wfs conference the energy revolution by michael lee pdf

The Energy Revolution: Is South Africa Future-Ready?

Towards a 2030 vision for South Africa

The Energy Revolution: Is South Africa Future-Ready?

By Michael LeeFounder & Chairman

High-Alert Warning from the Future!

“Passive adaptation to a deterioratingenvironment is a road to disaster.”

Jamshid Gharajedaghi, Systems Thinker and Futurist

Is a Fifth World Revolution Inevitable?

Agricultural Revolution Industrial Revolution Information Revolution

10,000-8,000 BC 18th-19th Century AD 1950-2000

Hunter-Hunter-GathererSociety

AgriculturalSociety

IndustrialSociety

InformationSociety

Ecological(Post-Industrial)Society

Energy Revolution :2015 -?

GlobalSociety

Globalization 1945-

Global energy is about to hita brick wall…

Oil = 35%Coal = 25%

World Primary Energy Consumption

Coal = 25%Gas = 21%Total = 81%

The “Big Three” of Global Energy

Source: Author’s Own Pie-Chart Basedon IEA Data

Estimated “Big Three” Energy Production Peaks

Oil 2006-2010

EnergyWatchGroup

“Crude Oil: the Supply

Outlook”, October 2007

www.energywatchgroup.org

2015-2040*

Association for the Study

of Peak Oil & Gas (ASPO)

Natural Gas

2015-2040*

(i.e. long plateau

followed by steep

decline)

“ The Peak and Decline of

World Oil and Gas

Production”

www.peakoil.net

Coal 2025

EnergyWatchGroup

“ Coal: Resources and

Future Production”, July

2007

www.energywatchgroup.org*The International Energy Agency expects gas production to peak between 2020-2030 World Energy Outlook 2007

The Energy Revolution Syllogism

PREMISE 1

Our industrial, globalised society has an absolute dependence uponan energy order made up primarily of the Big Three fossil fuels: oil,gas and coal.gas and coal.

PREMISE 2

During the period 2010-2030, we will move into an era of irreversibledepletion of fossil fuels and diminishing economic returns for theirassociated industries.

CONCLUSION

Therefore our society has to find a new energy order to preventsocio-economic collapse scenarios.

The Energy Crunch Defined

At different times during the next two decades, oil, gasand coal are likely to reach their peak of worldand coal are likely to reach their peak of worldproduction, resulting in relatively rapid decliningsupplies of energy and a growing incapacity to meetescalating global demand for key energy sources.

These fossil fuel resources are reaching their peaks at atime of unprecedented growth in demand for energy.

The Energy Revolution

Most revolutions are turbulent!Innovation in theform of creative

destruction is thedriving force ofdriving force of

material progress..

Key Ingredients of the Energy Revolution

Decreasing oil productionIncreasing energy demand

Creative destruction of fossil fuelenergy order : 2010-2030

Climate change &environmental pressure

Some systems are just not sustainable

The End of the Oil Age is Nigh

50

60

70

80

90

Global Oil Supply Projections:2006-2030Measured in Mb/d

0

10

20

30

40

50

2006 2020 2030

Mb/d

Source: Author’s Own Graph Based on EnergyWatchGroup Data & Projections(“Crude Oil: the Supply Outlook”, October 2007 www.energywatchgroup.org )

But no one seems to be paying any attention…

Growth in Global Demand for Oil: 1970-2020Measured in Mb/d

80

100

120

Source: Author’s Own Chart Based on IEA Data (“Oil Market Report”, 10 July2008 - http://omrpublic.iea.org)

0

20

40

60

80

1970 1979 2008 2020

The peak oil theory and the facts of fossilfuel depletion are not part of nationalfuel depletion are not part of national

conversations or strategic discussions inSouth Africa – they have not entered ourvocabulary or national consciousness!

Two Minute Lesson on Peak Oil

Billionaire US oil investor T. Boone Pickens hasstated that the total amount of oil available every dayin the world is 85 million barrels but if every vehicleon the world’s roads filled up on a given day it woulduse up 78 million barrels of oil, close to the world’stotal daily production.


“The world has now consumed almost half the totalamount of conventional oil most experts estimate willever be available for recovery…. The overwhelming

majority [of published studies] put the world's originalmajority [of published studies] put the world's originalendowment of recoverable oil at no more than about

2,400 billion barrels; the average estimate is 2,000billion barrels. Cumulative worldwide consumption had

exceeded 900 billion barrels by the end of 2003.”

Association for the Study of Peak Oil and Gas (ASPO)“The Peak andDecline of World Oil and Gas Production”


It’s half-time! Peak Oil = midpointof total extracted

and extractable oilreserves on earthreserves on earth


And the 2nd half will be muchrougher and tougher than the 1st

half….


It took 140 years (1859-1999) to consumethe 1st trillion barrels of oil BUT it willonly take 30 years (2000-2030) toconsume the 2nd trillion barrels

Why Creative Destruction will HappenTo the Energy Order…

80

100

Projected Global Supply/Demand Gap Growth RateExpressed in units of mb/d

Supply Gap

0

20

40

60

2008 2020

Oil Demand

Oil Supply

Source: Author’s Own GraphBased on Forecasts by IEA (“Oil Market Report”, 10 July 2008 – http://omrpublic.iea.org and CERA

“Finding the Critical Numbers: What Are the Real Decline Rates for Global Oil Production?”quoted in “New Fields May Offset Oil Drop” Wall Street Journal, 17th January 2008

Weighed on the scale and found wanting…

Demand UPSome experts seeworld productiondropping to 76-77

mb/d by 2011

Production DOWN

The world’s demandfor primary energy is

set to increase by60% up to 2030

IEA forecasts thatworldwide oil demand

could exceed 100 mbd by2020, with ¾ of that due

to transport growth

mb/d by 2011


Demand UP

Production DOWN

An annual growth rate for newdemand of about 1.5 mb/d, added to

the production depletion rate ofabout 3 mb/d, could result in the

global supply/demand gap wideningby approximately 4.5 mb/d p.a.


Two billionpeople live

withoutelectricity

There is still abacklog of un-

electrifiedschools, clinics& houses in SA

Energy Poverty

& houses in SA

In 1990, onlyabout 30% ofhouseholds

had access toelectricity

In 1990, fewerthan 10% ofrural homeshad access to

electricity

When are we going to pick up the comingenergy crisis on our radar screens?

Peak oil and the energy revolution are not on thenational agenda : the national energy summit of2007 made no mention of fossil fuel depletion.

Petroleum

Renewables& Gas

Petroleum

Electricity

Source: 2006 Digest of Energy Statistics

Hydro0% Renewables

8%

Gas2%

Nuclear3%

Coal

68%

Crude Oil19%

2%

Primary Energy Supply – 2004Source: 2006 Digest of Energy Statistics

South Africa’s Energy: Oil

The SA Oil Balance Sheet:

Oil production = 195,000 bbl/day (2008 est.)country comparison to the world: 42

Oil consumption = 583,000 bbl/day (2008 est.)Oil consumption = 583,000 bbl/day (2008 est.)country comparison to the world: 29

Oil imports = 490,500 bbl/day (2007 est.)country comparison to the world: 25

(Oil = SA’s largest single import)

Oil proven reserves = 15 million bbl (2009 est.)country comparison to the world: 86

Source: CIA World FactBook

South Africa’s Energy: Oil

The SA Oil Balance Sheet:

Transport sector uses 3/4ths (77%) of SA’s petroleumproducts!

South Africa has limited oil reserves and about 95% of itsSouth Africa has limited oil reserves and about 95% of itscrude oil requirements are met by imports from the Middle Eastand Africa (Saudi Arabia, Iran, Kuwait, the United Arab Emirates,

Yemen, Qatar, Iraq, Nigeria, Egypt and Angola).The Energy Security Master plan highlights liquid fuels as a

key vulnerability, estimating the economy would, in the case oftotal fuel supply disruption, lose at least R925 million a day

South Africa’s Energy: Gas

Natural gas production = 3.25 billion cubic metres (2008 est.)country comparison to the world: 53

The SA Gas Balance Sheet:

country comparison to the world: 53Natural gas consumption = 6.45 billion cu m (2008 est.)country comparison to the world: 54Natural gas imports = 3.2 billion cu m (2008 est.)country comparison to the world: 40Natural gas proven reserves = 27.16 million cu m (2006 est.)country comparison to the world: 102Source: CIA World FactBook

Limited natural gas reserves exist around the South African coast.

South Africa’s Energy: Coal

South Africa = a coal giant6th largest coal producer with 5.5% of world’s coal

The SA Coal Balance Sheet:

6th largest coal producer with 5.5% of world’s coalreservesreliable supplier of high-quality steam coalworld’s leader in coal-to-liquids (CTL) technology(Sasol) [Secunda plant produces 150,000 b/pd ofsynthetic fuel]Exports about 30% of its annual coal production (ofwhich 80% to Europe)68% of our primary energy supplied from coal

South Africa’s Energy: Coal

75 % of the South African economy is estimated tobe coal-energy driven

The SA Coal Balance Sheet:

be coal-energy drivenAbout 40-50 years of coal mining left (Waterbergregion where half of remaining reserves are located),BUTX New reserves will probably be more expensive tomineX Many mines approaching end of their economic life

South Africa’s Energy: Electricity

The SA Electricity Balance Sheet:

The nominal installed generation capacity is 42 011 MWCIA World FactBook ranks SA 16th in world for annual electricityCIA World FactBook ranks SA 16 in world for annual electricity

production

Eskom generates about 96% of SA electricity needsMost plants are coal based, with one nuclear power station and

the balance being hydro and gasIndustrial and mining sectors use 2/3rds of our national electricity

usageAnticipated electricity growth demand projected at 1 500MW p.a.

South Africa’s Energy : Electricity

The SA Electricity Balance Sheet:

Between 1994 and 2000, Eskom committed itself to connect2,5 million houses. That commitment was exceeded by 750 homes,

one year ahead of target.one year ahead of target.By the end of 2006 the national grid reached 73% of the

population.In urban areas about 85% of households now have access to

electricity, whereas the figure in rural areas is around 50 %.A target date of 2012 for 100% access by households, schools

and clinics to electricity.

Source World Energy Council http://www.worldenergy.org/publicationsOctober 2009 quoted in SA The Good News

South Africa’s Energy: Electricity

SA Energy Security Masterplan

The recent upward trajectory of energy consumption anddemand has put the transmission infrastructure underdemand has put the transmission infrastructure under

tremendous pressure.Additional 40 000MW electricity has to be generated by 2025

while existing capacity has to be upgradedBy 2050, Eskom’s coal-fired fleet (assuming a 70% share of

total capacity) would exceed 90 000MW in a business-as-usualscenario.

Reliability standard for power generation should be the “1 dayin 10 years” standard. This means only one day blackout in 10

years will be an acceptable standard.

SUPERGRIDTRANSMISSION BACKBONE

CORRIDORS

SA Energy Security Master-plan : Electricity Super-Grid

The main power corridor backbone

Generation

Supply Node

South Africa’s Energy: Nuclear

Koeberg is rated at 1,800 MWThe abundant uranium resources in the country present a

strategic opportunity for SA to introduce diversity in base loadstrategic opportunity for SA to introduce diversity in base loadelectricity generation capacity.

Nuclear energy presents a viable alternative to coal, leading toa significant reduction in greenhouse gas emissions. The 2007energy summit concluded that renewable energy and nuclear

have a huge potential for reducing emissions.Government has recently taken a decision to invest in nuclear

power generation including the development of a nuclearindustrial base. The Energy White Paper encourages a diversity

of both supply sources as well as primary energy carriers.

The Superpowers are going nuclear!

China has 20 nuclear power reactors under construction withplans to increase their nuclear capacity six-fold over the next

decade.decade.

There will be 12 such reactors built in India over the nextseven years.

Plans to build a total of 150 nuclear reactors across East andSouth Asia as a whole are currently in the pipeline.

In his State of the Union address, Obama called for construction ofa new generation of clean nuclear power plants, pledging more than$8bn of federal loan guarantees to begin building the first US nuclearpower stations for 30 years: "To meet our growing energy needs and

The Superpowers are going nuclear!

power stations for 30 years: "To meet our growing energy needs andprevent the worst consequences of climate change, we'll need to

increase our supply of nuclear power. It's that simple.”

Nuclear energy has the greatest potential of all the cleanalternatives.

In a case study done on a 500-megawatt nuclear power plant, it wasfound that 250,000 homes could be powered for just several poundsof waste, that nuclear plant would emit 4.1 million less tons of CO2

over the course of a single year than a coal-fired plant.

Energy : evolution or revolution?

The White Paper on Renewable Energy set a 2013 target of 10 000 GWhfrom renewable energy sources. But this has not factored in the drasticimpacts of fossil fuel depletion.impacts of fossil fuel depletion.

If we have one of the world’s best potential markets for solar power whyis less than 1% of the total electricity generated in South Africa basedon renewable energy resources?

When are we going to truly harness and harvest our sunny skies?

The Energy Revolution: Solar

Every second amillion tonnes ofmass is converted

into energy

Surface temp =6000 ºC; core

temp = 15 milliondegrees

Earth is on thesun’s life support

system

Power unleashed atcentre is equivalent

to 80 billionhydrogen bombsexploding every

second.

150 million kmfrom earth lies a

nuclear powerstation in space

To equal the sun’senergy output for just

one second, it would benecessary to detonate ahydrogen bomb everysecond for 3200 years!

AFRICA IS RICHAFRICA IS RICH

In a year, solar radiation striking theearth is equivalent to 178,000 terawatts

Yet solar energy accounts for less than0.1% of total global primary energydemand

(Source: “The Sun: A Biography”, by David Whitehouse, p.198)

Solar power has the potential to provideover 1,000 X total world energy consumption


Yet it provided only 0.02% of the total in 2008

Solar energy demand is growing atabout 25% per annum


Apollo Solar Energy to Build an All-Solar Energy City in Anhui Province,

China

SOURCE Apollo Solar Energy, Inc.Apr 19, 2010

China is looking beyond oil, spending$34.6 billion on renewable energy in2009. They plan to invest $216 billion

more over the next five years.

SOURCE , Bloomberg New EnergyFinance report. Apr 2010

Global Solar Power MapOverview of worldwide solar power average Peak Sun Hours

Sub-Saharan AfricaOverview of worldwide solar power average Peak Sun Hours

Is South Africa Future Ready?

Liquid fuels exposure

Problem: High exposure to any oil shortages – would bring transportand tourism sectors to a grinding halt; dependence on volatile foreignsupplies of oilSolution? Vast public/private expansion and modernisation of national,regional and local rail networks; investment in electric & hybrid cars;regional and local rail networks; investment in electric & hybrid cars;step up CTL operations? Build larger petroleum reserves.

National Energy Policy Short of Foresight on Fossil Fuel Energy Crunch

Problem : National energy policies and papers do not reference fossilfuel depletion – it is not a challenge or an obstacle, rather IT IS THE ENDOF AN AGESolution? We need a radical energy policy review taking into accountfossil fuel depletion rates and developing our own SA Oil DepletionProtocol (ODP)Solution? We need an energy revolution

Is South Africa Future Ready?

Exposure to Electricity Generation Capacity Gaps &High Dependence upon Coal

Problem: High exposure to electrical power shortages from 2011Problem: Extreme dependence of economy on coalSolution? We need massive public and private investment in solarSolution? We need massive public and private investment in solarpower in rural and urban areas to finally provide for long-term energysecurity - South Africa must go solar!Solution? Build more nuclear power stations to meet long-termshortfall and to prepare for Peak CoalSolution? Drive systems efficiencies and energy savingsSolution? Change unsustainable consumer patterns and incentivisemeasures like house insulation, solar heating, lift clubs, etcSolution? We need an independent national energy indaba to plan thetransition from fossil-fuel dependent economy to a new energy orderbased on renewable and nuclear energy

We need new generation ofnuclear power stations on ourshores!

And we need more green power!

Thank you for your kind attention!

Any questions please?

Recommended References

1. Post Carbon Institute - http://www.postcarbon.org/2. Association for the Study of Peak Oil and Gas (ASPO)http://www.peakoil.net3. EnergyWatchGroup www.energywatchgroup.orgInternational Energy Agency http://www.iea.org4. Oil Depletion Analysis Centre (ODAC)http://odac-info.org/peak-oil-primer5. Digest of Energy Data – 20066. Energy Summit SA 20077. Guidelines for Development of Renewable Energy in SA8. Energy Security Masterplan – 2007-2025, Department of Minerals andEnergy - http://www.dme.gov.za

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