Part 3. Are sustainable futures possible?

Analysis using energy scenarios indicates that it is possible to simultaneously address the sustainable development objectives set forth in part 1 using the resources and technical options presented in part 2. The scenarios exercise and subsequent sections suggest that: · Continuing along the current path of energy system development is not compatible with sustainable development objectives. · Realising sustainable futures will require much greater reliance on some combination of higher energy efficiencies, renewable resources, and advanced energy technologies. · A prerequisite for achieving an energy future compatible with sustainable development objectives is finding ways to accelerate progress for new technologies along the energy innovation chain, from research and development to demonstration, deployment, and diffusion. · Providing energy services to rural areas poses particular challenges. But it also offers considerable opportunity for improving the lives of billions of people within a relatively short period. Promising approaches include decentralised solutions, appropriate technologies, innovative credit arrangements, and local involvement in decision-making.

Energy scenarios

Energy scenarios provide a framework for exploring future energy perspectives, including various combinations of technology options and their implications. Many scenarios in the literature illustrate the degree to which energy system developments will affect the global issues analysed in part 1. Some describe energy futures that are compatible with sustainable development goals. Key developments in sustainable scenarios include increases in energy efficiencies and the adoption of advanced energy supply technologies. Sustainable development scenarios are characterised by low environmental impacts (local, regional, and global) and equitable allocation of resources and wealth.

The three cases of alternative global developments presented in chapter 9 suggest how the future could unfold in terms of economic growth, population trends, and energy use. The challenge is formidable. For example, by 2100, 6-8 billion additional people - significantly more than today's world population - will need access to affordable, reliable, flexible, and convenient energy services.¹⁵ All three cases achieve this through different energy system developments, but with varying degrees of success in terms of sustainability (table 5).

A middle-course, or reference, case (B) includes one scenario and is based on the general direction in which the world is now headed. This scenario assumes the continuation of an intermediate level of economic growth and modest technological improvement, and it leads to adverse environmental impacts, including regional acidification and climate change. Although this middle-course scenario represents a substantial improvement relative to the current situation, it falls short of achieving a transition towards sustainable development. The other two scenarios and their variants lead to higher economic development with vigorous improvement of energy technologies. They both - and especially the ecologically driven case (C) - achieve, to a much higher degree, a transition towards sustainable development (table 6).

For instance, one of the three high-growth case A scenarios (A3) achieves some goals of sustainable development, primarily through rapid economic growth and a shift towards environmentally more benign energy technologies and options. In this scenario, higher levels of affluence result from impressive technological development, including a significant role for clean fossil, renewable, and nuclear energy. Dedicated decarbonisation of the energy system contributes to environmental sustainability. Two other variants of this high-growth case are also considered. Both lead to higher dependence on carbon-intensive fossil fuels, resulting in high energy-related emissions. Consequently, they are unsustainable from an environmental point of view.

TABLE 5. SUMMARY OF THREE ENERGY DEVELOPMENT CASES IN 2050 AND 2100 COMPARED WITH 1990

		Case A	Case B	Case C
		High growth	Middle growth	Ecologically driven
Population (billions)	1990	5.3	5.3	5.3
	2050	10.1	10.1	10.1
	2100	11.7	11.7	11.7
Gross world product (trillions of 1990 dollars)	1990	20	20	20
	2050	100	75	75
	2100	300	200	220
Gross world product (annual percentage change)	1990-2050	High	Medium	Medium
	1990-2100	2.7	2.2	2.2
		2.5	2.1	2.2
Primary energy intensity (megajoules per 1990 dollar of gross world product)	1990	19.0	19.0	19.0
	2050	10.4	11.2	8.0
	2100	6.1	7.3	4.0
Primary energy intensity improvement rate (annual percentage change)	1990-2050	Medium	Low	High
	1990-2100	-0.9	-0.8	-1.4
		-1.0	-0.8	-1.4
Primary energy consumption (exajoules)	1990	379	379	379
	2050	1,041	837	601
	2100	1,859	1,464	880
Cumulative primary energy consumption, 1990-2100 (thousands of exajoules)	Coal	8.9-30.7	17.5	7.1-7.2
	Oil	27.6-15.7	15.3	10.9
	Natural gas	18.4-28.7	15.8	12.2-12.9
	Nuclear energy	6.2-11.2	10.5	2.1-6.2
	Hydropower	3.7-4.2	3.6	3.6-4.0
	Biomass	7.4-14.3	8.3	9.1-10.1
	Solar energy	1.8-7.7	1.9	6.3-7.4
	Other	3.0-4.7	4.3	1.4-2.2
	Global total	94.0-94.9	77.2	56.9
Energy technology cost reductions (through learning)	Fossil	High	Medium	Low
	Non-fossil	High	Medium	High
Energy technology diffusion rates	Fossil	High	Medium	Medium
	Non-fossil	High	Medium	High
Environmental taxes (excluding carbon dioxide taxes)		No	No	Yes
Sulphur dioxide emissions (millions of tonnes of sulphur)	1990	58.6	58.6	58.6
	2050	44.8-64.2	54.9	22.1
	2100	9.3-55.4	58.3	7.1
Carbon dioxide emission constraints and taxes		No	No	Yes
Net carbon dioxide emissions (gigatonnes of cartoon)	1990	6	6	6
	2050	9-15	10	5
	2100	6-20	11	2
Cumulative carbon dioxide emissions (gigatonnes of carbon)	1990-2100	910-1,450	1,000	540
Carbon dioxide concentrations (parts per million by volume)	1990	358	358	358
	2050	460-510	470	430
	2100	530-730	590	430
Carbon intensity (grams of carbon per 1990 dollar of gross world product)	1990	280	280	280
	2050	90-140	130	70
	2100	20-60	60	10
Investments in energy supply sector (trillions of 1990 dollars)	1990-2020	15.7	12.4	9.4
	2020-50	24.7	22.3	14.1
	2050-2100	93.7	82.3	43.3
Number of scenarios		3	1	2

The three cases unfold into six scenarios of energy system alternatives: three case A scenarios (A1, ample oil and gas; A2, return to coal; and A3, non-fossil future), a single case B scenario (middle course), and two case C scenarios (C1, new renewables; and C2, new renewables and new nuclear). Some of the scenario characteristics, such as cumulative energy consumption, cumulative carbon dioxide emissions, and decarbonisation, are shown as ranges for the three case A and two C scenarios.

Source Kakicenovic, Grand McDonald, 1998

FIGURE 7. PRIMARY ENERGY SHARES, 1850-1890, AND IN SCENARIOS C1 AND C2 TO 2100

FIGURE 7. PRIMARY ENERGY SHARES, 1850-1890, AND IN SCENARIOS C1 AND C2 TO 2100

Source Nakicenovic, Gr and McDonald 1998

A third case (C) includes two scenarios and is ecologically driven, with high growth in developing countries (towards being rich and 'green'). The difference between the two scenarios is that one, C1, assumes a global phase-out of nuclear energy by 2100, whereas the other, C2, does not. Both assume the introduction of carbon and energy taxes directed at promoting renewables and end-use efficiency improvements. The revenues from carbon and energy taxes are assumed to be used to enhance economic growth and promote renewables and end-use efficiency, rather than to reduce other taxes in industrialised regions.

Both case C scenarios assume decentralisation of energy systems and reliance on local solutions They also require considerably lower supply-side investments than the others. They would, however, require substantial investments in the end-use sector, which is not captured in the scenarios. Ambitious policy measures control local and regional pollutants, and a global regime results in reduced greenhouse gas emissions. Of the three cases considered, case C is the most compatible with the aims of sustainable development, as analysed in part 1 (table 6). In scenario C1 this occurs through a diminishing contribution of coal and oil to the primary energy mix, with a large increase in the share of solar and biomass energy by 2100 (figure 7).

Also shown for illustrative purposes is the primary energy mix for scenario C2, in which nuclear energy could play a large role if the problems associated with it (cost, safety, waste disposal and weapons proliferation) can be adequately resolved

The considerable differences in expected total energy consumption among the scenarios reflect different approaches to addressing the needs for energy services in the future, and they demonstrate clearly that policy matters (figure 8). Achieving the two scenarios with characteristics of sustainable development will require a substantial increase in private and public research, development, and deployment efforts to support new energy technologies. Otherwise, most clean fossil and renewable technologies, as well as many energy-efficient end-use technologies, may not reach competitiveness. (The mix of needed efforts may vary depending on the maturity of the specific technology.) Significant technological advances will be required, as will incremental improvements in conventional energy technologies.

In terms of their expected high growth in energy demand, developing countries are well-positioned to take advantage of innovations in energy technologies and policies that support them. In general, scenarios A3, C1, and C2 require significant policy and behavioural changes within the next several decades to achieve more sustainable development paths. Taken together, the outcomes of these changes, which are described in more detail in part 4, represent a clear departure from a business-as-usual approach.

Another crucial prerequisite for achieving sustainability in the scenarios is near-universal access to adequate, affordable energy services and more equitable allocation of resources. Finally, environmental protection - from indoor pollution to climate change - is an essential characteristic of sustainable development in these scenarios. The resolution of these future challenges offers a window of opportunity between now and 2020. The nature of the decisions made during this time will largely determine whether the evolution of the energy system is consistent with current practices (along the lines of the B scenario), or whether it achieves the transition towards more sustainable development paths (along the lines of the A3, C1, and C2 scenarios).

Because of the long lifetimes of power plants, refineries, steel plants, buildings, and other energy-related investments such as transportation infrastructure, there is not sufficient turnover of such facilities to reveal large differences among the alternative scenarios presented here before 2020. But the seeds of the post-2020 world will have been sown by then. Thus choices about the world's future energy systems are relatively wide open now. This window of opportunity is particularly significant where much infrastructure has yet to be installed, offering the possibility of a rapid introduction of new, environmentally sound technologies.

Once the infrastructure is in place, a phase of largely replacement investments begins. Changes can be made in this phase, but they take much longer to affect average system performance. If wise decisions are not made during the next few decades, we will be locked into those choices, and certain development opportunities might not be achievable. Thus the achievement of sustainable development demands a global perspective, a very long time horizon, and the timely introduction of policy measures.

An effective strategy to address the energy needs of the rural populations is to promote the climbing of the 'energy ladder'.

Rural energy in developing countries

Between 1970 and 1990 about 800 million additional people were reached by rural electrification programmes. Some 500 million saw their lives improve substantially through the use of better methods for cooking and other rural energy tasks, particularly in China.

Despite these enormous efforts to improve energy services to rural populations in the past 20-30 years, the unserved population has remained about the same in absolute numbers - 2 billion people.

Although the unavailability of adequate energy services in rural areas is probably the most serious energy problem confronting humanity in the near future, rural energy remains low on the list of priorities of most government and corporate planners. And the increased demands of the more influential (and rapidly growing) urban population will make it more difficult to keep rural development on the agenda.

An effective strategy to address the energy needs of rural populations is to promote the climbing of the 'energy ladder'. This implies moving from simple biomass fuels (dung, crop residues, firewood) to the most convenient, efficient form of energy appropriate to the task at hand - usually liquid or gaseous fuels for cooking and heating and electricity for most other uses. Such climbing involves not only a shift to modern fuels but is often also complemented by the synergistic use of modern, more efficient end-use devices such as cooking stoves.

TABLE 6. CHARACTERISTICS OF SUSTAINABILITY IN THREE ENERGY DEVELOPMENT SCENARIOS IN 2050 AND 2100 COMPARED WITH 1990

Indicator of sustainability	1990	Scenario A3	Scenario B	Scenario C1
Eradicating poverty	Low	Very high	Medium	Very high
Reducing relative income gaps	Low	High	Medium	Very high
Providing universal access to energy	Low	Very high	High	Very high
Increasing affordability of energy	Low	High	Medium	Very high
Reducing adverse health impacts	Medium	Very high	High	Very high
Reducing air pollution	Medium	Very high	High	Very high
Limiting long-lived radionuclides	Medium	Very low	Very low	High
Limiting toxic materialsa	Medium	High	Low	High
Limiting GHG emissions	Low	High	Low	Very high
Raising indigenous energy use	Medium	High	Low	Very high
Improving supply efficiency	Medium	Very high	High	Very high
Increasing end-use efficiency	Low	High	Medium	Very high
Accelerating technology diffusion	Low	Very high	Medium	Medium

a. For this row only, the qualitative indicators are not based on quantitative features of the scenarios, but were specified by the authors on the basis of additional assumptions.

Source: Chapter 9.

The current path of energy development, and the rate of change, are not compatible with key elements of sustainable development.

Climbing the energy ladder does not necessarily mean that all the rungs used in the past should be reclimbed. In the case of cooking, for example, users do not have to go from fuelwood to kerosene to liquefied petroleum gas (LPG) or electricity. What users should do - whenever possible - is leapfrog directly from fuelwood to the most efficient end-use technologies and the least polluting energy forms (including new renewables) available. Because of the emergence of new technologies, it is also possible to introduce new rungs on the energy ladder, and gain even greater efficiencies and environmental acceptability.

The energy-related sustainable development goals for rural areas are to:

· Satisfy basic human needs by providing all households with minimally adequate amounts of electricity for uses such as lighting and fans, in addition to cleaner cooking fuels. Specifically, all households should move away from unprocessed solid fuels (biomass and coal) for cooking and heating to modern energy forms, which may potentially be derived from renewable sources (biomass and solar) or fossil fuels.

· Provide electricity that is sufficiently affordable to support industrial activity in rural areas, which can provide employment and help curb urban migration.

In many cases the rural poor are willing and able to pay for energy services if appropriate financing options are offered to help them meet high first costs. The economics of providing basic electricity to rural households should be evaluated according to the costs of supplying comparable energy services through less efficient carriers. In most cases home solar photovoltaic systems can provide energy services at a lower cost than the kerosene and batteries they replace and can be an economically viable source of rural household power, even at relatively low levels of service provision.

The availability of affordable and adequate energy services in rural areas could lead to significant improvements in living conditions and to the fulfilment of basic human needs over a relatively short time frame. The amount of energy needed to provide such services in rural areas is relatively small. Modern ways of using biomass more efficiently could go a long way towards achieving this objective. Experience has shown that to find the most viable and appropriate solutions to rural energy, the active participation of the people who will use it is a must.

The challenge is to find ways to make modern energy carriers affordable to satisfy the basic needs of all rural residents - which may, at least initially, require subsidies. The key is to introduce market efficiencies if possible to use the smallest subsidy needed to achieve social objectives. If a subsidy is required, it might be provided as an integral part of a new social contract, whereby energy providers serve rural energy needs while simultaneously, highly competitive conditions are created in the energy sector (a key element of energy reforms). One way to finance the subsidies that might be needed would be to complement the creation of competitive markets with the establishment of a public benefits fund generated by non-bypassable wire and pipe charges on electricity and on gas providers. Such funds have been adopted or are under consideration in several countries as a means of protecting public benefits under competitive market conditions. Other options include carefully designed economic incentives, perhaps using tax regimes.

Specifically, some of these revenues could be used to subsidise the very poorest households until they are able to work themselves out of poverty. This strategy could be made entirely consistent with a shift to greater reliance on market forces to efficiently allocate resources. If, for example, a rural energy concession was the preferred approach for bringing adequate energy services at a set price to a particular rural area, and if the concession was awarded competitively, market forces would be brought into play to find the least costly mix of energy technologies with the least amount of subsidy to satisfy the concessionaire's obligation to provide affordable energy services to all.

FIGURE 8. GLOBAL PRIMARY ENERGY REQUIREMENTS, 1850-1990, AND IN THREE CASES, 1990-2100

The figure also shows the wide range of future energy requirements for other scenarios in the literature. The vertical line that spans the scenario range in 1990 indicates the uncertainty across the literature of base-year energy requirements.

Source: Nakicenovic, Gr and McDonald, 1998;
Morita and Lee, 1998; Nakicenovic, Victor, and Morita, 1998.