Archive for January, 2010

Copenhagen – Filling in the Appendices

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Whilst many will focus on President Obama delivering the State of the Union on Wednesday, the other big event of this week is the nominal deadline for those adhering the Copenhagen Accord to submit their national targets and actions for logging in the appendices of the document. Although the UNFCCC have indicated that January 31st is a “soft deadline”, we may nevertheless see some movement in this space.

The question is, “What will make a difference?”.

The Accord offers two tables as appendices, one for developed countries to offer up absolute reduction targets through to 2020 and a second for developing countries to propose their own nationally appropriate mitigation actions. Without getting into the very specific details of what each country might specifically propose, it is useful to look at the trends that are developing in terms of direction and then see what impact this has in terms of total global emissions if continued through to 2050.

For most OECD countries, the general direction is of the order of an 80% reduction from current levels by 2050, although there will be some use of offsets along the way and reductiosn will be quite limited through to 2020. For the rapidly developing economies, a reduction in CO2 per GDP seems to be one metric and prior to Copenhagen China suggested a 40-50% reduction from 2005 to 2020. So let’s imagine that other major economic blocks also take on a similar approach (for energy related emissions), say India, the rest of Asia (not Japan or Korea) and Latin America. Let us also assume that the Middle East and economies in transition (mainly the former USSR) pledge to plateau emissions at current levels and the aviation and shipping industries offer to manage overall emissions growth such that by 2050 it is back to current levels and falling. African countries continue to grow at about 3% p.a. For non-energy emissions assume that deforestation and all other emissions (methane, cement CO2, various industrial gases and so on) are reduced significantly over the next 40 years.

The above might be seen as quite an achievement, given the way in which Copenhagen ended. But what would it mean if stacked up as a global effort? To get some idea about all this it is necessary to make some further assumptions about overall economic growth, given that so many big economies would be targeting emissions per GDP. Not surprisingly it turns out that economic growth is a major differentiator, particularly when compared to the percentage level of emissions reduction as GDP growth shifts. In doing this I have assumed that GDP growth would be higher in the early years and lower in the future – so a 6% average annual growth for China between now and 2050 would mean 9% p.a. now, dropping to 3% by 2050. The results, using IEA 2009 CO2 data, look something like this:

  • Case 1: China growth at 6% p.a. through to 2050, with a continuous 4% p.a. reduction in energy CO2/GDP (equivalent to  45% reduction from 2005 to 2020). India is also at 6% p.a., Asia and Latin America at 5% p.a. but all with a 3% p.a. decline in energy CO2/GDP (equivalent to a 35% reduction from 2005 to 2020). Deforestation emissions drop by two thirds and other emissions are halved.

  • Case 2: Growth the same as in Case 1, but the rate of decarbonisation vs. GDP for developing countries is increased by 1% in all cases, i.e. from 4% to 5% for China and 3% to 4% for the others. All other assumptions remain the same.

Whilst all of this looks like a positive story and I think it is, it doesn’t necessarily get us out of the woods. Recently I wrote about the “trillion tonne challenge“. In these two cases, we reach the trillion tonne total by about the mid 2040s and mid 2050s respectively. Although the curves look quite different, the area under them doesn’t vary by a great deal. In addition, with significant emissions still to come through to 2100 in these cases, the trillion tonnes is well and truly busted, which is an indicator of going above the 2 degree C goal of the Accord.

It isn’t until really aggressive numbers are used that the reductions start to bite and the 2 degrees target starts to come into range.

  • Case 3: Growth is the same as Case 1, but for major developing economies the rate of decarbonisation per annum is equivalent to the long term growth rate of the economy. In addition, a much faster reduction of other emissions (i.e. non energy related) is achieved. The other assumptions remain the same.

Whilst we are unlikely to see very aggressive reduction targets tabled this week, Case 1 shows that we may at least be in the “plateau” ballpark as a start. Later on, if a CO2/GDP approach persists, the annual reduction must be similar to long term growth.  Another clear message from all this is that apart from energy, it isn’t just deforestation that is important. The broader management of all greenhouse gases from all sources will be critical.

But what will it all cost?

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Late last year I participated in a webcast with MIT Professor Henry Jacoby. The subject was the cost of action on climate change – or more specifically the cost of cap-and-trade. Professor Jacoby leads the The MIT Joint Program on the Science and Policy of Global Change. From the perspective of the program, the question is no longer whether global warming is upon us . . . but how we can rise to its challenge. They are a world leader in this effort. Their many activities cohere around one strategy: science and policy have to work together. Shell is a sponsor of the program. Given that Massachusetts is well and truly back in the news today, it seems timely to post this video.

David Hone at M.I.T.: But what will it all cost? from David Hone on Vimeo.

A decade of change

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For most of the decade just passed I have been involved in the subject of climate change at Shell. This is unusual in one respect in that jobs in Shell normally have a tenure of 3-5 years, but this hasn’t exactly been a “normal job”. In fact, the job I have today bears little resemblance to the one I took on in June 2001. At that time domestic legislation wasn’t on the agenda or was in its infancy, the Kyoto Protocol was stuggling for ratification and many companies and industry associations were detached from the issue or at best focussing on “voluntary actions” as the way forward.

 The science agenda was also very different in 2001 – the conversation typically centred on 550 ppm, or double pre-industrial levels. This was probably more one of convenience than deep thought, but it also reflected a much lower perception of “climate sensitivity” than is currently proposed. As the science has become better understood over the last decade we have collectively shifted the goal posts. Now, it is easy to be heckled for even mentioning 550 ppm, although the recent Shell scenario work shows that such a target is already very challenging and is perhaps the best that we might actually achieve. 550 ppm is certainly better than a world heading towards 1000 ppm (the flip side of the more CO2 optimistic scenario), but nevertheless the discussion today is squarely focussed on 2 degrees Centigrade or something like 450 ppm. But just as we are becoming settled with that discussion, an even more ambitious 350 ppm objective, based on new thinking about impacts, is on the table for consideration – although with no clarity whatsoever as to how we might achieve it.

One activity I particularly look forward to every 8-10 months is attending the MIT Forum on the Science and Policy of Global Change. The forum is put on by the Joint Porgram of which Shell is one of the sponsors. Following the work done there over a number of years is a great way to get a perspective on the development of climate models and an appreciation of the increasing sophistication of the calculations behind them. The Joint Program is the source of one of my favourite climate science graphics , the wheel of fortune “Greenhouse Gamble“. It shows the uncertainty the world faces in terms of temperature rise – but even this has changed. In 2003 the “no policy” wheel still had a sizable wedge in the 1-3 degrees C range. This is now gone  (reduced to a sliver) as the understanding of climate sensitivity has changed.

Externally, the biggest change has been the rise of carbon markets. I had barely settled into my new office in 2001 when a colleague dropped a copy of the European Emissions Trading System Draft Directive onto my desk and asked me for comments! So here we are today, nearly nine years later, with a global market of some 8 billion tonnes in 2009 (PointCarbon) at a value of nearly €100 billion. This is largely EU-ETS based, either directly or through the CDM. The nine years that have passed also illustrates, like the technologies I discussed in my last post, that big changes takes decades to find root, grow, mature and become mainstream. Although several new carbon markets will probably appear during the current decade, it may not be until the 2020’s that we truly see the real start of the big changes in the energy system that they can deliver. That will mean a 20-25 year journey from concept to something approaching mainstream.

 This has also been a journey in Shell as well. In 2001 we were experimenting with our own internal emissions trading system, primarily to build understanding and gain acceptance of the idea across the company. At the same time we were in the process of hiring just one person to launch our Environmental Products trading unit, which in turn has gone from strength to strength as carbon markets have grown and our own exposure to carbon pricing has materialised. As early as 2002 we were advocates of an EU-ETS based on absolute targets and mandatory participation. This was in stark contrast to an EU industry position that was largely built around voluntary participation and relative (i.e. output based) targets. Compare that with the recent Copenhagen Communique which had some 900 companies globally signing on and organisations such as USCAP advocating an economy wide cap-and-trade approach in the USA.

 In 2001 I was “climate change in Shell”. The job itself was just three years old and I was the second incumbent. Although there was some exploratory thinking on carbon capture and storage (CCS) and coal bed methane technologies taking place in our EP division, most of what the Group was doing emanated from the Corporate Centre where I was based. That is far from the story today. Activities relating to CO2 management permeate across all our businesses and at every level of the organisation. Hundreds of people are involved in CO2 based programmes ranging from CCS projects in Australia and Norway to CER origination in China. Rather than being a lone representative in the Corporate HSE team, I work in a dynamic Group CO2 team based in our Downstream Business, but with a second line of reporting to the CEO.

 Such is the nature of this issue to a large oil and gas company today

Across large swathes of the Northern Hemisphere bitterly cold temperatures and heavy snowfalls are causing travel chaos, disrupting work and resulting in loss of life through accidents and exposure. Even for those living in the southern hemisphere or warmer parts of the north it is hard to ignore what is going on given the near saturation media coverage. As a person involved in the climate change issue I don’t have to get too far into each day before somebody asks me how this can happen in an increasingly warming world.

I don’t really know the answer to that question, but I can at least offer an observation which seems to make some sense to me – at the risk of showing that my knowledge in this area isn’t really a strong point.

Working for a company based in the Netherlands for nearly 30 years, it is hard not to know about the Elfstedentocht. This is a 200 km, eleven city skating race which is only held in years when there is extensive freezing of the canal network and the ice is several inches thick (although a committee plans for it every year just in case). In the first half of the twentieth century it was held ten times, but in recent decades the frequency has plummeted. But some are still held and there is hope that it may happen this year – it has certainly been very cold. The last one was in 1997, prior to that in 1985 & 1986, then 1963. I remember the one in 1985 as I was living in the Netherlands and it was bitterly cold for weeks (Australians remember cold weather). There was huge excitement on the day as there hadn’t been one for 22 years and as I recall I was one of the few in the office. Everybody else was either competing or watching.

I recently came across the chart below (Frölich, C. 2006: Solar irradiance variability since 1978. Space Science Rev., 248, 672-673), which has been constructed from satellite data. It plots total solar irradiance over time and shows the cyclical nature of solar variability. What it also shows is that we are presently in the deepest most prolonged solar minimum in the period of satellite data. The 11-year solar cycle is struggling to rebound. Interestingly, if you look at the years in which the Elfstedentocht was held, they coincide with the minimums of the cycle – although there wasn’t one around 1974, but looking back further there was one in 1963 which is consistent with the pattern.

I am not going to claim that this is the cause of the current severe weather, but it is an interesting trend. It also puts solar variability into some context with regards specific weather events versus long term warming as a result of increasing CO2 levels. Equally, this could be a coincidence. The “missing Elfstedentocht” winter of 1974 was very mild, yet 1979 was one of the most spectacular cold outbreaks in Western Europe of the century. 2007 and 2008 were quite mild winters yet are also near the solar minimum. Another perspective is presented by the BBC today, showing the current cold regions of the northern hemisphere in contrast to other parts which are unseasonably warm. A similar picture emerges for December 2009 as shown below. Although there were unseasonably cold parts of the northern hemisphere, there were also significant departures on the warm side, notably in the Arctic regions.

All good food for thought.