by Dean Anderson
| 1. Preface
2. Progress indicators
3. Executive summary
4. Trends in energy intensity
5. Changes in the mix of supply side energy sources
Fuel-switching from coal to natural gas is more important as a climate change mitigation measure than as a contributor to long-term energy sustainability. This is because whereas natural gas combustion can reduce CO2 emissions by 60% or more, global reserves are smaller than for coal. Natural gas is thus for environmental reasons considered a 'bridge fuel' to renewable sources of energy.
All OECD countries have (nominally) adopted, separately, or in
conjunction with their climate change programmes, both fuel-switching
and renewables support programmes (either R&D, commercialisation,
or both). Most renewables programmes are small and modestly funded. In
some cases fuel-switching is being aggressively promoted. The following
country reports highlight some of the tendencies and trends:
Australia is the world's largest exporter of coal and is dependent on coal for two-thirds of electricity generation. The Commonwealth government supports in principle fuel-switching from coal to natural gas and development of renewables but has limited ability to influence state-level policy. State governments have continued to approve new coal-fired plants in preference to economically competitive, gas-fired CCGT plants and they have continued to support grid expansions in preference to renewables development in remote areas where the economics favour off-grid applications. This has put Australia on a track away from energy sustainability as well as on a collision course with the climate change convention. Generally, the government has taken the view that while desirable the potential for renewables to contribute to power production in the near term is limited, except for remote off-grid applications and solar water heating. The scope for further expansions of hydropower is very limited by both environmental and resource factors. While recognising the considerable long-term potential for grid-connected, utility-scale wind and solar power, the government has resisted providing immediate market support for these technologies and the state controlled utilities have by and large resisted both developing renewable projects themselves and purchasing power from independent developers. Continuation of the present course could lead to the situation where the government is forced to close down coal-fired power plants prior to the end of their useful lives.Country reports
Austria Natural gas is expected to increase its share of electricity production from 15% in 1992 to around 20% in 2005. Domestic coal production and use is being gradually phased out. Biomass use for space and water heating and in industrial processes is increasing. There is very low penetration of non-biomass renewables such as solar and windpower. If supported more aggressively, the latter could supply 15-20% of electricity needs. Given its existing high level of hydro, Austria has good prospects for achieving energy sustainability.
Belgium is heavily reliant on nuclear (60%), and to a lesser extent on coal, for electricity generation. Since it must import all its fuel and has few renewable resources, it plans to continue using coal for the sake of fuel source diversity. Natural gas use will slowly increase while renewables development will focus on waste combustion. Belgium will face difficult choices when its existing nuclear plants need to be scrapped or replaced and will have great difficulty achieving energy sustainability.
Canada obtains more than half its electricity from hydro but has limited potential for expansion. The balance of its electricity needs are supplied by fossil fuels and nuclear. Biomass use includes wood combustion in the pulp and paper and wood products industries, wood burning for space heating in residences, and combustion of agricultural and municipal wastes. Wood waste and black liquor provide about 50% of the pulp and paper industry's energy needs. Development of small hydro plants and wind energy is expanding slowly. Resource-rich Canada is in a reasonably good position to achieve long-term energy sustainability.
Denmark is a study in contradictions. It is the world's largest exporter of wind turbines but at home as much as 80% of its power generation comes from coal and only 5% from wind. However, it has firm plans to change this situation. Its utilities have pioneered the development of multi-fired power plants capable of using coal, oil, natural gas, and/or biomass as fuel. The government plans to phase out all coal use by 2028, increasing the penetration of natural gas to 27% of electricity supply by 2005. It also plans to increase the penetration of renewables, including biomass and wind, to 12-14% by 2005. Denmark has good prospects for achieving energy sustainability
Finland is focusing on achieving ambitious economic goals, giving lower priority to long-term energy sustainability and environmental considerations. Decisions on electricity supply are left up to the utilities, whose focus is on the comparative economics of expanding coal-fired generation, gas-fired generation, and/or increasing electricity imports. They would also be inclined to expand nuclear, were it not for public opposition. Finland uses relatively high amounts of peat, wood, and wood waste for electricity and heat supply and has moderate hydro and wind resources. It will only make progress towards energy sustainability if it begins soon to work in that direction, which it is not now doing.
France has either made the most or the least progress towards energy sustainability depending on one's point of view. For those who see nuclear as a sustainable option, France is a pioneer and leader. To those who see nuclear as dangerous and/or expensive, France, which depends on nuclear for 75 to 80% of its electricity supply, is setting itself up for an eventual mammoth conversion to a combination of fossil fuel and renewable energy sources, with the probable emphasis on the former. It has reasonably good biomass and wind resources which it has only recently begun to develop. France will maintain a high degree of energy sustainability as long as its nuclear industry avoids accidents and problems which might increase public resistance. If it is forced to convert to other electricity sources, it will face enormous costs.
Germany is heavily dependent on coal and moderately dependent on nuclear for power generation. It continues to provide subsidies to coal, planning, for social reasons, to phase them out only gradually. Major fuel-switching from coal to natural gas is not anticipated, as this would increase dependence on imports. There is disagreement on the future of nuclear but any serious effort to expand its use would encounter substantial public protests. The government is sponsoring considerable R&D and providing generous subsidies to renewables, but penetration levels are low and unlikely to increase substantially. Germany faces a considerable challenge in trying to achieve a sustainable energy future.
Greece is heavily dependent on coal for power generation but is working to change this. It is introducing natural gas on a large scale and has a policy of encouraging the 'maximum' penetration of renewables. Greek is the sunniest country in the EU, giving it the potential to derive 15% or more of its electricity generation from solar. It also has extensive wind, biomass and geothermal resources. The government must realise that maximising the penetration of natural gas and simultaneously of renewables are competing objectives, with the former leading to increasing foreign dependence and only the latter sustainable in both energy and geopolitical terms.
Ireland is in a similar situation to Greece. Its dependence on fossil fuel imports is extremely high and increasing. In 1992 42% of electricity generation was based on imported coal. The government is supporting large-scale fuel-switching to natural gas, expecting its use in electricity production to increase from 23% in 1992 to 40% by 2000. But like coal, all natural gas must be imported, replacing one form of foreign dependence with another. The exploitation of domestic peat is intended to make up for this somewhat, but Ireland's peat is not a renewable resource and reserves are limited. Ireland has large wind, wave and biomass resources but plans to exploit these resources are modest. The year 2000 planning target for both renewables and CHP is less than 1% of total generation. Ireland is thus setting itself up for excessive dependence on imported fuel and an unsustainable mix of energy sources.
Italy is dependent on imported oil for around half its electricity generation. It is trying to wean itself off both oil and coal, which the introduction of competition in electricity supply is reinforcing, engendering a rush of independent power projects, mostly CCGT and CHP burning natural gas. The utility ENEL is focusing on developing multi-fired plants.
Italy has extensive hydro, solar, biomass, wind and geothermal resources. The government, recognising their potential, adopted aggressive renewables and CHP support programmes in 1991 but has failed to deliver budgeted funds, thus reducing actual progress to a snail's pace.
Japan is heavily dependent on both nuclear and fossil fuel imports. It has an official objective for nuclear to provide 40% of power generation by 2010, which would require approximately a doubling in the number of nuclear plants (to 86). Each new plant is likely to trigger local protests, putting this strategy in doubt. If nuclear cannot be expanded because of public opposition, then the government can be expected to increase natural gas and coal imports. Japan, which lacks a natural gas infrastructure, is the world's largest importer of LNG. In 1992 'new' renewables, (i.e. those other than large-scale hydro) accounted for only .2% of primary energy and .04% of electricity supply. Their share is expected to increase five-fold to 1% of primary energy and .2% of electricity supply) by 2010, a penetration rate which appears woefully inadequate and short-sighted. The biggest gains are projected for photovoltaics and ocean energy, which are currently under-developed. Wind has limited potential. Solar thermal, already in use, is expected to expand. Japan has extensive and well-developed low-temperature geothermal resources mostly suitable for water and space heating. The government needs to reassess its energy programme and take steps which will improve its energy independence and environmental sustainability.
Luxembourg - The share of coal in total energy consumption is projected to fall substantially, from 24% in 1993 to around 3% by 2000, as the steel industry phases out blast furnaces in favour of electric forms of production. However, use of imported oil accounts for over half of total energy consumption and is increasing. Natural gas, all of which is also imported, is being promoted by the government, particularly in the residential and commercial sector, and its share is expected to increase from around 13% of total energy consumption in 1993 to over 18% in 2000. The government is actively promoting CHP, with the dual aim of reducing dependence on electricity imports and cutting emissions. It estimates that 2% of the country's electricity could be provided by small hydro projects and 1% by wind power and is making development subsidies available to spur their development. However, it appears that Luxembourg will remain dangerously dependent on imported fossil fuels, with the only viable alternative being to increase its electricity imports.
Netherlands has traditionally used coal for power generation but since becoming the world's fourth largest natural gas producer has been increasing domestic gas use, which accounted in 1993 for 57% of total generation. At the same time renewables and waste combustion accounted for only 1% (2% of primary energy supply), the second lowest penetration rate in the OECD after the UK. Given its natural gas resource, CHP is very attractive, so much so that over-capacity is being created. The government has set ambitious targets for wind, solar, waste-to-energy. and biomass but these sources have limited potential. The Netherlands will have difficulty achieving energy sustainability.
New Zealand - Due to its abundant rivers, hydropower dominates electricity generation, accounting for almost three quarters of total capacity. However, hydropower's share of electricity production is not expected to keep pace with projected demand increases. Other renewable energy sources, especially geothermal, have considerable potential, but the government's free market approach forces renewables to compete with cheaper fossil fuels, which they are presently unable to do. New Zealand is self sufficient in natural gas and its reserves are expected to last another 10-15 years. In 1994 natural gas accounted for 27% of total energy consumption and 19% of electricity output. New Zealand's first gas-fired CHP plant is under construction. Coal accounted for only 6.7% of total energy consumption in 1994, but its share is expected to double by 2005. Domestic coal production is at its highest historical levels increasing, with coal's share of electricity generation expected to increase to over 13% of output in 2005 compared to just over 1% in 1994. New Zealand is clearly not on a path towards sustainable energy development, though it has the potential for achieving it.
Norway has already achieved a high degree of energy sustainability, at least in its electricity sector. It not only obtains almost 100% of its electricity supply from large-scale hydro but also has considerable room to expand production without impacting watercourses it wishes to protect from development. Norway is the most electricity-intensive country in the OECD as well as the leading exporter of oil and natural gas. It could become the world's largest electricity exporter but has no plans to do so. Its low electricity prices and energy independence are not conducive to the promotion or development of 'new' renewables, even though Norway has extensive biomass and wind resources. Norway has the potential to convert a large portion of its transport energy needs from fossil fuel-based to clean electricity-based. In spite of Norway's strong environmentalist orientation, the direction of Norwegian energy policy is unclear.
Portugal is heavily dependent on imported oil and coal with the degree of dependence varying from year to year in relation to the water available for hydro generation. A major priority of the government is to reduce dependence on oil by introducing natural gas (in 1997); the goal is for gas to supply 12% of electricity production by 2000 as well as an even larger proportion of heat supply. But coal use for power production is expected to increase slightly. Portugal is developing an extensive natural gas infrastructure linking it with north Africa and northern Europe. Portugal also has extensive renewable resources. The government is basing its ambitious support programme for new (non large-scale hydro) renewables on the German model of subsidies, which it hopes will produce a gradual but steady penetration of small hydro, biomass, wind, solar thermal and geothermal capacity. But it is too early to tell if this will lead Portugal down a path towards energy sustainability.
Spain is about equally dependent on coal and nuclear for power generation. While a moratorium has been placed on nuclear expansion, the government is gradually reducing coal subsidies but coal use is only expected to decline modestly in response to gradually diminishing subsidies. Fuel switching from coal and oil to natural gas is being encouraged, and gas-fired generation, including CHP, is increasing rapidly. An extensive gas infrastructure linking the country to northern Europe and north Africa is being completed. Spain has extensive biomass, solar, and wind resources. Substantial support is being provided to renewables other than large-scale hydro but their contribution to overall supply will not become significant in the short term. To avoid excessive dependence on gas imports and ensure a sustainable energy future, Spain will need to devote more attention to renewables development.
Sweden depends almost entirely on hydro and nuclear for power generation but is planning to phase out nuclear. It faces a serious dilemma in deciding what to do as its nuclear plants close down in the future. The options are to increase the development of large-scale hydro, which would entail environmental impacts, develop natural gas-fired power plants, sourcing the gas from Russia and Norway, and/or increase electricity imports from Norway, Denmark, Germany and France. Sweden has extensive biomass resources, the use of which for district heating, localised electricity production, and in pulp and paper manufacturing can be increased. It also has a moderate wind resource. The challenge will be to come up with a balanced programme conducive to long-term energy sustainability.
Switzerland - Hydro accounts for about three-fourths of Switzerland's electricity capacity, nuclear for 20% and fossil fuels for 5%. The relative abundance of hydropower enables Switzerland to export electricity in good water years; however, environmental constraints preclude significant further hydro development. Overall Switzerland is almost 85% dependent on imported energy. Since the oil shocks of the 1970s, the government has endeavoured to reduce its dependence on imported oil. Natural gas' share of total energy consumption increased from 1.6% to 15.4% between 1973 and 1992 and the government plans to increase this to over 20% by 2010. Natural gas is used mostly for industrial process heat and space heating; however, oil still dominates the general heating market, with a 56% share compared with 19% for natural gas. The penetration of non-hydro renewable sources of energy in Switzerland remains low, although use of biomass, particularly wood, and solar energy, including heat pumps, is rising slowly. Wind and geothermal power are only marginal contributors to Swiss energy supply. Switzerland has good prospects for achieving energy sustainability.
UK engendered an explosive 'dash for gas' by a combination of removing subsidies from coal and introducing competition into electricity generation. It has also fostered a 'model' support programme for renewables (the NFFO) as an unintended consequence of electricity privatisation. In order to justify continuing nuclear subsidies made necessary by nuclear's cost uncompetitiveness, the government established a (modest at first) subsidy programme for the commercialisation of renewables, which has demonstrated both the technical feasibility and the improving cost competitiveness of renewable technologies. The question is if the UK will build on this successful programme. The risk is that it will declare the NFFO as having succeeded and end it, thereby falling short of achieving steady increasing penetration and cost convergence of renewables. This would be a serious blow to energy sustainability not only in the UK but also throughout the world: at the moment there is no other renewables support programme in the OECD offering as credible a demonstration effect as the UK programme.. The UK is at risk of carrying the dash for gas too far: as it phases out its older nuclear power stations in the future it may find itself excessively dependent on gas.
US - Though it has nuclear and domestic coal, oil, and natural gas resources, dependence on imported oil and natural gas is increasing. Net imports of crude oil are again on the rise, expected to increase from around 45% of total oil use in 1993 to over 60% by 2010. Gasoline (petrol) costs less, in inflation-adjusted terms, than at any time since the 1950s, and as a result consumption is increasing rapidly. In 1993 the breakdown of primary energy supply was: oil 38%, natural gas 24%; coal 23% and other solid fuels 4%, nuclear 8% and renewables, including hydro, 2%. Domestic coal production peaked in 1990 and has since declined. However, coal use in power generation is holding steady. The electricity and gas industries are undergoing a process of liberalisation, the environmental consequences of which are hard to predict. The government provides substantial support for renewables R&D but has phased out the tax incentives which sparked a surge in renewables development during the 1980s. The future of renewables is uncertain, while natural gas-fired CHP continues to expand because of its cost competitiveness.