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Significance of Diversification of Energy Resources Reza Amrollahi In the Name of God.

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Presentation on theme: "Significance of Diversification of Energy Resources Reza Amrollahi In the Name of God."— Presentation transcript:

1 Significance of Diversification of Energy Resources Reza Amrollahi In the Name of God

2 Outline Energy Production and Its Perspectives Definition of Security and Its Categories Security & Disruption in Energy Supply Types of Energy Production Risks Diversification & Security in Energy Supply Energy Production Factors –Energy Diversification Factor –Energy Supply Risk Factor Solutions Summing Up

3 Energy & Its Perspectives World population would reach 8.2 billion in 2030, from 6 billion in 2000. One third of the world population have no access to electricity and another one third have only limited access. If the per capita energy usages in the developing and developed states are to be the same then the energy demand would increase 8 fold till 2050. In 2030 70% of total energy demand would form in developing countries. Therefore, the energy exchange trade (production, demand, supply, transport) would significantly grow.

4 In 2030: Still more than 1.4 billion people have no electricity. Natural gas would rapidly replace other energy resources. Growth in natural gas usage would be limited by advances in other energy technologies. Flower-house emissions would increase steeply. Conclusion: Stability of states in near future depends primarily on their capability to produce clean and enough secure energy. Energy & Its Perspectives

5 Security can be relatively defined as: Getting Free of Risks, Survival, and Preservation of Basic Values Security is the fundamental concern for all states from military and non-military aspects. Non-military aspects can be divided into different categories, including Energy Production, Economic, and Environmental issues. Definition of Security

6 Security and Disruption Energy Supply and Risking Factors Technological Limitations Major Dependence on One or Few Technologies for Energy Production Geographic Limitations Major Dependence on One or Few Countries for Energy Imports Energy Supply Risk

7 Security and Disruption Energy production security similar to security itself, covers a vast and diverse concept. Countries with major reliance on limited energy supplies and import them would be more vulnerable to risks. Instabilities in energy supply and demand, technological, or geographical limitations can lead to disruptions in energy market. Energy importing countries usually do not face political chaos, but they are threatened by market disruptions (e.g. developed states).

8 Security and Disruption On the other hand, developing countries usually experience all three types of disruptions: 1.Disruptions Because of Political Issues: Due to Inability of Exporting Country, Internal Political Problems (Internal Chaos, Post-war Issues, etc.), External Problems, and Group Decisions of Unions, 2.Disruptions in Markets: Due to, for instance, Embargos, 3.Disruptions Due to Accidents: Natural Disasters, with no humans playing role.

9 Types of Energy Supply Risks Effective Risks in Energy Supply Non-diversifiable Risks Diversifiable Risks Problems in the Global Market Problems in the Local Markets Problems in Access to Technologies

10 Types of Energy Supply Risks Non-diversifiable Risks: Correspond to oscillations in the global market and affect a large number of producers and consumers in countries. Diversifiable Risks: Correspond to those risks, against which a country can increase the security factor by taking proper policies and programs.

11 Diversification & Security According to IEA, in 2030 fossil fuels would produce about 89% of world’s energy with the current rate. This will be 2% above the corresponding figure at the beginning of the current century. At present, major available energy resources are: –Oil –Coal –Natural Gas –Nuclear Energy –Hydro-power

12 Diversification & Security Share of various energy resources in the world (Source: IEA)

13 Energy Production Factors For a quantitative rather than a qualitative measurements we define two energy production factors. Qualitative Evaluation Quantitative Evaluation 1. Comparison to Other States 2. Position of Technology Stability & Reliability in Energy Production Energy Security Factor Usage of Various Technologies & Resources Energy Diversification Factor

14 Energy Diversification Factor Primary Energy Supply in Various Countries (Million Ton Crude Oil) 2002200120001999Country 2290.4 516.9 265.9 350.0 203.5 538.3 143 156.1 126.4 75.4 2253.9 517 266.4 248.2 193.9 524.2 134.5 149.6 119.7 71.6 2302.6 521.6 257.6 350.9 190.9 523.6 125.00 146.1 105.3 77.5 2242.3 516.4 255.1 244.4 178.5 502.1 121.7 140.6 90.1 71.0 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey 10376.410150.19963.59711.6 Total World

15 Energy Diversification Factor Percentage of Primary Commercial Energy Supply (Based on 2003 Statistics) OilNatural Gas CoalNuclear Energy Hydro- power Country 39.7 49.2 36.1 33.0 49.8 32.8 41.8 50.3 54.9 42.9 26.6 13.6 15.1 27.0 11.4 7.8 56.0 29.9 45.1 25.4 24.9 22.2 4.7 10.6 24.1 53.6 0.5 17.6 __ 20.8 7.9 10.3 38.3 5.7 13.8 1.1 __ 2.6 4.5 6.5 23.5 0.7 4.5 1.5 2.1 __ 1.7 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey

16 Energy Diversification Factor To measure the diversification of various energy resources we define the energy diversification factor d as: Here: N is the number of energy resources, x i is the percentage of the i th energy in the country’s supply.

17 Energy Diversification Factor Calculated Diversification Factors for Countries Energy Diversification FactorCountry 3.0 3.1 3.4 2.3 3.4 4.6 5.7 4.0 6.0 2.9 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey

18 Energy Diversification Factor Canada with the smallest and Saudi Arabia with the largest diversification factors have respectively the most even and most uneven usage of energy resources. Iran has a close d-factor to that of Saudi Arabia, showing its unreasonable situation. Some states essentially have no capacity to produce some forms of energy, e.g. hydro- power in Saudi Arabia. Hence, diversification in energy production schemes should be of the primary concern for Iran.

19 Energy Supply Risk Factor From the energy supply security side, we can take quantitative measures too. Energy supply risk factors are given relative to crude oil for Japan as –Liquid Natural Gas:1.94 –Crude Oil: 1.00 –Coal: 0.317 –Nuclear Power: 0.026 Unexpectedly, the risk factor for nuclear energy (in Japan) is much lower than other forms, being 75 times less than LNG. Jap. J. Political Sci. 5, 1 (2004)

20 Energy Supply Risk Factor This remarkable difference can be due to Japan’s access to nuclear fuel cycle. Therefore inability to access the peaceful nuclear fuel cycle will be a direct cause for increasing nuclear energy’s risk factor. Of course, there are numerous political, regional, and global issues affecting this situation. In fact a precise evaluation of risk factors for every country requires a separate and detailed research.

21 Energy Supply Risk Factor If we take zero risk factor for Hydro- power and equal factors for LNG and natural gas, then we can define the total energy supply risk factor e as where r i is the risk factor of i th energy.

22 Energy Supply Risk Factor Calculated Energy Supply Risk Factors Energy Supply Risk FactorCountry 0.99 0.83 0.67 0.89 0.80 0.64 1.51 1.14 1.43 0.99 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey

23 Energy Supply Risk Factor India and France have the smallest energy supply risk factors: Cause: –Major reliance respectively on nuclear and coal energies (low risk resources). Iran and Saudi Arabia have the largest energy supply risk factors. Cause: –Heavy reliance on high risk energy resources (fossil fuels). Although the geographical and local benefits of these two countries are not included in this estimation, however, several compensating issues should be considered in the long term as follows in the next pages.

24 Energy Supply Risk Factor Iran has huge natural gas reservoirs, but this would not help to attain a more reasonable energy supply risk factor: Pressure drop in many oil fields and the necessacity of gas reinjection Very low internal prices, encouraging unreasonable consumption Heavy subsidies paid, encouraging Illegal trade Global limitations in usage of fossil fuels due to flower-house emissions Limitations in Long-term Usage of Natural Gas

25 In general, countries having large energy diversification factors (i.e., uneven usage of resources), have large energy supply risk factors too. In both cases Iran has almost the worst situation. There are three inter-related solutions for Iran: 1.Diversification of Energy Resources 2.Development of Low Risk Technologies (Coal, Hydro-power, and Nuclear Power) 3.Maximum Utilization of Renewable Energies Solutions

26 Hydro-power: Iran has not yet fully developed its hydro- power capacities. Through the completion of existing projects, the share of this clean energy form would increase. Within 9 months the total installed capacity of hydro-power plants would exceed 6007MW, which constitutes 18% of total country’s electricity. After completion of current projects during the next twenty years, the total capacity of hydro- power plants in Iran would reach 11,584.4MW.

27 Solutions Karon-3 Dam

28 Solutions Jiroft Dam (Illustration of Spillway)

29 Solutions Natural Gas: Currently, European Union is considering Iran as the best alternative for Russia to import natural gas. From another point of view, exports of national reservoirs such as natural gas and oil, in their crude form, results in destruction of many economic potentials as well as very low surplus benefits. Perhaps the best way to deal with this, is to keep the exports and therefore exchange with money to minimum, and replace it with the imports of science and technology, in the infra-structures of energy production with high efficiency, nuclear energy, renewables, and collaboration in the nuclear fusion research.

30 Solutions

31 Coal: Current estimations show that only 50% of the country’s coal can be used for total required electricity over the next 30 years. Iran’s Electricity Development Organization has the first coal plant with the Clean Coal Technology in Tabas, close to the Mazino coal mines. If the share of coal from the total energy supply is one-third of the current total value, then internal coal mines would last for about a century.

32 Solutions Nuclear Power: Atomic Energy Organization of Iran initially planned in 1977 for a minimum of 9000MW and maximum 19800MW nuclear power according to country needs and consultation with Stanford Research Institute. 2x1200MW reactors in Bushehr and 1800MW plants in Ahwaz were planned. After the revolution, contracts were unfortunately stopped. However Bushehr plants would be ready for operation at reduced capacity in 2 years.

33 Solutions Bushehr reactors under construction

34 Solutions With the completion of Iran’s hydro-power projects within the current year, energy diversification and supply risk factors would improve to 4.3 and 1.29, respectively, which show a much more favorable situation. Completion of Bushehr nuclear plants, Tabas coal plants, and all remaining hydro-power projects should be done in about 15 years. In this case, the energy diversification and supply risk factors would reach 3.5 and 1.09, respectively, which represent a situation quite comparable to developed states.

35 Solutions Current Status of Energy Factors and Their Expected Values in Future For comparison, the Energy Diversification and Supply factors respectively for France and the United States are 3.4 and 0.99. FactorCurrent Value Mid-20062020 Diversification d-Factor Supply e- Factor 1.511.291.09

36 Solutions Renewable energies require heavy initial investment and small energy production capacitites, which limit their usefulness. Considering all political aspects and the serious enviornmental issues involved with nuclear fission, the best remaining choice for energy production is the peaceful and clean NUCLEAR FUSION technology. Breaking heavy nuclei Attaching light nuclei Nuclear Fission Nuclear Fusion Nuclear Power

37 Summing Up Not only diversification in energy resources of developing countries has direct relationship to their energy supply security, but also it is a condition for sustained development as well. Developed countries with stable economies enjoy favorable diversified energy production among various resources and rely on low-risk energies. Nuclear energy, contrary to the serious political difficulties during the construction have never been, at least up to now, affected by external problems after operation.

38 Summing Up From both energy diversification and supply security views, there is a one-to- one correspondence. In general countries with large d-factors (less diversified) have large e-factors (less reliable situation) too. In both cases Iran is the most critical state. Through completion of hydro-power, coal, and nuclear projects, Iran’s energy factors would come close to the figures for developed countries.

39 Thank You for Your Attention

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