Air Pollution Costs the West Almost $1 Trillion Annually

Air Pollution Costs the West Almost $1 Trillion Annually | 07/12/14
by John Brian Shannon John Brian Shannon

Air pollution has a very real cost to our civilization via increased healthcare costs, premature deaths, lowered productivity, environmental degradation with resultant lowered crop yields, increased water consumption and higher taxation.

However, air pollution is only one cost associated with fossil fuel use.

Smokestack Image Credit: Alfred Palmer
Smokestack image credit: Alfred Palmer

There are three main costs associated with energy

  1. The retail price that you pay at the gas pump or on your utility bill for example (which is paid by consumers)
  2. The subsidy cost that governments pay energy producers and utility companies (which is ultimately paid by taxpayers)
  3. The externality cost of each type of energy (which is paid by taxpayers, by increased prices for consumers, and the impact on, or the cost to, the environment)

Externality cost in Europe and the U.S.A.

A recent report from the European Environment Agency (EEA) states that high air pollution levels (one type of externality) in the EU cost society €189 billion every year and it’s a number that increases every year. (That’s $235 billion when converted to U.S. dollars)

To put that number in some kind of context, the cost of the air pollution externality in the EU annually, is equal to the annual GDP of Finland.

Let’s state that even more clearly. The amount of taxation paid by EU taxpayers every year to pay for airborne fossil fuel damage is equal to Finland’s entire annual economic output!

It’s getting worse, not better, notwithstanding recent renewable energy programs and incentives. Even the admirable German Energiewende program is barely making an impact when we look at the overall EU air quality index.

Of the 30 biggest facilities it identified as causing the most damage, 26 were power plants, mainly fueled by coal in Germany and eastern Europe. — Barbara Lewis (Reuters)

That’s just Europe. It’s even worse in the U.S., according to a landmark Harvard University report which says coal-fired power generation alone costs the U.S. taxpayer over $500 billion/yr in externality cost.

Each stage in the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple hazards for health and the environment. These costs are external to the coal industry and thus are often considered as “externalities.”

We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public a third to over one-half of a trillion dollars annually.

Many of these so-called externalities are, moreover, cumulative.

Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of non fossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive.

We focus on Appalachia, though coal is mined in other regions of the United States and is burned throughout the world.” — Full Cost Accounting for the Life Cycle of Coal by Dr. Paul Epstein, the Director of Harvard Medical School Center for Health and the Global Environment, and eleven other co-authors

The report also notes that electricity rates would need to rise by another .09 to .27 cents per kilowatt hour in the U.S. to cover the externality cost of American coal-fired electricity production.

The externality cost for solar or wind power plants is zero, just for the record

Dr. Epstein and his team notes: “Coal burning produces one and a half times the CO2 emissions of oil combustion and twice that from burning natural gas (for an equal amount of energy produced).”

There’s the argument to switch from coal to natural gas right there

Also in the Harvard report in regards to the intrinsic inefficiency of coal:

Energy specialist Amory Lovins estimates that after mining, processing, transporting and burning coal, and transmitting the electricity, only about 3% of the energy in the coal is used in incandescent light bulbs.

…In the United States in 2005, coal produced 50% of the nation’s electricity but 81% of the CO2 emissions.

For 2030, coal is projected to produce 53% of U.S. power and 85% of the U.S. CO2 emissions from electricity generation.

None of these figures includes the additional life cycle greenhouse gas (GHG) emissions from coal, including methane from coal mines, emissions from coal transport, other GHG emissions (e.g., particulates or black carbon), and carbon and nitrous oxide (N2O) emissions from land transformation in the case of MTR coal mining.” — Full Cost Accounting for the Life Cycle of Coal report

It’s not like this information is secret. All European, American, and Asian policymakers now know about the externality costs of coal vs. renewable energy. It’s just that until recently everyone thought that the cost of switching to renewable energy, was higher than the cost of fossil externalities.

It’s not only an economic problem, it’s also a health problem

Air pollution impacts human health, resulting in extra healthcare costs, lost productivity, and fewer work days. Other impacts are reduced crop yields and building damage.

Particulate matter and ground-level ozone are two of the main pollutants that come from coal.

90% or more of Europeans living in cities are exposed to harmful air pollution. Bulgaria and Poland have some of the worst pollution of the European countries.

An estimated 400,000 premature deaths in European cities were linked to air pollution in 2011. — CleanTechnica

Externality cost in China

Remember the Beijing Olympics where the city’s industry and commercial business were shut down to allow visitors and athletes to breathe clean air during their stay (and Wow!) look at their clear blue sky for the first time in decades. Great for tourists! Bad for Beijing business and industry, with the exception of the tourism industry (for one month) of course.

The Common Language Project reported in 2008 that premature deaths in China resulting from fossil fuel air pollution were surpassing 400,000 per year.

China faces a number of serious environmental issues caused by overpopulation and rapid industrial growth. Water pollution and a resulting shortage of drinking water is one such issue, as is air pollution caused by an over-reliance on coal as fuel. It has been estimated that 410,000 Chinese die as a result of pollution each year. —

The die is cast since it is becoming common knowledge that renewable energy merely requires a small subsidy to assist with power plant construction and grid harmonization — while fossil fuels continue to require truly massive and ongoing subsidies to continue operations.

Subsidy cost of fossil fuels

Already there is talk of ending fossil fuel subsidies, which in 2014 will top $600 billion worldwide

Want to add up the total costs (direct economic subsidy and externality cost subsidy) of fossil fuels?

Add the $600 billion global fossil fuel subsidy to the to the $2 trillion dollars of global externality cost and you arrive at (approx) $2.5 trillion dollars per year. Then there is the more than 1 million premature deaths globally caused by air pollution. All of that is subsidized by the world’s taxpayers.

Compare that to the total costs of renewable energy. Well, for starters, the economic subsidy dollar amount for renewable energy is much less (about $100 billion per year globally) and there are no externality costs.

No deaths. No illness. No direct or related productivity loss due to a host of fossil fuel related issues (oil spills, coal car derailment, river contamination, explosions in pipelines or factories) for just a very few examples.

The fossil fuel industry is a very mature industry, it has found ways to do more with ever-fewer employees, and it gets more subsidy dollars than any other economic segment on the planet.

By comparison, the renewable energy industry is a new segment, one that requires many thousands of workers and it gets only relative handfuls of subsidy dollars. And, no externalities.

It becomes clearer every day that high-carbon fossil must be displaced by renewable energy

No longer is it some arcane moral argument that we should switch to renewables for the good of the Earth; Fossil fuel is proving to be a major factor in human illness/premature deaths, it sends our money abroad to purchase energy instead of keeping our money in our own countries, and the wholly-taxpayer-funded subsidy cost of fossil is out of control and getting worse with each passing year.

The time for dithering is past. It’s time to make the switch to renewable energy, and to start, we need to remove the worst polluting power plants from the grid (and at the very least, replace them with natural gas powered plants) or even better, replace them with hybrid wind and solar power plants.

To accomplish this, governments need to begin diverting some of the tens of billions of dollars annually paid to the fossil fuel industry to the renewable energy industry.

Germany’s Energiewende program was (and still is) an admirable first step. Once Germany has completed it’s energy transition away from oil, coal and nuclear — having replaced all of that generation capacity with renewable energy and natural gas, only then can it be hailed a complete success — and German leaders should go down in history as being instrumental in changing the world’s 21st century energy paradigm.

Dank an unsere deutschen Freunde! (With thanks to our German friends!)

If only every nation would sign-on to matching or exceeding the ongoing German example, we wouldn’t have 1 million premature deaths globally due to fossil fuel burning, we wouldn’t have almost 2 trillion dollars of externality cost, we wouldn’t need $600 billion dollars of direct subsidies for fossil fuel producers — and we would all live in a healthier environment, and our plant, animal, and aquatic life would return to their normally thriving state.

Taxes would reflect the global $2.5 trillion drop in combined fossil fuel subsidy and fossil fuel externality costs, employment stats would improve, productivity would increase, the tourism industry would receive a boost, and enjoyment of life for individuals would rebound.

It’s a truism in the energy industry that all energy is subsidized, of that there is no doubt. Even renewable energy receives tiny amounts of subsidy, relative to fossil.

But it is now apparent that over the past 100 years, getting ‘the best (energy) bang for the buck’ has been our nemesis. The energy world that we once knew, is about to change.

The world didn’t come to an end when air travel began to replace rail travel in the 1950’s. Now almost everyone travels by air, and only few travel by train. And what about the railway investors didn’t they lose their money when the age of rail tapered-off? No, they simply moved their money to the new transportation mode and made as much or more money in the airline business.

Likewise, the world will not come to an end now that renewable energy is beginning to displace coal and oil. Investors will simply reallocate their money and make as much or more money in renewable energy.

The ‘Variability’ of Renewable and Non-renewable energy

The ‘Variability’ of Renewable and Non-renewable energy | 29/05/14
by John Brian Shannon John Brian Shannon

The ongoing debate about the effects of the Variability of Renewable Energy on national electrical grids

Merit Order ranking control room
Most utility companies have Merit Order ranking control rooms similar to this one where decisions are made about which power producer will contribute to the grid in real time. Microprocessors make the instant decisions, while humans are present to oversee operations and plan ahead.

Solar Variability

Some people argue that solar photovoltaic (solar panels) produce ‘variable’ electricity flows — and they assume that makes solar unsuitable for use in our modern electrical grid system.

And it’s true, the Sun doesn’t shine at night. Also, if you are discussing only one solar panel installation in one farmer’s field, then yes, there is the variability of intermittent cloud cover to consider, which may temporarily lower the output of that particular solar installation.

But when grid-connected solar arrays are installed over vast areas in a large state such as Texas or throughout the Northeastern U.S.A. for example, it all balances out and no one goes without power as solar panels produce prodigious amounts of electricity during the high-demand daytime hours. If it’s cloudy in one location thereby lowering solar panel outputs, then it is likely to be sunny in 100 other solar locations within that large state or region.

Therefore, solar ‘variability’ disappears with many, widely scattered installations and with interconnection to the grid. So much for that accusation.

NOTE: The marginal ranking (which reflects the wholesale kWh electricity price) for solar is (0) and that ranking never varies. (More on this later)

Wind Variability

The situation with wind power is essentially the same, One major difference though; In many parts of the world the wind tends to blow at its most constant rate at night, which helps to add power to the grid while the Sun is asleep.

In fact, complementary installations of solar and wind help to balance each other through the day/night cycle — and through the changing seasons. There is even an optimum ratio between the number of solar panels and the number of wind turbines to better complement the other, but I won’t bore you with the details.

NOTE: The marginal ranking for wind is (0) and that ranking never varies.

Natural Gas Variability

What? Natural gas is not variable!

Oh really? Over the course of the past 60 years, how has the natural gas price per gigajoule changed? Got you there. The natural gas price has increased by orders of magnitude and wild price fluctuations are quite common.

OK, that’s not ‘output variability’ but it is a variable factor with regard to energy pricing. And that’s a variable that actually matters to consumers.

Natural gas prices have swung wildly over the years forcing utilities to peg their rates to the highest expected natural gas rate. No wonder investors love natural gas!

So there is ‘supply variability’ and wholesale ‘price variability’ with natural gas, which is why it is the last choice for utility companies as they meet the peak demand hours of the day. Gas is a good but expensive option, however, it comes with its own variability baggage.

We won’t even talk about the associated CO2 cost to the environment. (OK, it’s about $40 per tonne of CO2 emitted)

Coal variability

Not to the same degree as natural gas, but coal also faces price swings and potential supply disruptions — again forcing utility companies to set their rates against unforeseeable labour strikes at a mine, a railway, or shipping line — and against coal mine accidents that can shut down a mine for weeks, or market-generated price spikes.

These things are impossible to foresee, so this ‘averaging up’ of the price results in higher energy bills for consumers and better returns for investors.

Yes, there is variability in coal supply, in coal supply lines, in coal power plant maintenance cycles which can have a plant offline for weeks, and coal market pricing. These things can affect total annual output, and is yet another kind of ‘variability’. (Again, that doesn’t factor-in the other costs to society such as increased healthcare costs from burning coal which releases tonnes of airborne heavy metals, soot, and nasty pollutants besides CO2 which some estimates put at $40-60 per tonne emitted — in addition to the environmental cost of $40 per tonne for plain old CO2 emissions)

NOTE: Should we talk here about how much water coal plants use every year? More than all the other energy producers put together, and then some.

Hydro power variability

What? Hydro power is not variable!

Oh yes it is. Nowadays thanks to global warming, many hydro dams in the U.S. can barely keep water in the reservoir from August through November. They cannot produce their full rated power in a drought, in late summer, during maintenance, or during earthquake swarms. Just sayin’ hi California!

An impressive-looking body of water behind the dam is meaningless when the water level isn’t high enough to ‘spill over the dam’. If the water level isn’t high enough to spin the turbines then all that water is just for show. Take a picture!

In 1984, the Hoover Dam on the Colorado River generated enough power on its own to provide electricity for 700,000 homes because the water level of Lake Mead behind the dam was at its highest point on record.

But since 1999, water levels have dropped significantly, and Hoover Dam produces electricity for only about 350,000 homes. — CleanTechnica

And then there is this problem; Global warming and resultant drought conditions mean that some dams are essentially finished as power producing dams for the foreseeable future.

Again, we have output variability; But this time it is; 1) lower power output and variable output due to reduced reservoir levels caused by anthropogenic drought and 2) the months of year that hydro dams cannot produce their full rated power.

Price variability: This is what Merit Order ranking is about

Merit Order ranking is a system used by most electric utilities to allow different types of electrical power producers to add power to the electric grid in real time. Thanks to a computerized grid, this occurs on a minute-by-minute basis every day of the year.

In the German example, electricity rates drop by up to 40% during the hours in which solar or wind are active, and this is what Merit Order ranking is all about; Using the cheapest available electricity source FIRST — and then filling the gaps with more expensive electrical power generation.

Solar and wind electricity are rated at 0 (default) on the Merit Order scale making them the default choice for utility companies when the Sun is shining, or when the wind is blowing, or both.

Why? No fuel cost. That’s the difference. And bonus, no environmental or healthcare hazards with solar and wind either.

Once all of the available solar and wind Merit Order ranking (0) capacity is brought online by the utility company, then (1) nuclear, (2) coal, and (3) natural gas (in that order) are ramped up as required to match demand, according to the marginal cost of each type of energy. (German Merit Order rankings)

NOTE: In the U.S. the normal Merit Order rankings are; default (0) for solar and wind, (1) coal, (2) nuclear, and (3) natural gas, although this order can change in some parts of the United States and around the world. Merit Order is based on cost per kWh only and different regions of the country have different fuel costs.

(The one cost that is never factored-in to the kWh price is the cost of disposal for nuclear ‘spent fuel’ and for good reason, but that’s a discussion for a different day)

The Fraunhofer Institute found – as far back as 2007 – that as a result of the Merit Order ranking system – solar power had reduced the price of electricity on the EPEX exchange by 10 percent on the average, with reductions peaking at up to 40 percent in the early afternoon when the most solar power is generated.

Here’s how the Merit Order works

All available sources of electrical generation are ranked by their marginal costs, from cheapest to most expensive, with the cheapest having the most merit.

The marginal cost is the cost of producing one additional unit of electricity. Electricity sources with a higher fuel cost have a higher marginal cost. If one unit of fuel costs $X, 2 units will cost $X times 2. This ranking is called the order of merit of each source, or the Merit Order.

Using Merit Order to decide means the source with the lowest marginal cost must be used first when there is a need to add more power to the grid – like during sunny afternoon peak hours.

Using the lowest marginal costs first was designed so that cheaper fuels were used first to save consumers money. In the German market, this was nuclear, then coal, then natural gas.

But 2 hours of sunshine cost no more than 1 of sunshine: therefore it has a lower marginal cost than coal – or any source with any fuel cost whatsoever.

So, under the Merit Order ranking of relative marginal costs, devised before there was this much fuel-free energy available on the grid, solar always has the lowest marginal cost during these peaks because two units of solar is no more expensive than one. — Susan Kraemer

It’s as simple as this; With no fuel cost, solar and wind cost less.

Although solar and wind are expensive to construct initially (but not as expensive as large hydro-electric dams or large nuclear power plants!) there are no ongoing fuel costs, nor fuel transportation costs, nor fuel supply disruptions, nor lack of rainfalls, to factor into the final retail electricity price.

As solar panel and wind turbine prices continue to drop thereby encouraging more solar and wind installations, we will hear more about Merit Order ranking and less about variability. And that’s as it should be, as all types of grid energy face at least one variability factor or more.

Only solar, wind, hydro-electric, and nuclear have a predictable kWh price every day of the year. Coal, natural gas, and bunker fuel do not. And that’s everything in the utility business.

Although utility companies were slower than consumers to embrace renewable energy, some are now seeing potential benefit for their business and henceforth things will begin to change. So we can say goodbye to the chatter about renewable energy variability and utility companies can eventually say goodbye fuel-related price spikes.

Buckle up, because big changes are coming over the next few years to the existing utility model that will benefit consumers and the environment alike.

WWF says India could reach 100% Renewables by 2050

by Guest Contributor Emma Fitzpatrick

Originally published on RenewEconomy

When the world thinks of countries that could go 100 percent renewable, the immediate thoughts go to islands with solar and storage, hydro and geothermal rich countries such as Iceland, or even wind and wave-rich countries like Scotland.

One of the last economies imagined going fully renewable would be India, the rising economic giant that is still yet to connect several hundred million people to its mostly coal-fired grid, and is expected to have the highest growth of electricity consumption. But according to environmental group WWF, India could reach a goal of 100 percent renewables by 2050.

The study examines the possibility of a near 100% Renewable Energy Scenario (REN) for India by the middle of the century against a reference scenario (REF) in which the economy is likely to be dependent primarily on fossil fuels – coal, oil and gas.

WWF says that to get there India must make some large-scale changes to get on the right track as soon as possible. According to the report, aggressive energy efficiency improvements alone can bring in savings of up to 59 percent (by both the supply and demand sides) by mid-century.

Biofuels are set to play a large role, especially in the transport sector accounting for nearly 90 percent of the industry’s requirements.  According to WWF the third-generation biofuels in question are currently still in R&D phase and for the plan to go accordingly they must become commercially viable within the next two decades.

Overall, biofuels account for 23 percent of the total commercial energy supply,  most of the transportation needs. Solar thermal accounts for much of industry’s heating needs, and the electricity supply increases nearly 8 fold, with wind contributing the largest component.

Electricity generation by resource - Renewable Energy Scenario (REN) for India
Electricity generation by resource – Renewable Energy Scenario (REN) for India

The report says the reference scenario depicts an unsustainable, polluting and relatively inefficient energy future in 2051. The renewable scenario, on the other hand, presents a modern, cleaner and highly efficient India and shows that it is, in principle, theoretically feasible to achieve close to 90 percent penetration of renewable energy sources in the energy mix by 2051.

“However, there are still many unresolved questions in the REN scenario related to resource potentials, availability, commercial viability of alternative options, policy and finance mobilization, barriers of cultural and technological lock-ins, etc,” it says.

“Several feasibility studies are, therefore, needed to lay the basis for moving toward the REN scenario; these have not yet been carried out. There are many interventions that would be necessary to remove various barriers and to achieve higher levels of renewable energy deployment in India.”

Concentrated solar thermal technologies, many of which are currently still in the research and development phase, will take on a large chunk of the nations electricity needs as well as meeting thermal demand in industries that require temperatures below 700°C.

Wind is also set to push India towards its 100 percent goal. Currently India has no estimates of its offshore wind potential but the WWF predicts that it could have up to 170 GW installed by 2051.

Rural households will be forced to change their cooking habits, meeting their needs through improved cook stoves while urban households switch to electrical based cooking.

In 2010, fossil fuels accounted for 74 percent of India’s total energy consumed as well as being the world’s third largest emitter of carbon dioxide. India’s greenhouse gas emissions have also steadily risen by 2.9 percent each year between 1994 and 2007.

Much of the rural population still relies on biomass (such as firewood and agro-residue) for much of its basic cooking needs (around 24.6 percent of the primary energy supply) as well as using kerosene for lighting purposes.

Coal currently accounts for 42.4 percent of India’s total primary energy demand in 2010, with the national rail network being the largest coal consumer before 1975 – now overtaken by the power sector (87.7 per cent of total consumption).

Electricity alone plays a crucial role in improving levels of human development and the quality of modern life – with a strong positive link between human development, economic growth and growth in energy and infrastructure.

To sustain India’s own growth it requires large amounts of energy, with little oil reserves and much of its large coal reserves being inaccessible due to technological, social or geological factors, the country has many push factors to get its renewable base up and running. Due to the low oil reserves India has a high import dependence making it more economically vulnerable and well as supply issues.

India started its National Solar Mission in 2010 and is aiming to get 20 GW of grid connected solar power by 2020. As well as this, the Mission is promoting 2,000 MW of off-grid applications; including 20 million solar lighting systems and 20 million square metres of solar thermal collector area by 2022.

In general, India has a vast potential for solar power generation, with about 58 percent of the country’s total land area receiving an annual global insolation about 5 kWh/m2/day. These areas with 5 kWh/m2/day or above can generate at least 77 W/m2 at 16 per cent efficiency.

Rooftop PV is likely to play a major role in both rural and urban areas with residential, agricultural and industrial priorities reducing the amount of available land for solar programs.

It was estimated that almost 30 percent of industrial processes in India require heat below 250°C which can be supplied with heat from solar thermal concentrators. Temperatures below 80°C can be met through solar air heaters and solar water heaters. Industries – with the exception of iron, steel, cement and fertilizer – could in theory shift to CSP based heating.

Wind energy in India currently ranks second to hydro in renewable energy’s generating electricity. With 17,700 MW of installed capacity India’s rank in harnessing wind energy is fifth in the world after USA, China, Germany and Spain. Over the period of 1992-2010 the wind energy installed capacity in India witnesses an annual growth rate of 37 percent.

According to the Centre for Wind Energy Technology, most of India’s wind energy is concentrated in five states – Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra and Gujarat.

The WWF estimates that India’s total wind potential in megawatts stands at 49,130 at 50 metres, when taken up to 80 metres the reading more than doubles at 102,788 MW.

Hydropower is also being considered, with estimates around 148GW of energy potential. Two rivers, Brahmaputra and Indus, have the highest potential, with only 11 and 50 per cent respectively being utilized thus far.

India’s first tidal power project, with a 3.75 MW capacity, is being set up as well as the Kapasar project which involves building a 30 km-long dam. A recent study cited in the report suggested that also tidal power generation is feasible in certain areas it may not be commercially viable due to diesel costs. Currently, The Government plans to build 7 MW of grid-connected ocean tidal power plans in its 12thfive-year plan.

India’s geothermal potential is around 10,600 MW, distributed across various states and in 2009 the country’s geothermal power capacity stood at 10.7 GW. Although geothermal power development is restricted to tectonically active regions, and seeing as India lacks volcanic activity on its mainland, it also faces issues such as costs of drilling and transmission of energy.

Comparing the REF’s and REN’s final energy demands in 2050 highlights not only a stark mix of energy uses but also efficiency levels. In 2051 the REF is approximated to have increased the countries’ energy demand up to 2,545 Mtoe when compared to the REN sitting at 1,461 Mtoe – highlighting an overall energy savings of 43 percent.

Modeling done by the WWF has estimated that the total undiscounted technology investment cost for the renewables scenario is 42 per cent more than the reference (fossil-fuel) scenario, requiring 544 trillion Indian Rupees from 2011 to 2051. Although the figure sounds quite high it is only around 10 percent higher than if India was to stick to its reference scenario.

In the renewables scenario, India will have almost a quarter more electrical generation capacity (in GW) than if it continues along the reference scenario path. Furthermore, in 2051 the renewables scenario will yield less than one billion tonnes of carbon emissions, compared to the reference scenario with almost 12 billion tonnes.

WWF highlights that although the renewables scenario is preferred it will not be easy for government to get there, recommending various policy options available including; tax holidays for renewable energy uptake, creating incentives for new projects, enhancing R&D, increasing the budgetary allocation, pricing energy and technology for efficiency and strengthening policy and regulatory set-ups.

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This article, India Could Reach 100% Renewables By Mid-Century, is syndicated from Clean Technica and is posted here with permission.

Royal Dutch Shell Drops Two ‘Bombs’ in One Week

Royal Dutch Shell Drops Two ‘Bombs’ in One Week | 01/03/13
by John Brian Shannon John Brian Shannon

First came the announcement this week by Shell senior executives that oil extraction in the Arctic would be postponed for the second year in a row, and second is yesterday’s announcement foreshadowing the company’s plan for the future, Shell Sees Solar As The Biggest Energy Source After Exiting It in 2009.

The New Lens Scenarios Europe Shell report depicts two different energy policy scenarios, predicts that “photovoltaic panels will be the main power source by 2060 or 2070”  (depending on which scenario) and “lower costs and state support will boost solar to about 600 gigawatts in 2035” – worldwide totals.

What might lie ahead 50 years from now… or even in 2100? We consider two possible scenarios of the future, taking a number of pressing global trends and issues and using them as “lenses” through which to view the world.

The scenarios provide a detailed analysis of current trends and their likely trajectory into the future. They dive into the implications for the pace of global economic development, the types of energy we use to power our lives and the growth in greenhouse gas emissions.

The scenarios also highlight areas of public policy likely to have the greatest influence on the development of cleaner fuels, improvements in energy efficiency and on moderating greenhouse gas emissions.


The first scenario, labelled “mountains”, sees a strong role for government and the introduction of firm and far-reaching policy measures. These help to develop more compact cities and transform the global transport network. New policies unlock plentiful natural gas resources – making it the largest global energy source by the 2030s – and accelerate carbon capture and storage technology, supporting a cleaner energy system.


The second scenario, which we call “oceans”, describes a more prosperous and volatile world. Energy demand surges, due to strong economic growth. Power is more widely distributed and governments take longer to agree major decisions. Market forces rather than policies shape the energy system: oil and coal remain part of the energy mix but renewable energy also grows. By the 2060s solar becomes the world’s largest energy source. – Shell

According to information compiled from Bloomberg New Energy Finance and the International Energy Agency, solar photovoltaic (PV) capacity has grown to about 102 gigawatts worldwide in 2012 – which is up from 1 gigawatt globally in 2000.

Since year 2000, an average of 10 gigawatts of PV solar, per year, has been very unevenly added to the world’s electrical grids, but if PV solar installations were to grow at the same rate as the 2000-2012 timeframe, just 450 gigawatts of PV solar would be installed by 2035 — not the 600 gigawatts predicted by the report. The growth rate for PV solar has been astonishing for a new kind of energy for utility companies — and additionally so, considering it is battling with the big boys of the energy world, oil & gas, coal and nuclear. Regardless of past challenges, strong growth in PV solar is forecast until 2100.

All of this means that PV solar is set to grow dramatically between now and 2035, let alone by 2070.

Peter Endig/dpa via AP Images
Shell Solar GmbH 2004 | World’s then-largest solar power plant in Espenhain, Germany | Image credit courtesy: Peter Endig/dpa via AP Images

The report has PV solar power moving to number one position to provide at least 38% of worldwide energy supply (well up from today’s ranking of 13th place) to become the predominant kind of energy by 2100.

By 2100, energy from oil will account for only 10% of worldwide energy use and natural gas will account for just 7.5% of the worldwide total, Shell said.

Due to enhanced Carbon Capture and Storage, clean combustion technology and the use of CO2 gas for industrial processes by 2100, Shell sees “global emissions of carbon dioxide dropping to near zero by 2100”.

As all of the above plays out, natural gas demand is expected to surpass the historic demands seen for any other kind of fuel and the quote from the report’s main authour Jeremy Bentham, speaks volumes about the anticipated level of demand for the gas.

“The underlying pent-up demand for gas is very strong…we see it being sucked up, every molecule.”– Jeremy Bentham

The overall demand for energy will double in the next 50 years due to population growth and increases in living standards, and natural gas will eventually enjoy the highest level of fuel demand in history. But by 2100, the world will mainly run on PV solar, while other kinds of energy will contribute small percentages to the overall global energy mix.

It now appears that Shell would rather ‘switch than fight’ the move to PV solar. It is likely to be the first of many such switches in the global energy industry.

Related articles

The Big Energy Story of 2012

by John Brian Shannon

The world energy industry is suddenly transforming into something very different from the industry we have grown accustomed to over the past decades. In those previous decades, it was pump and burn more oil, mine and burn more coal and build more coal-fired burners to produce electricity. More, more and more smokethat is!

Anti-nuclear protesters were a constant feature in the press anywhere a reactor was considered, built or commissioned into use. Urban residents held irregular anti-smog protests outside of City Hall in large cities like LA and Tokyo.

Small-scale and large wars, were fought over control of the world’s oil and gas fields — sometimes affecting the very economic health of those nations.

Welcome to 2013. The world is still reeling from President Barack Obama’s decision to wean America completely off of foreign oil, he also ordered oil and gas production to be dramatically ramped up in the U.S.A. – and he decided to make his country a net oil exporter of oil and gas. Not just any-old net exporter mind you, but the world’s number one exporter of both oil and gas by 2017! That’s in four years.

Heady stuff for a normally ambivalent world.

Remember back in February of 2006, when then-President George W. Bush famously stated in his State of the Union speech that “America is addicted to oil.” That of course, is true. The U.S.A. and the other industrialized nations wouldn’t survive without oil as the entire Western economy is based on petroleum and the products made from it. From transportation and energy fuels, to plastics, medicines, agricultural fertilizers, residential and commercial buildings – virtually everything we live in, drive, wear, buy or use, is a product or by-product of petroleum.

Both Presidents — Obama and Bush, foresaw the importance of lowering overall energy use to improve the health and quality of life for American citizens, to lower international tensions by sourcing oil and gas domestically and to invest in clean technology to improve conservation and efficiency.

It turns out that conservation, green energy and domestic energy extraction is not a Democrat or Republican thing — it’s a leadership thing. And all over the world, it is catching on. Welcome to 2013, indeed!

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