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Finding anenvironmentallysustainable way of

producing and using energy isthe only way in which we cancount on a secure energyfuture. Failure to respond tosociety's concerns about energyand the natural environmentwould put at risk thecontinued, reliable supply ofenergy on which oureconomies depend.

To speak of energy in thecontext of sustainabledevelopment introduces thesocial dimension. Not onlymust energy production anduse be compatible withsociety's environmentalpriorities, it must also beorganized in such a way as tosupport the social consensuswhich binds us together.

Sustainable development isan over-arching theme today ofthe work of the Organizationof Economic Co-operation andDevelopment (OECD), towhich the International EnergyAgency (IEA) is affiliated. (Seebox, next page.) It findsconcrete expression in work onclimate change — both theOECD and the IEAcontributed to the conferencein November 1998 of theParties to the UN FrameworkConvention on ClimateChange in Buenos Aires — onsustainability indicators, ontechnological development andon the environmental impactof subsidies. A major report onthese and other aspects of

sustainable development willbe delivered to OECDMinisters in the year 2001.

It is worth pausing for amoment to consider what ismeant by sustainabledevelopment. If you consultthe founding articles of theOECD, you will find that eventhen, in 1960, there wasreference to the pursuit ofeconomic development on asustainable basis. But the use ofwords evolves over time. Whatthe founding fathers of theOECD had in mind waseconomic development whichcould be sustained indefinitelywithout over-heating theeconomy, avoiding a cyclicalpattern of boom and bust.Sustainable development todaymeans more than that: suchsustained development,certainly, but also developmentwhich does not unacceptablydraw down our environmentalor social capital, or imposedisproportionate burdens onfuture generaions.

That is an enricheddefinition. It captures, forexample, the sense of ourresponsibility, today, to takeprudent action to diminish therisk of future climate change,which found politicalexpression in the Kyotoprotocol last year. But in ourenthusiasm to capturethese new nuances, let us notforget one thing. Continuedeconomic development is anessential part of the equation.And a secure, economic supply

of energy is essential toeconomic growth.

CLIMATE CHANGEIN LIBERALIZEDMARKETSAt their summit, the G-8leaders issued a statementexpressing their commitment“to encourage the developmentof energy markets”. They alsodeclared that “the greatestenvironmental threat to ourfuture prosperity remainsclimate change [and] weconfirm our determination toaddress it”.

The first of thosecommitments reflects concernwith efficiency in energy supplyin a globalized economy, tounderpin vigorous economicactivity. The second reflects thegrowing perception of themenace of climate change.There are clearly potentialtensions between these concerns.Let us consider how theymight work out in practice.

Governments' perceptions asto how best to secure energysupplies at acceptable priceshave been transformed in

ENERGY & SUSTAINABLE DEVELOPMENTBY ROBERT PRIDDLE

Mr. Priddle is the ExecutiveDirector of the InternationalEnergy Agency, which isaffiliated with the Organizationfor Economic Cooperation andDevelopment in Paris, France.This article is adapted from Mr. Priddle’s address to theItalian National Conference onEnergy & Environment inNovember 1998.

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recent years. Whereas thestrategic importance of energywas once assumed to leadnaturally to public ownershipand state monopoly, energy isnow widely regarded as aservice best delivered in acompetitive market. There isless government intervention,whether through regulation or ownership.

Private sector investors fromall over the world are beingencouraged to participate inenergy infrastructure projectsand competition is beingintroduced into projectspreviously regarded as naturalmonopolies. For example,sixteen countries in the OECDnow have systems whichprovide effective third partyaccess to the electricity gridand a wholesale electricity poolsystem — the hallmarks of acompetitive market.

If expectations are fulfilled— and, so far, the signs aregood — competition willstimulate innovation, increaseproductivity, improve resourceallocation and encourage moreefficient fuel conversion in theenergy supply system. In short,there will be efficiencyimprovements; and greaterefficiency should mean lowerprices to end users.

Clearly, greater efficiency in fuel use in the energy supply system is in the interestboth of the economy and the environment.

Lower prices however, maydiscourage efficiency inend-use. Wasteful use of energy is clearly notcompatible with environmentalobjectives. If fossil fuel is theprimary fuel in question, thereis a particular conflict with theobjective of curtailinggreenhouse gas emissions.

What this illustrates is that,though free and open marketsdo some things very well, onething they do not do well isdeliver benefits which are notvalued in the market. Economistscall these externalities. Climatechange is one such externality.The benefits of avoiding globalwarming, though large, comelargely in the form of problemsavoided, rather than marketablecommodities created.

That is why governmentshave had to step in, in Kyoto, to make politicalcommitments, which they nowhave to realize through policyinstruments. In liberalizedmarkets, the instrumentsavailable to governments aremore limited than before. They cannot, for example,direct company fuel choice as,in many cases, they couldwhen those companies werestate-owned. A range ofmarket-compatibleinstruments nonethelessremains available, such astradeable permits or taxes; and direct regulation is still anoption too, provided it is

applied uniformly across the market, e.g. in settinginsulation standards for new buildings.

CARBON-FREEFUELSOne of the options open fortackling the greenhouse gasproblem is to encouragesubstitution of carbon-freefuels for conventional fossilfuels. I shall consider two suchforms of fossil-free energy,which have sharply contrastingenvironmental reputations,renewable energy and nuclearenergy. There is a tendency toover-simplify, regardingrenewables as always "good"and nuclear energy as always "bad". The reality ismore complex.

Renewables. Let us considerrenewable energy first. Thefirst thing to say about thisform of energy is that weknow a lot about renewableenergy -—more than youmight think — simply becauseit is already so widely used. Ofthe world's primary energyrequirement for electricity

THE INTERNATIONAL ENERGY AGENCYNot to be confused with the Vienna-based International AtomicEnergy Agency (IAEA), the Paris-based International Energy Agency(IEA) was set up in 1974 to focus on issues of energy security,especially oil security. Today, the organization is equally concernedwith the question of how production and use of energy can besatisfactorily reconciled with the preservation of our naturalenvironment. This transition represents an evolution in theexpression of its objectives, but not a fundamental change. The IEAprepares and publishes a wide range of reports, studies, andpublications on energy issues of importance to its membercountries.

The IEA is part of the Organization for Economic Cooperationand Development, also based in Paris. More information aboutthe IEA is available over its Internet site at http://www.iea.org. Themailing address is 9, rue de la Fédération, 75739 Paris Cedex 15,France. Telephone: +33-1-4057-6554. Facsimile: +33-1-4057-6559.

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production, over 20% comesin the form of renewables. Ifbiomass is included, 18% oftotal world energy demand ismet by renewables. Globally,final consumption of biomassis roughly equivalent toconsumption of coal or gas.Many governments have highexpectations of the sector —Italy, for example, promotesthe use and development ofrenewables in support of thecentral policy objectives ofdeveloping indigenousresources and protecting theenvironment. Most IEAgovernments supportrenewables in one way oranother — through researchand development, subsidies,tax exemptions, premiumprices, purchase obligations onutilities, and so on.

The present contribution ofrenewables to electricity supplycomes mainly from hydro-electric plants; but the newrenewables are growing fast,faster than any other methodof electricity generation.

The global installed capacityof wind turbines doubledbetween 1990 and 1995; theannual production ofphotovoltaics is doubling everyfive years. The World EnergyCouncil has a scenario inwhich 45% of electricity isproduced from renewables inthe year 2020. Shell (OilCompany) has a scenario inwhich renewable energypredominates worldwide, notjust in electricity productionbut in alternative fuel formstoo, by the middle of the 21st century.

Many environmental benefitsare foreseen from such anenergy future. By displacingfossil fuels, renewables alreadysave 1500 million tons of

carbon dioxide emissions every year, some 7% ofenergy-related C02 emissions.By 2020, one World EnergyCouncil scenario raises thisfigure to 9000 million tons,40% of the present level of allenergy-related C02 emissions.There are advantages, too, inreduced emissions of sulphurdioxide and nitrogen oxides.

And it doesn't stop there.Renewables can also bringbenefits in terms of improvedwater supply, land reclamationand employment opportunitiesin rural areas. It is no surprisethat the European Commissionhas called for adoption of atarget of doubling the share ofrenewables in total energyconsumption in EU memberstates in 2010, from 6% to 12%.

The title of a recentInternational Energy Agencypublication, Benign Energy?The Environmental Implicationsof Renewables, appears to echothis high expectation. But ourtitle has a subtle difference.There is a question mark afterthe words "Benign Energy?".What is it that we arequestioning?

We are questioning the glibassumption that renewables areall good for the environmentand fossil fuels all bad. Notdenying the benefits, buttaking a cool look at thepicture in the round. Forrenewables are not withouttheir environmentaldisadvantages. One needs tolook at the life-cycle impact,not just the environmentaleffects of annual operations.This means looking atrenewables — and otherenergy forms — in terms ofthe impact at all stages, fromresource extraction,transportation, materials

processing, componentmanufacture and so on, rightthrough to plantdecommissioning and productdisposal.

For renewables, gaseousemissions from all stages otherthan operation are equivalentto, or greater than, thosearising from the same stages ofthe life-cycle of conventionalgenerating technologies. This isbecause renewables convert“dilute” sources of energycompared to the concentratedfossil fuels and uranium usedin conventional generatingsystems. The collection of thesedilute sources and theirconversion to useful energygenerally requires moremachinery and largerstructures per unit of electricityproduced. These, in turn,require more energy in theirmanufacture and construction.

Nonetheless, after takingaccount of all these factors,gaseous emissions fromrenewables are small comparedto those from the fossil-fuelledplant they displace. The ratiois, typically, 1:10. It can be1:100. But it can also be muchless. The life-cycle advantage of solar photovoltaics over agas-fired, combined cycle gasturbine, in terms of C02emitted per kilowatt-hour ofelectricity produced, is of theorder of 3:1.

There are other hazards inmaking comparisons. Electricvehicles have zero gaseousemissions at the point of use,which is certainly good newsfor urban air quality. But if theelectric power required wasoriginally generated from aconventional mix of fossilfuels, the overall CO2emissions from electricallypowered vehicles are

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approximately the same asthose from petrol vehicles,while sulphur dioxideemissions may well be higher.

And there are significantenvironmental impacts beyondgaseous emisisons. We are allfamiliar with the controversywhich surrounds anylarge-scale hydro-electricproject, in terms of populationdisplacement, loss of habitat,change to the water table andso on. Some of the materialsused in the production ofphotovoltaic cells are toxic andhazardous. Geothermaloperations can release heavymetals which may leach intogroundwater. To produceelectricity from energy cropsrequires well over 100 timesthe land area required toproduce the same electricityfrom coal. Wind farms have anundesirable visual impact inthe eyes of some, can generateirritating noise, and interferewith electromagneticcommunications.

I do not make these pointsin order to discreditrenewables. The IEA, likeothers, has high hopes ofrenewables. Rather, mypurpose is to caution againstover-simplistic environmentalassumptions. All energy formsrequire careful site selection, athorough environmentalimpact assessment, applicationof the best availabletechnology, and properengagement of the localcommunity in the evaluation.Renewables are no exception.

Nuclear Power. Let me nowturn to another energy source,but one with a very differentenvironmental image: nuclearpower. Though free of carbonemissions at the operationalstage, nuclear power awakens

grave environmental concerns.These stem from the possibilityof the release of radioactiveemissions, as a result of anaccident or in the course oftransport or storage ofhigh-level waste. There is alsothe fear that the civil nuclearprogramme might contribute,indirectly, to the proliferationof nuclear weapons.

These public concerns havefound expression here, in Italy,after a referendum, in amoratorium on nuclearproduction. And, as you know,the new German governmenthas decided, in principle, tophase out nuclear operations.

The Chernobyl accident,understandably, lies behindthese grave concerns. Thatplant was not operated safely,nor designed to fail-safe. By contrast, the accident at Three Mile Island in the USAdid demonstrate that properlyengineered safety systems can prevent the release ofradioactivity to theenvironment, even when badly operated.

And in other respects, civilnuclear power has somesignificant advantages to asociety troubled by theprospect of climate changetriggered by carbon emissions.In operation, nuclear plantsare carbon free. Fuel supply tocivil nuclear plants is,potentially, indefinitelysustainable. Uranium resourcesare globally widespread. Atcurrent rates of usage, knownuranium resources would last60 years — longer than theknown reserves of oil and gasand, like them, likely to growas demand and price increase.Moreover, technologicaloptions are known though notyet commercial, for increasing

the energy extracted fromnatural uranium, permitting usto extend the estimatedavailability of this energysource, even on the basis ofpresent knowledge, to a periodof 8000 years.

Eight thousand years, in thiscontext, can be equated withindefinite sustainability. Butthis consideration alone is notenough. The timescale whichhas been adopted as a designcriterion for safe isolation forrepositories of high-levelnuclear wastes is 10,000 years.No government, or evencivilization, can be counted onactively to safeguard a wastesite over that period. Asolution must be found fornuclear waste disposal which ispassively safe, i.e. whichrequires no active humanintervention to ensurecontinuing safety.

ENERGY&ECONOMICSI started by discussingsustained economic activity;and I want to conclude byreferring again to economics.

The security of energysupply and the costs of energysupply are no longer issues inthe public eye. Accordingly, theneed for nuclear energy seemsless imperative to many todaythan it did during the periodof oil shocks in the 1970s.

But concern about climatechange could change this.Putting a cap on carbonemissions necessarily meansthat energy prices will rise toreflect an emerging “carbonvalue” — the value of notemitting carbon. The publicattitudes towards carbon-freenuclear power could thenchange as the balance isperceived to shift between the

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risks and rewards of nuclear power.

Cost-effectiveness is anecessary condition ofsustainable development. Bothrenewable and nuclear energyare currently at a disadvantagein this respect. A recent IEApublication, Nuclear Power:Sustainability, Climate Change,Competition, discusses whatwould be necessary to makethese energy sourceseconomically competitive. Onthe assumptions discussedthere, a carbon value of as little

as US $25-$35 per tonnewould make nuclearcompetitive, while $65-$100per tonne would achieve thesame for many renewables.These figures are well withinthe range being quoted for thecarbon value implicit in theKyoto commitments.

What I have sought to do isto explore what constitutessustainability in energy supply.One vital feature is sensitivityto environmental concerns.Security of supply andeconomy in supply are no less

important. When it comes toevaluating environmentalacceptability, renewal is a greatvirtue; but it is necessary to gowell beyond that in order todraw up the full balance sheet.Some renewables haveenvironmental drawbacks.Some other forms of energy,though anathema to certaingroups, have characteristicswhose value will becomeincreasingly clear as we come to grips with the realities of acting to combatclimate change. ❐

Two recent publications of the InternationalEnergy Agency examine policy andenvironmental issues related to the use of nuclearpower and renewable energy technologies,respectively. The reports were issued in October1998 and are available for purchase from the IEA(see box, page 3).

■ Nuclear Power: Sustainability, ClimateChange and Competition examines the future ofnuclear power in the context of three policyissues: the sustainability of energy supplies andenergy use, concern about the effects of energy useon the earth’s environment, and the advent ofcompetitive electricity markets. It concludes thatnuclear power has the potential to compete inelectricity markets, on an environmentallysustainable basis, provided that key issues are resolved.

The report makes the following points:Public acceptance of new nuclear facilities, or

even an extension of lifetimes for current plants,is a key issue. Second, real, complete programmesand facilities for disposal of high-level radioactivewaste and processing of used fuel have to be putinto place. Third, in the global context, animportant issue is ensuring that any expansionof civilian nuclear power does not lead toproliferation of nuclear weapons.

If emissions of carbon dioxide are to be curbed,the report states there must be some recognitionof the value of producing less carbon dioxidefrom energy use. Nuclear’s ability to produce

electricity with no carbon dioxide emissions willnot lead to its increased use unless some of thenon-economic impediments to nuclear power are overcome.

The report states that nuclear power will not beimmune from the changes brought about bymarket liberalization in the electricity sector.Competition brings a focus on reducinggenerating costs that will reinforce the trendtowards improved economic performance innuclear plants.

■ Benign Energy? The EnvironmentalImplications of Renewables outlines theenvironmental benefits of renewable energysources and describes the best practices andmitigation measures to reduce their undesirableenvironmental impact. The report addresses theuse of biomass (including agricultural, forestry,and municipal waste), hydropower, geothermalenergy, photovoltaics, solar thermal electricsystems, and wind power.

It points out that renewables are projected foruse on a larger scale over the next ten to fifteenyears, as global efforts accelerate to achieve greaterreductions in energy-related gaseous emissions. Abig part of this growth is expected to come from“new” forms of renewable energy not yetestablished in the marketplace. The reportaddresses a number of environmental burdensassociated with renewables, and examinesmethods to reduce them. They cover aspectsrelated to land use, visual intrusion, noise, and

ENERGY RESOURCES

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