The International Seminars on Planetary Emergencies

The 55th session of the International Seminars on Planetary Emergencies at the Foundation Ettore Majorana and Centre for Scientific Culture (FEM) took place between 20-23 August 2023 in Erice, Sicily. The in-person event was an excellent opportunity to refresh the spirit of the Seminars, which started in 1981 in midst of the Cold War. Each year, nuclear physicists and advisors to leaders of the most powerful nations have had the opportunity to freely exchange ideas and have discussions, at times very heated, thinking about the possible benefits in finding room for positive collaboration among nations that were on the brink of war. One significant result of those discussions was the historic Seminar in August 1987, where Professor Zhou Guangzhao (Scientific Advisor to Premier Deng Xiaoping), Professor Edward Teller (Scientific Advisor to President Reagan), Professor Evgeny Velikov (Scientific Advisor to President Gorbachev) and Professor Antonino Zichichi (Chairman of the International Committee ‘Science for Peace’, President and Founder of FEM), reached an Agreement for International Scientific Collaboration East-West-North-South without Secrecy and without Frontier.

The Seminar this year had eight sessions in which over 90 scientists from 25 different nations participated and spoke. Topics covered include nuclear weapons, arms control-devolution of global security, origin of the Covid -19 pandemic, the oil markets and the energy transition. Critical infrastructure, cyber security challenges, progress on small modular nuclear reactors, pollution and water crisis, environmental contaminants and children’s health were the other subjects covered.

 One of the most relevant topics covering today’s challenges is the energy transition. Under the leadership of Professor Carmine Difiglio¹, Chairman of the Energy Permanent Monitoring Panel, we analyzed the oil markets and the energy transition, and the role of small nuclear reactors. Papers on each of these topics by Carmine and Robert J. Budnitz² follow. 

 At the bottom of this REview, Claudio has effectively summarized the key takeaways from the oil markets session, which I would further summarize as follows: make sure politicians provide the objectives to be reached and the financial resources, but do not impose the means. Let the free market play its fundamental role in efficiently allocating the resources, as it has done in an effective way since the dawn of the industrial era.

 Fabrizio Zichichi

Vice President and Member of the Board of Directors, Ettore Majorana Foundation and Centre for Scientific Culture
Chief Operating Officer at Phibro LLC

The Oil Market and the Energy Transition

From pre-history through the industrial revolution, human development depended on finding new ways to harness energy - from agriculture, the plow, the domestication of animals, the wheel and smelting metals. The industrial revolution began with the first practical steam engine at the end of the 18th century. Since then, economic progress has rapidly accelerated with vastly expanded power for industry as well as life-changing new technologies. These included railroads, steam ships, products of chemistry, electrical power, electric lighting, many other new technologies powered by electricity, the internal combustion engine, farm tractors, motor vehicles, aircraft, electronics and computers: in essence, our modern world. 

Petroleum has been an important part of this story since the first modern oil well in 1859. By the 20th century, modern economies depended on a reliable supply of oil at affordable prices.  Between 1935 and 1970, due to ample excess US production capacity, managed by the Texas Railroad Commission, world oil prices remained stable and affordable, encouraging a steady increase in motor-vehicle production, roads, real-estate development and economic progress.³ That all changed after US excess production capacity was reduced to zero and, in 1973, markets witnessed rapid price spikes followed by a steep plunge. These spikes slashed world GDP growth and pushed the OECD (the Organisation for Economic Co-operation and Development) economies into recession.⁴  The energy supply problem not only hurt the developed economies that were most dependent on oil, but stalled progress in developing nations who could least afford higher energy prices. Soon after the 1973 “energy crisis”, many analysts warned that world oil supplies would soon peak and threaten continued world economic development.  This theory did not account for technological progress, as it assumed that certain reserves of oil were too difficult to exploit. Even after deep offshore wells were increasing supply, “peak oil” concerns drove public policies to conserve oil and develop oil alternatives. “Peak oil” was finally abandoned after the US began to produce oil from its shale deposits.⁵  After a decade of record-breaking year-on-year oil growth, by 2019, the International Energy Agency (IEA) and several major oil companies assumed that the U.S. would, by itself, satisfy increasing world oil demand through 2030.⁶ However, since the 2020 pandemic, we’ve had more net-zero policies, battery electric vehicle (BEV) growth, ESG pressures and greener oil company boards. As a result, there’s been a dramatic change in the oil demand outlook by some governments and institutions supported by governments. For example, the IEA’s 2022 net-zero scenario has led many to believe that we no longer need to invest in new oil production.⁷ Other analysts are not so sure. Depending on one’s view on whether net-zero targets would be achieved, there are now wide differences of opinion on the need to continue to invest in oil exploration and production (E&P). Net zero scenarios require a rapid replacement of internal combustion vehicles by BEVs. While China’s BEV fleet is rapidly growing, there are questions whether almost all drivers will accept BEVs. It is also uncertain whether the power sector can eliminate fossil fuels and, at the same time, grow sufficiently to replace petroleum in the transport sector. There are also uncertainties about the mineral supply chain needed for BEV batteries and other renewable technologies.

The world economies and the oil sector are closely linked. As noted above, oil price spikes have caused economic downturns. Economic growth also affects oil demand. From 2005 through 2009, a period of relatively flat oil supply, the developing countries were experiencing rapid economic growth while the OECD countries were not. This led to rapidly growing oil demand outside the OECD and stalling demand elsewhere. As a result, there was a shift of available supplies from OECD consumers to the developing countries.⁸ Vast increases in US shale production rapidly expanded world oil supply after 2009, which was especially crucial due to the loss of Libyan production in 2011 and other outages following the Arab Spring.  However, 10 years later, the outlook for a steady US role in expanding oil supply cannot be taken for granted. Measures of US oil shale activity have trended downward even as road and air travel have resumed pre-pandemic growth levels. Drilled-but-uncompleted wells (DUCS) are a measure of ready shale oil reserves. DUCS have rapidly declined since 2020. Even with relatively high world oil prices, US shale oil production growth has slowed.⁹ Depending on E&P investments, future oil demand and the decline of oil production from mature wells may leave the world dependent on OPEC+, bringing the world oil market pretty much back to the situation it was in at the beginning of the 1970s energy crisis. Depending on one’s view about net-zero, this may or may not be of concern especially if one expects that the pathway to net-zero will rapidly reduce oil demand, causing excess oil production and declining oil prices. However, a more sober estimate of BEV growth requires more oil E&P as billions of people enter the modern energy economy.

The expected increase in per-capita energy consumption in the developing world will spur global energy growth. Chinese and Indian data show that per capita energy consumption increases sharply with per capita income. If this holds, improved living standards in the developing world will require large increases in energy supply. To avoid big increases in developing world fossil fuel demand, a much larger shift to renewable and nuclear power will be necessary than is evidently being developed thus far. While the Chinese growth of BEVs has been impressive, with over half of worldwide BEV sales, climate benefits depend on lowering the carbon footprint of the Chinese grid. While China is geopolitically motivated to reduce its oil consumption, the same does not apply to its reliance on coal. Even if worldwide BEV sales rapidly increase, it takes time to reduce the fleet of internal combustion engine (ICE) vehicles. For example, if BEV sales grow to over half of total sales by 2030, BEVs will still constitute less than 20% of the total fleet. By 2050, reducing the ICE vehicle fleet to one-third of the total will require EV sales grow to 90% of total sales. ¹⁰ To achieve this, mineral supplies must increase in lockstep, not only with BEV production but for more renewable technologies in the power sector. Net-zero BEV growth by itself will require a 10-fold increase in lithium supplies between now and 2050.¹¹  

While a large penetration of light-duty EVs might be possible, electrifying the truck sector is far more challenging. Even lithium batteries are heavy for the power needed to provide enough class-8 truck range between recharges.  In a light duty vehicle, while these batteries considerably increase vehicle weight, vehicle performance and load carrying capacity remain satisfactory. This does not hold for heavy trucks. Tractor trailers must typically weigh less than about 70,000 pounds. This provides a load carrying capacity of about 40,000 pounds. About 15,000 pounds of batteries are required to provide acceptable range in a heavy truck.¹² Holding all other factors constant, this reduces maximum load to 25,000 pounds, greatly affecting the economics of road transport.  Consequently, net-zero scenarios estimate that hydrogen fuel cell tractors will replace diesel tractors. While technologically possible, the challenges to replace a diesel fleet with expensive hydrogen fuel cell tractors in less-developed countries, and provide the hydrogen refueling infrastructure they would require, are not well represented in the net-zero models that predict significant worldwide uptake of these trucks, especially considering that the majority of truck diesel fuel is consumed outside of the OECD. Plastics are another challenge to reducing oil consumption. Plastics demand is expected to double by 2050 and less than 10% of plastics are recycled. ¹³ While plastics can be made without using oil or natural gas as a feedstock, these alternatives are unlikely to be competitive or adequate. 

 If petroleum E&P is abandoned based on optimistic net-zero scenarios, while the resulting oil production is estimated to be nearly adequate in 2050, there would be massive shortfalls of oil supply before then. Realistic estimates show that the 2030 shortfalls would be 50 million to 60 million barrels per day (bpd). Shortfalls by 2040 would be to the tune of 40 million to 80 million bpd. Compare these shortfalls to current oil demand of just over 100 million bpd.¹⁴  Of course, industry and world governments would never allow shortfalls of this magnitude to develop. Consequently, curtailing oil and gas E&P is an unacceptable public policy to achieving net zero. In addition, halting oil and gas E&P would not help to achieve net zero. The economic chaos it would cause, during the transition to net zero, would foreclose the clean energy investments that are needed to achieve net zero.

 To understand why the outcomes of recent net-zero policies are so uncertain, it is worth exploring the models that are used to analyze green energy policies. Energy model methodologies have changed little since the 1970s when they came into wide use. A comparison of the predictions made by these early models to reality shows that they were widely off the mark. For example, renewable projections made by the Carter Administration, Amory Lovins and Bent Soerensen predicted that, by 2000, total renewables would reach between 20% to 40% of primary energy demand, mostly due to the growth of wind and solar energy. In fact, less than 10% of primary energy was supplied by renewables, almost all from hydropower and less than 1% from wind and solar.  Projections made after 1990 were equally off. The U.S. Department of Energy and the UNFCC projected that, by 2020, renewables would grow to 27% (DOE) or 30% (UNFCC). By 2020, wind and solar energy reached 5% with total renewables achieving 12% of total primary energy supply, again widely off the mark. We have little reason to expect that current energy models will perform any better. First, the models have become considerably more complex, encompassing a wide variety of technologies required to achieve net zero. Many of these technologies have not achieved any commercial success. For example, coal plants with carbon capture are typically projected to be an important technology to achieve net zero. Yet, after over two decades of government support (demonstration plants), there are still no commercial coal plants with carbon capture. Battery electric and hydrogen fuel cell vehicles are estimated to essentially replace internal combustion cars and trucks within the next two decades. ¹⁵  These projections are not based on any assessment that the motor vehicle market would naturally evolve in this direction. The estimate comes as the model cannot find any other way to achieve net-zero by 2050. In other words, it is an ‘end-driven’ projection. To achieve this, governments must essentially ban internal combustion vehicles over time. Given this need, the next question is whether such a policy is sustainable, especially in the less developed world, the largest driver of increased petroleum demand. When confronted with the commonsense observation that poor countries are not likely to forgo cost-effective fossil fuels to achieve net zero, another assumption is made that the OECD countries will subsidize poor countries sufficiently to motivate them to forgo fossil fuels. The energy models have no capability to assess these assumptions. One needs to consider, without relying on models, whether such outcomes are likely. It appears that the outcome of net-zero models will only be achieved if governments completely suppress fossil fuels in every sector of the energy economy and that OECD governments transfer enough wealth to less developed nations to get them to do the same thing.  While such an outcome might be achieved, the likelihood that it might not explains why, today, the outlook for future petroleum demand is so uncertain with some outlooks assuming net zero and others greatly scaling back what is likely to achieved, especially in less developed countries/regions like India, China, the Middle East and Sub-Saharan Africa.  For the oil market, this uncertainty leads to a wide difference of opinion about how much E&P investment must grow, if at all.

 Three countries are responsible for over one-third of world oil supply: the US, Saudi Arabia and Russia. As discussed above, the outlook for US shale oil growth has been substantially revised since the pre-pandemic estimates. While the US will continue to be an important oil exporter, several factors make it unlikely that the US will be adding over 1 million bpd of world oil supply every year. Saudi Arabia will likely want to achieve its budget targets with higher prices, not higher production. Since the Ukraine war, the outlook for Russia reflects different assumptions about how restricted Western investments will affect the country’s oil sector or how successful Moscow will be in finding new customers. Data shows that while Russian exploratory drilling has declined, this has been offset by increased development drilling. ¹⁶ There has also been uncertainty about how the withdrawal of Western services sector support, which was about 20% of the Russian services sector, will affect its future oil production. Nonetheless, the Russian services sector has benefitted from 30 years of learning from Western companies. In addition, the future growth of Russian oil production - with or without Western service companies - is expected to be conventional oil, not “new” oil such as the exploitation of tight oil reserves. This is not only true for Russia, but almost all tight oil reserves outside of North America.¹⁷  Also, increased Russian oil production does not depend on drilling deep offshore wells, something that might be more challenging without Western E&P companies.  Regarding finding new customers, there has already been a major shift from pipeline exports to seaborne exports that were necessary to move Russian oil deliveries from Europe to Asia.  Russian refining trends in 2022 were also not significantly different than in prior years.  Consequently, it does not appear that the pre- and post- pandemic assessment of future Russian oil output has changed very much, especially compared to the revised outlook for the US.

To sum up, a more sober outlook for US shale growth, likely OPEC+ policies and the likelihood of increasing world demand, despite net-zero policies, all imply that oil E&P investments must increase to avoid worldwide economic disruptions.

Carmine Difiglio

Network faculty member, Faculty of Engineering and Natural Sciences, Sabancı University

Progress on Small Modular Reactors

In recent years, a major change has occurred in the global nuclear-power industry. After decades in which almost all nuclear power reactors worldwide have been large units, each generating about 1,000 megawatts (MW) or more of electricity, the industry has turned its attention to designing an entirely new generation of reactors called ‘small modular reactors,’ or SMRs. There are now over 75 new SMR designs being developed around the world, and almost every company, institute, or government agency working on new-reactor technology is concentrating on one or more of them. A couple of SMRs are actually in operation now; perhaps a dozen or more are in the early stages of construction; and another few dozen are in the ‘talking stage’ during which the reactor designer-developer is negotiating with a host electric utility or company about the terms for starting an actual deployment project.

The reactor technologies under development today also span an enormous range of coolant types (water, gas, liquid metal, molten salt, etc.), neutron-spectrum types (thermal neutrons, fast neutrons), moderators (water, heavy water, various other liquids, graphite), sizes (from as small as a few megawatts-electric to a few hundred MWe) and other characteristics. What is common about them, or at least most of them, is their smaller size, their promise of much improved safety, their expected lower capital cost (per unit), and the broad idea that a nuclear-power site might consist of many individual small factory-manufactured modules rather than one or only a few of the huge (1,000-MWe-range) reactors deployed now.

What are the drivers that have motivated so many companies, institutes and government agencies to be working on the many SMR designs now under development or in early stages pointing toward deployment? The drivers vary worldwide, but two common factors seem to be economics  - the potential for electricity or other energy services at lower costs – coupled with the fact that nuclear reactors do not release significant carbon dioxide that affects the climate. Other drivers are that the SMRs mostly promise much improved safety, offer siting flexibility, require capital investments in smaller increments, and can assist in electricity-grid stability. Also, they can be factory-fabricated, making manufacturing, construction and installation potentially simpler and faster. Not every new SMR design potentially offers all of these benefits, but most of the SMRs offer most of them, and some of them also seem to be aiming for non-electricity markets such as industrial process heat, hydrogen production, or sea water desalination.

Despite the many important potential benefits, it is not at all clear that, in the end, the SMRs as a class will end up dominating the nuclear-power market in decades to come, nor that the overall nuclear market will grow in a way that will be able to absorb a huge number of SMRs. Also unknown, even if the growth occurs, is which of the many different SMR reactor technologies and designers-vendors will win out in the end, and how quickly, and where and why.

In addition, it is not clear whether SMR deployment, if it happens, will occur in parallel with continuing deployment of a significant number of large reactors that are similar in size to today’s deployed reactors, or will occur almost entirely at the expense of a diminished deployment of those larger designs, even if the new large reactors will themselves embed many advanced features.

There has always been opposition to nuclear-power deployment in some parts of society worldwide, and in some governments, based on a variety of different concerns (potential for large accidents, radioactive-waste disposal, security, and weapons proliferation, among other factors). The opposition’s importance and intensity have varied over the past many decades, and may now have entered a less influential period. Whether it will prevail, and where, is again unknown. This will all evolve, of course, in the next several years. The remainder of this note will discuss the most important factors affecting how this future will play out.

Economics: The economics aspect will likely be the most important determinant of whether SMRs as a class, or any individual SMR design, will succeed in being widely deployed. Today, large reactors (1,000 MWe or larger) are widely viewed as uneconomic in many electricity markets. They simply seem unlikely to be able to compete with either natural gas or renewables (solar, wind), with a few exceptions in places where today’s electricity is extremely expensive or where government subsidies to nuclear energy distort the true market costs. 

This cost problem with the larger reactor designs, in particular the high up-front capital needed, provides the opportunity window for SMRs. But what is not known today, and won’t be known for several years (or more) into the future, is whether the costs of any of the SMRs will be able to compete successfully  - in terms of both the capital required and the cost of electricity or other energy generated. This cannot be known now in part because it will depend a lot on whether series production of Nth-of-a-kind SMRs will make them cheap enough – the first ones probably won’t be. Only time will tell whether economies due to factory-manufacturing efficiencies and other economies of deployment scale will be sufficient. Delays in licensing of these new reactor types may also affect costs. Another aspect is whether the complexities of obtaining regulatory approval to proceed with a given SMR at a given site will hurt the investment structure intolerably, or not. Again, only time will tell.  (A discussion of the regulatory issues can be found below in a later paragraph.)

Safety:  There is a broad consensus that most of the new SMR designs offer significantly enhanced safety compared to today’s deployed large reactors. There are four principal reasons for this: First, significant advances have been made over the past decades in engineering, in materials, in software used for control, in the effectiveness of human-influenced operations and in equipment reliability.  They have made today’s operating fleet much safer than, say, 20-30 years ago, and these advances are all taken advantage of in the new SMR designs. This means, for example, that the abnormal conditions that could lead to a potential accident sequence are far less likely to occur in most SMRs. Second, the SMRs’ smaller size means less heat to cope with in abnormal conditions, more time before accident conditions can get out-of-hand, and less radioactivity to be potentially released if an actual release were to occur. Third, the new SMR designs all strive to take advantage of numerous insights learned in operating today’s larger reactors, leading, for example, to the incorporation into the SMRs of many new passive features that involve less need for active human intervention or functioning of active equipment. Finally, there have been improvements in regulations, in safety culture, and in analysis and monitoring of reactor designs to detect problems. Together with an international sharing of best operating practices, these advances mean that if a reactor starts showing signs of problems, it is much more likely that intervention will occur before things get out-of-hand in a way that could lead to an accident. For all of these reasons, these new SMRs will almost surely have a much smaller risk profile - less frequent upset conditions, less frequent actual accidents, and less severe consequences if an accident were to occur.

Safety regulations worldwide:  The regulation of the safety of any reactor worldwide is the responsibility of the country in which it based, and is universally assigned to a national regulatory agency, each of which has its own regulations, inspectors, enforcement procedures, and the like. The International Atomic Energy Agency (IAEA) has had a program for decades under which it has developed model safety regulations, analysis methods and inspection protocols, and has provided assistance when requested from any member state to help assure that the regulatory agency is doing a competent job. The IAEA also offers various inspection services in many technical areas and in many procedural and administrative areas too. There are also international treaties that provide a framework for assuring that the safety of a nuclear power program in each member state meets IAEA standards.

However, the IAEA has no enforcement authority; it merely provides guidance, inspection services when requested, and the power of outside peer pressure when appropriate. This will be true for the new SMRs just as it is for the several hundred existing operating power reactors worldwide. Although strengthening the IAEA’s mandate, capabilities, or both seems highly desirable, it is unlikely to happen soon. A more immediate challenge for the IAEA arises because the new SMRs will, in some cases, be using novel technologies. Hence, its guidance documents and inspection protocols will need to be revised, updated and tested. This revision and updating process is now under way, but will not be fully in place for at least a few years. The importance of this IAEA role in coordinating activities across many countries cannot be overemphasized.

Also, in most countries with reactors operating today, the safety regulations are tailored to the technology deployed in that country. If SMR deployment using a different technology is contemplated, these safety regulations need to be modified or new ones developed to cover the specific technical issues that arise. This regulatory-revision work is under way now worldwide, including an effort to make the new regulations adopted in different countries compatible so that an approval granted in one country may be easily accepted in others.

SMR deployment internationally: A major opportunity to enhance widespread worldwide deployment is that there has been broad interest in the new SMRs in many countries that have not had nuclear power reactors before. However, challenges and barriers also exist when developing a new nuclear-power program: it can require a significant investment in infrastructure, beginning with the establishment of a national regulatory agency (akin to the Nuclear Regulatory Commission in the US) empowered by legislation to license and regulate the SMRs as they are built and operated. Establishing such an agency is difficult, and although there is detailed guidance on how to do this in IAEA documents or programs, even the most successful recent newcomer-country regulatory programs have taken a decade or so to reach maturity.

Achieving an acceptable safety culture can also be problematic. Some countries are widely known as suffering from disturbing corruption at various levels in the society.  In these cases, it is essential to ensure that this corruption does not affect the effectiveness of the nuclear-power program. Some countries have a culture in which calling attention to an error or other failure by a colleague is deeply frowned upon, especially if the colleague has higher social or managerial rank or is much older. And some countries have a sufficiently weak or ineffective central government that many of the new SMR vendors might decide simply not to allow their new SMRs to be installed in that country.

The worldwide nuclear-power industry is diligently working now on approaches to ensure that the regulatory issues mentioned will not become a barrier to widespread SMR deployment.

Security and safeguards: Today there is an international safeguards regime under the Non-Proliferation Treaty, administered by the IAEA and participated in by almost all countries. Existing and newcomer countries with SMRs will have to fulfil the requirements of this regime, but this is unlikely to be a major barrier in the end to widespread SMR deployment. However, because SMRs represent many novel reactor and fuel-cycle technologies, it will take time for the IAEA regime to adjust effectively to these new SMR technologies and the industries that support them. This could delay SMR deployment in some countries. One positive attribute of many of the new SMRs is that their design has attempted to incorporate both more secure features and more difficult-to-compromise attributes than is true of many of today’s existing large power reactors. This is so because one can incorporate certain features in the design stage that simply were not considered important when the existing fleet was originally designed.

Front-end fuel-cycle issues: Some of the new SMR designs require fuel with novel designs, either untested or with limited test data. This limitation may delay the deployment of some of these designs. Also, some of the new SMR designers plan to use uranium-235 enriched to 15% to 20%, much higher than the 5% range that most of today’s light water reactors worldwide use. There is currently a shortage of certain types of enrichment capacity worldwide that could hold up the initial deployment of some of the SMRs. The worldwide marketplace is currently trying to bridge this short-term gap, but it might take several years, which could delay some of the first SMRs.

Back-end fuel-cycle issues: All nuclear power reactors produce radioactive spent fuel as the chain reaction proceeds, and all of the fission products that have not decayed radioactively are basically a ‘waste’ that needs to be both stored safely at first and then ultimately disposed of safely. Other non-fission-product radioactive species are also produced, from actinide activation, activation of metals in the facility, and other processes. Storing these radioactive wastes can be done safely today using widely deployed technologies, and at a cost that does not drastically affect the life-cycle costs of nuclear power. However, implementing the technically preferred solution of final disposal deep underground has been a major impediment to reactor deployment in some countries. 

There is a very broad consensus worldwide among technical experts that disposal in a deep repository, for hundreds of thousands of years, is both very safe and not very expensive, amounting perhaps to a cost of a few percent of the total value of the electricity produced. For decades the preferred disposal technology has been using a mined facility. In recent years, disposal in deep boreholes has also been advanced as an alternative and might offer a much less expensive option. However, public acceptance of the siting for a deep repository has been a major problem almost everywhere worldwide, and remains an impediment. Whether this issue will impede the deployment of SMRs is not known now but is an issue of importance. No country contemplating the deployment of SMRs should take the decision without giving consideration up-front as to what will be the fate of these radioactive materials that will ultimately require deep disposal.

Summary:  In brief, there are a very large number of new SMR designs being developed around the world, and the first few of them are operating or under construction now, although in a niche market or in a heavily subsidized environment. Many other new SMR designs are being actively considered for near-term deployment worldwide. The promise that these new reactors offer is that the cost and other barriers standing in the way of widespread future deployment of the larger reactors (around 1,000 MWe in size), can perhaps be overcome by these smaller SMR designs. Whether the various barriers and other factors affecting the outcome can be overcome is unknown, and hence it is unknown whether or not the SMR reactors, as a class, will make an important contribution worldwide. Only time (and hard work) will tell.

Acknowledgment: This short summary is my own work, but could not have been written without my having benefitted from the insights and collegial interactions with several colleagues who attended the WFS sessions in Erice, Italy in August 2023 and who also have interacted with me often over the past several years. For which much thanks are due to Noura Mansouri, Charles McCombie, Anita Nilsson, Holger Rogner, Robert Schock, and Adnan Shihab-Eldin.  Also much thanks are offered to Carmine Difiglio for helping to organize our Erice sessions and interactions.

Robert J. Budnitz

Lawrence Berkeley National Laboratory (ret.), Energy Geosciences Division

Takeaways

Participating at the Erice Seminar on Planetary Emergencies was an absolute privilege. I spoke at the session dedicated to the energy transition, along with four other presenters. Carmine, the chair of the session, kindly agreed to provide his take on the topic, which you can find above. We are highly grateful for his contribution and thought leadership.

For clarity, I would like to highlight a few areas where my views are different. I believe this is where analytical value is produced: by exchanging and debating different scenarios, and then going back to check the assumptions behind them. For instance, take the statement that a government ban on internal combustion engine (ICE) vehicles is essential to achieving the transition away from oil. I think that scenario is applicable only if battery technology and costs do not continue to improve as per historical trends. This is the main hypothesis that underpins Rystad Energy’s +Sigma scenario for passenger road transport, which means that at some point the EV rate of penetration slows down, although it never reverses. Yet, if technology and costs were to keep improving over the next two decades, then EVs would be ‘in the money’ for both consumers and producers by the early part of the next decade across most of the world. ICE vehicles would then struggle to compete. This is the main hypothesis underpinning our -Sigma scenario, in which the role of a government ban is marginal. I don’t believe we can rule out either scenario yet.

Another point was made at the seminar on the inability of models to predict future trends. A quote by statistician George Box that “All models are wrong, some are useful” was offered. I agree. Yet, I believe that models have improved significantly in the past 50 years. While those exclusively based on energy demand have tended to be overly optimistic on the uptick of renewables, those that are supported by a detailed analysis of Clean Tech supply chains yield more credible results. Told another way, our -Sigma scenario is not based just on the demand for clean tech, but also on a bottom-up analysis of the supply chain of solar PVs, batteries, wind technology, etc. – which are supposed to fulfill demand and therefore are used as constraints. For instance, if there’s not enough lithium output to support a set number of EVs in a certain year, then we decrease the supply of EVs until it matches the relevant production capacity in that scenario. These types of models tend to be more realistic than ones that are purely macro, but they are also data intensive and costly to maintain.

My main takeaway from the Erice seminar is that the energy transition remains highly uncertain, and that was portrayed in the difference of opinions amongst the Erice scientists over its speed, depth, breadth and implications for investments and the global economy. While the recent exponential growth in EVs shows that passenger road transport is potentially ripe for disruption, the expected steady expansion in plastic demand means that oil still will be needed 50 years from now. The next few years will tell us which scenario of the energy transition is likelier to materialize. It will be a fast transition if batteries and renewables over the next 20 years continue to see cost reductions and gain market share at the speed that we have seen in the past 5 years. A slow transition if those clean technologies were to soon encounter hard to abate technical barriers. Or a middle of the road transition if some technologies will continue to thrive while others will fail. As of today, any of these scenarios is still possible.

Claudio Galimberti

North America Research Director, Rystad Energy

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Authors: 

Claudio Galimberti  

Senior Vice President of Oil Markets, Head of Americas Research 
claudio.galimberti@rystadenergy.com

Fabrizio Zichichi

Vice President and Member of the Board of Directors, Ettore Majorana Foundation and Centre for Scientific Culture; Chief Operating Officer at Phibro LLC

Carmine Difiglio

Network faculty member, Faculty of Engineering and Natural Sciences, Sabanci University

Robert J. Budnitz

Lawrence Berkeley National Laboratory (retired), Energy Geosciences Division

(The data and forecasts contained in this column are Rystad Energy’s and the opinions are of the authors.) 

¹Network faculty member, Faculty of Engineering and Natural Sciences, Sabancı University

²Lawrence Berkeley National Laboratory (retired), Energy Geosciences Division

³Robert McNally, Crude Volatility, Columbia University Press, 2017

⁴Carmine Difiglio, “Oil, economic growth and strategic petroleum stocks”, Energy Strategy Reviews, 2014

⁵"Peak oil” as understood to be a peak, and subsequent decline, of oil production due to resource limitations despite growing demand.  Once it was realized that this was not likely, “peak oil demand” replaced the concept of “peak oil”.  “Peak oil demand” anticipated a peak and subsequent decline in world oil consumption despite adequate oil supplies. This expectation reflected several trends including the saturation of internal combustion vehicle ownership in developed countries, improved vehicle efficiency, and the worldwide uptake of battery electric vehicles.  A peak and decline of oil use was projected in most recent energy projections, including the International Energy Agency’s World Energy Outlook.

⁶2019 World Energy Outlook, International Energy Agency

⁷2022 World Energy Outlook, International Energy Agency.  It should be noted that the IEA net-zero scenario is one scenario among other scenarios and that the IEA has not represented this scenario as a prediction, absent the significant policies needed to bring it about.

⁸Documented by Steven Kopits, Princeton Energy Advisors, August 2023

⁹Ibid, Kopits

¹⁰Rystad Energy Oil Market Transition Solution, Rystad Energy OilMarketCube

¹¹Ibid, Rystad Energy

¹²Carmine Difiglio, “Hydrogen Fuel Cell Vehicles: Why do we need them with the rapid uptake of BEVs?”, EMFCSC, July 2022

¹³Ibid. Rystad Energy

¹⁴Ibid, Rystad Energy

¹⁵International Energy Agency, 2022 Net-Zero Scenario. 2022 World Energy Outlook

¹⁶Vitaly Yermakov, “Russian oil output increase in 2022 amid unprecedented Western sanctions: What’s next?”, Oxford Institute for Energy Studies, July 2023

¹⁷Ibid, Difiglio (2014)