Ethics and the Electricity Industry · 2007-08-27 · Elec4011 Ethics & Electrical Engineering Practice 2007 Ethics & the Electricity Industry, 27/8/07 3 Ethics & the Electricity

Elec4011 Ethics & Electrical Engineering Practice 2007

Ethics & the Electricity Industry, 27/8/07 1

Hugh Outhred ([email protected])

School of Electrical Engineering & Telecommunications

& Centre for Energy & Environmental Markets

Elec4011, Ethics & Electrical Engineering Practice, 27 August 2007

Ethics and the Electricity Industry

2Ethics & the Electricity Industry 2007

Outline

The nature of technology

Decision-making & its consequences

Ethical issues for the electricity industry

Addressing the climate change challenge for theAustralian electricity industry




What istechnology?(www.iiasa.ac.at)

Orgware is

critical for

complex

industries such

as electricity &

communications


Decision-making & its consequences #1Decision-making always involves uncertainty:

– No uncertainty implies no decision

Technological decision-making is often utilitarian:

– Whether a proposed action is considered to be right orwrong depends on its (anticipated) consequences

Decision-making intent (from the perspective of thedecision-maker):

– To reduce uncertainty about the consequences:

Increase probability of intended outcomes

Reduce probability of unintended outcomes




Decision-making & its consequences #2

Contrasting criteria for utilitarian decision-making

– Economic growth: Proceed with a project unless costsproved to outweigh benefits

– Precautionary principle: Only proceed if benefits provedto outweigh costs & with informed consent

When benefits are distributed differently from costs:

– Tragedy of the commons (Hardin, 1968) - Individualinterest runs counter to group interest:

Hardin’s solution: mutual coercion, mutually agreed upon

– Economist’s perspective: Externalities are impacts (goodor bad) on others that do not impact on a decision-maker

Economists’ solution: internalise the externalities


Decision-making & its consequences #3

Decision-making right (authority):– Independent decision-making by individuals:

Appropriate when there are few externalities

– Group decision-making by consensus or delegation:Appropriate when there are significant externalities

Some forms of group decision-making:– Governance: delegation of decision-making authority

through an election process

– Commercial: coordination of decision-making via trading:Internalise externalities by taxes, tradeable permits, etc.

– Engineering: coordination of decision-making bytechnical standards, protocols, design techniques, etc.




Governance in an isolated, “pure”parliamentary democracy

People (citizens of a State)as the source of power in a parliamentary democracy

Elected governmentact as Governance

Decision Makers

Delegated DM authority

Accountability

Corporations as toolsfor implementingeconomic activity

Influence

Ow

ne

rsh

ip


Opinions on the role of the corporation

Porter & Kramer, 2002:

– “the most important thing for a corporation can do forsociety, and for any community, is to contribute to aprosperous economy” (profit-maximising behaviour)

Beder, 2006:

– “the rise of corporate power and the increasingimportance accorded to markets means that TNCs areeclipsing the nation state as the driving force behindpolicy making” (capturing government decision-making)




Governance in the modern world

Citizens of a specific Stateas the source of power in a parliamentary democracy

Elected governmentact as Governance

Decision Makers

Delegated DM authority

Accountability?

Corporations as the toolsfor implementingeconomic activity In

flu

en

ce

Ow

ne

rsh

ip?

People (citizens of other States)

Elected governmentsof other StatesAccountability?


Ethical issues for the electricity industry

Social issues - electricity as an essential good:– Residential energy services in advanced countries:

Are air-conditioning, entertainment & swimming pools essential?

– Residential energy services in poor countries:What rights do poor people have & who should fulfil them?

– Commercial & industrial energy services:What is the appropriate role of subsidised electrical energy inregional, industry and corporate development?

Environmental issues - local, regional & global:– Biological impacts of electro-magnetic fields

– Impacts of primary energy resource use, e.g:Climate change




The climate change emission problem

Human climate change emissions are a function of:

– Number of humans & per-capita fossil fuel energy use

– The trajectory of per-capita fossil fuel use through time:Energy use strongly linked to social status

“Tragedy of the commons” features apply:

– Benefits of fossil fuel consumption are private & near-term

– Climate change costs are public, uncertain & long-term

Private corporations are major stakeholders:

– In fossil fuel extraction for export & local use

– In electricity-intensive industry (low cost electricity)

– In general business (electricity an essential input)


Some important climate change risks (Grubb, 2006)




Expected climate change impacts onAustralia (Senate Environment Committee, 2000)

Australia probably “very negatively affected”:– Large size, long coastline, soil salinity, exposure

to cyclones & El Nino/La Nina cycle, economicdependence on agriculture & tourism

Likely changes in next 50 years:– Higher temperatures, more frequent extreme

weather events, reduced available waterresources, reduced area of arable land, reducedcrop & livestock yield & quality, severe damageto coral reefs


Rainfall trend, 1950-2006 (mm/decade) (Aust BOM, 2007)




Max temperatures, 2002-2006 (Aust BOM, 2007)


Drought affecting electricity gen’n (coal & hydro)

(www.bom.gov.au)




The climate change challenge (BCSE, 2003)


The path to avoid Tavg >2°C (gold) requires much earlier, more

drastic action than path to avoid >3°C (green): start falling by 2015

BAU (>6°C)

(~3°C)

(~2°C)

Global emission paths to stabilise CO2e &average temp rise (Holdren, 01/07, www.aaas.org)




Actual emissionsat or above “BAU”(Raupach et al,PNAS, April 2007)


Outlook for Australian Stationary Energy Sectorwith existing measures (Aust 4th Comm to UNFCCC, AGO, 2006)

Unacceptable emissions trajectories




Per-capita emissions (Hansen, Feb. 2007)


Climate change emissions(Tonnes C per capita, Grubb 2006)




Climate change mitigation options(Stern, 2007)


Policies to reduce emissions (Grubb, 2006)




Fossil fuel emissions: total; electricity & industry(Stern, 2006)


An emission reduction scenario for theAustralian electricity industry (UMPNER, 2006)

Peak too late to help keep tave<20C




Projected 2050energy mix(Business Case forEarly Action, AustralianBusiness Roundtableon Climate Change,2006)


Estimates of Australian cost-effectiveenergy efficiency(NFEE, 2003)

Estimates have highuncertainty howeverpotential very large(NFEE, 2003)

Rebound effect maynegate reduction inenergy use unlesselectricity prices rise

50%




Indicative cost of fossil & nuclear generationin Aust. in 2030 (ESAA Owen Inquiry Submission, 2007)

CCS: Carbon capture & storage (Sequestration)CCGT: Combined cycle gas turbineIGCC: Integrated gasification (of coal) & combined cycleIDGCC: Integrated drying (of brown coal), gasification &

combined cycle


Findings on civilian nuclear energy“Is nuclear dangerous? Can it help reduce CO2 emissions?The short answer to the first questions is ‘very’: nuclearpower is uniquely dangerous when compared to other energysources. For the second question the answer is ‘not enoughand not in time” (Oxford Research Group, Secure Energy? Civil Nuclear

Power, Security & Global Warming, 2007, p7)

“In one scenario, deployment of nuclear power [in Australia]starting in 2020 could see 25 reactors producing about a thirdof the nation’s electricity by 2050” (UMPNER, 2006)

Issues for nuclear power in Australia:

– Competitive disadvantage, safety, fuel cycle management, weaponsproliferation, late availability, role in generation mix




Options for carbon sequestration

Leave fossil fuels in the ground

– Nature’s sequestration - proven over millions of years &fossil fuels still available for future generations to use

Biosphere sequestration:

– Plant matter & carbon in soils - not safely sequestereddue to bushfires, animals, etc.

Geosequestration:

– Burn fossil fuels, then capture & geo-sequester CO2

An irreversible process

How safe is it for future generations (inter-generational equity)?


CCS does not mean zero emissions

IGCC with geosequestration will still have CO2 emissions– Energy and cost tradeoff in CO2 capture from flue / gasifier stream;

also energy for transport and pumping underground

IEA (2001)

Coal IGCC with CO2 capture

emits approx. 40% of standard

CCGT (without capture)




Key findings of IPCC CCS report(www.ipcc.ch, 2005)

A portfolio of mitigation measures will be needed(CCS alone not sufficient)

Large-scale CCS power plant don’t yet exist

By 2050, 20-40% of fossil fuel CO2 technicallysuitable for CCS at cost of 13 to 67 A$/MWh

Deployment needs CO2 price of 25-30 US$/MWh

CCS might contribute 15-44% of cumulativemitigation effort to 2100, limited beyond that(identified storage sites would then be full)


Scenarios of CCS contribution to 2100(IPCC CCS report, www.ipcc.ch, 2005) CCS might decline

beyond 2100




Capture-ready coal-fired power stations(IEA Greenhouse Issues, June 2007)

No accepted definition of a capture-ready plant

Minimum steps that should be taken:– Study options for CO2 capture retrofit

– Provide sufficient space & access for the additionalfacilities required

– Allow for the reduction in net power output with CO2capture (20-25% for post-combustion capture)

– Identify storage options & reasonable routes tostorage

– Provide evidence to permitting authorities that thesesteps have been taken


Ethical considerations for CCS

Prudent avoidance:

– Choose lowest-risk option unless very expensive

Informed consent:

– Consult those affected prior to implementation

Neither principle favours CCS:

– Risks of human geosequestration are significantand fall on future generations:

Proponents want governments to carry this risk

– Fossil fuels are the safest geosequestration




Renewableenergy & coalcomparison forEurope (IEA, 2006)

Aust. non-hydroRE marketshares (%)

Bagasse

Coal-fired power stationapprox 35 /MWh


Low-emission generation cost projections forAustralia (MMA, 2006)




Location of the renewable energyLargest current

90.75 MW

Under Construction

192MW

Planning Approved

329MW


Growing size of wind farms

* Under construction ** Planning Approved




Wind as a generation resource

Resource– Non-storable, variable and partly predictable

Technology– 95%+ availability, controllable conversion effects

Output– Non-storable, variable, partly predictable, controllable

down

Wind is at the research frontier of integratingnon-storable renewable energy resources intothe electricity industry


Key issues for wind energy integrationPhysical complexity:– Shared, non-storable, time-varying primary energy

flow; concerns about robustness to disturbances

Commercial complexity:– Electricity industry infused with short- to long-term

risks that are difficult to commercialise (correctlyallocate to industry participants)

Institutional complexity:– Shared issues in wind farm approvals, grid connection

& management of power system security

High-penetration of wind energy will test theeffectiveness of electricity industry restructuring




A balanced climate change response…

Increased demand-side participation:– End-use efficiency, frugality, flexibility

– Importance of information & decision making

– Address problems of multiple decision makers

Low emission generation:– Renewables, “zero emission” coal, nuclear, …

No “magic bullet”

– Importance of appropriate innovation


Conclusions

The electricity industry is complex & risky:

– Governance & regulation are also complex

The central issues are:

– Identification & specification of risks

– Efficient delegation of decision making, riskmanagement & risk accountability:

Appropriate mix of market & regulatory mechanisms

Disciplined, stable and wise policy settings

Careful management of boundary issues

High level of professionalism in government & industry




Hugh Outhred: [email protected]

Many of our publications are available at:

www.ceem.unsw.edu.au

Documents

Ethics and the Electricity Industry · 2007-08-27 · Elec4011 Ethics & Electrical Engineering Practice 2007 Ethics & the Electricity Industry, 27/8/07 3 Ethics & the Electricity