12 JAN 2017

Practical steps towards decarbonisation

Jonathon Porritt, Founder Director of Forum for the Future and Selection Committee Member of the Zayed Future Energy Prize

The simplest way of capturing today’s overarching imperative on climate change is this: radical decarbonisation. In other words, securing dramatic reductions in emissions of greenhouse gases, per unit of GDP generated across the global economy. There are many, many low-carbon initiatives that feed into that growing wave of decarbonisation efforts, but none matters more than reducing the use of fossil fuels as rapidly and cost-effectively as possible – in energy, transportation, infrastructure, chemicals and so on.

Essentially, this is all about technology, investment and political will. Which, as it happens, is what I’m most looking forward to about attending this year’s Abu Dhabi Sustainability Week: aligning innovation, investment and political leadership.

On the whole, the technology side of things looks more and more encouraging every year, with tumbling prices and increased efficiencies in most renewables and storage technologies, in demand management and grid optimisation.

Nowhere does one see that more clearly than through the lens of the Zayed Future Energy Prize, which I’ve been associated with as a member of its Selection Committee since its inception. It’s now the world’s leading celebration of clean energy endeavour, in both the for-profit and not-for-profit sectors, and a huge inspiration to all those countries trying to work out how best to transition from today’s dependence on fossil fuels to a world driven primarily by renewable energy sources of one kind or another.

The ‘storage story’ is particularly exciting as breakthroughs here (in both cost – down by around 75% since 2008 – and flexibility) are equally significant in energy and transportation. Demand for electric vehicles is rising fast all over the world. China, for example, is offering generous incentives to increase overall market penetration for both electric vehicles and hybrids, and investing in a huge new charging infrastructure.

There will of course be plenty of bumps along that road! Two thousand sixteen, for instance, was a disappointing year in terms of clean energy investment, down from the 2015 high of around $350bn to something closer to $280bn. There are all sorts of reasons for that, but it is now almost universally accepted that the direction of travel towards renewables is irreversible. Investors have really begun to see this – both from a ‘transition risk’ perspective and through burgeoning opportunities to drive new financial value.

We’re dealing here with what the Bank of England Governor, Mark Carney, called the ‘Tragedy of the Horizons’ back in a speech in 2015: “The catastrophic impacts of climate change will be felt far beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix. Once climate change becomes a defining issue for financial stability, it may already be too late.”

And that’s a massive political challenge, where chronic short-termism still reigns supreme. In that regard, things have just gotten a whole lot harder in 2016. As the next President of the United States, Donald Trump has made it very clear that he will reverse the Obama Administration’s commitment to low-carbon prosperity, and promote again the interests of fossil fuel companies at every turn. Worse yet, he continues to characterise the science of climate change as ‘unproven’, and has appointed a number of very prominent ‘climate change denialists’ to his interim Administration.

This raises all sorts of question marks over the agreement struck by 196 governments in Paris at the end of 2015 – and will be hugely disappointing to the vast majority of young people around the world. In celebration of its 10th anniversary, Masdar commissioned an extraordinary online Sustainability Survey of around 4,500 post-millennials (18- to 25-year-olds) in 20 countries, including the UAE, Morocco, Jordan, Saudi Arabia and Egypt. Forty per cent of those surveyed named climate change amongst the biggest challenges facing the world over the next decade, ahead of the state of the global economy (34%), terrorism (32%) and inequality (29%).

The UAE’s rulers have recognised that passionate concern amongst its young people for many years – with the UAE now the highest-rated MENA country amongst clean-tech leaders, just outside the top ten globally. Nobody imagines that the transition from a global economy driven by fossil fuels to one where clean-tech rules is going to be easy – but that transition will happen, one way or another, and the real test of any nation’s leaders today is the insight and vision they bring to bear on that all-important challenge.

12 JAN 2017

From ambition to action on climate how is an oil company responding

Bjørn Otto Sverdrup, Senior Vice President, Sustainability, Statoil

In 2016 we saw the Paris climate agreement ratified and brought into effect at high speed. The agreement was a call for government and business action. At my company, Statoil, we have decided to take a proactive approach and actively shape the energy transition, a key discussion topic at Abu Dhabi Sustainability Week. To be able to do something about the climate challenge, we need to change how we use and produce energy, simply because our energy systems are responsible for nearly two-thirds of all man-made emissions. Changing the world’s energy mix is not easy. It will take time. Even with an exponential increase in investment in alternative energy, most forecasts predict that fossil fuels will still make up a large share of the energy mix in 2040. Less than the 80% share of today, but almost certainly well over 50%. To supply more energy for a growing population while emitting less greenhouse gas requires a collective leap of the imagination and technology development. We all share this responsibility. Governments need to implement visionary policies. Consumers need to change the ways they use energy. And energy companies like mine need to continuously drive operational efficiency to lower emissions and costs.

At Statoil, we don’t question climate science, we act on it and see the transition to low-emissions energy as a key driver of our business. We now embed climate action into our business strategy and the management of the company in new and profound ways. Statoil’s effort to tackle the climate challenge is built on two pillars: First, we position ourselves to capture the growth and value creation opportunities offered in renewables and new energy solutions. Second, we will continue to be a world leading oil and gas company recognised for leading energy efficiency and the lowest carbon emissions.

We have ramped up our offshore wind business with new developments in the UK and Germany, and later this year we will open the world’s first floating offshore wind farm off the coast of Scotland. Collectively, these projects will supply 1 million households with renewable electricity. Through our US$200 million venture capital fund and the new US$1 billion Oil and Gas Climate Initiative fund, we are dedicated to investing in attractive and ambitious growth companies in low carbon solutions. We believe carbon capture and storage technology will be vital, based on 20 years of experience from our Sleipner field, where we have safely stored 16 million tonnes of carbon emissions.

Despite strong growth in renewables, the world will continue to rely on fossil fuels for decades. How we produce oil and gas, and which resources we develop, will therefore be increasingly important. We need producers who can deliver energy at low cost, with low emissions. We are focusing on reducing the carbon intensity and cost of our oil and gas assets, to build a resilient portfolio for the future. Statoil is a world leader in carbon-efficient oil and gas production. This is the result of determined efforts over decades. The carbon intensity of our upstream production is currently around 10kg per barrel of oil equivalent, compared to an industry average of 18kg. We have now set ourselves a target of reducing that to 9kg by 2020. Indeed, the Carbon Disclosure Project ranked Statoil in first place for readiness for a low carbon future among oil and gas companies.

At Statoil we believe we can make a difference and both improve our business and help meet the climate challenge. Yet, the scale of change that is necessary requires businesses and sectors to mobilise, and consumer behavior to change. Sound policies are essential to encourage what we need to see more of and reduce what we need less of.

Two policies can be particularly effective: Firstly, a price on carbon is probably the most efficient policy instrument to accelerate a change in the energy mix and to shift behaviour among both producers and consumers. Secondly, if policy makers are serious about tackling climate change, dramatically and rapidly reducing the amount of coal in the energy mix is an obvious and urgent priority. Coal emits twice as much carbon emissions as natural gas when consumed. Since coal is mainly used for power generation, renewables and natural gas are better alternatives. We see how this is working in the United States, where emissions from the power sector have been cut 12% in the past decade due to the switch from coal to natural gas. Last year alone, 100 coal plants closed down, and natural gas for power generation grew 19%. As part of their climate strategies, the United Kingdom plans to close its last coal-fired power station in 2025, and Canada will follow by 2030. The potential is even bigger in the rest of the world.

The energy transformation needed is tremendous and change will take time. In order to be successful we need responsible governments, responsible consumers and responsible companies willing to take the lead. At Statoil, we are ready to do our part.

12 JAN 2017

Market competition the best model for clean-tech innovation

Marie-José Nadeau, Honorary Chair of the World Energy Council

More than two years on from the ambitious and forward-looking COP 21 agreement in Paris, the need for effective government and business strategies to implement the commitments is growing stronger.

Indeed, the global community, and more specifically individual governments and corporations, must be encouraged to redouble their efforts to decarbonise their economies, to focus on further developing their Nationally Determined Contributions (NDC) and to implement them. Government and business strategies go hand-in-hand and both have a role to play in reducing the Green House Gas (GHG) emissions that contribute to global warming. The stakes are high and each sector needs to play an active role. Individual governments should not wait for new global agreements, and corporations should not wait for signals from governments.

According to the latest edition of World Energy Scenarios, global demand for electricity will double by 2060. Meeting this demand with cleaner energy sources will require substantial infrastructure investments and systems integration to deliver benefits to both consumers and the environment.

Fortunately, World Energy Scenarios says that much of this growth will be supplied by non-fossil energy sources such as solar and wind, driven by the steep reductions in the cost of renewable technology. Solar and wind energy accounted for only 4% of power generation in 2014, but by 2060 it could represent between 20% and 39%. This is a very wide range and the final outcome will depend on the decisions taken by governments and corporations over the coming decades.

While lifestyles and economies demand more energy, efficiency gains will keep consumption growth moderate. World Energy Scenarios suggests that the optimum results will come from those societies that allow a competitive economy shaped by market mechanisms that allow technological innovation to thrive. In this scenario, the continued penetration of digital technologies leads to new markets across industries, driving strong productivity gains and strong economic growth. Consumers, not governments, are expected to drive the penetration of both renewables and natural gas. For their part, governments will support the transition by promoting the creation of market structures that result in liquid power markets and increased distributed energy backed by the rising liquid natural gas (LNG) trade.

These are, of course, scenarios; they are not forecasts. The future will be determined by choices made by governments and corporations. The key tools for enabling change are state directives and markets. All states have a mixture of both. Even strong market economies like the USA have a wide range of regulations — for example, anti-trust policies and environmental standards.

In the current debate on the environmental and social factors shaping energy policy, there is a clear difference between those who take a socio-political perspective and those who see choice as predominantly a techno-economic matter. Each perspective includes two very distinct and coherent bodies of tools. One focuses on taxes and subsidies and on the state’s role in research, regulation, education, national planning, state-run companies and public investment. In contrast, the markets-focused perspective is concerned with competition, corporate vision and planning, private investment in R&D, innovation and training. A set of public-private enterprises is emerging, but such organisations remain limited. The important point is that governments and corporations face choices. With so much at stake, not making a choice is not an option.

Fortunately, the UAE is showing leadership with a range of policies as outlined in its NDC contribution. Abu Dhabi Sustainability Week from January 12-21 will be an opportunity for other countries and corporations to showcase their commitments.

14 JAN 2017

ADSW and Festival at Masdar City Come to the Corniche

It’s been a weekend of family fun on the Abu Dhabi Corniche, as Masdar and Abu Dhabi Municipality teamed up to bring ADSW and Festival at Masdar City to local residents. The past two nights, children have been treated to an activation, or sneak preview, of what’s in store for the 20-21 January Festival at Masdar City. On the East Plaza, where Khallej Al Arabi and Corniche Steets meet, a large Masdar booth greeted guests who were strolling upon the Corniche.

Children can color and design t-shirts with sustainability messages; or have a smoothie, which they would mix themselves by peddling on a stationary bicycle; or assemble, and then race, a model solar-powered car while they learn the basics of renewable energy. Younger children also had a corner where they could color and draw images of solar panels and wind mills. “I’m so glad we came by during our walk this evening,” said Nigel, a United Kingdom national who has lived with his family in Abu Dhabi for three years. “I’ve heard the adverts on radio and have seen some signs, but having this area right in the middle of the Corniche ended up making this an even nicer evening for us.

Now we definitely are keen come to Masdar City next weekend and explore the Festival.” The activation at Masdar City has its final evening tomorrow, 14 January, from 4:00 p.m. to 10:00 p.m. Festival at Masdar City will occur Friday, 20 January, from 10:00 a.m. to 10:00 p.m., and Saturday, 21 January, from 10:00 a.m. to 8:00 p.m. Activities include a do-it-yourself crafts zone, arcades and carnival games, a bazaar selling foods and handicrafts, science experiments as well as arts and entertainment. We look forward to hosting you there!