Page 21 - Driving Force for Energy Demand
P. 21
ving Forces for Energy Demand 2010
way, without losing competitiveness. The cost of carbon is also now a firmly
established factor in European power market's investment decisions (Chestney,
2010). Two factors may limit the efficacy of market mechanisms as the primary
instruments for stabilizing climate. First, carbon taxes high enough, or carbon
emission permits scarce enough, to substantially reduce emissions are unlikely to
be adopted as it would require substantial political courage. Second, there is
doubt about the capacity of carbon taxes or emission permits to induce the
necessary technological change (Green, Baksi, & Dilmaghania, 2007). Therefore,
a combination of stable and predictable programs will be necessary to best
promote growth of technology and restrictions on carbon emissions.
Clearly the pain of carbon abatement cannot be born equally between the
developing and developed worlds. However, the cost of increased quality of life
for a massive amount of people is not necessarily expensive either in monetary
terms or carbon emissions. The IEA estimated that providing another 1.3 billion
people with access to LPG by 2015 would result in less than 1% change in global
oil consumption. Another estimate shows that eliminating the electricity access
problem (i.e., providing electricity to all 1.5 billion people without access at the
moment) would result in an increase of CO2 emission of just 0.15 GtC/year ( 2%)
(Zerriffi & Wilson, 2010). This indicates that solving the most basic rural energy
poverty problems do not significantly increase greenhouse gas emissions. In fact,
there is some evidence that the incomplete combustion of biomass in cook
stoves may be a significant source of black carbon, carbon monoxide and other
products of incomplete combustion that, in fact, have significant climate change
implications. If that is the case, then switching from biomass to fossil fuels may in
fact reduce net GHG impacts rather than increasing them (Zerriffi & Wilson,
2010).
Although CO2 pricing has many issues, absent any policies that impose a cost on
CO2 emissions, it is likely that coal and natural gas are the lowest-cost options
for future, as seen 3-3 showing the cost per KW/H under various assumptions. At
$30 per ton of CO2, natural gas would become the most economic alternative for
new-build power plants. At $60 per ton, natural gas is still competitive, but then
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose. Page 21
way, without losing competitiveness. The cost of carbon is also now a firmly
established factor in European power market's investment decisions (Chestney,
2010). Two factors may limit the efficacy of market mechanisms as the primary
instruments for stabilizing climate. First, carbon taxes high enough, or carbon
emission permits scarce enough, to substantially reduce emissions are unlikely to
be adopted as it would require substantial political courage. Second, there is
doubt about the capacity of carbon taxes or emission permits to induce the
necessary technological change (Green, Baksi, & Dilmaghania, 2007). Therefore,
a combination of stable and predictable programs will be necessary to best
promote growth of technology and restrictions on carbon emissions.
Clearly the pain of carbon abatement cannot be born equally between the
developing and developed worlds. However, the cost of increased quality of life
for a massive amount of people is not necessarily expensive either in monetary
terms or carbon emissions. The IEA estimated that providing another 1.3 billion
people with access to LPG by 2015 would result in less than 1% change in global
oil consumption. Another estimate shows that eliminating the electricity access
problem (i.e., providing electricity to all 1.5 billion people without access at the
moment) would result in an increase of CO2 emission of just 0.15 GtC/year ( 2%)
(Zerriffi & Wilson, 2010). This indicates that solving the most basic rural energy
poverty problems do not significantly increase greenhouse gas emissions. In fact,
there is some evidence that the incomplete combustion of biomass in cook
stoves may be a significant source of black carbon, carbon monoxide and other
products of incomplete combustion that, in fact, have significant climate change
implications. If that is the case, then switching from biomass to fossil fuels may in
fact reduce net GHG impacts rather than increasing them (Zerriffi & Wilson,
2010).
Although CO2 pricing has many issues, absent any policies that impose a cost on
CO2 emissions, it is likely that coal and natural gas are the lowest-cost options
for future, as seen 3-3 showing the cost per KW/H under various assumptions. At
$30 per ton of CO2, natural gas would become the most economic alternative for
new-build power plants. At $60 per ton, natural gas is still competitive, but then
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose. Page 21
