In the next 10 to 15 years we will see an accelerating change in geopolitics driven by energy needs and the early impacts of climate change. Major infrastructure investments will be required for energy supply to support both economic development and increasing urbanisation, particularly in rapidly growing Asian economies, and climate change mitigation through reduction in carbon intensity. Renewable energy will be one of the fastest growth areas and carbon capture and storage will be a critical technology development. There will be plenty of opportunities for the UK in this, and also many challenges. One of the challenges will be the supply of engineers – the engineering sector skills councils suggest that we will need 2.2 million engineers and technicians in the next 5 to 10 years. So what must we be doing to address the challenges of new partnerships, new technologies and new recruits, in order to deliver success?
The UK’s Energy Needs
In the UK, to meet our climate change commitments, enshrined in the Climate Change Act and the Carbon Budgets, we need major changes in our energy infrastructure. By 2050 we could see almost a doubling of energy demand in Britain, from around 350TWhr per year to almost 600, which has to be accompanied by a rapid decrease in the carbon intensity of generation – an order of magnitude drop from 500g CO2/kWhr to less than 50.
To be on this path by 2020 we will need something like 23GW of new wind generation and 3 new nuclear power stations completed or underway. Through the 2020s a further 30-40GW of low carbon capacity will need to be built. That means an increase in energy infrastructure investment from historic levels of £2 billion per annum to £10 billion. By 2030 97% of our power generation will be low carbon, compared to 26% today, involving the key technologies of nuclear – new build and life extension; renewables – wind and marine; carbon capture and storage, CCS, – predominantly on new gas-fired plant.
This will also deliver a major improvement in our energy security: today almost 75% of our electricity and all of our transport depends on imported fossil fuels, this will be less than 25% by 2050.
So, some major infrastructure investments lie ahead, which will deliver reduced CO2 emissions and increased energy security. These are dependent on three key technology areas, CCS, renewables and nuclear, bringing some different but equally critical requirements in terms of investment in research, demonstration and skills. If one of these technologies fails to deliver as part of our low carbon system, the pressure on other areas will be intense. Demonstrating capability as early as possible has to be a major element of our risk reduction strategy.
The UK is of course just one part of a global picture, highlighted in World Energy Outlook 2011, published in November last year.
The Global Energy Outlook
In the next 25 years, global energy demand is predicted to increase by 33%. But 90% of this will occur in non OECD countries - by 2035 China will consume nearly 70% more energy than the USA – and growth rates are even faster in India, Indonesia, Brazil and the Middle East. The total global investment in energy in the next 25years will be $38trillion – around $1.5 trillion per annum. That puts the UKIs £10bn into perspective.
As in the UK, renewable technologies will be the fastest growing area, particularly wind and hydro, and will account for half the new capacity installed to meet growing demand. Fossil fuel dominance will decline slowly, but nothing like fast enough to address the issue of climate change unless there is extensive use of CCS – further underlining the importance of this technology in enabling essential economic growth, much of which will depend on fossil fuels in non-OECD countries, whilst also constraining CO2 emissions.
As ever, the changing energy scene will drive political allegiances and actions - and there are likely to be some interesting changes ahead.
The US already obtains 25% of its gas supply from local shale gas. The Obama administration’s new vehicle efficiency standards will reduce vehicle consumption by 50% over the coming years. With shale gas and new oil production, the next 25 years will see the US become increasingly energy independent.
Energy independence, combined with an ‘embedded’ climate change scepticism – take all the leading Republican presidential candidates as an example – could leave the US with waning interest in events in the Middle East and North Africa, and becoming increasingly inward looking and even isolated.
This may not be as unthinkable as it sounds.
China is rapidly becoming the world’s largest energy consumer. But China is already seeing the impact of changing climate on its crop harvests and its interest in, and concern about, climate change is growing. There will be a huge need for low carbon power in China – and China has the funds but not all the technologies, so the opportunity for collaboration is huge.
Like Europe, and unlike the US, China will have a growing dependence on the Middle East and North Africa for oil. China will be increasingly interested in stability in these regions.
New alliances will form; Europe and China could find many reasons to be new best friends:
This could lead to collaboration in global climate change negotiations; partnerships to develop and demonstrate key technologies; perhaps even collaboration in global policing?
- common concerns about climate change – and potentially about the behaviour of the US;
- common concerns about the political stability of key oil producing countries;
- common needs for (expensive) low carbon technologies such as renewables and CCS.
A changing world?
So energy security and climate change could drive a rapidly changing world picture over the next 25 years.
There will be major investments in low carbon energy infrastructure – especially CCS, renewables and nuclear. These investments will be concentrated in non OECD countries, but with a significant UK market at the new technology end.
We could see strengthening Chinese-European links and an increasingly energy independent and internally-focussed USA.
It is an interesting picture, full of opportunities. So how do we deliver benefit for the UK?
Supply of engineers
One thing that will be critical if the UK is to play a successful role is the supply of engineers. There are some good signs: increases in the number of students taking Physics at A level; engineering applications holding up better than most other subjects.
However, the sector skills councils and Engineering UK estimate that 2.2 million new engineering employees will be needed over the next 5-10 years to replace people retiring and fill new jobs. 2.2 million equates to 220,000 to 440,000 per year. Let’s put that in perspective. We have about 800,000 18 year olds. A simplistic assessment suggests we need to persuade between 25% and 50% of school leavers each year to study or go into engineering!
About 22,000 students per annum graduate in engineering – so over 10 years that delivers the 0.2 in 2.2 million engineers. Worse still, 25% of those graduates are from overseas, and with the new visa regulations they will need to return home. Meanwhile 40% go into jobs that are not in engineering.
We need concerted action to stimulate the supply of engineers and engineering employees in the UK if we are to play a leading role in this rapidly growing opportunity of the global, low carbon power system.
We all need to be playing a role in ensuring we have the engineering workforce for the future.
There is a huge opportunity in relation to the growing demand but a looming crisis on the supply side. We need to be pulling all the levers to address it: increasing the numbers of engineering apprenticeships; the quality and number of science and technology staff in schools and the quality of their labs and workshops; supporting initiatives like the Baker-Dearing Trust’s University Technical Colleges; increasing the number of college and university places for engineering; participating in the Big Bang Fair; welcoming overseas graduates contributing to the UK’s success; raising the profile and status of engineers and engineering; and finding other innovative ways to increase the supply of engineers.
It will take Government, industry, schools, colleges and universities working together.