TABLE OF CONTENTS

     1. Introduction
        1.1. Background
        1.2. Emerging Fuel Technologies
     2. Conduct of The Project
     3. Scenario-Based Futures
        3.1. Introduction
        3.2. Methodology Used
        3.3. Scenarios
        3.4. Insights Gained from the Scenarios
     4. Technology Roadmapping
        4.1. Introduction
        4.2. Methodology Used
        4.3. Hydrogen/Fuel Cells
        4.4. Conventional/Unconventional Hydrocarbons
        4.5. Biofuels
     5. Integration of Future Fuel
     6. Co-Operative Projects and Follow-Up
     7. Conclusion

FOREWORD

Given the pivotal role of energy in economic development, policies need to be pursued to ensure a secure and sustainable energy supply for the APEC region for the foreseeable future. This could involve a variety of new technology approaches and major investments in infrastructure.

The APEC Center for Technology Foresight (APEC CTF) in 2003 proposed a Foresight study on future fuel technologies in the context of APEC with a time horizon of 2030. This year was chosen because it was thought to be a reasonable time frame for emerging technologies to enter the market and for R&D efforts to support the innovation process. The study would use the techniques of scenario creation and technology roadmapping. The aim was to identify technology turning points in the energy sector, particularly fuel technologies, and to examine the opportunities for technology development and commercialization in manufacturing industry in APEC. The study was focused on hydrogen/fuel cells, conventional and unconventional hydrocarbons, and biofuels.

After being submitted to the due process in the APEC Industrial Science and Technology Working Group (ISTWG), the study was approved and additional funding was made available from the APEC Central Fund to complement the funding from APEC CTF and other co-organizers. It was recognized at an early stage that the APEC Energy Working Group (EWG) was also working on energy security and had its own initiatives involving development of energy options. EWG has many Expert Groups and a well established Energy Business Network. Contact was established with the EWG Secretariat at an early stage and has continued during the study. Further, the APEC Science Ministers at their meeting in Christchurch in 2004 directed that the Working Groups cooperate to ensure optimum use of resources. Following a presentation of the scope of the study to the EWG meeting in Port Douglas, Australia in November 2004, the EWG Secretariat and Expert Group members agreed to participate in the study where possible and to provide technical information. Several individuals have taken an active part in the workshops.

The study has involved three interactive workshops and a symposium, namely:

1. a scenario creation workshop held in Krabi, Thailand on 13-15 December, 2004;
2. a technology roadmapping workshop held in Vancouver, Canada on 27-29 April, 2005;
3. a further technology roadmapping workshop held in Ping-Tung, Chinese Taipei on 10-12 August, 2005.
4. a symposium held in Chiangmai, Thailand on 3-4 November, 2005.

The support and hospitality of the host institutions is greatly appreciated.

The workshops and the symposium have been strongly supported by Position Papers from a number of economies and by presentations at the workshops. These have been posted on the APEC CTF website to stimulate discussion and to encourage participants to respond to questionnaires seeking their views. The available material has been collected and made available in the attached CD-ROM. The co-sponsors are especially grateful to the authors and speakers and their organizations which enabled them to devote considerable time and effort to the study. In particular, the very considerable efforts by Canada (*) (Jack Smith, Geoffrey Nimmo and David Minns) throughout the whole foresight process, particularly in technology roadmapping, and Chinese Taipei (Fanghei Tsau) in linking EWG to ISTWG are deeply appreciated.

The co-sponsors would also like to thank the numerous participants (roughly 50 to 60 in each of the workshops and roughly 160 in the final symposium) from over half the economies in APEC who gave their time and experience to make the meetings successful and productive.

APEC Center for Technology Foresight

(*) The work on Technology Roadmaps culminated in a separate report “APEC 2030 Integrated Fuel Technology Roadmap”, also available at www.apecforesight.org

EXECUTIVE SUMMARY

Increasingly national governments are recognizing that it is vital for their futures to ensure that innovation based on science and technology is promoted to ensure economic growth and an increase in the standard of living of their societies. This means that policy decisions have to be made against a rapidly changing background using information from a variety of sources and in an atmosphere of participation and transparency. There is a need for strategic policy intelligence for decision makers. Strategic policy intelligence can be defined as: “the set of actions to search, diffuse and protect information in order to make it suitable to the right person at the right time in order to make the right decision”.

This project has been a unique cooperative exercise between ISTWG and EWG to provide strategic intelligence on future fuel technologies for the APEC region. The technologies selected for study were: hydrogen/fuel cells, conventional and unconventional hydrocarbons and biofuels within the time frame to 2030. This project has used Foresight as a systematic and participatory approach to anticipate and manage change in energy futures in APEC, and to develop effective policies and strategies for the medium- to longer-term future. Foresight provides an alternative approach to economic models which tend to underestimate the potential of emerging technologies.

Scenario creation has been used to provide a framework for understanding the role of emerging energy fuel technologies in energy futures while technology roadmapping has enabled identification of critical steps in development of these technologies. The aim was not to produce a set of detailed roadmaps for selected technologies but to develop a number of ambitious, but realistic, visions which would assist planning for future developments by industry, researchers and policy makers.

The major conclusions of the study are:

• There is no unique solution to the future fuel needs of APEC economies. To ensure energy security an integrated approach is needed in which various energy technologies can make significant contributions. The roadmapping exercise has developed technology roadmaps for three fuel areas and shown how they can be used in an integrated approach.

• While the study has focused on only three fuel areas, it is clear that development and application of other energy technologies, e.g. photovoltaic arrays, wind turbines and advanced nuclear power systems are important components of an integrated energy approach.

• While there is current concern over security of oil supplies the current and projected developments of conventional oil production, together with the potential of hydrocarbon liquids from unconventional sources, e.g. tar sands and conversion of natural gas, have the potential to meet anticipated needs, particularly for transport fuels, for the foreseeable future.

• For some economies with available agricultural resources, liquid biofuels (ethanol and biodiesel) provide an opportunity to ensure a considerable degree of energy security. Such fuels can be readily incorporated into the existing transport fuel infrastructure. Biofuels in the form of biomass can be used in stationary applications for power production and heating.

• Fuel cells are likely to be applied first in stationary applications for distributed power generation using a variety of fuels. Reduction of cost and development of small efficient systems should lead to their widespread application later in vehicles. However hydrogen is likely to appear only as a minor component of the energy mix in the late 2020s to 2030.

• The impact of a strong push to a low carbon economy in response to concerns over climate change resulting from continued greenhouse gas emissions from fossil fuel combustion could speed up the rate of development of alternative energy sources. A complementary driving force for more rapid change is pressure to reduce urban pollution and improve the health of urban dwellers.

• However, change will be incremental as there is considerable inertia in bringing about shifts in energy systems due to the very large investments involved and the long life of major infrastructure. Over a 50 year time horizon for a complete transition, there will be probably only one replacement of major electricity generating plant and perhaps two to three replacements of the motor vehicle fleet.

• Long term planning for overall energy infrastructure must take into account the anticipated changes in fuel technologies. Thus a steadily increasing share of electricity production from distributed sources is likely as a result of moves to energy security; this has considerable implications for grid operation and management.

• While oil prices have more than doubled in 2005 similar price jumps have occurred in the 70s and 80s followed by a decline in price. However the rapid and continuing economic growth in the APEC region suggests that prices will stabilize at a higher price of say US$35 per barrel by 2010. Such a price favors both the continued development of hydrocarbon resources and the development of alternative energy sources.

• The emphasis on research and development of energy technologies will vary from one economy to another, depending on their resource bases and their R and D capabilities. There is a clear need for cooperation and exchange of research information and personnel in materials and energy R&D within APEC.

• Policymakers need to be conscious of community attitudes to new energy technologies and ensure that adequate steps are taken by their governments to communicate with the general public on issues of health and safety, and environmental impacts associated with such technologies, e.g. biofuels, hydrogen, nuclear power.

This project is a contribution to a better understanding of the possible energy futures facing APEC economies and of the role of science and technology and industry in dealing with those futures. It is a positive response to the directives of the APEC Ministers of Science and of Energy for cooperation between ISTWG and EWG. However it is only a beginning and there is a need for further discussions on cooperative projects and for a continuing dialogue between ISTWG and EWG in view of the rapidly changing situation of energy security and technology development in the APEC region.

1. INTRODUCTION

1.1. Background

The increasing world population and the rising living standards of many developing countries mean that the world energy demand will continue to increase for the foreseeable future. Thus the International Energy Agency (IEA) forecasts that the world will need 50 per cent more energy than today by 2020. About 90 per cent of this will be supplied by coal, oil and natural gas. The APEC region shows a similar pattern as shown in Figure 1.

The share of world energy use by the Asia-Pacific region is increasing as its economic development, particularly in China, continues at a strong rate of growth. Projection from current trends indicates that, by 2010, the Asia-Pacific area will be the world’s largest consumer of energy. While much of this can be supplied from indigenous resources, an increasing proportion will need to be imported, particularly oil from the Middle East. The instability of this region poses threats to future supply. The vulnerability of a number of APEC economies is clearly illustrated in Table 1. Several economies are already completely dependent on imported oil while others will move to a dependent position by 2020.

Because of this concern the most significant body of work in EWG is the Energy Security Initiative which is developing short and longer-term measures designed to enhance the capacity of APEC economies to respond to temporary supply disruptions, particularly of oil. The longer-term measures are aimed at facilitating energy investment, using energy more effectively, expanding energy choice and capitalizing on technological innovation. Another major initiative is Energy for Sustainable Development which has led to an increasing effort on future energy sources which fits with the aims of the present study.

The usage pattern of oil raises concerns. Thus according to IEA about 56 per cent of worldwide oil demand will be used for transport with some 70 per cent of this for road transport and about 12 per cent for aircraft. With the rapidly increasing use of cars and trucks in Asia, particularly China, coupled with the increasing regional tourist trade, the proportion of oil for transport is set to rise in APEC economies.

These changes are taking place against the increasing awareness of problems associated with fossil fuels such as:

• Recognition that current resources of oil will be exhausted by the end of the century. This means that new resources will need to be found and exploited, with greater difficulty and at greater cost.

• Recognition that the continuing emission of so-called “greenhouse gases” from fossil fuel combustion is leading to changes in the world climate with possible increases of 2 to 6 °C. by 2100 coupled with increases in severe weather events.

• Growing public pressure for the use of environmentally sustainable forms of energy and for the reduction of pollution in cities.

• Strong growth in demand from developing countries such as China, coupled in 2005 with severe weather events in the USA, leading to increased price of oil and refined products. It appears that higher energy prices are set to continue for the future with the oil price stabilizing at around US$ 35 per barrel by 2010.

In recent years considerable effort has been expended worldwide on R&D directed to more efficient use of energy e.g. through energy conservation, and on commercialization of alternative energy sources which are making an increasing contribution to electricity production e.g. photovoltaic arrays, solar-thermal systems and particularly wind turbines, and to transport e.g. biomass conversion to ethanol and biodiesel. As technology improves and production increases, their costs are becoming competitive with fossil fuels, particularly oil at US$35 or more per barrel. The development and commercialization of new energy technologies to meet the anticipated demand in the region offers enormous opportunities for manufacturing industry in the APEC region.

Moreover APEC CTF is aware that new energy technologies are essential components of integrated energy systems of many economies, particularly those lacking in indigenous supplies of fossil fuels. The present study has focused on hydrogen/fuel cells, conventional and unconventional hydrocarbons and biofuels. A preliminary assessment by APEC CTF of their time frame of significant introduction into the pattern of energy usage is given in Table 2. This was based on published energy futures studies for Europe and the US. Changes in electricity generation have a much longer turnover time than changes in transport modes.

This time frame also appears to apply in general to the APEC region as judged from the presentations in the workshops and the responses to questionnaires by participants.

1.2. Emerging Fuel Technologies

These are discussed in detail in the Position Papers and the presentations at the workshops which have been posted on the APEC CTF website (http//www.apecforesight.org) and available in the attached CD-ROM. Other material is available in energy futures studies for Europe and the USA, and particularly in the reports of the Sub-Groups of EWG. The following overview is drawn from all this material.

• Hydrogen
The attraction of hydrogen as an energy carrier is that its combustion produces only water and it is thus a clean fuel. A growing number of economies are seriously considering the implications of a shift towards a “hydrogen economy” i.e. a transition to the greater use of hydrogen as a source of energy. Public and private investment around the world is anticipated to be of the order of several billion $ US over the next decade. Economies in APEC such as the USA, Canada, Japan, China and Australia are actively working in the field.

Hydrogen is an energy carrier and not an energy source and thus must be produced. Two production routes are available: conversion of hydrocarbons by partial oxidation or reforming, and electrolysis of water using electricity produced from various sources. Currently 98 per cent of hydrogen is produced from hydrocarbons with the production cost roughly four times the cost of the hydrocarbons used to produce the hydrogen. However this route also produces considerable amounts of carbon dioxide which is a greenhouse gas. Currently there are more than 50 million tons of hydrogen produced per year globally but practically all of this is used in the petrochemical industry. Moves to use hydrogen as a significant energy source in APEC by say 2030 would require massive investment in plants to produce at least 20 to 25 times more hydrogen than at present. This would need to be coupled to a major move to carbon dioxide (CO2) sequestration through underground storage in order to avoid exacerbating climate change.

One option for widespread use of hydrogen, particularly in transport, is the development of a distribution system comparable to that serving petroleum or natural gas products. Hydrogen has high calorific value by mass but low calorific value by volume. Thus the cost of pumping and pipeline transport is expected to be considerably more than for natural gas. Usage on site for electricity generation is clearly the best option for the medium term as noted in Table 2.

Storage is another challenge: high pressure hydrogen gas storage is an option but compression is costly. Another possibility is to use lower pressure gas storage in hydrides or carbon nanotubes but both these are currently very inefficient and costly. Hydrogen can be stored and shipped in liquid form but liquefaction is also costly.

While there is much work at present in the fields of codes, safety and standards, perceptual risks about the safety of hydrogen remain and these will need to be addressed in the short to medium term.

• Fuel Cells
An integral part of moves to a hydrogen economy is the use of fuel cells which operate by taking hydrogen and oxygen and putting them through a catalyzed reaction to produce electricity and water. Fuels which are hydrogen carriers such as natural gas and methanol usually need to be reformed to release the hydrogen to feed fuel cells. Active research programs are in place in many APEC economies to develop fuel cells of different types e.g. proton exchange membrane, alkaline, phosphoric acid, molten carbonate and solid oxide operating over a range of temperatures from 60 to 1000 °C with efficiencies in the 50 to 60 per cent range. However off-the-shelf commercial products are still scarce and costs are still high.

Portable appliances such as laptop computers, cell phones and similar devices appear to be the first mass market for fuel cells based on nanomaterials. There is a strong consumer demand for an alternative to batteries which are relatively high cost for their energy output. This is not a major source of energy demand but it offers the opportunity of a move to public acceptance of hydrogen.

As noted above the concept of hydrogen as a direct fuel for transport suffers from the problems of storage and distribution and storage. An alternative which has been examined is the on-board reforming of natural gas or methane to provide hydrogen on demand.

• Conventional hydrocarbons
Very large reserves of coal and natural gas exist in a number of APEC economies and constitute the major sources of energy production, both for stationary and transport applications, in the foreseeable future. Both fuels produce carbon dioxide on combustion with natural gas producing 40 per cent of that of coal for a comparable energy output. If technology for carbon sequestration from coal-fired power plants can be developed, and the costs are not too great, it may become an integral feature of new fossil fuel plants and may be retrofitted to existing plants.

Considerable effort is being devoted to the combustion of black coal and lignite to improve efficiency and to reduce carbon dioxide emissions. Technologies such as pressurized fluidized-bed combustion or gasification using pressurized steam and oxygen have considerable potential. Improvements in reforming are reducing the production cost of liquids such as methanol or dimethyl ether from coal gasification.

Natural gas is an efficient fuel for stationary applications and can be readily transported in liquid form by tankers. It has flexibility for use in transport either as a compressed gas or as a liquid. It can be readily converted to liquids and several large projects are underway, e.g. in Qatar, planned projects will produce 800 000 barrels per day of GTL diesel by 2016. This technology is an attractive proposition for remote gas fields where pipelines are uneconomic or impossible to install. These so-called “stranded” fields constitute about 50 to 60 per cent of the proven reserves and thus could make a significant contribution to liquid fuel supplies in the medium to longer term.

• Unconventional Hydrocarbons
These include tar sands, heavy oils, oil shale and methane hydrates. Large reserves of bitumens and heavy oils similar to those existing in the tar sands of Canada or in oil shale in Australia are estimated to be twice the reserves of conventional oil. The production from Alberta oil sands is one third of Canada’s oil output and the reserves are enormous. However constraints on production exist because of the need to use natural gas to fuel the extraction process together with large quantities of water for the production of steam. Environmental problems and high costs have stalled the production of oil from oil shale in Australia.

Methane hydrates are naturally occurring ice-like solids in which water molecules trap methane gas molecules in a cage-like structure. They form at low temperatures and high pressures in Arctic regions and below 500m off continental shelves. Estimates suggest that gas hydrates may be roughly twice as large as all other hydrocarbon reserves combined and perhaps 100 times that of conventional gas resources. However there are formidable problems to be solved in the extraction of the hydrates and in the separation and containment of the methane which is a potent greenhouse gas.

• Biofuels
Biofuels produced from sustainable sources have been used in various forms for a long time for both electricity production and for transport fuels. Thus in the sugar industry in Australia the waste material after crushing the cane (called bagasse) is burnt to produce steam for power generation and excess power is fed into the grid. Sawmill waste and straw from agriculture is used in a similar fashion. Studies are underway in a number of APEC economies e.g. Canada and Thailand, to examine the potential for a systems approach to biomass production and its usage as a replacement for fossil fuels. This offers the possibility for a sustainable energy source with a neutral effect on greenhouse gas emissions. Thus an area of timber with programmed harvesting and planting could supply a power station using highly efficient combustion technology. This concept is already being trialled in Europe.

Liquid fuels can be produced from biomass. An example is ethanol from sugar cane which can be used either neat or as a blend with petrol; this is extensively used in Brazil which expects to makes some 16 billion litres of ethanol this year. The USA expects to make a similar quantity this year and to achieve about 5 per cent of its transport fuel supply from ethanol in 2012. Other APEC economies such as China and Canada are stepping up production of ethanol from cellulosic waste such as straw. Other crops such as cassava or sugar beet can be used as an alcohol source. In Europe sugar beet and wheat are being used with Spain and France as the major producers. A target of about 6 per cent biofuels by 2010 has been set by the European Commission. In Europe a major thrust is the production of biodiesel based on oilseeds, usually rape (canola) with France and Germany the major producers. Biodiesel can also be produced from palm oil and coconut oil and this could be an attractive option for a number of South East Asian economies. The availability of sufficient land is a critical factor in developing a biofuels industry. The application of genetic manipulation to produce higher yielding crops with controlled chemical properties coupled with advances in conversion technology could alter the dynamics of the biofuels industry.

• Linkages between these fuel technologies
There are links between these emerging fuel technologies. Thus for example the supply situation which is likely to face the global natural gas markets beyond 2030
challenges the wisdom of developing a hydrogen economy based on natural gas feedstock if an economy wishes to achieve security of supply. Increased production of hydrogen from fossil fuels demands a major effort on carbon dioxide sequestration. Moves to produce hydrogen from water by using electricity from renewable resources such as biomass alter the opportunities to convert that material to biofuels. An option which is being tested is to reform ethanol to produce hydrogen as an input to fuel cells. This is an alternative to using it as a biofuel.

One representation of possible paths to a hydrogen economy based on renewable and non-renewable energy sources is shown in Figure 2. This shows that there are numerous options for economies and that various strategies for energy futures are possible depending on their particular conditions. For example, one option is to move to a synthetic liquid hydrocarbon economy while another is to move to a hydrogen economy using biofuels.

Figure 2: Possible paths to a hydrogen economy (Source: “Fuel Cells impact and consequences of fuel cells technology on sustainable development”. Technical Report series, Institute for Prospective Technological Studies (IPTS) Seville, 2003)

2. CONDUCT OF THE PROJECT

A Concept Paper was produced by APEC CTF and MTEC and then, in consultation with Canadian colleagues, the emerging energy technologies noted in the Introduction were identified as worthy of study. Position Papers (1) were then sought from various economies to give a snapshot of the current situation and future directions. These covered biofuels, conventional and unconventional hydrocarbons, integrated energy systems and methane hydrates. Together with a short questionnaire these were placed on the APEC CTF website to stimulate discussion and obtain further information from potential participants.

Three workshops have been held as:

The Scenario Workshop in Krabi, Thailand on 13-15 December, 2004.
At the workshop, 55 participants from 12 APEC economies were given presentations of the Position Papers and of the current and planned activities of the Energy Working Group. Participants then identified critical issues for the project. Following this, the scenario creation technique was used to create six scenarios for future fuels in APEC to 2030. The implications of these were discussed in terms of technology turning points and links to technology roadmapping. A report of the workshop was placed on the APEC CTF website (http://www.apecforesight.org).

The First Technology Roadmapping Workshop in Vancouver, Canada on 27-29 April, 2005.
At the workshop, 57 participants from 10 APEC economies were given an address on sustainable energy futures, a resume of the outcome of the Krabi workshop and three presentations on unconventional hydro carbons, biofuels and hydrogen. Breakout groups then developed draft technology roadmaps for the three technologies. The outputs of the groups were then discussed and areas for further development were identified. The material from the workshop was again placed on the APEC CTF website (http://www.apecforesight.org).

The Second Technology Roadmapping Workshop in Ping-Tung, Chinese Taipei on 10-12 August, 2005.
At the workshop, 47 participants from 11 APEC economies were given addresses on commercialization of R&D, nanotechnology and energy research, APEC energy supply and demand, alternative fuel projects of the Expert Group of EWG and the future of alternative fuels. Canadian experts then reported on the methodology and present state of the three roadmaps developed at Vancouver. Breakout groups then considered the refinement and possible implementation of the roadmaps and their possible integration. The outputs from the groups were then discussed in plenary session. Following the workshop a draft summary report was prepared and placed on the APEC CTF website.

The Symposium in Chiangmai, Thailand on 3-4 November 2005
At the symposium, 160 participants from 12 economies were informed of the current state of the project and were given addresses on energy policy in Canada and Thailand, on implementation of energy policies in several APEC economies and a keynote speech on energy strategy by Dr Arthur Carty, Chair of the International Advisory Board of APEC CTF. Breakout sessions reviewed the results of the study and their implications for ISTWG and EWG, while a representative Panel covered possible cooperative projects.

(1 The papers are:
1. Hydrogen for the future fuel by Dr.Withaya Yongchareon, Chulalongkorn University, Thailand
2. Conventional Hydrocarbons by Dr. Kuniko Urashima, NISTEP, Japan
3. Methane Gas Hydrates by Ken White, Acton White Associates, Canada
4. Biofuels by Ken White, Acton White Associates, Canada
5. Fueling an Integrated Energy Future, Eddy Isaacs and Don Simpson, Energy Innovation Network, Canada
6. Modeling Tools for Energy Scenario Analysis: The Canadian Transportation Energy and Emissions Model, Robert Hoffman and Bert McInnis, Robbert Associates Ltd., Canada)

3. SCENARIO-BASED FUTURES

3.1. Introduction

One technique which has been used extensively in Foresight studies is scenario creation. This is a way of envisaging what the future might hold for a particular economy, industry sector, organization or company for a period of 10 to 20 years ahead. In contrast to using projections from past trends as a single forecast, scenario creation attempts to develop several internally consistent stories about possible futures. It recognizes that the future is complex, uncertain and ambiguous. The essence of scenarios is that they: represent possible alternative futures: allow for qualitative perspectives; allow for discontinuities; allow us to develop new insights; enable us to express multiple views on complex events; and enable us to develop strategies to deal with change.

The technique follows a systematic series of steps. Firstly, the key drivers of future change are identified and then the uncertainties influencing these drivers are developed. Self-consistent scenarios are then constructed for a time well into the future. By working back (backcasting) from these pictures of the future, critical turning points can be identified which can be used to assist in policy decisions.

3.2. Methodology Used

Firstly, using breakout groups and a plenary session the key drivers for the development of future fuel technologies were identified using a classification called STEEP-social, technological, economic, environmental and political. The results are shown in Table 3.

Table 3: Key Drivers of Development of Future Fuel Technologies

Social
• Environmental and health concerns
• Urbanization and rural income disparity
• Knowledge-based society with increased awareness
Technological
• Integrated approach combining various technologies
• Low carbon economy with large reduction of carbon dioxide emissions
Economic
• Rising cost of fossil fuels, particularly oil
• Need to increase employment
Environmental
• Global climate change concerns
• Local pollution of air and water
Political
• Energy security
• Interdependence of energy supplies across region
• Enforcement of an agreed Protocol on emissions.

The political drivers (particularly energy security) were seen as most important, followed by the technological, environmental (particularly climate change and local pollution) and economic (particularly cost of oil) drivers of equal weighting, with the social drivers seen as least important.

Secondly, the major uncertainties which could alter the pattern of future change were identified. These can range from relatively predictable although often with significant effects, e.g. terrorist attacks in major cities or major natural disasters such as tsunamis or hurricanes, through to events which are highly uncertain but which trigger complete discontinuities, e.g. a pandemic with millions dead or an asteroid strike. The major uncertainties identified in the Krabi workshop are set out in Table 4. These were mainly political, social and environmental in nature. They were ranked according to their degree of impact and degree of uncertainty i.e. lack of basis to predict their occurrence. Those with highest impact and highest uncertainty are the ones which could have the greatest unexpected influence. Table 4 sets out the major uncertainties roughly in decreasing order of influence.

Table 4: Major Uncertainties Affecting Development of Future Fuel Technologies

• Dwindling supply of oil and gas leads to bitter conflicts between major powers for control of current sources.

• Accidents occur in development of new nuclear or hydrogen power plants.

• Impacts of dramatic climate change e.g. collapse of Antarctic ice sheet, changes in ocean currents, shift demand patterns for energy over wide regions.

• Political instability leads to long-term oil supply disruption.

• Public becomes intolerant of R&D on new fuels because of failure to deliver benefits.

• Regional groupings emerge for energy cooperation to secure supplies and develop common technologies e.g. biofuels.

• Technological breakthrough occurs, e.g. cheap solar, stable fusion, low temperature fuel cells.

• Leadership in alternative energy technologies by China and India alters energy choices of other counties.

• Terrorism leads to destruction of major power supply and distribution systems.

• Concern over energy security increases dramatically due to continued failure of existing power systems.

• Governments in developing counties give priority to rural energy systems.

These inputs were used by the breakout groups to create six scenarios for the energy situation in APEC in 2030.

3.3. Scenarios

The full scenarios are recorded in the report of the Krabi workshop on the APEC CTF website and only brief summaries are presented below.

Scenario 1: Sunny Days are Here to Stay
Environmental deterioration in megacities and intense competition for limited oil and gas resources triggered acceleration of low cost solar and fuel cell alternatives, leading to vigorous trade in energy products with positive societal and economic impacts throughout the APEC region.

Scenario 2: East Ásian Union-the Renewable Fuel Super Empire
Adverse impacts of rapid climate change impacts, coupled with oil supply crises, led to the formation of the East Asian Union with a significant shift in the regional energy mix towards hydrogen, nuclear and renewables. This in turn strengthened the regional move to free trade and the development of regional corridors for communications and energy transport to enable a speedy response to shortfall situations.

Scenario 3: 2030- The New Reality
Global climate change which led to major disasters associated with severe weather events accelerated the demand for concerted action by APEC economies, particularly a move to the hydrogen economy. R&D on carbon led to a new range of products so that fossil fuels were designated as valuable feedstocks .By 2030 the hydrogen economy was well established.

Scenario 4: War of Resources
Continuing expansion of economies in Asia led to pressure on energy supplies with consequent price rises in gas and oil. A series of wars left the major economies in control of fossil fuel resources and, as a result, smaller economies joined together to restructure their energy systems using biofuels and hydrogen/fuel cells, thus gaining energy independence.

Scenario 5: The 7-km Island Disaster
Increased cost of oil hastened move to a more sustainable system based on hydrogen. A major accident at a hydrogen power plant at 7-km Island in Shanghai created many negative reactions across the region and the thrust to a hydrogen economy was stalled. In the swing back to fossil fuels, biofuels played a significant role in meeting demand for transport fuels.

Scenario 6: Back to the Future
A global recession in early 2000s and rising oil prices led to increased coal dependency and a major switch to natural gas and biofuels for transport. However, continued demand for transport fuel led to increased competition for limited biomass feedstocks and the rationing of oil to conserve it as a feedstock for chemical production. There was no move to a hydrogen economy.

These six scenarios have some common features and were later reduced to three by the time of the Chiangmai symposium, namely:

Scenario 1: Dynamic Transition to Renewables
Fossil fuels deplete more rapidly than anticipated and, to ensure energy security, APEC governments provide financial incentives to stimulate development and use of alternative fuels. Initially biofuels take off as extenders for diesel and petrol and create new industry sectors. Then the availability of low temperature solid oxide fuel cells using gasified biomass leads to a more distributed electricity system and changes in industry patterns. Finally more efficient methods for producing hydrogen either by photocatalysis or using electricity from solar photovoltaic arrays offer an opportunity to move towards a hydrogen economy beyond 2030.

Scenario 2: Volatile, Competitive, Alternative Technologies
Major supply disruptions of oil triggered a concerted response by APEC economies to reduce dependence on oil and to stimulate a range of new energy technologies. Transport systems were targeted to introduce more efficient engines able to use biofuels. Ageing power plants were replaced by new plants using clean coal technologies and become competitive for both stationary and transport applications. A variety of cost-effective technologies enabled economies to create diversified systems tailored to their specific needs.

Scenario 3: Sustainable, Adaptive, Diverse Hydrocarbons
Despite intermittent problems with supply and price, hydrocarbons remained dominant due to sustained technological advances. Developments in CO2 sequestration reduced greenhouse gas emissions both in production and use of fossil fuels while advanced exploration and deep drilling production techniques increased reserves and capacity. Gas to liquids technology enabled substantial production from “stranded” gas reserves while unconventional hydrocarbon sources such as heavy oils, bitumen, oil shale and methane hydrates were being exploited. Against this background other energy technologies received little support and were seen as longer term possibilities.

These new scenarios provide a better representation of the energy futures that have evolved during the study.

3.4. Insights Gained from the Scenarios

The scenarios contain a number of insights as:

• All are generally positive about the prospects for coping with increased energy demand by using a combination of fuel technologies.

• All anticipate significant turbulence in the region, associated with conflicts over resources.

• Increased impacts of climate change due to increasing emissions of greenhouse gases from fossil fuels, particularly coal, are seen as major drivers of attitudinal change.

• Desire for energy security leads to new groupings of economies.

• Renewable energy technologies are essential for energy security and economic growth.

• Air quality issues in urban areas are driving development of vehicles using alternative fuels.

• The acceptance of new technologies by society is an essential step in moving to a completely new energy paradigm such as a hydrogen economy.

• The scenarios suggest that significant turning points in energy technology will occur in the next 20 to 30 years and that Table 2 is a reasonable time frame for planning.

The scenarios also raise a number of important issues:

• There is no unique solution to the future fuel needs of APEC economies. To ensure energy security an integrated approach is needed in which various energy technologies can make significant contributions. There are large differences between APEC economies in their energy resources and their energy needs and the approach will be different for each economy.

• Although the study has focused on fuel cells/hydrogen, biofuels and conventional and unconventional hydrocarbons, it is clear that development and application of other energy technologies such as photovoltaic cells, wind turbines and advanced nuclear reactors are important components of an integrated energy system.

• The impact of a strong push to a low carbon economy in response to concerns over climate change could affect significantly the path of development of alternative fuel technologies. A possible scenario from the APEC Energy Research Center is shown in Table 5.

• The emphasis on research and development will correspondingly vary from one economy to another. Thus an economy with a strong agricultural sector and adequate arable land could choose to concentrate on biofuels of different types. Another with a strong R&D capability and advanced manufacturing systems could concentrate on fuel cells or photovoltaic arrays. In some cases there could be benefits in close cooperation.

• There is a clear need for cooperation and exchange of research information and personnel in materials and energy R&D within APEC. Thus the development of improved catalysts through application of nanotechnology in a developed economy could significantly alter the economics of production of biofuels in a developing economy.

• The resistance to change from manufacturers and distributors of vehicles, from electricity generating and distributing companies, from petroleum companies and the general public should not be underestimated when considering future energy strategies. Thus the internal combustion engine will continue to play a major role in transport over the medium term; however gradual change will occur through the introduction of hybrid petrol-electric vehicles.

• Long-term planning for energy infrastructure must take into account the anticipated changes in fuel technologies and also developments in other energy sectors. Thus the development of improved distribution systems, e.g. superconducting cables for electricity or higher pressure gas pipelines could alter national and regional energy production and distribution patterns. A steadily increasing share of distributed electricity generation is likely as a move to improve energy security. This has implications for grid operation and management.

• Policymakers need to be conscious of community attitudes to new fuel technologies and ensure that adequate steps are taken by their governments to communicate with the general public on issues of safety and health associated with these technologies.

• The recent rises in oil price will probably stabilize in the next few years but at a higher value than previously. This will have significant impacts on economic growth in most APEC economies and could lead policymakers to introduce incentives to accelerate the development of new fuel technologies, particularly in transport.

Together with the background material these insights were used as the framework in which to carry out the second part of the study using the technique of technology roadmapping.

4. TECHNOLOGY ROADMAPPING

4.1. Introduction

Another technique which has been developed for Foresight studies is technology roadmapping. It is a needs-driven technology planning process to help identify, select and develop alternatives to satisfy a set of market needs. Its characteristics are: the process is industry-or market-driven; the time horizon depends on the industry sector and is generally 5 to10 years; the outputs provide a basis for strategic investment decisions; the process requires collaboration among all stakeholders and achieves a clear sense of purpose and ownership.

The development of a technology roadmap follows a systematic pattern as: the establishment of scope, vision and market needs; the identification of technology barriers and challenges; the identification of technology alternatives; the placing of priorities on these alternatives; and finally the combination of all of these to create a technology roadmap. This roadmap should identify the critical enabling technologies to achieve the desired product needs and the gaps that need to be filled by R&D, as well as the infrastructure and human resource needs. A conceptual overview of a typical technology roadmap is given in Figure 3. This comes from Industry Canada which has wide experience in technology roadmapping including several related to energy as: biofuels, fuel cells, clean coal and CO2 capture and geological storage. This general approach was used in the present project.

Technology roadmaps have been used in many industry sectors in different countries and take various forms from longer term overviews at a national or regional level to detailed handbooks for short term implementation at company level. In the present study the technology roadmapping process was spread over two workshops held in Vancouver, Canada in April 2005 and in Ping-Tung, Chinese Taipei in August 2005.

4.2. Methodology Used

The participants agreed that the Vision for their work on technology roadmaps should be: “A Secure and Sustainable Fuel Supply for the APEC Region” where:

• “Secure” means a greater diversification of sources of energy supply; emphasis on trading of energy supplies from within the APEC region, and emphasis on renewable energy supplies, particularly from domestic sources.

• “Sustainable” implies operations where waste emissions are within the acceptable tolerance of ecosystems and meet public health requirements; where socio-economic objectives such as job growth, poverty reduction and preservation of rural communities are important, and where other non-energy resources such as fresh water and biodiversity are conserved.

At each workshop breakout groups considered the three emerging energy technology areas of hydrogen/fuel cells, conventional and unconventional hydrocarbons, and biofuels using the methodology of Figure 3. The aim was to develop a path of technology development from today to the future goal by:

1. Considering trends and drivers identified as affecting the Vision and strategic goals,

2. Identifying technology barriers (Barriers are knowledge gaps such as lack of scientific and technological skills or facilities, or regulatory issues which could prevent the achievement of the goals.),

3. Identifying the priority technologies from the alternatives (according to their ability to overcome the barriers and achieve the goals in short, medium and long-term timeframes).

4. Identifying resources to aid in implementation covering R&D, partnerships and collaboration, infrastructure, policy instruments, societal initiatives etc.

The criteria for setting priorities were:
• Timeline – short (present to 5 years), medium (10 to 20 years, long (20 to 25 years).

• Stage of development – basic R&D, applied R&D and product development, engineering testing and codes and standards, technical demonstration, product demonstration and first purchases, production and sales.

• Cost sharing model – government (solely or with another government), academia (solely or with others), industry (solely or with others).

• Lead stakeholder – government, academia or industry (or a combination).

Each of the three areas was tackled somewhat differently by the breakout groups. Considerable work was carried out by the Canadian team between meetings to produce detailed Interim Reports.

4.3 Hydrogen/Fuel Cells

Although the concepts for either fuel cells or for hydrogen as a fuel are not new, it is only in the past two decades that significant attention has been paid to the synergy of the two. Prototype fuel cells of a range of capacities and using different technologies are in operation and feasibility studies have been carried out on a transition to a hydrogen economy. The study examined two options for hydrogen production namely: from fossil fuels, and from renewables and other sources. Table 6 lists the various technology alternatives considered.

Leverage areas for technical development were identified as:

• Improved reformer technology to maximize hydrogen production in distributed systems and to utilize a range of feedstocks – particular attention needs to be directed to new high-performance catalysts, better understanding of the reaction kinetics and the possible use of liquid feedstocks, e.g. bioethanol or waste chemical solvents.

• New membranes able to operate at 110?C - 120?C for proton exchange membrane fuel cells – this would eliminate water management issues and improve tolerance to impurities.

• New solid oxide fuel cells able to operate at temperatures of 500?C to 600?C this would simplify manufacturing by allowing use of conventional materials such as stainless steel for containment rather than ceramics.

• Better techniques for studying processes in production and usage of hydrogen – improved on-line monitoring and process modeling.

• New materials for hydrogen storage – research on nanostructured materials to increase hydrogen uptake, reduce weight, improve reversibility of hydrogen withdrawal.

The breakout group identified major non-technical barriers to the development of a hydrogen economy from Table 7 as:

• Low price of conventional fuels
• Requirement of large investment in infrastructure
• Negative public perception of risks
• Lack of regulation and standards.

In order to progress development it is clear that collaboration between APEC economies is needed in a number of these areas. This collaboration needs to be supported by financial investment by governments in R&D, demonstration plants, infrastructure and creation of a regulatory structure to ensure safety and sustainability. A first step has been taken by EWG with the production of an Interim Framework Document on Hydrogen and Fuel Cells in mid-2004 following a workshop held in Hawaii. This identified five areas for activity which are being followed up by EWG as:

1. Creating a web-based “tool-box” for policymakers in APEC economies to aid in the education and dissemination of current information on the challenges, opportunities, benefits and life-cycle costs of hydrogen and fuel cell technologies.

2. Holding an APEC policy forum, involving the private sector, on the successes and failures of various policy and regulatory mechanisms to advance hydrogen energy development.

3. Organizing a comprehensive codes and standards inventory relevant to hydrogen and fuel cell technologies.

4. Holding a workshop to analyze hydrogen and fuel cell codes and standards gaps.

5. Establishing an information exchange on policies and R&D status with the IEA and the International Partnership for the Hydrogen Economy to help identify potential market opportunities.

This initiative is reinforced by the findings of this project and needs to be progressed in cooperation with ISTWG as directed by the meetings of APEC Science Ministers and APEC Energy Ministers in 2004. In addition there is clearly a need for an inventory of activity in this area in APEC as a further joint activity.

4.4 Conventional/Unconventional Hydrocarbons

These are closely linked since introduction of unconventional hydrocarbons can be seen as a replacement for conventional ones with the opportunity for a low cost changeover by using the existing infrastructure where possible with limited technical changes to equipment. The study concluded that, within the timeframe of the project, hydrocarbons will still represent greater than 80 per cent of the energy resource needed to meet the demands of the APEC region. Three Visions for the hydrocarbon options are:

• Gas Vision – Firstly, gas will increase market share over coal and oil over the next 25 years substantially due to environmental considerations, lower costs and availability. Secondly, liquefied natural gas provides an established and secure solution to gas supply that is limited by capacity and infrastructure linked investment. This capacity gap can be filled by both gas-to-liquids technology replacing oil, and by methane hydrates replacing coal, if technology development produces economically competitive sources of supply.

Public perception of the risks associated with gas terminals on coastal or offshore sites could be a limiting factor in the expansion of market share by gas. There is an urgent need for a public awareness program on this topic. Further, continued investment in gas infrastructure will facilitate an ultimate transition to a hydrogen economy.

• Coal Vision – Firstly, a new economy of coal where the product is liquid and gas and there are multiple products along the value chain. Secondly, coal has the image of a clean fuel where CO2 is captured and stored. Thirdly, coal is a feedstock for other processes with products such as high quality diesel and low quality petrol which can be used in existing applications.

Public perception was also seen to be an important factor in changing the image of coal from a “dirty old fuel” to a valuable source of liquid fuels and new carbon materials. The extensive use of clean coal combustion technology combined with CO2 sequestration is significant in this respect.

• Oil Vision – Firstly, oil is considered as a valuable petrochemical feedstock with widespread applications e.g. creating a new carbon materials industry. Secondly, oil can be processed to provide hydrogen for a cleaner transport fuel.
Liquid hydrocarbons were seen as remaining predominant until 2030 because of the huge investment in the existing oil infrastructure and the ability to adapt that to unconventional hydrocarbon fuels.

A historical representation of the possible transition from a carbon to a hydrogen economy based on these Visions is shown in Figure 5.

Technology development alternatives were explored as: natural gas exploration and development, LNG distribution and storage, lower gas-to-liquids cost based on Fischer-Tropsch technology, extraction and processing of methane hydrates, coal gasification, heavy oil/ bitumen production and processing, CO2 sequestration and applications. The specific focus for development of these is given in Table 8. The evaluation of “High” is dependent on cost-effective technology for CO2 sequestration being available.

• Greater investment in LNG transport and improved security of distribution
• More flexible terms for LNG trade
• Improved systems for gas storage on vehicles
• Incentives for coal bed methane development
• Incentives for introduction of clean coal technology
• Incentives for gas to liquid technologies and their application to stranded gas fields
• Incentives for bulk energy storage technologies
In general there was seen to a need for energy market deregulation, for more government support for new technology demonstration projects and for public education on energy issues concerning risks and environmental impacts. Again these are topics on which EWG is actively engaged and there is a need to ensure that EWG and ISTWG work together to ensure sharing of information and optimum use of technical resources in the APEC region.

4.5 Biofuels

Biomass has long been used as an energy source based on combustion while biofuels are not new. However, markets for ethanol have been expanding, notably in Brazil, China and the USA with a boost from government mandates for ethanol blends in petrol. Widespread use of domestically produced ethanol and biodiesel would improve security of energy supply for many economies.

The study developed a biofuels value chain for a variety of feedstocks leading to applications in both stationary and transport applications as shown in Figure 6. This expands on the possible fuels and paths noted in Figure 2.

The application of biofuels in stationary and transport applications was examined and a simplified roadmap produced for each sector. Based on these the major barriers and knowledge gaps to be overcome to enable biofuels to make a major contribution by 2030 were identified as shown in Table 10. A common problem for all biofuels in transport is limited fuel flexibility in the vehicle fleet and limited capacity of the fuel distribution infrastructure to handle biofuels.

A number of issues were identified for further examination as:

• In transport fuels there is concern with the use of stronger blends of ethanol with petrol in terms of engine performance and fuel systems.

• Similarly with biodiesel there are concerns on safety of blends and need for tighter specifications to ensure guaranteed engine performance. There may be a need for further engine development.

• In stationary applications more work is needed on large scale biogas production and on its conversion to liquids. Various cellulose feedstocks have been used for production of biogas but there are problems in variability of feed, cleaning of waste gases and waste water treatment needing technical solutions. Dedicated sources e.g. tree plantations need to be examined and methods for better handling of lighter materials such as straw need investigation.

There is already extensive activity in this area in APEC economies and EWG has an active Expert Group on New and Renewable Energy Technologies chaired by Dr. Cary Bloyd who participated actively in this workshop. Again there is a need for EWG and ISTWG to work together to develop an inventory of activity in this area.

5. INTEGRATION OF FUTURE FUEL TECHNOLOGIES

The discussions at the workshops clarified the issues in relation to the interaction of the three chosen sectors in an integrated energy pattern. The ability to integrate was seen to be a necessity not an option. Thus the integration of fuel and energy supply is vital to make maximum use of the investment in extraction, production and distribution infrastructure while meeting needs for overall energy security, good public health and sustainable development. Moreover the distinction between the characters of fuels for different applications is significant in considering future developments. Thus transport applications, in particular vehicles, require on-board supplies of readily stored, high energy density fuels, preferably liquids but also gases and this limits options. In contrast stationary applications, primarily for electricity production and heat for commercial, industrial and residential applications, can be satisfied by a variety of input energy sources including solids, liquids and gases and this provides opportunities for a broader approach to energy futures.

Following the Ping-Tung workshop an integrated fuel technologies roadmap incorporating the findings from the three separate roadmaps was developed as shown in Figure 8.

As emphasized throughout the study, three key drivers underlying this diagram are: 1) the need for a diversity of energy sources for security of supply; 2) the creation of a low carbon economy to reduce greenhouse gas emissions and thus mitigate climate change and its impacts; and 3) the need to improve urban air quality for public health reasons.

The first is paramount given the long term risks of heightened political instability in many areas rich in liquid and gaseous fuels and the vulnerability to natural disasters of others. Within the time frame of the project, oil will remain a significant fuel particularly for transport and a move to alternate fuels is imperative for those economies dependent on imported oil (see Table 1).

The second is vital given the increasing evidence for major changes in the Earth’s climate such as rapid melting of glaciers and increased frequency of severe storms. The move to a low carbon economy can be achieved both with fuels for stationary applications and for transport. Hydrocarbon gas fuels have lower carbon content than liquid or solid hydrocarbons and their increased use, together with CO2 sequestration, will lead to reduction of carbon dioxide emissions in the stationary sector. In the case of transport the use of biofuels either as blends or neat is a move to a low carbon economy provided that engine technology is adapted for such fuels.

In the third case much of air pollution in Asian megacities stems from badly maintained vehicles and domestic use of solid fuels. Stricter legislation on emissions and its enforcement, together with potential improvements in engine efficiency in new vehicles can probably solve this problem. However, growing societal pressure for change backed by political will and significant investment could lead long-term to a transition to a hydrogen economy through hybrid petrol-electric vehicles to fuel cell vehicles using hydrogen from a variety of sources. Vehicle manufacturers are already well advanced with development and production of the former.

While Figure 7 attempts to present a general picture for the APEC region the pattern of timing and fuel priority will vary from one economy to another depending on resource base, economic situation and technological capability. The fuel mix and supply infrastructure will evolve over time in the most cost-effective way to meet national priorities. The study has identified technology trends for each of the three fuels and these need to be taken into account in developing an energy strategy for an economy against the pattern of Figure 8. These are set out below in order of possible timing.

1. Unconventional Hydrocarbons – Given the continuing dominance of hydrocarbons in the fuel mix, unconventional hydrocarbons will be developed to produce synthetic crude, as is the case with bitumen and heavy oils, for use with existing refineries and distribution systems. Priority will be given to exploitation of stranded natural gas reserves using either liquefaction or conversion to liquids for transport to major centers for use in stationary or transport applications. Gasification of coal will be used to supplement natural gas and thus make best use of existing distribution infrastructure

Methane from coal beds is already used but large potential reserves remain to be exploited. Another primary source of methane in the longer term is from methane hydrates if technology were developed for extraction and processing. Again these sources will be used either as gas for stationary applications or converted to methanol or dimethyl ether for transport fuels.

2. Biofuels – Liquid biofuels (ethanol and biodiesel) can be readily incorporated into the existing transport fuel infrastructure through the use of blends and are already in use in several APEC economies. However there are issues to be considered with regard to engine modifications and to health risks during handling which could limit the extent of their use. Increased efficiency in feedstock production and processing will be needed to meet increased demand. Competition with food needs and availability of land for cultivation could limit the use of biofuels in some economies

Biomass in the form of waste byproducts from pulp and paper plants has been used for decades in stationary applications for production of steam for power generation and heating. Improved combustion technology will extend the use of cellulosic materials in these applications while gasification techniques will enable their use as either gas or as liquids after reforming.

3. Hydrogen/ Fuel Cells – Hydrogen will likely not appear as a major component of the energy mix until the late 2020s to 2030. The initial applications will be on a small scale in the stationary sector. The development of small fuel cells able to operate on a variety of fuels from hydrocarbons to biofuels will accelerate their introduction. Stationary applications with large fuel cells for distributed electricity generation will come later, as the conventional, centralised, fossil-fuel based technologies will also improve over time, stay economically competitive and have long turnover times.

For transport applications, fuel cell technology has the potential to produce motors that are two to three times as efficient as the internal combustion engine but much research and development is needed. Linking into the existing fuel distribution systems for liquids and gases will minimize the cost of infrastructure. Large scale application is several decades away but vehicle manufacturers in Japan, Europe and the US