Technology in a Carbon Constrained World

1. Technology in a Carbon Constrained World Arnulf Grübler gruebler@iiasa.ac.at SHELL Workshop, London September 19-21, 2000

2. Part I: Technology and Global Change • The powers of technology • Basics of Technological Change I&II • Examples for characteristics of TC: dynamic (DRAMS) systemic (H2 systems) cumulative (PVs) uncertain (smoke-spark arrestors) • Hierarchies and rates of change

3. Factors of Growth: The Last 200 Years 1800 2000 factor World population, 1 6 x 6 billion Life expectancy, years* 35 75 x 2  Work hours per year* 3,000 1,500 2 70,000 300,000 Free time over life* x 4 Mobility, km/day* 0.04 40 x 1000 (excl. walk) World income, trillion $ 0.5 36 x 70 Global energy use, Gtoe 0.3 10 x 35 Carbon, energy, GtC 0.3 6 x 22 Carbon, all sources, 0.8 8 x 10 GtC

4. Dimensions of Global Change AD 2000 Land Water Materials Energy Carbon Net source sink 6 2 3 9 3 10 km km 10 t 10 EJ GtC Human 47 3.000 <140 0.4 <9 +7 Natural 84 10.000 <25 5440 ~600 --2 as % 56% 30% 560% 0.01% ~1% 300% Land - use vs. availability Water - use vs. surface water runoff Materials - total materials used (40 Gt) and moved (100 Gt) vs. material transported by rivers Energy - global primary energy use vs. solar influx Carbon - sum of annual exchanges between reservoirs (bi-directional) vs. gross emissions Source: Turner et al., 1990; IPCC, 1996; Grübler, 1998. c:\leoben\global_change_shell.doc

5. Technology = H+S+O = hardware + software + “orgware” • Most important single factor of productivity and economic growth • Source and remedy of adverse impacts • Hierarchical levels of change (increasing size = slower diffusion)

6. Basics of Technological Change II: Change is.. • Dynamic: importance of both incremental and radical change (e.g. DRAMS) • Systemic: importance of spillovers, clusters, and systems “architecture” (e.g. H2 system) • Cumulative: increasing returns: learning by doing, but: forgetting by not doing (e.g. PVs) • Uncertain: risk, but resilience through diversity and experimentation (e.g. unsuccessful smoke spark arrestors for steam locomotives)

7. DRAMs • Key technology for increased computing performance • Market size: ~30 billion $ • Moore’s Law holds for >30 years (self-fulfilling prophecy) • Density: doubles every 18-21 months 1kB to 1GB = x106 • Cost decline ($/bit): a factor >100,000 !

8. DRAMS: Memory Size

9. DRAMS: Prices

10. A Possible H2 System

11. Japan - PV Costs vs. Expenditures

12. Technological Uncertainty: Patented but non-functional smoke-spark arrestors Source: Basalla, 1988.

13. Hierarchy of Technological Change Technology = Hardware, Software, Orgware Incremental (H) Radical (Hn + S) Systems (Hn + Sn + O) Clusters & Families (Hn + Sn + On) With increasing hierarchy (complexity): larger market size, but slower diffusion.

14. Hierarchies in Rates of Change

15. Part II: The GHG Economy: Challenges and Opportunities • Challenges (e.g. unknown targets) • Opportunities (e.g. continue decarbonization) • Opportunities along hierarchy of TC • An example: “Towngas” strategy • Implications for SHELL

16. Challenges • Uncertain targets: long-term = unknown; short-term = not arguable • No easy fix: pervasiveness of emissions (agriculture, energy, industry, land use, sewers, etc.) • Extreme long time horizon: >100 yrs (act and see rather than see and act, mismatch between rhythms of climate change, socio-economic change, and politics) • Externality not quantified (no binding targets = no price; future (ecosystems) damages: not quantifiable; damages < than costs with discounting; dilemma between intra- and inter-generational equity) • Institutional settings not yet existing (“rules of the game”?, who decides?) with contradictory interests (global -- national; dominant -- emerging business)

17. Uncertainties in Stabilizing Climate at +2.5 ºC by 2100

18. Opportunities • External support for development of new technologies, businesses, industries • Innovation trigger (technologies, organizations, institutions) • Move with, and shape social tide (PR, avoid worse: e.g. hefty C-tax) • Continue historical path of decarbonization (woodcoaloilgas hydrogen) • New business (revenues and profits) from: --new products (e.g. fuel cells, carbon-buckyball structures, CO2 turbines) --new markets (e.g. CO2 sequestration & storage, “towngas”: CH4 & H2) --new industries (e.g. C as structural & manufacturing material, H2 economy)

19. World Primary Energy Supply

20. World Primary Energy Shares

21. Decarbonization of Global Energy

22. Hierarchies of ChangeT = H+S+O • Incremental (H): e.g. CO2 capture from CO2-rich gas & reinjection; 3-litre car • Radical (Hn+S): e.g. cheap&clean recovery of methane hydrates; CO2-turbine • Systems change (Hn+Sn+O): e.g. CO2 market (sequestration + transport + disposal); “towngas” strategy • Clusters, families, “paradigms” (Hn+Sn+On): e.g. H2 economy: H2 + FC = all energy services; consumers = utilities

23. An (evolutionary) “Towngas” Strategy • Location: close to major transit pipelines and old oilfields (e.g. West Ukraine) • Steam reforming (endothermal - gas; later exothermal - nuclear) • Towngas: CH4 + H2 (<30%) • Transport to consumption centers in existing gas pipelines • Membrane separation (H2FC; CH4gas turbines (with CO2 capture) (C. Marchetti, 1989, Int.J.Hydrog.Energy 14(8):493-506)

24. Methane  Hydrogen

25. Where to start...

26. Implications for SHELL • Biggest risk: customers and rules still undefined; options involving soil carbon (forestry) might turn out phoney • Biggest opportunity: entirely new business areas, new dash for gas • Focus short-term 1: capacity building (CO2 trading, CDM, work with: sisters, NGO’s, governments) • Focus short-term 2: incremental changes with positive (even if small) ROI: efficiency improvements (refineries), stop flaring, monitor & plug CH4 leaks (become world leader) • Focus medium-term: increase value of gas reserves (infrastructure investments); “towngas” strategy • Focus long-term: push decarbonization and hydrogen economy, explore fundamentally new solutions (return to R&D, e.g. closed hydrate - H2 cycles)