Balancing the sometimes conflicting needs for energy security, energy equity, and environmental sustainability—including trying to limit average global temperature increases—can be a daunting task for countries. A new report focuses on the challenges and potential pathways to achieving this energy “trilemma” of meeting energy and environmental needs.
Among the challenges is meeting the global energy demand that is predicted to increase and even double by 2050, according to the report 2014 World Energy Trilemma, released by the World Energy Council (WEC) at a Washington, D. C., forum on 24 November.
About $40.2 trillion are needed to meet that demand across the energy infrastructure supply chain between 2014 and 2035, with another $8 trillion investment needed in energy efficiency, the report states. Energy investment requirements increase the cost another 10%, to a total of $53 trillion by 2035, if the goal is to try to limit average global temperature increases to 2°C, the report adds.
“At a time when balance sheets are constrained, when government [balance] sheets in particular are under pressure, when new regulations are inhibiting the willingness of some banks and financial institutions to take on any investments that have much risk attached to [them], we are looking at lifting up the scale of investment as much as 50% or even possibly more if we were to achieve a goal of keeping global warming to 2°C,” said WEC executive chair Joan MacNaughton.
McNaughton noted that just 3 of the 129 assessed countries—Switzerland, Sweden, and the United Kingdom—are in the top tier of successfully balancing their energy trilemma; last year, there were 5. “That says everything about how tricky a challenge this is for governments and for all their stakeholders,” she said, adding that more and more countries are looking at the trilemma balance as a kind of benchmark to work toward.
Financing Energy Systems
The report, which is subtitled Time to Get Real—The Myths and Realities of Financing Energy Systems, focuses on energy investment needs, stating that they “offer a significant market opportunity if robust and equitable pathways are provided for the investment community.” The report found that enough capital is available from the private sector if the right conditions are provided but that policy makers and regulators “must clearly signal their future energy strategies, recognizing the need for appropriate risk-reward structures, and to put in place lasting policy and regulatory frameworks, free from populist political interference.”
The report identifies three recommended action areas. First, policy makers should focus on implementing the regulatory and policy frameworks to encourage investment and reduce political and regulatory risk. Second, the financial infrastructure must exist for capital to flow easily to the energy sector. Finally, the energy sector needs to bring clearly bankable projects to the market.
At the forum, Dean Oskvig, president and CEO of Black & Veatch Energy, said that governments, development banks, and the private financial community have significant roles to play in meeting increasing energy demands and the energy trilemma. “There is a lot of money out there looking for good places to go. All of us in this triad have a role to make that happen,” said Oskvig, who also is vice chair of the World Energy Council.
Meeting Environmental Goals
Jonathan Pershing, deputy assistant secretary for climate change policy and technology and principal deputy director at the U.S. Department of Energy, said that although the United States is just twelfth among 129 countries this year in terms of the energy trilemma balance, he anticipates that the country’s ranking will move higher due to the administration’s climate action plan and its proposals.
“The question of 2° is going to be rough. It’s not a straightforward exercise,” he said about limiting temperature increases. “The potential is there,” he added. “The cost of technology [has] declined to the point where the policy required to implement this [goal] is much more modest than it ever was before.”
Pershing told Eos that the question about whether the 2°C target can be achieved hinges on what various countries can deliver. “We have the potential still to make it, if we look at the analysis that has been done by the science community. You’ve got to be aggressive; you’ve got to move soon.” He pointed to the 12 November U.S.-China announcement about limiting greenhouse gas emissions as an example of an action that “maintains the potential to achieve those outcomes.” He added, “I think it’s a hard thing to deliver, [but] if we do it right, we could still deliver it.”
Pershing commented on whether Congress could stop the administration’s climate change efforts. “In my meetings with them, they are also really interested in what their states will do on renewables. They are interested in the opportunities for jobs and the export capacity. They are interested in new technologies. And I think, if we focus on those pieces instead of the part that clearly has divided us around attribution and cause and effect, we may have a much more promising conversation. It’s been hard. Let’s not be hedging our bets here. It’s not been straightforward, but I think there may be some potential windows of opportunity.”
Charles Feinstein, director of energy and extractives global practice at the World Bank, said the bank refers to the trilemma as “the energy triple challenge.” “First,” he said, “it’s meeting the growing demand for energy in a manner that is both reliable and affordable; second, ensuring energy access and access that is socially equitable; and third, enhancing the environmental sustainability of energy. To me, these are probably the greatest challenges facing the planet today.”
Feinstein added that he is personally not optimistic that the 2° goal can be met. In response to a question about whether the upward curve of global gas emissions can be reversed, he said, “We’ll bend the curve all right. It’s just a question of when. Details. Is it going to be 2030 or is it going to be 2060? And the difference between those scenarios is kind of the difference between a 2° warmer world or a 4° warmer world.”
“I think 2° is in the rearview mirror,” Feinstein said, careful to note that he was speaking personally and not for the World Bank about the 2° target. “We’re beyond that. The reason is, there is so much inertia in the system and the time constraints that these things”—such as greenhouse gases in the atmosphere—“play out.”
In an interview with Eos, Feinstein elaborated on his comments about the 2° target. “That is a personal opinion, and it is not based on any kind of scientific assessment,” he said. “I think it’s still a very useful target. I’m not saying that this is a target that should be abandoned.”
Recent events, including the U.S.-China announcement, “have created a degree of optimism,” Feinstein said. “If indeed all of the commitments that have been voiced are actually carried through, and if there is a knock-on effect”—for example, if the U.S.-China announcement could be emulated and replicated—“then maybe, who knows, maybe what appears to be in the rear-view mirror may all of a sudden be in front of the windshield.”
For more information, see http://www.worldenergy.org/.
—Randy Showstack, Staff Writer
Citation: Showstack, R. (2014), Report calls for balancing energy security, energy equity, and environmental concerns, Eos Trans. AGU, 95(49), 455–456, doi:10.1002/2014EO490003.
© 2014. American Geophysical Union. All rights reserved.
© 2014. American Geophysical Union. All rights reserved.