Global Energy Scenario:

Implications for Sri Lanka Anil Cabraal

Making Sustainability the Next Metric

Energy Forum and Center for Poverty Analysis

Sri Lanka Foundation Institute

20 February 2014

Overview

• Global Energy Demand and Trends

• Energy Costs

• Climate Change

• Implications for Sri Lanka

Energy Demand

• Global primary energy demand rises from 14,000 to 20,000 Mtoe between 2013-2035

• China main driver of increasing energy demand in current decade, but India takes over in the

2020s as principal source of growth

Source: IEA, World Energy Outlook 2013

Sources of Energy Slow to Change

Source: IEA, World Energy Outlook 2013

Renewable Energy Capacity

Additions 1991 -2035

Source: IEA, World Energy Outlook 2013: Renewable Energy Outlook

Average Annual Capacity Additions (GW)

Huge Uncertainties in Fossil

Energy Price Trends

Oil Price Projections

Coal Price Projections • Global Energy Subsidies

• Fossil fuel $544 billion in 2012

• Renewables $88 billion in 2012

Sources:

1. UK Department of Climate Change and Energy, Fossil Fuel

Price Projections 2013.

2. IEA World Energy Outlook 2013

3. IEA World Energy Outlook 2012: Renewable Energy Outlook

4. Joint report by IEA, OPEC, OECD and World Bank on fossil -

fuel and other energy subsidies: An update of the G20 Pittsburgh

and Toronto Commitments

• Fossil fuel prices might vary by

factor of 2 by 2025

• Fossil fuel price impact in LKR

could be high (inflation and

currency effects)

Renewable Electricity Economic Costs

Source: IPCC, 2011: IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation. Prepared by Working Group

III of the Intergovernmental Panel on Climate Change. Solar PV adjusted by author, to latest costs as component costs are declining

rapidly.

- 5.0 10.0 15.0 20.0 25.0

Biomass Steam

Biomass Co-firing Co-feed

PV Residential Roof Top

PV Commercial Roof Top

PV Utility Scale (Fixed)

Mini-Hydro Power

Onshore Wind

US$ per kWh

Levelized Economic Cost of Electricity from Renewable Energy Sources (IPCC)

Sri Lanka economic cost based on NCRE

tariff calculation assumptions but at 10% discount rate

Climate Change: Trends are

Discouraging

Energy sector accounts for

2/3 of all CO2 emissions

Source: IEA, World Energy Outlook 2013

CO2 emissions trends point to a

long-term temperature increase

of up to 5.3° C

Climate Change Mitigation:

No Cost Options

Source: IEA, World Energy Outlook 2013

But…

• Globally climate change has lower political priority now though climate change evidence increases

• Mixed news on energy trends… – Price signals driving switch from gas from

coal especially in USA

– Renewables investment declined in 2012

– Greater emphasis in efficiency

– Challenges for nuclear and CCS and they are still distant option

Implications for Sri Lanka

• Important to diversify energy sources to those not correlated with fossil fuel prices and to increase efficiency of energy use

• Transport sector energy efficiency and shift to non-oil transport modes or alternatives is key to reducing petroleum use

• Mitigation measures essential to protect energy sector from effects of climate change Rainfall variability – hydropower output uncertainty, biomass crop yield

uncertainties

Intense rain and floods – damage to hydropower plants, biomass plantations damage

Sea level rise and storms – coastal power plants damage, fuel delivery

High temperatures – reduced efficiency of power plants, greater demand for cooling energy

Cyclones and other extreme weather – damage to energy facilities including wind, solar plants