What is the Energy of the Future?

Nicolas Meilhan

Principal Consultant, Frost & Sullivan

April 2015

2

Evolution of world primary energy consumption - Million tons of oil equivalent , 1860 to 2012 -

What is the energy of the past? Oil remains by far the main source of world energy, but has lost market share to gas and coal

Sources: Shilling et al., 1977, et BP Statistical Review, 2013

30%

27%

22%

8%

6%

4%

2%

80%

Biomass

Nuclear

Natural gas

Coal Oil

Hydro

Wind, solar &

geothermal

3

Isn’t coal the energy of the past? Yes it is as it fuelled the industrial revolution during the 18th century. But it might as well be

the energy of the future as it could surpass oil as the most primary energy used by 2030

Electricity production from coal - % of total electricity production, 2012 -

Source: World Bank, BP Statistical Review of World Energy 2014

Coal currently provides 40% of the world's electricity needs, accounts for 40% of

CO2 emissions and as much as 60% of CO2 emissions increase since 2000

1 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

40 %

0 %

45 %

50 %

Coal consumption per capita - Tons of oil equivalent, 2013 -

What do we use this energy for? Transport is almost exclusively based on oil, while industry relies on massive coal and gas

usage

* Including non-energetic use

Sources: BP Energy Outlook 2035, IEA

World primary energy consumption mix - % of million tons of oil equivalent, 2013 -

4

Hydroelectricity

+ Nuclear Energy

+ Renewables

Natural gas

Industry* Transport Agriculture, residential,

commercial & public service

Oil

Coal

46% 17% 36%

95%

12% 21%

39%

28%

13%

25%

28%

34% 19%

22%

31%

28%

34%

2% 3%

Brazil Mexico

Switzerland

Belgium India

Spain

Italy Sounth Korea

Netherlands

United Kingdom

France Japan

Germany

China

United States

0

500

1000

1500

2000

2500

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Exp

ort

s o

f g

oo

d &

se

rvic

es (

bn

$)

Electricity production from coal (% of total electricity production)

Why do we use coal for industry? Ask the top 15 exporting countries (who accounts for 80% of exports globally) – they probably

know the answer

* Energy exports excluded

Source: World Bank

5

Exports vs. Electricity production from coal - Top 15 exporting countries*, 2011 -

R2 = 0.7

Why do we use oil for transport? 1kg of oil contains as much energy as in 100 kg of batteries

Source : Pierre-René Bauquis, Richard Heinberg

Energy density of energy vectors used in transport

Energy density

Sp

ecific

en

erg

y

6

“If the building of the Great Pyramid required 10,000 people working for 20 years, then the

petroleum based energy used in the US on an average day build 100 Great Pyramids”

Richard Heinberg

Are we really running out of fossil fuels? Knowing whether we’ll still have fossil fuels in 2100 is not the issue – the critical issue is

for how long we will have affordable oil to fuel our economy (and our cars..)

Liquid fuels extraction simulation - 1900 to 2100 -

7

“It's not the size of the tank which matters, but the size of the tap”

Jean-Marie Bourdaire

Extr

actio

n in

bill

ion

s o

f o

il b

arr

els

pe

r ye

ar

Source : Jean-Marie Bourdaire, Patrick Brocorens

8

Do we really need affordable oil to fuel our global economy? Four of the last five global recessions were preceded by an oil shock

Economic Recession vs. Oil Price

Source: Steven Kopits, June 2009, Douglas Westwood, Oil: What price can America afford?, EIA, NBER

Houston, we have a problem Higher cost new oil projects require $80/bbl+ oil price to be profitable while oil demand (hence

GDP per capita) contracts when oil price surpasses $100 in the US and $120 in China

9

Breakeven price of for various US plays (single well) tight oil B

rea

ke

ve

n p

rice

(U

S$

/bb

l)

Source: The Oxford Institute for Energy Studies Mars 2014, Douglas-Westwood Associates

Source: TPH and HPDI (Global Shale Conference, 21 November 2013); BE required for 10% IRR, including

capital recovery. The authors indicate that the chart includes large number of conventional and non-

conventional which generally have less attractive economics. Grey color chow major production plays

Is shale gas the energy of the future? In the short term maybe in the US with as high as 40% of gas demand in 2013, in

the longer term probably not in Europe with only 10% of gas demand in 2030

10

Bird’s eye view of a Texas shale gas field - Click on the image-

Source : Google maps

Is space that important when it comes to energy? Energy surfacic density must be considered when looking at the energy of the future – The

less space we have, the less choice we have!

Source: David MacKay, a reality check on renewables

11

Energy surfacic density

What could be the energy of the future then? Fossil fuels share in primary energy mix will decrease only modestly, from 85% in 2013 to

80% in 2035, the new renewables share increasing from 3% in 2013 to 8% in 2035

Source: BP Energy Outlook 2035

Mto

e

Evolution of world primary energy consumption - Million tons of oil equivalent & % , 1965 to 2035 -

12

85%

66%

47%

41%

38% 37%

31% 30% 29% 28%

23% 20% 19%

16%

11% 9% 9%

7% 6% 6%

1%

6 45 5 284 51 20 34 30 24 333 26 18 134 159 325 248 2852 2266 200 474 271

Solar

Wind

Geothermal & Biomass

Biofuels

Hydro electric

Can’t we just use renewable energies like our ancestors did in Middle Ages? Countries which inherited large significant forests, hydraulic or geothermal potential might get

close to it – for others, it will be much more difficult unless consumption significantly decreases

13

Sources: BP Statistical Review of World Energy 2014, Frost & Sullivan analysis

Iceland Costa Rica

Brazil Norway New Zealand

Sweden Finland Austria

Canada Denmark

China Portugal

Italy

Spain

France Japan

Germany

USA

Primary energy

consumption

(Mtoe)

Share of renewable energies in primary energy

consumption of selected countries - 2013, in % -

EU average = 11%

WW average= 9%

Switzerland

United Kingdom

South Korea

Mtoe figures for power generation are converted on the basis of thermal equivalence assuming 38% conversion efficiency in a modern thermal power station

What will life after fossil fuels look like? It will be pretty difficult without strong energy savings

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Mtoe figures for power generation are converted on the basis of thermal equivalence assuming 38% conversion efficiency in a modern thermal power station

Potential renewable energy production - Million tons of oil equivalent per year -

453 2 000

Additional

Hydro

140

Biofuels

2 850

Biomass Total

Renewable

7 Gtoe

2 263

Wind

power

10 000

226

Geothermal

power

1 000

?

Total

20 Gtoe

[TWh]

[Mtoe] 688 3 040

Current

Hydro

453

2 000

Solar

power

15 compared to

2013

20 billions panels of

1m2

15 compared to 2013

cover 0,5 million km2)

25% of forests

exploited at 3 toe/ha

9.5 million km²

dedicated

8 billion

people

at 2.5

toe/year?

10% of current

arable land at 1 toe/ha

1.4 million

km² dedicated

Source: Philippe Bihouix, BP Statistical Review of World Energy 2014, Frost & Sullivan

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What is the real energy of the future then? The one we will not use!

Note : koe = kilogram of oil equivalent ; best available technology in 1995 Source: Bernard Multon, ENS Cachan ; Commissariat au plan

Sector

koe /

person

In 1995

koe /

person

Best

techno (1)

Comments

Housing

Heating 740 300 • Norms

Kitchen devices 35 25 • Best equipment

Other devices 70 35 • Standby systems

Tertiary

Heating 415 200 • Norms

Specific usages 90 50 • Standby systems

Food 360 250 • 50% saving on cold and

cooking

Industry

Intermediary products

625 450 • Recycling, eco processes

Equipments 150 130

Transports

Persons 490 250 • 4 liters / 100 km vehicles

Goods 315 200 • Truck power reduction, rail

freight

Total 3290 1890

• Almost 50% energy

reduction with no real

change in comfort…not

enough but a good start !

• But we have a strong

inertia issue due to

installed base

replacement speed…

Standby of electrical

devices…5 to 6 TWh in

France : almost one

nuclear reactor !

Nicolas Meilhan Principal Consultant

Energy & Transportation Practices

(+33) 1 42 81 23 24

nicolas .meilhan@frost.com