Energy Policy for Energy Security

1. Energy Policy for Energy Security By Achilles G. Adamantiades, Ph. D. 2nd Hellenic Forum for Science, Technology, and Innovation 3-July-2014

2. Lecture Outline • Introduction and Basics • Energy Sources • Environmental Impacts • Climate Change • Diversity of Energy Suppliers • Diversity of Supply Routes • The Eastern Mediterranean H. A Few Examples - Do’s and don’ts • Conclusions

3. A. Introduction and Basics • Energy – a vital ingredient of the economy • Issues of Technology, Economy, Environment and Politics • Necessity for a sound energy (and economic) policy • The need to change course – priority on energy efficiency • This presentation will offer mostly facts and analysis, but also some opinions • Geopolitics are an indispensable context

4. Environment Energy Economy Politics

5. The Main Objectives • To secure long-term supply of energy through: • Increased domestic production, in an environmentally sustainable way • Increased storage, whenever possible • Securing diversity of sources (incl. fuels, suppliers, and routes, • Participating in free commerce and free-market practices (e.g., pricing) • Introducing strong energy efficiency standards (obtain the needed service but with minimum input)

6. B. Energy Sources • Hydro resources • Renewable energy – mainly, wind and solar (but also, geothermal, biomass, etc.) • Fossil fuels: • Coal • Petroleum • Natural gas • Nuclear Fuels • Hydrogen is an energy currency not a source

7. World Energy Sources in Electricity Generation • Coal 39% • Natural gas 18% • Nuclear 17% • Hydro 17% • Petroleum 8% • Renewables 4%

9. Hydro • Hydro resources are widely spread – particularly, in small sizes (up to 10 MW of power output) • The technology is old and well established • Many developing countries are rich in hydro resources • No fuel is necessary but usually an (expensive) dam is needed • It involves some environmental impacts (often resisted) • Can be used as a storage device (with pumped storage, or in synergy with other energy forms) • Excessive dependence on it (Brazil) can be risky (drought)

10. Renewables • Mainly solar and wind; also geothermal, biomass, wave, tidal, ocean thermal, etc. (the latter not yet practical) • In many areas they are local and abundant; they provide high energy security; in other locations, not so • Main drawback of wind and solar is their unreliability and low use factor (or plant utilization) • Costs are becoming competitive – sharp drops in recent years, mainly from Chinese competition • Some environmental impacts are there, mainly, land use and aesthetics • Certain areas are very favorable; others not so • So far, small % of total generation -- but growing • In the long-run, we need to rely on RE for most, if not all, energy needs

11. Coal • The most abundant fossil fuel • Relatively inexpensive • Widely used throughout the world (electricity generation) • (China: 75%, Poland: 80%, U.S.: 37%, Greece: about 30-35%) • Coal mining is accident prone (thousands of fatalities per yr, globally) • Wide range of noxious emissions (NOx, SO2, particulate matter, ash, heavy metals, e.g., mercury, arsenic, etc.) • A host of other problems • In several countries, dropping use (see, recent Obama proposed regulation—2-June-14); globally, use expected to grow (US-EIA; and OECD’s IEA)

12. Petroleum • Dominant fuel; especially in transportation • High-energy density fuel; convenient • Widely used throughout the world (less in electricity generation) • Deposits unevenly spread in the world • Many wars have been waged for its control • Deposits are not to last forever (50 yrs? with new discoveries, perhaps, longer) • Its price is highly volatile • Cost of production: 3-7/bbl; cost in the market: ~$100/bbl. ! • Causing many spills on land and in the seas (e.g., Exxon-Valdez, March 1989); Deepwater Horizon platform in the Gulf of Mexico, in 2010; many others)

13. Natural Gas • Sources are fairly widely distributed • Recent large discoveries – new technologies: “fracking” • Deposits are now expected to last for many decades • Environmentally benign – a good transition fuel (less CO2 ; about ½ that from coal) • Flexible in its use - many uses • Electricity generation at high efficiency – GTCC: up to 58% • Its price is also volatile • Cost shows wide variations; US: 3-4/MMBtu; Europe: 10-12/MMBtu; LNG: 16-17/MMBtu • Accidents are also possible (Siberia fire; pipeline leaks cause massive release of methane, and fire in nearby passing train, etc.)

14. Natural Gas Discoveries - USA

15. U.S. Shale Gas Production and PricesLippman Consulting, U.S. Energy Information Administration.The Washington Post – 14-Nov-12).

16. Natural Gas Potential - Europe

17. China’s growing need for Natural Gas (growth rates)

18. Natural Gas Potential - China

19. Nuclear energy - Current status • Worldwide, it has come to provide about 17% of generated electric power • Percentage of contribution varies widely: • France; 75% • U.S.: 20% • Germany and Japan (before a drastic decision to shut down nuclear plants, 30%) • In the U.S. and Europe, it has remained rather stagnant • Strong plans for growth exist in many developing countries, mainly the BRICS (Brazil, Russia, India, China, and South Africa ) but also in Korea, Turkey, Mexico, etc.) • Small, Modular Reactors (SMR) are under study and development in the U.S. (US DOE support given)

20. Nuclear Energy - Pros and Cons • Has proven reliable operation over many years (since the 1950s) • Produces no significant air or water emissions (barring an accident) • Produces almost zero greenhouse gas (GHG) emissions • Relatively wide-spread uranium deposits with adequate Supplies for over 100 yrs (assuming no reprocessing of wastes) -------------------------------------------------------------------- • Risk of accidents (Thee-Mile island, Chernobyl, Fukushima) • Risk of weapons proliferation (Iran, North Korea) • Radioactive-waste management and disposal • High capital cost and long gestation period

21. Nuclear Energy and Energy Security • The technology can be provided by at least five manufacturers with good competition: • U.S, • Japan • S. Korea • France • Russia • Nuclear fuel can also be procured competitively • No risk of restrictions for GHG limitation • An amount of fuel lasting for three years’ operation or more can be stored easily on-site. This was a main motivation for Japan which is highly exposed to energy insecurity.

22. C. Environmental Impacts • Environmental impacts figure as a primary concern in energy policy – cannot be ignored • Advanced countries have made great strides in improving air, water, and land conditions • Every project needs to have an objective, reliable, and credible Environmental Impact Assessment and it has become a science in itself • However, people in many developing countries live in dire (land, water, and air) conditions • Economically advanced countries need to be concerned about environmental conditions in developing countries

23. Air conditions in China – very poor

24. D. Climate Change • A major concern in our times – Green House Gases (GHG) are increasing in the atmosphere (now reaching 400 ppm) • A scientific consensus has been formed • A series of reports by the IPCC highlights the risks • Consensus: global temperature is rising and the main cause is anthropogenic • Measures need to be taken now in order to ensure temp. rise not larger than 2o C • Announcement of US. EPA on 2-June-2014 • Current and future restrictions must be taken into account now, in an energy policy for energy security

26. E. Diversity of Energy Sources and Suppliers • Coal is offered by a number of suppliers (S. Africa, Australia, Colombia, Poland, Russia, Ukraine, etc.) • Petroleum is also supplied by a number of suppliers (Arab Gulf nations, Libya, Algeria, Russia, Norway, Venezuela, Mexico, Canada, etc.) • New sources are being discovered by “fracking” • Suppliers are linked to methods and routes of transportation. • Open routes need to be maintained

27. The Persian Gulf

28. Gas suppliers • Largest deposits are found in Russia, Iran, Iraq, Algeria, Brunei, and other countries • The U.S. is expected to become a net exporter or energy– LNG terminals for export are now being planned, designed, licensed, and constructed • Large deposits have been discovered and appraised in Eastern Mediterranean (Cyprus, Israel and Greece) • Israel has contracted to export nat. gas from the Tamar field to Jordan (and plans to export gas further east)

29. Revolution in the gas supply • Large shale gas (and shale oil) discoveries • The U.S. is expected to become a net exporter of hydrocarbons (by 2022?) • Large economic effects (manufacturing moving back to the U.S. – even Chinese firms are moving to the U.S.) • Prices will take downward pressure from the low cost of U.S. gas, especially when it starts exporting

30. The Russia-China gas deal (21-May-14)

31. F. Diversity of Supply Routes • Geopolitics are important in establishing and maintaining routes • Coal, oil, and gas can be transported by land, and sea • Diversity of transport routes are important for both suppliers and buyers • Many routes have been proposed in recent years • Some made it to reality - some not

32. B. Existing and Proposed Gas Pipelines

33. A tangle of pipelines –South-East Europe

34. Multiple routes – The South Stream

35. Burgas-Alexandroupolis Oil Pipeline

36. Interconnector Turkey-Greece-Italy (ITGI)Poseidon Section (in red)

37. The Trans-Adriatic Pipeline (TAP)

38. G. The Eastern Mediterranean(Geopolitical context) • Turmoil in North Africa (Tunisia, Libya, and Egypt) • Civil was in Syria • Deterioration in Israel-Turkey relations (possible reversal?) • Cyprus’ economic crisis and rescue package (EU, ECB, and IMF) • Dialogue restart between the two Cypriot communities (early 2014) • Discoveries of large hydrocarbon deposits in the Cyprus and Israeli Exclusive Economic Zones (EEZ) • Greece has been in severe economic recession but made large hydrocarbon discoveries – reached a primary budget surplus in 2013 • New context: the Ukraine crisis

39. The Discovery of Hydrocarbon Deposits(Noble Energy, Inc.)

40. Exploration Lots within the Cypriot EEZ

41. Important discoveries in the Eastern Mediterranean • A very important development • In underwater region, mainly between Israel and Cyprus • Large quantities of natural gas (possibly, also of oil) • Official estimates – in EEZ of Cyprus: • 5-8 tcf (142-227 bcm) • Total deposits in Cyprus EEZ (speculative) are estimated at: • 80-100 tcf (2,265-2,830 bcm) • In the larger off-shore region: up to 350 tcf

42. Gas Export Pipeline

44. Greece’s Exclusive Economic Zone (EEZ)

45. Greece: First “Open Door” Exploration Areas

46. Estimated deposits in the Greek EEZ(50% confidence level)

47. H. A few examples - Do’s and don’ts • US: has a strong environmental but not a coherent energy policy. Imports less than 10% of oil imports from any source (except for Canada). Has a good oil storage capacity • China: high economic development was made at the expense of the environment. Low energy prices have led to overconsumption and a need for high imports • India: has a poor energy endowment; low prices have led to overconsumption and non-viable energy companies • Egypt: low prices have led to quick depletion of its gas resources; it will need to import gas from Israel • Japan: closure of nuclear plants have led to increase of coal use and excessive imports of LNG, leading to loss of competitiveness. • U.A.E. and Saudi Arabia: started the development of nuclear power in view of depletion of its hydrocarbon deposits; also dev’t of RE • Greece and other EU: high prices for solar energy have led to serious problems for its national power corp. (DEH) and even to breach of contracts

48. I. Conclusions • Energy Security is a primary need of the economy and a serious responsibility of governments • Means: indigenous production, storage, diversity of supply and transport, use of renewable energy, and strong efficiency measures • There are means of approaching this goal but sound policies are often not in place owing to many obstacles, mostly political • The energy landscape is changing dramatically • Good international relations are essential for achieving energy security