November 25, 2016
ENERGY WATCH by Karel Beckman
November 25, 2016
European Gigafactory in Sweden?
Belgian nuclear reactors: how safe are they?
Holland prepares for gasless future
Global status of CCS
Will 2nd generation biomass fly?
When smart meters don’t work
Could Sweden get the first European gigafactory?
There has been speculation for some time about Tesla building a gigafactory for the production of lithium-ion batteries in Europe. Elon Musk’s company has acquired a German automated manufacturing company, Grohmann Engineering, for this purpose. But that does not mean that the factory would necessarily be located in Germany.
Some commentators argue that Spain or Portugal would be the ideal locations, because of the solar power these countries can provide. Tesla’s gigafactory in Nevada is powered in part by solar panels. However, another strong contender might be Sweden.
In fact, there is a possibility that a gigafactory might be built in that country by other companies than Tesla.
At the InnoEnergy Business Booster event in Barcelona this week, where sustainable energy startups met with investors and utility companies, Peter Carlsson – a Swedish investor who worked for Tesla until last year – and whom we interviewed for Energy Post recently – presented an ambitious plan to build just such a gigafactory in Sweden.
In fact, the project plan Carlsson presented is already quite advanced: a feasibility study was prepared in September and he is now getting partners involved. According to Carlsson, there is a lot of interest from European companies, such as Vattenfall, Eon, Mercedes Benz, Volkswagen, Nissan, Scania, Electrolux and Volvo. He said he hoped the first spade would be put in the ground in 2018.
According to Carlsson, Sweden is the ideal location because of the presence of cheap hydropower in the Nordic countries, and also the availability of important minerals, including lithium itself.
I hope to be able to supply you with more details on Carlsson’s plan next week.
The status of CCS: a drop in the ocean
So what about CCS? It’s a question that regularly occurs to me. Where do we stand with CCS? Is this ever going to fly?
To answer that question, just out is the Global Status of CCS 2016 report, from the Global CCS Institute, the premier international membership organization of the CCS industry. Chief Executive of the Global CCS Institute, Brad Page, gave a positive spin to the findings.
“We are close to having 18 large-scale CCS facilities operational globally with a number of key facilities in the United States completing construction and in the final phases of commissioning”, he said at a press conference in Marrakesh at the COP22 climate convention, according to the Carbon Capture Journal. “This compares with less than 10 operational large-scale CCS facilities at the start of 2010. This success has been driven by proactive government policy initiatives developed towards the end of the last decade.”
But Page also said that the deployment of CCS still falls far short of what is needed if this technology is to play the role allotted to it by some in the climate effort: “The current level of CO2 capture capacity is dwarfed by the amount of CCS deployment required over the next 25 years under the International Energy Agency’s (IEA) 2°C scenario. Under the 2° scenario (2DS), we need to capture and store almost 4,000 million tonnes per annum (Mtpa) of CO2 in 2040 – mostly from non-OECD countries. Current carbon capture capacity of facilities in operation or under construction sits at around 40 Mtpa. We need to make up a lot of ground to bridge that gap.”
So rather than 18 CCS facilities, the world needs 1800 of them.
According to Page, what CCS needs to make it fly is “ policy parity” with other low-carbon technologies, i.e. the same level of “ consideration, recognition and support”, presumably especially the latter.
Page did get at least moral support in Marrakesh from Lord Nicholas Stern, Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, famous of course for his Stern Review on the Economics of Climate Change (from 2006!), who said the pace of deployment of carbon capture and storage is simply too slow and must be given much greater attention by countries around the world: “If the world is to achieve the target set in the Paris Agreement of holding global warming to well below two Celsius degrees, we are likely to need negative emissions, including those from the use of bioenergy with carbon capture and storage. In addition, carbon capture and storage seems to be the only option for reducing emissions from many industrial activities. We cannot afford to neglect this technology, and we need better policies and more investment to accelerate its development.”
Page put it more starkly: “The danger is, if the right policy, legal and regulatory preconditions are not put in place over the next five years, Paris will be just a pipe dream.”
Actually, the reality of CCS is even worse than Page said in Marrakesh – and I am not making this up, because it’s right there in his own Global Status Report.
On page 11 of that report, we read that “Momentum is slowing” in the international CCS sector: “… funding for large-scale projects has tightened in a number of key jurisdictions. In Europe, the pace of CCS project development has suffered from a sharp reduction in the carbon price since the European Energy Programme for Recovery (EEPR) was established in 2009 and policy uncertainties in some countries. In China, where many CCS projects in development planning are linked to EOR, major progress in bringing these projects into construction is still awaited; the business case having been adversely influenced by the reduced oil prices of recent years. Looking forward, in the absence of new initiatives to support large-scale project development, the pace of project progression in the next five years looks set to slow considerably.”
In other words, despite some projects having been started up, there is still no reason to think that CCS will fly.
Personally, I think that the fossil fuel industry’s pleas for public support are likely to continue to fall on deaf ears. CCS will not get the same “consideration, recognition and support” that renewable energies get from policymakers, because there is a feeling – rightly or wrongly – that CCS is essentially something that the fossil fuel industry should invest in if it wants to survive into the future. If they don’t, well, then it’s their own problem.
To be sure, both the IEA and the IPCC (the UN’s scientific organization) have come out roundly in favour of CCS. The IPCC has said that without CCS mitigation costs will be 138% higher than with.
The IEA has also just produced a report, on 15 November, 20 years of CCS: Accelerating Future Deployment, which states that “CCS today is the only technology able to significantly reduce emissions from coal-fired power plants operating or under construction around the world. CCS is also one of the few technologies that can address emissions from industrial processes, including the production of steel, cement and chemicals.”
“Deployment of CCS will not be optional in implementing the Paris Agreement,” said Fatih Birol, the executive director of the IEA. “Indeed, faster deployment of CCS, particularly in industry, must be an integral part of a strengthened global climate response.”
But this is a message that continues to be unpopular.
It may be instructive in this context to see where we stand in the world when it comes to greenhouse gas emissions and concentrations.
You have probably read that emissions from fossil fuels this year will be stable for the third year in a row. This (somewhat premature) result was released on 13 November by the Global Carbon Project, a global consortium of scientists and think tanks under the umbrella of Future Earth and sponsored by institutions from around the world, as can be read in this article on The Conversation by four of the researchers involved in the project.
The long-term trend of CO2 emissions from fossil fuels and industry looks as follows:
The slow-down in emissions is mainly attributed to changes in the Chinese economy, which appears at the end of its long construction and heavy industry boom. The US also contributed to the slow-down thanks mainly to improvements in energy efficiency, coal to gas switching and to a lesser extent renewable energy.
By contrast EU emissions will grow 1.4% this year after a decade of declining emissions:
Total global CO2 emissions will come out at around 41 billion tons this year – 36.3 billion from energy and industry and 4.8 billion from land use changes and deforestation.
But now we come to the most interesting part when we talk about CCS, namely what is the carbon budget left according to scientists if we want to stay within 2 degrees warming (not to mention 1.5 degrees)?
There is no precise figure for that, but after emitting 2100 gigatons (=2100 billion tons) from around 1870 onward, the researchers say that we now have between 450 and 1050 gigatons left to burn. If we assume we can stil emit 800 gigatons, and divide that by 41, it is clear we have about 20 years of emissions left at the current rate:
So when the CCS industry talks of a target 4 billion tons of CO2 to be captured and stored, they are talking about 10% of annual global emissions. And when they say CCS is doing only 40 million tons at the moment (including projects under construction!) it means they are capturing 0.1% of global CCS emissions. A drop in the ocean.
EU not on track for climate targets: “desperate” measures needed
Although the EU “has made significant progress in the structural decarbonisation of its energy system”, it is “currently off-track to achieve its objectives by 2030 and 2050”, according to a recent study from IDDRI, the Institut du développement et des relations internationals, in Paris.
IDDRI led a consortium of 8 research institutes from 6 member states which took a detailed look at the most important economic sectors to find out what is really taking place in terms of energy use and greenhouse gas emissions. The conclusions are not positive.
First, notes IDDRI, “the rate of change is insufficient across a large number of the indicators assessed. Second, too much of the change in aggregate emissions has been driven by cyclical effects rather than structural decarbonisation, notably the impact of the financial crisis and subsequent slow recovery. Third, long-term decarbonisation options, for example to decarbonise industrial processes and materials, are not being adequately prepared. While some policies under the EU’s 2030 Climate and Energy Framework will have an impact, our study suggests that the ambition of EU and Member State policies is either a continuation of business as usual in terms of rates of progress, or is being dialled down in some cases.”
The authors of the study conclude that “The EU and Member State policy should significantly revise their approach to decarbonisation by refocusing on the key drivers of emissions in each sector.”
That sounds polite, but between the lines you can read that they are saying strong action should be taken. The EU needs a “shake-up” of policies, they write. It should phase out coal, do much more to decarbonize energy-intensive industry. They also note that “Proposals to reform the EU ETS and adopt non-ETS targets go some way to strengthening the decarbonisation of the EU energy system. However, by themselves they are not sufficient to put the EU on track to achieve its 2030 or 2050 commitments. This is especially true of the EU’s energy efficiency objectives. If adopted in its current form—i.e. 27 to 30% energy savings by 2030—the target would represent a slowdown in the pace of energy productivity improvements for the EU. The EU ETS desperately needs be strengthened to avoid the risk of low and ineffective carbon prices persisting well in the late 2020s.”
How safe are the Belgian nuclear reactors?
There has been a lot of discussion in the Belgian press over the past few days about safety risks in the Belgian nuclear plants owned by Electrabel, a subsidiary of the French energy giant Engie.
Belgian media have reported that the head of the nuclear regulator FANC, Jan Bens, sent two letters to the CEOs of Electrabel and Engie in July and September, in particular about the safety management of the Tihange nuclear power plant. In the first letter, addressed to Philippe van Troeye, Electrabel’s CEO, Bens underscored the “alarming” results of two studies investigating the reactor’s capacity to cope with two fires that took place earlier this year.
Bens highlighted the “questions arising from the alarming probability of suffering a nuclear disaster” in the event of a fire in Tihange. Bens apparently also complained about Electrabel’s “lack of any inquisitive attitude and the excessive haste in dismissing any problems based solely on an informal note drafted in the space of two weeks” and called these “worrisome elements regarding the company’s security culture.”
“I have doubts on (Electrabel’s) willingness to secure the necessary means to quickly resolve their problems,” Bens wrote.
In a letter addressed to Isabelle Kocher, Engie’s CEO, the director of Belgium’s nuclear authority also expressed his “deep worry regarding Electrabel’s management of its nuclear activities in Belgium”, according to press reports.
Bens underscored the company’s “incapacity” last year to “react in a structured, prompt and efficient manner as it sought to upgrade its security.” FANC reached this conclusion after undertaking two inspections during the month of August, where it was detected that the energy company was only implementing a part of the action guidelines which it had agreed to follow after the nuclear authority had previously a series of safety infractions in May.
In April of this year, German Environment Minister Barbara Hendricks asked Belgium to take two of its nuclear reactors offline, citing safety concerns. The environment minister said doing so would show that Brussels “takes the concerns of its German neighbors seriously.” At the time, FANC reacted with “surprise”, stating that it “remains convinced that the Doel 3 and Tihange 2 comply with international safety standards and that there is no need to shut down these units from a nuclear safety point of view”.
The recent news stories seem to contradict this official reaction. A spokesperson of FANC told Energy Post that they are preparing a reaction to the news stories. Electrabel has acknowledged that it has received warnings from FANC and says it has taken measures.
Swiss offer to give away their nuclear reactors but no takers
The problems in Belgium come at a sensitive time for the West European nuclear industry. France is caught in a nuclear crisis with 18 nuclear reactors – a third of its capacity – shut down as a result of safety checks as well as maintenance.
The French nuclear crisis – which will be viewed with alarm in the UK, where the government has made a controversial deal with French operator EDF to build the giant Hinkley Point C project – has driven up European wholesale power prices. News agency Platts reported last week that baseload power prices in France for January 2017 have been pushed up to €140/MWh, up 65% compared to a year earlier. German baseload power prices for January are much lower at €52.25/MWh, but that is still a level not seen in over four years.
Meanwhile, Swiss media reported last week that Swiss reactor operator Alpiq tried to give away its nuclear power plants for a token fee, but could find no buyers! The firm’s CEO is quoted as saying that France’s EDF was not interested even at no cost because it “has its own problems pertaining to nuclear power at present”, writes energy journalist Craig Morris on the website Energy Transition of the Heinrich Boell Foundation.
The Swiss are holding a referendum later this month about the phasing out of nuclear. Alpiq’s Gösgen reactor would then have to close in 2024; Leibstadt, in 2029, notes Morris. “The company may thus be looking for ways to ask for money from the Swiss state in return for a closure. At present, the firm is apparently losing 2 billion francs annually but can only pass on half of those losses to consumers.”
Morris notes that “concerns of a power shortage also extend to the UK, where system operator National Grid warned of a potential shortfall on 7 November. Power prices have reached as high as 40 pence on the spot market, whereas 4 pence would be more usual (play around with this table). The British were importing power full blast on line from the Netherlands and France, thereby contributing to the drain on French supply.”
According to Morris, “the problem is that France and the UK have failed to build enough renewables, especially biogas plants running on waste (which are dispatchable), while they wasted time hoping to build nuclear plants that never emerged. As for the Swiss, well, they have suffered from the same indecision but may set it aside finally in their referendum on November 27.”
Smart meters: they hardly reduce energy use, by themselves
The massive installation of smart meters in the Netherlands has led to energy savings of just 1% rather than an expected 3.5%, according to a report from the authoritative Dutch “Planning Agency for the Environment” (PBL), a government institution.
The Dutch government decided in 2015 that all 7 million households in the Netherlands should get a smart meter, to be installed by the distribution system operators. It was hoped that this would lead to 3.5% lower energy consumption. Now that a quarter of the smart meters have been installed, it appears that households have saved just 1%.
If savings remain stuck at 1%, it will mean that the costs of the programme of €3.3 billion will be “several hundreds of millions” higher than the benefits, writes PBL. With savings of 3.5%, the benefits would be €770 million higher than the costs.
However, the authors of the report do not despair yet. They argue that if consumers got feedback on their energy consumption, preferably through in-home displays connected to the smart meters, they would be much more motivated to save energy. As it is, many of the smart meters are not connected to displays or other devices.
There is evidence that in-home displays would work: energy supplier Eneco has been successful with a “smart thermostat”, called Toon, which has led to electricity savings of 3.2% on average, and even higher savings on gas consumption (6.1%), says PBL.
On a personal note, I might add that I agree with this conclusion based on my own experience as an inhabitant of Amsterdam. Two years ago my network operator installed a smart meter in my house, and then simply left it at that. I didn’t have to pay for it, which was positive, but at the same time no attempt was made by the company to make the smart meter work for me. This is probably the result of the model chosen in the Netherlands: the distribution system operators are the only ones who are allowed to install a smart meter, but they are government-owned, non-commercial companies. They are not interested in making money from the smart meters.
Netherlands preparing for a gasless future
The Netherlands – for over 50 years the largest natural gas producer and exporter in the EU, and the country with the largest, most extensive gas infrastructure anywhere – is preparing to wean itself off gas over the next few decades. A breath-taking transformation.
As a Dutch citizen, I can assure you: this is like French getting rid of nuclear. Or Saudi Arabia getting rid of oil.
The Netherlands has long been derided by other EU countries for having the lowest share of renewables in the energy mix, apart from Cyprus and Luxemburg. There was a reason for this: the Dutch have gas. The giant Groningen field – the largest onshore gas field in Europe and one of the largest in the world – has spoiled the country. With so much gas available, there was no need to turn to renewables.
But things are finally starting to change.
Just recently over 90 municipalities and provinces, including major cities like Amsterdam, Rotterdam and The Hague, have signed a declaration that they will aim for a gasless society. New houses will not be connected to the gas grid anymore and existing houses will be disconnected when possible. Amsterdam wants to disconnect 10,000 existing houses from the gas grid in the coming years. In the Netherlands virtually all 7 million households are connected to the gas grid.
This move is mostly motivated by climate considerations, but the gas industry has also suffered great reputational damage in recent years. All around the Groningen gas field earthquakes have been taking place. This happened after the operating company, NAM, a 50/50 joint-venture of Shell and ExxonMobil, recklessly decided two years ago to increase production from the field. Many houses have been damaged and both the companies and the government reacted slowly to the crisis.
As a result of the earthquakes it has also become clear that the industry and government (the Ministry of Economic Affairs) work very closely together in ways that are not transparent to citizens. All of this contributes to public support for a change to a gasless society.
Nevertheless, the costs and uncertainties will be high. Nor are the alternatives easy. One study, from technical consultancy TE Delft, envisions that houses will be heated in 2050 by a combination of geothermal heat (44%), thermal storage (22%), waste heat (17%), “green” gas (5%), electricity (2%) and a combination of green gas and electricity (10%).
The future of second-generation biomass – according to McKinsey
As my colleague Sonja van Renssen writes in her Brussels Insider column this week, first-generation biomass, based on edible feedstock, is under strong pressure both in Europe and elsewhere. The same goes for biofuels, which according to some are an outright “climate mistake”.
Salvation will have to come from so-called second-generation biomass and biofuels (2G!). As McKinsey puts it in a recent report on The future of second-generation biomass, “the promise of the second-generation (2G) bioconversion industry is that it will transform cellulose-based, nonedible biomass and agricultural waste into clean and affordable high-value fuels or chemicals. (The first-generation, or 1G, technology converts edible biomass.) In this way, 2G could offer an alternative source both of energy and of chemical-industry inputs, which other renewable technologies cannot provide.”
But as McKinsey also adds: “That is 2G’s potential, but the industry failed to deliver on this promise for almost a decade.”
However, according to the report, “there has been progress in recent years. Since the inauguration of the first commercial-scale 2G plant, in 2013, eight more have opened around the world, of which some, not surprisingly, are failing, while others are progressing. Most are in North America, two are in Brazil, and one is in Europe—all markets with mature 1G biomass industries and governments that support cellulosic ethanol.”
“Second-generation projects have also begun attracting interest in China, India, Indonesia, and Malaysia in the form of government initiatives to coordinate action and to facilitate the establishment of a 2G ethanol market. As these trends suggest, the technology could be approaching the acceleration phase that marked the development trajectory of other industries, such as wind power, solar energy, and shale gas. In each case, growth was modest at first and then took off (exhibit).”
The “exhibit” that the authors refer to is this graph:
This is all very well, but the fact that “a new industry can take more than 15 years to reach a sizable commercial scale” does not mean that biomass will reach that stage. Unfortunately, McKinsey does not show any evidence why it expects “2G” to become a success. The report lists 7 “enablers” that are needed to make biomass a success, such as “reliable, commercial-scale conversion technology” and “access to affordable feedstock”, but we don’t need McKinsey to tell us this. The question is whether we can expect a breakthrough in 2G.
On this the report concludes: “How big a piece of the renewables pie is 2G likely to capture? This will depend on two things: the speed of adoption and whether 2G can address the seven enablers discussed above and improve relative to alternative fuels. The future is unknown. What is clear, however, is that even after the problems of the past decade, the 2G industry now has an opportunity to industrialize its technology—and thus to improve its chances of success.”
Well, yes. Maybe I am expecting too much from McKinsey but I keep being underwhelmed by their energy analyses. See my earlier piece on why I find the famous consultancy behind the curve on energy.