Archive for the ‘China’ Category

“Show me the money” or CO2 mitigation at COP 19 ??

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After the first week of the Warsaw COP, an observer could be excused for wondering what exactly the thousands of delegates meeting here were actually discussing. The closest the assembled negotiators, NGOs, business people and UN staff came to seriously talking about CO2 mitigation was when Japan announced its new 2020 target, an increase of 3% in emissions vs. 1990 (but positioned as a decrease of 3.8% vs. 2005 emissions). The change in target by Japan is a consequence of their decision to stop all use of nuclear power following the Fukushima disaster.

Curiously, the Japanese announcement was criticized by China, with their climate negotiator Su Wei saying: “I have no way of describing my dismay” about the revised target. The European Union also expressed disappointment and said it expected all nations to stick to promised cuts as part of efforts to halt global warming. Christiana Figueres, the Executive Secretary of the UNFCCC told Reuters that, “It is regrettable.” Somewhat predictably, she forecast that Japan’s planned investments in energy efficiency and renewable power would prove that the target could be toughened.

The Japanese decision sent one other major ripple through the football stadium holding the COP, that being the realization that national pledges are wide open to correction and change as circumstances dictate. Given that “pledge and review” is the likely foundation of the global deal that negotiators are aiming for in 2015, the Japanese move brings into question if such an approach has any legitimacy at all. Had the original Japanese target been underpinned by carbon market instruments with the robustness that we expect of financial markets, they might have felt compelled to buy the difference, which would have at least financed equivalent compensating mitigation actions in other parts of the world (although that being said, Canada took no such action when it failed to meet its goals under the Kyoto Protocol, it just rescinded its ratification instead).

But Japan and CO2 was a momentary distraction from the real discussion, money. This has appeared in a variety of forms and is endemic within the process. There is endless questioning about the $100 billion pledge made in Copenhagen;

In the context of meaningful mitigation actions and transparency on implementation, developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries.

. . . with the most often repeated phrase from many countries being akin to “Show me the money”. Of course, the intention of the Copenhagen Accord was never to have $100 billion per annum deposited in the Green Climate Fund by Annex 1 countries, but to develop approaches which would see at least $100 billion per annum in mitigation and adaptation investment flow to developing countries, leveraged by instruments such as the Green Climate Fund. Unfortunately this interpretation of the pledge is largely ignored.

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Money also rears its head in the Loss and Damage discussion where agreement was reached in the dying hours of the Doha COP to agree a mechanism for this in Warsaw. The horrors appearing across the media of the aftermath of Typhoon Haiyan in the Philippines has of course focused minds on this discussion. In their various opportunities to speak in the plenary sessions, many nations called for the Loss and Damage issue to be rapidly progressed in Warsaw. 

Even within the discussions on technology transfer there is a renewed call from some nations for the opening up of patents (money) on a variety of “climate friendly” technologies.

The other half of any COP is the side event programme and here CO2 mitigation didn’t get much of an airing either. There were many side events on financing and adaptation and those on energy primarily focused on energy efficiency and renewables, neither of which offer a direct path to measurable and sustained CO2 mitigation. By contrast, the few side events on carbon capture and storage were rather sparsely attended.

The rather sparsely attended but content rich GCCSI event on CCS developments.

The rather sparsely attended but content rich GCCSI event on CCS developments.

 Even the “Green Climate” exhibition in the Palace of Culture was principally focused on energy efficiency in buildings, solar PV and waste management. However, Shell at least kept the CCS flag waving with its novel CCS lift / elevator (something of a virtual ride to 2 kms below the surface where CO2 could be safely stored).

The Shell CCS “lift” in the Palace of Culture and Science in Warsaw.

The Shell CCS “lift” in the Palace of Culture and Science in Warsaw.

So to week 2 of the Warsaw COP, which will likely end in the usual rush to a declaration of some description at the end, although in the very last hours of Week 1 on Saturday night the collected negotiators came away with nothing agreed on FVA and NMM.

Redrawing the Energy-Climate Map

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The world is not on track to meet the target agreed by governments to limit the long term rise in the average global temperature to 2 degrees Celsius (°C).

International Energy Agency, June 2013

The International Energy Agency (IEA) is well known for its annual World Energy Outlook, released towards the end of each year. In concert with the WEO come one or more special publications and this year is no exception. Just released is a new report which brings the IEA attention back squarely on the climate issue, Redrawing the Energy-Climate Map. The IEA have traditionally focused on the climate issue through their 450 ppm scenario. While they continue to do that this time, they are also going further with a more pragmatic model for thinking about emissions, that being the “trillion tonne” approach. I have discussed this at some length in previous posts.

The report looks deeply into the current state of climate affairs and as a result fires a warning shot across the bows of current national and UNFCCC efforts to chart a pathway in keeping with the global goal of limiting warming to 2 °C above pre-industrial levels. The IEA argue that we are on the edge of the 2 °C precipice and recommends a series of immediate steps to take to at least stop us falling in. With the catchy soundbite of “ 4 for 2° “, the IEA recommend four immediate steps in the period from now to 2020;

  1. Rapid improvements in energy efficiency, particularly for appliances, lighting, manufacturing machinery, road transport and within the built environment.
  2. Phasing out of older inefficient coal fired power stations and restricting less efficient new builds.
  3. Reductions in fugitive methane emissions in the oil and gas industry.
  4. Reductions in fossil fuel subsidies.

These will supposedly keep some hope of a 2°C outcome alive, although IEA makes it clear that much more has to be done in the 2020s and beyond. However, it didn’t go so far as to say that the 2° patient is dead, rather it is on life support.

I had some role in all this and you will find my name in the list of reviewers on page 4 of the report. I also attended a major workshop on the issue in March where I presented the findings of the Shell New Lens Scenarios and as a result advocated for the critical role that carbon capture and storage (CCS) must play in the solution set.

As a contributor, I have to say that I am a bit disappointed with the outcome of the report, although it is understandable how the IEA has arrived where it has. There just isn’t the political leadership available today to progress the things that really need to be done, so we fall back on things that sound about right and at least are broadly aligned with what is happening anyway. As a result, we end up with something of a lost opportunity and more worryingly support an existing political paradigm which doesn’t fully recognize the difficulty of the issue. By arguing that we can keep the door open to 2°C with no impact on GDP and by only doing things that are of immediate economic benefit, the report may even be setting up more problems for the future.

My concern starts with the focus on energy efficiency as the principal interim strategy for managing global emissions. Yes, improving energy efficiency is a good thing to do and cars and appliances should be built to minimize energy use, although always with a particular energy price trajectory in mind. But will this really reduce global emissions and more importantly will it make any difference by 2020?

My personal view on these questions is no. I don’t think actions to improve local energy efficiency can reduce global emissions, at least until global energy demand is saturated. Currently, there isn’t the faintest sign that we are even close to saturation point. There are still 1-2 billion people without any modern energy services and some 4 billion people looking to increase their energy use through the purchase of goods and services (e.g. mobility) to raise their standard of living. Maybe 1-1.5 billion people have reached demand saturation, but even they keep surprising us with new needs (e.g. Flickr now offers 1 TB of free storage for photographs). Improvements in efficiency in one location either results in a particular service becoming cheaper and typically more abundant or it just makes that same energy available to any of the 5 billion people mentioned above at a slightly lower price. Look at it the other way around, which oil wells, coal mines or gas production facilities are going to reduce output over the next seven years because the energy efficiency of air conditioners is further improved. The fossil fuel industry is very supply focused and with the exception of substantial short term blips (2008 financial crisis), just keeps producing. Over a longer timespan lower energy prices will change the investment portfolio and therefore eventual levels of production, but in the short term there is little chance of this happening. This is a central premise of the book I recently reviewedThe Burning Question.

Even exciting new technologies such as LED lighting may not actually reduce energy use, let alone emissions. Today, thanks to LEDs, it’s not just the inside of buildings where we see lights at night, but outside as well. Whole buildings now glow blue and red, lit with millions of LEDs that each use a fraction of the energy of their incandescent counterparts – or it would be a fraction if incandescent lights had even been used to illuminate cityscapes on the vast scale we see today. The sobering reality is that lighting efficiency has only ever resulted in more global use of lighting and more energy and more emissions, never less.

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An analysis from Sandia National Laboratories in the USA looks at this phenomena and concludes;

The result of increases in luminous efficacy has been an increase in demand for energy used for lighting that nearly exactly offsets the efficiency gains—essentially a 100% rebound in energy use.

 I don’t think this is limited to just lighting. Similar effects have been observed in the transport sector. Even in the built environment, there is evidence that as efficiency measures improve home heating, average indoor temperatures rise rather than energy use simply falling.

The second recommendation focuses on older and less efficient coal fired power stations. In principle this is a good thing to do and at least starts to contribute to the emissions issue. This is actually happening in the USA and China today, but is it leading to lower emissions globally? In the USA national emissions are certainly falling as natural gas has helped push older coal fired power stations to close, but much of the coal that was being burnt is now being exported, to the extent that global emissions may not be falling. Similarly in China, older inefficient power stations are closing, but the same coal is going to newer plants where higher efficiency just means more electricity – not less emissions. I discussed the efficiency effect in power stations in an old posting, showing how under some scenarios increasing efficiency may lead to even higher emissions over the long term. For this recommendation to be truly effective, it needs to operate in tandem with a carbon price.

The third and fourth recommendations make good sense, although in both instances a number of efforts are already underway. In any case their contribution to the whole is much less than the first two. In the case of methane emissions, reductions now are really only of benefit if over the longer term CO2 emissions are also managed. If aggressive CO2 mitigation begins early, and is maintained until emissions are close to zero, comprehensive methane (and other Short Lived Climate Pollutants – SLCP) mitigation substantially reduces the long-term risk of exceeding 2˚C (even more for 1.5˚C). By contrast, if CO2 emissions continue to rise past 2050, the climate warming avoided by SLCP mitigation is quickly overshadowed by CO2-induced warming. Hence SLCP mitigation can complement aggressive CO2 mitigation, but it is neither equivalent to, nor a substitute for, near-term CO2 emission reductions (see Oxford Martin Policy Brief – The Science and Policy of Short Lived Climate Pollutants)

After many lengthy passages on the current bleak state of affairs with regards global emissions, the weak political response and the “4 for 2°C “ scenario, the report gets to a key finding for the post 2020 effort, that being the need for carbon capture and storage. Seventy seven pages into the document and it finally says;

In relative terms, the largest scale-up, post-2020, is needed for CCS, at seven times the level achieved in the 4-for-2 °C Scenario, or around 3 100 TWh in 2035, with installation in industrial facilities capturing close to 1.0 Gt CO2 in 2035.

Not surprisingly, I think this should have been much closer to page one (and I have heard from the London launch, which I wasn’t able to attend, that the IEA do a better job of promoting CCS in the presentation). As noted in the recently released Shell New lens Scenarios, CCS deployment is the key to resolving the climate issue over this century. We may use it on a very large scale as in Mountains or a more modest scale as in Oceans, but either way it has to come early and fast. For me this means that it needs to figure in the pre-2020 thinking, not with a view to massive deployment as it is just too late for that, but at least with a very focused drive on delivery of several large scale demonstration projects in the power sector. The IEA correctly note that there are none today (Page 77 – “there is no single commercial CCS application to date in the power sector or in energy-intensive industries”).

Of course large scale deployment of CCS from 2020 onwards will need a very robust policy framework (as noted in Box 2.4) and that will also take time to develop. Another key finding that didn’t make it to page one is instead at the bottom of page 79, where the IEA state that;

Framework development must begin as soon as possible to ensure that a lack of appropriate regulation does not slow deployment.

For those that just read the Executive Summary, the CCS story is rather lost. It does get a mention, but is vaguely linked to increased costs and protection of the corporate bottom line, particularly for coal companies. The real insight of its pivotal role in securing an outcome as close as possible to 2°C doesn’t appear.

So my own “ 2 for 2°C before 2020“ would be as follows;

  1. Demonstration of large-scale CCS in the power sector in key locations such as the EU, USA, China, Australia, South Africa and the Gulf States. Not all of these will be operational by 2020, but all should be well underway. At least one “very large scale” demonstration of CCS should also be underway (possibly at the large coal to liquids plants in South Africa).
  2. Development and adoption of a CCS deployment policy framework, with clear links coming from the international deal to be agreed in 2015 for implementation from 2020.

But that might take some political courage!

The Global Status of CCS

The Global Carbon Capture and Storage Institute has just released its 2012 report on the current status of CCS around the world. The headline is that CCS is clearly up and running and CO2 is being sequestered. Around the world, eight large-scale CCS projects are storing about 23 million tonnes of CO2 each year. With a further eight projects currently under construction (including two in the electricity generation sector), that figure will increase to over 36 million tonnes of CO2 a year by 2015. This is approximately 70 per cent of the IEA’s target for mitigation activities by CCS by 2015.

The flip side of this is that the rate of deployment is far below anything that remotely passes for a 2°C trajectory. The report finds that in order to maintain the path to the 2°C target, the number of operational projects must increase to around 130 by 2020, from the 16 currently in operation or under construction. Such an outcome looks very unlikely as only 51 of the 59 remaining projects captured in the Global CCS Institute’s annual project survey plan to be operational by 2020, and inevitably some of these will not proceed.

I have discussed CCS many times in the past. Given the continued abundance of fossil resources, their ease of use for both mobile and stationary energy generation, combined with the fact that they continue to be very cost competitive as new extraction technologies are introduced, it is therefore highly likely that we continue to make use of them. But as the report notes, we need to limit the increase in the stock of CO2 in the atmosphere to 1000 Gt this century (giving a 50 per cent chance of limiting global temperature rise to 2°C) which in turn requires energy-related CO2 emissions to fall to zero by 2075. The only way to square this circle will be large scale deployment of CCS.

One of the surprising aspects of the report is the review of where CCS is actually happening. Conventional wisdom says the EU then North America and that is certainly true for many of the more advanced projects, but close behind is China which has a number of projects in the identification stage of development. In fact the report finds that more than half of all newly-identified projects are located there. Using CO2 for Enhanced Oil Recovery (EOR) is being investigated as a revenue option in all the projects.

  • Daqing Carbon Dioxide Capture and Storage Project (Identify stage) – a super-critical coal-fired power plant that would capture around 1 Mtpa of CO2 through oxyfuel combustion, developed by the China Datang Group in partnership with Alstom.
  • Dongying Carbon Dioxide Capture and Storage Project (Identify stage) – a new build coal-fired power generation plant with a planned capture capacity of 1 Mtpa of CO2, also developed by the China Datang Group.
  • Shanxi International Energy Group CCUS Project (Identify stage) – a new, super-critical coal-fired power plant with oxyfuel combustion being developed in partnership with Air Products, with a capture capacity of more than 2 Mtpa of CO2.
  • Jilin Oil Field EOR Project (Phase 2) (Identify stage) – EOR operations at the Jilin oil field, where around 200,000 tpa of CO2 from a natural gas processing plant are currently being injected, are scheduled to be expanded to more than 800,000 tpa from 2015.
  • Shen Hua Ningxia Coal to Liquid Plant Project (Identify stage) – a new build coal-to-liquids (CTL) facility developed that would capture around 2 Mtpa of CO2.

Perhaps the most disappointing news comes from Europe, where the value of the main CCS capital support mechanism has been reduced to a fraction of its anticipated amount following the collapse of the EU carbon market to some €8 per tonne of CO2. The EC policy objective of having up to 12 commercial-scale demonstration plants operating in Europe by 2015 is no longer achievable, with 4–5 projects operating in the next 5–6 years being a more realistic scenario. I commented on this back in June.

As well as giving a comprehensive breakdown of all the current projects, the report does the same for policy development, support mechanisms, storage potential and the progress in the technology itself. If you want to know more about CCS then this is truly a “one stop shop”.

The report download page with laptop, iPad and Kindle versions can be found here. Alternatively, you can go directly to the PDF version here.

Five short stories from WEO

The IEA’s World Energy Outlook (WEO) is an annual tradition, the result of much work, data analysis and presentation. A formative volume is produced for all to read and digest, but few of  us have the time to do so in the detail required. As such we rely to some extent on IEA presentations and summary documents. One such presentation was given by IEA Chief Economist Dr. Fatih Birol in Shell Centre last week, not for Shell but for the British Institute of Energy Economics. Rather than a WEO “tour de force”, the format was closer to storytelling, or more correctly short stories. Here are five pearls that emerge from the most recent WEO:

1.  A new trend in energy efficiency

Much emphasis is placed on the need for energy efficiency from policy makers and business leaders. We hear about how well certain enterprises are doing and how we need to replace our domestic boiler, insulate our homes and use public transport. Some leaders have even argued that energy efficiency is close to a single solution to energy prices, emissions and access in developing countries. But the stark reality of energy efficiency trends at the global level is the opposite to that which is desired. There is doubtless an impact here related to the financial crisis, but even before that the trend had started shifting.

2.  Oil security concerns shift

Perhaps since the gasoline lines of the 1970’s but certainly since 9/11 in 2001, a focus of US foreign policy has been security in the Middle East and by implication oil supply security. Although Europe has long been a significant importer of oil its attention has been more focused on Russian gas supplies. But all that is due to change. In the timeframe of the WEO (to 2035) China will become the world’s largest oil importer and the US dependence on oil from outside North America will decline. With increased domestic (NA) production from oil sands and light tight oil (using a similar extraction technology to shale gas), in combination with much tougher energy efficiency standards for cars, light trucks and trucks, US import demand will fall. This could have an eventual impact on global governance as China starts to look at Middle East supply and worries about its security. 

3.  The winner was coal

In the first decade of this century, coal accounted for nearly half of the increase in global energy use, with the bulk of the growth coming from the power sector in emerging economies. Next was natural gas, then oil and after that renewable energy. Nuclear was a distant fourth. That’s an order which is almost the opposite of where we should be going with emissions reduction as a high priority.

4.   Modern energy for all

Basic energy services are an essential part of life today, yet 1.3 billion people in the world live without electricity and 2.7 billion live without clean cooking facilities. The need to correct this has become a global imperative and remarkably this could be done with almost no impact on global energy demand and global emissions.

The flip side to this story is the point that I raised back in December when the UNFCCC declared that alleviation of poverty and energy access would become a key priority with mitigation and adaptation. Although “energy for all” is a critical issue, arguably it shouldn’t be on the agenda of the UNFCCC. Their focus needs to be squarely on the other 99.3% of emissions. “Energy for all”, as the IEA have clearly demonstrated, is not a climate change issue.

5.  The weight of a world issue shifts to Chinese shoulders

One of the longstanding arguments in the global debate on climate change has been that the burden rested with developed countries in that they had created the problem during their long industrial development era. But that situation is rapidly changing. By 2035 cumulative emissions from China will have exceeded the EU and will be rapidly approaching the US. China’s per capita emissions will also match the OECD average by then. This by no means puts the USA and EU in the clear, but it does shift the burden solidly to a tripartite response. 

Thanks to Dr Birol and the IEA for a stimulating presentation.

 

Two steps forward, one back

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2011 turned out to be a busy year for the development of carbon pricing. Long the cornerstone of EU climate policy, the approach continues to find favour with governments focused on the issue of managing emissions, rather than those trying to manage the shape of the entire energy mix. Since the EU system was introduced in 2005, carbon pricing has appeared in Alberta and British Columbia in Canada, in the North Eastern US states and remains under consideration in South Korea. Several other governments have raised the possibility of a carbon pricing system of some sort.

At the outset of the year there appeared to be little prospect for much movement forward, with some worrying signs that a retreat was possible. Proposition 23 may have been defeated in California, but other legal challenges had surfaced and the new Australian government was not expected to raise an issue that had only a few months earlier led to the fall of the Prime Minister.

But by year end Australia had a carbon price mechanism in place, South Africa had announced its intention to implement a carbon tax, China was apparently moving forward with a variety of pricing mechanisms and California was finalizing the details of its cap-and-trade system. In addition the inclusion of aviation in the EU-ETS had withstood numerous legal challenges and looked likely to go ahead in 2012.

While this is a positive set of developments, it can’t counter the fact that there was a major step backward during the year as well. The price weakness in the EU-ETS at the end of the year and the related difficulties facing the Clean Development Mechanism (CDM) are worrying developments. Although COP 17 in Durban saw a lifeline of sorts thrown to the Kyoto Protocol (and therefore the CDM) and a key committee of the European Parliament voted in favour of a mechanism to bolster the ETS price, both these mechanisms remain in the balance.

2011 also saw a number of US States pull out of the Western Climate Initiative and New Jersey pull out of RGGI.

2012 could well be a pivotal year for a market-based approach to managing emissions.But with the prospect of new negotiations for an international agreement, the possibility of giving new life to carbon pricing is also with us.

 

So much is now written about electric car development and particularly the push in China for this mode of transport that I now have expectations of seeing something on the street, but the reality is different.

Such is the story in Shanghai, where I am attending the Annual Council Meeting of the World Business Council for Sustainable Development (WBCSD). This is a remarkable city, with a Maglev train that travels at 431 km/hour to and from the airport (sadly only at 300 km/hour in off-peak times when I happened to use it), vast (and somewhat empty) highways, a first rate underground transit system and an almost brand new financial centre, built around the third tallest building in the world. But no electric cars (that I saw).

Nevertheless, electricity is making inroads into the personal transport system. Electric motorbikes are everywhere and appear to be in the majority when compared to conventional gasoline motor bikes. A simpler and presumably cheaper version of this is the electric assisted pedal bike. These are all eerily silent vehicles, gliding along the road at modest speed. The only warning the pedestrian gets is the horn or, somewhat too late, the sound of rubber on bitumen rolling along.

An extensive report on the scale of the industry and the technology behind these vehicles has been produced by Argonne National Laboratory in the United States. Key findings of the 2009 report are as follows:

  • In 2006, 20 million E-bikes were made in China. At present, China has 50 million battery-operated bicycles on the road, of which a very small percentage operate on Li-ion batteries. The rest of them use lead acid batteries. In China, about 2,500 companies produce electric two- or three-wheeled vehicles. All of the large companies producing electric vehicles (EVs) have E-bike models that are powered by Li-ion batteries, but the performance-to-price ratio for those E-bikes is still not compatible with that for E-bikes powered by lead acid batteries.
  • There are 10,000 enterprises, both large and small, involved in the Chinese national production of electric bikes. Small and mid-sized companies accounted for 35% of total national bike production in 2007. Most of the E-bikes use lead acid batteries, yet in 2007, the entire industrial production of Li-ion batteries for electric bicycles had surpassed 100,000 ETWs. In 2007, China exported about 395,000 electric bicycles; exports to Japan, the United States, and the European Union (EU) numbered 203,300, which was 58% of production.
  • As an example, Shenzhen BAK Battery Co., Ltd. (BAK), produces 600,000 cells per day for cell phones, 150,000 cells (18650 type) per day for notebooks, and 20,000 polymer Li-ion battery cells per day for electric vehicles and electric bikes. Li-ion power batteries for E-bikes are still in the research stage; these batteries use four 2.5-A•h cells in parallel and then 11 cells in series to make a 10-A•h, 36-V battery pack. The range is 45–50 km per charge. BAK has patents for protective boards for the Li-ion battery pack. The positive material is LiFePO4.

What is visibly missing is the conventional bicycle (but there are some), once the primary mode of transport in China. I assume that as Chinese city centres have deurbanized to make way for office and industrial developments and urbanization has moved further out, the distances involved for daily transit of the population have defeated cyclists.

Meanwhile, all that is seemingly missing in Shanghai is appearing in London, of all places. With inner-London boroughs reurbanizing, bicycles are back in force, recently further supported by the city bikes provided by London Transport. Electric cars are just starting to appear and recharging infrastructure can be found in a few inner city streets and in some shopping mall carparks. I recently even rode on a trial electric bus service from Paddington Station to Bank, provided as an extension of the Heathrow Express rail service.