Energy: Elements for the Future
Shirley Ann Jackson, Ph.D.
President, Rensselaer Polytechnic Institute
Chinese Academy of Sciences
Monday, March 28, 2005
It is risky to make predictions about the future, especially on a global scale. The impact of key events of the past five years the terrorist attacks of September 2001, in the United States, the SARS epidemic, or the recent earthquake and tsunami tell us that the 21st century may turn out much differently than our best prophets could have predicted.
Nevertheless, current trends make it clear that we must give more thought to the future, however uncertain identifying key variables, determining elements we can change, and taking action.
Today, I will discuss one sector energy, hoping to stimulate your thinking on key elements already shaping the future, and on the impact energy will have on other sectors.
Global Energy Trends
Some trends are hard to dispute. In the past 35-40 years, worldwide energy consumption has nearly doubled, driven by population growth, rising living standards, invention of energy-dependent technologies, and consumerism. Energy consumption has grown nearly everywhere, with the most dramatic percentage increases in China and the rest of Asia. Coal usage has decreased marginally, but consumption of every other major energy source has increased markedly. Electricity use has nearly tripled.
If these trends continue, global energy consumption will be almost 60% higher in 2030 than it is now, and will double by mid-century. Fossil fuels will continue to dominate, and the share of nuclear power and renewable energy sources wind, solar, and geothermal energy will remain limited.
While the planet has energy resources to meet this demand beyond 20302, less certain is how much it will cost to extract and deliver these fuels to consumers. New energy infrastructure will require vast amounts of financing. Fossil fuels will continue to dominate [accounting for about 85% of the increase in demand or consumption]. Major oil and gas importers including the United States, Western Europe, and the expanding economies of China and India will become more dependent on supplies from Middle East members of OPEC and Russia. As international trade expands, the vulnerability to disruptions will increase, and geopolitical turmoil may trigger surging energy prices. Carbon dioxide emissions will continue to rise, calling into question the sustainability of current energy usage models.
And, that is only looking at the next 25 years.
The Energy Imbalance
Before I move on, let me talk about the current global energy imbalance.
An estimated 160 million people do not have access to electricity. One sixth of the worldís population lacks safe drinking water; half lack adequate sanitation; and, half live on less than $2 per day.
A reliable energy supply especially electricity is a prerequisite for addressing these needs the basis for the United Nations Millennium Goals set five years ago.
Put this in practical terms. Consider the situation in Nigeria, where the per capita consumption of electricity is about 70 kilowatt-hours per year. That equates to an average supply of 8 watts about one-fifth of what it takes to power a normal light bulb for each Nigerian citizen. With that 8 watts, a person must not only light his or her home, but also to compete with living standards in the developed world refrigerate food, pump water, wash laundry, read email, recharge a cell phone, perform online research, watch satellite television, heat and air-condition an apartment and siphon off enough so that doctors, storekeepers, manufacturers, government officials, power plant operators, and university instructors have enough left over to keep providing the expected services. In short, these 8 watts are more than 100 times less than what an average citizen in the developed world consumes about 200 times less than what we consume per capita in the United States, and 300 times less than per capita consumption in the colder countries such as Canada, Iceland, or Scandinavia.
And, of course, there are many developing countries in which the energy poverty levels are quite severe.
China, however, is a success story in the making. Throughout the 1990s, Chinese electricity generation grew by an average rate of 8% per year. In 2003, electricity generation in China increased by 16%, and the 2004 rate of increase was even higher (~18%).
The increase in oil consumption in China, from 2002 to 2003, accounted for more than 18% of global oil-demand growth and, in the process, China surpassed Japan, becoming the second largest oil consumer. In fact, China is the second largest consumer of primary energy overall not to mention the second largest economy, and the second largest contributor to global energy-related CO2 emissions. If projections hold, China will continue to dominate growth in energy demand. It should come as no surprise that the Tenth Five-Year Plan of the Chinese government, covering the period 2001-2005, puts energy conservation near the top of its energy policy agenda.
Many developing countries have not matched China's performance, either in terms of its evident careful planning or its resultant success. It also is evident that the imbalance in world energy supply, between the richest and poorest countries, is related to imbalances in opportunity and hope. In this way, on a global scale, energy poverty is related to security. The persistence of societal ills in many developing countries fuels the despair that gives rise to extremism.
What would happen if the world really sought to redress all the social and economic inequities? Even at present population levels, if the U.S. and Western Europe could manage (through conservation, no new technology, etc.) to lower their energy expenditure by 50%, and the developed world raised its per capita consumption to the current average (which would be equivalent to half the consumption levels now in Eastern Europe) the overall result would be a net increase in energy usage, globally, of 20%!!
Being slightly more realistic (e.g. assuming that the U.S. and Western Europe remain close to current consumption levels, conserve, but account for mild population growth and new technologies), and account for the population growth expected by 2030, the net increase is approximately 70% in global energy usage.
Despite energy demand growth, and progress in raising energy production and availability, per capita consumption in many developing regions is likely to remain well below that of the developed world at least for the next two and a half decades. Developing countries face challenges in financing energy projects, since their needs are larger relative to their economies. If current trends persist, the ranks of the rural poor using traditional fuels for cooking and heating actually will increase by 2030. And, the use of coal the most carbon intensive of fuels will go up sharply in developing countries, raising CO2 emissions by about 60% over current levels.
Put succinctly, one might characterize our options this way: Forget Development, Kill the Planet, or Go Nuclear!
That is, of course, an oversimplification, but it illustrates the degree to which choices in the energy sector will impact other societal trends. If we find these impacts compelling enough, if we seek to produce a different future energy picture, and if we choose to act now, there are a number of other factors under our control. If governments around the world adopted more energy-efficient and environment-friendly policies, the future energy use scenario could look quite different. These policies would focus, in part, on savings in energy consumption, through more efficient use of energy in transportation, electric appliances, lighting, and industrial applications. And, on the power generation side, these policies would promote a fuel mix more in favor of renewables and nuclear power.
Nuclear Power: Current Trends
Nuclear power currently generates 16% of global electricity [about 20% of U.S. electricity; about 80% in Lithuania; 78% in France; 56% in Belgium; 57% in Slovakia; 50% in Sweden; 46% in Ukraine; 40% in South Korea; 40% in Switzerland; 38% in Bulgaria; 36% in Armenia; 34% in Japan (less in 2003 due to shutdown plants, unclear for 2004); 33% in Hungary; 31% in Czech Republic; 28% in Germany; 27% in Finland; 24% in UK; 24% in Spain; 17% in Russia; 3.3% in India; 2.2% in China] [put another way, in Western Europe, about 150 nuclear power plants provide about 30% of the electricity]. Nuclear produces virtually no sulfur dioxide, particulates, nitrogen oxides, volatile organic compounds or greenhouse gases. The complete cycle, from resource extraction to waste disposal including facility and reactor construction emits only 2-6 grams of carbon equivalent per kilowatt-hour. This is about the same as wind and solar, if we include construction and component manufacturing. All three are two orders of magnitude below coal, oil and natural gas.
Worldwide, if the existing nuclear power plants were shut down and replaced with a mix of non-nuclear sources proportionate to what now exists, the result would be an increase of 600 million tons of carbon per year equivalent to about twice the total that experts estimate will be avoided by adherence to the Kyoto Protocol in 2010.
Despite the advantages, it remains uncertain what role nuclear power will play in meeting increased global energy demands. Yet, in the United States, there is a sense that nuclear power is being reconsidered. President Bush has stated repeatedly his support for new nuclear plants. A U.S. public opinion poll, found a record high 67 percent of respondents favored nuclear energy, with only 26% opposed.
Support for nuclear power, and specific plans and actions in a number of countries to expand nuclear capacity, are influencing global projections among nuclear insiders. The near term projections released in 2004 by the IEA and the International Atomic Energy Agency (IAEA) were markedly higher than just four years ago. The most conservative projection predicted 427 gigawatts of global nuclear capacity in 2020, the equivalent of 127 more 1000 megawatt plants than previous projections.
Where will this new capacity come from?
Nuclear expansion is centered in Asia. Of the 25 reactors under construction worldwide, 17 are located either in China (including Taiwan), South Korea, North Korea, Japan, or India. Twenty of the last 30 reactors completed are in the Far East and South Asia.
With 40 percent of the world's population, and with the fastest growing economies in the world, demand for new electric power in China and India is very high. The Chinese economy is expanding at 8-10% per year, and while it currently gets only 2.2% of its electricity from nuclear power, that percentage is scheduled to increase. By 2020, China plans to raise its total installed nuclear electricity generating capacity from the current 6.5 gigawatts to 36 gigawatts.
India, currently with nine plants under construction, plans to expand its nuclear capacity by a factor of 10 by 2022, and plans a 100-fold increase (!) by mid-century. Russia, which connected Kalinin-3 to the grid in December 2004, and has two new plants under construction, plans to approximately double its nuclear capacity, from 22 gigawatts today to 40-45 gigawatts in 2020.
In Western Europe, excavation began in 2004 for Olkiluoto-3 in Finland, a 1600 megawatt European pressurized water reactor (EPR), which marks the first new construction in the region [Western Europe] since 1991. The French utility, ElectricitÈ de France, recently selected Flamanville as the site for a new EPR, with construction set to begin in 2007. The new European Union accession countries, and other Eastern European countries with nuclear power, have made it clear that they intend to retain and expand their nuclear options. Even in Poland, where nuclear development was halted by a Parliamentary decision in 1990, the Council of Ministers, earlier this year, approved a draft energy policy that explicitly includes nuclear power.
In the United States, the most concrete sign that nuclear energy is regaining stature as a serious option, is nuclear plant license renewal. By December 2004, the U.S. Nuclear Regulatory Commission (NRC) had approved 30 nuclear power plant license renewals, extending reactor lifetimes from 40 to 60 years. To date, about three quarters of the 103 U.S. nuclear power plants have renewed their licenses, filed renewal applications, or indicated they expect to apply soon.
The U.S. Department of Energy (DOE) has a program Nuclear Power 2010 to facilitate additional order and construction of nuclear plants by the end of the decade. The Nuclear Energy Institute, the U.S. industry organization, has set a goal of adding 50,000 megawatts of nuclear generating capacity nearly a 50 percent increase to the national grid by 2020, plus 10,000 megawatts of additional capacity from existing units.
Whether or not these goals are met, the outlook for new U.S. nuclear plant orders is brighter than it has been. The industry has learned from its experiences in both safety and design. Three advanced new nuclear plant blueprints, with advanced safety features and standardized designs, have received NRC certification. Certification of a fourth, the AP1000 design, is expected later this year.
Three companies are seeking NRC site permits for nuclear plants, to use if they decide to build. Three consortia have responded formally to a DOE initiative to test the streamlined NRC combined construction and operating license process for new nuclear plants.
They include (1) NuStart Energy Development LLC, a partnership of 11 leading energy companies; (2) a group led by Dominion; and (3) another led by the Tennessee Valley Authority. DOE announced its approval of the NuStart and Dominion applications in November 2004, and had approved funding for the TVA effort already in July 2004.
The companies participating in NuStart are: Constellation Generation Group, EDF International North America, Entergy Nuclear, Exelon Generation, Southern Co., Westinghouse Electric Co., GE Energy nuclear operations, Bechtel Power Corp., and, more recently, Duke Energy, Progress Energy, Florida Power & Light Co., and TVA.
The Dominion led consortium includes Dominion, Bechtel, and GE.
The TVA led consortium includes TVA, GE, Toshiba, USEC Inc., Global-Fuel Americas, and Bechtel.
The Future of Nuclear Power: Key Factors
Four variables will influence the future of nuclear power: (1) incentives factors making nuclear power attractive; (2) concerns and open issues; (3) technological innovation; and (4) international cooperation.
Incentives include the expected growth in energy demand and the status of nuclear power as an emission-free source of electricity.
The reduction of carbon emissions is a high priority, where both nuclear and renewable sources of energy wind, solar, and geothermal plants could have greater roles. Renewable sources, however, do not provide the baseload capacity needed to replace large fossil fuel plants.
A second incentive is energy security and diversity. During the oil crisis of the 1970s, escalating concerns about the vulnerabilities of dependence on imported oil helped to drive nuclear power investment in both the U.S. and Europe. Similar concerns have been voiced recently. In January 2004, the European Commission issued a so-called "Green Paper" on energy supply security in Europe, in which the Commission estimated that continuation of the status quo would increase the dependency of Europe on imported energy from the current 50% to about 70% in 2030. The recent spike in oil prices, coupled with political concerns regarding the reliability of relationships with large oil and natural gas producers, likely will continue to spark security of supply concerns for many countries. [The recent vote of the U.S. Senate to open the Alaskan Arctic National Wildlife Refuge to oil drilling was promoted, most strongly, as a means of lessening U.S. dependence on imported oil, of reining in energy prices, and of easing the growing U.S. trade imbalance.]
Given diverse stable uranium producers, and the relative ease of acquiring and storing a long term supply, nuclear energy may offer an advantage over fossil fuels.
Concerns and Open Issues
Critical issues facing nuclear power include: economics, safety, waste disposal, and, more recently, security and proliferation.
While many observers attribute the decline of nuclear energy generation in the U.S. to the 1979 accident at Three Mile Island, in Pennsylvania, a large factor was economics. After the Arab Oil Embargo of 1973 and 1974, annual growth in electricity use in the U.S. fell from 7% to 1 percent to 2 percent per year leading to huge backlogs of unneeded generating capacity on order or under construction. Nuclear plants were highest in cost, and most easily cancelled. More than 120 nuclear plant orders were withdrawn. Construction schedules stretched over years, and inflation caused construction costs to soar. The cost overruns could not be fully recovered through rate increases allowed by state public utility commissions.
By the late 1980s, numerous nuclear plants were retired before the ends of their 40-year licenses, due to costs and mediocre performance. By 1995, when President Clinton appointed me as the Chairman of the U.S. Nuclear Regulatory Commission (NRC), the safety performance and production efficiency of the U.S. nuclear industry were showing some improvement, driven by economic necessity and industry focus on operating performance.
I shifted the NRC and the U.S. nuclear industry to "risk-informed, performance-based" regulation. This meant directing oversight toward issues presenting the greatest risk. Rather than devote equal regulatory oversight to all plants, resources were concentrated on plants (and activities within plants) most at risk. While all plants were subjected to a baseline inspection program, those that had a proven commitment to safety were able to continue to improve their performance with less regulatory interference. Probabilistic risk assessment of nuclear designs and operations was applied much more widely to facilitate risk-informed, performance-based regulation and operation of nuclear facilities.
This paid immediate dividends, and both the approach and its benefits have continued. In 1980, the average nuclear plant in the U.S. produced electricity at 62.7 percent of potential capacity. In 1990, the figure was 71.7 percent. Since 2000, unit capability has run consistently in the 90 percent range. Total electricity production for the 103 U.S. nuclear plants reached approximately 780 million megawatt-hours of electricity in 2002, compared with about approximately 560 million megawatt-hours in 1990. That is the effective equivalent of commissioning approximately 25 new 1000-megawatt plants at zero cost.
This production efficiency is greater than for other fuels: coal-burning electricity generating plants operate at about 70 percent of potential capacity; natural gas plants can vary from capacity factors of 14 to 50 percent. And, capacity factors for wind and solar generation average around 25 percent. Nuclear energy has become the most efficient, economical, and widely available energy source. The average electricity production cost in 2003 for U.S. nuclear plants was 1.72 cents per kilowatt-hour. Coal-fired plants were next at 1.80 cents, oil at 5.53 cents and natural gas at 5.77 cents.
The improved economic performance has made existing U.S. nuclear plants more desirable. The deregulation of the electric utility industry has provided opportunity for the sale of electricity on the open market, and merchant companies have acquired nuclear plants to do that.
While nuclear plants require higher capital investments, fuel costs make up a very small percentage of their electricity generation costs. For example, when Finland performed a comparison study in 2000 and found that nuclear energy would be its least-cost option for new generating capacity, one of the considerations was fuel cost. The Finnish study found that a doubling of fuel prices would result in the cost of nuclear-generated electricity rising about 9 percent, while for coal, costs would rise 31 percent, and for natural gas, 66 percent.
Although the costs of coal have remained relatively stable, the costs of crude oil, petroleum products, and natural gas are more volatile. As countries look toward the future, the low costs of nuclear fuel, with more stable and predictable operating costs of nuclear plants, will be seen, increasingly, as an advantage.
Despite improvements in terms of avoiding unplanned shutdowns, better preventive maintenance, availability of important safety components, the efficiency of refueling outages, and reduced worker radiation doses the nature of nuclear technology will never leave room for complacency. In the wake of the 1986 Chernobyl accident, nations put international safety standards and peer review networks in place, and it is vital that these measures, together with strong national regulatory programs remain. As new reactor designs are developed and built, as nuclear technology spreads, and as existing plants age, safety measures must be adapted and more broadly implemented.
Nuclear security and proliferation concerns are more prominent today. The September 2001 terrorist attacks in New York City (USA) led to the reevaluation of security in every industrial sector in the United States and world wide. But, well before this global security consciousness, nuclear power plants were among the most secure industrial structures. Reinforced concrete and steel structures, physical barriers, well-armed security forces, redundant safety systems, intruder detection devices, and perimeter patrols were already in place in the U.S. and most other countries. Since 9/11, countries are re-examining and strengthening these measures, with additional barriers, larger security forces, improved equipment, and better coordination with international, national, and local law enforcement.
A final "open issue" which I have sometimes called the Achilles' Heel of the nuclear industry is the management and disposal of spent nuclear fuel. Even though the actual volume of spent nuclear fuel produced globally every year some 12,000 tons is small compared with the 25 billion tons of carbon waste released directly into the atmosphere every year from fossil fuels, and even though most technological problems associated with geological disposal are solved, the public is likely to remain skeptical until waste repository solutions have been demonstrated, or other ways to close the back-end of the nuclear fuel cycle are further developed, and accepted.
The U.S. government has made progress toward licensing and building a nuclear waste repository at Yucca Mountain in Nevada. But, its future is still in doubt, and it may not be adequate to store the volume being generated, especially with license renewal. [Last year, a court ruling asked the Environmental Protection Agency to reconsider the formulation of its radiation standards for the repository. And earlier this month, the DOE statement that government employees could have falsified documents related to the repository project has thrown yet another spin into an already complex saga.]
Elsewhere, the greatest progress on deep geological disposal has been made in Finland and Sweden. Finland's government and parliament have approved a decision, in principle, to build a spent fuel repository near Olkiluoto. Construction is slated to start in 2011, and operation in 2020. Sweden has started geological investigations at two proposed sites, and expects to have a site recommendation by 2007.
Other nations with nuclear power generation programs minimize the volume of waste, and extend the fuel supply, by reprocessing spent fuel. The U.S. declined the reprocessing option in the 1970s, concerned that the reprocessed fuel, which contains plutonium, could be used in nuclear weapons.
Recent proposals urge the consideration of multinational cooperation in spent fuel management and disposal. Over 50 countries have spent nuclear fuel (including fuel from research reactors) awaiting disposal or reprocessing. Some have neither the proper geology to house an underground repository, nor the volume of nuclear activity to make such a facility cost-effective.
Innovation in Nuclear Technology
Although no U.S. plants have been ordered since the early 1970s, U.S. nuclear vendors have introduced technological innovations, designing advanced reactors for certification by the NRC, and marketing them to other countries. These vendorsí construction and operational experience, and the shared experience of other multinational vendors and countries developing indigenous designs, have kept nuclear technology moving.
Industry already is planning for succeeding generations of nuclear power technology. The U.S.-led Generation IV International Nuclear Forum a collegial effort by 10 countries has published a roadmap for research and development on six innovative reactor concepts, such as the "Molten Salt Reactor" and the "Supercritical Water Cooled Reactor."
The innovative reactor and fuel cycle technologies which address vulnerabilities related to safety, security, proliferation, and waste disposal, while generating power at competitive prices, are the most likely to be built. This requires a reliance on passive safety features (not requiring operator intervention); fuel configurations that achieve tighter control of sensitive nuclear materials; and design features which reduce construction times, and lower operation and maintenance costs.
If nuclear energy is to offer realistic solutions to the energy needs of developing nations, a key feature will be size. Traditionally, nuclear plant designs have grown larger, utilizing economies of scale. But smaller plants (less than 300 megawatts) allow more incremental investment, better match lower grid capacities, and can be adapted easily to other industrial applications ñheating, seawater desalination, or the manufacture of chemical fuels.
A few of these designs are moving toward implementation. Russia has completed the design and licensing of a floating (barge-mounted) nuclear power plant, the KLT-40S, which takes advantage of Russian experience with nuclear-powered ice-breakers and submarines.
South Korea is making progress with its System-integrated Modular Advanced ReacTor, or "SMART" pressurized water reactor. The Korean government plans to construct a one-fifth-scale (65 megawatt) demonstration plant by 2008, but has not yet announced a commercialization date for the full scale (330 megawatt) plant.
Among gas-cooled reactors, the South African Pebble Bed Modular Reactor (PBMR), which features billiard-ball-sized, self-contained fuel units, is well under way. Preparation of the reactor site at Koeberg has begun, and fuel loading is anticipated for mid-2010.
More innovative designs still in development employ modular cores that need refueling only every 30 years. This would reduce proliferation concerns and it would lessen infrastructure needs.
There are a number of countries that continue to reprocess spent fuel, and, in most cases, this is leading to the production and use of MOX mixed oxide fuel which is then used as a reactor fuel for power generation. There are concerns about the proliferation potential of MOX, given its use of plutonium, but France and Japan, among others, are proceeding nonetheless.
Transmutation is another waste management approach. The basic goal is referred to as "P&T" "partitioning and transmutation" i.e. trying to separate out the long-lived transuranic radionuclides (actinides -- neptunium, americium, and curium, in particular) and using neutron bombardment in an accelerator-driven system (ADS) to burn up the nastiest bits of waste, making more electricity in the process. If these actinides could be converted into shorter lived radionuclides essentially fission products the result would make high level radioactive waste much easier and less expensive to handle and dispose of. In addition to the actinides, longer lived fission products like technetium-99 and iodine-129 could also be burned up in an ADS.
Yet another factor that already has influenced the expansion of nuclear power is international cooperation, and cooperative innovation. In the late 1980s aftermath of the Chernobyl accident, the value of international nuclear safety cooperation became painfully evident. The nuclear community understood, "a nuclear accident anywhere is an accident everywhere", and acknowledged that a single additional instance of a nuclear core meltdown accident could signal the death-knell of the entire industry.
But, as design safety features and superior operational practices began to be shared, the positive synergistic benefits of technological cooperation also became evident.
Many nuclear industry achievements have built on prior knowledge, cooperation, and sharing. The South African pebble bed reactor is modeled on a German design. China also has shown a keen interest in the pebble bed design, both for its safety features and its scalability. China has built and gained experience with a 10 megawatt PBMR pilot plant.
Currently, Westinghouse is trying to sell four of its soon-to-be-certified AP1000 reactors to China as an alternative to the European Pressurized Water Reactor offered by Areva, and the Economic Simplified Boiling Water Reactor from General Electric (GE). The latter, according to GE, improves on a previous evolutionary version, the NRC-certified advanced boiling water reactor, two of which were built at Kashiwazaki in Japan in the late 1990s.
But, perhaps the most unique proposal for cooperation is the project recently approved by the city council of Galena, Alaska, a tiny town of less than 700 people, located on the north bank of the Yukon River, with no roads leading into or out of town, and the nearest electrical grid 200 miles away. According to a study prepared jointly by the U.S. DOE, the University of Alaska, and several other organizations, nuclear energy was a "clear economic winner" over proposals to use coal or enhanced diesel to replace the existing six-generator diesel facility that gives the town electricity. What came as even more of a surprise is that the reactor proposal selected was the Toshiba 4S (which stands for "Super Safe, Small, and Simple"). According to Toshiba, the 10 megawatt unit would be manufactured offsite and delivered by barge; it would have no mechanical systems internal to the sealed assembly, and the reactor core would be sent back to the factory for a replacement at the end of its 30-year life.
While this project has yet to enter even the pre-license-application review stage, the unusual nature of the proposed collaboration shows how far nuclear power has come, and hints at possibilities that lie in its future.
Beyond Nuclear: Liquid Natural Gas
An important energy source beyond nuclear is natural gas. Over the next 25 years, the global consumption of natural gas is expected to increase more, in absolute terms, than that of any other primary energy source. The World Energy Outlook of the International Energy Agency projects an annual 2.3% rate of growth through at least 2030, with the highest increases relating to power generation. While per capita gas consumption is expected to remain highest in the mature markets of OECD North America, the most rapid growth is projected in Africa, Latin America, and the developing countries of Asia. In China and India, the use of gas is expected to rise by 5% per year during this period.
A combination of factors is driving the growth, including rising oil prices; the fact that natural gas has fewer greenhouse emissions than oil and coal; the need for energy security and diversity; and the relative ease of investing in combined cycle gas turbines for power generation.
Liquefied natural gas (LNG) will play a major role. While proven natural gas reserves have outpaced production, a common difficulty has been in getting the fuel from the source to the user. Extended pipelines such as the 4000 kilometer West-East Pipeline project in China that began commercial operation just two months ago have been viewed as the only economically feasible solution for natural gas delivery. But, there are risks associated with placing pipelines through politically unstable regions (especially when they go outside a country). Improved LNG production technology, efficiency, and economics are beginning to reshape the picture.
Volume reduction, by a factor of about 600, enables LNG to be transported on special double-hulled ships designed to provide the required pressurization and cryogenic cooling.
Until recently, LNG shipments were widely viewed as a Pacific Ocean business, with ships fueling up at terminals in Australia, Brunei, Malaysia, and Indonesia (currently the largest exporter), and delivering liquid gas to Japan, South Korea, and Taiwan. While the United States has used LNG commercially since the 1940s, it has represented only a minute fraction of U.S. natural gas consumption (1-4%, depending on the source). By contrast, Japan with minimal domestic natural gas production, and no pipeline access imports over 95% of its natural gas in LNG form, and now counts on gas for more than 12% of its total energy needs.
The "liquefaction trains" needed for LNG production require a huge investment and, in many cases, multi-decade sales contracts. The gas must not only be extracted; it must be liquefied, stored in export facilities, transferred to tankers, received at special terminals, and reconverted to a gas. Nevertheless, the industry insists that production and transport costs are dropping, and that the LNG industry is on the verge of huge expansion.
It is not only the industrial sector which sees this potential. Already in 2003, both U.S. Secretary of Energy Spencer Abraham and U.S. Federal Reserve Chairman Alan Greenspan were calling for increases in LNG imports to the United States, to help offset declining North American gas production.
According to Jonathan Stern, the Director of Gas Research at the Oxford Institute for Energy Studies in England, "This is an exploding market. We've really had a breakthrough in technology, and therefore price, in the last five years. Everything has gotten bigger and cheaper. The liquefaction plants, tankers, and re-gasification plants have been scaled up, and unit costs have fallen."
Projections for the future of LNG are substantial. In 2004, exporters sold 1.8 billion cubic feet of LNG in North America. By 2010, the gas industry hopes that figure will rise to between 6 and 10 billion cubic feet. The World Energy Outlook 2004 (WEC) notes that while almost 70% of cross-border trade in gas currently goes through pipelines, 60 percent of the growth in gas trade will be in the form of LNG and points out that the development of common operating standards for safety, quality, and other technical aspects will only increase the prospects for LNG trade.
Industry has recently begun to make major LNG investments. Just last month, Qatar Petroleum signed LNG joint ventures with two companies, Exxon Mobil Corporation and Royal Dutch/Shell Group investments of $12.8 billion and $6 billion, respectively. The Qatar offshore Persian Gulf North Dome field, the largest known natural gas reservoir in the world, is estimated to hold 900 trillion cubic feet of gas. With this venture which Qatar Petroleum has called "the world's largest ever LNG development," the country clearly is banking on tapping large markets in Europe and North America.
As I indicated earlier, China has invested heavily in its West-East Pipeline project in hopes of tapping the extensive gas fields of its central and western provinces to supply its energy-hungry markets to the east. China also has explored the possibility of building a gas pipeline from Turkmenistan, and reopened talks earlier this month with Kazakh officials about a trans-border gas pipeline from Kazakhstan the latter of which, according to Ambassador Steven Mann, the U.S. would support.
China also is looking to import LNG. The China National Offshore Oil Corporation (CNOOC) is building a terminal in the Guandong province, scheduled to begin receiving LNG from Australia in 2006. And, CNOOC plans a second terminal in Fujian as soon as in 2007. The Chinese government has refused CNOOC's request to build a third terminal in Zhejiang, at least until the first two plants are operational. But, it is clear that China is watching the shift in world natural gas markets; and as the emerging role of LNG continues to play out, China, like the other major energy consumers, will adapt accordingly.
The 2002 IEA Study
In 2002, the International Energy Agency examined the effort needed to meet Chinaís desired target of doubling the share of natural gas in the Chinese energy supply mix within 10 years.
IEA provided the following conclusions:
- The Chinese gas industry, while nascent as of 2002, is poised for rapid growth.
- Success requires making natural gas competitive turning a market potential in the eastern coastal provinces into a paying market. (with the main competitor abundant and cheap domestic coal).
- The Chinese government must translate the benefits of natural gas (the reduction of local air pollution) into a driver for gas development through coal emission fees, budget subsidies, and better implementation of environmental laws and other governmental incentives.
- A systematic approach requires technical norms, demand evaluation, supply security, gas quality, contract standardization, and training for engineers and economists.
- Development of pricing reforms, and a legal and regulatory framework, are needed.
Since the time of the study, China has carried pipeline development through to operation. What is not yet clear, given that the major West-East Pipeline only became operational in January, is to what extent China will, in a parallel, develop the "downstream" receiving and distribution sector of its gas infrastructure the "end-use" markets. This is key to broader energy security and to domestic and international market success.
Beyond Nuclear: Hydrogen and Hydrogen Fuel Cell
One final possibility for the future lies in the use of hydrogen as a transport fuel. Most efforts focus on the development of a fuel cell, in which hydrogen is used to produce electricity, which would then be used to drive an electric motor for propulsion. Honda has been testing its 107-horsepower hydrogen fuel-cell-powered FCX model. General Motors recently said it would have a fuel-cell system ready by 2010, with vehicles available not later than 2015. Daimler Chrysler announced last week it had sent 60 hydrogen fuel-cell-powered Mercedes-Benz A-Class cars to Japan, Germany, Singapore, and the U.S. for testing, and that the cars would be ready to go on sale in 2012.
At Rensselaer, we have been working on perfecting certain aspects of fuel cell technology, focusing on fuel cell development, hydrogen generation and storage, electrochemistry, solid state and polymer science, and the application of nano-materials in fuel cell and hydrogen research, including new material solutions to improve fuel cell reliability, efficiency, and cost. One of our professors studies nonlinear control systems to apply them to fuel cells. Flexible control systems that can react to the variables in the environment or differing operating conditions are key to fuel cell systems.
For all the virtues of hydrogen as an emission-free transport fuel, it is not a "primary fuel". It cannot be mined like uranium or coal. Advocates say that hydrogen is the most abundant element in nature, which is true. However, hydrogen in a form useable as a fuel must be produced.
Both of the hydrogen production processes electrolysis and steam reforming of methane require consumption of some other form of fuel. Depending on the form and process, the resulting carbon emissions could offset any environmental benefits.
Research initiatives are underway in Japan, China, Europe, and the U.S. to explore using the elevated heat of high-temperature gas-cooled reactors to produce hydrogen from water, using thermo-chemical reactions. This approach, or the simpler approach of using nuclear generated electricity to power hydrogen production through electrolysis, would ensure not only emissions-free automobiles, but emissions-free production plants as well.
In summary, it should be clear that achieving a sustainable global energy framework, capable of meeting the energy needs of citizens without causing irreparable damage, will require continuing technological advances that modify our current production and use of energy. Nuclear power is most attractive today in countries where energy growth is rapid, where alternative resources are scarce, where the security of energy supply is a priority, and where the infrastructure (human, civil, legal, regulatory) exists to support nuclear power generation. In the future, the promise of advanced nuclear reactor technology could help to free us from dependence on fossil fuels, to produce the hydrogen for emission-free transportation, and to raise living standards around the planet. But, achieving that goal will require long-term vision, controlling variables like safety, security, and economic performance, and cooperative innovation.
In the interim, there will be increased focus on other fossil sources such as natural gas, which requires an integrated gas strategy. This means continued exploration, transportation systems to get the resources from source to market, and downstream infrastructure. It will depend, as well, upon the market, security, and global need, competition, and cooperation.
Finally, research into new technologies and fuel sources, such as hydrogen (fuel cells), should be vigorously pursued.
This is not a complete picture, but it is a picture. I hope it is illuminating.
Source citations are available from the division of Strategic Communications and External Relations, Rensselaer Polytechnic Institute. Statistical data contained herein were factually accurate at the time it was delivered. Rensselaer Polytechnic Institute assumes no duty to change it to reflect new developments.