Five Disruptive Shifts in the Energy Sector (Part 1)

October 02 2008 / by Garry Golden
Category: Energy   Year: General   Rating: 4

Energy is now synonymous with the future. We cannot talk about the the world in 2025 without having energy central to that conversation. But how do we prepare to talk about the future of energy beyond extrapolating the most obvious trends and new ideas?

Here are 5 disruptive shifts that could define the next fifty years of changes in energy systems:

-Pricing of Carbon
-Rise of Renewables leads to ‘Green’ Hydrocarbons
-Nanoscale science and engineering
-Tapping power of bio energy
-Energy’s entrepreneurial spirit

What’s happening?
The world is moving from bicycles to cars, and rice to protein
The good news is that many people are now aware of the biggest trends that are pushing the global energy sector to the limits. Most people will refer to challenges of China’s growth, peak production of conventional oil reserves, climate change, and need to shift towards renewable energy sources.

Energy analysts try to sum it up in one sentence: Surging global demand has led to tighter supplies and higher costs for production of hydrocarbons (coal, oil, natural gas) and utility scale electricity generation.

If the slowdown of the global economy continues we might see a temporary drop in high prices, but sooner or later the situation will be back again as hundreds of millions of people uplift their lives and become ‘middle class’ consumers moving from traveling by foot and bicycles to cars, and from eating rice to protein based diets. Along the way their energy consumption patterns will change as they buy electronics and home appliances.

An even bigger problem? Those countries with the highest energy growth rates are more likely to have a policy of ‘grow at any cost’, including environmental degradation, unless they have serious alternatives that are low cost and easy to implement.

Our energy choices in the next twenty years will surely be among the most relevant strategic decisions of this century.

#1 Pricing of Carbon

It is hard to imagine an idea that is more disruptive and wide-reaching to the energy sector, and the modern global economy, than the pricing of carbon.

Today there is no real market price or cost attached to carbon emissions. There is also no profit motive for turning carbon into a valuable feedstock. So we have no incentive to avoid carbon emissions, or innovate to use carbon as a resource

The pricing of carbon– either through a ‘cap and trade’ scheme that creates a market for trading carbon emissions, or a ‘carbon tax’ applied to all forms of carbon production is an increasingly likely regulatory event and market reality.

The pricing of carbon is critical in reducing emissions of greenhouse gases, and as a market incentive for unleashing innovation that could transform the energy sector.

#2 Rise of Renewables leads to Greening of Hydrocarbons
Almost everyone can agree that we must shift from traditional resource extraction to renewable energy systems. The disagreements are usually based on timeliness and sacrifice over cost.

As the world doubles its energy production in the next several decades, most analysts expect all sources of energy to grow.

Renewable forms of energy (solar, wind, wave) are expected to have the highest growth rates over the next several decades, but the majority market share of energy production through 2040 will likely come from hydrocarbon energy (coal, oil and natural gas).

One of the potential consequences of the rise of renewables and emission regulations is the ‘greening’ of hydrocarbons through carbon utilization via sequestration or bio energy (e.g. carbon eating algae).

This hydrocarbon legacy could continue well beyond 2040 if these industries can address carbon emissions and meet regulatory definitions of ‘green’. While we cannot avoid harmful effects of extraction, the industry could successfully position themselves as green by measurable standards based on emissions.

In fact, the definition of ‘green’ could become a moving target as hydrocarbons try to maintain their market share.

While it might not be pleasant to imagine- What if China and India agreed to grow around ‘clean’ coal rather than leapfrogging into solar or wind power?

Renewables might then need strategies to grow that go beyond just being marketed as ‘green’.

The cleantech benefits of local low cost, decentralized production could become its most valuable advantage to green hydrocarbons!

Related posts:

Part Two:
-Nanoscale science and engineering
-Tapping power of Bio energy

Part Three:
-Energy’s entrepreneurial spirit

Image: Dan Kamminga Flickr CC

Comment Thread (2 Responses)

  1. How soon do you believe carbon itself will become carbon-neutral? :)

    Posted by: Alvis Brigis   October 03, 2008
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  2. Re: Alvis

    Not sure I entirely understand your question…

    There are pricing schemes in European markets now—but that doesn’t have the potential to make carbon neutral.

    I think the only way to make carbon ‘neutral’ is to make carbon a resource that bio energy companies (and others) want to purchase to create more fuels.

    Chemistry and biology are at the center of the ‘carbon neutral’ vision. When carbon is released via combustion it bonds with oxygen. We all know that it then goes up into the atmosphere and accelerates greenhouse effects..

    The alternative is bonding carbon back with hydrogen (where it started – as a hydrocarbon as coal, oil or natural gas) So when we bond carbon back w/ hydrogen we can then make it carbon ‘neutral’

    We can do this via chemical engineering—setting up large scale systems to force C and H together.

    Or we can tap the power of biological systems. Plants are ok, bacteria/algae are better. In this future we ‘feed’ the carbon into closed environments of algae/bacteria that use sunlight or other sources of energy (sugars) to keep the carbon from going into the atmosphere.

    So we tap biology to keep the carbon in a local loop cycle.

    This type of technology is likely to expand considerably in the next 2-10 years… I suspect real large scale (e.g. cheap) global change will possible around 2020.

    We could definitely see carbon pricing schemes before then—but I’m not sure that really closes the loop.

    Was that the target of your question?

    Posted by: Garry Golden   October 06, 2008
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