3E Intelligence

After EU policymakers’ disenchantment with biofuels (see EurActiv: MEPs seek reduced biofuel commitments), it is time to find the new “silver bullet” to tackle the climate and energy crisis. During two conferences held in Brussels this week, lobbyists for carbon capture and storage (CCS) pulled out all the stops to convince us that governments should invest big time to speedily develop this “inevitable” solution. The question is: is it inevitable and is it a solution or a false hope?

During the roundtable organised by Friends of Europe moderator Giles Merritt tried to focus on the question “who will pay?” (business or the public sector, so basically us the taxpayers) and “how much will it cost?”. I heard no clear answers on both questions.

With an over-representation from pro-CCS speakers (Shell and BP top managers, the Hydro-sponsored NGO Bellona Foundation, speakers of the EU Technology Platform for Zero Emission Fossil Fuel Power Plants - ZEP for short -  and the UK Carbon and Storage Association), the main message of the roundtable was loud and clear: fossil fuels (and in particular coal) are the future and CCS will have to clean up the mess so that we can continue to live our current lifestyles. “I hate CCS” said European Parliament rapporteur Chris Davies, “but I hate coal even more”.

No big arguments of course about the coming oil, gas and coal peaks or the environmental uncertainties surrounding CCS (more water use, less efficient power plants, so even more coal use, and the dangers of stored CO2 leakage in the future) . A lonely Greenpeace speaker seemed to be a bit overwhelmed by the heavy fire from his other speakers and was therefore not really capable to highlight enough the arguments of the excellent report the environmental organisation published recently (BTW I disagree with this report’s optimism about the potential of renewable energy but that’s for another blog post).

Although all of the CCS panelists called upon the EU and member states to open their purses for big financial support, none was willing to put an exact figure on how much governments would have to put up for the 10 to 12 demonstration plants which need to be built asap if CCS needs to be really commercially operational by 2020. In that context, a very ideological and neo-liberal intervention by a Deutsche Bank speaker in favour of letting the “pure free market” deal with climate change looked a bit out of touch with reality. He also probably never read Nick Stern’s report ;).

As I mentioned during one of my own interventions, I felt that the whole argumentation used by the CCS groupies was built on two fatalisms: the China fatalism and the coal fatalism. Let’s have a closer look at them. “China is building two new coal power plants per week so we need CCS as soon as possible”. Good point, only, by the time CCS will be commercially available (2020) China will already have built around 5000 extra plants (and yes they might be “CCS-ready”, but that phrase is no more than PR spin - in most cases it means that some terrain is left for use later). Moreover, it is exactly our CCS rhetoric which will convince the Chinese that they can continue to construct these plants even if their environment is already suffering heavily as a result. The Chinese BTW will be one of the biggest losers of climate chaos.

And then there is the abundant and cheap coal which we will “inevitably” use when the lights start going out or when we do not get enough oil or oil becomes too expensive. Yes, another good argument for CCS. Problem here is: coal is no longer that cheap and the reserves (as with oil) are scandalously overestimated (see 2007 JRC report and a study by the German Energy Watch). Should we really invest billions in technology which uses rapidly declining energy reserves?

The best form of carbon sequestration already exists: just leave the coal (and the CO2) in the Earth!

CCS is basically a very smart technology fix promoted by the oil, gas and coal industries to extend the era of fossil fuels. If we are indeed “addicted to oil” (George W. Bush), we should get off of it as soon as possible, not develop new medicines to make sure marihuana smokers can safely move to heroin. We need a “fossil fuel cold turkey”.

That said (here comes my fantastic U-turn :)), I am also realistic and I fear that coal will indeed be used because our “overshoot” societies will postpone the really “inevitable” (big lifestyle and distribution changes) until it is too late. Look at how our “spoiled” societies are already protesting against the high oil prices. Imagine what will happen when prices go to 200 or more per barrel. Riots in the streets. Who really thinks our elections-driven political systems will be able to deal with these developments?

So here are my recommendations to policymakers:

• establish a moratorium on new coal power plants until CCS is ready;
• start a phase-out plan for old coal power plants;
• put pressure on China (and other BRICS) to stop building coal plants and help them move to other energy solutions fast;
• provide 100% financial coverage of the costs of 10 demonstration plants but invest at the same time 5 times more in sustainable energy solutions (decentralised energy systems, efficiency, renewables) - I know this will cost a lot but compared to other costs (resource wars, failed states, climate chaos) it will be peanuts;
• commit that we will not use CCS when it is ready if we see within the next ten years that other innovations and technology breakthroughs can put us on a more sustainable zero-fossil-fuel path. So develop CCS but only use it when all other options fail to deliver.

Most importantly: stop the denial and start telling people to hard truths about the unsustainability of our Western lifestyles even if they will not thank you for it. This is called REAL climate and energy leadership!

Jeremy Bentham and Jeroen Van de Veer presented Shell’s latest scenarios Scramble and Blueprints to Brussels policymakers on 7 April. Their visions for the future look pretty grim although they were not very upfront about it and their plea for big government hand-outs for carbon capture and storage raises a lot of questions.

The scenarios had already been presented during the last annual World Economic Forum and therefore I can refer back to other coverage (NY Times) summarising the main findings of the report. But there are a few issues in the report which have not really been picked up by the traditional press media and therefore I would like to draw attention to them here.

It is commendable that Shell recognises most of the “hard truths” about energy supply and demand. “By 2015, growth in the production of easily accessible oil and gas will not match the projected rate of demand growth. While abundant coal exists in many parts of the world, transportation difficulties and environmental degradation ultimately pose limits to growth“. Admittedly “limits to growth” is not a phrase we hear often from industry circles. Nevertheless, Shell also keeps believing in the myth of “abundant coal” although several reports in the last 15 months have clearly demonstrated that coal reserves have been seriously overestimated (see for outstanding coverage of this “peak coal”, David Strahan’s “The Great Coal Hole“).

Shell makes a clear choice for the “optimistic” “blueprints” scenario which presupposes a level of international cooperation at a level not really seen in the past, so it is questionable whether the “scramble” (each nation for itself) future is not much more probable. By the way, the scramble world could easily become a resource-wars-world when some of the big players would get in real supply problems. The current war in Iraq, the debate about the future role of NATO (which is getting a keen interest in natural resources), and the ongoing militarisation of China are signs on the wall.

Moreover, a closer look at some of the figures in the so-called positive “blueprints” scenario makes me wonder whether the other scenario Sell endorses is really so desirable. The CO2 emissions under this preferable blueprints scenario would still be around 25 gigatonnes per year by 2050 (graph on page 37 of the report), basically still at the same level as we have now, whereas everyone knows that the IPCC has recommended reductions of between 60 and 80% before 2050.

Does this mean Shell believes climate change is inescapable? It surely looks this way and its political message from the report seems to underline this. According to Shell the world will still be addicted to fossil fuels for the next forty years. Coal (for power generation and coal-to-liquids for transport) and non-conventional fossil fuels (tar sands in Canada) are Shell’s solutions for this fossil future. Shell’s “joker”: carbon capture and storage, a technological solution which according to experts will not be full commercially available before 2020 (some think even 5 years later). O, yes, and please Mr Government and dear tax payers, could you subsidise the demonstration plants which will be needed to bring this technology to its maturity? This was the main message of Jeroen van de Veer to the Brussels crowd.

My questions to the Shell speakers about the 25 gigatonnes emissions by 2050 and the possible financial burden for the taxpayers in case of big subsidies for carbon sequestration demonstration plants remained, of course, unanswered.

In conclusion: the two scenarios in Shell’s new report are in reality scenarios of doom and gloom. It might hurt Shell’s business prospects but we need to kick off from our fossil addiction much faster if we want to give our future generations any chance to have a lifestyle comparable to ours. And in this analysis, carbon capture and storage is no more and no less than what methadone is for regular drug addicts. Should we taxpayers really pay big-time for this?

The Wall Street Journal reported today that three of the biggest US investment banks are getting cold feet about financing new coal power plants as they expect US policy-makers to introduce a carbon capture-and-trade system in the future. The environmental standards which the three banks will lay down could mean that coal plants without carbon capture and storage could have a hard time to get financed.

The news follows close upon another setback for the US coal industry. On 29 January, the US Department of Energy decided to withdraw funding for the US’ biggest carbon and capture demonstration plant FutureGen (see Wikipedia) because of costs overrun.

The bad news comes at a time of rising prices for coal as a result of supply problems from South Africa and Australia. In China, coal stocks have dwindled to emergency levels. Although the current supply problems are not geological, there are more and more experts who are starting to have doubts about the future reserves of coal. I reported on this in earlier posts. An excellent summary of the coal reserves issue (”The great coal hole“) has recently been published by David Strahan, the author of the must-read book “The last oil shock”. As the world is starting a new rush on coal (see the latest IEA World Energy Outlook 2007), the question of the real coal reserves will become one of the key questions for the future energy/climate debate. US author Richard Heinberg has just published a new article on this Great Coal Rush (and why it will fail) on Global Public Media.

A new report by the National Academy of Sciences in the US has raised serious questions marks about America’s coal reserves, according to an article in the International Herald Tribune today.

The report recommends the federal government to undertake a serious study to “determine the size and characteristics of the nation’s recoverable coal, with the goal of providing policymakers with a full account of these reserves within 10 years“. Current reserves might be seriously overestimated, says the report.

The future use of coal also poses other health and environmental challenges which need to be studied more carefully “to ensure that [coal] is extracted efficiently, safely, and in an environmentally responsible manner”.

This is the third report in three months that points to unreliable reserve figures on coal. See also our post of 10 May on the two other reports.

How can our policy makers make the right decisions on the future of our global energy if the basic information is basically flawed or sometimes even manipulated. This transparency issue seems to me the sine qua non of any serious energy or climate change policy.

One month after the surprising report on coal reserves by the German Energy Watch Group, there is another report predicting a less rosy future for the black gold. According to Richard Heinberg on Global Public Media, the European Commission’s Joint Research Centre will, within the next few days, publish a new report “The Future of Coal,” prepared by B. Kavalov and S. D. Peteves of the Institute for Energy (IFE).
The three main conclusions of the JRC-financed study will broadly confirm the results of the EWG report. Heinberg summarises them as follows:
• “World proven reserves (i.e. the reserves that are economically recoverable at current economic and operating conditions) of coal are decreasing fast….
• “The bulk of coal production and exports is getting concentrated within a few countries and market players, which creates the risk of market imperfections.
• “Coal production costs are steadily rising all over the world, due to the need to develop new fields, increasingly difficult geological conditions and additional infrastructure costs associated with the exploitation of new fields.”

The study confirms a point I made this week during a conference in Brussels: how can the EU define the right framework for a low-carbon future if even the most elemental information on global energy reserves is lacking? EU Commissioner Piebalgs repeatedly promised to take action to stimulate more transparency in this area. What progress has he made?

The report “The future of coal” was published by the JRC’s Energy Institute after this post was written. Read the full report and a supplemental report by the same organisation on the “Coal of the Future“.

I came across three interesting reports this week:

• Richard Heinberg reports on the Global Public Media blog that the German Energy Watch group is about to publish a very worrying report on the future of coal world coal reserves. According the the energy experts of the group, global coal reserves are much smaller than generally expected. They estimate that coal production will peak within the next ten to fifteen years. A more positive though also sometimes critical study on the future of coal was recently published by the Massachusetts Institute of Technology.
• The Research Service of the American Congress published a very balanced evaluation of the opportunities and challenges of the ethanol and biofuels market in the US.
• Last but not least, the World Business Council for Sustainable Development published “Policy Directions to 2050”, exploring policy ideas and concepts for the necessary transition to a low greenhouse gas economy.