Energy for the Future

Progress:
Still no progress in our "JAHUS".

Event: Energy for the Future

How do we cover the future energy needs, AND solve the climate crisis? We were not given the final answer in Copenhagen. What does this mean for the energy sector's challenges? What does it mean for our climate?

This morning I had the pleasure of attending a meeting with the above mentioned agenda. The chief executive officer of Statoil, Helge Lund was there to give the opening speach and professor at the University of Oslo, Dag Harald Claes, was invited to comment on the speach by Helge Lund. Secretary General of the Red Cross and former Minister of the Environment, Børge Brende was also invited - but he had to fly to Haiti this morning to lead rescue efforts following the earthquake yesterday. In his place, they managed to get Nikolai Astrup is member of parliament and in the energy and environment committee, deputy chairman of the Oslo Conservatives Party (Høyre).

I found the speaches and discussions very interesting, and have therefore included highlight below (assuming also readers of this blog are interested in the questions of energy supply and climate changes).

Helge Lund first talked about the common misconception that we are running out of oil in a few years - and Dag Harald Claes later on referred to numbers from BP that there are reserves (including estimates for future discovery of new oilfields) to last an estimated 40 years with todays level of production. "The interesting thing" said the professor, "is that BP in 1980 said that it would last only 20 years". 

During the questions and answers session at the end, there was a comment about the middle-east countries manipulating the numbers (size of oil reserves) to get the oil-price they want. Both Helge Lund and Dag Harald Claes agreed with the statement that estimates of reserves in Saudi Arabia is largely a political question.    

It is, however, a fact that the new oil reserves Statoil finds these days are smaller and the oil more expensive to produce (deeper waters, colder etc.). Combine this with the increase in demand expected over the next 20 years and you get a big challenge. Why will the demand for energy increase by almost 50% by 2030 (fossil fuels included, both for transportation, heating and for generating electricity) ?

• By 2030 they estimate that the people living on this globe will have almost doubled (to ca 10 billion)
• Today there are 1.6 billion people without electrical power. More of the developing countries will "develop" and their people will get access to electricity, own a car and buy "more stuff" (take China for example, who now have bypassed USA as number 1 on the list of countries with the most new cars sold per year)   

Helge Lund mentoned that the oil companies have to bring to the market an additional 45 million barrels of oil per day by 2030, just to meet todays demand for oil (need to replace the reduction in production from the current oil fields). Given that the total oil production today is approximately 80 million barrels per day - we understand that this is a big challenge.

He also claimed that petroleum is the best carrier of energy known today and referred to the energy needed in a car during a normal year: to replace the gasoline one would have to grow biodiesel material (sugercane etc) on farmland equal to 35 acres, or dig out 450 kg of coal. It takes ca 5 seconds on the Grane oilfield to produce the oil needed for one car/year. His claim was that it is not easy to replace the oil that fuels the machinery of our planet - and demand for fossil fuels will be there for a long time even with the climate changes being high on the political agenda.

So we need fossil fuels, but what can Statoil and its competitors do - to also do their fair share of fighting dramatic climate changes due largely to emissions from burning fossil fuels?

Helge Lund said that they have for a long time used the norwegian tax of 350 NOK/ton of CO2 as input to their project calculations. This results in best in class numbers for CO2 emissions per produced barrel of oil (7 tons) - much better than for example oil from Nigeria (40 tons).

They also engage in projects for capture and storage of CO2, and renewable energy (i.e. offshore wind farms). Statoil has market leading skills in operations offshore and can utilize this to win new business in wind farms and wave energy. This will not help Norway cut CO2 emissions, but it can generate new business - AND - it is a fact that global warming and the expected energy crisis is a global challenge. Helping UK cut CO2 emissions (look at the blog post from yesterday to read more) is just as valuable as cutting CO2 here in Norway.

The projects in UK are based on wind-mills that stand on the bottom of the ocean - but Statoil is also involved in the Hywind project which is a full-scale pilot involving a floating (!) wind mill. They say that each such windmill should be able to generate 2.3MW (or 230 houses who uses 10KW each). With Statoil putting 400 MNOK into Hywind and Enova and others add ca 100MNOK - the price per W is very high: 0.0008 W/USD (compared to the estimated cost at Doggerbank of 0,18W/USD). This is, however, a pilot and price per produced W will of course come down before this becomes a commercial product.

Nikolai Astrup also commented on the fact that the yearly tax- and dividends from Statoil make Norway a very rich country and this enables us to launch expensive research and development projects such as the CO2- capture and storage project (25 000 MNOK or ca 4 000 MUSD).

OK, so it will be very difficult for the transportation industry to replace fossil fuels quickly, but can (and should) we look at other sectors with high energy demand - like the way we produce and use electricity?

Dag Harald Claes later on said that coal was used for 75% of all electricity produced in 1970, and that it is now down to being used as fuel fir a third of all electricity produced. It is, however, also a fact that the consumption of electricity have increased. The net of this is that the use of coal for generating electricity has tripled in the same period (!) To illustrate: China opens on average a coal fired power plant each week.

Electricity generation using carbon based fuels is responsible for a large fraction of carbon dioxide (CO2) emissions worldwide; and for 41% of U.S. man-made carbon dioxide emissions. Of fossil fuels, coal combustion in thermal power stations result in greater amounts of carbon dioxide emissions per unit of electricity generated (2249 lbs/MWh) while oil produces less (1672 lbs/MWh) and natural gas produces the least (1135 lbs/MWh).

Helge Lund followed up with comments on gas (in the intersection between the issue of energy shortages and climate changes). "The importance of natural gas is grossly underestimated" he said, and "the United States could be energy self-sufficient for a 100 years if they managed to migrate to natural gas". He also mentioned the amount of CO2 cuts we could get from increased export of natural gas from Norway to Europe if it was used for replacing coal as the fuel for powerplants (50% reduction in CO2 emissions). He claimed the savings would be more than the total CO2 emissions from Norway. I know where he's coming from (want to sell gas), but still...

Nikolai Astrup was part of the norwegian delegation to COP15 in Copehagen in December and he admitted that the COP15 unfortunately didn't give the results he had hoped for. He also looked back to Kyoto - were the countries signed the Kyoto Protocol and then went back and did nothing (ref. Canada who has increased their CO2 emissions and have not come close to what they comitted to in Kyoto).

There is political will in EU to cut CO2 emissions and the UK wind farm project mentioned is one example. Nikolai Astrup said that EU is good at both promising CO2 cuts and delivering on their promise - while Norway is good at promising deep cuts, but show little in terms of actions that will generate the required CO2 cuts.

The recent cold weather here in Europe (or a bad/cold summer) makes many people think that the global warming is just fiction - and they are not motivated to go the extra mile "to save the planet". What they forget is that the temperature in the Arctic is 5C warmer (and many other scientific reports that documents the effects of global warming. 


Astrup says that he thinks that we need a new framework that will make more homeowners - isolate their houses and replace their oil-fueled heating with biomass and/or heatpumps. He must be referring to the financial help homeowners get in France (interest-free loans of 30.000 Euros for 10 years) and tax relief in USA. We need these types of start help to get the "ball rolling"....

Nikolai Astrup also commented on many interesting facts such as:

• EU has a goal of 20% renewable energy, but Norway is already at 60% due to our hydroelectric powerplants (water coming down from the mountains)  
• If we don't increase our ability to transfer clean energy to Europe, the effect of our energy saving efforts will be energy surplus and lower prices
• On the production of aluminum (Norsk Hydro) he said that the CO2 emissions per ton of aluminum produced with coal-based electricity is 8 tonnes and with hydro electrical power it is 2 tonnes. He wants rules and regulations that cuts the CO2 emissions - not move it (to a country where they have different CO2 pricing). 
• Renewable investment does not provide gains in Norway. We also need actions that cuts CO2 in Norway like the house improvement projects - see "Klimakur" (in norwegian).   

Dag Harald Claes later on said:

• "Helge Lund can be disappointed with the results from COP15 (in terms of uncertainty associated with CO2 prices etc) - but he should be used to worse risks". International Energy Agency (IEA) has been very precise in predicting the demand of oil, but the price still fluctuates wildly (150 USD to 40 USD per barrel in just one year). He therfore claims that the normal market forces do not work in the oil sector (demand/supply)
• "Many of the worlds oil reserves are located in geographies where corruption is commonplace. Statoil faces the fact that their competitors go in - forcing Statoil to follow?". Helge Lund answered that new and very strict new anti-corruption laws in USA has changed the view on corruption in all the big oil companies. He therefore claims that even their competitors stay clear of anything that smells like corruption.          
• Why do people think that Statoil and Norway as major oil-producing nation/country should be in the frontline of finding a replacement for fossil fuels? "It does not make sense".