So far in the course, we have talked primarily about technical issues, energy sources, supply chains, storage, and efficiency. Now we've learned enough background to ask the key question, what does humanity need to do to create the best energy transition? A transition which addresses a host of critically important issues, including greenhouse gas emissions and climate change. Let's review the key issues we must address while considering the answers. At the beginning of the course. We look at humanities needs through the lens of the UN Sustainable Development Goals Report. There's widespread agreement that every one of these goals is important to achieving peace, prosperity, and opportunity for people in every part of the world. But for those of us fortunate enough to live in high-income countries like Canada, or the United States, it's easy to take these goals for granted in our everyday lives. We easily forget that people in lower-income nations have achieved only some of these goals, and in some places, very few of them. Looking through the list, there are a lot of interdependencies. For example, we can't have good health and well-being Sustainable Development Goal number 3, without zero hunger, number 2, clean water and sanitation, number 6, decent work and economic growth, number 8, and peace, justice and strong institutions, number 16. One can quite reasonably argue that we can't really achieve any of these goals without achieving all of them. Perhaps the most critical goal humanity must achieve a Sustainable Development Goal number 7, access to affordable, reliable, sustainable, and modern energy for all. Energy is central to everything in modern human life, and we must have it in order to achieve any of the other goals, particularly considering that there are almost eight billion people alive on Earth today. The 21st century energy transition must take place. Recognizing that we must be able to apply solutions at every part of the world, developing new technologies and policies to reduce GHG emissions in the European Union, or North America are fine and necessary objectives, but those particular strategies won't work everywhere. Let's dig into that further. Our first major issue is global population growth. The world's annual global population growth rate peaked about 1970 and is slowing as shown by the purple line. Demographics experts tell us that this is the result of improving energy and technology availability as people in more urban and wealthy societies have fewer children. In fact, not only is population growth slowing in many of the richest nations, total population is actually declining except where there is a high level of immigration. Despite the slowdown in the rate of global population growth, the number of people in the world continues to increase and will likely do so until there are more than 10 billion people, compared to today's 7.8 billion in the world, which is predicted to happen before the year 2100. Faster modernization could cap that total sooner and at a lower level than predicted as increasing wealth slows growth rate sooner. Faster modernization requires affordable, reliable, sustainable, and modern energy for an ever-expanding population. Providing that energy is a daunting challenge and an incredibly important one. The Energy for Growth Hub is an energy research center based in the United States. It is built upon UN Sustainable Development Goal number 7 to make the case that every human being requires a certain minimum amount of energy for modern living. The modern energy minimum. Achieving the modern energy minimum in as many places as possible is a key concept in modernizing life and managing population growth worldwide. John Ayaburi, a PhD student in operations research with engineering at the Colorado School of Mines, and an associate of the Energy for Growth Hub explains the modern energy minimum. Two critical global energy issues centers around energy access and energy reliability. By energy access, we are looking at how many people are connected to the grid, and by reliability, we are looking at how reliable is the energy system. That is to say, for how many hours do people have power and for how many hours does the power goes off. These critical issues have been highlighted in the Sustainable Development Goals 7, which is goals set up by the United Nations to ensure there's an increase in the number of people that have access to affordable, reliable, and modern energy for all by 2030. If we take a look at Sustainable Development Goals 7, access rate is the only key progress metric. The only way the United Nations measures the progress they make with respect to this goal is by looking at the access rate. Now the access rate is simply a binary, which is 0 or 1. You are classified as 0 if you do not have access to the grid at all, and you are classified as 1 if you have access to the grid. It is quite interesting to note that the access rate only applies to households, which form a part of an entire economy. Over the years, the access rate has increased tremendously. For instance, in 2010, we had about 1.2 billion people not having access to electricity at all. But eight years down the line comes to 2018, that number dropped to 789 million people. This has been a significant improvement. But one issue still remains for those who are connected to the grid, how reliable is their access? This led us to do some research on the reliability aspect of electricity crisis or electricity issues. We had a paper entitled measurement reasonably reliable access to electricity services. This was written by me, Morgan Bazilian, Jake Kincer and Todd Moss. Morgan and I are from the Payne Institute for Public Policy at the Colorado School of Mines. Jake and Todd are from Energy for Growth Hub in Washington DC. There are also some complimentary works on the issue of reliability, such as the modern energy minimum by the Energy for Growth Hub. I'm going to touch a little bit on this modern energy minimum since the rest of the presentation is going to be on measuring reasonably reliable electricity. The modern energy minimum raises the ambition. That is, previously we had a minimum threshold of about 100 kilowatts per hour per person per year. But what the modern energy minimum does is that, this number is too low and we have to raise ambitions if you really want to ensure that people are getting the services that they need. The research team at the Energy for Growth Hub came up with a new threshold which augments the current or which raises the current 100 kilowatts per hour per person per year. The out proposed threshold is 1,000 kilowatts per hour per year per person and the firms. Interestingly, they extend this way to include firms which captures the broader economy as well as households and also raised the ambitious so the policymakers can give electricity access and reliability a different perspective. As I stated earlier, the rest of the presentation is going to be on measuring reasonably reliable access to electricity services. Which is another metric that we proposed that different from the modern energy minimum. If we talk about reliable electricity services, what we consider is power outages? How many power outages do you have in a year? For each outage, how long does it last? They're currently metrics in place to ensure that we are able to track or measure these outages. The first one is the SAIDI, which is the System Average Interruption Duration Index. This captures the duration of an outage in hours. Then we have the SAIFI, which is the System Average Interruption Frequency Index and this captures the number of power outages. We have one, the hour of power outages and two the duration of such outages. What we did in the reasonably reliable exercise was to come up with a benchmark that captured the reality of the electricity issues of developing countries. We propose a threshold of not more than 12 hours per year and a frequency of not more than 12 outages per year. This boils down to one outage in a month and such outage to last for an hour, and this cumulatively add up to 12. After we did that, we obtain data from the World Bank doing business report and an Enterprise server. We obtain data for the two indices that are described in the previous slide being the SAIDI and the SAIFI. Based on the duration, we had about 179 countries in total. The minimum duration was zero, which definitely came from countries that have very good electricity system. But the average was about 83.17, which is almost about 3-4 days of power outage. If we go to frequency, we have about 151 power outages in a typical year, in any economy based on this dataset. These two averages exceeded 12 hours and 12 outages we proposed. So for instance, here we have about 83 hours, which is greater than 12 hours and here we have about 151 power outages, which is greater than 12 outages, so globally we can see that we are not doing well when it comes to having reasonably reliable electricity. What we then did was to classify these countries, 179 countries based on our threshold and we have 103 countries that are meeting that threshold of having less than 12 hours of power outages, and then we have 109 countries meeting our threshold of not having more than 12 outrageous in a typical year. Without go ahead to plot these countries on a map so that we can visually see where the issue of unreliable power supply is. Clearly, the countries in orange are countries that did not meet our criteria of having reasonably reliable electricity services, and these countries are centered around South America, Africa, and parts of Asia. This is a good map that policymakers can use to tailor policies to ensure that we are addressing the key issues, or the key electricity issues being faced by the world. Clearly, there are some countries that are doing well, that are not shaded in orange, but they are added that are shaded in orange. We found that the number of people who would have access to electricity or diesel quality electricity is roughly 3.5 billion. This number is roughly half of the entire global population. If we have this number of people not having reliable electricity services, there is actually a key energy issue that we need to address if we want to have modern lives. Even in countries where electricity supply is skyrocketing, for instance, you look at countries like Ghana, Nigeria, they are approaching a 100 percent access rate, which is a binary yet they still experienced high unreliable electricity services. At the end of the day, what we are trying to bring forth is the issue of unreliable electricity, which is hindering modern lives. We proposed a 12-hour and a 12-outage threshold to augment and refine the way progress towards SDG7 is being tracked. Excellent. Thanks, John for explaining the modern energy minimum. The second key issue and the energy transition is the desire of every person on the planet to live a modern energy-rich lifestyle. With the development of global information and travel networks, people in low to middle-income nations are very much aware of the comfort and security of high-income energy-rich nations. Every citizen wants those comforts, which is really another expression of the UN sustainable development goals. These aspirations go beyond the modern energy minimum. Billions of people want the lifestyle of high-income countries. My colleague Kaushal Pander, a geophysicist, born and trained in India, now living and working in Canada, explains the perspectives of the people of India in developing their own oil and gas resources to achieve energy prosperity as quickly as possible. Hello, my name is Kaushal Pander. I grew up in India and studied physics at Punjab University and later geophysics at Banaras Hindu University. I am an exploration and development geophysicist, helping energy companies and exploring for and producing oil and gas. I have worked in different countries like India, Singapore, Qatar, and Canada. Today I will talk about India's dependence on oil and gas, how the living standards have changed, and the country's strategy to promote domestic production of oil and gas. India is the third largest consumer of oil after China and USA. It's also the fastest-growing energy consumer in the world. On this chart, the horizontal axis shows years from 2013-2019. The vertical axis measures crude oil in million metric tons. The red bars indicate oil imports and the black line indicates the import bill in billions of US dollars. As an example, in 2019 India spent 97 billion US dollars to import 200 million metric tons of oil. From 2013-2019. Oil import bills is generally decreasing because oil prices have crashed in 2015. The green bars indicate domestic oil production, and the blue line indicates the government earnings in billion US dollars. As an example, in 2019, India produced less than 50 million metric tons of oil and earned 63 billion US dollars in royalties and taxes. Now let's imagine a scenario in which India produces oil equal to its demand in 2018. That's a straight saving of $97 billion per year. On top of that, India would earn around five times more royalties and taxes, about 350 billion US dollars. In total, the savings would be around $450 billion plus the additional benefits of job and prosperity for the region. Countries like India recognize this opportunity and are doing everything to promote oil and gas exploration domestically. What has happened to India's living standards in the past 20-30 years? Here's a chart showing the Human Development Index from 1980 to 2017, which represents quality of life, access to education and health. We can see that India and China have improved significantly since 1980, but are still below the developed countries. This improvement is because of the economic growth within the country. On this chart of Indian energy use and living standards, we see that GDP per capita has increased sharply since 1990, and so the energy consumption, including electricity generation. In other words, higher living standards and better human development index are related to more energy consumption. On the right, compare these two images of the city of Gurgaon near Delhi. The top image is from 1990s and the bottom image is from 2010, 30 years ago, the city didn't exist. Now it has more than 26 shopping malls, seven golf courses, and all luxury car brands are there. Many of the world's biggest companies have offices in Gurgaon. There are many examples like Gurgaon across India. But the bulk of India's population still lives in the countryside and needs access to better living standards. This means that India will require much more energy in the coming years, and even now, it's the fastest growing energy consumer in the world. Indian policymakers are reacting to this huge energy demand since 2015, the Director General of Hydrocarbons, also known as DGH, has introduced multiple reforms in exploration and development. They have launched policies for early monetization, development of small fields, and promotion of unconventional hydrocarbons. There is the environmental clearance for exploration wells and early monetization of discoveries. Countrywide seismic acquisition has been commissioned for hydrocarbon exploration. Paperwork and approval processes have been streamlined. It's clear that there is a high priority on increasing domestic oil production. In summary, India is the fastest growing energy consumer in the world, and it needs much more energy to keep up with the growth of living standards. Energy policies have been revamped to promote domestic oil exploration and production by cutting down paperwork, ensuring faster approvals, and easing environmental clearances. Thank you for your attention. Thank you for those perspectives, Kashal. To sum up, many people fortunate enough to live in high-income countries see GHG emissions and climate change to be of paramount importance. People in many low to middle-income nations recognized concerns about climate change and GHG emissions but to them, abundant energy access is a higher priority. They intend to continue to develop and use oil, gas, and coal resources to alleviate energy poverty and to provide sufficient energy to support modern lifestyles. Everyone must recognize that people in other parts of the world do not share the same priorities about energy and emissions. The differences are fundamental, but we can't say either side is right or wrong. People in lower income nations are not going to abandon their dreams for a better life as quickly as possible. They know that the quickest route to abundant energy is to use as many different available energy sources as possible. Some people in higher-income nations want to quickly reduce global emissions, but cannot hope to force their priorities on the rest of the world. Our third major energy transition issue. Today's energy and industrial supply chains have been built over decades and are incredibly complex. From energy supply to transmission and transportation, to the thousands of components that go into the average vehicle. We learned earlier that new and emerging energy source and storage technologies will require many new and modified supply chains to provide the necessary raw materials. Massive new infrastructure will be required, including extensive new electrical grids to manage different energy distribution. New supply chains and logistics must also be created as we manufacture new products and adopt new methods. For example, we have to provide extensive charging networks as electricity powered vehicles become more common while at the same time, maintaining fueling networks for the existing fleet of internal combustion engine vehicles. All of these upgrades are expensive and require time to build. Major generation projects including nuclear, hydro, and large wind and solar installations take anywhere from several years to more than a decade from concept to power delivery. Large electrical grid projects take similar lengths of time. While all this construction is happening, existing systems must be maintained to meet current demand. In late 2021, California's State Grid Operator realized that shutting down natural gas power generation too quickly degraded electrical grid performance to unacceptable levels, causing local blackouts and necessitating construction of new dispatchable gas power generation capacity. A fourth important energy transition issue is that many people in high-income countries have not made significant lifestyle changes to reduce their own energy consumption. Even as technology makes vehicles, appliances, and many other products in our everyday lives more energy-efficient, most of us continue to consume as much or more than we can afford. Here's a great example. In late 2019 before COVID distorted markets, the three top selling vehicles in the United States were pickup trucks; the largest, most gas hungry vehicles in the consumer auto fleet. Most of the rest were sports utility vehicles with only six sedans in the top 20 list, including the Tesla Model 3 in 20th place. Gasoline was relatively cheap in late 2019. But as gas prices rose through 2021 with higher world oil prices, the United States federal government put out a call to OPEC to increase production and reduce oil prices instead of calling for smaller vehicles and reduce gasoline consumption. Many people don't want to give up their trucks despite the fact that many truck owners live in a city and have little real need for such a vehicle. Electric and hybrid vehicles are making inroads on the top selling list. I've owned a hybrid SUV for three years and find it an excellent vehicle that uses less gasoline than most smaller sedans while serving my long distance travel needs. But I'm not making a sacrifice. I'm relying on technology to reduce my gasoline consumption. The world cannot possibly produce enough energy to supply all 7.8 billion of us with the amounts consumed in rich countries today. This map shows that each person in the richest nations consumes more than 100,000 kilowatt hours of energy equivalent per year while many people in the world live on less than a quarter of that amount. The International Energy Agency's Net Zero by 2050 roadmap foresees that citizens of richer nations will reduce their energy footprint by being actively involved in deployment of new technology such as installing a solar water heater or driving an electric vehicle. On top of that, fully eight percent of emissions reductions must occur through behavioral changes; turning down the thermostat, walking, cycling, and taking transit instead of driving, and much more effective recycling. Peter Peter Tertzakian, a well-known Canadian energy analyst, made the case in his 2009 book, The End of Energy Obesity, that citizens of high-income countries must make large and systematic changes in energy consumption behaviors as part of the solution to reducing energy consumption and GHG emissions. More recently in August of 2021, the Tony Blair Institute for Global Change added that meeting net-zero goals will require significant behavioral changes from consumers across the United Kingdom and by implication, all in high-income nations. But so far, most of those changes are not happening and many people in high-income nations are resisting higher energy costs. I'm asking each student in this course, what can you do in your everyday life to reduce your energy consumption? What are you willing to do? Are you prepared to drive a smaller vehicle or no vehicle at all? Can you travel less? Can you reduce energy consumption where you live by installing a heat pump or improving your insulation? We've set up an online site for participants in this course to share ideas about reducing energy consumption. Remember, we're talking about taking positive action to change your own behavior to reduce the amount of energy you consume. This is a pretty good start on the issues we need to consider before plunging into how the energy transition will work. Next lesson, let's think of the specific questions we need to ask and answer to guide the way.
