Mr Nobuo Tanaka took over as Executive Director of the International Energy Agency (IEA) on 1 September 2007, recently stepping down on 1 September 2011. Prior to that, he had been Director for Science, Technology and Industry at the Paris-based Organisation for Economic Co-operation and Development (OECD). Mr Tanaka will share his views and perspectives on the changing energy landscape at this year's Singapore Energy Lectur SIEW.
NT: India should have all possible options for energy demand in the future. At the same time, it is vital to increase efficiency for the demand side as much as possible in areas such as energy conservation and energy efficiency standards for appliances, transportation. It is very cost effective to invest and reduce energy consumption, as there is much more to gain by investing in energy efficiency than in energy capacity. This is very important because the cheap energy age is over price of energy, oil, gas and electricity will continue to increase. It is imperative that India invests in efficient technology standards. The second, on top of reduced energy demand, is to try to decarbonise the power sector as much as possible through the use of renewable energy investment and nuclear power. India should also invest in carbon capturing and storage to use coal and gas more efficiently and in a more sustainable way. India is now also very interested in smart grid technologies and market investments which I believe is a very important new technology. Electric vehicles (EV) could be utilised. Thus there are plenty of new technology components of the energy for the future and as a growing economy and market I think India's role will expand with new technologies and practices in this industry.
1. How can the global market look at balancing the needs of an unsteady economic recovery and the efforts required to bridge the gap between our climate actions and our climate goals?
Nobuo Tanaka: Economic growth, climate change and energy security are the three targets of global energy policies, and the challenge for everybody is to achieve balance between these three parameters. Achieving these goals sometimes requires a trade-off among these three parameters, and the energy sector would have to be decarbonised as much as possible in order to do so.
The IEA has already shown that there is a scenario to achieve this--it is called the 450ppm CO2 emission stabilisation scenario, which aims to lead the global community to a 50 percent reduction of carbon dioxide by 2050. To realise this goal, it is necessary for us to invest heavily in energy conservation and energy efficiency efforts, deploying all possible options of power sources including renewable and nuclear energies.
The devastating Fukushima Daiichi nuclear accident has raised questions about the role of nuclear power in meeting the world's energy needs and has since made deployment of nuclear power very difficult. The Fukushima incident has raised concerns over nuclear deployment in the OECD countries, including Japan. IEA recently stated that the 450ppm CO2 emission stabilisation scenario is almost impossible after Fukushima, but we should still try to achieve that with our efforts and investment in technology policies.
We need to use more gas because coal is too carbon intensive. It is necessary to deploy carbon capturing storage technology. However, the costs of such technologies are high, and this poses challenges to the global energy market. In fact, all energy sources, including electricity, will be much more costly in the future. On top of that, we will put carbon prices in place, and the IEA scenario states that the carbon price will increase to US$120 per tonne of CO2 in 2035.
So, this is challenging. Achieving this paradigm, also known as the green paradigm or green growth model, will lead us to greater energy security and sustainability because there is less dependence on oil and less CO2 emissions. Furthermore, it provides more jobs for this new technology sector. This is the direction we therefore need to move towards to achieve a balance between the three different parameters as mentioned in the beginning.
2. In your opinion, what would be the role of coal in driving economic growth in an emissions-constrained world?
NT: This is a very important question--coal is very important in countries like India, China, the US, and Russia. For the sake of energy security or supply security, coal is a very good and cheap option. However, coal emits too much CO2 into the atmosphere when used as a form of power, exacerbating the climate change problem. To ensure that coal is used in a more environmentally friendly manner, investments have to be made in more efficient coal fired power plants. As the first step, efficient clean coal technologies would have to be introduced.. The second step is to invest in carbon capture storage technology, which means having to store CO2 emissions underground this is the technology that is needed to produce clean coal. The problem is that this would mean additional costs for coal powered plants and a corresponding increase in the price of coal/carbon. Therefore, this is a real challenge especially for developing countries to maintain economic growth amidst the higher prices.
The downside of this is that there needs to be established technology to make this a commercially viable option that is accepted by the public and industry. To make this commercially viable, a carbon price has to be allotted to it. The current carbon price is about US$10 to US$20 per tonne of CO2, which is too low to be competitive. Under the 450ppm scenario, the ideal price is about US$120-130 more. As a result, coal power plants are less competitive relative to other technologies such as nuclear, etc. While it certainly penalizes the use of coal, this is the only option to make a clean coal.
3. Photovoltaic (PV) electricity generation has seen phenomenal growth in worldwide production and deployment over the past two years. Especially in Asia, the equatorial "sunbelt" countries are endowed with abundant solar energy, making them important markets for the solar PV market. Where should Asian countries place PV in their energy mix?
NT: At a recent IEA ministerial meeting, interesting discussions concerning PV have been ongoing and there is definitely a huge investment for PV in Europe. This is especially so in Germany where they are advocates of alternative energy, and are thus putting very high feed-in tariffs in solar PV and deployment. China, as a big PV producer, is also using PV in a very special way and is preparing feed-in tariffs as well. In terms of PV, it would be safe to say that a technological breakthrough is definitely happening and the cost of PV production, along with the cost of electricity generation, is declining very rapidly.
While it is still underway to be commercially completive, feed-in tariffs, subsidies and other support mechanisms would still be required. Feed-in tariffs fix the price for the foreseeable future of the next 10 to20 years, so it is a good thing the cost is declining. Together with wind, PV could be one of the leading alternative clean energy sources in the future.
Europe is very serious about PV because they need to invest in renewable sources for CO2 emission reduction. On the other hand, the potential is in the developing countries also because this deployment of PV and wind could be deployed in a much more decentralised manner. For Asian and Middle East countries where solar resources are abundant, this may be a very interesting energy solution.
4. What do you feel have been India's most significant contributions in the field of clean tech? What steps should India take to further develop their expertise in this field?
NT: India is now in the midst of a massive economic growth and it needs to reduce its energy intensity. One way that India can contribute is to be energy efficient in products, appliances and residential usage. In addition, India has a huge potential market in the renewable energy field with targets such as solar and wind. For example, plenty of wind mills are already deployed. Other experiments and initiatives in India are can also potentially be a model for other emerging economies in the future. India's challenge is access to electricity there are many who do not have any access to electricity. The IEA believes this can be solved though the deployment of renewable technology such as solar via a decentralized local mini-grid and small scale hydropower. If India invests in such initiatives, there is huge potential for even greater growth.
At the moment, all options are required as we do not know which technology will prevail. According to IEA, different technologies require different levels and types of support according to the maturity of the technology. A premature technology needs more basic R&D support. For example, wind is coming close to maturity so the different support measures may work with that feed-in tariffs may be one of them. PV is close to a breakthrough so there is plenty of potential as well. Also for solar farms, hot water could be produced quite cheaply by the solar farm technologies so this is another interesting application in India.
5. What is the scale and type of investment needed in India to provide modern energy for industrial growth and consumption by households?
NT: India should have all possible options for energy demand in the future. At the same time, it is vital to increase efficiency for the demand side as much as possible in areas such as energy conservation and energy efficiency standards for appliances, transportation. It is very cost effective to invest and reduce energy consumption, as there is much more to gain by investing in energy efficiency than in energy capacity. This is very important because the cheap energy age is over price of energy, oil, gas and electricity will continue to increase. It is imperative that India invests in efficient technology standards. The second, on top of reduced energy demand, is to try to decarbonise the power sector as much as possible through the use of renewable energy investment and nuclear power. India should also invest in carbon capturing and storage to use coal and gas more efficiently and in a more sustainable way. India is now also very interested in smart grid technologies and market investments which I believe is a very important new technology. Electric vehicles (EV) could be utilised. Thus there are plenty of new technology components of the energy for the future and as a growing economy and market I think India's role will expand with new technologies and practices in this industry.