The case for clean energy

The world’s progress towards clean energy is off track but the cost of action will – in the long term – protect the climate and improve security and affordability. The IEA’s Didier Houssin discusses its latest Energy Technology Perspectives with Peter Cheney.

Ireland’s energy system is “at the forefront” of global energy trends, according to the International Energy Agency’s Director of Sustainable Energy Policy and Technology. Didier Houssin is discussing the IEA’s latest Energy Technology Perspectives (ETP).

He noted that the high share of renewables in Ireland – while welcome – can present problems with energy security and flexibility but his overall assessment of Irish energy is positive.

“One of the areas where I think we may well see the most drastic changes is the demand side sector with smart grids and demand side responses,” he adds. “With the use of the internet and new communication technologies, we may well see a drastic revolution in the future.” Ireland’s position in this area is “well very advanced.”

Houssin highlighted two messages from ETP 2014. “One side of the coin is quite gloomy and pessimistic,” he notes. “It’s basically to remind policy-makers and the general public that we’re not on track.” He adds that “the more you wait, the more expensive the transition will be.”

More positively, the study shows that the energy transition is still achievable.

“Of course, there is a price to pay in the short term,” Houssin remarks. “In the long term, it pays off. We can see a lot of fuel savings and you can reach goals in terms of climate change but also in terms of energy security and energy prices.”

Houssin speaks with knowledge and enthusiasm about energy policy and also highlights what he sees as some exciting developments in the sector.

Growth in renewable energy is on track despite a slowdown in investment in OECD countries during 2013. This has been “more than compensated” by investments made in emerging economies: more than half of all new solar panels were installed in Asia:

“We tend to be very Euro-centric in Europe and now China has become the most important market for renewable energy – as well as other emerging countries like Brazil.”

More effort is also going into energy efficiency – in OECD and developing countries alike – and new technologies such as hydrogen and energy storage are emerging. He hopes that policy-makers will be motivated to make the right steps as they face the drivers of high energy prices, the need for energy security and “an increasing realisation that climate change is becoming an issue with more and more extreme weather events worldwide.”

Electric future

The perspectives, launched in Seoul in May, predict that electricity will increasingly power the world’s economies in the 21st century, rivalling oil as the dominant energy carrier. Less progress on deploying clean energy technologies was made in 2013 compared to 2012 due to the growing use of coal. A radical change of course is “long overdue” as the emissions intensity of the overall electricity system has not changed in the last 20 years.

Electricity production uses 40 per cent of primary energy and produces an equal share of energy-related carbon emissions. However, cost-effective and practical solutions can increase efficiency, moderate electricity demand and decarbonise almost all power generation by 2050.

According to the report, an extra $44 trillion is needed to secure a clean energy future by 2050 but this is offset by $115 trillion in fuel savings. The investment estimate has risen from $36 trillion in the previous ETP analysis and indicates the major and rising costs of waiting before taking action.

Attracting capital investment is seen as key to financing the transition but the higher capital costs (despite lower operating costs) of low carbon technologies mean that investors will need support in order to manage financial risks.

ETP 2014 also states that the “unrelenting” rise in coal use without deploying carbon capture and storage is “fundamentally incompatible” with climate change objectives. The balance of supply and demand for variable renewable energy can be actively managed.

Natural gas is viewed as having a short-term dual role in replacing coal and supporting the integration of renewables. “But in the medium to longer term, gas must be seen for what it is,” it adds, “a transitional fuel, not a low-carbon solution unless it is coupled with CCS.”

Electricity storage can play multiple roles in an integrated system but the ETP also finds that “electricity storage alone is not an indispensable game changer for the future energy system.” Electricity “could be the key to weaning the transportation sector off its oil addiction” but not all regions are ready to go through that transition.

The perspectives also recognise the significant differences between emerging and developed economies: “For example, very few countries face challenges of the magnitude that confront India in its quest to maintain strong economic growth while providing electricity to its 300 million citizens who currently lack access.” A whole chapter is devoted to India and the institutional and structural barriers that are hampering the expansion of the country’s power sector.

The IEA’s analysis aims to help decision-makers in government and industry to unlock new opportunities to enhance the efficiency, security and reliability of the energy system, while reducing the cost of the required infrastructure, and decarbonising the overall energy supply.

In a note of caution, though, the agency warns that the decision-making process needs to abandon a short-term ‘silo’ mentality and embrace a longer term systems approach that “identifies synergies within all sectors of the energy system.”

Profile: Didier Houssin

Didier Houssin has been the International Energy Agency’s Director of Sustainable Energy Policy and Technology since December 2012 after five years as its Director of Energy Markets and Security.

His previous roles have included developing EU strategy for Total (1987-1990), Director of Energy and Mineral Resources in the French Ministry for the Economy and Finance (1997-2004), and Managing Director of the French Geological Survey (2004-2007).