Enhancing the Energy Transition

Enhancing the Energy Transition

WHITE PAPER ON Enhancing the energy transition NOVEMBER 2019 The energy transition is one of the largest global challenges that societies are presently facing. It demands stewardship from Van Oord. Our ambition is to decarbonise societies and make them more sustainable, creating a better world for future generations. That is why we have launched our game-changing S.E.A. programme. Our S.E.A. programme consists of three mutually reinforcing themes: Accelerating climate initiatives, Enhancing the energy transition and Empowering nature and communities. In this white paper, we focus on Enhancing the energy transition. We highlight the scale and scope of the energy transition and we propose eight key elements to account for. We advocate making use of integrated solutions. These include innovative solutions and accounting for environmental and social impact. Accelerating Enhancing Empowering climate initiatives the energy transition nature and communities | 2 Enhancing the energy transition Energy is essential for all life on Earth. Society’s energy choices and decisions impact the earth’s natural sources. In order to be sustainable, we need to choose our energy sources carefully. Our current energy production and consumption are responsible for a substantial part of climate change. Therefore, the true cost of energy goes beyond money. Economic, political and social factors also play an essential role, because these factors have an enormous influence on the pace and process of the energy transition. For Van Oord, this demands undergoing two transitions: at company level and at global level. Our ambition is to enhance the decarbonisation of the world’s energy supply. Topics such as system integration, energy storage, stakeholder engagement and partnerships play a crucial role in enhancing the transition towards a decarbonised energy system. | 3 Closer look at the energy system To obtain more insight in the worldwide energy transition, we have to take a closer look at what’s happening in the energy system. Both world energy demand and supply are gradually shifting towards renewables. Energy efficiency is also being given increased attention. For this analysis, DNV GL (2018) has been used as the main source. World energy demand The world’s energy demand increased by 35% over the past 15 years (see the graph below). For the coming 15 years, energy demand is expected to increase by just 15%, and thereafter level off and start to decline. This demand downshift is based on the presumed deceleration in population and productivity growth, and on an accelerating increase in energy efficiency. Increased energy demand TRANSPORT BUILDINGS MANUFACTURING Last 15 years Coming 15 years 35% • 15% • Graphic 1: Energy demand | 4 Transition from fossil to renewables for application. Moreover, maintenance costs of tidal energy systems are The energy transition transforms the present energy system into a more sustainable a major issue due to the aggressive offshore environment. one based on renewable energy sources. Several renewable options are needed to achieve this. The main challenge is to realise this transition at the lowest Bridge fuel possible cost without compromising the system’s reliability. Since the biggest Natural gas as such is not a renewable energy source. However, we expect renewable sources (in 2050 solar and wind energy) produce electricity, the energy this to be a bridge fuel as gas is still needed for ensuring a stable power transition must first be incorporated into the existing electrical power system. baseload and associated energy system reliability. Scale and scope of the worldwide energy transition Natural gas has significant environmental advantages over coal and oil, both Figure 1 presents DNV GL’s energy supply forecast, based on the categorization in terms of GHG and particulate matter emissions. It is therefore increasingly fossil fuels, renewables and nuclear energy. It shows that the share of being used by power plants and the maritime sector. Meanwhile, natural gas renewables will increase dramatically at the expense of the share of fossil production can generate earning capacity for developing countries where sources, while the nuclear share remains more or less the same. DNV GL natural gas is found and will hopefully help them to build sufficient financial further expects that as regards fossil, the absolute and relative shares of coal resources for investing in their own energy transition. But certainly in the and oil will decrease in time, but that those of natural gas will more or less long term, natural gas will encounter increasing competition from other ‘real’ stabilize after a relatively small increase. renewables such as e-fuels (e.g. hydrogen). In addition, oil is not just a fuel, but also an important resource for producing products such as plastics. Renewable options for offshore energy Substitutes will be developed simultaneously for these applications. Within the scope of offshore energy, there are several renewable options available: Primary energy supply by source (1018 joules per year) - Wind - Solar 2016 2030 2050 - Tidal - Bio (from algae) % - Waves - Hydrogen 5% 6% 5 14% 20% The options offshore wind, solar and tidal energy are technologically the most mature. Western Europe, for instance, focusses strongly on offshore wind energy, 45% 50% resulting in a competitive offshore wind market with strong innovation efforts 81% 74% FOSSIL FUELS and substantial cost reductions. Although tidal energy is very interesting with RENEWABLES a view to predictive availability, only a limited number of locations are suitable NUCLEAR Figure 1: DNV GL’s (2018) energy supply forecast | 5 The challenges we are facing … Time is running out. It’s time to act now! In the next 15 years, the world’s Today’s mitigation measures In 2010, the energy supply To comply with the Paris energy demand will increase are not enough to keep global sector was responsible for Climate Agreement, renewable by 1% per annum warming well below approximately energy would need to supply years C % % % • 15 2.0° 35 of total 70 -85 • % a more likely outcome is anthropogenic of electricity by 2050 1 C GHG emissions. (14% at present). 3.0° (DNV GL, 2018) (Paris Agreement, 2015) (IPCC, 2014) The central objective of the The route towards a By 2050, global shipping In 2019, Van Oord signed Dutch National Climate sustainable future demands will have to emit an the Green Deal Maritime and Agreement is to reduce national immediate action, given the average of Shipping with the aim of achieving GHG emissions by state of the energy system • % • % % by 2030 and the urgency of 50 70 • climate change warnings. 49 less CO2 than reduction by compared with 1990 in 2008. 2050 compared (Dutch National Climate (World Economic Forum, Fostering with 2008. Agreement, 2019) Effective Energy Transition, 2019) (IMO, 2014) | 6 OUR VISION Key elements System integration Continuous roll out of projects for Enhancing This represents smart pairing of fossil and The transition of energy supply has largely renewable energy networks. The presence been stimulated by policy, particularly direct the energy transition of (offshore) infrastructure for fossil subsidies. We observe that governments 8 1energy production and transportation may 2are turning towards competitive auctions. This means Enhancing the energy transition represents a provide opportunities to facilitate the transition that the energy (electricity) cost price is driven by challenging journey towards a decarbonised energy to renewable energy sources such as offshore competition. Offshore wind is therefore widely system. Apart from energy efficiency measures, wind. Smart pairing of offshore wind farms and expected to expand on a unsubsidized or - preferably - there are many options for making this journey gas infrastructure leads to optimal use of existing lightly subsidized basis (Equinor, 2019). Cost price as cost-effectively and as fast as possible. Below, infrastructure (e.g. second life). It makes the costs reduction is however also driven by economies of we indicate key elements that we think should be socially acceptable and it is possible to maintain scale requiring a continuous roll out of new projects accounted for in Enhancing the energy transition. a stable energy production during the transition based on clarity of policy and a long-term vision on period. (TNO, 2018) energy policy. This should lead to price certainty. Implementing energy storage Using Carbon Capture and Storage Empowering nature and smart grid (CCS) as interim solution Renewable options such as wind and solar Energy production from renewable Part of the interim solution when we are typically need substantial surface areas. sources such as wind and solar is more moving towards fully renewable energy This requires careful spatial planning, variable3 in time (intermittency) and location is4 CCS. It comprises technologies that capture 5particularly in regions with space scarcity. Due to specific than energy production based on fossil carbon dioxide (CO2) emissions produced from the designation of marine protected areas and fuels and nuclear. Implementing energy storage, the use of fossil fuels in electricity generation and the construction of offshore wind farms, areas with using a wide variety of storage options (e.g. e-fuels industrial processes, preventing the carbon dioxide undisturbed seafloor are increasing. This provides such as Power-to-X and hydrogen), and smart grid from entering the atmosphere. In our view, CCS multifunctional

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