Tratamiento de las lesiones de la vía biliar

2.3

The past: historical trends and transitions in the en-

ergy sector

The continuous process of creating new technologies, that form the basis of the products and services required to maintain and improve our living standards, was described by Schumpeter as a process of ‘creative destruction’ (Schumpeter, 1942). In this context, innovation and technological progress have played a vital role in modern economic development. In recent centuries, technological progress has accelerated exponentially, opening the possibility for new generations to have access to technologies that their ancestors only dreamed of. At the core of this technological revolution, is the energy sector, providing the ‘blood’ that fuels the increasingly complex systems under which modern societies are built.

2.3.1

The fossil fuel era and climate change

The end of the historical dominance of biomass, animal power, wind and water, as main primary energy resources globally, started with the invention of the steam engine, just before the industrial revolution (Renwick and Pambour, 1848). The steam engine was the key driver that allowed coal to become the dominant energy resource globally at the beginning of the twentieth century (see figure 2.1), despite it being part of the energy matrix for a significant period of time.1 Coal did not only replaced biomass for heating, but it also replaced humans and animals, previously used as source of mechanical energy. The extensive adoption of the steam engine in all sort of productive activities, enabled a rapid expansion of various sectors, including agriculture, manufacturing, transport and mining (Podobnik, 2005).

The technical and economic development triggered by the industrial revolution, led to an exponential increase in global population, matched by a parallel trend in energy use (see the top charts of figure 2.2). In little more than one century, global primary energy production increased ten folds, fueled by a massive expansion in the coal and oil industries, during the 19th and 20th century, respectively (EIA, 2016; Etemad, 1991). The new fossil fuel era, marked by the access to low-cost and better energy services, led to a paradigm shift in productivity. The invention of the steam engine, followed by the internal combustion engine and the electric motor, were the basis for the development of all the technologies and

1_{The inclusion of coal in the energy matrix dates back long before the industrial revolution. For instance,}

Smith (1997) describes coalfields exploited by the Romans in the late 2nd century AD, while the Tiangong Kaiwu encyclopedia, published in 1637, depicts ancient coal mines in China (Elvin, 2008; Song Yingxing, 1637).

Figure 2.1 Two grand historical transitions in global energy systems, measured by market shares of primary energy use. The first transition, corresponds to the emergence of coal based steam systems, which replaced renewable energy sources. The second transition, corresponds to the displacement of the previously dominating coal-based steam technology cluster by electricity and petroleum-based technologies. The chart is taken from the book “Energy Technology Innovation” (Grubler, 2013, p. 9).

services that modern cities rely on. As a by-product of the economic development based on hydrocarbons, however, CO2emissions started to accumulate in the atmosphere, at a rate

proportional to the burning of fossil fuels. The bottom right chart of figure 2.2 shows the rise in the level of CO2concentration in the atmosphere during the industrial revolution (blue)

and during the last decades (red), in contrast to the historical records from the last thousand years (green).

The sharp increase in the concentration of CO2 in the atmosphere, shown in the bottom

right chart of figure 2.2, is completely aligned with the observed changes in the climate system. As stated by the IPCC, human influence on the climate system is clear [...] Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, and sea level has risen(IPCC, 2014c, p. 2). Multiple lines of evidence indicate a near-linear relationship between net cumulative CO2

emissions and projected global mean temperature change to the year 2100 (IPCC, 2014c, p. 62). Therefore, to meet the 2◦C target stated in the Paris Agreement, it would require

2.3 The past: historical trends and transitions in the energy sector 17

Figure 2.2 Snapshot of the era of post-industrial revolution, from the perspective of the global energy sector. In the top left, the exponential increase in global population over the last two centuries (data from UN (1999)). In the top right, the conjoined increase in global primary energy consumption over the same period (data from EIA (2016); Etemad (1991)). The bottom charts show some of the consequences of having an energy matrix dominated by fossil fuels. The bottom left chart shows the global CO2emissions from fossil fuel burning

(data from Boden et al. (2016)), while the bottom right chart shows the historical evolution of CO2concentration in the atmosphere. The red line in the bottom right chart, corresponds

to measurements made at the Mauna Loa observatory, in Hawaii (Keeling et al., 2009); the green and blue lines are estimations based on ice core samples (from Friedli et al. (1986) and Etheridge et al. (1998), respectively).

substantial emissions reductions over the next few decades and near zero emissions of CO2

and other long-lived greenhouse gases by the end of the century(IPCC, 2014c, p. 20). On the contrary, if the increasing trend in emission continues, climate change will amplify existing risks and create new risks for natural and human systems, especially for disadvantaged people and communities in countries at all levels of development (IPCC, 2014c, p. 13).

2.3.2

Energy transitions from different perspectives

Before the industrial revolution, the global energy sector was dominated by renewables, as can be seen in figure 2.1. The introduction of steam power in transport and production processes during the eighteenth century boosted the development of the coal industry, generating the first grand transition in global energy systems, from biomass to coal as the main primary energy resource. This technology transition lasted more than one hundred years, and was one of the driving forces of one of the most important milestones in modern human history, the Industrial Revolution. In a similar way, the adoption of the internal combustion engine at the peak of the coal dominance initiated the second major transition of the global energy sector, from coal to oil as the main primary energy resource. That transition took around 50 years, although it can be argued that is not yet finished.2 Even though the historical context during these two transitions is entirely different, it is still possible to identify some common drivers. For instance, Podobnik (1999) identified geopolitical rivalry between military powers as one of the main facilitators of the two grand technological transitions in the energy sector. From a completely different perspective, but arriving to congruent conclusions, Wilson and Grubler (2011) identified the demand for end-use applications as the main driver of technological change in the energy sector.

Major energy transitions are connected to broad social and geographical change (Bridge et al., 2013). The necessity of national military and political leaders to secure affordable and reliable access to energy resources, for instance, has driven states to intervene directly in domestic and foreign energy industries (Krasner, 1978; Podobnik, 1999). In that context, Great Britain’s intervention in the coal-based cluster (including iron, rail, and shipping sectors), followed by similar efforts from other governments during the late nineteenth century, led to an exponential growth in the production and consumption of coal (Mitchell, 1984). Similarly, the arms race between political powers at the beginning of the last century was a strong stimulus for the adoption of oil-powered ships, vehicles and aircraft, that were later adopted by other sectors such as industry and energy (Podobnik, 1999). In both transitions, the expansion of the emergent energy system relied heavily on the stable support from the geopolitical and economic powers at that time (Podobnik, 2005). Not surprisingly, geopolitical factors and the availability of resources have played an important role in the diversification of the global energy matrix, as part of the energy security strategies (Ang et al.,

2_{Since the first technological transition, from biomass to coal as the main primary energy source, the share}

of biomass in the energy mix has experienced a sustained decline. However, while the share of coal in the primary energy mix also decreased after the second transition from coal to oil as the main primary energy source, this tendency has changed during the last decades, mainly driven by an increase in consumption of coal by developing countries such as India and China (IEA and OECD, 2011)

2.3 The past: historical trends and transitions in the energy sector 19

2015). For instance, state supported funding for R&D in low carbon energy technologies surged during the oil shocks of the 70s, and many of the renewable technologies available today are a direct consequence of some of those funds. The USA and Japan, the two largest investors in energy R&D, spent an average of 3.38 and 2.45 billion US$, respectively between 1975 and 1999 for many energy research programmes (IPCC, 2007, p. 762).

End-use technologies, consumers, and the demand for energy services have also played a critical role in past energy transitions (Grubler, 2013). Wilson and Grubler (2011) identified the replacement of steam engines by gasoline and electric engines at the beginning of last century as one of the key factors for the transition from coal to oil, even though steam energy was more economical than oil-based energy at that time . Direct economic signals such as price, are discarded as main drivers of technological change in this view, even if these exerted an influence at various times (Grubler, 2008). In another detailed analysis of past energy transitions, Fouquet (2010) derived different conclusions regarding the influence of price on the evolution of energy technology. For instance, he identified the price of energy as one of the key factors in the diffusion of technology in several historical transitions, such as the replacement of woodfuel by coal in residential and industrial heating, or the replacement of candles by gas and kerosene appliances in lighting. However, similar to Wilson and Grubler, Fouquet also identified the services provided by end-use application, as one of the main drivers of technology diffusion (Fouquet, 2010).

From a more economic standpoint, Ayres (1990), based on the work of Schumpeter (1939), associated the transitions in the energy sector with Kondratieff waves.3 Following the seminal work of Freeman and Perez (1988), Ayres identified that the rise and decline of coal as the main primary energy resource, was part of a long economic cycle, and that so too was the rise of oil (Ayres, 1990). The hypothesis that 50 year Kondratieff waves can explain transitions in the energy sector is further supported by de Oliveira Matias and Devezas (2007), who divided the last 250 years of the energy sector into 5 waves of technology transformation. All of them identify clustering of technologies as an important facilitator of technological evolution.

3_{Kondratieff waves are cycles in the dynamics of the capitalist economy, or business cycles using modern}

economic language. They are characterised by phases of boom, followed by phases of depression, with a frequency in the order of 50 years (Barnett, 1998; Kondratieff and Stolper, 1935).

2.3.3

Lessons from the past

One of the most important lessons that can be extracted from the past grand energy transitions, is that profound global energy shifts can happen in a time frame of decades. Therefore, the speed that renewable energy technologies diffuse, could potentially be accelerated, if the proper political, commercial, and social conditions were fortified. Consequently, this dissertation explores profound energy transition scenarios of the power sector in the future, aligned with the international commitment of holding the increase in the global average temperature below 2◦C above pre-industrial levels (UN, 2015b). The profound energy transition scenarios analysed in this dissertation are based on a portfolio of decarbonisation policy instruments, introduced in chapter 5. These policy instruments are analysed in terms of their abatement potential and impact on expenditure at the global level (chapter 7), and the particular case of Brazil is analysed in detail (chapter 8).

The future technology diffusion scenarios analysed in this dissertation are simulated using the power sector model FTT:Power (see chapter 4 for a detailed description). While this model is able to include several types of policy instruments that influence energy transitions (including carbon pricing, subsidies, feed-in-tariffs and regulation in the construction of new power plants), the model is limited on its capacity to include more complex drivers of technology diffusion. Indeed, from an academic perspective, some of the most relevant drivers of technology transitions are, unfortunately, very difficult (if not impossible) to model. The best example is geopolitics. Despite its importance in the evolution of the global energy sector, it is not part of any of the major models considered by the IPCC for the creation of future scenarios of the energy sector.4 Our knowledge regarding the different drivers of technology transitions in the energy sector is limited. For instance, the successful implementation of policy depends on many factors associated with human and institutional behaviour, which is prone to behavioural biases and influenced by social norms (IPCC, 2014b, p. 95). Consequently, policies to mitigate emissions are extremely complex, and arise in the context of many different forms of uncertainty (IPCC, 2014b, 114 ). In this context, forward-looking models and scenarios, with underlying assumptions about policy implementation and rates of adoption of low-carbon technologies, should incorporate an appropriate treatment of uncertainty.

Depending on the knowledge gaps to be addressed, different methodologies to deal with uncertainty are required, from a wide approach (such as modelling uncertainty), to a very specific approach (such as parametric uncertainty). The scenarios analysed in this dissertation