Russia

Strategy launched by the Soviet regime

Investments in research and development and industrial policy must secure Russia’s energy independence. As of today, identified fossil fuel reserves represent several decades of future exploitation, according to a report by BP (Statistical Review World Energy 2012). However, energy transition is a long-term policy which requires a massive investment of financial and human capital. A 2009 report on Russia’s energy policy commissioned by the committee on economic affairs of the French Senate reminds that “the Soviet Union was leading the way on wind power” and that the state-owned consortium Rosatom-Atomenergoprom controls the whole of the nuclear energy sector. Nevertheless, World Bank estimates of R&D figures published that same year show that in spite of government commitment to enter the “knowledge-based economy”, Russia ranks below the OECD average (2.4% of GDP) with only 1.3%.

Russia’s commitment to renewable energy sources is reflected in the KPMG Global Energy Competitiveness Index, which points out “increasing efforts with regard to renewables”. This notwithstanding, the study also stresses “poor performance in terms of environmental compatibility” due to CO2-related pollution. Finally, the French audit firm mentions Russia’s competitive advantages and acknowledges its “growing influence on the international stage”. Admittedly, World Bank figures reflect an upward trend in R&D investments between 1992 and 2009, but it remains to be seen whether this strategy will be pursued in the years to come.

Energy efficiency to foster Franco-Russian relations

Alongside the development of renewables, other instruments can be used to transform Russia’s carbon-intensive economy. For instance, a 2011 OECD study on Russia indicates that “the potential for profitable investment in energy efficiency is tremendous and, as a matter of fact, significant efforts are being made in this field, although it seems that several hurdles and market failures slow down the process” and that “despite the concerns of Russian company managers over energy efficiency issues, the reduction of energy consumption falls short of expectations”.

It is to be noted, however, that France and Russia closely cooperate on the issue, as evidenced by the foundation of the Franco-Russian centre for energy efficiency (CFREE) on December 20^th 2012 during the fifteenth intergovernmental seminar held by both countries. According to Thierry Méraud from the French Environment and Energy Management Agency (ADEME), a number of joint projects are underway: “investments such as the Greater Moscow project will be subject to calls for tenders and the CFREE will actively strive to place French companies in a position to win contracts”. Besides, the French agency stresses that both countries have complementary fields of expertise: “We encourage various kinds of cooperation, for instance in technical and scientific fields”.

Overall, in spite of existing strategies on renewables and energy efficiency, Russia will keep tapping into its reserves to remain a major oil and gas producer and exporter. However, there are a number of reasons why it should diversify its energy-supply range. First, its energy-intensive economy represents significant potential energy savings; second, climate change is a clear incentive to put an emphasis on less polluting energy sources.

See also:

• British Petroleum, Statistical Review World Energy 2012
• French Senate 2009 report on Russia’s energy policy
• Les Echos, R&D spendings in Russia
• KPMG Global Energy Competitiveness Index (2012)
• OECD economic survey on the Russian Federation (2011)
• ADEME, Kick-starting Franco-Russian partnership (2012)

Political manoeuvre or genuine change of course?

Before the general election in the winter of 2012, the Democratic Party of Japan announced it would plan to abandon nuclear power by 2040. This campaign statement in September did not dispel doubts on the sustainability of the country’s energy mix, as evidenced by another statement made by the then minister of economy Yukio Edano, quoted in the French newspaper Le Monde: “We will never remove previously delivered authorizations for the building of new reactors”. Besides, in the course of the summer of 2012, the department of industry had published a forecast study including several scenarios for meeting energy demand (see chart below). Uncertainty about Japan’s energy future was therefore widespread when Liberal Democrat Shinzo Abe took over as prime minister, making a nuclear phase-out all the more unlikely.

According to Usine Nouvelle, the newly appointed minister of industry Toshimitsu Motegi (Liberal Democratic Party) is expected to set forth an energy plan by the end of the year. To better understand where Japan stands, it is worth mentioning theKPMG Global Energy Competitiveness Index published in November 2012 which ranked it 119^th for energy mix quality, noting “a balanced strategy despite structural deficiencies”; energy supply falls far short of matching Japan’s status as the world’s third largest economy. An explanation for this can be found in the share of oil in the energy mix and that of renewables in domestic electricity production. However, the study assesses rather positively the efficiency of the country’s energy policy, taking into account grid access, frequency of power outages and business environment. Japan thus ranks 25^th out of 146 countries in the survey’s general index.

Alternatives for Japan

But government efforts do not target only grid and infrastructure quality, as an article in 20Minutes reads: Japan moving towards renewable energy revolution after Fukushima. According to the daily newspaper, under the previous government a renewable energy bill was passed in July 2012, “forcing Japanese power companies to buy electricity derived from solar panels, wind turbines and biomass above market prices”. The department of industry hopes this measure will boost the renewable energy sector, whose share in Japan’s energy mix was only 3.6% in 2008, according to estimates by the International Energy Agency. The law firm White & Case LLP indicates that “Japan’s wind power industry will see major growth in installations similar to the increase in solar power the nation saw last year”. According to Bloomberg, experts think this policy could curb Japan’s fossil fuel dependency.

This being said, recent findings reported by French newspaper La Tribune cast doubt on Japan’s ambition to de-carbonize its energy mix. Minister of industry Motegi welcomed progress made by the Japan Oil, Gas and Metals National Corporation (Jogmec) research programme exploring the exploitation of offshore methane hydrate, also known as “fire ice”.  Finally, according to the expert on Japan’s energy policy Paul J. Scalise in the French weekly Challenges, “the tragedy which occurred on March 11^th 2011 forced Japan to pause on or even to leave the path towards all-out nuclear power”; however he reminds readers that “the Japanese people sees a war in the Strait of Hormuz and the following oil shortage as more of an immediate threat than another tsunami”. This set of economic, technological and psychological circumstances has a strong bearing on future changes in the energy mix and makes forecasts difficult; therefore it remains to be seen whether or not the land of the rising sun will be home to a renewable energy boom.

For more information :

• Le Monde, Concerns over nuclear phase-out in Japan
• Usine Nouvelle, Japan going back to nuclear energy
• KPMG Global Energy Competitiveness Index
• 20Minutes, Japan moving towards renewable energy revolution after Fukushima
• Bloomberg, Japan moving towards renewable energy revolution after Fukushima
• La Tribune Has Japan found the panacea to secure energy supplies?
• Challenges Heavy price of Japanese nuclear shutdown

Jeremy Rifkin is an American economist, essayist and macro-economic forecaster. His latest book, entitled The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World was published in 2011. Following best-sellers such as The End of Work (1995) and The European Dream (2004), it is an ambitious and provocative call for a Copernican revolution of the global energy model, based on the large-scale development of renewable energy sources and smart grids.

Following the steam engine in the XIX^th century and the combustion engine, oil exploitation and telecommunications in the XX^th century, it is time mankind went through a “third industrial revolution”, according to J. Rifkin. The author takes a simple observation as a starting point: the second industrial revolution ends with the increasing scarcity of fossil fuels. In his opinion, three recent developments warn us that our current model is running out of steam:

• The current economic downturn started before the financial crisis when oil prices rose to a whopping $147 per barrel in 2008
• Hunger riots broke out in about thirty countries in the summer of that same year
• The collapse of Lehman Brothers bank in September 2008 and the weaknesses of the global financial system caused a worldwide recession which continues today

According to the economist, these three events are harbingers of the impending collapse of the “old energy regime”. Growing demand for fossil fuels from BRICS countries (Brazil, Russia, India, China and South Africa) will soon become unsustainable: at this rate, the world would have to pay “8,000 trillion dollars” for energy as early as 2020. Rifkin assumes that this money ought to be spent on a full-scale energy transition scheme so as to enable the so-called “third industrial revolution” to emerge.

A new growth model based on five pillars

J. Rifkin pinpoints five fundamental steps towards energy transition:

• shifting to renewable energy worldwide;

• transforming buildings into micro-power plants, thus creating many jobs;

• deploying hydrogen and other technologies to store energy locally;

• developing a smart energy-sharing intergrid that acts just like the internet, enabling each building to sell surplus back to the grid;

• transitioning to electric vehicles that can buy local surplus energy on a smart, interactive power grid while parked.

Smart grids, bedrock of Rifkin’s theory

While the massive use of renewable energy sources has become a priority for many countries, the novelty of Rifkin’s theory is based on a new kind of buildings. They could be transformed into “micro-power plants” with their own on-site renewable energy generation systems and be connected with each other via a decentralized power grid, thus becoming energy producers as well as consumers. Widespread use of home-automation could channel surplus energy to where it is needed. “In the XXI^st century, hundreds of millions of people will produce their own green energy in their homes, offices, and factories, and share it with each other in an “energy Internet,” just like we now create and share information online.”, Rifkin says.

Hydrogen to improve intermittent renewable energy sources

Rifkin also sees room for improvement in our capacity to store renewable electricity locally (at home or in a city) to avoid shortages. He considers hydrogen as the “universal means” of storing energy, much more efficient than lithium batteries. Although hydrogen is the most abundant element in the universe, it is scarce in its pure form. Hydrogen can be extracted from animal and organic waste (biomass); furthermore, pure hydrogen can be obtained through electrolysis: hydrogen can be separated from water thanks to an electrical process and then stored as gas.

“Third industrial revolution” to end forecasted energy conflicts

In addition to technical and environmental progress, the author promotes a genuine renewal of the current economic system. Following the 1^st and 2^nd industrial revolutions which led to the emergence of modern capitalism and the nation state, the 3^rd should usher in large continental markets and post-national economic models. According to Rifkin, it should reach a climax around 2050, “radically transforming our ways of working and living”. Just like the European Coal and Steel Community contributed to making war impossible between European countries, the interconnection of the power grid will render states dependant on each other and enable the rise of what he coined a “political biosphere”.

In Rifkin’s model, large continental energy markets would be combined with regional and municipal markets. The author sees the European Union as the most advanced transition model, whose role it is to “usher in the third industrial revolution“. Among other examples, he cites the Mediterranean Solar Plan which will connect a giant solar farm in the Sahara desert to power grids in North-Africa and Europe, thus covering 15% of EU energy needs.

Rifkin’s sometimes pompous but always irreverent work suggests that we should rethink long term economic cycles. However, far from being overtheoretical, he takes it upon himself to make this new model come true by implementing some of his ideas. He currently works as an adviser for big municipalities such as Utrecht, Rome or San Antonio (Texas) and works on a project to foster a “third industrial revolution” in the French Nord-Pas-de-Calais region.

For more information:

• Joint interview of J. Rifkin and French writer and former minister Luc Ferry on national public radio France Culture (02/13/2012)
• Comprehensive summary of Rifkin’s latest book

Before the Copenhagen Summit in 2009, China set as a prerequisite a series of measures it wish not accept to negotiate on. After that half-hearted summit, China had to face some criticism from the international community, particularly from Europe. China had then refused to set higher environmental goals, highlighting the paradox of Western countries not to grant the “right” to pollute as much as they have. But the 2011 Five-Year Plan significantly revised government targets. What accounts for such a policy shift?

First of all, China must manage the consequences of a fast-growing, energy-consuming economy. Annual growth between 1991 and 2011 almost reached 10%. Thermal power plants make up 70% of electricity production. Coal consumption has doubled since 2000 so as to meet the needs of the industry and households alike. Although China has the biggest coal reserves in the world, this very polluting electricity source will eventually run out. Economic growth inevitably transforms the Chinese way of life. Households are buying more and more domestic equipment. Whereas in 1980 they accounted for only 3% of the country power use, in 2007 they accounted for 11% of electricity consumption.

Other fossil fuels also represent a crucial energy concern, since China endeavours to decrease its dependence on imported oil and gas (the country imports half the oil it uses, and it uses more and more because of the dramatic increase in car ownership). According to Liu Hanyuan, CEO of the solar panels manufacturer Tong Wei Group, “China must move away from its dependence on coal and oil toward clean energy. Solar energy, particularly, could be a solution.” The Chinese government is aware of these issues and has been working for a while on restructuring its energy mix. For instance, the Three Gorges Dam opened in 2006 and provides nearly 10% of the nation’s electricity. Moreover, over 200 million households were already equipped with solar water heaters in 2008.

This shift in attitude on the part of the government enabled China to meet the energy challenge. It is taking advantage of the highly profitable clean energy market, both at home and abroad, being the biggest “green business” market, as its installation potential is still largely untapped. Well-established industries cater to domestic needs while aggressively targeting foreign markets. Today, 7 of the 15 first solar panel manufacturers are Chinese and they alone meet 51% of global world demand (see our Electrical Efficiency Magazine, December 2011). The Chinese wind energy sector also develops and has just entered the European market: two Chinese-made windmills were installed in Tjurhojden, in the Swedish town of Molkom. These two 3MW turbines should produce 15,000 Mwh per year and thus cater to the needs of 3,000 households.

The government took a further step in early 2011 when it was decided that the Five-Year Plan would include a 300 billion-euro government grant on clean and sustainable energy. The process seems to have actually started for good: in 2010, construction of wind farms at home accounted for half of the newly implemented wind power capacity worldwide, making China’s reach 42GW, thus outstripping the US. The priority target is to reduce fossil fuel use by 15% by 2020, which entails producing 235GW through renewable energy sources in the next 5 years. This goal should be achieved by increasing the wind power capacity (42GW today) by 70GW, the solar energy capacity (625MW) by 5GW, the hydropower capacity (210GW) by 120 GW and the nuclear energy capacity (11GW) by 40GW. Furthermore, the government wishes to fund sectors of the automobile industry which specialize in hybrid or electric vehicles, so as to create an incentive for investors. Finally, in February 2012 the Chinese government created the National Renewable Energy Centre (CNREC, an institution in charge of designing strategies and research programmes) and thus openly strives to move progressively toward a carbon-free economy. In 2040, 40% of the Chinese energy mix could consist in renewable energies.

Despite this encouraging evolution, there a few black spots in two areas. Most parts of the power grid, for instance, are obsolete. For the moment, most wind farms are located in the Gobi desert and cannot be connected to the main network. Besides, the 300 billion-euro government grant does not seem to suit the interests of the US and the EU, both of which have made complaints to the WTO, accusing China of being protectionist. Undoubtedly, on top of obvious grievances (western industries will have to struggle to remain competitive) there are signs that western countries are somewhat envious of China’s fast move onto the renewable energy market.

Read more :

• Brazil: hydropower, a solution to the country development issues?

Photo © Novartis AG

Opened on October 4^th 2011 by Juan Carlos, the King of Spain, and the Crown Prince of Abu Dhabi, the Gemasol CSP* (concentrating solar power) power station at Fuente de Andalucia, Spain, may well foreshadow the future of energy.

The principle is simple, for a nonetheless huge power station. A total of 2,650 mirrors reflect the sunlight towards a 140-metre high tower that contains liquid salt. The effect of the mirrors makes the tower heat up, reaching temperatures in excess of 500 degrees Celsius. The tower is then cooled, which results in the forming of vapour, which in turn drives turbines, which then generate electricity.

The principle is simple up until this point, and does not appear to stand out from what already exists. However, the liquid salt not only enables extremely high temperatures to be reached, but the heat to be stored over a long period. In fact, once the salt has been heated up, it enables the Gemasol power station to operate independently for around fifteen hours, with no exposure to sunlight. Night-time, or periods of cloudy weather therefore no longer restrict the generation of power that is still solar. The constant generation of energy enables excessive fluctuations in the network supply to be avoided.

The energy generated by the power station, which is expected to be 110 GWh per year, would amount to burn 89,000 tonnes of lignite or 217,000 barrels of oil per year in equivalent power stations that use these fossils fuels. There is a dual saving: first, the 304,750 m² of reflective panels only need sun to fulfil their task, and second, this amounts to 30,000 tonnes of CO₂ that are not emitted into the atmosphere every year. This should appeal to the 27,500 households in Southern Spain whose electricity already comes from the Fuente de Andalucia power station.

The power station, where building was completed in 2010, managed its best performance in June 2011 following several days of exceptional solar radiation, although it was only running at 63% capacity at the time.

Gemasol, which is a trend-setting clean and sustainable energy project, is managed by Torresol (“the Sun Tower”), which is in turn 60% owned by the SENER* and 40% by the MASDAR, an investor specialized in the energy sector.  The cost of the power station, which is estimated at 171 million euros, was primarily financed by the European Investment Bank, which contributed 80 million euros. The aim now is to succeed in disseminating this technology, in order to lower the cost of generating this “green” energy. Although there is no financial saving as yet, everything leads us to believe that Spain will be able to make these innovations bear fruit. In 2009, so-called sustainable energy amounted to 12.5% of the energy consumed in the country, and is expected to amount to 20% in 2020.

So, can we talk about future? The power station won the 2011 Technological Innovation Award, a prize awarded by CSP Today, the international standard-setter. It also won the Red Ribbon Award for its managing company, Torresol, at the European Business Awards. This is a fine set of trophies for an energy that is still young, and far from having demonstrated its full potential.

Photo © Novartis AG

Read more :

• USA : Getting more from solar panels

European energy ministers have reacted negatively to the European Commission’s proposed directive on energy efficiency targets.

The proposed directive, which focuses specifically on energy providers and public buildings, has met with opposition from some ministers, who claim in its current form the directive lacks flexibility. The proposal for the directive currently stipulates an obligatory 1.5 percent annual electricity saving which energy suppliers must provide their customers.  The dissenting ministers, among whom are the energy ministers of the Czech Republic and Finland, believe such a requirement would hinder competitiveness.

Another proposed target that proved unpopular was one concerning the renovation of buildings. Under this proposed measure, member states would be required to carry out energy efficiency renovations on 3 percent of public buildings. However, a number of ministers want this figure halved, on the grounds that the upfront costs of such a scheme would be too great.

Compromise a possibility

However, all is not yet lost. The European commissioner for energy, Günther Oettinger, has indicated there is still room for negotiation over the targets. “It’s a question of whether there is wiggle room given to member states. I don’t mind if it’s 1.5% or 3%; what’s important is that measures are taken to achieve the objective,” he said.

Despite the vocal dissenters contesting the targets in their current form, there are also those who feel the current proposal is about right. One such figure is Danish energy minister Martin Lidegaard, who says the directive could reduce the EU’s reliance of fossil fuels. “We must maintain the level of ambition, but we can be flexible as to the actual architecture,” he said.

Making changes to the proposals can be an intricate and time consuming process. To date, around 1,800 amendments have been submitted to the European parliament.

Energy island infrastructure

Another concern voiced by European Union member states, particularly island states such as Cyprus, Ireland and Latvia, regards the renovation of the trans-European energy infrastructure (known as Ten-E). These ‘energy islands’ are keen to highlight the importance of connecting their outlying island states to the grid at large. Latvia in particular has ardently argued that gas connection terminal linking Sweden to neighboring countries should be located within its (Latvia’s) borders. Its reasoning is that it has no other gas links to other European Union countries.

The problem with grid expansion, however, remains the cost. Core states such as France and Germany are reluctant to splash out, arguing that projects eligible for EU funding often put forward criteria that are far too vague.  “Procedures for authorization of projects of common interest must respect subsidiarity. A single EU model for organization cannot be imposed on member states,” commented French energy minister Eric Besson.

There looks likely to be some time yet before these discussions yield results. The Commission is obliged to present its report on the implementation of measures by 2013.