Drivers of Innovation in Energy and Fuel Cell Technology: Supply-Demand and R&D
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Drivers of Innovation in Energy and Fuel Cell Technology: Supply-Demand and R&D Madeline Woodruff IEA and Yukiko Fukasaku OECD 1 Overview Q Drivers of energy technology innovation – Sustained increase in demand – Diversification of sources of fossil fuel supply due to growing security and economic concerns – Fuel switching and development of new fuels due to efficiency and environmental concerns – De-regulation and increasing competition Q Increasing importance of R&D and technological innovation Q How the energy innovation system works Q Focus on fuel cells 2 Part I Supply, Demand, and Investment Trends Role of Fuel Cells in the Energy System 3 4 Today’s Energy Reference Word Primary Energy Demand Challenges 6,000 WEO 2002 Oil Q Energy security to fuel economic 5,000 growth and mobility Gas 4,000 and Coal 3,000 curbing environmental and climate Nuclear damage from energy use 2,000 Hydro 1,000 Other – “business as usual” energy renewables demand is rising inexorably 0 1970 1980 1990 2000 2010 2020 2030 – greenhouse gas emissions also – stronger policies stabilize OECD emissions only after 2020. Reference Energy-Related CO2 Emissions WEO 2002 Q Access to modern energy for all – 1.6 billion people have no access 45000 to electricity, 80% of them in 40000 World South Asia and sub-Saharan 35000 30000 OECD Africa 25000 Transition 20000 Q Lower costs in deregulated Economies 15000 markets; infrastructure stresses Developing 10000 Million Tonnes CO2 Tonnes Million Countries 5000 0 1971 1990 2000 2010 2020 2030 5 Renewables Growing Fast, but From a Low Base Growth of Renewables Supply from 1971 to 2000 12% 52.1% 10% 9.4% 32.6% 8% 8.8% 8.4% 6% Geothermal Solar Wind Tide, other 4% annual growth rate rate growth annual 2.7% 2.1% 2.1% 1.8% 2% 0% TPES Renewables CRW Hydro Other TPES: total primary energy supply CRW: combustible renewables and waste 6 Source: International Energy Agency Meeting the Challenges: What Does it Take? Q Faster progress in energy Q How? technology development is – more resources for technology R&D an essential element: and demonstration and underlying – more cost-effective sciences; identify and fill gaps (as solutions usual) – fostering of public/private partnerships, – capitalize on capital stock and of international collaboration, turnover as it occurs especially for large demonstrations (as – costs depend on not only usual) development and – support and facilitation of technology investment costs but also uptake (as usual, but connection to the extent to which capital R&D and technology learning stock is retired early sometimes missed) – other efforts to foster and facilitate innovation – more specific policy advice to governments 7 What Can Hydrogen Offer? Energy Security A number of IEA member countries have made commitments to accelerate the development of the hydrogen energy economy: H2? Q Energy security: reduced dependence on imported fuels Environmental Economic (depending on the source) Security Security Q Climate change: potentially near- emissions-free vehicles and distributed generation (carbon sequestration required if fossil- Two main strategies for dealing with based; lower-cost production climate change: essential) • Europe: renewables, energy efficiency • North America: carbon capture and storage Q Investment: some heavy demands promising enormous dividends • Both pursuing hydrogen – from fossil fuels, nuclear energy, renewable energy 8 Roles for Fuel Cells – Stationary, Distributed Generation Local and system benefits, including storage to back up intermittent renewables TODAY: • niche markets -- telecommunications, back-up power systems TOMORROW: • Natural gas fuel cells: significant contribution to energy supply expected after 2020 -- primarily stationary applications (WEO 2002) • Competitive fuel cells (distributed generation): expected when -- capital costs fall below $ 1,000 /kWe (~75% reduction) -- efficiencies approach 60% (>50% increase) • N atural gas reforming first -- coal, biomass, water electrolysis not expected to be economically feasible before 2030 • Fuel cell/gas turbine combined cycle -- over 70% efficiency? 9 Roles for Fuel Cells Vehicles: transport is responsible for over half of world oil demand Q fuel cells in vehicles expected to become attractive only around 2020 (WEO 2002) Q by 2030, only a small share of the vehicle fleet; even under alternative (stronger) policies, less than 5% of the OECD fleet Q difficult to supply substantial quantities of hydrogen for vehicles before 2050 unless carbon sequestration is applied on a large scale -- only fossil fuels could achieve this at reasonable cost Q any increase in renewable or nuclear electricity before 2050 would probably best be used to reduce emissions in the power sector 10 Investments in Developing a Hydrogen Economy Q Iceland, Singapore, others: Q Others: e.g., Italy, Canada, United committed to introducing hydrogen Kingdom have accelerated and and fuel cell products in the electric expanded their investments. utility and transport sectors Q China: has an organized program Q European Union: recently intended to lead to development of announced a long-term, 2 billion fuel cell vehicles euro R&D program in hydrogen energy, ren. energy technologies Q Private sector: investments in hydrogen energy technology, fuel Q United States: recently cells have grown dramatically over announced a five-year, $ 1.2 billion the past decade (in developed and hydrogen energy technology and developing countries) infrastructure program. Q Q Japan: fuel cell and hydrogen Several developing countries: technology research program has financing for demonstrations of tripled since 1995, reaching over hydrogen fueling stations, fuel cell- $ 200 million in 2002 powered buses 11 Part II Innovation in energy and fuel cell 12 How can innovation influence energy supply and demand? Q More efficient use of primary energy sources (e.g., combined cycle power generation) Q Increased efficiency in end-use (e.g., electric appliances, lower-consumption cars) Q Harnessing emerging sources of energy (e.g., solar, wind, biomass) Q Developing technologies that address efficiency and environmental concerns (e.g., fuel cells, advanced turbines, advanced exploration and extraction) Q Putting in place infrastructure that can deliver new energy services (e.g, hydrogen) 13 How can innovation in energy technology be stimulated? Q Assuring well-functioning markets Q Assuring well-functioning innovation system – Innovation takes place in a system of inter-linked actors, – In both public and private sectors. – Depends on government policies to: • Fund R&D and demonstration including through public-private partnerships, • Supply highly qualified S&T human resources and ensure mobility, • Put in place appropriate framework conditions including regulations, competition policy and intellectual property protection, • Stimulate use of emerging organisational innovations, e.g., industrial clusters and venture capital 14 What are the characteristics of energy technology innovation system? Q The sector itself is diverse - there is no one characteristic type of innovation system Q Traditionally a large role of the public sector, but the private sector is growing in importance. Q Technology rapidly becoming more diverse and complex (nuclear fusion, renewables) Q Important role of R&D and innovation Q Requires long time horizon for development and commercialisation Q Infrastructure dependent – tendency for technology lock-in. 15 What are the characteristics of fuel cell innovation system? Q Rapidly growing energy technology sub-sector for stationary, mobile and portable applications, Q Co-existence of mature and emerging technology -the innovation system is changing fast, Q Actors include diverse industrial sectors outside the energy sector, firms of differing sizes and specialisation, and diverse scientific disciplines, Q Many government programmes and research consortia, Q Further development highly dependent on a well-functioning innovation system. 16 Public and private energy R&D trends 17 Figure 2 IEA Government Energy R&D Budgets, 16000 14000 12000 10000 8000 6000 1974-2001 Exchange4000 Rates 2000 US$ M illion, 2001 Prices and 0 19 74 19 77 19 80 19 83 19 86 Conservation 19 89 Fossil Fuels 19 92 Renewable Energy 19 95 Nuclear Fission 19 98 Nuclear Fusion 20 01 Power and Storage Other 18 14,000 12,000 10,000 Energy R&D Expenditure in the U.S. (in millions of constant 1995 $) 8,000 6,000 4,000 2,000 0 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Public Sector Private Sector 1992 Total 1993 1994 1995 1996 1997 1998 1999 19 Energy R&D Expenditure in Japan (in millions of constant 1995 PPP $) 8,000 7,000 6,000 5,000 Business Research institutes 4,000 Universities Total 3,000 2,000 1,000 0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 20 Private R&D Expenditure of the German Energy Sector (in millions of constant 1995 PPP $) 200 180 160 140 120 100 80 60 40 20 0 1995 1997 1999 2000 2001 21 Challenges in enhancing innovation in energy and fuel cells Q Sustaining R&D investment levels, in view of the decreasing overall R&D in both public and private sectors, Q Efficiently channelling R&D funds through public/private partnerships and research consortia, Q Taking measures to stimulate networking, in view of actors that are dispersed in diverse sectors in the innovation system, Q Extending the innovation system globally, including non-OECD member economies. 22.