BUS604: Innovation and Sustainability

Will severe emission targets make a country uncompetitive if the price of energy remains too high? Is solar energy a solution?

"Solar energy is, thanks to the Chinese, already commercially available: decentralized solar for domestic use. The question arises again, what should a government do? Should we subsidize solar, as the Germans and the Dutch do? Or do you say as a government: if you build a new house with a roof on the south, you are allowed to do that, but it should be a solar roof. So basically do you use the power of government to set rules?"

"I think that is much more powerful and in the end costs less, not only for the government but for society as well, to do it that way. Now maybe solar technology is not developed enough to say that every roof that has to be built should be a solar roof. But then government can say something else: in Europe, we can say that by 2024 every roof facing south should be at least 50 percent solar. And by 2030 it should be 75 percent. If you set those rules, then companies will start to do research because they are assured of a market. That is a much better incentive than subsidy".

"But when it comes to large-scale projects, such as solar farms in the desert in Algeria, can they work? I think so. But are they commercially viable? No. Is Algeria a country where you feel comfortable to have a very large investment sitting there for over 30 years? I'm not so sure".

"So there is a form of solar energy which may over time become commercial as well. It is here that you need smart grids. You have to connect grids, which is not easy, the difficulty being that you have to transport electricity over long distances, so you need special investment to go from one type of current to another".

"Solar energy can play a big role in this, but not soon. That is my message on those factors. It is important to continue to do some experiments, but it doesn't solve the equation".

"Then you have onshore wind, which can cost less than offshore wind. But nobody wants to have it next to their home, so you have a problem of space".

"With energy from ocean waves, you have the same problem as with large- scale solar plants - technically possible but not commercial as yet. Over time, you still have to do research in that area".

"And you have all kinds of alternative solutions. You can say, OK, what do I do with solar? I generate electricity and I transport it to Europe. Or you can say, in Algeria we have a lot of sun. I generate electricity and with the electricity I make hydrogen, and hydrogen is much more flexible to transport than electricity. So you have different pathways".

"Research and development are also needed for traditional gas as well as shale gas. While shale gas is not ideal, I find it strange that this country [the Netherlands] doesn't like to do exploration. We need exploration to see whether we have commercial shale gas or not. If I were the government, I would like to know that, because later it could be an alternative to Russian imports".

"In the Shell scenarios shale gas was mentioned but as unconventional and with a minor role. Nobody had foreseen the major role that shale gas now plays for the US, so that they are substantially reducing their imports of oil and gas and they have electricity prices which are substantially lower than in Europe - 40 to 50 percent lower, in that order of magnitude. Nobody had foreseen that. Some of today's forecasts will be wrong in ten years".

Despite the difficulty of long-term predictions, and the impossibility of forecasting the role of new technologies that may emerge, some generalizations are possible about larger trends.

"There are two likely scenarios. One is that after 2060 you will see a real major contribution from solar energy, but much more decentralized. This is not so much the Algeria desert scenario, but one where solar-based technology becomes a part of everything you build, with solar roof panels, walls and windows. And the other scenario is basically gas, with natural gas and shale gas as the big breakthroughs that will drive out coal".

"In both scenarios you can help the overall system by imposing a penalty on coal. There is then the disaster scenario in which you fail to drive out coal, but I think that is unlikely. Because if you continue to increase coal, people will notice. Either you get local air pollution as in China, or you get completely unacceptable climate change, and coal will be seen as the culprit".

With a major role for gas in the present and future, and despite the role of shale gas, Europe will continue to have to rely on Russia for supplies. Taking a global view of energy politics, there will be a great deal of interdependence. Is the way Europe and Russia are currently behaving towards each other in light of the Ukraine crisis helpful for a global energy policy?

"No, it is not. But first, to be fair to Gazprom, they have so far, even in the Cold War, supplied Western Europe with a track record of too percent. That is incredible. They have never failed, not even technically. So the first reality is that they have perfect contract compliance. And, they will bend over backwards to keep that record".

"People say Ukraine's supply was interrupted. But that is a different story, about non-payment and gas siphoned off that was not measured".