Urgent Investment In Renewables Needed

Nov. 25, 2011 - Andrea Hotter - nasdaq.com

PARIS -- A fundamental change is needed in power generation, with a greater and more urgent investment required in renewables used in all industries, including the metals sector, an executive at the International Energy Agency said Thursday.

Richard Jones told a Metal Bulletin conference in Paris that power will be more costly, less secure and less sustainable going forward, and that the goal of achieving climate targets amid a diminished role for nuclear in a post- Fukushima world will make energy efficiency key.

This is already a familiar message to the aluminum industry. At least a third of aluminum production costs are accounted for by energy, a factor that has driven producers to relocate capacity to locations with cheap, abundant energy like the Middle East, and driven the closure of high cost capacity in Europe, the U.S. and China.

"In the aluminum sector, the implementation of best available technology is a priority in the short term while longer term the development and deployment of new technologies will be needed," he said. "The decarbonization of the global power sector will be central to reducing the sector's overall emissions," he added.

Low-carbon technologies will account for over three quarters of global power generation by 2035 in the 450 scenario, a four-fold increase on current levels. Renewable electricity is vital in all scenarios, Jones said.

"Technical difficulties to achieve this are significant, but can be mitigated by a host of supply and demand side solutions," he said. "Increased flexibility can be achieved with storage, interconnections, smart grids and dispatchable plants," he told delegates.

But the greatest challenges of ambitious climate change and nuclear replacement plans will be politics and costs, he said.

"Industry is a key actor in the fight against climate change," he said, noting there's been some progress to date but that more is needed. "Technology can help bring about a low-carbon industrial revolution--global action is needed," he told the conference. This technology will include biofuels, he noted.

The IEA's 450 scenario sets out an aggressive timetable of actions to limit the long-term concentration of greenhouse gases and keep the global temperature rise to around two degrees Celsius above pre-industrial levels.

The IEA was initially set up to help countries coordinate a collective response to major oil supply disruptions through the release of emergency stocks to the market, as was seen earlier this year. Its role has further expanded to include not just energy security but also economic development, environmental awareness and engagement worldwide.

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