36
what carbon beyond petroleum?
Fuel
Fossil
Agriculture
Biomass
?
?
5300
Big!
Annual World Carbon (Mt C)
15 of Transportation Fuels
37
biofuels today
Food Crops for Energy

• 2 of transportation pool
• (Mostly) Use with existing infrastructure
  vehicles
• Growing support worldwide
• Conversion of food crops into ethanol or
  biodiesel
• US Corn ethanol economic for oil gt 45 /bbl
• Brazilian sugarcane economic for oil gt 22/bbl

Flex Fuel Offers in Brazil
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key questions about biofuels

• Costs
• Biofuel production costs
• Infrastructure vehicle costs
• Materiality
• Is there sufficient land after food needs?
• Are plant yields sufficiently high?
• Environmental sustainability
• Field-to-tank CO2 emissions relative to business
  as usual?
• Agricultural practice water, nitrogen,
  ecosystem diversity and robustness,
  sustainability, food impact
• Energy balance
• More energy out than in?
• Does it matter?

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corn ethanol is sub-optimal

• Production does not scale to material impact
• 20 of US corn production in 2006 (vs. 6 in
  2000) was used to make ethanol displacing 2.5
  of petrol use
• 17 of US corn production was exported in 2006
• The energy and environmental benefits are limited
• To make 1 MJ of corn ethanol requires 0.9 MJ of
  other energy (0.4 MJ coal, 0.3 MJ gas, 0.04 MJ
  of nuclear/hydro, 0.05 MJ crude)
• Net CO2 emission of corn ethanol 18 less than
  petrol
• Ethanol is not an optimal fuel molecule
• Energy density, water, corrosive,
• There is tremendous scope to improve (energy,
  economics, emissions)

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optimizing biofuels requires fusing the petroleum
and agricultural value chains

• Cellulose (bugs/ enzymes/ chems)
• Microbial engineering
• Plant integration / optimization
• Co-products
• Role of gasification

• Tillage
• Planting
• Fertilizer
• Water
• Pest control
• Crop rotation
• Sustainability

• Blends
• Additives
• Distribution
• Engine mods

• Species
• Yield / Morphology / Development
• Chemistry
• Unnatural products
• Stress tolerance
• / Bio-overhead
• Safety

• Optimal catchment
• In-field processing (e.g., pelletizing)
• Transport energetics
• Storage
• Waste utilization

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BP Energy Biosciences Institute to pursue these
opportunities

• Dedicated research organization to explore
  application of biology and biotechnology to
  energy issues
• Sited at University of California Berkeley and
  its partners, University of Illinois
  Urbana-Champagne and Lawrence Berkeley National
  Laboratory
• Open basic and proprietary applied research
• Initial focus on the entire biofuels production
  chain
• Smaller programmes in Oil Recovery, hydrocarbon
  conversion, carbon sequestration
• Involvement of BP, academia, biotechnology firms,
  government
• 500M, 10-year commitment operations commencing
  June 07

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evaluating power options
power sector
High
Solar
Unconventional Gas
Hydrogen Power
Nuclear
Wind
Concern over Future Availability of Oil and Gas
Biomass
Coal
Hydro
Geothermal
Gas CCGT
Low
Low
Concern relating to Threat of Climate Change
High
43
electricity generation shares by fuel - 2004
Source IEA WEO 2006
44
levelised costs of electricity generation
Cost of Electricity Generation 9 IRR (/MWh)
Low/Zero carbon energy source
Renewable energy source
Fossil energy source
Source BP Estimates, Navigant Consulting
45
impact of CO2 cost on levelised Cost of
Electricity
46
potential of demand side reduction
Urban Energy Systems
Low Energy Buildings

• Buildings represent 40-50 of final energy
  consumption
• Technology exists to reduce energy demand by at
  least 50
• Challenges are consumer behaviour, policy and
  business models

• 75 of the worlds population will be urbanised
  by 2030
• Are there opportunities to integrate and optimise
  energy use on a city wide basis?

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likely 30-year energy future

• Hydrocarbons will continue to dominate
  transportation (high energy density)
• Conventional crude / heavy oils / biofuels /
  CTL and GTL ensure continuity of supply at
  reasonable cost
• Vehicle efficiency can be at least doubled
  (hybrids, plug-in hybrids, HCCI, diesel)
• local pollution controllable at cost CO2
  emissions now 20 of the total
• Hydrogen in vehicles is a long way off, if its
  there at all
• No production method simultaneously satisfies
  economy, security, emissions
• Technical and economic barriers to distribution /
  on-board storage / fuel cells
• Benefits are largely realizable by plausible
  evolution of existing technologies
• Coal (security) and gas (cleanliness) will
  continue to dominate heat and power
• Capture and storage (H2 power) practiced if CO2
  concern is to be addressed
• Nuclear (energy security, CO2) will be a fixed,
  if not growing, fraction of the mix
• Renewables will find some application but will
  remain a small fraction of the total
• Advanced solar a wildcard
• Demand reduction will happen where economically
  effective or via policy
• CO2 emissions (and concentrations) continue to
  rise absent dramatic global action

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necessary steps around the technology

• Technically informed, coherent, stable government
  policies
• Educated decision-makers and public
• For short/mid-term technologies
• Avoid picking winners/losers (emissions trading)
• Level playing field for all applicable
  technologies
• For longer-term technologies
• Support for pre-competitive research
• Hydrates, fusion, advanced fission, PV,
  biofuels,
• Business needs reasonable expectation of price
  of carbon
• Universities/labs must recognize and act on
  importance of energy research
• Technology and policy

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Questions/Comments/Discussion
50
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