10.4.1 Barriers to Technology Transfer
Many opportunities to reduce carbon emissions in the energy supply sector are
well documented. A series of barriers precludes actions which can be undertaken
to use already available technologies. A detailed list of barriers limiting
energy efficiency diffusion and more intensive use of renewables is provided
in Chapters 4 and 5. Instead of
listing all of them we prefer to discuss a few, particularly the ones important
for conventional energy sources.
More efficient conversion of fossil fuels can be obtained through identification
of the necessary technology and its utilisation to improve oil refineries processing
efficiency, coal mining processing, power generation and the widespread use
of cogeneration, to name the most important ones.
Efficiency improvements in oil refineries are limited mainly by the lack of
competitive financial conditions. Due to the low price of oil, capital investments
in refinery upgrades often would not provide an economical return. The same
is true for coal processing upgrades. Low price of fossil fuels are consequences
of many traditional policies like direct and indirect subsidies (SAR II, 1996),
non-inclusion of external costs (Harou et al., 1998) associated with their production
and use (environmental and social costs), large scale of consumption and long
time presence in the market which allowed the creation of an optimised production,
transportation and commercialisation structure.
Opportunity to reduce emissions while reducing economic costs exists in the
FSU, where the efficiency of long-distance, high-pressure natural gas transmission
pumping is only 28-30 per cent in the compressor turbines. As far as technology
transfer is concerned, Ukraine and Russia have developed 35 per cent efficient
systems, but they cannot implement them due to the financial crises.
Efficiency improvements in power generation are already demonstrated and there
is significant potential to increase present world average thermal efficiency
from 30% to 60% (IPCC TP 1, 1996; Willians and Zeh,1995). Diffusion of thermal
plants with 60% energy efficiency is limited in industrialised countries to
the small growth in electricity demand and by the long lifetime of existing
conventional power plants. In developing countries, where opportunities for
supply expansion are frequent, diffusion of the most efficient plants is occurring
but limited by the availability of natural gas and capital constraints for the
construction of gas pipelines. As result, efficient coal plants are being built
but constrained by capital availability.
Cogeneration or sequential production of power and heat is a much more efficient
process than the production of each one of these energies alone. Major obstacles
are shortage of capital and lack of regulatory policies to allow commercialisation
of the excess electricity produced through access to the existing grid systems.
Energy efficiency improvements in power generation and cogeneration also face
barriers due to:
- Lack of incentive of the major utilities: Many electric utilities sell
electricity through a regulatory review process that allows the utility to
recover all operating expenses, including taxes and a fair return for its
investments. This could give insufficient incentive to improve efficiency
(US DOE, 1996).
- Deregulation creating uncertainties in the power generation business. Deregulation
may not necessarily lead to the most environmentally friendly outcome unless
the proper institutional policies are in place.
- Lack of human qualification in developing countries. Without investment
in capacity building the existing electricity service is of lower quality
compared with industrialised countries, information gathering is not a priority,
and new technologies, which may be less costly or more environmental friendly,
are seldom taken into account.
Switching to low carbon fuels is an important way of abating GHG emissions.
In particular, replacement of coal and oil by natural gas as the primary energy
source in power generation is an excellent solution. Conversion to natural gas
is constrained by the long lifetime of the existing coal and oil power plants
in operation in industrialised countries and by the costs associated with installation
of pipelines and other infrastructure in the developing countries. The trend
to power deregulation could inhibit fuel switching in the absence of complementary
policies due to the existence of cheaper alternatives such as coal.
Lack of a consistent and comprehensive framework for the evaluation of energy
costs from different energy sources is another serious barrier to technology
transfer. For such an evaluation it is necessary to include the complete energy
cycle analysis. In the case for biomass the amount of land needed, cost of collection
and competition with farming to produce food must be considered. For nuclear
energy costs for security, for handling and storing radioactive wastes and for
disassembling the plant after its operational life are barriers to private sector
Uncertainties in the economic systems discourage long term investments, including
sustainable energy. Most multilateral and international lending institutions
are technologically risk averse. As a result, governments may be reluctant to
invest in high-tech projects that entail high capital costs (ECOSOC, 1994).
Unfortunately, most ESTs are characterised by large up-front investments. In
effect, the pollution abatement advantage is paid in advance. This is also a
serious obstacle for nuclear energy. Reduction in nuclear unit scale may be
a way of widening its market, but must be initially tested commercially in industrialised
countries to attract further economic interests.
Another concern is the lack of continuous energy supply from some renewable
sources. Energy supply intermittence may require another energy source in a
hybrid system or a storage mechanism to guarantee continuous supply. This adds
cost or limits the maximum share of intermittent renewables in an integrated
electric system (Ishitani et al., 1996).