As some of the world’s foremost energy experts from business, academia and government gathered in Austin, Texas for a major energy conference, the Northeastern US was still reeling from Hurricane Sandy’s devastation that took lives, homes and disrupted power and fuel delivery for millions of people. This stark reminder of how fragile US energy infrastructure can be makes the conference theme, “Transition to a Sustainable Energy Era: Opportunities and Challenges,” all the more timely and important.
The 31st US Association of Energy Economics/International Association of Energy Economics North American Conference kicked off this morning with an opening plenary session that was appropriately titled, “Putting the ‘Sustainable’ in Sustainable Energy Future.”
For more from the conference, read here.
Sustainability has become such a common buzz word in modern society that its definition is often overlooked, which is why it made sense for Professor Evan Hillebrand from the University of Kentucky’s Patterson School of Diplomacy to begin his talk with some definitions of the word. And while there are many, people often simply associate sustainability with using less, he said. Of course, the concept of sustainability is more complex, particularly when applied to energy.
Geopolitics is just as important as engineering or policy decisions when it comes to addressing climate change for example, said Hillebrand.
The Importance of Energy Price Stability
Rachid Bencherif, Senior Policy Analyst and Head of the Grants Unit at the Opec Fund for International Development looks at sustainability from three main perspectives (OFID’s mandate is to help eliminate poverty in low-income non-Opec developing nations).
Bencharif said OFID approaches its challenge by breaking down the issues into energy poverty, sustainable energy and the energy mix in a given country or region. In rural Africa 9 of 10 people are without access to electricity and the International Energy Agency estimates this to be unchanged by 2030. Worldwide, 2.7 billion people are considered to be in energy impoverished situations he said.
With regard to sustainable energy, energy efficiency is widely considered to be the “low hanging fruit” in energy rich and poor countries alike.
Renewable energy in the developing world should be technology neutral and aimed at being low cost, even if that means deploying renewables in concert with fossil fuels said Bencherif.
“No one knows what the energy mix will be in 50 years, but all agree it will be more diverse.” However, maintaining energy price stability is important for securing economic growth as the world’s energy mix changes, he said.
Karen Palmer, Research Director and Senior Fellow at Resources for the Future also mentioned the importance of energy price stability.
Palmer considered the role a Clean Energy Standard – which has been floating around congress and could come back on the table depending on the results of the US election – would play in the country.
A CES policy – as currently proposed – would reduce CO2 emissions 21% below a “business as usual” baseline by 2035. Power prices would also increase nation-wide by 2035 under a CES, but these increases would vary significantly between states, she said, with heavily-coal dependent states being affected more significantly than states generating power from other sources like nuclear or natural gas.
No one knows what the energy mix will be in 50 years, but all agree it will be more diverse.”
Jaime Williams, President of the Energy Commission at Mexico’s Private Sector Coordination Council kept with the themes of energy price and fuel mix when he asked, “as the Mexican economy develops, energy consumption will increase, but what path will that energy consumption increase take?”
He pointed out a need for greater natural gas transportation infrastructure, as gas is one of the country’s cheapest energy sources, but only 4% of the population uses the fuel because they do not have access to it. Burning wood and propane are far more common and more expensive he said, with 34% and 32% of residential energy consumers respectively using these fuels.
While natural gas is abundant – and recent shale gas discoveries have been made – 11 Mexican states have no access to natural gas.
The power sector also faces challenges. Williams said industrial tariffs in Mexico are twice those in the US, which hurts the competitiveness of industrial concerns and limits the power company’s ability to raise rates.
His recommendations include eliminating energy subsidies, encouraging private investment in gas and power transport infrastructure and encouraging the use of renewables when it makes economic sense to do so.
