Transcript presentation

Enhancing Global Climate
Technology RD&D
Annelène Decaux
Global Climate Change Research
EPRI
Climate Talk Series
Climate Change Kiosk
UNFCCC COP 9, Milan
December 5, 2003
Enhancing Global Climate
Technology RD&D
1. The climate change
challenge and current
energy RD&D trends
2. Some key elements for
implementing an energy
technology RD&D regime
2
The time scale of the climate problem
3
The climate technology RD&D challenge
• Climate change is a problem of unprecedented scope: century-scale,
massive risks, “public good” nature, global
• “Technology is the answer”:
– Responding to the climate change challenge means widespread
deployment of low- and non-carbon energy systems
– These systems do not currently exist on a commercial scale
– Higher levels of RD&D investment than today are needed
• Why act now?
– Energy R&D takes time – typically, decades (e.g. carbon
sequestration project = 10-20 years)
– Energy capital stock is long-lived – typically, 50+ years
– It is not just the technology, it is the infrastructure (e.g. hydrogen)
– Overall, it takes approximately 50 years for energy technologies
to become dominant in the economy (e.g. automobile)
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Current investment in energy R&D that could reduce
the cost of stabilization are inadequate
1.1 Industry
1.2 Residential Commercial
1.3 Transportation
5000
1.4 Other Conservation
Total public energy R&D,
OECD countries
TOTAL CONSERVATION
2.1 Enhanced Oil & Gas
2.2 Refining Transp. & Stor.
2.3 Oil Shale & Tar Sands
4000
2.4 Other Oil & Gas
Total Oil & Gas
$million (2001)
3.1 Coal Prod. Prep. & Trans.
3.2 Coal Combustion
3.3 Coal Conversion
3000
3.4 Other Coal
Total Coal
TOTAL FOSSIL FUELS
4.1 Solar Heating & Cooling
4.2 Solar Photo-Electric
2000
4.3 Solar Thermal-Electric
Total Solar
5. Wind
6. Ocean
7. Biomass
1000
8. Geothermal
9.1 Large Hydro (>10 MW)
TOTAL
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1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
0
Source: IEA, 2001
… and inconsistent
500
1.1 Industry
1.2 Residential Commercial
Total public energy R&D,
OECD countries
450
1.3 Transportation
1.4 Other Conservation
TOTAL CONSERVATION
2.1 Enhanced Oil & Gas
400
2.2 Refining Transp. & Stor.
2.3 Oil Shale & Tar Sands
2.4 Other Oil & Gas
350
Total Oil & Gas
$million (2001)
3.1 Coal Prod. Prep. & Trans.
300
3.2 Coal Combustion
3.3 Coal Conversion
3.4 Other Coal
250
Total Coal
TOTAL FOSSIL FUELS
4.1 Solar Heating & Cooling
200
4.2 Solar Photo-Electric
4.3 Solar Thermal-Electric
150
Total Solar
5. Wind
6. Ocean
100
7. Biomass
8. Geothermal
9.1 Large Hydro (>10 MW)
50
TOTAL
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1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
0
Source: IEA, 2001
Energy R&D decline continues
• Most industrialized countries are cutting public sector energy R&D
budgets in real terms as well as in % of overall R&D
• Total world energy R&D expenditure = $7.4B (US: $3.75B), vs
Daimler/Chrysler
Cisco Systems
Intel Corp
$8.4B (3.8%)
$4.7B (21.5%)
$3.95B (11.9%)
Microsoft
Pfizer Corp
$3.8B (16.4%)
$2.9B (10.1%)
• No sustained commitment to non- or low-carbon technologies
– Nuclear R&D declining across the industrialized world
– Solar, wind and efficiency program funding declining in the US,
Germany and Canada
• Investment has grown in some key climate technology areas, but remains
relatively small ($10’s of millions):
– Energy efficiency: most of the growth
– Hydrogen and fuel cell research: from nothing to some
– Carbon capture and sequestration: growing but still less than 5% of
total public energy R&D budget
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Trends in private RD&D are no different
• Private sector is also cutting funding, due in large part to deregulation,
liberalization, and consolidation of energy industries
– Lowest R&D / Sales ratio of any industry:
• 0.3% for energy sector (0.1% for electricity sector)
• vs 3.9% for industry on average (source: NSF)
– Long term research time frames contracting
– Most investment decisions down to business unit level
• Initiation of advanced power generation R&D programs (e.g. fuel cells)
not feasible under these conditions
• Concentration:
– E.g. in US, 69% of all industrial energy RD&D is conducted by the
12 largest companies (> 25,000 employees)
– and 97% by 37 large companies (> 1,000 employees)
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US example
• Since 1990:
• Federal energy R&D fell by
~25%
• Private energy R&D by
~63%
• Since 1996:
• Hydrogen research program
has grown ~83% (to $28M)
• Superconductor and
electricity storage program
has doubled (to $68M)
• Biomass program has grown
~30% (to $116M)
• Nuclear fission R&D has
fallen ~30% (to $78M)
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Source: Battelle GTSP, 2003
Energy R&D in the US, 1990-2000
What about international climate change
RD&D cooperation?
• Very little cooperation so far, and mostly review/coordination role
only, e.g IPCC (reviewing role only), OECD Global Science Forum,
IEA GHG project
• Energy R&D is uncoordinated across countries
– Duplication of efforts, missed opportunities, diseconomies of
scale
– Why? Competitive concerns: cooperation only justified for very
large, capital-intensive, not commercializable research topic (e.g.
ITER – nuclear fusion)
• Kyoto Protocol has not provided impetus for more or coordinated
energy R&D – in fact, the issue is not addressed
• 96% of the world’s public (i.e. long term) energy R&D in only 9
countries
– UN may not the right forum for implementing an energy RD&D
regime: what forum?
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Enhancing Global Climate
Technology RD&D
1. The climate change
challenge and current
energy RD&D trends
2. Some key elements for
implementing an energy
technology RD&D regime
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1. Use the right combination of policy instruments:
“market pull” vs “technology push”
• “Innovation failure”: Emissions mitigation measures are not enough to
promote private and public sector investment in emerging technologies
– especially if they do not provide long-term objectives
• Pushing technology RD&D is not enough either
• Better / cheaper approach = combination of “market pull” and
“technology push” measures
• Technology push measures provide automatic incentives for participation
and compliance
– while emissions mitigation strategy is often criticized for not providing
such incentives, e.g. concerns over Kyoto “leakage” effects
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A few examples of “technology push” measures
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•
Raise carbon tax or equivalent to fund public RD&D
•
Increase IP protection (patents)
•
Encourage industry research consortia (EPRI, GRI)
•
Incentivize private sector R&D through: direct funding, subsidies,
government/industry consortia, private sector matching funding
•
Focus on RD&D that stimulates strong private sector participation
•
Focus on technologies that bring broader public benefits
– E.g. air quality, cheaper electricity, sustainable development
•
Communicate effectively on RD&D investment choices
2. Understand what is in the “RD&D black box”
3. Identify financing mechanisms
•
Get broad understanding of what is in the RD&D “black box”,
i.e. for each technology, investigate and communicate its:
–
Technical potential = chance of success, time frame,
environmental performance, ancillary costs and benefits
– Market potential = chance of being funded and deployed (involves
analysis of market trends and psychology)
– Cost
– Barriers to commercial deployment, often a cause for failure for
deploying large-scale systems (environmental acceptability,
security, infrastructure, complexity)
 Draw RD&D roadmaps
•
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Identify mechanisms to finance long-term key technology
RD&D and enable public and/or private funding
4. Re-define Public / Private roles
• Public / Private sector traditional roles:
Public sector
Private sector
Enhance environment
Promote economic growth and efficient use of resources
Comply with regulations
Maximize profits
Medium to long term focus
Short-term focus
Basic and pre-competitive applied research
e.g. nuclear fusion
Market-oriented applications
e.g. fuel cells
• Re-defined leadership roles in Public / Private partnerships:
Public leadership role
Private leadership role
- Provide a supportive and stable environment for innovation, consistent
with economic development and public policy objectives
- Promote broad-based technology roadmap development
- Rationalize funding to key technology areas, set priorities
- Fund long-term fundamental research for breakthrough technologies =
stop incremental, unsustained work
- Support multi-disciplinary collaboration among industries, academia
and national labs while protecting commercial interests
- Fund early demonstration of critical projects prior to economic
availability
- Ensure its policies are coordinated and consistent and that unintended
regulatory, policy and tax impediments to innovation are remedied
- Contribute knowledge and
experience to the
development of technology
roadmaps
- Collaborate in joint industry
/ academia / national lab
research to achieve critical
mass of knowledge and
expertise on focused
objectives
- Provide real-world settings
for, and operate, projects to
demonstrate technology
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5. Facilitate international cooperation and
enable technology transfer
• Put in place new institutional arrangements: what is the right forum?
• Identify good candidates for international RD&D programs:
– E.g. carbon sequestration: international cooperation most welcome
– Hydrogen production: US – EU have announced cooperation
– Carbon capture (IGCC etc), biotechnologies and fuel cells: not so
good candidates (very competitive, IP concerns)
• Enabling technology transfer:
– CDM / JI (indirect) mechanisms
– Develop effective institutions to directly incentivize transfer of new
energy technologies?
– Private companies, not governments, own commercial technologies
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Carbon Emissions (MTCpa)
Effective technology transfer will make the
difference in the success of a UN agreement
First
Commitment Period
14,000
12,000
10,000
8,000
Developing
Country
Emissions
6,000
4,000
2,000
Industrialised Country
Emissions (Kyoto -1% pa)
Source: Grubb, Hope and Fouquet, in Climatic Change, 2003
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Zero
Spillover
Scenario
Intermediate
Spillover
Scenario
Maximum
Spillover
Scenario
Key points
• Energy R&D expenditures are small by most metrics and still declining
• Especially, climate “gap” technologies are languishing
• Investment choices reflect current incentive structure and policies
• Indirect incentives alone (e.g. creation of a carbon market) are likely to fail to
stimulate critically needed technology development
• Kyoto Protocol is silent on energy technology development
• UN may not be the right forum for implementing an energy RD&D regime, given
energy RD&D concentration among industrialized countries and large firms
• Elements that could speed implementation of an energy technology RD&D
regime include:
– Right combination of push and pull policy levers
– Understand what is in the “RD&D black box”
– Identify mechanisms to finance long-term key technology RD&D
– Emphasize public/private partnerships and re-define public/private roles
– Put in place new institutional arrangements to facilitate international
cooperation and address technology transfer
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