Energy technology: Ten signposts for the journey ahead - … · Energy technology: Ten signposts...

Energy technology: Ten signposts for the journey aheadThe world of energy faces some tough challenges in the decades ahead, particularly in meeting increasing demand with less environmental impact. However, technology can play a big role in helping to overcome them. BP’s Technology Outlook, a report previously only distributed within the company, provides projections showing how technology has potential to change the picture in many ways – for example, opening up new resources, lowering costs and reducing carbon emissions. We’ve decided to release the report more widely to provide information for decision-takers as they make choices about policies, investments and priorities for the years ahead.

This summary of the full report is based around ten charts, each of which provides a signpost to a particular way in which technology can help energy evolve.

BP Technology Outlook1

SummaryOur view in brief

• Access to energy underpins human development and economic growth. For the future, we want to have energy that is not only sufficient, but also sustainable and secure.

• There are plentiful resources to meet demand for energy – from fossil fuels underground to sunlight and wind - even though demand is set to keep rising as populations grow and emerging economies continue to industrialise.

• However consuming all of the available fossil fuel resources would create greenhouse gas (GHG) emissions well above the threshold recommended by scientists. Limiting emissions requires both saving energy – through greater efficiency – and switching energy – towards lower-carbon sources.

• Technology has a vital part to play in enabling sustainable and secure energy to be produced and consumed at affordable costs for producers and prices for consumers. It can unlock new supplies, create new ways to produce, process and consumer energy and reduce costs – including those of lower-carbon technologies.

• Key technologies for the future will include: advanced materials, digital technology, renewable energy technologies and biotechnology.

• If policy-makers impose a price on carbon this makes lower carbon technologies more competitive and encourages their development. It offsets the higher costs of renewable energy such as wind and solar, which are more widely distributed than large power plants burning coal or gas – and hence require more energy storage. A high carbon price also makes it affordable to decarbonise fossil fuels – for example by capturing and storing carbon dioxide at power stations or factories.

• Improving energy efficiency is generally economically viable and beneficial for business, even without a price being put on carbon.

• In short, technology can accelerate the energy future we want at lower cost.


4.8tn boerecoverable resource

2.0tn boeCumulative productionto 2014

Conventionalgas

Unconventionalgas

Conventionaloil

Unconventionaloil

Oil and gas originalin place volumes45tn boe

FormerSoviet Union 16%

North America 16%

Arctic 0%

Africa 5%

Asia-Pacific 11%

Europe 3%

Middle East 34%

South and CentralAmerica 15%

65% of today'stechnicallyrecoverableresources are fromconventional oiland gas.

80% of the world's technically recoverable oil and gas is found in the Former Soviet Union, North America, South and Central America and the Middle East.

Energy resources Energy resources are more than sufficient to meet demand.

We estimate that around 2 trillion barrels of oil and gas have been produced and consumed in human history, largely since the industrial revolution. This is out of a total of 45 trillion barrels that are estimated to exist or have existed around the world – a figure that has been revised upwards in the last decade as the potential of shale resources has become clear. Looking to the future, BP estimates that around 2.4 trillion barrels will be needed to meet demand from 2015 to 2035 – based on current and expected trends in demand, supply, policy and technology. Beyond that, estimates from the International Energy Agency suggest something between a further 1.7 and 2.4 trillion barrels might be needed in the 2035-2050 period.

This gives potential maximum demand of 4.8 trillion barrels between now and 2050. However policy makers are aiming to keep demand below the higher levels to limit carbon emissions.

In terms of resources to meet demand, BP estimates that there are 2.9 trillion barrels of ‘proved reserves’ alone – those that are reasonably certain to be recoverable from known reservoirs. We estimate that a further 1.9 trillion barrels can be produced using the best technologies available today – making 4.8 trillion of future recoverable resources – enough to meet the higher levels of expected demand to 2050 – although the environmental impact would be severe.

We also estimate that, by 2050, technology-driven improvements in recovery rates could add yet another 2 trillion barrels (see chart 2) while new discoveries could add another 0.7 trillion - making a total of 7.5 trillion barrels of yet-to-be produced energy in total.

Chart 1 – Technology helps keep energy resources plentiful

Volumes of oil and gas


Recovery and costs Technology can increase recovery rates as well as reducing costs.

Between now and 2050, we calculate that technology has the potential to increase recovery rates by 2 trillion barrels of oil equivalent – or 35% - as well as reducing energy production costs by 25%, important if prices stay low and capital spending and costs are constrained.

The technologies expected to have most impact in increasing recovery and decreasing costs are in the areas of digital technology, wells, enhanced oil recovery, facilities and subsurface imaging. While seismic imaging enables explorers to locate new fields, enhanced oil recovery (EOR) which boosts production from already-discovered fields, is projected to have the larger impact in boosting recoverable volumes – 12% against 10% for seismic imaging. EOR is typically used once oil has ceased to flow to the surface under its own pressure, typically 10% of the oil, or been driven out using waterflooding – typically producing a further 25%.

EOR techniques have potential to increase field recovery rates to over 50% and include adding chemicals to the water used in flooding, changing the ionic composition of the water or injecting natural gas or CO2 into the field. EOR research is focusing on potential breakthroughs in areas such as nano-technology and microbial technology.

Seismic imaging has developed through the capacity to create 3D images and its potential is now accelerating as growing computing capacity provides faster and more sophisticated processing. In terms of reducing costs, digital technologies–including sensors, data analytics and advisory and automated systems – stand out as the leading contributors. They have important roles in enabling and integrating other technologies and enhancing safety and reliability.

Chart 2 – Technology increases recovery and cuts costs

More recovery and lower costs

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Energy volumesRenewable energy offers the greatest scope for increasing the technically recoverable energy compared to current levels, but smaller percentage increases in fossil fuels can potentially deliver larger volume increases as they start from a higher base.

Technology is expected to increase the recoverable volumes of all forms of energy. However decisions by policy-makers and investors will also play a major role. The greatest scope for increasing volumes of specific fuels from today’s levels lies in areas where the current technology is relatively immature and has a lot of scope to develop. These are led by marine - or wave - power with a potential 400% increase in technically recoverable volumes by 2050. Wind turbines are expected to be able to harvest 150% more energy than today and solar panels 80%. However renewable technologies start from a much lower base than fossil fuels. So, for example increasing oil consumption by just 10% on 2014’s figure would be roughly equal to increasing all renewable consumption – other than hydro - by 130%.

Policy-makers may give most encouragement to the technologies that offer the best combination of increased recovery and carbon abatement. So, for example, while there is scope to increase coal recovery by 50%, policy-makers are likely to give more support to the technologies that have high potential for both extra recovery and emissions reduction.

As well as renewables, these may include gas, the cleanest fossil fuel, in which a 25% potential increase represents more energy than would be released by more than doubling recovery of all non-hydro renewables.

400% 95%

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Relatively immature technologies have

the most scope for improvement but

make a small contribution to today’s energy

supply.

Bioenergy

Gas

Coal

Oil

Nuclear

Hydro

Wind

Geothermal

Solar

Marine

Share of 2012 globalprimary energy demand.Source: IEA World EnergyOutlook 2014.

Percentage increase intechnically recoverablevolumes by 2050.

2050

Chart 3 – Technology enables varying levels of extra recovery

Impact of technology on recovery


Transport fuels Costs of liquid transport fuels are likely to remain broadly similar over the coming decades though advanced biofuels should become more competitive by 2050.

There is relatively little scope for technological advances to drive down costs in transport fuel generally production because raw materials make up the majority of the cost, leaving less scope for improvements in processing costs to make a major difference. Global demand for energy for transport is likely to remain largely met by refined liquid fuels. Refining is expected to remain cheaper than most alternatives, such as turning gas or biomass to liquid fuel.

In BP’s Energy Outlook 2035 we project that in 2035, oil will provide 19.7 billion of the 22 billion barrels of oil equivalent use for transport fuel.

However, the chart also shows how technology is expected to lower the cost of ligno-cellulosic biofuels – powerful, advanced fuels made from woody plants and grasses rather than corn, wheat or other edible crops. As the chart also shows, a carbon price would push up the cost of gasoline and diesel, potentially making ligno-cellulosic biofuels competitive. Sugar-cane ethanol remains the cheapest option where it is available, for example in Brazil.

Carbon price of $40 per tonne of CO2 equivalent

Fuels production cost


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via syngas

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Corn ethanolGas-to-liquidsvia syngas

LCethanol

Chart 4 – Technology can cut costs of advanced biofuels

Costs of transport fuels ($2012 per gigajoule)


Vehicle costs Running costs of most vehicles are expected to remain similar up to 2050.

The overall running costs of vehicles per kilometre travelled are projected to remain broadly similar. The internal combustion vehicles also have similar cost profiles and are expected to remain more affordable than hydrogen fuel cell-powered vehicles. However by 2050, with advances in battery technology, electric vehicles

The vehicle fleet and fuel economyIncreases in the efficiency of vehicles will broadly offset the environmental impact of massive growth in fleet numbers.

Demand for cars and other vehicles is growing fast in the emerging world and the total world car fleet is set to grow from just over 1 billion now to nearly 3 billion in 2035.

However, at the same time, the fuel economy of vehicles is improving fast, offsetting the increase in emissions from the growing fleet.

CO2 emissions from transport are expected to remain broadly similar between 2012 and 2035 at between 20 and 25% of the total of energy-related emissions.

are likely to be competitive. Electric vehicles may not always offer major

reductions in lifecycle emissions if the power used comes from fossil fuel-driven power stations.

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Chart 6 – Technology will help vehicles become more efficient

Size of global vehicle fleet (billions of vehicles) and fuel economy (litres of gasoline per 100km) to 2035

Chart 5 – Technology can cut some vehicle running costs

Vehicle running costs (US cents 2012 per km for medium sized car)

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Vehicle cost

Fuel cost


Power costs Gas and renewables are expected to be the most competitive forms of energy for power generation by 2050, assuming a carbon price is widely applied.

This chart shows the costs of generating electricity in North America from different fuel feedstocks – the actual costs from 2012 and projected costs in 2050. Technology advances are expected to bring down costs of many forms of electricity generation by 2050 while a carbon price would increase costs of the higher carbon options, making gas – the cleanest fossil fuel - and renewable energy, the most competitive fuels. The potential for reducing emissions is greater in power than transport, as power accounts for more than 40% of energy-related CO2 emissions and there is considerable scope for technology advances that reduce emissions substantially per unit of energy generated.

Without a carbon price, gas (using combined cycle generation turbine – CCGT – technology) and coal remain the cheapest sources of electricity. However, the impact of a carbon price is greater in the power sector than in transport, with coal becoming significantly more expensive than renewables and CCGT.

By 2050, with a carbon price of $80 per tonne of CO2, existing gas power plants would have the same cost for generating electricity as onshore wind. The chart also shows other options such as CCGT fitted with carbon capture and storage (CCS) to sequester the carbon emissions below the ground and power plants retrofitted to burn biomass such as agricultural wastes or crops. Both become competitive with an $80 carbon dioxide price. Solar power remains somewhat more expensive – but cheaper than coal if the higher carbon price is applied. The chart indicates how new CCGT capacity will be more expensive due to the capital costs involved in building new power plants. It also includes costs to cover the fact that renewables are intermittent – depending on the variable strength of wind or sunlight – and thus require back up – typically provided by gas capacity.

Existingcombined-cycle

gas turbine (CCGT)

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CCGT withCCSb

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Retrofit biomassa

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Nuclear

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Utility-scalesolar PV

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Existingcoal

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Newcoal

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Integration cost of $30 per MWh

Integration cost of $8 per MWh

Electricity generation cost

Chart 7 – Technology can create cheaper, cleaner power

Cost of generating electricity to 2050 ($ 2012 per megawatt hour)


Wind technologyIn wind, as well as other technologies, cost reductions are driven by multiple advances in different areas.

By way of example, costs of onshore wind power are expected to fall around 30% by 2050 as a result of technological progress, while the energy harvested can increase by 150%. The improvements are expected to come about via a number of changes to turbine construction, building on advances in made in recent years, such as increasing tower heights, creating longer rotor blades, improving site optimization and increasing turbine efficiency. For instance, increasing the height of towers to accommodate 100-metre-diameter rotor blades, in average wind speeds of 7.5 metres/second, has increased the amount of wind energy captured by approximately 20%.

Turbines with such 100-metre-diameter blades and larger rotors accounted for more than 80% of installed capacity in the US in 2014, compared with less than 10% in 2009. Continued advances are expected across a range of areas including ground base and structure design, new materials and manufacturing processes to further increase blade sizes, developments in sensors and control systems, better drive design, improved gearbox reliability, prognostic maintenance systems, predictive technologies and active control systems.

Drive train10%

Tower5%

Development15%

Balance ofplant10%

Lifetime care15%

Rawmaterial cost5%

Hub andnacelle

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Blades andcontrol

25%

Gridconnection and

transmission5%

Low-costmanufacturing

5%

Chart 8 – Technology can reduce costs in many ways

Impact of technology on cost of wind turbines


Cutting Carbon Becomes Cheaper The greatest scope for reducing carbon emissions affordably is in the power sector through greater use of natural gas in place of coal, renewable energy and carbon capture and storage.

BP estimates that carbon dioxide emissions from energy will rise 25% over the next two decades, based on current trends in demand, supply, policy and technology. That’s higher than the rate scientists say is required to keep the global temperature rise within 2°C on pre-industrial levels. This chart shows the impact of various ways of reducing carbon emissions compared to today’s typical technologies in terms of the volume of carbon that is saved (shown on the horizontal axis) and the cost (shown on the vertical axis).

The further to the right, the more carbon is reduced for every unit of energy generated. The further down the chart, the lower the cost of reducing emissions. The best opportunities to save carbon are in the power sector, delivering greater volumes of carbon reduction per unit of energy than transport, with many of them at relatively affordable costs, particularly in 2050.

For example, using gas (CCGT or combined cycle gas turbine) power generation instead of coal avoids 180 kilograms of carbon per unit of energy and has a negative cost of $20 per tonne – in other words a saving of $20. In transport, technologies such as engines are the most cost-effective options for reducing CO2. However they only save very small volumes of CO2 for each unit of energy.

Electric and hydrogen fuel-cell vehicles have a high cost of CO2 avoidance for relatively small volumes of CO2 saved.

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Chart 9 – Technology brings down the cost of reducing emissions

Impact of technology on cost of redicing co2 emissions 2012 vs 2050


Emerging technologies A range of emerging technologies could see breakthroughs that change the course of energy dramatically.

Such major advances have been rare, but when they have occurred they have driven rapid transformation, examples being the development of three-dimensional seismic imaging and the technologies for producing shale gas and oil – directional drilling and hydraulic fracturing. The pace of innovation is increasing as businesses, universities, governments, specialist research centres and consultancies combine their capabilities. This graphic shows just a few of the emerging technologies that could have a major impact in the world of energy. For example, exponential increases in computing power provide the capacity to process vast volumes of ‘big data’ opening up possibilities for much more precise targeting of oil wells and molecular modelling of new types of fuels, lubricants and chemicals.

Next generation batteries may change the prospects for vehicles by enabling electric cars to travel further. Solar power has traditionally been restricted partly by the limited level of efficiency of solar modules – the volume of sunlight converted into energy – but if that volume could be increased beyond 30%, with low-cost production, then solar energy could rise to make up a much larger share of total consumption. Other possibilities include more small scale power generation using fuel cells, 3D printing, more widespread use of hydrogen as a fuel and greater use of robots.

Modular approach to power generation

Enabling safe andreliable operations

Creating value fromvast data sets

Enhancing the growth of vehicle electrificationand reducing emissions

Ultra-fast, high-efficiency computing utilizing next-generation materials and approaches

Widespreadavailability of hydrogen

for the consumer

Bespoke custom components in high-value applications

Breaking through the30% efficiency barrier

using low-costfabrication methods

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Importance to theenergy industry

Timeline

2020203020402050

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mediumhigh

Fuel economy of

Chart 10 – New, emerging technologies could have a big impact

Key areas where new technologies may have an impact


Key messagesWhat the analysis shows

Energy resources are plentiful

• Energy resources are more than sufficient to meet demand

• Technology has great potential to increase recovery of both fossil and non-fossil fuels and also reduce the costs of doing so

• The questions for policy-makers are about choices – which resources to prioritise with regard to meeting demand while limiting emissions and providing energy security

The power sector offers greatest scope for reducing emissions

• Projections show that there is more scope for reducing emissions in power generation than in transport.

• A relatively modest carbon price can make natural gas more competitive than coal as well as cleaner – although fossil fuel generation costs without a carbon price remain similar to today

• With a higher carbon price, wind power and gas plants with carbon capture and storage become cost competitive

Transport is set to become more efficient, while costs remain similar

• Costs of producing most transport fuels and running vehicles are expected to remain fairly stable to 2050

• The world’s vehicle fleet is set to triple by 2035 but the additional GHG emissions will be offset to a large degree by vehicles becoming much more fuel efficient

• Technological progress should help reduce the cost of emissions-saving ligno-cellulosic biofuels, made from grasses, wastes and other non-edible agricultural matter

Digital technology will be among the most transformative sources of innovation

• Digital technology will help us find, convert and use energy in smarter, cheaper and more efficient ways

• Digital technology includes sensors that provide real-time information from wells, refineries and other facilities to support safety and efficiency as well as seismic processing to help explorers find resources

• IHS Energy calculate that digital technology in an oilfield can increase production up to 8% and lower costs by up to 25%

Emerging technologies may be game-changers

• Several areas of technology now being explored could provide breakthroughs that have a major effect on the energy industry

• These include advances in batteries, robotics, solar and hydrogen technologies

• Exponential increases in computing power using ‘big data’ could augment the already powerful potential of digital technologies to transform the energy sector

There are now twice the global proved oil reserves that there were in 1980.

In the past 30 years energy consumptionhas doubled.

Technologies, such as horizontal drilling and hydraulic fracturing, have opened up significant shale oil and gas formations.

The 2014–15 drop in the oil price will drive further efficiency in oil production.

Since 1800 the global population has grown from

one billion to seven billion.

Improvements in living standards in the twentieth century have doubled life expectancy to 60 years, a transformation largely fuelled by coal, oil and gas.

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The carbon dioxide created by consuming

fossil fuels will continue to be a major issue.

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In the futuretransformational

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or more of anumber of different

technologies working in

unison.

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The energy journey

Technology is critical at this stage of the evolution of energy.

Since the 18th century, energy has helped to drive industrialization and development, a process that is continuing in emerging economies today. In the past two centuries, life expectancy has doubled, the global population has increased from one billion to over seven billion and economic development has brought higher living standards to much of the world. This transformation has been largely fuelled by fossil fuels – coal, oil and gas – providing heat, power and mobility for industry and consumers. The past three decades have seen a surge in these trends, driven by demand from emerging economies, led by China and India. In that period, consumption of energy has almost doubled. Millions have been lifted out of poverty – but the process continues – as many lack the access to energy taken for granted in advanced economies: For example, more than a billion people still live without electricity. On the supply side, technology has helped the energy industry to discover more oil and gas than society has consumed.

Resources are now plentiful and concern about oil and gas running out has all but disappeared. The major concern relating to energy now is the impact of greenhouse gas emissions caused by the consumption of fossil fuels – and to a lesser extent – their production.

Policy-makers are therefore seeking to find ways to limit and ultimate reduce carbon emissions, even as total energy consumption continues to rise.

Technology is critical at this point in the evolution of energy because it offers ways to overcome this dilemma, including advances that enable energy to be used more efficiently and make low-carbon energy less costly and more competitive. As this analysis confirms, putting an effective price on carbon globally could accelerate the development of technology and drive a decisive shift towards lower-carbon energy. The combination of policy-making by governments and innovation from business, working with partners in academia and elsewhere, has the potential to release the power of technology to deliver a future in which energy is sufficient, secure and sustainable.

Energy technology: Ten signposts for the journey ahead - … · Energy technology: Ten signposts...

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