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Defining the Challenge
Energy Transition Distilled: Part 1
Hello and happy New Year! I thought I’d kick off 2023 with something a little different. With so much climate news and content coming out these days, it’s pretty easy to lose the wood for the trees. Especially for those newer to the space, it can be difficult to identify and then stay focussed on the big pieces of the climate puzzle, the levers that really matter. This is made harder still by the tendency of the press to throw around numbers without proper context (“equivalent to taking 10k cars off the road” sounds much better than “equivalent to 0.0001% of global emissions”). In a series of posts over the next few months I’m going to try to break down energy transition into the simplest building blocks possible. This has been inspired to some degree by Sustainable Energy Without the Hot Air, which I regularly find myself recommending but know most people won’t take the time to read. Given that I’m building this picture up from the foundation, some of the content will be elementary to some readers. The posts will necessarily be high-level and not comprehensive. But it is my hope that they will prove to be a helpful reference for readers. Note that whilst agriculture and land-use change are important levers for addressing climate change, I won’t tackle them within this series, but will focus exclusively on emissions from the energy system. As always, reader feedback / challenge is welcome as we all work towards better understanding and outcomes.
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Energy Transition, a simple definition: To supply the energy we need to fulfil the needs of society (including bringing billions of people out of poverty) without putting more carbon into the atmosphere (on a net basis).
We might break this down into “the energy that we need” and “without putting more carbon into the atmosphere”. One useful way to look at the component pieces for energy emissions and, hence, decarbonisation levers is the Kaya Identity. The Kaya Identity states that global (energy) emissions are a function of:
GDP per capita
Energy use per unit of GDP
Emissions per unit of energy
The first three factors define “the energy that we need”, or the demand side. Population control is (obviously) fraught ethically and history has a few examples of unsavoury regimes having a go. The early environmental movement had an unfortunate depopulation element to it, driven by worry of Malthusian collapse and generally not giving humanity enough credit to be able to innovate our way to greater efficiencies. GDP / capita we want to generally go higher, drastically so in developing countries (“degrowth” might be advocated by some but, outside of a few well-heeled European urbanites, pretty much nobody wants that). And, incidentally, economic growth is cause of reduction of birthrate, so those elements are intertwined, especially in developing countries.
That leaves “energy intensity of GDP” as the lever we want to focus on to reduce overall energy demand. This we address through energy efficiency including dematerialisation of the economy (less physical stuff), avoiding wasted energy (e.g. by insulating buildings) and lifestyle choices like taking trains rather than planes or working from home, and also through electrification. We’ll get more into these in later posts.
The final term of the Kaya Identity - emissions per unit of energy, or the supply side - is where most of the heavy lifting needs to be done.
First, a few basics:
Units: The basic unit of energy is a “joule”. A “watt” is one joule / second, so refers to a flow of energy. A “watt hour” puts us back into stock rather than flow of energy, referring to one joule / second for an hour, or 3600 joules. This then scales to kilowatt hours (kWh) or 3,600,000 joules, which is what residential energy bills are generally denominated in. For context, in my modest home for a family of 4, we use about 3,000 kWh of electricity and about 4,000 kWh of natural gas per year. From there it jumps to MWh (1,000 kWh), GWh (1,000,000 kWh) and TWh (1,000,000,000 kWh). With that last one we are finally in a unit that we can sensibly use for national or global scale energy consumption.
Electricity / power ≠ Energy - this might seem like an extremely basic point, but electricity (also called “power”) is not the same thing as energy, and the terms are often used incorrectly, for example on the Irish grid operator’s otherwise excellent dashboard describing “energy demand” when they mean “electricity demand”. Electricity is an extremely high-value form of energy as it is easy to transform it into various forms - kinetic, heat, light, etc - and is easy to transport. Heat energy, on the other hand, is “low-grade” energy and more difficult to turn into other forms of useful energy and more difficult to transport. (Yes, of course, heat via high temperature steam is used to create a lot of our electricity, but not very efficiently, about 3:1 thermal: electric.)
Primary / Final / Useful Energy: There is another important concept to cover, which isn’t popularly understood and can be easily used to obfuscate or otherwise bamboozle readers. That is the difference between primary, final, and useful energy. Different analyses will use different measures, making it challenging to get an apples-for-apples comparison.
Primary energy refers to the embedded energy in whatever the fuel source is; for example the chemical energy within coal.
Final energy refers to the energy in its final form as delivered to the end consumer, be it refined fuel for a car or electricity to a home.
Useful energy refers to the energy consumed in doing the actual thing that we want it to do - kinetic energy moving a car, lighting our homes, etc.
Losses are incurred at each step so that there is a big gap between primary energy input and useful energy consumed. The biggest losses occur with combustion of fuels. That can either be at the gap between primary and final energy, like burning coal in a power plant, or between final and useful as petrol in a car and kinetic energy moving the car forward. There are also smaller losses incurred in the transmission and distribution of electricity, AC/DC conversion and inefficiencies in appliances. The best visualisation of these losses comes from the energy flow diagram from Lawrence Livermore showing US energy consumption. Converting the units to TWh, it shows about 28,000 TWh of primary energy input delivering about 9,000 TWh of useful energy, or “energy services”.
Global demand: Since what we really care about is the utility that we get out of our energy, useful energy is the underlying demand metric that we need to solve for and is not sensitive to the assumptions on the mix of energy sources. Today globally we use about 70,000 TWh of useful energy, with per person consumption varying from about 20MWh per person per year in Europe to 40MWh in the US and 2.5MWh in Africa and India (more here). Because of population growth and increasing GDP (the first two inputs in the Kaya Identity), that is expected to increase to something like 120,000 TWh by the middle of the century along current trajectories.
How do we deliver 70,000 TWh of useful energy today? With 140,000 TWh of primary energy. In the chart below, the zero carbon bit starts with the red of nuclear below. Pretty small, eh? The good news is that wind and solar have a much smaller gap between primary and useful energy so their importance is under represented here. I have deliberately chosen a version of this chart below that doesn’t gross them up to the equivalent of fossil fuels because this difference between fossil energy and renewable electricity is part of the transition narrative. Where we move to electrification and renewables, the gap between primary / final energy and useful energy shrinks drastically.
Final energy demand: Going forward, we can see final (and primary) energy demand plateau and shrink, even as we deliver an increasing amount of useful energy or energy services due to electrification and efficiencies. BP in their latest energy outlook see final energy demand plateauing at about 150,000 TWh along current trajectories, up from about 135,000 TWh currently (converting from exajoules in the chart below). Their more aggressive scenarios imply basically no growth in useful energy demand at a global level.
In order to get to Net Zero across the energy system there are a few broad vectors for decarbonisation. This particular cat has been skinned a few different ways by different analyses, but this is how I’m breaking it down. I will follow up with separate posts on each of these (perhaps more than one on each if needed). In rough order of priority:
1. Energy efficiency and electrification - reducing useful energy demand through efficiency and increasing renewables’ addressable market through electrification is in many ways the low-hanging fruit, easing the supply challenges and mostly resulting in net savings and better outcomes (e.g. more comfortable homes, lower total cost vehicles).
2. Generation of zero carbon electricity and heat - This is arguably the killer app for decarbonisation. Taken to an extreme, if we had sufficiently abundant zero carbon electricity, we could do whatever we wanted, including sucking CO2 from the atmosphere and either sequestering it or combining it with zero carbon hydrogen to make net zero emission liquid fuels. Unfortunately we’re a long way from that point of super abundance!
3. Green molecules - really for tackling the trickier parts of transport or industry, either through biofuels or starting with low-carbon hydrogen.
4. Carbon management (capture and removal) - inevitably there will be some residual emissions either from mobile emissions or areas that are inherently difficult to decarbonise (e.g. cement) that will require either point-source capture or taking carbon out of the atmosphere through natural or engineered pathways.
Further reading - for readers wanting to explore further:
Our World in Data - many great charts that have been drawn from diverse data sources and a quick way to get a sense of differences between countries and changes over time. More of these charts will feature in future posts.
BP Energy Outlook - one of the key energy publications during the year.
IEA World Energy Outlook - a snapshot of the impacts of the energy crisis and the recent progress (or lack thereof) in decarbonisation energy. The IEA’s website more generally is a virtually inexhaustible resource on all elements of the energy system.