Royal Swedish Academy of Sciences

Energy for the New Millennium

Author(s): José Goldemberg, Thomas B. Johansson, Amulya K. N. Reddy, Robert H. Williams
Source: Ambio, Vol. 30, No. 6 (Sep., 2001), pp. 330-337
Published by: Allen Press on behalf of Royal Swedish Academy of Sciences
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 Article Jose Goldemberg, Thomas B. Johansson,
Amulya K.N. Reddy and Robert H. Williams
Energy for the New Millennium
The evolution of thinking about energy is discussed. When
the authors began collaborating 20 years ago, energy was
typically considered from a growth-oriented, supply-side
perspective, with a focus on consumption trends and how
to expand supplies to meet rising demand. They were
deeply troubled by the environmental, security and equity
implications of that approach. For instance, about two
billion people lack access to affordable modern energy,
seriously limiting their opportunities for a better life. And
energy is a significant contributor to environmental prob-
lems, including indoor air pollution, urban air pollution,
acidification, and global warming. The authors saw the
need to evolve a different perspective in which energy is
provided in ways that help solve such serious problems.
They argued that energy must become an instrument for
advancing sustainable development-economically viable,
need-oriented, self-reliant and environmentally sound
development-and that the focus should be on the end
uses of energy and the services that energy provides.
Energy technological options that can help meet sustain-
able development goals are discussed. The necessity of
developing and employing innovative technological so-
lutions is stressed. The possibilities of technological leap-
frogging that could enable developing countries to avoid
repeating the mistakes of the industrialized countries is
illustrated with a discussion of ethanol in Brazil. The role
foreign direct investment might play in bringing advanced
technologies to developing countries is highlighted. Near-
and long-term strategies for rural energy are discussed.
Finally, policy issues are considered for evolving the
energy system so that it will be consistent with and
supportive of sustainable development.
A COLLABORATION GREATER THAN
THE SUM OF ITS PARTS
This paper is based on findings that have resulted from more
than20 years of collaborationby the authors,andbegan at a time
when energy security concerns were paramount.The fact that
billions of people in the developingcountriesrelied on traditional
and inefficient energy sources for cooking, heating, and work-
ing was just startingto come into focus as a policy concern;and
environmentalissues were gaining increasingattention,though
climate change was not yet listed high on the public policy
agenda.Most expertsconsideredenergy from a growth-oriented,
supply-side perspective, focusing on consumption trends and
how to expand suppliesto meet rising demand,withoutaddress-
ing the mounting environmentalimpacts and security concerns
associatedwith energyproductionanduse. For example,in 1981,
the InternationalInstituteof Applied SystemsAnalysis published
Energy in a Finite World(1), which envisioned an energy fu-
ture in which thousandsof plutoniumbreederreactorsproduc-
ing annually thousands of tonnes of weapons-usable material
would be introducedearly in the 21stcentury, and that the use
of fossil fuels would increasedramatically.The prospectthatthe
energy system might be made sustainable using such options
while the world served by this energy would become more and
more unsustainablewas frightening.
The authorsof this paper believed it was importantto estab-
330 ? Royal Swedish Academy of Sciences 2001
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lish a differentway of thinking about energy. We shareda vi-
sion of energy as an instrumentof global and nationaldevelop-
ment and of technology as a crucialmechanismfor making this
possible. Ourthinkingwas bolsteredby energy use trendsin the
wake of the oil shocks of the 1970s, which showed thatthe link
between energy consumption and economic growth could be
substantiallyweakened. The challenge of trying to change the
energy paradigmwas the catalyst for our collaborationon En-
ergyfor a Sustainable World(2, 3), in which we showed how
new patternsof energy productionand use could furthereco-
nomic efficiency, equity, empowerment and environmental
soundness.
Each of the authorshad an establishedtrackrecordin energy
analysis before we startedcollaborating.Although we had sci-
entific backgrounds,we were sensitive to socioeconomic issues.
Our sharedcommitmentto economically viable, need-oriented,
self-reliantand environmentallysound developmentconvinced
us to work togetheras peers in an informalpartnershipthatwas
independentof institutionalpressures.Our differences in terms
of perspectives,experience and expertise were complementary,
andtogetherwe were able to producewhatnone of us could have
producedalone. Ourcollaborationhas continuedto this day with-
out a conventional organizationalor institutionalumbrella, in
parallelwith our work on our own individualprojects.
In our firstproject,Energyfor a SustainableWorld,for which
our collaborationis perhapsbest known, we looked at energy,
not in isolation,but in relationto global issues, such as poverty,
populationgrowth, food and undernutritionand environmental
degradation,to which energy is inextricablylinked.We believed
that new approachesto energy must not aggravatethese other
problems. Instead, solving the energy problem should contrib-
ute to, and be consistent with, the solutions to the other major
issues. Energy, we argued, must be an instrumentof need-ori-
ented, self-reliant and environmentallysound development-
what has come to be referredto as sustainabledevelopment.
The emphasis on using energy to serve needs meant that the
focus must not be on energy consumption,but on the end-uses
of energy-that is, the tasks that energy performsand the util-
ity it provides to human beings. The switch in focus from en-
ergy consumptionto energy services was not a semantic trick.
It emphasizedthe fact that enhancementof energy services does
not necessarily require expanding supplies. It can also be
achieved by using energy more efficiently. Technological op-
portunitiesaboundfor enhancingenergy services withouta cor-
respondingincreasein primaryuse. Indeed, over the long term,
efficiency increases of an order of magnitudeare theoretically
possible. In additionto many othercollaborativeefforts,the four
of us have just served, along with many other scientists and re-
searchers,on the editorial board of the WorldEnergy Assess-
ment.We discoveredthat our vision of energyas a force for sus-
tainable developmenthas gained currencyin many circles, in-
cluding among industryleaderswho served with us on the edi-
torial board. Still, the assessmentrevealed majorcontradictions
between the currentenergy path and the ideal of a sustainable
world:
- Modern energy carriersare still not accessible to some two
billion people, severely limiting their choices and opportuni-
ties. The wide disparitiesin access to and use of affordable
commercial energy runs counterto the concept of equitable
humandevelopmentand threatenssocial stability.
Ambio Vol. 30 No. 6, Sept. 2001
- Energy activities are major contributorsto indoor air pollu-
tion, urbanairpollution,acidificationandglobal warming.For
example, they contribute85% of anthropogenicemissions of
sulfurdioxide and a significantfractionof emissions of small
particulatematter, and their contributionto greenhouse gas
emission is also very significant-78% of C02, and 23% of
methane.
- Unreliableenergysuppliespose a hardshipand economicbur-
den for a substantialportion of the world's population.And
the fact thatthe world is becoming increasinglydependenton
oil from politically troubled regions leaves many countries
vulnerableto disruptionsin supply.
As recently as 25 years ago, it was widely believed that a
shortageof fossil fuels might constrainglobal economic devel-
opment.Currentanalysisrefutesthis notion. Physical limitations
of fossil fuel resourcesare not likely to constrainenergy devel-
opment; rather a departurefrom the current energy path will
probablybe requiredin response to social, environmentaland
securityconcerns.Fortunately,thereare ways to reconcile these
concerns-even the dauntingchallenge of climate change miti-
gation-with the need for more energy services. However, de-
spite good technicaland economicprospectsfor shiftingto a sus-
tainablepath,this will not be easy. The currentpathis supported
by weighty infrastructuresand powerful vested interests.
MOVINGTOWARDENERGYSYSTEMSTHAT
SUPPORTA SUSTAINABLEWORLD
The following patternscharacterizeprimaryenergy consump-
tion in both industrializedand developing countries:
- Per capita primaryenergy consumptionper year in develop-
ing countries averages less than 30 gigajoules, comparedto
about 380 gigajoules for the United States plus Canada.
- Fossil fuels represent81% of primaryenergy consumptionin
industrialized countries and 70% in developing countries
where three quartersof the world populationlives.
- Biomass representsonly 4% of primaryenergy consumption
in industrializedcountries and is the most widely used form
of energy elsewhere. (Traditionalbiomass representsabout
90% of total energy consumption in some least developed
countries.)Althoughmodernbiomassenergyconversiontech-
nologies can be clean and environmentallyfriendly,in the de-
veloping world, biomass tends to be used very inefficiently,
with serious environmentaland health consequences.
- Energygrowthwas about 1.5%in OECD countriesin the pe-
riod 1987-1997 and 4.5% in developing countries. The in-
crease in global energy demandin the next 15 to 20 years will
be largely from these developing countries as they strive to
meet the basic needs of and improveliving standardsfor their
growing populations.
There is now widespread agreementon the broad strategies
needed to steer the presentenergy system in a more sustainable
direction.They include:
Improvingefficiency of energy use to help reduce costs and en-
vironmental damage. Many cost effective steps have already
been taken in this directionsince the oil crises of the 1970s, but
these have not been sufficient to reduce the rate of growth of
energy consumption.Tremendousenergy savings (from 25 to
35% in many countries)are cost-effectively possible with avail-
able technologies. And greater potential exists over the long
term.
Increasing the contributionof renewable energy sources such
as wind,photovoltaics, and modernizedbiomass. These renew-
able energy sources have the potential to provide energy serv-
ices with zero or almost zero emissions of both air pollutants
and greenhouse gases. Furthermore,they are based on the use
of indigenousresources.New renewableenergy sourcescontrib-
ute about 2%of total primaryenergy. Substantialprice reduc-
Ambio Vol. 30 No. 6, Sept. 2001 ? Royal Swedish Academy of Sciences 2001
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tions in the last decades have made these sources competitive
with fossil fuels in certainapplicationsin growingmarkets.Mod-
ernized biomass energy is especially importantfor developing
countries.Solarphotovoltaicsand grid-connectedwind technolo-
gies are growing at a rate of 30% per year.
Increasing the share of the cleaner and more-efficientfossilfuel
technologiesin the energymix. In transportation new hybridelec-
tric cars offer a 50% reductionin gasoline requirements,along
with a 1/3 reductionin air pollution damage costs comparedto
conventional cars. In power generation,new naturalgas com-
bined cycle power plants are highly cost-competitive, with air
pollution damage costs and CO2emission rates less than 10%
and40%,respectively,of those for new coal steam-electricplants
with pollutioncontrols.Combinedheat andpower systemsbased
on gas turbines,combinedcycles, and microturbines,and, in the
years immediatelyahead fuel cells as well, offer substantialen-
ergy-saving,environmental,and economic benefits comparedto
the productionof electricity and heat in separatefacilities. The
use of such technologies is growing rapidly, especially where
market reforms encourage competition in power generation.
Moreover, new coal integratedgasifier combined cycle power
plants that are becoming cost competitivewith coal steam-elec-
tricplantsoffer damagecosts fromairpollutantemissionsas low
as those for naturalgas combinedcycles and CO2emissions that
are 80% of those for new coal steam-electricplants. Costs for
coal gasification technologies are especially attractive in
"polygeneration"configurations, in which various mixes of
chemicals,fuels, and industrialprocessheat are coproducedwith
electricity.
Accelerating developmentand deploymentof new energy tech-
nologies. Many advancedenergy technologieswill be much less
environmentallydamagingand more cost-competitivethantech-
nologies availableon the markettoday. Some examplesare:fuel
cells for transportation;fuels cell hybridswith gas and/orsteam
turbinesfor stationarypower and combinedheat andpower;fos-
sil fuel-derived hydrogen with geological sequestrationof the
separatedcarbon dioxide; dimethyl ether produced from crop
residuesfor use as a clean cooking fuel, village-scalepower gen-
eration,and transportationin ruralareas;wind and photovoltaic
systems that provide dispatchablepower by coupling to hydro-
electric power or compressedair energy storage.Advanced nu-
cleartechnologiesmight also make contributionsif the problems
of cost, reactorsafety, waste disposal, and the nuclearweapons
link to nuclear power that presently stall the expansion of nu-
clear power can be satisfactorilyresolved.
Opportunities
While the above strategiesare straightforward in one sense, their
implementationis handicappedin partbecause differentpartsof
the world are so different in terms of resources, technical and
institutional capacity, and energy infrastructure.In many re-
spects, the achievementof sustainabledevelopmentdependson
what happens in the developing world, where energy demands
are set to grow substantiallyin any scenario of economic suc-
cess. This observationis not meant to understatethe responsi-
bility that industrializedcountriesbear for most energy-linked
global environmentalproblemsto date,especiallyclimatechange
andacidification,nor the rightof developingcountriesto develop
economically. Ratherit is intendedto point out that while the
lack of large-scaleenergy systems is one of the problemsfaced
by many developing countries,this relatively "blankslate" also
affords some interestingpossibilities. It means that many devel-
oping countrieshave the opportunityto "get energy right"at an
early stage in their economic development,which will be less
expensive for them over the long term. It also means that de-
veloping countrieshave the chance to leapfrog over the many
of the dirty and wasteful processes that industrializedcountries
adoptedbecauseof the limits of technologyat the time. The com-
331
bination of state-of-the-artand advanced energy-efficient end-
use and clean modem energy supplytechnologies offers a prom-
ising energypathfor developingcountries.Because of theirrapid
energy demandgrowth,nascent infrastructuresand large renew-
able energypotentials(e.g. typically much higherinsolationlev-
els than in most industrializedcountries),these countriescould
become majortheatresfor energy technological innovation.
In industrializedcountries,technological advance (mainly in-
volving improvedenergy efficiency) has weakened the histori-
cally tight link between economic developmentand primaryen-
ergy consumption.By shiftingto more energyefficientprocesses
and end-use devices and to modem energy carriersin the de-
veloping world, it would be possible to achieve dramaticim-
provementsin living standards,with relatively small additional
inputsof primaryenergy. For example, providingmodem clean
cooking fuels in the amountneeded to satisfy the cooking needs
of the two billion people, today deprivedof of such fuels, would
require a mere 1.3% increment of global commercial energy,
equivalentto 3% of global oil consumption.
The early adoptionof modem up-to-datetechnologies-tested
and availablein the industrializedcountries-is one obvious op-
tion. An example, albeit outside the energy area, is the adop-
tion of mobile phones as the preferredway of expandingthe tel-
ephone system instead of following the path used in the past of
extending lines for fixed telephones. The success of this strat-
egy is evident all over the world, and the manufactureof these
products via joint ventures in the developing countries them-
selves is perhapsan importantcontributorto success.
An example of leapfrogging in the energy area is the early
transitionto LPG (liquefied petroleumgas) as a fuel for cook-
ing replacing inefficient and highly polluting fuelwood or coal
cooking stoves. The success of such an approach,especially in
a numberof LatinAmericancountries,is very impressive(4).
In addition, developing countries can profit by developing
technologies that are particularlysuited to their needs and in
which they might have comparativeadvantage.An example of
success is the ethanol program in Brazil based on the use of
sugarcane,which grows well in the particulargeographicalcon-
ditions of that country. The technology has desirable general
characteristicsof sustainability-the raw materialis renewable;
ethanol is far superiorto leaded gasoline from an environmen-
tal perspective and generates less air pollution damage than re-
formulatedgasoline; and the productionof sugar cane-derived
ethanol provides ruraldevelopment benefits, e.g. 700 000 jobs
were created by the programme.Moreover, in contrast to the
volatility of the world oil price, the price of this synthetic fuel
has declinedwith experience,on averageabout4% per year with
Figure 1. History of the ethanol tmoo00
price in southeast Brazil and the
gasoline price in Rotterdam for
comparison. The price shown for
ethanol is the price on a higher
fuel heating value basis divided i
by 1.15 to take into account the C,
higher thermal efficiency of a
ci
ethanol-fuelled engines (5, 6).
co
0
0
0
_ 10,00
._8
100I
0 1000
332 C Royal Swedish Academy of Sciences 2001
http://www.ambio.kva.se
cumulativeproductionsince 1980-as is typical of many manu-
facturedproducts(Fig. 1). Ethanolis now competitivewith gaso-
line on a cost basis, not accountingfor externaleffects.
A note of caution is warrantedto avoid applying the "leap-
frogging" concept indiscriminately. Advanced technologies
shouldbe pursuedin a countryor region only if they would help
advance sustainabledevelopment objectives. What is required
there is a high level of human technological capacity for ena-
bling energy decisionmakersto make technological choices that
are often not obvious.
Clearly, developing (and transitional)countries need to fur-
ther develop their own unique combinationsof resources-hu-
man, naturaland technological-so they can create energy sys-
tems appropriateto their own circumstances.But to do so, they
need assistance in terms of technology transfers,financing and
capacitybuilding.
The declining share of official development assistance rela-
tive to other investmentcapital, especially foreign direct invest-
ment (FDI), suggests the importanceof steering private sector
resources towardthese ends. Internationalindustrialcollabora-
tions (e.g. industrialjoint ventures)andprivate/publicsectorpart-
nerships are alternativeattractivemechanisms that could both
fosterthe migrationof new technologies to developing countries
and help build the capacity for indigenous technological inno-
vation.Considerthatfor the 20 developingcountriesthataccount
for about three quartersof GDP and four fifths of primaryen-
ergy requirementsof all developing countries,FDI as a percent-
age of gross domestic investment(GDI) was relatively stable at
2-3% duringthe 15-yearperiod ending in 1986 but then rose to
about 4% during the late 1980s and during the 1990s rose
sharply,reaching 10 per cent in 1994. The massive infusion of
FDI duringthe 1990s was stronglycorrelatedwith a drop in the
energy intensity of the economy (Fig. 2). The coefficient of de-
terminationfor the regressionline of the energy intensityagainst
foreign direct investment (FDI) share of gross domestic invest-
ment (GDI) is R2= 0.87. Energy intensitywas reducedat a rate
averaging about 1.5% per year, more than 50% faster than the
long-termhistorical trend-probably due to the introductionof
moderntechnologies that came with the FDI and thus leapfrog-
ging over the traditionaltechnologies in wide use in the coun-
tries.
THECHALLENGEOF RURALENERGY
A pressing concern is that some two billion people-mostly in
ruralareas of developing countries-do not have access to af-
fordablemodernenergy services that could help them breakout
of cycles of poverty, ill-health and deprivation.It would be an
Learning curve for ethanol
1
2000 3000 4000 S600
Cumulative production (PJ)
Ambio Vol. 30 No. 6, Sept. 2001
enormousmistake-on moral,political and economic grounds- accomplishedthroughlarge governmentinterventions.The cur-
to ignore the plight of this deprivedsegment of humanity. rent trend of corporatisinginefficient public sector units may
Serving ruralenergy needs is a dauntingchallenge but is not need to be coupled with imposed obligations to serve the un-
technologically constrained. Technologies are available that derprivileged.
could make significant improvementsin living standardsin just Subsidizing rural energy would not necessarily mean aban-
a few years. And looking ahead, many new technological op- doning the use of marketmechanismsto efficiently allocate re-
tions will become available. Table 1 outlines some of the pros- sources. Consider,for example, the ruralenergy concession, an
pects for meeting energy services for ruralareas over the near-, arrangementin which a substantialmarketis awardedto a sup-
medium-and long-terms.Some of the more advancedtechnolo- plier, along with an obligation to serve all customers within a
gies are describedin the next section. specified market.If such a concession were awardedcompeti-
The remote, dispersed characterof rural populations makes tively, marketforces could hopefullybe broughtinto play to find
provision of electrical energy services problematic.The exten- the least-costlymix of energy technologies. While some subsidy
sion of centralized, grid-based sys-
tems will probably not be economi-
cally feasible in the foreseeable fu- Table 1. Some near-, medium-, and long-term technological options for rural energy (9).
ture. Decentralized rural electrifica-
tion-based on variouscombinations Energysource Present Nearterm Mediumterm Longterm
or task
of wind turbines,mini-hydroturbines,
village-scale biopower systems, solar Source
Electricity Gridor no Naturalgas Biomass-based Grid-connected
photovoltaics, and diesel genera- electricity combinedcycles, generationusing photovoltaicand
tors-may be the solution. Some of biomass-based gasifierscoupledto solarthermal,
generationusing microturbinesand biomass-based
these technologies still need public- gasifierscoupled integratedgastifier generationusing
sector supportfor their development, to intemal combined cycles, gasifierscoupledto
combustion minigridsinvolving fuel cells and fuel
but even for those decentralized engines, various celVturbine hybrids
photovoltaic, combinationsof
power systems for which cost-effec- smallwind,small photovoltaic,wind,
tiveness is proven, some public in- hydroelectricfor small hydroelectric,
applications batteries
vestmentwill probablybe requiredto remotefromgrids
get systems up and running. Fuel Wood,charcoal, Naturalgas, LPG, Syngas, DME Biomass-derived
As a general rule, subsidies for dung,crop producergas, DMEwith
commercially established energy residues biogas electricity
coproduct
technologies are ill advised, for rea- Cogeneration Intemal Microturbinesand Fuelcells, fuel
(combined heat combustion integratedgasifier celVturbine hybrids
sons discussed below. But an impor- and power) engines, turbines combinedcycles
tant exception is temporarysubsidies
to ensure that energy services from Task
modem, clean energy supplies are Cooking Woodstoves Improved Producergas, Electricstoves,
woodstoves, LPG naturalgas and catalyticbumers
available in quantities sufficient to stoves, biogas DMEstoves
satisfy basic needs of the poor, in- Lighting Oiland kerosene Electriclights Fluorescentand Improved
cluding the ruralpoor, as an element lamps compactfluorescent fluorescentand
of an integrateddevelopment initia- lamps compact
fluorescentlamps
tive that seeks to alleviate poverty in
Motivepower Human-and Intemal Biofueledprime Fuel cells
rural areas. Such subsidies should animal-powered combustion movers,improved
serve as an enabling transitional devices engines, electric motors
motors
measure rather than a permanent
crutch.It is useful, in this context, to Process heat Wood,biomass Electricfumaces, Inductionfumaces Solarthermal
cogeneration, biomass/solar fumaces withheat
recall that the extension of modem producergas, thermalfumaces storage
NG/solarthermal
energy to the ruralareas of the now- fumaces
industrialisedcountrieshas often been
Energy intensity and FDVGDI
20 developing countries (1987-1998)
Figure 2. Energy intensity of the 0.33 -
economy for 20 developing countries
vs. percentage of FDI in GDI. GDP data
are on a purchasing power parity
basis, from the World Resources
Institute (7). Energy, Foreign Direct
Investment (FDI),and Gross Domestic

-X
Investment (GDI)data are from the C,, 0.30 -
World Bank (8).
S ~0.29 ,T.- **

0.3
0.28
0.3 W. m*,-*s **

0.27 4#*

0.26

0.25
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14%
FDVGDI

Ambio Vol. 30 No. 6, Sept. 2001 ? Royal Swedish Academy of Sciences 2001 333
http://www.ambio.kva.se
might still be necessary,competitionwould help ensurethatpub-
lic funds providedthe minimum subsidy requiredto satisfy the
concessionaire'sobligationto providemodem energyto all. This
ruralenergy concession concept is theoreticallyvery appealing
but requirestesting and modificationas needed in light of field
tests, because successful experience is lacking.
RADICALCHANGEIN ENERGY
ENVISIONING
TECHNOLOGIESWORLDWIDEFORTHE LONG
TERM
Over the long-term, not just new but truly radical new energy
technologies will be needed in orderto address effectively the
challenges of air pollution, climate change, and energy supply
insecuritywhile expandingenergy service availabilityto all, in-
cluding those who today do not enjoy the benefits of modem
energy, and keeping the costs of energy services affordableto
all. One hopes to see duringthe second quarterof this century
technologies like i) photovoltaicpower; ii) fuel cell cars;iii) hy-
drogenderivedfrom fossil fuels with sequesteringof carbondi-
oxide in geological reservoirs,and iv) dimethyl ether (or simi-
lar synthetic fuel) derived from biomass, become as common-
place as gasoline cars and coal-firedpowerplantsaretoday. And
if such technologies are to be commonplace duringthe second
quarterof this century,they must be launchedin the marketdur-
ing the first decade of this century. These are daunting chal-
lenges.
Realizing a futurefor energy that is supportiveof sustainable
development goals requires thinking seriously about the long
term-say 2050 and beyond. A clear articulationof long-term
goals is essential for prioritizingnear-termactivities for build-
ing the path to a sustainablefuture.
The long-termenergyfuturemustbe both affordableand char-
acterizedby near-zeroemissions of both airpollutantsandgreen-
house gases. It must also involve a diversificationof the trans-
portationenergy supply system away from petroleum.Ideally,
such a future would involve using only three energy carriers:
electricity,hydrogenand a supercleancarbon-basedfluid fuel-
perhapsdimethylether.
Electricityis a very familiarclean energy carrierthat in prin-
ciple might satisfy all energy needs. But storing electricity and
using it to meet peaky energy demands(as in transportation)is
difficult, so one or more fluid fuels will also be probablyneeded
as well-although thisjudgmentmight changeif thereis a break-
throughin electric storagetechnology.
Hydrogenis a fluid fuel thatcan be derivedfrom a wide range
of primaryenergy sources.Its use can facilitatea shift to highly-
efficient end-use devices such as fuel-cell vehicles. Its produc-
tion and use could satisfy the zero emissions criteriaif the CO2
co-productwere sequesteredsecurely in geological formations
wheneverthe hydrogenis manufacturedfrom fossil fuels. There
is growing optimism in the scientific communitythatthe global
capacity for secure CO2storage in such formationsis large, al-
thoughmore researchis needed to be confidentof this.
One drawbackof hydrogenis its low volumetricenergy den-
sity, which complicates storage issues. For this reason, hydro-
gen will probablybe economically viable mainly in urbanareas
having high populationdensities where fulelinfrastructurecosts
can be kept to relatively low levels. For ruralareas,which char-
acteristicallyhave low population densities, an easily storable
carbon-basedfluid fuel will probably be needed-even in the
long term. But if a new carbon-basedfuel is to be introduced,it
should probablybe both far cleaner than today's hydrocarbon-
based liquid fuels, derivable from a wide variety of primary
feedstocks, and useful in a wide range of ruralapplications.To
meet the near-zerogreenhousegas emissions criterion,the fuel
should be derived from biomass. The energy carrierthat comes
closest to meeting these criteriais dimethyl ether (DME). DME
334 ? Royal Swedish Academy of Sciences 2001
http://www.ambio.kva.se
is not used today as fuel but ratheras an aerosol spray-canpro-
pellant that has come to replace fluorinatedhydrocarbonsthat
were phased out because of ozone-layer depletion concerns.At
ambientconditions,DME is a gas that must be storedat modest
pressure,for example, in canistersvery similar to the canisters
now used for storingLPG. Like LPG, DME is an ideal cooking
fuel. It is also a good energy carrierfor use in compression-ig-
nited engines-the combustionof which leads to zero soot for-
mation. And it is well suited for use in fuel cells for stationary
or mobile applicationsbecause it is even easier to reformthan
methanol.
In an energy futurebased on these energy carriers,electricity
could be producedfrom renewableenergy sources such as PV,
wind, and hydroelectricpower, or from hydrogen or DME in
some applications.
The hydrogenfor urbanuse might well be producedin large
city-gate plants that produce electricity as a co-product. Such
plants would use as feedstock a variety of carbonaceousmate-
rials-natural gas, coal, heavy oils, and municipal solid waste.
Hydrogenwould be deliveredto refueling stationsfor hydrogen
fuel-cell vehicles and to buildings where it would be used both
in fuel cells for combinedheat and power (CHP) as well as for
cooking and supplementalheating. The CO2byproductof hy-
drogenproductionwould be transportedby pipeline to geologi-
cal disposal sites such as deep saline formationslocated up to
severalhundredkm fromhydrogen/electricityproductionplants.
The DME for ruralapplicationswould probablybe produced
from biomass feedstocks (perhapsfrom crop residues) as a co-
productwith electricityin relatively small-scale plants (perhaps
10 megawattsof electricityplus 60 tonnes per day of DME) lo-
cated near where the biomass is grown. Manufactureof these
modernenergy carriersfrom crop residueswould createthe op-
portunityfor even the pooresthouseholdsto affordthe clean en-
ergy producedwith income they might earn gatheringresidues
from the fields of rich farmersand delivering them to energy
conversioncenters.
This vision for the long term is of course only one of many
possible alternativefutures for energy systems at mid-century
thatwould be characterizedby near-zeroemissionsandenhanced
energy supply security. It has been chosen for illustrativepur-
poses because, on the basis of preliminarycalculations, it ap-
pears that there are reasonablygood prospectsthat such clean/
secure energy systems could be evolved at attractivecosts com-
paredto conventionalenergy systems and thus "affordable."
But would such systemsbe sustainable?To the extentthatthey
rely on fossil fuels of course they would not be. Eventuallyboth
economically recoverable fossil fuels and secure CO2 storage
capacity will run out. It is not yet clear which limit will come
first,but these physical constraintsare likely to be manifestonly
in the very distant future.But these fossil energy systems with
their characteristicsof near zero emissions of air pollutantsand
greenhousegases, diversifiedprimaryenergyresourcebase, and
affordabilitymight suffice for a centuryor two.
Of course it might turn out that geological sequestrationof
CO2at large scales is not viable because of some environmen-
tal and/orstorage securityproblemsthat are not currentlyfore-
seen. Undersuch conditionshydrogencould alternativelybe pro-
vided by electrolysisusing a renewableelectric source.But elec-
trolytic hydrogenwould be much more costly-even underopti-
mistic assumptionsaboutlong-termcosts for renewableelectric-
ity and advancesin electrolytictechnology.
The detailed features of an energy future such as this one in
which electricity, H2 and DME are the dominantenergy carri-
ers can be describedin technologicalterms in some detail based
on present knowledge. Substantialcost reductions for proven
technologies would be needed via exploitationof scale econo-
mies, learning,and continuingmarginaltechnological improve-
ments to realize such an energy future.Fundamentaltechnologi-
Ambio Vol. 30 No. 6, Sept. 2001
cal breakthroughswould of course be helpful but would not be
necessaryto move toward.But getting therewill not be easy be-
cause fundamentalredesign and rebuildingof the entire energy
system are required.Perhapsmost important,the process would
have to be guided by public-sectorleaders who would both set
the goals for a clean and secure energy futureand enact the fa-
cilitatingpolicies, andby private-sectorleaderswho would show
the way and begin makingthe needed investments.
GETTINGTO A SUSTAINABLEFUTUREDEMANDS
ACTIONNOW
Many might think that putting in place an energy system like
the one described above by the middle of this century should
be the responsibilityof the next generation.But that is not so.
If we as a humansociety decide to pursuesuch a futureor some-
thing similarwe have to begin to shift to such a coursevery soon,
because of the slow rate of turnoverof the capital stock for the
energy system. Long lead times for new technology dictatethat
intensive energy innovative activity is needed today in orderto
establisha portfolioof new energytechnology optionsto choose
from over the longerterm.Effectively addressingsuch long-term
technological challenges will require major new public policy
initiatives. New public policy initiatives are also needed to en-
couragewider deploymentof many commerciallyavailableclean
and efficient energy technologies,with which much can be done
in meeting sustainabledevelopmentobjectives.
Whateveris done to promoteenergy strategiesand technolo-
gies for sustainabledevelopmentmust be carriedout in the con-
text of the evolving structureof the energy industryworldwide,
which, in short,has involved a diminishingrole for government
in supplyingand distributingenergy. In the industrializedcoun-
tries this has been driven largely by technological changes that
underminesome of the naturalmonopoly featuresof the energy
system and is leadingto restructuringaimedat encouragingmore
competition in energy markets-most notably advances that
make smaller-scale systems for energy conversion more eco-
nomically attractive.In developing countries energy sector re-
structuringtoward corporatizationor privatization,in some in-
stances with elements of competitionas well, are takingplace-
mainly as a responseto inefficiencies and otherdifficulties with
publicly run energy companies, althoughthe technological ad-
vances thatare drivingchangein industrializedcountriesare also
relevant.
Some might view this diminished role for governmentsas a
threatto the protectionof public goods-especially in the face
of the dauntingrequirementsfor makingthe energy system sus-
tainable.However, ongoing structuralchanges in the energy sec-
tor also present an opportunityfor a new role for government.
Indeed, implementing regulatory and tax measures to protect
societal objectives and ensure fair competition may be a more
appropriateand effective role for government.
In the process of economic liberalization,corporationsare cre-
ated that act under the provisions of the legal, economic and
regulatorysystems of the country.Changes in these framework
conditionsoften demandreadjustments,with associatedcosts and
changes in competitiveness, and are therefore often resisted.
However, once a new frameworkis introducedto replace a mo-
nopoly situation,the process of change has alreadybegun. This
transitionalperiod, while the rules are in flux, may present a
timely opening in which to introduceand negotiate provisions
that addresssocial and environmentalconcerns.Because of on-
going marketreforms,many countriesare now in a position to
take advantageof this window of opportunity.
One of the most obvious places to begin the process of redi-
recting the course of energy, in a world whose economic func-
tioning is dictatedby markets,is by making sure that the power
of the market in efficiently allocating resources is working to-
Ambio Vol. 30 No. 6, Sept. 2001 ?DRoyal Swedish Academy of Sciences 2001
http://www.ambio.kva.se
wardthe efficient realizationof societal aims. In the energy sec-
tor, economic efficiency is hamperedby a lack of competition
and huge price distortions.Its functioningwould be enormously
improved by promoting competition, removing subsidies, and
internalizingexternalities. The emergent new energy industry
should be reregulatedin ways that are consistent with this new,
more efficient, more competitive marketstructure,to compen-
sate for free marketshortcomingsin addressingsustainablede-
velopment objectives.
Promotingcompetitionto keep energyprices in check is com-
plicated in the power sector by the high cost of electricity stor-
age options, which dictates that most electricity must be con-
sumedas soon as it is generated,so thatreformspromotingcom-
petition must be shaped to ensure that reliable electricity sup-
plies are adequateto meet demand. Such considerationshigh-
light the importanceof coupling measurespromotingcompeti-
tion to integratedresourceplanningactivitiesthatestablishgoals
for capacity expansion and electricity supply reliability that
would be met competitively.
Energy subsidies work at cross-purposesto the aims of sus-
tainable development, representingpublic costs at the global
level of the orderof USD 100-200 billion per year-not includ-
ing those in the transportsector.Since these supportconventional
technologies, they create a huge hurdle for new technologies,
especially energy efficiency improvementsand renewables, to
overcome.
However, as discussed above, an importantexception to the
general rule of removing subsidies is where the subsidy would
be used to ensure that basic needs of the poorest and most vul-
nerable groups are met and provided in the context of broader
programsdesigned to help such groups break out of a cycle of
poverty. One possibility is "lifeline rates"for such groups, that
is, the provisionof small amounts(in the case of electricity,per-
haps 50 kilowatt hours per household per month at little or no
cost). Because the goal should be to satisfy basic needs at the
least cost, a key part any scheme should be a one-time subsidy
to assist in the purchase of energy-efficient capital equipment
(e.g. compact fluorescentlight bulbs, LPG stoves). Where such
subsidiesare well-targeted,and well-designed(to encourageuse,
but not inefficiency), the resultingbenefits-including access to
the outside world throughradio and television, light for reading
and studying, time savings, health benefits and so on-far out-
weigh the costs.
A second distortionoccurs because externalitiesare often not
reflected in prices; although many Europeancountries, in par-
ticular,have made considerableprogressin this. In the absence
of governmentintervention,marketsfail to accountfor environ-
mental and other societal costs associated with energy produc-
tion and use. Finding ways to accuratelyfigure these negative
externalitiesinto the energy pricing equation is difficult, how-
ever, partiallybecause there is no consensus on how to meas-
uretheircosts in monetaryterms.Nevertheless,the best estimates
available of these "external"costs are that they can be substan-
tial-in some cases comparableto, or in excess of, the direct
privatecosts of the energy provided.Variousapproachescan be
taken to integrateexternalitiesinto prices at the national level.
One widely practicedapproachis to regulateharmfulemissions
of energy systems to air, water, and solid waste streams.An al-
ternativeapproachis to tax emissions. A carbontax provides a
simple and consistentmethod for internalizingthe cost of miti-
gating climate change. A mix of carbon taxes and other pollu-
tion-impact-weightedenergy taxes could addressa wide range
of environmentalimpactsassociatedwith energyproductionand
use; all or most of the revenues so generatedshould be used to
offset revenues from conventional taxes that are regressive or
otherwise unfair. Correctpricing signals can have a profound
impacton measuresto make renewableand advancednear-zero-
emitting fossil energy systems more competitive and to over-
335
come some of the obstacles standingin the way of energy effi-
ciency improvements.
Unfortunatelyfor the many strongcandidatetechnologies for
meeting sustainabledevelopmentobjectivesthatarealreadycost-
effective, "getting the energy prices right" is not sufficient to
ensurewidespreaddeployment.It is now widely recognizedthat
many cost-effective energy efficiency improvements are not
readily implementedby marketforces alone, because of a range
of institutionalbarriers-barriersthat are faced by many renew-
able and distributedenergy systems as well. Barriersincludelack
of informationabout costs and benefits, high implicit consumer
discount rates (potentialbenefits tend to be strongly discounted
by individualswho have to invest time and money up front in
orderto realize long-termsavings), inadequatefinancingoppor-
tunities, split responsibilities between those who make invest-
ments and those who pay operatingcosts, and high transaction
costs because of a lack of marketaggregationin the delivery of
services provided, among others. Such problems call for gov-
ernment intervention. The needed programs can take various
forms, includinginformationprograms,regulations(e.g. energy
efficiency standards),tax incentives, subsidized loans or guar-
anteedprices, governmentprocurementand competitivemarket
transformationinitiatives. To the extent that governmentinter-
vention involves subsidies, the supportshould be temporaryand
partof a broaderinitiativeaimed at eliminatingthe targetedbar-
rier. "Green"pricing, whereby customers can choose to pay
higher prices for environmentallyfriendly energy, is a market-
based mechanism for helping overcome barriersto such tech-
nologies.
Another crucial area for public policy and investment is in
helping to develop and launch some of the advancedtechnolo-
gies discussed above. Because the private firm cannot fully ap-
propriatethe benefits of R&D investmentsand the existence of
environmentaland other negative externalities,it is widely rec-
ognized that governmenthas a major obligation to supportre-
searchand development(R&D)-and the need for such support
is especially great for energy R&D. What is not widely recog-
nized is that governmentalso has major obligations to encour-
age demonstrationprojectsand early deploymentof energytech-
nologies that offer promise in addressing sustainabledevelop-
ment objectives, because the marketalone will typically not be
able to overcomethe higherinitial costs of new energytechnolo-
gies. Even after R&D has shown the viability of promisingnew
Figure 3. Learning curve and buy-down cost for an advanced energy technology. The
incremental cost for buying down the cost of the advanced technology relative to the
conventional technology is shown, as the advanced technology moves along its
learning curve. The area between the curves indicates the total cost for buying down
the cost of the advanced technology to the level at which the advanced technology is
competitive with the conventional technology. The point where costs for advanced
and conventional technologies are equal does not necessarily represent the
asymptotic (long-term) market price for the advanced technology.
Learning curve for advanced technology
Area undercurve is total cost
of Buy-downrequiredto
commercializeadvanced
Conventional technology
Incrementalcost for advancedtechnology
number of units produced (cumulative)
technologies, demonstration projects and decades of market
growthare typically requiredbefore new technologies can com-
mand majormarketshares.
Demonstrationprojects are generally costly, risky and diffi-
cult to finance, so thatgovernmentsupportis crucialat this stage
of the energy innovationprocess. One way of limiting risks and
enhancingprospectsthatdemonstrationwill be followed by com-
mercializationis to insist on major roles for the private sector.
Some of the most successful demonstrationprojects have been
those where the government role has been to set performance
and cost goals and to have only limited financial involvement,
e.g. providing only a fraction of the needed capital investment
or providing instead a price guaranteefor the energy produced
in the demonstrationproject, while the private sector has taken
responsibility to decide how to meet the goals and has shoul-
dered a substantialshareof the financialrisk.
Even after successful demonstration,incentives will often be
neededto bringclean energytechnologiesto the point wherethey
can compete with conventional energy. Radically new energy
technologiesoffering significantpotentialin meeting sustainable
development objectives are almost invariably initially more
costly thanthe conventionalenergytechnologiesthey would dis-
place. But economies of scale in production,learning,and com-
petition can all help drive the costs of new technologies down.
Typically,manufacturedgoods show cost declines of about20%
for each cumulativedoublingof production.Subsidies for "buy-
ing down costs" of such technologies to marketclearing levels
(Fig. 3) are warrantedbut should be craftedto be both effective
and efficient. Mandatedmarketshare measuresthat use market
competition to select among qualifying technologies those that
warrant subsidy offer promise in these respects. The UK's
RenewablesNon Fossil Fuel Obligationthat was in place in the
1990s and the Renewal Portfolio Standard(known as the Green
Certificate Market in Europe) being tried in several countries
aroundthe world are examples of such initiatives that encour-
age cost buy-downsby stipulatingthat a specified amountof re-
newable energy or percentageof renewables in the energy mix
is provided by energy suppliers.Experience with the Non-Fos-
sil Fuel Obligationillustratesboth the efficacy and the economic
efficiency of this approach:between 1991 and 1998, the aver-
age contractprice for renewables purchasedin a series of auc-
tions declined nearly threefold, yet the cost of buy down, paid
for via a levy on fossil fuel power supplierswas never burden-
some, resultingin a retailconsumerrateincrease
of no more than 1%in any year.
If developing countries are to meet their en-
ergy needs, they will also need more human
capital and strongerinstitutions.Technological,
entrepreneurial,and managerialcapabilitiesare
all criticalfor successful technology transferand
innovation. Such capacity building in develop-
ing countries is a sine qua non condition for
technological leapfrogging.Yet, capacitybuild-
ing in developing countries is often given low
priorityeven by organizationsthat are supposed
to be committed to this challenge. Capacity
building is a slow, time-consumingprocess, and
programexecutives in a hurryfor profits do not
emphasizethe task. However,withoutstrongpri-
vate-sectoractorsand marketsas well as sustain-
able energy programsand agencies, sustainable
energy initiatives in developing countries are
likely to be ad hoc, limited in scope, and insuf-
ficient to overcome the full set of barriersinhib-
iting large-scale implementation.
Strong government-privatesector collabora-
tion has been a key feature of many successful
market development programs.This means in-

336 c Royal Swedish Academy of Sciences 2001 Ambio Vol. 30 No. 6, Sept. 2001
http://www.ambio.kva.se
volving the private sector in programdesign as well as imple-
mentation.Successful nationalenergy efficiency and renewable
energy centers and programs are already operating in Brazil,
China, India, and EasternEurope. These centers and programs
work with the privatesector, utilities, and other entities to intro-
duce and provide supportfor a variety of energy efficiency and
renewableenergy measures.
CONCLUSIONS
A tremendouschallenge for human society is to move beyond
the tangible pressuresexperienced today and to manage global
resourceswith futuregenerationsin mind. Taking such actions,
in the face of competing short-terminterests,will requirea para-
digm shift. For this shift to occur, the sustainabilitydebatemust
move to center stage and be accompaniedby greatly raised lev-
els of public awareness, informationand commitment.Contin-
ued dialogue and consensus building within the international
community,between the public and private sectors, and within
society at large is needed to advance sustainableenergy policies
at the national,regionaland global levels. A goal-oriented,strat-
egy-basedpolicy drivenapproachto energy in the new paradigm
implies thatthe futureis a matterof choice ratherthanbusiness-
as-usual destiny. In this sense, we continue to be the optimists
we were when Energyfor a Sustainable Worldwas first writ-
ten-harbingers of hope ratherthan prophetsof doom.
Further Reading
* Johansson,T.B., Kelly, H., Reddy, A.K.N. and Williams, R.H. 1993. Renew-
able Energy-Sources for Fuel and Electricity.IslandPress,Washington,DC.
1160 pp.
* Johansson, T.B., Bodlund, B. and Williams, R.H. (eds). 1989. Electricity:
Efficient End-Use and New Generation Technologies, and their Planning
Implications.Lund University Press. Lund, Sweden. 960 pp.
* Nakicenovic, N., Griibler,A. and MacDonald,A. 1998. Global Energy Per-
spectives. CambridgeUniversity Press, Cambridge,UK. 299 pp.
* PCAST Panel on InternationalCooperationin ERD. 1999: Powerful Part-
nerships: the Federal Energy Research & Developmentfor the Challenges
of the 21st Century.Reportof the Panel on InternationalCooperationin En-
ergy Research, Development, Demonstration,and Deployment of the Presi-
dent's Committeeof Advisors on Science and Technology, Office of Science
and Technology, the White House, Washington,DC, June 1999. This report
is availableon the World-WideWeb at http://www.whitehouse.gov/WH/EOP/
OSTP/html/ISTP_Home.html.
* Reddy, A.K.N., Williams, R.K. and Johansson,T.B. 1997. EnergyAfterRio:
Prospects and Challenges. United Nations Development Programme,New
York,.176 pp.
* United Nations Development Programme,United Nations Departmentfor
Economic and Social Affairs, World Energy Council. 2000. WorldEnergy
Assessment:Energy and the Challenge of Sustainability.UNDP, New York.
508 pp.
* World Energy Council. 2000. Energyfor Tomorrow'sWorld-Acting Now!
Atalink ProjectsLtd. London.

References and Notes

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World:A Global Systems Analysis. Report by the En-
Instituto de Eletrotecnica e Energia International. Energy Initiative (IEI) ergy SystemsGroupof the IntemationalInstitutefor Ap-
Universidade de Sao Paulo 25/5 Borebank Road plied Systems Analysis. Ballinger,Cambridge.837 pp.
2. Goldemberg, J., Johansson, T.B., Reddy, A.K.N. and
Av. Prof. Almeida Prado, 925 Benson Town Williams, R.H. 1987. Energyfor a Sustainable World,
Cidade Universitaria Bangalore 560 046 World Resources Institute,Washington,DC. 119 pp.
3. Goldemberg, J., Johansson, T.B., Reddy, A.K.N. and
05508-900 Sao Paulo - SP India Williams, R.H. 1988. Energyfor a Sustainable World,
Brazil E-mail: ieiblr@bgl.vsnl.net.in Wiley Eastem Limited,New Delhi. 517 pp.
4. LPG in Brazil-54 Yearsof History. Published for the
E-mail: goldemb@iee.usp.br IV World LPG Conference,November 6-8, 1991. Rio
de Janeiro,Brazil.
Dr. Robert H. Williams 5. DATAGROLPG in South America,DATAGRO(Cana
Prof. Thomas B. Johansson Center for Energy and de Asucar e Alcool), Bimonthly Bulletin published by
DATAGRO PUBLICACOES LTDA, Plinio Nastari,
Bureau for Development Policy Environmental Studies EditorApril 2001 (for ethanolprice paid to producers).
United Nations Development Pro- Princeton University 6. Based on the OPEC Monthly Oil Market Report, and
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gramme Engineering Quadrangle Bulletin (for Rotterdamregulargasoline price).
304 East 45th Str., Room 9100 Princeton, N.J. 08544 7. WorldResourcesInstitute,1999. Privatecommunication
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New York, NY, 10017 USA 8. World Bank. 1999. WorldDevelopmentIndicators.
9. UNDP. 2000. WorldEnergy Assessment. UNDP, New
USA E-mail: York. Chapter10.
E-mail: thomas.johansson@undp.org rwilliam@arundel.princeton.edu

Volvo EnvironmentPrize
Why Reward Environmental Efforts?
The threatsposed by pollutionof the biosphereand the loss of its resources
are today evident, and all humanactivity has an impacton the environment.
The landscapeis changed, the quality of air and water deteriorates,and ef-
fluents and noise increase.Over the past few decades, consensus has spread
across the social, industrialand political spectrumabout the urgentneed to
show greaterrespect and care for the Earth'secosystems and their manage-
ment.
As a consequence,every industrialenterprisesuch as Volvo has evident
responsibilitiesto reduce the impact its productsand processes have on the
environment.This must be done continuously and consistently making full
use of new knowledge and technology.
In 1972, at the first United Nations Conferenceon the Environment,held
in Stockholm, Volvo demonstratedits awareness of the issues at stake by
initiating its own environmentalprogramconcerning cars. Volvo fully be-
lieves it has a responsibilityto ensure that its vehicles function effectively
from a pro-environmentperspective (Volvo 1972, The Car in the Environ-
ment).
The realityof environmentalprotectiondemandsthatwe reflect upon the
entire life cycle of a productfrom conceptionto design, production,use and,
finally, its recycling or disposal. It is only by taking such a global view of
the problems that we will be able to solve them effectively. Deep and cur-
rent knowledge is essential to be able to decide the right priorities in the
environmentalfield. The new results that research is presenting are there-
fore a necessity for both industryand society in general.
In institutingan annualenvironmentprize Volvo wanted to attractatten-
tion to extraordinaryresearchefforts and to encouragescientistswhose work
and discoveries are of decisive importancefor our future. The creation of
the VolvoEnvironmentPrize is an expression of Volvo's awarenessof the
interdependenceof all actions, inventions and processes that sustain and
protectthe environmentalbase on which we all stand.

Ambio Vol. 30 No. 6, Sept. 2001 c Royal Swedish Academy of Sciences 2001 337
http://www.ambio.kva.se