Energy companies are being asked to meet growing world energy demand, but at the same time, they're expected to cut carbon dioxide emissions. World energy demand is growing at 1.5 per cent a year. Meanwhile, negotiations are underway under the auspices of the United Nations Framework for Climate Change to broker consensus for curbing greenhouse gas emissions. It's something of a conundrum.
Total, the world's fourth-largest quoted oil company, has a three-pronged investment strategy to reduce emissions, while producing more energy to meet world demand, says Jean-Francois Minster, senior vice president of scientific development at Total: investing in energy efficiency; carbon capture and storage (that is, storing CO2 in geological formation or in oceans, instead of releasing it into the atmosphere); and producing energy from renewable sources. Each area has strong profit potential, but each also has obstacles to scaling up development, Minster says.
Total's number one priority is improving energy efficiency, Minster says. That is where we will get the most reward for the customer and the company at the same time. The company is investing in ways to boost the energy efficiency of its facilities, and in lighter plastics, lighter elastomers, which are used mostly in seals and adhesives, engines that consume less fuel, and better performing lubricants.
The company is increasing its investments in renewable energy sources, focusing on technologies which are already profitable, such as photovoltaics and biofuels. To spur greater investment in 'greener' energy sources, Minster says the EU needs to provide a roadmap of incentives for investment in emerging technologies which are not yet profitable. He adds that public spending on new energy technologies is vital, citing the Stern Review on the Economics of Climate Change released in the UK in 2006 that said public spending levels must double to address global climate change.
Total has already launched a pilot carbon capture and storage project in France. Minster expects the authorities in the future to give carbon credits in relation to this technology, an important stimulus to its development, which at the current cost of up to 100 euros a ton, is much higher than current CO2 market prices in the region of around 20 euros. There is not real incentive to develop this technology at a significant level, he says.
Other ways to make the technology more economical may be to inject carbon dioxide which is 80 per cent pure instead of 100 per cent, and provide policies for industry to develop cheap storage sites. Also key to developing the sector will be to set up a public monitoring authority, he says.
So far, the strategy is fulfilling the 'double bottom-line' objective of meeting energy demand without increasing emissions, Total reckons. We are producing twice as much oil and gas compared to 1990, but our CO2 emissions are the same, Minster says.
That said, Minster points out that fossil fuels will remain the most important source for future energy demand for the next generation - at least until 2030.
At the same time, technologies for renewable energy are getting close to industrialisation and economic production. This makes the system for change after 2030 possible, he adds. We must grow the industry now for it to take a significant place later.