Power
Since 1995, the amount of power generated around the world has grown by about 2.4% a year. And between 2004 and 2030, the global demand for electricity is set to double from 17,408TWh to 30,364TWh. This will require over US$10 trillion of investment.
This overview takes a look at power - predominantly electricity generation. Around 40% of fossil fuels and other energy sources used in 2004 were used to create electricity.
Since 1995, the amount of power generated around the world has grown by about 2.4% a year. However, the demand for electricity is growing significantly in developing countries, such as China and India. And between 2004 and 2030, the global demand for electricity is set to double from 17,408TWh to 30,364TWh. This will require over US$10 trillion of investment.
Burning so much fossil fuel presents a serious environmental challenge. In 2004, greenhouse gas emissions from the power sector came to 12.7 GtCO2e. This made up 26% of total global greenhouse gas emissions, half of which came from the US, China and the EU.
Unless something is done, emissions could increase to 17.7 GtCO2e by 2030 .
But with smart investment in low carbon energy infrastructure and enabling policies, the power sector could reduce the intensity of its emissions. At a carbon price of €40/tCO2, this reduction is estimated to be 35%
. The knock-on benefits would also include technological innovation, lower fuel costs and job opportunities. In the US alone, it is forecast that over 3 million new jobs will be created in the renewables sector by 2030.
The power sector needs to be decarbonised but there are obstacles in the way. It’s expensive to upgrade T&D networks. It’s also currently expensive to develop and deploy CCS. And as long as low carbon power generation is more expensive than traditional methods, green power will never be mainstream.
This is where government needs to step in to incentivise the power industry, business and society to move to a low carbon economy. If low carbon energy infrastructure isn’t put in place now, the world will be ‘locked in’ to the emissions from these power stations for the length of their working lives (of up to 100 years).
The world’s energy mix
In 2005, the 
world’s electricity was produced from the following fuels:
| Coal | 40% |
|---|---|
| Natural gas | 20% |
| Nuclear | 16% |
| Hydro | 16% |
| Oil | 7% |
| Other renewables | 2% |
What can be done by governments?
Implement emissions reduction policies
Many industrialised countries have introduced grant support schemes for installing more energy efficient power plants and producing electricity and heat based on renewable energy sources.
However, while government subsidies for the energy sector are roughly US$250-300 billion a year, only 2-3% goes towards renewable energy. Significant CO2 emissions reductions could be made by getting rid of the mechanisms in place to support power generation from fossil fuels.
Set targets for renewable energy
Over 49 countries, including key developing countries like Brazil, China and India, and many individual states and regions have already set targets for growing renewable energy. At the supranational level, the EU “climate action and renewable energy package” includes the target of increasing the share of renewables in energy use to 20% by 2020. These goals show that governments are serious about developing renewable energy, which in turn encourages private investment in renewables projects.
Reward renewable producers
One way for governments to encourage the renewable energy market is to reward renewable energy producers by offering preferential feed-in tariffs, such as those in Germany, Italy and Spain. Over the years, they have proved more effective in developing the market than just offering big grants for renewable energy projects.
Consider nuclear power
Total lifecycle greenhouse gas emissions per unit of electricity from nuclear power are below 40g/CO2e/kWh. These greenhouse emissions are as low as those from many renewable energy sources. The future of nuclear power is a controversial topic. Critics point to the environmental and security risks that come with both nuclear power generation and its waste. The profitability of nuclear power also varies from site to site.
Buy a renewable energy tariff
Switching to a green electricity tariff will encourage the development of more renewable energy. Many companies are already taking this step and buying green from their electricity suppliers. BT is one of largest buyers of green electricity in the world. It is also pushing for more transparency from electricity suppliers in the form of carbon labelling.
Invest in on-site renewable energy
Developing renewable energy systems on corporate sites is fast becoming a popular way to make the most use of the land or rooftops owned by businesses. This will not only lower your company’s emissions, it will also mean lower, more predictable energy bills. In certain situations, you can even make money from leasing your land or rooftops to renewable energy developers for hosting of wind turbines or solar panels. Nike’s Customer Service Centre in Laakdal, Belgium has one of the largest corporate on-site wind power projects in Europe. For more information on how to develop onsite renewable energy, the Green Power Market Development Group is a good place to start.
Invest in research, development, demonstration and deployment (RD3)
As markets expand and new industries grow more private investment in RD3 results. In 2007,Google announced a research and development initiative known as RE<C. The aim? To develop electricity from renewable sources that’s cheaper than electricity from coal.
Invest in research, development, demonstration and deployment (RD3)
As markets expand and new industries grow more private investment in RD3 results. In 2007, Google announced a research and development initiative known as RE<C. The aim? To develop electricity from renewable sources that’s cheaper than electricity from coal.
Make plants more efficient
One way is to build power stations that create more energy from less fuel. Take the Yuhuan coal plant in China. Finished in 2008, it uses ultra supercritical technology with a thermal efficiency of over 45%, making it one of the most efficient coal plants in the world. Every year it saves 11 million tonnes of CO2 compared to an average Chinese coal power station.
It’s also possible to reduce emissions from existing plants . This can be done by retro-fitting with more advanced technologies like gas and steam combined cycle technology or using the waste heat to warm local buildings (Combined Heat and Power). And by using software and hardware tools to carefully manage peaks and troughs in energy demand, it’s possible to reduce waste across the power generation and transmission and distribution (T&D) network.
For more on smart grid technology, see the SMART2020 report.
Switch to lower-carbon fossil fuels
In the short term, energy companies can cut CO2 emissions by changing their fuel mix and using fuels with lower carbon content, e.g. from coal to gas.
Generate more from renewables
Renewable energy includes solar, wind, hydro, biomass and geothermal power. These new types of energy are crucial for reducing greenhouse gas emissions in the sector. The good news is that the renewable energy market is growing fast. The number of installed wind turbines and solar panels is going up 30% each year. Between 2004 and 2007, investment in clean energy more than quadrupled, from US$28 billion to US$148 billion. And market capitalisation of clean energy companies reached US$ 1 trillion last year.
Use carbon capture and storage (CCS) technology
CCS involves capturing CO2 emitted from fossil fuel power stations before it reaches the atmosphere, and storing it in natural underground sites. It has huge potential – once up and running, CCS could save over 85% of power-plant emissions, or 40% of total emissions from the power sector. Encouragingly, the “GreenGen” project in China is striving to create the country’s first near-zero emissions coal power plant, capable of hydrogen production and carbon capture and storage. The first phase of the plant is expected online by 2009.
But there are still issues to sort out before it’s commercially viable. CCS technology makes energy conversion less efficient and there are concerns about CO2 leakage from pipelines or storage sites. It’s also currently expensive, although costs could be reduced by 20-30% over the next few decades
Disclose your climate change strategy
To see which utilities are in the ‘Carbon Disclosure Leadership Index 2007’ see Utilities in Sector Facts and Stats.
Key data