The Whitlam Institute
secure
University of Western Sydney
June 2008
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Energy Security
2. Fossil Fuels: coal, oil and gas
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Dr Beverley Ronalds
Group Executive, Energy
Energy Security
Fossil Fuels: coal, oil & gas:
What?
• What’s the problem? Fossil fuels, GHG emissions & energy
security in a global, regional and Australian context
Why?
• The significance of fossil fuels & their role in a new energy
regime
How?
• What are the challenges, opportunities, & likely technologies in
this energy mix?
Key Factors
• What are the major influences that will determine our energy
future?
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Energy Security
The world runs on fossil energy
Ongoing fossil energy use brings risks:
• Greenhouse gas emissions need to be cut
• Supply is tightening
→ we
need an energy revolution
“The world is facing twin energyrelated threats: that of not having
adequate and secure supplies of
energy at affordable prices and that
of environmental harm caused by
consuming too much of it.”
IEA World Energy Outlook, 2006
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Energy Security
UK surface transport history
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Lowson (1998)
Energy Security
The world runs on fossil energy
Ongoing fossil energy use brings risks:
• Greenhouse gas emissions need to be cut
• Supply is tightening
→ we
need an energy revolution
Drivers of energy futures are uncertain and dynamic
Australia has particular challenges, and also opportunities and
responsibilities to play a key role in our regional and global
energy future
“The world is facing twin energyrelated threats: that of not having
adequate and secure supplies of
energy at affordable prices and that
of environmental harm caused by
consuming too much of it.”
IEA World Energy Outlook, 2006
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – sources of energy
The world runs on fossil energy
Production (106boe/d)
• Historically: cheap, readily available resources
→ underpins our economy
100
Oil
World
Gas
Coal
Nuclear
Renewable (ex Hydro, Biomass)
50
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Alternative
scenario
2030 energy mix:
77-81% fossil fuels
BP (2007), IEA (2006) 0
1950
Business as
usual
1975
2006
2000
Year
2025
2050
Fossil fuels – sources of energy
The world runs on fossil energy
CDIAC, DOE
http://cdiac.esd.ornl.gov/trends/emis/tre_glob.htm
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Global Fossil Carbon Emissions
6000
Total
Liquid (oil)
Solid (coal)
2004
Million Metric Tons of Carbon / year
• Fossil energy use emits greenhouse gases
→ global warming
Gas
4000
Cement
2000
1800
1850
1900
Year
1950
2000
Fossil fuels – sources of energy
Australians are accustomed to cheap, readily available
energy:
Coal
• largest fossil fuel reserves, very cheap
• underpins electricity generation
• highest GHG emissions (brown > black > oil > gas)
Oil
• depleting reserves
• underpins transport economy (& used in many products)
Gas
• large reserves, ‘transitional’ cleaner energy fuel?
Plus…
⇒ differ in efficiency, GHG emissions, & reserves
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Coal, oil &
natural gas
supply 95%
of Australia’s
energy needs.
Fossil fuels – sources of energy
Australia’s energy resources & major export ports
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – sources of energy
Australia is the world’s
largest coal exporter, 2nd
largest uranium producer
and 5th largest LNG
exporter
“Making the most of our
great comparative
advantage in energy is not
just in Australia’s interests,
but it also will contribute to
global economic welfare as
well. Man’s constant
hunger for energy and all
that this involves will
profoundly shape geopolitics this century”
The Hon John Howard MP, 2006
Productn, Consumptn (106boe/d)
Australia has a rich endowment of energy sources,
and is a major energy producer for the region
Australia
Prodn
4
Consumptn
Gas
Coal
Uranium
2
0
1950
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
1975
2007
2000
Year
2025
2050
ABARE, 2007
Fossil fuels – sources of energy
Australia’s oil
trade gap may
reach A$12-27B pa
by 2015
APPEA, 2006
Productn, Consumptn (106boe/d)
Australia’s oil self-sufficiency is expected to decline
Australia
Prodn
Consumptn
Oil
4
2
Trade gap
ABARE (2007)
GA (2006)
0
1950
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
1975
2000
Year
2006
2025
2050
ABARE 2007, GA, 2006
UK oil production
World-scale petroleum province
1000 tonnes oil
140000
DTI (2000); LBST
120000
Production/Consumption (106boe/d)
Fossil fuels – sources of energy
n
UK
Product
n
Consumpt
Oil
Gas
4
2
0
1950
1975
2005
2000
2025
2050
Year
100000
80000
60000
Access requires
“resources”:
• technology
• capital
• people
China
40000
20000
0
1975
1980 1985 1990 1995
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
2000
2005
2010
Fossil fuels – sources of energy
Remaining resource potential is considerable
Produced
Reserves
Identified
Undiscovered
UK
Oil
Gas
Exploration potential
Australia
Oil
Gas
NGL
Shale Oil
~$1tn
CSG
????
Hydrates
0
Development/production potential
10
20
30
40
50
9
Resources (10 boe)
DTI, GA (2006)
Australia has ∼40 offshore basins that display signs of oil potential and
half of them remain unexplored
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – sources of energy
In Australia, energy has strong economic importance
• Cost-effective energy supports large energy-intensive industries
• Energy exports (and imports) play a significant part in Australia’s trade
balance
• Resource extraction generates substantial secondary taxes
Australian Energy Trade 2006-07
Crude oil
Petroleum Products
LPG
LNG
Uranium
Coal - Steaming
Coal - Coking
In 2006-07, energy
contributed 28% of
Australia’s commodity
exports by value
Energy Content
2
A$39B
A$24B
A$22B
1
IMPORTS
ABARE (2007)
-80% -60% -40% -20%
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
EXPORTS
0%
20%
40%
60%
Value
80%
100%
Fossil fuels – sources of energy
Developing Asian
economies are expected
to generate 86% to 120%
of increased global coal
demand to 2030
Developing Asia’s
emissions are expected
to increase by 78% to
115% in the period 20052030, contributing 71%
to 59% of global
emissions growth
IEA World Energy
Outlook, 2006
Productn, Consumptn (106boe/d)
World energy demand growth is strongest in
Developing Asia
8
India
Prodn
6
Consumptn
Oil
Gas
Coal
Nuclear
4
2
0
1950
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
1975
2007
2000
Year
2025
2050
BP 2007, IEA 2006
Fossil fuels – sources of energy
Security of supply is receiving increased attention
“Since Churchill’s day,
the key to energy security
has been diversification.
This remains true, but a
wider approach is now
required that takes into
account the rapid
evolution of the global
energy trade, supplychain vulnerabilities,
terrorism, and the
integration of major new
economies into the world
market.”
Daniel Yergin, 2006
Production (106boe/d)
Oil Price (2006 US$/bbl)
6.6% of remaining oil
reserves lie in OECD
countries
BP Statistical Review, 2007
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Oil
Biofuels
GtL
CtL
Oil Price
100
June 08 price
IEA
(2006)
Shell
(2003)
World
ASPO
(2004)
50
IEA (2006)
0
1950
1975
2006
2000
Year
2025
2050
BP (2007), IEA (2006)
Fossil fuels – sources of energy
Consumption
Million tonnes oil equivalent
Coal Facts
1996
2006
• Primary global electricity source
¾ also steel & cement production
• Reserves
¾ most abundant fossil fuel
¾ global distribution & abundance, unlike oil & gas
• Emissions
¾ high GHG emissions
¾ increased efficiencies & emissions reduction along
whole value chain: mining to end-use
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
BP Statistical Review
2007
Almost
70% of the
world’s steel
production is
based on coal
Fossil fuels – sources of energy
Oil Facts
• Underpins transport sector
¾ record high prices……& increasing?
• Supply
¾ restricted geographic distribution
¾ peak oil?
¾more efficient extraction
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – sources of energy
Proved Gas Reserves / Production (Yr)
60
Australia has a long gas production
future relative to other OECD countries
BP (2007)
40
UK
Denmark
Canada
0
1.4
existing stock
1.2
new stock
1
Kg CO2e/KWh
•Emissions
¾ less carbon-intensive than other fossil fuels
• Development
¾ stationary + transport energy
¾ unique R&D needs
¾ knowledge exports
0.8
0.6
0.4
0.2
0
Black coal
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Mexico
Germany
USA
Netherlands
Poland
Norway
• Opportunities
¾ rich endowment in Australia
20
Australia
Gas Facts
Italy
Historical technology
leaders
Brown coal
Natural gas
CSIRO: The Heat is On, 2006
Fossil fuels – greenhouse gas mitigation
The energy challenge (opportunity / obligation)
• accelerate large-scale emissions cuts
• ensure smooth transition to new energy futures
⇒ significant changes are required now
⇒ changes to our energy regime will impact everyone
“Australia cannot afford to miss out on the next great global economic
transformation that will come from clean technology and the clean energy
revolution”
The Hon Kevin Rudd MP, 2007
“global warming could be one of the biggest opportunities this country
has every had…The world is looking for solutions and technologies. It is
an area in which Australia could take a lead with enormous economic
rewards”
Catherine Livingstone, 2006
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – greenhouse gas mitigation
1 wedge = 1 billion tons emissions per year by 2054
carb
7 ‘wedges’ needed to stabilise trajectory
on
& s captu
tora
re
ge
• dividing up excess emissions
alin co
y
c
ie n
s&
effic d plant as
fire ed by g
ac
repl
470 ppm
Socolow et al., 2004
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
en
tr erg
an y
sp e
or ffic
t, ie
ho nc
m y:
es
1 wedge
CCS @ 800
GW coal
power plants
380
ppm
2B cars @ 60mpg
(from 30mpg)
nu
c
win lear,
s
d,
bio olar,
fue
ls
re
fo
re
til sta
lag tio
n
e
Stabilising atmospheric CO2 levels
2M x1MW windmills
displacing coal power
Wedges Options
Socolow & Pacala, 2006
Princeton
Fossil fuels – greenhouse gas mitigation
Australia has high greenhouse gas emissions intensity
(43% above OECD average)
Construction
0.5%
Shares of energy
consumption in Australia,
by end-use
Commercial
4.5%
Other
1.5%
Min
ing
AGO (2006)
al
nti
ide
s
Re 7.8%
Agriculture
1.8%
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
6.2
%
Transport
24.3%
Electricity
30.8%
Manufacturing
22.6%
Fossil fuels – greenhouse gas mitigation
Big shifts are needed to reduce emissions
But…fossil fuels will remain dominant until 2030 at least
Electricity generation
CSIRO Energy Futures Forum Scenario 2a
Lowest carbon price early emissions cuts to stabilise atmospheric CO2 at 575ppm in 2100
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – greenhouse gas mitigation
Impacts or opportunities?
• a diverse, balanced, energy portfolio is required
• economic opportunities
¾ high demand for new technologies & expertise
¾ dependent on utilising our natural endowments (eg. gas,
coal, solar, geothermal)
ealth
w
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
n
clea
• increase energy efficiency
• new low-emissions technologies
• storage, distribution, management
re
u
c
se
Energy options
Fossil fuels – a new energy regime
What belongs in the energy mix?
• fossil fuels
• renewables
¾ wind: intermittent → energy storage
¾ solar: intermittent → energy storage
¾ biofuels?
- full-cycle energy efficiency
- impact on food distribution & market
¾ ocean energy: wave, tidal
Geothermal potential in Australia
• geothermal?
CSIRO Solar Tower
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – a new energy regime
The Future Distributed Power System
Renewables integrated
Two-way power flow – Smart meters –
Intelligent agents – Power arbitrage
2-way grid
transmission lines
Base-load power
generation ~ 600 MW
Solar
cells
Solar cells
Industrial complex /
factories
Apartment
Apartment
block
blocks
Wind
Wind
farm
Commercial
Commercial
House /
buildings
residential
suburbs
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Hospital
/ shopping
Hospital
&
shopping
complexcomplexes
Transport
‘Smart’ Storage
Fossil fuels – a new energy regime
Considerations
• low GHG emissions
¾ high impact, ie. significantly curb emissions
• energy efficiency
• cost efficiency
¾ ensures market adoption, affordability
• availability of resource
¾ sustainability, energy security
• economic prosperity / security
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – a new energy regime
The role of fossil fuels in the new regime:
Low emissions technologies
• carbon capture & storage (CCS)
¾ CO2 capture:
¾ CO2 storage: geosequestration
• natural gas
• fossil fuels to liquids (GtL, CtL)
Related technologies
Technological challenges
Australia-specific challenges & opportunities
• requires local expertise, solutions, technologies
• niche opportunities for Australia
• opportunities to support technology uptake in Developing
Asia
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – a new energy regime
“Clean coal”
• capture GHGs during processing
• Post-combustion capture
¾uses reactive liquid to capture CO2 from flue gases
• retrofit to existing power plants
• Loy Yang pilot launched April 2008
• Coal gasification
• Oxy-fired
• Couple with CO2 sequestration
• R&D → pilots → demonstrations → commercialisation
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – a new energy regime
Carbon capture & storage (CCS)
• potential for near-zero emission electricity
• many locations: site-specific issues
• Otway Basin geosequestration demonstration
¾ launched April 2008
¾ injecting 100 kt CO2 over 2 years
Challenges
• reduce costs of CCS
• identify suitable sites
• develop infrastructure
• ensure long-term CO2 containment
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – a new energy regime
Natural gas
• lower GHG emissions & readily accessible product
→ immediate impact on emissions reductions
• gas-fired electricity generation
• industry / household fuel
• transport fuel
• liquid fuels from NGL & GtL
Technological challenges
• improve exploration & extraction
¾ large unconventional gas resources
• coal seam gas
• remote, deepwater ‘stranded’ gas
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – a new energy regime
Fossil fuels to liquids (GtL, CtL)
• feedstock (eg. coal, gas) converted to CO & H2 mix (‘syngas’)
then to liquid fuel (‘synfuel’) → mainly diesel
Alternative transport fuel supply
• current heavy reliance on oil
¾ Australia’s growing petroleum trade deficit
¾ peak oil?
Energy security
• Australia is gas- & coal-rich
Secures economic prosperity
R&D challenges
• down-size plant & processing
•
•
•
•
produce & convert offshore gas
reduce GHG emissions
synthetic gasoline rather than diesel
reduce costs
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Fossil fuels – timelines
500
base case
projection
450
ency
effici
y
g
r
Ene
400
Mt CO2e
350
Distributed generation
Building the
low emission
foundation
Renewables
Nuclear
300
250
Fossil
200
Flagship trajectory
150
Alte
rna
tive
0
2000
Australian “wedges”
CSIRO futures modelling
2010
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
2020
&v
ehi
c
les
Re
duc
ed
trav
el
50% reduction in GHG
emissions
100
50
fue
ls
50% below 1990
emission levels
2030
2040
2050
Fossil fuels – grasping the nettle
Opportunities vs Impact
• environmental
• economic
• social
Australian focus
• our resource endowment
•
•
•
•
site-specific technological challenges
niche opportunities
export technologies & expertise
economic prosperity
Responsibilities
• governments, industry, consumers, R&D providers
• working together!
Energy Security: Fossil Fuels – coal, oil & gas. June 2008
Dr Beverley Ronalds
secure
Group Executive, Energy
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CSIRO Energy
Helping Australia and the region to achieve a secure, clean, wealth-creating energy
economy, tailored for a carbon-constrained world
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Phone +61 8 6436 8700
Email [email protected]
Web
www.csiro.au/cpr