Nous Group recently released our formal position on contributing to a carbon-neutral society. In it, we make the case for serious and sustained action through this century to limit damaging climate change from growing levels of atmospheric carbon.
At Nous, we accept our corporate and social responsibility to help reduce global emissions to net zero by 2050. Our statement summarises our intent and what we will do.
As a Nous Principal with significant experience in the energy sector, I was pleased to work with colleagues to shape this position. In this article I want to consider the implications that flow from it.
Our position statement is predicated on the premise that plausible paths to reaching zero emissions by 2050 are emerging. But there is substantial uncertainty about the combination of energy sources and uses that will achieve that goal with the most favourable economic and social impacts.
Considerable work is still needed to research, demonstrate and commercialise individual technologies and integrate them to produce secure, affordable and equitable energy services. The historical Australian preoccupation with decarbonising electricity must be extended to a global focus on all sources of atmospheric carbon. This includes transport, industrial and domestic heating from direct combustion, other industrial processes such as cement-making, and agriculture.
Getting to net-zero depends on a variety of forces
We think there are nine forces that have high potential as prospective contributors to a net-zero energy system.
- Renewable energy must grow to dominate the energy mix. These sources comprise large-scale solar and wind, supplemented by hydro, bioenergy and geo-thermal. On top of their medium-term contribution to climate change mitigation, renewables can provide greater longer-run energy resource sustainability and security. It seems inevitable that a fully transformed, long-run energy system will be based largely on renewables.
- The variability of renewables will need to be balanced (or ‘firmed’) with transmission upgrades, pumped hydro and batteries, but these have limitations that will be crucial as the renewable share grows, namely high-cost, limited capacity and dependence on the same variable renewables they are meant to back up.
- This will make gas-fired power an important source of firming that will enable renewables to grow to a dominant share of domestic power production, and old coal-fired power stations to be safely closed. This may necessitate encouraging gas exploration and production, although the need for greater generating capacity does not equate to greater output. In fact, gas-fired power output (and associated emissions) should decline as renewable power production and storage grows, to the point that gas-fired power progressively becomes a low-use, high-value strategic reserve. Requiring new gas-fired plants to be convertible to hydrogen will allow the transition from low to zero emissions to be completed in future, when we have production and storage of hydrogen has grown sufficiently.
- Hydrogen is the most prospective option for the hardest decarbonisation tasks such as heavy transport, high-grade industrial heat and chemical processes (for example in steelmaking). Hydrogen in some form is also the most promising bulk energy export to import-dependent nations that cannot decarbonise using only their own resources.
- The lowest cost form of hydrogen, at least initially, may be from gasified coal or reformed natural gas, both with carbon capture, utilisation and storage (CCUS). Producing hydrogen using renewable power to electrolyse water – using large off-grid renewable resources, and in the longer-run a surplus of grid-connected renewables – is likely to be more expensive for some time, but will increasingly be needed to mitigate the energy security risks of finite fossil fuel use.
- A CCUS system underpinned by hydrogen production will be a key asset in decarbonising other activities, including cement-making and gas production. It will also enable negative emissions (for example the sequestration of carbon from processing biomass to bio-hydrogen).
- Nuclear energy will continue to contribute zero-emissions power in countries with established nuclear industries, such as the UK and Canada; meanwhile, Australia and Canada will remain major exporters of uranium. The prospects for nuclear power in Australia are low because of its lack of experience in building and managing them, compounding long construction lead times, high costs and risks to public support from potential accidents and the unresolved challenges of waste disposal. Plans to build new reactors have been made in the UK and Canada, however the UK’s construction program has been delayed and subject to cost increases, while Canada’s has been deferred. Thorium reactors hold promise of improvements in waste management and resource adequacy, and thorium fuel is a potential export, but is not commercial now. Uranium and thorium are also finite, so are susceptible to supply insecurity in the long run.
- Because all countries will be served by global decarbonisation, resource-rich nations have enlightened self-interest in clean energy exports. This will assist resource-poor trading partners to decarbonise and will help to offset the likely decline of fossil fuel exports in both countries. Hydrogen and uranium are the most prospective zero-carbon export commodities, however coal and gas could qualify if they will be used in conjunction with CCUS. Australia and Canada have identified hydrogen as a potential export opportunity, and the possibility has been explored in the UK.
- Progressive improvements in efficient energy use and management of energy demand can reduce costs and emissions, and increase energy security, affordability and equity. Technologies that use less energy for the same outcomes can be complemented by more distributed power production and responses by users in an increasingly two-way electricity system. The American Council for an Energy-Efficient Economy in 2018 ranked Australia towards the bottom of industrialised economies on energy productivity, the UK near the top, and Canada in the middle.
Meeting this challenge requires a detailed roadmap
Given that every strategic option carries significant risks, a detailed roadmap for energy transformation will only emerge from decades of adaptive action in which we build on successes, learn from failures, and adjust to unexpected circumstances. The transition path and ultimate mix of sources are impossible to predict with certainty.
While climate change requires urgent action, decarbonisation will take its place among other priorities in the decades that energy transformation will take. Global improvements in living standards will be essential to maintain public support in wealthy nations and address poverty in the developing world.
This will place a premium on high reliability of energy supply at affordable prices, bearing in mind that momentum to decarbonisation must be sustained over many changes of government, in democracies and even autocracies. Technologically advanced countries have grown dependent on highly reliable energy supplies and are less exposed to shortages that require energy rationing.
Never before have we embarked on an economic transformation to achieve a quantified global policy goal (net zero emissions) over such a long period. The complexity and criticality of this challenge is unparalleled in human history.
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