Buenos Aires 2001

Key Energy Linkages

The WEC Survey of Energy Resources 2001 confirms that there are abundant resources in every region of the world to meet growing global energy demand well into the 21st century. It is essential for all regions and countries to diversify their energy portfolios by keeping all energy options open. While fossil fuels will continue to be the most significant and stable component of the total primary energy mix for several decades to come, the earlier we rationalise their production in terms of cleaner technologies and the optimum energy carriers the longer we will provide for their sustainable use.

A new power generation industry is rapidly emerging to face the broad and deep changes occurring in the way energy business is now conducted and to meet the requirements for competitiveness and environmental accountability. The traditional power plant is progressively turning into a more complex operation, trading not only energy and capacity as commodities but also green credits and other services.

The key linkages addressed at the Congress were:

- Oil and gas price volatility and decoupling: Security of supply and price stability are major concerns of all countries. Producing countries' revenues depend on getting oil and natural gas to the main markets, while the growth and prosperity of consuming countries depend on reliable and affordable supplies. With the rapid penetration of liquefied natural gas as well as the expansion of pipeline networks, a global natural gas commodity market will soon be established with prices partially decoupled from oil prices;

- Cleaner combustion technologies for oil, natural gas and coal: An economic way to produce energy from fossil fuels with lower or manageable CO2 emissions is the rapid and wide diffusion of cleaner technologies. Fossil fuels have a sustainable future in combination with such technologies and\or carbon sequestration. One Congress paper argues, for example, that underground coal gasification could meet total energy demand for many centuries with relatively low emissions;

- Gas\electricity convergence and multi-energy services: Electricity transmission and natural gas transport are complementary in regional energy systems and their regulatory needs must be addressed together to foster liquidity and the delivery of efficient energy services. If one third of the world's installed simple cycle gas turbine plants were converted to combined cycle, the increased power output would equal the need for additional generation capacity for the next 4-6 years, with no additional greenhouse gas emissions;

- Gas and potable water: There is a potential linkage between natural gas development and other critical resources, such as potable water. In the Middle East, for example, much of the domestic potable water is supplied by gas fuelled desalination plants, which also produce electricity. These cogeneration processes will be needed elsewhere as shortages of potable water develop;

- Nuclear power, large hydro and greenhouse gas emissions: For baseload electricity generation, the most effective means currently in use to reduce CO2 emissions are nuclear power and hydroelectric power. Those countries with the highest proportion of nuclear and\or hydro power have the lowest CO2 emissions per KWh. Nuclear energy and large hydro have advantages in terms of global warming, cost stability and high capacity factors which make them compatible with the goals of sustainable development for tomorrow's world. They should continue to play an important role in electricity generation. In particular,

• In the case of nuclear power there is a range of options including plant life extensions, new plants, reprocessing of spent fuel to maximise its use (where economically feasible), and innovative technologies which address design, licensing, fabrication, construction, performance, safety and effective waste management. With the help of governments and industry, public acceptance of this significant source of energy will continue to improve; and

• New large scale hydroelectric projects could make up a significant proportion of the renewable energy people need for a liveable world. The planning, design, construction, operation and maintenance of hydroelectric projects have been and can be further improved, in accordance with the best environmental practices;

- Renewables and distributed generation based on local resources: The timeframe for substantial penetration of new renewable technologies in the global energy mix is now 30-40 years. In the short term some renewables, such as wind and geothermal, are a very suitable complement rather than a replacement for large scale generation. The pace of development and use of renewables and distributed generation should be accelerated through increased RD&D and government support of deployment, especially in developing countries; and,

- Competition and efficiency: New modern technologies account for about 25% of the potential improvement in power plant performance, with 75% coming from better management and operational decision making. If the substantial gap between worldwide average performance and the top performing plants could be eliminated through the application of best practices, this would result in an estimated saving of up to US$80 billion per annum in building and operating capacity and a reduction in CO2 emissions of one GT per annum, as well as a reduction in other pollutants. In energy end use, prices influence electricity consumption patterns but cannot explain all the differences in performance among different countries. Competition and trade induce progress in efficiency of end use appliances. Framework conditions are improving and could foster efficiency gains of 20-30 percent.