Energy technology transitions

This section considers lessons that can be drawn from the evolution of four broad technology areas: gas-fired electricity generation, nuclear power, biomass fuels and domestic energy technologies.

CCGT technology rapidly displaced coal for electricity generation in the UK, US and elsewhere in the 1990s. This was a rapid process, and one that significantly reduced GHG emissions. However, the story behind this transition is far from the simple one where a superior technology takes market share from the competition. The gas turbine technology came out of very heavy investment by the US government and others into the development of jet engines for military use (Watson, 2004). CCGT then gained momentum as a niche power technology, used for pumping natural gas and oil through long distance pipelines. It was then introduced by US utilities as emergency backup generation capacity during a period of regular power blackouts in the 1960s.

CCGT's subsequent penetration of electricity generation in the US and the UK reflected the technology's low costs, flexibility and high efficiency. Liberalised energy markets created a good 'selection environment' for technologies with these attributes. While public R&D funding does not guarantee any technology will become successful, it clearly can produce successful technologies. The importance of state R&D funding, technical flexibility and niche-uses comes out strongly in the story of the CCGT.

Nuclear power lacks CCGT's flexibility and low costs, and the selection environment has evidently been poor for nuclear newbuild for some time. However, this appears to be changing in the US and UK where the hope for finding a few large-scale technical fixes to climate change and energy security problems remains very beguiling. Nuclear power is one such technology, offering low carbon electricity in a potentially secure way. However, public sector investment in unlikely in liberalised markets (and has been ruled out in the UK), and the risks to private investors remain prohibitively high. Moreover, there remains substantial and passionate political resistance to nuclear power in many countries on a variety of grounds.

A large revival of nuclear power does not seem very likely given these considerations. Assuming investors do come forward, nuclear power could make a small contribution to reducing GHG emissions, but one that would be far from immediate. The contribution of nuclear power to energy supply security, where oil supplies for transport are the foremost concern, would probably also be limited.

Solid biomass fuels for heat and electricity, and ethanol produced from woody crops, have significant potential to reduce emissions, and in terms of broader sustainability. Liquid fuels produced using intensively farmed annual crops such as maize or palm oil, however, have proven most attractive to OECD policymakers as an alternative to oil imports (and to food crop production for farmers). As a result the direction being taken in industrialised countries is towards production and importation patterns that may do very little to reduce total fossil fuel use, and are far from sustainable in other respects.

This is not to say that biomass and even nuclear technologies necessarily have no role to play in transitions to sustainable energy around the world. Rather the challenge is to address their technological and related shortcomings though targeted RD&D, and to create 'selection environments' that favour appropriate low carbon technologies for specific contexts. For example, in the household sector two sets of information technologies will have vital roles to play in future. Firstly, 'smart meters' allow energy supply companies to read meters remotely, and make possible full integration of households into the market as electricity importers and exporters. Secondly, display units in homes can show people exactly how much gas or electricity they are using or wasting.

Micro-generation technologies can and must have a central role to play in providing for people's heat and electricity needs. The key technologies here are: solar PV and micro-wind turbines for electricity; solar thermal panels, heat pumps and biomass burners for domestic heat, and micro CHP units (fuelled by biomass or natural gas) for supply of both heat and electricity. However, people are not accustomed to taking an active role in securing (low carbon) energy supplies, which implies that there must be social as well as technical transitions.

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