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Renewables Won't Stop Climate Change: Technology-Neutrality Required

Image from the BP Statistical Review: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

Highlights

  • 2018 saw 2% growth in annual CO2 emissions as fossil fuels accounted for 71% of primary energy growth.
  • A five-year forecast shows that wind and solar could account for half of electricity growth, but only 17% of final energy consumption growth.
  • Encouraging all solutions through technology-neutral policies is the only viable pathway to achieving climate goals.

2018: A year of worrying energy data

There was a distinct air of political correctness in the presentation given by Spencer Dale, BP Chief Economist, at the live launch of the 2019 BP Statistical Review of World Energy. As CO2 emissions climbed 2% and fossil fuels once again accounted for the majority (71%) of annual energy growth, Mr. Dale carefully acknowledged the impressive growth of wind, solar and electric car technologies, but reaffirmed that these popular solutions are not enough to achieve climate targets.

Another interesting finding from the 2018 data was the significant increase in energy consumption caused by more extreme weather. In this respect, Mr. Dale was also careful to point out that this may or may not be due to climate change, but that climate change could create a vicious cycle where more extreme temperatures lead to higher energy consumption, leading to more emissions.

Regardless, the slim hopes that a CO2 plateau had been reached following a cyclical energy slowdown in China and the coal-to-gas switch in the US were well and truly dashed by this year's data. It was once again confirmed that we cannot lift 6 billion (and counting) developing world citizens to decent living standards without strong energy growth, and that renewables cannot grow fast enough to meet this growing demand.

In this article, I will illustrate this very important point more concretely.

A look to 2023

Long term energy forecasting is very difficult, particularly when there are as many uncertainties as there are today. The near-term is more certain though. Also, when looking at climate change, the 1.5 degrees scenario is very much a near-term issue, given that we only have about 8.5 years of our 1.5 degrees carbon budget left. For these reasons, a 5-year analysis of the ability of wind and solar to stop emissions growth will be presented here.

Near-term estimates for wind power deployment are quite uniform around an average of 61.5 GW per year (IEA, MAKE, GWEC). Solar forecasts are more uncertain, spanning a range of 96-220 GW/year (IEA, SPE). Here, I took the average of the four scenarios in these two forecasts at 135.5 GW/year.

Using this data and assumed capacity factors of 32% for wind and 17% for solar (current global average capacity factors are 27% for wind and 15% for solar based on BP data), the growth in wind and solar generation can be estimated. This is an optimistic estimate since no performance degradation or retirements of the existing fleet is assumed.

Wind and solar growth can then be compared to electricity demand growth, which was a whopping 3.7% in 2018, but a more reasonable 2.6% over the past 5 years. Assuming 2.6% annual growth over the next 5 years yields the graph below.

 

It is shown that projected annual electricity demand will be 3600 TWh greater in 2023 than it is today and that wind and solar will be able to cover about half of this increase.

But electricity is just one area of global energy growth. To get the full picture, we must add other energy growth (primarily transport, industry and heat). This could be estimated from BP data by subtracting primary energy demand for power production from coal, gas and oil from total primary energy consumption of these fuels. Primary energy demand for power production from each fuel was estimated using global average power plant efficiencies derived from data in the latest IEA World Energy Outlook. Primary energy was then converted to final energy with conversion factors for coal, gas, oil and electricity derived from IEA data.

Final energy consumption excluding electricity grew on average by 1.4% over the past 5 years, with a strongly accelerating trend since the oil price crash in 2014/2015. If we assume 1.4% growth over the next 5 years, we see that wind and solar can account for less than a fifth of total final energy growth:  

To reach a situation where renewables can stop CO2 emissions growth, wind and solar growth will need to quadruple from today's rate and we will need a major step-change in the rate of electrification. But our real challenge is much steeper still: cut CO2 emissions by 3% per year to avoid the growing emissions gaps illustrated below. To achieve this, wind and solar growth rates will need to increase by over an order of magnitude from the averages assumed in this assessment.  

The takeaway

These results suggest that Mr. Dale will give five rather similar talks over coming years, possibly with gradually diminishing degrees of political correctness. The message will be the same: wind, solar and electric cars are great, but insufficient. We need all solutions, including nuclear and CCS. We need technology-neutral policies.

With current complex and inefficient technology-forcing policies, we will break through the 1.5 degrees carbon budget in the mid-2020's while still on an upwards trajectory. By that point, the task at hand could start to look truly insurmountable, bringing the complex ethical questions of climate change into much sharper focus, primarily the fact those least responsible will be impacted most.

In a previous analysis of cumulative emissions, I found that the average developed world citizen currently owes a CO2 debt of over 500 tons to the developing world ($50000 at $100/ton). As the balance of power continues to shift from West to East and climate change impacts become more severe, developing countries might eventually work up the nerve to demand repayment. The resulting sanctions and trade-wars will undoubtedly make it even harder to combat climate change.

I see only one possible solution for avoiding these major global problems: technology-neutral policy. Fossil fuels must pay for their emissions and other pollution impacts, wind and solar must be directly exposed to their actual market value and pay for the grid expansions, redispatch and other balancing services they require, and nuclear must pay for full insurance against possible black swan events.

This universal leveling of the playing field will send the right market signals to all actors, unleashing a new wave of innovation, not only in solar PV and batteries, but in all clean technologies as well as a wide range of "soft-science" solutions. I, for one, would love to live in such a world.

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