6 POWER MATRIX POWER MATRIX Global Perspectives on Energy Policy Moritz Gathmann, Russia Johannes Wamberg Andersen, Denmark Carsten Germis, Japan Justin Gerdes, USA Ward Pincus, Saudi Arabia Reinaldo José Lopes, Brazil Andrea Spalinger, India Justus Krüger, China Letters from Our Correspondents A nation’s energy policy is determined by many factors, including its level of industrialization, its demographics, its national economy, and its technological sophistication. In recent years, the global financial crisis, growing electrification, and the fight against CO2 emissions have had, and continue to have, an increasing impact on the energy market, while technical innovations have suggested new ways of dealing with these Photo: NASA/Corbis issues. Eight correspondents from very diverse regions report exclusively for Living Energy on recent trends in their country’s energy policy. 7 8 POWER MATRIX POWER MATRIX Brazil: a Clean Energy Giant at a Crossroads A country of contrasts: Yaulapiti indigenous people generate solar power on the Xingu River in northern Brazil. “Brazil’s leaders must balance the hunger for rapid economic growth with the country’s role as an environmental superpower.” Photo: Ricardo Funari / Alamy / Aurora Photos By Reinaldo José Lopes 9 10 POWER MATRIX Saudi Arabia: More than Just Oil Skyrocketing energy consumption: Saudi men look out over the city from the top of the Kingdom Tower in Riyadh. POWER MATRIX “Saudi Arabia is aggressively building both conventional and alternative capacity to keep up with rapidly growing demand.” Photo: Shawn Baldwin / The New York Time/Redux / laif By Ward Pincus 11 12 POWER MATRIX USA: Staying the Course Photo: Jim Richardson / National Geographic Stock Open for business: The lights of Chicago burn brightly at night under a blanket of clouds. “Though nuclear power and coal still form the energy backbone of the USA, their share is being eroded by a boom in the renewables market.” By Justin Gerdes POWER MATRIX 13 14 POWER MATRIX India: Fueling Rapid Growth POWER MATRIX “Many remote villages still lack electricity in India, where the energy deficit is compounded by transmission and distribution losses.” By Andrea Spalinger Photo: Redux / laif Local power: biogas production units used to fuel stoves at a cheese factory in Pondicherry, India. 15 16 POWER MATRIX POWER MATRIX Photo: Sarah Leen / National Geographic Stock Denmark: Catching Up with the Green Image Turbines at Middelgrunden Wind Park: Denmark aims to be CO2-neutral by 2050, including by increasing offshore wind power generation. “Although the share of renewables in the energy mix, at 20 percent, is relatively high, that is less than Denmark’s image may suggest.” By Johannes Wamberg Andersen 17 18 POWER MATRIX China: More Power – How Can Beijing Meet Growing Energy Demands? “China aims to complement its reliance on coal with renewable energy, set to increase to 15 percent of overall consumption by 2020.” Photo: Ryan Pyle By Justus Krüger Going green: A set of solar panels supplies energy to the village of Subash, near Karakol Lake. POWER MATRIX 19 20 POWER MATRIX POWER MATRIX Japan: Confidence in Nuclear Shaken after Fukushima Photo: Franck Guiziou / hemis.fr / laif “The question of continued reliance on nuclear energy has become a political and economic battlefield.” By Carsten Germis Seeking alternatives: Beppu on the Japanese island of Kyushu is famous for its hot springs (onsen). 21 22 POWER MATRIX Russia: Energy Efficiency and Nuclear Power Drive for modernization: An engineer checks the interior of the Nord Stream pipeline near Leningrad. Photo: PhotoXPress / VISUM “The Russian government wants to double the country’s energy generation by 2030, but must enhance efficiency.” By Moritz Gathmann POWER MATRIX 23 24 POWER MATRIX POWER MATRIX Brazil: Saudi Arabia: A Clean Energy Giant at a Crossroads More than Just Oil Traditionally a bastion of hydropower, Brazil has become a player on the oil market. Which path will it choose in powering GDP growth? Saudi Arabia faces two challenges: increasing installed capacity, including nuclear and renewable sources, and reducing demand. By Reinaldo José Lopes By Ward Pincus a significant strain on the biodiversity and indigenous communities of Amazonia. Though Brazil may not repeat the stunning 7.5 percent growth in GDP of 2010 anytime soon, the country is still voracious for infrastructure growth and building development in preparation for hosting the 2014 football World Cup and the 2016 Olympics. Besides, economists estimate that since 2003, almost 40 million Brazilians have joined a fledgling middle class. Short-term thinking has long been the bane of political and economic life in Brazil. It remains to be seen whether current leaders will be able to balance the hunger for rapid economic growth with Brazil’s role as an environmental superpower. Reinaldo José Lopes is the science and health editor at Folha de S.Paulo, Brazil’s leading daily newspaper. Statistics Electricity total final consumption (2009) 2,201 Gross electricity generation (2009) 466.5 TWh kWh per capita CO2 emissions / population (2009) 1.74 tonnes CO2 per capita Population (2009) 193 million 2% Coal 3% Others (e.g., oil, fuel cells) 3% Gas 3% Nuclear 84 % Hydro (incl. pump storage) 5% Renewables Living Energy · Issue 6/February 2012 Illustrations: Masao Yamazaki, Graphics: independent Brazilians learn at elementary school that they live in “a country of contrasts,” and another familiar cliché says that this is the “country of the future.” Both phrases are apt descriptions of where the nation stands in terms of its energy policy, and where it will probably go in the near future. Let’s start with the contrasts. Among the world’s major economies, Brazil has the cleanest energy matrix, with almost 80 percent hydropower. At the same time, the country is the fourth-largest carbon emitter, overwhelmingly due to deforestation. This means relatively little economic growth comes out of each deforested acre, since forests are usually cut down or burned to become sparsely used pastureland, as a rule abandoned after a few years. At the same time, after decades as one of the global leaders in biofuel development and consumption (largely using sugarcane ethanol), Brazil is now a net exporter of oil, and set to exploit the fabled presalt layer of hydrocarbons recently discovered off the southeastern coast. That brings me to the “country of the future” label. Brazilian hydropower still costs less than US$40 per MWh, around half the cost of thermal energy. But construction of controversial new dams is advancing in the Amazon basin. The new projects flood a much smaller area than dams built during the 1970s and 1980s. Still, they put It is perhaps no surprise that the world’s largest oil exporter has an electricity market with some unusual contours, but the extent of its “uniqueness” is staggering. One example: Most Saudi residential customers pay the equivalent of just over one US penny per kilowatt-hour. As might be expected, consumption is skyrocketing, with peak demand growing by 8 percent a year. And it’s the kingdom’s 4.9 million residential customers that are driving this. They account for a remarkable 51 percent of the total power supplied in 2010. With a home-building initiative under way to meet the needs of Saudi Arabia’s young, fast-growing population (over 25 million people, 30 percent of whom are under 15 years old), residential demand will only increase, while an economic diversification effort will drive industrial demand for power. In response, the kingdom is aggressively building both conventional and alternative capacity, including with nuclear and renewables. It’s also gingerly attempting to curb demand growth. The Saudi Electricity Company (SEC), the kingdom’s sole electricity provider, expects to spend US$80 billion over ten years to add around 30 GW of additional capacity and is also seeking private funding for five independent power projects. Three of them are under construction or have been awarded. While all electricity generation today comes from fossil fuels, that will Living Energy · Issue 6/February 2012 change. Saudi Arabia is planning to build 16 nuclear reactors over the next 20 years. While no national renewables target has been set, tentative steps are under way with a handful of solar projects and other efforts to explore solar desalination and PV plants for remote villages. Saudi Arabia also aims to reduce power demand growth to 5 percent a year within five years through efficiency measures that include new standards for air conditioners, which account for about 70 percent of residential electricity consumption. Unchecked demand growth and the costs of fueling this growth with 25 an ever-greater share of valuable crude oil and gas seem to limit policy choices. But a senior executive of national oil company Aramco recently said the kingdom’s vast shale oil reserves could be tapped if technology costs continue to fall. Statistics Electricity total final consumption (2009) 7,842 kWh per capita CO2 emissions / population (2009) 16.17 tonnes CO2 per capita Population (2009) 25.4 million Gross electricity generation (2009) 217.1 TWh 0% 55 % Coal 0% Nuclear Others (e.g., oil, fuel cells) 0% Hydro (incl. pump storage) 0% Renewables 45 % Gas Ward Pincus (Dubai) is a Middle East expert who writes on science, technology, health, and business issues for publications in North America, Europe, and the Middle East. He is a former correspondent for the Associated Press (AP) in the United Arab Emirates. 26 POWER MATRIX POWER MATRIX USA: 27 India: Staying the Course Fueling Rapid Growth In the USA, nuclear power and coal still form the nation’s energy backbone, but their share is eroding as renewables experience a market-based boom. Until green technology breaks through, shale gas will most likely bridge the gap. India seeks alternatives to fossil fuels for powering its economic boom. While coal and nuclear power will continue to be used, renewables offer new opportunities. By Andrea Spalinger By Justin Gerdes fers energy projects a cash grant in lieu of tax credits, expires at the end of 2011. Nevertheless, the renewables sector is booming. The USA does not have a federal energy policy; instead, 30 states have in place Renewable Portfolio Standards mandating that a percentage of power sent to the grid must be from green sources. This combination of steady demand, falling prices (prices for solar panels have plunged 30 percent since the beginning of 2010), and smart policy, such as the DoE’s SunShot Initiative, which aims to drive down the in- Justin Gerdes, Concord, California, is an author specializing on energy and climate change. His work has been published in chinadialogue, Mandag Morgen (Monday Morning), Earth2Tech.com, and MotherJones.com. stalled cost of solar by 75 percent by 2020, has produced a veritable surge for the industry: As of September 2011, 24 GW of utility-scale PV projects alone had been installed. Statistics Electricity total final consumption (2009) 11,849 Gross electricity generation (2010) 4,336.5 TWh kWh per capita CO2 emissions / population (2009) 16.9 tonnes CO2 per capita 45 % Coal Population (2009) 307 million 1% Others (e.g., oil, fuel cells) 23 % Gas 19 % Nuclear 6% Hydro (incl. pump storage) 5% Renewables Living Energy · Issue 6/February 2012 Illustrations: Masao Yamazaki, Graphics: independent Nuclear energy remains a mainstay of energy policy here in the USA. In a speech at the IAEA in Vienna on September 19, 2011, Energy Secretary Steven Chu reiterated US support for the technology. The fact that nuclear power continues to account for only 20 percent of the current electricity mix is likely due to its cost. After all, it took US$8.33 billion in loan guarantees from the Department of Energy (DoE), announced February 16, 2010, to persuade a consortium to build two new reactors in Georgia; this is expected to be the first new US nuclear plant to be constructed in 30 years. The sectors to watch are shale gas and renewable energy, which promise to erode the market share of coal, still 45 percent of the electricity mix in 2010. Coal prices are currently rising, while pending Environmental Protection Agency rules are likely to force the nation’s dirtiest coal-fired power plants offline. In this situation, domestic shale gas – expected to reach 47 percent of US natural gas production by 2035 – will be the transition fuel as renewables reach scale. Congress is offering only fickle and fleeting support for renewable energy; the US Treasury’s 1603 program, which of- In many smaller towns and villages of India, despite the subcontinents economic surge, lack of electricity means that sunset marks the onset of darkness. A new development strategy is needed, and nuclear power will play a crucial role. The government aims to supply 25 percent of electricity from nuclear reactors by 2050, up from 2.6 percent today. Five reactors are currently under construction; 18 more are to be built by 2025. In recent years, India’s energy consumption has been increasing at a fast rate due to rapid economic growth and a huge population of over a billion. The subcontinent is expected to be the second-largest driver of global energy demand by 2035. In 2008, India produced 830 million MWh, more than triple the output of 1990. Despite the huge increase, India’s per capita consumption is still one of the lowest worldwide (2010: 500 kWh). In addition to the burgeoning energy deficit, transmission and distribution losses are estimated to be as high as 30 percent. Many remote villages still lack electricity, but even big cities suffer from intermittent power and frequent power cuts. This imposes a heavy burden on the fast-growing industry and service sectors and is one of the major constraints for growth. At the moment, 65 percent of India’s generation capacity comes from fossil fuels. Coal accounts for 54 percent, Living Energy · Issue 6/February 2012 followed by natural gas (9 percent) and crude oil (1 percent). India ranks third among the coal-producing countries in the world. But despite an increase in production, demand still exceeds supply. As India is largely dependent on fossil fuel imports, it has shown great interest in developing renewable sources – wind power, solar energy, small hydropower, and biomass. Altogether, renewables contribute 11 percent to the energy generation. Big hydropower projects account for 21 percent. Coal will still dominate the coming decade. But the shortage of fossil fuels will continue to drive investments in nuclear and renewable energies. Andrea Spalinger (Delhi) is the Neue Zürcher Zeitung’s political and economics correspondent for South Asia. Statistics Electricity total final consumption (2009) 597 Gross electricity generation (2009) 899.4 TWh kWh per capita CO2 emissions / population (2009) 1.37 tonnes CO2 per capita 69 % Coal Population (2009) 1.15 billion 3% Others (e.g., oil, fuel cells) 12 % Gas 2% 12 % 2% Nuclear Hydro (incl. pump storage) Renewables 28 POWER MATRIX POWER MATRIX Denmark: China: Catching Up with the Green Image More Power – How Can Beijing Meet Growing Energy Demands? Denmark’s reliance on hydrocarbons belies its green image, but the new government is determined to reduce the nation’s CO2 footprint. After decades of growth, China is now the world’s second-largest economy. As the boom continues, so does China’s energy consumption. By Johannes Wamberg Andersen and investments in renewables, depriving the wind turbine industry of the home market that had given Denmark an edge and turned wind turbines into an export hit. Although the share of renewables in the energy mix, at 20 percent, is relatively high, that is less than Denmark’s green image may suggest, and even that level is partly due to imported pellets and hydroelectricity. Renewables are, however, expected to increase rapidly in the midterm. The Statistics Electricity total final consumption (2009) 5,721 kWh per capita CO2 emissions / population (2009) 8.47 tonnes CO2 per capita Population (2009) 5.5 million Gross electricity generation (2010) 36.3 TWh Johannes Wamberg Andersen (Copenhagen) is an independent analyst and journalist specializing in the energy trade between Eastern and Western Europe. His work has been published in various media, including the BBC and the Danish Broadcasting Corporation (DR). 49 % Coal 3% Others (e.g., oil, fuel cells) 18 % Gas 0% Nuclear 0% Hydro (incl. pump storage) 30 % Renewables government is launching an ambitious change of energy paradigm aimed at heavy reductions in CO2 emissions (40 percent by 2020), eliminating the decreasing but still heavy use of coal (20 percent of the energy mix) in the energy-efficient combined production of electricity and district heating. The goal of a CO2-neutral Denmark by 2050 is mainly to be reached by increasing offshore wind power generation and residential energy savings. Energy efficiency has allowed the Danish GDP to expand by more than 40 percent from 1990 to 2008 while consumption remained constant. Dependence on hydrocarbons, including imported coal for production of electricity (due to rejection of nuclear power), puts Denmark’s CO2 emissions well above the EU average. Indeed, Denmark has the lowest energy intensity among the EU states, but its high CO2 emissions defy the perception of Denmark as a green country and reflect the failure to clean the black smoke from central district heating power plants. Decreasing production will make Denmark an importer of oil and gas by 2020. With natural gas, playing a bridging role in the transition from oil (currently 40 percent of primary energy consumption) and coal, Denmark is partly dependent on gas from Russia. Having witnessed the failure of the Copenhagen summit to set binding international agreements, the new center-left government aims to show that energy savings and the transition to renewables not only benefit the environment, but are also cost-efficient. Living Energy · Issue 6/February 2012 By Justus Krüger Illustrations: Masao Yamazaki, Graphics: independent With its North Sea oil and gas, Denmark is the only net energy exporter among EU members. Originally seen as safeguard for energy supply reducing dependency on Mideast oil, the use of domestic hydrocarbons has effectively slowed the transition from fossils to renewables and frozen the development of solar power, geothermal heat pumps, and other sustainable technologies. In the past decade, the former centerright government cut most incentives 29 Energy production in China is a mix of continuity and novel elements designed to control emissions. New and cleaner fossil energy technologies are crucial. Increasing market penetration of renewables is another key factor. Coal, the only fuel of which China has plenty, covers two thirds of China’s energy demand (oil is at 20 percent). In order to keep emissions in check, China is increasingly investing in highly efficient coal plants which raise the efficiency grade to 45 percent, requiring far less coal to generate the same amount of energy. The world’s most efficient coal plant, core parts of which have been designed and built by Siemens, is located in Shanghai. The share of gas is set to rise from 4 percent currently to 8 percent by 2015. Nuclear energy will also continue to be developed. So far, it accounts for just above 1 percent in the energy mix. But nearly half of all nuclear reactors now under construction worldwide are situated in China. By 2020, the output of nuclear power is expected to increase from 10.8 to approximately 80 GW. Equally or more important is the further development of renewables. They constitute 7 percent of Chinese power generation today. Overall, the share of energy from nonfossil sources is to rise to 15 percent of total consumption by 2020. Living Energy · Issue 6/February 2012 Justus Krüger (Hong Kong) has been living in China for six years, covering its economic transformation with special attention to energy issues. He has written for the Financial Times Deutschland, GEO, the South China Morning Post, the Berliner Zeitung, and McK Wissen. One challenge is that renewable sources are often remote from consumers. Conventional transmission methods are not efficient enough to link remote wind or hydroplants to the industrial centers. This has now changed. Siemens has developed a new type of high-voltage, direct-current-based (HVDC) transmission technology that raises long distance transport to a new level of efficiency. The longest HVDC connection in the world, designed and built by Siemens in 2010, connects the Chuxiong hydroplant in the remote province of Yunnan with the Pearl River Delta. Conventional coal plants delivering the same amount of energy would blow 33 million tonnes of CO2 into the atmosphere every year. The Chuxiong plant produces exactly zero CO2. More HVDC lines are under construction throughout the country. China is thus building the infrastructure further to increase the role of green energy. Statistics Electricity total final consumption (2009) 2,648 kWh per capita CO2 emissions / population (2009) 5.13 tonnes CO2 per capita Population (2009) 1.33 billion Gross electricity generation (2009) 3,695.8 TWh 79 % Coal 0% Others (e.g., oil, fuel cells) 1% Gas 2% 17 % 1% Nuclear Hydro (incl. pump storage) Renewables 30 POWER MATRIX Japan: Russia: Confidence in Nuclear Shaken after Fukushima Energy Efficiency and Nuclear Power In the aftermath of Fukushima, the public mood has as turn turned ned d against nuclear power, and plans to foster alternative energy are gaining aining traction. Russia’s buzzword these days is “modernization,” and one of the greatest challenges is modernizing the country’s energy sector. What is certain is that nuclear power will continue to play a crucial role. By Carsten Germis By Moritz Gathmann Carsten Germis is the Japan correspondent for the Frankfurter Allgemeine Zeitung. The issue has become a political and economic battlefield. The nuclear lobby remains strong and the country’s ten power supply companies, which enjoy monopolies in their respective supply districts, oppose change and shun competition. This is another reason why energy costs are considerably higher in Japan than in most comparable countries. Meanwhile, the risk of electricity shortages is increasing. Safety concerns will prevent many nuclear plants from connecting to the grid this year, too. Last summer, power cuts were avoided. Work shifts were moved to weekends and employees worked from home, while air-conditioning was largely banned despite hot weather. The government intends to present plans for the promotion of renewables this year. Much will depend on fostering alternatives through compensatory feed-in tariffs. Certainly, renewables, especially solar, will become increasingly significant. Nevertheless, nuclear power will continue to play a central role. At present, a nuclear phaseout lacks majority support both in the government and the opposition. Statistics Electricity total final consumption (2009) 7,339 kWh per capita CO2 emissions / population (2009) 8.58 tonnes CO2 per capita Population (2009) 127 million Gross electricity generation (2010) 1,079.9 TWh 27 % Coal 9% Others (e.g., oil, fuel cells) 27 % Gas 27 % Nuclear* 7% Hydro (incl. pump storage) 3% Renewables *Less generation due to events in Fukushima Living Energy · Issue 6/February 2012 Illustrations: Masao Yamazaki, Graphics: independent It was a sight the officials at Tokyo’s Ministry of Economy, Trade and Industry had not seen in a long time. In early November, antinuclear activists thronged the sidewalks outside the ministry, collecting signatures in favor of phasing out nuclear power. “We’ve surprised ourselves,” said one of the activists, staring at the hordes in disbelief as petitions filled rapidly. How important will nuclear power in Japan remain in the wake of the Fukushima Daiichi nuclear disaster? It is unlikely to enjoy majority support among the Japanese population again. Mistrust is huge due to the catastrophic aftermath of the March 11, 2011, tsunami and the ambiguous information policy of the Tokyo Electric Power Company (Tepco). Irradiated beef and milk and grave errors at Fukushima have left public advocates of expanding nuclear power rather thin on the ground. Nuclear power has figured prominently in the energy strategies of all recent Japanese governments. It was to cover over 40 percent of the country’s energy requirements by 2020, and almost half by 2030. Pre-Fukushima, it supplied just over a quarter of Japan’s energy. Renewables, not including hydropower, currently account for just 1 percent of generation. However, this summer, the parliament decided to promote the expansion of renewable energies. Solar, wind, and biomass will gain in importance, even if the country continues to rely on nuclear power. The population of the worlds biggest country is 141 million. Because of low birth rates and bad health, Russia’s population is expected to shrink by 11 million until 2025. The country is already urbanized, having 164 cities with more than 100,000 inhabitants. Russia has seen a double-digit rise in GDP in the last decade, but its economy depends heavily on gas, oil, and other commodities. President Medvedev has proclaimed a big push to modernize the country, but small and medium-sized companies are still finding it very hard to succeed. Russia is already a consumer society, and the growing middle class is buying more and more cars, fridges, computers, and electronic devices. In 2010, the country consumed 1,009.2 billion kWh, but the Ministry of Energy expects consumption to double by 2030. At the same time, prices for electricity are growing at a double-digit rate. In 2011, it cost 2.2 rubles (5.5 euro cents) per kWh. According to the government’s energy strategy, the country must double its energy generation by 2030, but two major problems remain: increasing energy efficiency and reducing dependence on gas for power production. One of Medvedev’s first priorities after becoming president was to make the country’s power consumption 40 per- cent more efficient by 2030. The Russian parliament adopted a law on energy efficiency that prohibits filament lamps and requires energy-saving insulation in new houses (and in the renovation of existing houses). The energy companies are investing billions of rubles in the modernization of the antiquated transmission network. And Russia is planning to change its energy mix: Solar and wind energy dont play a significant role, but the country inherited several enormous Soviet-era hydroelectric stations, which today account for 18 percent of the energy mix. Fourteen percent come from nuclear power stations, and 68 percent from fuel-burning plants. Specifically, 47 percent of the country’s electricity is generated by natural gas. The main goal of the government is to limit the use of gas in electricity production to 43.1 percent by 2030 while increasing the share of coal and nuclear energy. Russia wants to add 26 new nuclear power plants to the 10 existing ones by 2030. The share of nuclear in the energy mix is supposed to increase to 30 percent, and Medvedev has proposed several new security conventions for nuclear plants to the International Atomic Energy Agency. The calculation is very economical: Russia’s state nuclear corporation Statistics: IEA Key World Energy Statistics, 2008–2011. Fractions researched by the editors; sum of percentages may diverge from 100 due to rounding differences. Moritz Gathmann has been working in Moscow since 2008 as a correspondent for various German magazines and newspapers. His articles have appeared in DER SPIEGEL magazine, Süddeutsche Zeitung, Frankfurter Allgemeine Zeitung, and others. Rosatom estimates that the envisaged increase of nuclear energy will enable the country to save 135 billion cubic meters of gas annually – that can be sold to the energy-hungry European states and China. Statistics Electricity total final consumption (2009) 6,133 kWh per capita CO2 emissions / population (2009) 10.8 tonnes CO2 per capita Population (2009) 141 million Gross electricity generation (2009) 990.0 TWh 17 % Coal 2% Others (e.g., oil, fuel cells) 47 % Gas 17 % Nuclear 18 % Hydro (incl. pump storage) 0% Renewables