Latest Articles by Antony Froggatt

The EU & China: new perspectives on energy efficiency

Antony Froggatt — Mon, 22 Oct 2007 08:06:00 +0000

China and Europe both recognise the importance of energy efficiency policies to ensure security of supply and help combat global warming. However, asks Antony Froggatt, are good intentions translating into action?

The way in which energy is produced and consumed will have to change fundamentally in response to growing impacts and concerns over climate change and security of supply. This must be achieved at a time when the rate at which energy is being consumed has never been greater and projections suggest that energy demand will be at least 40% higher by 2030.

In July 2007, the US National Petroleum Council Report concluded: “It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50% to 60% growth in demand over the next 25 years.” This is a remarkable statement from a body whose function it is to represent the views of the oil and gas industries to the US Secretary of Energy. The Financial Times described it as a “defining moment in the history of the global energy industry”.

This expected increase in energy consumption is in part due to the growth of China, India and other rapidly developing countries, and in part due to continual high levels of energy consumption in western Europe and North America.

Outlooks on efficiency

China’s energy consumption has increased considerably over the last five years, well above the forecast rate. In 2002, the International Energy Agency (IEA) predicted a 3% to 4% growth in demand, while 2005 saw an increase of 15%. Such strong growth rates are unsustainable in the short- and long-term. The impacts of such increases in power demand are seen nationally and internationally. Since 2003, 30% of the global increase in oil consumption was accounted for by China (and in 2006 it accounted for 80%). A number of factors are thought to have led to the rapid increase in energy demand, including more energy intensive industry, the rapid construction of domestic infrastructure, greater transport and individual energy use and a scaling back of energy-efficiency initiatives.

“China's energy efficiency remains low,” Liu Jiang, vice chairman of China’s top economic planning body the National Development and Reform Commission, said in 2005. “We have an onerous task to improve energy efficiency.” China’s eleventh Five Year Energy Plan put a strong emphasis on energy efficiency, proposing that between 2006 and 2010 there should be a 20% increase in the energy efficiency of the economy (which will require a decrease from 1.22 to 0.98 tonne of coal equivalent per unit of GDP). And it is hoped that there will be an additional 20% increase in energy efficiency by 2020. Such efforts not only bring huge improvements in energy and environmental security, but also significant economic benefits. The energy efficiency plans in the eleventh Five Year Plan address both the supply-side issues (such as improved coal mining technology, greater use of combined heat and power and higher efficiency levels in electricity generation) and demand-side questions (such as standards for buildings and equipment).

The EU has long recognised the importance of energy efficiency. Its 2000 Green Paper on Energy supply noted: “If the EU cannot reverse current energy consumption trends – energy and transport, especially in urban areas – it will have to resign itself to massive dependence on imports for energy supplies and will have trouble meeting its commitments under the Kyoto Protocol.” Since then, it has adopted a raft of legislation to improve Europe’s energy efficiency. In 2006, the EU adopted a target to increase its energy efficiency by 20% by 2020. With the expected increase in economic activity over the period, this could lead to an overall 13% reduction in energy consumption. The European Commission estimates that if this programme were fully adopted it could cut energy bills by around 100 billion euros by 2020, as well as a reducing carbon dioxide output by 780 million tonnes. This equates to 60% of the EU target to reduce carbon dioxide 20% by 2020, a target the EU would exceed were it to meet its goals on energy efficiency and renewable energy.

Enforcing legislation

However, despite the role of energy efficiency being recognised in both China and Europe, there are many barriers to its rapid and effective introduction. In both cases, the necessary policies and regulation are already in place. What is essential as a first step is that existing legislation is fully transposed, enforced and evaluated. This could result in significant decreases in energy use. Compared to a business-as-usual scenario, China could save 570 million tonnes of oil equivalent and 503 million tonnes of carbon by 2020, and the EU could save 37 million tonnes of oil equivalent and 456 million tonnes of carbon in the same period.

Implementing and enforcing regulations is a very complex process. Energy efficiency may be given prominence in national and regional policies, but it affects all aspects of society – and requires action across all government departments and levels. In the case of China, this would be enhanced by the establishment of an autonomous Ministry of Energy with a clear mandate and an office of energy resource savings. This would need adequate staff, budget and investment. Analysis undertaken by the Lawrence Berkeley National laboratories in the US suggested that the percentage of energy investment for conservation purposes in China in 2003 is a third of what it was in 1983.

The power sector offers an important insight into the opportunities and threats facing both parties in the coming decades. China’s expected demand increase in the power sector has garnered considerable press attention. However, there is little awareness of the forecast construction programme in Europe and the US, where the anticipated closure of existing power stations, coupled with modest demand increases, means the EU and the US require new generating capacities of similar orders of magnitude. This offers important opportunities for collaboration in order to avoid locking investment into carbon- and energy-intensive projects and to develop more flexible and forward-thinking strategies. Attempts must be made to move energy policy away from the “predict and provide” approach, to one that takes into account security of supply and environmental concerns.

China manufactures many goods that are used in Europe, electronic products in particular. It should be of mutual benefit for China and the EU to work together on introducing higher energy efficiency standards for such goods. But in some instances the EU has imposed anti-dumping tariffs where it believes products are being sold below their real value to create market distortions. The most prominent case is that of the compact fluorescent light bulb. In August 2007, the European Commission proposed that the EU should retain an import tariff on Chinese bulbs for an additional year.

Joint initiatives

China and the EU have established a number of joint initiatives to help capture the potential of energy efficiency. China and the EU established a five year programme in 2003 to strengthen co-operation in four main areas: energy policy development; energy efficiency; renewable energy; and natural gas. The energy efficiency programme includes initiatives on standards and labelling, energy intensive industries, small- and medium-size boilers and incentives to promote energy savings in China. In July 2007, the EU established the China Climate Change Framework Loan through the European Investment Bank. This loan facility for the energy sector is intended to help reduce greenhouse-gas emissions through renewable energy sources, energy efficiency enhancement and the capture and storage of greenhouse gases.

The IEA’s stark warning, that this energy future is not only unsustainable but also is doomed to fail, should be a reminder that urgent action is needed to change current energy supply and demand policies – a warning that was later echoed by the International Panel on Climate Change (IPCC) and the US Petroleum Council.

In China, the EU – and the rest of the world – more efficient use of energy must be at the heart of future policy and action. Scenarios on the global and regional level show that existing policies and technology, if widely implemented, will lead to significant reductions in energy use, improve security of supply and reduce environmental impacts.

Global markets in energy resources and energy-consuming goods mean that globalised solutions to energy security problems must be put forward. Existing co-operation between the EU and China reflects this, but this co-operation must be accelerated – especially in the removal of tariff barriers for energy efficient goods, joint research and development projects, joint manufacturing standards, initiatives to improve capacity and the introduction of international agreements.

Antony Froggatt is a researcher for the Royal Institute of International Affairs (Chatham House)

Homepage photo by David G. Romero

The global nuclear decline

Antony Froggatt, Mycle Schneider — Mon, 07 Jan 2008 09:18:00 +0000

The “nuclear renaissance” is a myth. Forecasters continue to overestimate the growth of atomic energy, write Mycle Schneider and Antony Froggatt, not least in China, where the energy mix remains dominated by coal.

The French president Nicolas Sarkozy visited China in late November, just prior to the tenth EU-China Summit. During his stay, large bilateral contracts were signed between the French and Chinese energy and transport industries. Nuclear vendor AREVA and the Guangdong Nuclear Power Corporation signed an agreement for the construction of two 1.6 gigawatt (GW) European pressurized water reactors (EPRs), a contract worth around 8 billion euros (about $12 billion). This includes a requirement that AREVA will provide materials and services required to operate them. In addition, an agreement was reached on joint developments for feasibility studies on the future construction of a spent fuel reprocessing plant.

The agreement enables AREVA to claim the deal as “the biggest ever in the industry”, an illustration of a wide export market for its nuclear products. For the Chinese, it will bring little to change the country’s energy mix, which is uniquely dominated by coal, supplying nearly 70% of the country’s needs. In addition, China signed a contract earlier this year with Westinghouse, now owned by the Japanese Toshiba, for the construction of four of its latest design of reactors, the AP1000. China is, as it has done before, signing agreements with different nuclear vendors, to gain nuclear and other technological know-how.

Chinese projections

China operates only 11 reactors, which generate 1.9% of the country’s electricity (down from 2.2% in 2003). Five additional units, totalling 3.3 GW, are under construction, bringing the total to little over 10 GW by 2010. Of all 31 nuclear countries, China has the lowest share of nuclear power in its electricity mix. It is highly unlikely that nuclear power will play a major role in China’s energy balance over the next 20 or 30 years, even if a major enlargement program did get underway, as official government forecasts suggest. According to the International Energy Agency (IEA), in its World Energy Outlook 2007, Chinese projections are not credible:

“The government’s target is to have 40 GW in place by 2020, implying that China must add to the plants now operating 31 GW of new plants, as well as 18 GW of nuclear capacity under construction in that year. Although efforts to build more nuclear power plants have been intensified in recent years, the target set by the government seems ambitious given the current level of development, the long construction times and the current global bottlenecks in nuclear component manufacturing, which impose extended delays on delivery. In the [IEA] Reference Scenario, installed nuclear capacity reaches 21 GW in 2020 and 31 GW in 2030.”

This is almost half of China’s projections for 2020, but corresponds to Chinese nuclear planning in the past. It is all the more surprising that the IEA considers an “alternative policy” scenario where the installed nuclear capacity reaches 55 GW by 2030. But even under this unlikely scenario, nuclear power would still represent less than France’s current installed capacity and provide no more than 6% of the nation’s power.

Graph 1: Nuclear power in the world

Nuclear “renaissance”

The status and perspectives of the global nuclear industry have been subject to a large number of publications and considerable media attention over the last few years. Claims of a “nuclear revival” have had wide exposure. However, as of December 2007, there are 439 nuclear reactors operating in the world. That is five less than five years ago (see figure 1). There are 34 units listed by the International Atomic Energy Agency (IAEA) as “under construction” – around 20 less than in the late 1990s. In Europe, the number of operating reactors is shrinking rapidly. In 1989, a total of 177 nuclear units were operating in what are now the 27 EU Member States. That number shrank to 146 units as of December 2007, and will decline further by the end of the decade.

In 1992, the Worldwatch Institute in Washington, WISE-Paris and Greenpeace International published the first World Nuclear Industry Status Report, which we, as two of the original authors, updated in 2004 and 2007. Our updated version in 2004 proved the 1992 analysis correct: the combined installed nuclear capacity of the 436 units operating in the world in the year 2000 was less than 352 GW – which should be compared with IAEA forecasts in the 1970s that capacity would reach up to 4,450 GW. Today, the world’s operating reactors total 371 GW. They provide 16% of the electricity, 6% of the commercial primary energy and 2% to 3% of the final energy in the world – less than hydro-power. Twenty of the 31 countries operating nuclear power plants decreased their share of nuclear power in the electricity mix when compared to 2003.

The average age of the world’s operating nuclear power plants is 23 years. Some nuclear utilities expect reactor lifetimes of 40 years or more, but considering the average age of all 117 units that have already been closed is about 22 years, a doubling of operational lifetime seems optimistic. However, in our study we assumed an average lifetime of 40 years for all operating reactors and those that are currently under construction and have calculated how many plants would be shut down year by year.

This exercise enabled us to evaluate the number of plants that would have to come on-line over the next decades in order to maintain the same number of operating plants. In addition to units currently under construction with a scheduled start-up date, 69 reactors (42 GW) would have to be planned, built and started up until 2015 – one every month and a half – and an additional 192 units over the following 10-year period – one every 18 days (see graph 2).

Graph 2: Massive numbers of reactors will retire

Ageing problem

Even if Finland and France build an EPR, China builds an additional 20 plants and Japan, South Korea or eastern Europe added a plant, the overall worldwide trend is likely to be downwards over the next two or three decades. With extremely long lead times of 10 years and more, it is practically impossible to maintain or even increase the number of operating nuclear power plants over the next 20 years, unless operating lifetimes would be substantially increased beyond 40 years on average – and there is currently no basis for such an assumption.

The lack of a trained workforce, a massive loss of competence, severe manufacturing bottlenecks, international finance institutions’ loss of confidence and strong competitors in highly dynamic natural gas and renewable energy systems all exacerbate the nuclear industry’s ageing problem. Two years after construction started, the world’s largest nuclear builder’s show-case pilot project, AREVA’s EPR reactor, Olkiluoto-3, in Finland, is two years behind schedule and 1.5 billion euros (US$2.2 billion) beyond budget.

New projects confirm key problems seen in the past. Beyond the industrial and political posturing, nuclear power is on the decline and will be for at least a decade to come.

Mycle Schneider (mycle@orange.fr) and Antony Froggatt (a.froggatt@btinternet.com) are both independent consultants on energy and environmental policy. They co-authored the World Nuclear Industry Status Report 2007.