For example, what are realistic costs, pace, scaleability and market penetration factors for different energy sources? How do we best address the variability of wind and solar and the requirements for a reliable power supply, while keeping costs affordable? There are the benefits of natural gas, and around how its use has displaced coal and how it has contributed to reductions in CO2 — and at the same time, questions have been raised by some on fracking and methane emissions, and investments in embedded infrastructure.
There’s the use of nuclear energy, a zero-carbon source. But again, there are concerns voiced by many regarding radiation, long term storage, waste and security issues. There’s carbon capture, storage and usage, which some would see as essential, but again comes with a cost. And some may see CCSU as promoting the continuing use of fossil fuels.
And there are the choices between fighting energy poverty and its health, quality of life and economic consequences versus the provisions of modern energy, including fossil fuels.
Who are the most critical actors making those decisions today? And how can it be more equitable in the future?
Lawrence: Well, typically there are several major actors. On the global, international stage you have participants including governments, NGOs, international business, banks, educational institutions and think tanks forging important forward looking constructs such as the Paris Agreement.
Of course, at the national level you have politicians, regulators and policymakers in governments making decisions that are driven in part by the energy resources those countries have available to them, in part on their stage of economic development, in part by how they see themselves impacted by climate change, and in no small part by partisan politics. In some impoverished nations, establishing legitimacy, transparency and stability of governments in place play a role, particularly regarding access to capital.
Then, importantly, there are the consumers of those energy sources who also may or may not have a choice. By that I mean the price that they are willing or able to pay for those energy sources, and whether those resources are even available. Some, fortunate consumers can vote with their pocketbooks. In some, again fortunate nations they can vote for the kinds of energies policies they want.
Vital players are energy companies of all scales, who would be the providers, and willing to provide the expertise and make the necessary investment, and take the economic risks on those energy sources. Finally, an often unlooked player would be those providing the capital resources that would make these different energy sources available as options.
What kinds of strategies can policymakers pursue that might achieve the lower-CO2 economy that most agree is critical?
Lawrence: Well, the cost of energy matters and policies matter. Policies that encourage innovation, employment, technology development, and a wide variety of potential low- or no-CO2 energy solutions are important. The Paris Agreement is an important step forward in that regards, and a framework to build on. I think a strategy that puts a price on carbon and that is simple, and can be implemented will be important, though politically difficult to achieve. And market-based solutions, where you have consumers and prices driving the solution can be very effective, as we see now taking place with the shift from coal to natural gas and in parts of the country where options like wind energy and solar have really made huge advances. These advances were driven not so much by externally driven policies, but because producers were able to to drive down the price and be highly competitive in the marketplace.
This puts a lot on the companies to enact a shift to lower-CO2 technologies.
Lawrence: I think you’ve already seen somewhat of a shift, haven’t you? We’re seeing that in the power sector in places like Texas and the mid continent with the tremendous growth in wind and in California with solar energy. There’s been a significant shift towards natural gas that many large companies have adapted. And that’s been driven by its availability, that it’s a lower CO2 fuel, and by the many uses that natural gas has in the world economy.
Most major companies are looking at the spectrum of what the world’s energy needs will be for decades to come because the returns of their investments are evaluated not only by the quarter, but over years and decades. They will play out many different scenarios: scenarios for high demand, low demand, higher CO2 emissions, lower CO2 emission, higher regulatory requirements, lower regulatory requirements. They will develop a range of scenarios for the timing of energy transitions. They will provide pricing forecasts for different energy sources, and then they’ll make their decisions based on that mix and where they expect to see the business continue to grow, and build, and be profitable, while meeting societal expectations. The challenge in all these scenarios is anticipating major discontinuities, Black Swan events, and technical breakthroughs.
What kinds of energy demand do they project for the coming decades? And how can lower-CO2 energy sources stay competitive on a scale in the face of that growth?
Lawrence: Almost all forecasts predict energy demand continuing to increase overall as we approach mid-century. Some say it will increase 10-20 percent, some 30 percent, some 50 percent, some more. There are a few rigorous models which have energy demand actually decreasing because of major increases in electrification, efficiency and conservation. The increase in absolute terms for all sources of energy demand is important. So where wind and solar, for example, are likely to significantly increase as a percentage of the world’s energy mix, it’s a percentage of a growing pie.
I think the biggest challenge is that the transition period — and the time for market penetration of major new energy sources — is typically measured in decades. If you look at oil, gas, coal, or LNG — it took several decades to be able to get to even a 20-percent market penetration on all of those sources. The same was true for nuclear. So to have an increase where you’ve achieved a greater than 20-percent market penetration for any given new energy source will be an enormous challenge, especially when you consider energy and CO2 emissions in its entirety, not just from the power supply in electricity, but from things like transportation, manufacturing, residential and agricultural sources. But I think it’s a challenge that can be overcome.
We’ve seen the growth of wind and solar in recent years. Have they shown potential to achieve such penetration in the market?
Lawrence: Well, I think wind and solar will continue to grow at a very significant pace, as they have over the last five years. The ultimate limit will be one of economics, with and without incentives, and the extent to which challenges on their variability can be overcome. I think their potential increases to the extent that things like integrated transmission systems, greater storage capabilities, smart grids and managed demand processes can be developed. We are seeing some of these challenges of wind and solar in real time in places like California, with the “Duck Curve,” where electrical power production during a day is not in balance between peak demand, peak supply and renewable energy production.
A recent report found that carbon emissions have remained level for three years running, even though global economies continue to grow. What does that say to you?
Lawrence: It’s good news. I think what we’re seeing in some sectors is greater efficiencies, and we’ve seen that for some time. And we especially see those greater efficiencies in places like the OECD [Organization for Economic Co-operation and Development] countries, where economies have also shifted from relying on, huge manufacturing sources, for example, to more service-based economies.
Typically in the emerging stages of economies, you have higher carbon intensities, and as those economies start to develop the carbon intensity lowers. That’s playing out. Also, I think we’re seeing a major shift in places like the U.S. where you’ve had both natural gas and renewables lowering that carbon intensity in the power sector as coal is displaced. I also think that you’ve seen a slowdown in economic growth in some areas, which has been coupled in part with lower carbon emissions. The question is whether a renewed growth in GDP will continue to be accompanied by slower rates of carbon emissions.
You’ve talked about some of the promising solutions, such as renewables, greater efficiency, smart grids. Are there other potential solutions that make you optimistic?
Lawrence: There are multiple solutions that we need to continue to invest in to make sure that they are widely available. I don’t believe in picking winners and losers, especially early in the process.
There are parts of the world where solar and wind will be economically and geographically advantaged and I think that they will continue to grow very rapidly in those places. The technologies that will play a major role in the further implementation of solar and wind are further development of batteries and other storage capabilities such as hydro, and integrated transmission systems. Smart grid solutions can also be very helpful.
Natural gas is one of those solutions, implementable now in many parts of the world. It has contributed to some of the greatest CO2 reductions that we’ve seen. One of the best examples of that has just come from the UK and I expect that natural gas will play a major role in reducing emissions as it displaces coal in many parts of the world. The advantage of natural gas is that it is dispatchable, and therefore complementary to variable renewable energy. Dispatchable energy is important. For this reason, I think there will be places where we will see that new nuclear technologies can play a major role, though the costs will need to come down significantly. So I think that that will be a part of the mix.
In the immediate future investment in the safe extension of the life of existing nuclear plants is important. Carbon capture storage and utilization is a technology that is costly at this point, but those costs will be driven lower through pilot studies, deployment, and new technologies. And that, by necessity, will play a major role.
In meeting climate goals, electrification across all sectors will be prominent. And efficiencies at all scales will need to improve — and not only in power, but in things like urban design, manufacturing and transportation, not only for cars, but for heavy duty vehicles, planes, and industrial applications.
Autonomous vehicles will play an increasingly important role. Perhaps hydrogen.
In terms of the U.S., is our mindset in the right place to respond to the challenges we’re talking about?
Lawrence: Innovation and technology development — and a willingness to experiment — have been hallmarks of much of the development in the U.S. And I think that we will continue to see further development, probably in some surprising areas. I’m encouraged by the continual advances in the energy sector. I’m discouraged that the levels of investment in research and development will likely decrease, especially since I think the levels of investment that we are making are small to begin with. So that is something that will need to be overcome.
Ultimately, when making energy choices that will have an impact on climate change, we have to answer the question of whether we are looking to achieve 100 percent renewable energy or to lower CO2 with the greatest probability of success over the next few decades. And I don’t think that those are necessarily the same choice.
I don’t think that there’s a perfect solution to this. I think that there is no perfect energy source. And so I think that when looking at all of these choices, when there is no perfect, choose the good. That’s a kind of a guiding principle as I look across the energy spectrum, as to what can we do that will both provide more energy, and help lower CO2. There may be no perfect solution, but there may be an implementable solution that’s quite good — and that we can deliver on.
Do you have advice for those students who will be entering the energy sector? What are some areas they should study or the kinds of opportunities they should pursue while they’re at school?
Lawrence: I think energy is and will be a tremendous career opportunity. A multidisciplinary skill set is becoming increasingly important because the field is evolving so rapidly.
It’s important to be well versed in science, technology, engineering, and math because I think that that provides a grounding for the understanding of many energy sources. But it’s also important to be able to place that within an economic, social, policy, and regulatory context and to have developed strong analytical and problem-solving capabilities.
Given the complexities of energy, people who work well in teams and bring out the best in others are invaluable. Internships and summer work experience in any area of energy are viewed as important by employers. My recommendation is to not pick “winners and losers” — even in educational terms — too early, but to get an adequate STEM-based backing and then follow the area of interest you have a real passion for. Don’t box yourself in. Energy needs people with commercial, business and finance expertise; government, history and public affairs knowledge, environmental and legal backgrounds, as well as engineers and scientists. Content matters — and increasingly context.