Archive for October, 2009

It’s all in the context . . .

After a short telephone interview yesterday, I was quoted in the Guardian newspaper today, but unfortunately completely out of context. Based on the interview, The Guardian chose to position Shell as opposing action in Copenhagen, which couldn’t be further from the truth. In fact the conversation was about the application of a floor price for the EU-ETS.  You may be interested in my reply which I hope will be published on Monday.

Dear Sir,

In today’s article “Shell opposes moves to reform carbon trading”, you chose to open with the assertion that Royal Dutch Shell is opposing moves to overhaul Europe’s carbon trading scheme at the crucial climate change summit in Copenhagen in December. This statement is incorrect on several counts;

  1. Copenhagen is not and will not be a forum for discussion on the detail of the EU Emissions Trading System (EU-ETS). Copenhagen is a United Nations Framework Convention on Climate Change (UNFCCC) meeting where we, along with many others, hope that our political leaders can agree a broad, workable framework within which nations and regions can seriously address the issue of climate change. The EU-ETS is one element of the domestic policy arrangements that the EU have put in place to meet their proposed goal of a 20% reduction in emissions by 2020, in comparison with 1990. Its structure and design is a domestic discussion, not a discussion for UNFCCC meetings, although elements of how it may link to other domestic approaches (such as that being developed in the USA) could possibly be discussed at the UNFCCC.
  2. Shell, initially as almost a lone voice but now with others, has supported the EU emissions trading approach since the first draft Directive was circulated for consultation in 2001. In 2008, when the EU-ETS was overhauled as the EU Commission crafted Phase III of this legislation (to run from 2013-2020), Shell maintained its strong support for the development of the system. Whilst we have not agreed with every part of every article within the Directive, we have maintained the view that industry should engage in a constructive dialogue with the EU Commission on this legislation.
  3. There are no moves to overhaul the EU-ETS as this has just been completed. The legislation was passed by the EU Parliament in December 2008 and was published in the Official Journal of the EU Parliament only four months ago.

However, the quote that you did include from me was correct. Shell does not support a floor price within the EU-ETS. This is a market based system and the market needs to be left to find the price that is required to deliver the necessary reductions to meet the clear environmental objective of the system. Today, as a result of the financial crisis and a consequent reduction in emissions across the EU due to lower industrial activity, the market is telling us that it can meet the 2020 20% reduction objective at a price of around EUR 15. We should respect this and allow the market to do its job. The lower price is coming at a time when EU consumers are tightening their belts so they may welcome this reduction in price, which feeds primarily into their cost of electricity.

 We also note that there is no specific mechanism within the design of the EU-ETS to set a floor price. However, EU governments do auction allowances into the system so they could choose to set a reserve price at those auctions. But the majority of allowances are still provided free of charge to EU emitters and that practice will continue for three more years. By then, we may be seeing quite a different set of market conditions and even a different overall 2020 target, as the EU has a provision to shift this to 30% should it be a signatory to a new international agreement.

 Yours sincerely,

David Hone

Senior Climate Change Adviser

Shell International

Guardian Article

From the sands of the desert . . .

One of the most important moments at the recent Bangkok UNFCCC meeting was the release by the IEA of its Climate Change Excerpt to the World Energy Outlook 2009. The full World Energy Outlook will be released in November as usual, but the pre-release was done to coordinate with the talks in Bangkok.

The excerpt lays out a possible 450 ppm energy scenario, built in part on the fact that the recession has given us something of an emissions break, with the IEA estimating that global emissions have fallen some 3% as a result. Whilst emissions will start growing again (and probably already have), the drop is akin to at least a 3 year reprieve, which means that the window of opportunity for 450 ppm is slightly open. But this is no easy scenario and in fact doesn’t plateau at 450 ppm, but overshoots it and reaches some 510 ppm in 2035 before beginning a gradual decline from about 2045. Global energy emissions must peak just before 2020. By contrast, the reference scenario sees atmospheric levels of CO2 eventually rising to over 1000 ppm and 2030 emissions some 14 GT greater than the 450 ppm scenario.

IEA Chart (small)

 

Key mitigation approaches are shown in the chart, but energy efficiency is clearly a major part of the pathway forward. The assumptions are very challenging and will really test our capacity for change.

But the evidence we can do this is starting to appear. Whilst in Abu Dhabi this week I was taken on a short tour of the construction site that will become Masdar City. This will be the worlds first carbon neutral, zero-waste city. It will have a working population of 90,000 of whom 40,000 are residents and be powered entirely by renwable energy. The city is being built in traditional Arabic style, with narrow streets and natural shading and with a number of features to improve the circulation of air and therefore energy efficiency of the buildings.

Masdar City

Masdar City CO2 compared to a conventional city.

Masdar City CO2 compared to a conventional city.

The transport infrastructure of Masdar City is also different to every other city in the world. There are no cars, just light rail and personal rail transport (PRT) – in effect small capsules on a rail system for individual and family use. The railway system is starting to appear on the construction site and a test PRT capsule has been delivered.

PRT

Masdar still faces challenges, particularly water supply. There is none, so pretty much all the water comes from desalination plants, which also means that the water has a high energy footprint. But tremendous efforts are being made to conserve and recycle, so net use will be low.

Masdar represents a truly large scale working demonstration of what is possible if we are prepared to invest in infrastructure and push technologies and design well beyond business as usual. Demonstration is also a vital step in the commercialisation of new technologies and approaches and Abu Dhabi Future Energy Company know this – I am sure they will build a flourishing business on the back of the techniques they develop in Masdar City. A truly remarkable transformation is taking place in this arid region.

Masdar Completed

A final interesting observation (at least to me) from the excerpt is that IEA have started showing total cumulative emissions since 1890 and national shares of the accumulation. This is important as the real measure should not be the particular level of emissions in any given year but the total cummulative emissions compared to the carrying capacity of the atmosphere, which is about 1 trillion tonnes of carbon (3.7 trillion tonnes of CO2). The figures shown are of course energy emissions and do not account for other gases, forestry and agriculture.
 
Photos and charts: Abu Dhabi Future Energy Company & International Energy Agency

Not a book I would recommend . . .

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I had never intended this blog to be about climate science, but every now and again something comes along which changes that. Recently that something was a book by an Australian geologist, Ian Plimer, Heaven and Earth – global warming the missing science. The book sets out to deconstruct every single aspect of climate change science (even to the point of arguing that CO2 levels may not actually be rising). The book cites over 2000 scientific papers. It was sent to me by a colleague who I have known for many years – other colleagues also received copies from the  same person. Added to this was the fact that the author comes from Adelaide University, where I studied chemical engineering.  So I feel compelled to reply.

There is no doubt that this is a very heavily researched book, quoting over 2000 sources and scientific papers. The papers quoted, as far as I can tell based on the ones that I recognise, represent the peer reviewed findings of scientists from around the world, but I think Plimer has been somewhat disingenuous  in the way he has picked pieces from a variety of papers on a subject, quoted them all en masse, but then not actually represented the full findings of those papers in the text that he writes on a given subject. I can only come to this conclusion based on papers I actually know and that sample represents a small fraction of the totality of papers cited, but I am concerned that this approach may be common throughout the book.

This is best illustrated with an example. On pages 405 to 410 Plimer discusses hurricanes and as is typical throughout every other part of the book seeks to deconstruct so called popular thinking about this issue in relation to climate change. He claims that tropical hurricanes and cyclones are not increasing in number, that there is no change in strength linked with temperature rise and that any variation we may have seen in hurricanes is due to a multi-decadal oscillation that exists as a background to hurricane activity. He twice quotes (and I am sure correctly) papers published in Natureby Dr Kerry Emmanuel, a well known researcher into this subject. I had the privilege of listening to a presentation by Dr Emmanuel on this paper and what was said in person bears little resemblance to the conclusions Plimer comes to, even though the paper is mentioned. Rather, Dr Emmanuel presented statistical evidence that hurricane strength is increasing as the oceans warm and that this is unrelated to any background oscillation. They did concur on the point that the number of hurricanes appears to remain the same globally, although Plimer puts “increasing numbers of hurricanes” forward as an issue that needs debunking, rather than an issue on which there are either no findings or possibly just a media finding.

It also appears to me that there is a faulty logic running throughout the book. It runs something along the lines of “I grow yellow flowers in my garden, this is a yellow flower, therefore it must have come from my garden”, or perhaps an alternative along the lines of, “When I last looked in my garden there were red flowers, this flower is yellow, therefore it couldn’t have come from my garden.” Over and over the reader is reminded that because certain sets of conditions have existed in the (long distant) past that we can’t be in the situation today where rising levels of CO2 can be linked with any change in temperature. For me this isn’t a valid argument. I can well imagine any number of steady states existing at quite different combinations of CO2 level and temperature, driven by the position of the continents, the type of biosphere at the time, orbital variation, solar activity and so on.

Other arguments seem just plain wrong. For example, he makes a constant mockery of Al Gore and his matching saw tooth graphs of CO2 and temperature. With hindsight, I suspect even Al Gore would probably agree that this wasn’t the best example to use, in that at least part of the phenomena he was highlighting is most likely CO2 degassing of the oceans as temperature rises (e.g. as a result of orbital variation) rather than rising CO2 driving temperature. There is a multi-century time lag involved for rising temperatures to lead to significant ocean degassing, simply because of the size of the oceans and the rate at which they take up heat. But Plimer then goes on to link (as a possibility) the current rising CO2 level (which in other parts of the book he even refutes is happening) to the Medieval Warm Period. Surely CO2 degassing will only take place after many hundreds of years of constant warming, i.e. a constant higher heat flux into the ocean, not as a delayed response to a temporary warming blip some 700 years ago, following by a cold period as well. This seems like pretty basic heat transfer thinking to me.

Perhaps the weakest part of the book is the discussion around CO2 absorption in the infra-red, which of course is critical to the whole issue. Having cited endless papers on everything else, he finally gets to this key point and cites almost nothing at all. He claims that the greenhouse gases that already exist in the atmosphere absorb most of the infra-red which means there is nothing more to absorb so there need be no fear of rising levels of greenhouse gases. I have spoken to colleagues who study the science very carefully and external climate scientists and this issue has long been put to rest. The reality is the opposite, i.e. that rising levels of trace gases are contributing to increased infra-red absorption. More importantly, the trace gases are driving (forcing mechanism) the change as they accumulate in the atmosphere, whereas water vapour, which Plimer talks about as the only greenhouse gas that really matters, is responding as a feedback mechanism with rising temperature. Water can only ever act in this way as it cannot accumulate in the atmosphere. If there is too much it rains. It is even possible to see all this from satellite data, which shows the difference in absorption spectra as seen from above our atmosphere over the period 1970 to 1997 (although presumably Plimer wouldn’t like this study as quite a bit of data processing has been done – seems to be a pet hate of his).

 One other issue that particularly bothered me is his criticism of the measurement of CO2 and his claim that CO2 levels in the atmosphere have been much higher even in recent times. He notes that 19th Century CO2 measurements show periods at over 400 ppm, so why worry now about 390 ppm and rising. The reality is that since the late 1950s a very accurate system of global monitoring of CO2 levels has been put in place. These CO2 measurements are done in remote locations based on the techniques developed by Charles David Keeling. The measurements represent the background CO2 level of the atmosphere, not some local spot number. Local spot data can vary significantly for all sorts of reasons and is the most likely contributor to significant variations in atmospheric CO2 levels reported over the last 150 years. Plimer doesn’t even discuss this. More recently, ice core data has shown that the long term background level is very stable during inter glacial periods.

It is also important to mention another Plimer perspective – this is where he seems to get angry. He relentlessly attacks the IPCC as if it were a monolithic block of scientific thinking that is intolerant of any findings that deviate from “climate doctrine”. That is far from any reality I have seen. Whilst nobody would claim IPCC is perfect or free from political interference, it is a body that seeks to pull together peer reviewed literature, not generate such material itself. For example, IPCC have no computer climate models, although Plimer constantly refers to the “IPCC models” and their “doubtful findings”. Rather the models exist in the various research institutions that IPCC draws on. On the subject of political interference, demonisation of sceptics and witch hunts (of climate sceptics) I suspect that some scientists would claim the opposite, i.e. that their disturbing findings on what we are doing to our atmosphere and the impact that will have, were undermined by some governments in recent years. I have heard first hand such sentiments expressed from the podium in scientific gatherings.

Over a period of about ten years now Shell has supported the MIT Joint Program on the Science and Policy of Global Change. The researchers there also contribute to the IPCC process and they have an increasingly sophisticated climate model. In the time that I have been attending the meetings there has been a steady progression of new findings and advances in many fields, including aspects such as clouds, aerosols, volcanoes and the like, all of which contribute to the overall thinking on the climate issue. The MIT forums do not seek to promote climate scientists nor to demonise those that have alternative view points, rather they serve to discuss findings and promote thinking and understanding of the issues we face. I am at a loss to understand why Ian Plimer has set out to invalidate everything that such people have contributed and why he thinks that his view of this issue is the correct one, let alone that all others are simply wrong.

Finally, let us not forget the political reality of all this. Governments in all parts of the world are acting on the issue of climate change. For this and many other reasons, some good and some not so good, they want to see a shift in the make-up of the energy system and the way in which we use energy. It is hard to see that the energy status quo will persist, even despite the Ian Plimers of this world.

As for a book I would recommend, try The Long Thaw, by David Archer. It is based on many of the same papers that Plimer cites, but perhaps not surprisingly the conclusion is very different.

The plight of the AAU

One of the less discussed and least used features of the Kyoto Protocol is the tradability of the Assigned Amount Unit or AAU. This is the instrument that national governments use for compliance and it functions in pretty much the same way as allowances do in a cap-and-trade system. If a Kyoto signatory country emitted 500 million tonnes CO2e in 1990 and agreed to a 10% reduction, then the UNFCCC would grant that country 5*(500-50)=2250 million AAUs for the period 2008-2012. The country can of course emit whatever it wants, so long as it can surrender sufficient AAUs or related units such as CERs from the CDM. The AAU is backed by a certain set of definitions that establish the measurement and reporting protocols for the emissions they represent.

One option open to a country is to buy from or sell AAUs to another country, depending on its overall position, i.e. in surplus or deficit. But the AAU can also transfer through other means. The EU-ETS is underpinned by the AAU, such that if an EU allowance was bought by a participant in a linked ETS, say the upcoming Australian system, then an AAU would quietly make its way from the EU account to the Australian one on the International Transaction Log (ITL) to keep everyone whole at the international level. Of course there is only one AAU backed ETS today and nobody is linked to it, so none of this has actually happened yet, but the principal is important to the long term goal of building a global carbon market.

Bangkok talks

I am in Bangkok this week at another round of UNFCCC talks in the lead-up to Copenhagen and one issue that has suddenly leapt out of the dark is the often ignored AAU. The US delegation has made the point that as they are not a signatory to the Kyoto Protocol and don’t intend to be, the AAU will not feature in the US view of a future agreement. By contrast, the Kyoto signatories whose (future) emissions trading systems are built around the AAU see this as the undermining of their hopes for a growing market. Other nations simply saw it as a brazen US attempt to tear up the Kyoto Protocol and said so in no uncertain terms – so the negotiations go on!

Despite this, the US delegation made it clear that they see linking to the EU-ETS (and others) as an important goal for the future. I for one can’t see this happening whilst the AAU is still part of the system, or at least part of some of the system. The problem is that there are a finite number of AAUs that represent the cap on those countries with targets on the basis of a certain measurement protocol. Typically, a national emissions trading system (cap-and-trade) is a cascade down into the economy of the AAU, but with a name change and revised legal definition on the way such that trading rules can be crafted for particular national circumstances. Nevertheless, there remains a one-to-one alignment between the two. When two trading systems are linked the AAUs move back and forth as described above. But if a US system were to link, trade between the two would be very limited. Certainly EU allowances could flow to the USA as this would be the same as retiring AAUs from that part of the system and just lowering the defined cap. But US allowances couldn’t flow back as this would bring unknown allowances into the system, raising the cap by the same amount. The exception would be if the US registry had a bank of AAUs from previous trades from the EU or if both recognised the same project mechanism and the US had a bank of these instead – but once the bank ran out that would be it, no more trade.

There are probably constructions around this, such as special recognition of US allowances (given that their cap is known and presumably agreed), but perversely the US is then effectively recognising AAUs within its system, which it didn’t want to do at the outset. The systems would also have to adopt the same definitions throughout, such that allowance arbitrage did not take place, which means that any change in the US system (and vice versa) at any point in time would have to be internationally ratified, which isn’t that different to recognising AAUs in the first place. The sensible thing to do is to back all the national targets with a single underpinning currency but this looks impossible from the discourse in Bangkok – for the US it would mean recognising some aspect of the Kyoto Protocol, which it just can’t do or for the Kyoto countries it would mean dismantling the Protocol, which is a non-starter for most participants.

A further casualty of an AAU free agreement could be a cap-and-trade approach for sectors such as shipping and aviation. The approaches described in my previous posting both rely on a carbon currency exisiting in the international agreement. The units are used as the basic building block of the shipping approach.

So, is the notion of a future global carbon market under threat? Perhaps not, but it will be quite a bit more difficult getting there given the current sentiment. The irony of the situation is that apparently some time back in 1997 it was the US delegation that invented the AAU in the first place!!!