Archive for the ‘Energy efficiency’ Category

Revisiting Kaya

Today we see a huge focus on renewable energy and energy efficiency as solutions for reducing CO2 emissions and therefore addressing the climate issue. Yet, as I have discussed in other posts, such a strategy may not deliver the outcome people expect and might even add to the problem, particularly in the case of efficiency. I am not the only one who has said this and clearly the aforementioned strategy has been operating for some 20 years now with emissions only going one way, up.

Kaya Yoichi

A question that perhaps should be asked is “why have many arrived at this solution set?”. Focusing on efficiency and renewable energy as a solution to climate change possibly stems from the wide dissemination of the Kaya Identity, developed in 1993 by Japanese energy economist Yoichi Kaya (pictured above). He noted that:

 Kaya formula

 Or in other words:

Kaya formula (words)

Therefore, by extension over many years (where k = climate sensitivity): 

Climate Kaya formula (words)

In most analysis using the Kaya approach, the first two terms are bypassed. Population management is not a useful way to open a climate discussion, nor is any proposal to limit individual wealth or development (GDP per person). The discussion therefore rests on the back of the argument that because rising emissions are directly linked to the carbon intensity of energy (CO2/Energy) and the energy use per unit of GDP (Energy/GDP or efficiency) within the global economy, lowering these by improving energy efficiency and deploying renewable energy must be the solutions to opt for.

But the Kaya Identity is just describing the distribution of emissions throughout the economy, rather than the real economics of fossil fuel extraction and its consequent emissions. Starting with a simple mineral such as coal, it can be picked up off the ground and exchanged for money based on its energy content. The coal miner will continue to do this until the accessible resource is depleted or the amount of money offered for the coal is less than it costs to pick it up and deliver it for payment. In the case of the latter, the miner could just wait until the price rises again and continue deliveries. Alternatively, the miner could aim to become more efficient, lowering the cost of pickup and delivery and therefore continuing to operate. The fossil fuel industry has been doing this very successfully since its beginnings.

The impact on the climate is a function (f) of the total amount delivered from the resource, not how efficiently it is used, when it is used, how many wind turbines are also in use or how many people use it. This implies the following;

Climate formula (words)

This may also mean that the energy price has to get very low for the miner to stop producing the coal. Of course that is where renewable energy can play an important role, but the trend to date has been for energy system costs to rise as renewable energy is installed. A further complication arises in that once the mine is operating and all the equipment for extraction is in place, the energy price has to fall below the marginal operating cost to stop the operation. The miner may go bankrupt in the process as capital debt is not being serviced, but that still doesn’t necessarily stop the mine operating. It may just get sold off to someone who can run it and the lost capital written off.

This doesn’t have to be the end of the story though. A price on the resultant carbon emissions can tilt the balance by changing the equation;

Climate formula with carbon price (words)

When the carbon price is high enough to offset the profit from the resource extraction, then the process will stop, but not before. The miner would then need to invest in carbon capture and storage to negate the carbon costs and restart the extraction operation.

What this shows is that the carbon price is critical to the problem. Just building a climate strategy on the back of efficiency and renewable energy use may never deliver a reduction in emissions. Efficiency in particular may offer the unexpected incentive of making resource extraction cheaper, which in turn makes it all the more competitive.

 

Is the UNFCCC ADP on track?

This week (March 10th-14th) in Bonn, parties to the UNFCCC are meeting under the direction of the Fourth Part of the Second Session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP 2.4). In short, this is the process that is trying to deliver a global deal on climate change over the next 20 months when the world comes together at COP 21 in Paris. The last attempt at such a monumental feat ended in tears in Copenhagen in December 2009.

One might imagine that a process with only a few months to reach a solution on a major global commons issue would be deeply imbedded in the economics of Pigouvian pricing, or at least attempting to see how the global economy could be adjusted to account for this particular externality. However, as we know from the Warsaw COP and previous such meetings that this isn’t the case, rather it is an effort just to get nation states to recognize that a common approach is actually needed.

The pathway being plied in Warsaw resulted in the text on “contributions”, which at least attempts to create a common definition and set of validation rules for whatever it is that nation states offer as climate action from within their own economies. More recently the USA set out its views on the nature of “contributions”. This process is at least trying to get everyone in a common club of some description, rather than having several clubs as has been the case since 1992 when the UNFCCC was created. The diplomatic challenge for Paris will be to find the most constraining club which everyone is still willing to be a member of and then close the doors. Once inside, the club rules can be continually renegotiated until some sort of outcome is realized which actually deals with emissions. This ongoing renegotiation will be for the years after Paris, it won’t happen beforehand or even during COP 21.

But ADP 2.4 in Bonn seems to have gone off-piste. Looking through the Overview Schedule, what can be seen is a series of meetings on renewable energy and energy efficiency. While this may be an attempt to highlight particular national actions as a template for others to follow, it is nevertheless symptomatic of a process that isn’t really dealing with the problem it is mandated to solve; limiting the rise in the level of CO2 in the atmosphere.

At best, the ADP has become a derivative process, or perhaps even a second derivative process. Rather than confronting the issue, it is instead dealing with tangents. Holding sessions on renewable energy is a good example of this behaviour. The climate issue is about the release to atmosphere of fossil carbon and bio-fixed carbon on a cumulative basis over time, with the total amount released being the determining factor in terms of peak warming (i.e. the 2°C goal). The first derivative of this is the rate of release, which is determined by total global energy demand and the carbon intensity of the energy mix. The second derivative is probably best described as the rate of change of the carbon intensity of the global energy mix, although this can be something of a red herring in that the global energy mix can appear to decarbonize even as emissions continue to rise, simply because demand change outpaces intensity change.

Energy efficiency is perhaps yet another derivative away from the problem. It deals with the rate of change of energy use, but this has further underlying components, one being the rate of change of energy use in things such as appliances and the other the rate of change of the appliances themselves. Efficiency isn’t good at dealing with the immediate rate of energy use in that this tends to be dictated by the existing stock of devices and infrastructure, whereas efficiency tackles the change over time for new stock. That new stock then has to both permeate the market and also displace the older stock.

Focussing on renewable energy deployment and efficiency is a useful and cost effective energy strategy for many countries, but as a global strategy for tacking cumulative carbon emissions it falls far short of what is necessary. Yet this is where the UNFCCC ADP 2.4 has landed. It also seems to be difficult to challenge this, as illustrated by one Tweet that emanated from a Bonn meeting room!!

 Twitter: 10/03/2014 16:47

shameful: US sells concept of “clean energy” (including gas, CCS) at renewable workshop. what hypocrisy / hijacking of process. #ADP2014

 

Emissions Trading via Direct Action in Australia

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The Australian Government recently released a Green Paper describing in more detail its proposal for an Emission Reduction Fund (ERF), the principle component of its Direct Action climate policy. The ERF will sit alongside renewable energy and reforestation policies, but is designed to do the bulk of the heavy lifting as the Government looks for some 430 million tonnes of cumulative reductions (see below) over the period 2014 to 2020. The ERF will have initial funding of about AU$ 1.55 billion over the forward period, with the money being used to buy project reductions (as Australian Carbon Credit Units or ACCUs) from the agriculture and industrial sectors of the economy by reverse auction. These reductions will be similar to those that are created through the Clean Development Mechanism (CDM) available under the Kyoto Protocol.

 Australia Reduction Task to 2020

Although the fund and reverse auction process are discussed in some detail and appear as central to the policy framework, this may not be the case as the system is rolled out and the full framework developed. The issue that comes from such an approach to emissions reduction is that despite buying project reductions from the economy, the overall emissions pathway for the economy as a whole still does not follow the expected trajectory. The ERF may also encounter a number of issues seen with the CDM, all of which are some form of additionality;

  1. Determining if there would have been higher emissions had the project not happened. Perhaps the reduction is something that would have happened anyway or the counterfactual position of higher emissions would never have actually happened. For example, an energy efficiency gain is claimed in terms of a CO2 reduction but the efficiency gain is subject to some amount of rebound due to increased use of the more efficient service, therefore negating a real reduction in emissions. Further, the counterfactual of higher emissions might never have existed as the original less efficient process would not have operated at the higher level.
  2. Double counting – the project presumes a reduction that is already being counted by somebody else within the economy as a whole. For example, an energy efficiency gain in a certain part of the supply chain is claimed as an emissions reduction, but this is already intrinsic to the overall emissions outcome for another process.
  3. Rent seeking – project proponents seek government money for actions already underway or even construct an apparent reduction.

The Australian emissions inventory will be measured bottom up based on fuel consumption, changes in forest cover and land use and established estimates / protocols for agriculture, coal mine fugitive emissions, landfill etc. It will not be possible to simply subtract the ERF driven reductions from such a total unless they are separate sequestration based reductions, e.g. soil carbon. This is because the ERF reductions are themselves part of the overall emissions of the economy.

The Green Paper clearly recognizes theses issues and proposes that the overall emissions pathway through to 2020 must be safeguarded. In Section 4 it discusses the need for “An effectively designed framework to discourage emissions growth above historical levels . . . “, with associated terminology including phrases such as “covered entities”, “baseline emission levels”, “action required from businesses” and “compliance”.  The safeguarding mechanism, rather than being a supplementary element of Direct Action, could end up becoming the main policy measure for decarbonisation if significant CO2 reductions are not achieved under the ERF. While this may not be the objective that the Government seeks, it does mean that the implementation of the safeguard mechanism needs to incorporate the design thinking that would otherwise be applied to the development of intended emission trading systems, such as the Alberta Specified Gas Emitters Regulation.

As currently described, the safeguarding mechanism looks like a baseline-and-credit system, with the baseline established at facility level either on an intensity or absolute emissions basis (both are referred to in the Green Paper). Should a facility exceed the baseline it could still achieve compliance by purchasing ACCUs from the market, either from project developers or other facilities that have over performed against their own baselines. Although the Government have made it very clear that they will not be establishing a system such as cap-and-trade that collects revenue from the market, facilities will nevertheless face compliance obligations and may have to purchase reduction units at the prevailing market price.

The level of trade and the need for facilities to purchase ACCUs will of course depend on the stringency of the baselines and this remains to be seen, however in setting these the Government will need to be mindful of the overall national goal and its need to comply with that. The development of a full baseline and credit trading system also raises the prospect of the market out-bidding the Government for ACCUs, particularly if the Government sets its own benchmark price for purchase, as is indicated in the Green Paper.

As Australia moves from a cap-and trade system under the Carbon pricing Mechanism (CPM) to the ERF and its associated safeguarding mechanism, the main change for the economy will be distributional in nature, given that a 5% reduction must still be achieved and the same types of projects should eventually appear. However, the biggest challenge facing any system in Australia could be around speedy design and implementation, given that the time remaining before 2020 is now very limited and the emission reduction projects being encouraged will themselves take time to deliver.

Selling CCS at a climate conference

As COP 19 rolls on in Warsaw, both delegates and observers that I have talked to are seeing little agreement, despite the sometimes upbeat assessment coming from the UNFCCC. It may well be late on Friday or even Saturday before something appears from this COP.

Meanwhile the side event and external (to the formal COP) conference programmes continue. It is through these processes that participants can meet and discuss various aspects related to climate change. This being a meeting about climate change, it might be expected that attendees would be interested in hearing about carbon capture and storage (CCS), but it turns out this is a hard sell here. The problem seems to start at the COP venue itself, where the meeting room banners feature various approaches to energy and environmental management. CCS doesn’t get a mention.

 COP Banners

All I could find were Energy Efficiency, Renewable Energy Sources, Air Protection and Water & Wastewater Management.

This theme continues in many presentations, speeches, dinner conversations and panel discussions. While CCS does of course feature when organizations such as GCCSI hold events, at more general climate solution events it struggles to hold its own. Rather the focus is solidly on energy efficiency and renewables. Neither of these are anything close to sufficient solutions to the climate problem as it stands today, yet you could sometimes come to the conclusion that this is what the COP is actually about.

Energy efficiency has transformed global industry since the first day of the industrial revolution. Everything we do is possible through a combination of technology innovation and energy efficiency, from power stations to vehicles to mobile phones. The result of this has been tremendous growth, but with it has come a continuous rise in greenhouse gas emissions, particularly CO2. We use more goods and services, buy more stuff and travel further than at any point in human history and there is no apparent let up in this trend as it continues to pervade the entire global economy. But now energy efficiency is being sold as a mechanism for reducing emissions, throwing into reverse a trend that has been with us for over 200 years and fundamentally challenging economic building blocks such as Jevons Paradox. A parade of people representing business organizations, environmental NGOs and multilateral institutions will wax lyrical about energy efficiency. In one presentation an airline industry spokesperson talked about the tremendous improvements in efficiency the industry was making, through engine design, light weighting, route optimization and arrival and departure planning. There is no doubt that this is happening, but it is also bringing cheaper air travel to millions of people and of course forcing up emissions for the industry as a whole. There is no sign of this trend reversing itself. Adding a carbon price to the energy mix is the way to change this trend and still make energy efficiency improvements. 

The renewable energy story is told in a similar way. While there is also no doubt that the application of renewable energy is bringing benefits to many countries, offering distributed energy, providing off-grid electricity and supplementing the global energy supply in a tangible way, the global average CO2 intensity of energy has remained stubbornly the same since the 1980s when it dropped on a relative scale (1990 = 100) from 107 in 1971 to 100 in 1987 (Source: IEA). It was still at 100 in 2011. This is not to say it will never change, but simply advocating for renewable energy is very unlikely to take us to net zero emissions before the end of this century. The fossil fuel base on which the economy rests is also growing as demand for energy grows. As recent IEA World Energy Outlooks have repeatedly shown, much of this new demand is being met with coal. The only way to manage emissions from coal is the application of CCS, yet this seemingly falls on deaf ears here in Warsaw.

When CCS does get a mention, it is increasingly phrased as CCUS, with the “U” standing for “use”. In her one upbeat mention of CCS that I have heard, UNFCCC Executive Secretary also referred to it as CCUS. In another forum, one participant even talked about “commoditizing” CO2 to find a range of new uses. The problem is that CO2 really can’t be used for much of anything, with one modest (compared to the scale of global emissions) but important exception. The largest use today is for enhanced oil recovery where the USA has a mature and growing industry. It was originally built on the back of natural CO2 extracted from the sub-surface, but the industry now pays enough for CO2 that it can provide support to carbon capture at power plants and other facilities (usually with some capital funding from the likes of DOE).  This has helped the US establish a CCS demonstration programme of sorts.

There are other minor industrial gas uses (soft drinks), some scope for vegetable greenhouses such as the Shell project in the Netherlands (which provides refinery CO2 to Rotterdam greenhouses for enhanced growing, rather than have them produce it by burnaing natural gas) and a technology that quickly absorbs CO2 in certain minerals to make a new material for building, but all of these are tiny. The problem is that CO2 is the result of combustion and energy release and therefore any chemistry that turns it into something useful again requires lots of energy – nature does this and uses sunlight. Even if such a step were possible, this wouldn’t change the CO2 balance in the atmosphere, just as any bio process doesn’t change the overall balance in the atmosphere. Only sequestration, either natural or anthropogenic, changes that balance.

Perhaps the BBC and others are having a fit of pre-COP optimism, but two recent stories would lead the reader / listener to the view that the world is at last turning the corner on emissions.

This started with BBC coverage of a report from the Netherlands Environment Agency which provided an assessment of global emissions for 2012, one of the most up to date reviews of global greenhouse gas emissions. While the report showed actual global emissions of carbon dioxide from fossil fuel use and limestone calcination (cement) reaching a new record of 34.5 billion tonnes in 2012, it noted that the increase in  emissions in that year slowed down to 1.4% (corrected due to the leap year), which was less than half the average annual increase of 2.9% over the last decade. The BBC argued that this development signals a shift towards less fossil-fuel-intensive activities, more use of renewable energy and increased energy saving.

 Global CO2 Emissions

Not to pour cold water on this, but the recent publication by BP of their Statistical Review of World Energy didn’t show such a marked change, although the rate of increase was certainly down. The chart below shows how the rate of increase (according to BP) has changed over the years, but it’s hard to argue that we have broken out of the long term range.

CO2 Emissions year on year change

The BBC followed this with a BBC World report, including an interview with David Kennedy, CEO of the UK Committee on Climate Change, where they argued that the world is turning a corner in terms of climate cooperation, clean energy deployment and ultimately emissions. The evidence for this was rather scant, but included a look at a very sophisticated heat capture system in Norway which exchanges heat from waste domestic water in Oslo. They also presented a chart which showed the world decarbonisation trend, i.e. CO2 per GDP, and drew solace from the fact that the Chinese decarbonisation rate was increasing (note that CO2 per GDP requires estimates of both global CO2 emissions and global GDP and that these numbers can vary from source to source). The BBC did note that the world “has much more to do”, but that there is finally cause for optimism.

The reality check on all this comes from PWC, with their new report Busting the Carbon Budget. They also focus on decarbonisation rates, but looking forward rather than back (where, unlike the BBC, they had no cause to celebrate at all). PWC note that if the world maintains the current decarbonisation rate of about 0.7% per annum, the global carbon budget for a 2°C pathway (IPCC RCP2.6 scenario) will be depleted by 2034, just 20 years away. Meeting RCP 2.6 now requires a decarbonisation rate of 6% per annum. Meeting the budget for the less ambitious RCP 4.5 scenario requires rates of 3% and even “meeting” the RCP 8.5 (4°C) scenario budget still requires decarbonisation rates which are double current practice.

The PWC report delves into national data as well and notes that Australia, the USA and Indonesia are the only three countries that have recently come close to the needed decarbonisation rates but that not one country has managed to sustain such a rate for five years. PWC finds that energy efficiency is the bright spot in that almost all of the change in carbon intensity can be attributed to efficiency improvements. For me, this is a cause for concern, in that intensity improvements are therefore masking that lack of progress on real energy mix decarbonisation. Efficiency will drive GDP, which in turn can give the appearance of decarbonisation when in fact there isn’t any. PWC note that CO2 per unit of energy consumed has remained at approximately the same level for five years.

The PWC review of mitigation highlights a number of home truths;

  1. The shale gas revolution in the USA is causing US coal to shift to other parts of the world (which highlights the need for more widespread adoption of carbon pricing).
  2. Biofuels consumption is largely confined to the Americas.
  3. There is a slow rise in renewable energy but reliance on fossil fuels is effectively unchanged.
  4. Nuclear is losing ground following Fukushima.
  5. There has been negligible progress in the deployment of CCS technology.

PWC conclude with the statement “Crucial is the collective will to act.” According to the BBC and the UK CCC we may be turning the corner in the regard, but let’s wait until COP 19 in Warsaw next week to see how that one develops.

It is widely known that Poland gets much of its energy from coal (it is even a net exporter). Many countries do, so it is hardly alone in this regard. In my last post I illustrated the increasing global dependence on coal through a recent tender issued by two states in India for a total of 8 GW of coal. At the recent Chatham House Climate Conference, one speaker noted that current Asian coal projects will add some 250 GW of capacity by the end of this decade. These facts highlight the challenge that we face in trying to manage global emissions.

In light of the above, what should we then make of the Warsaw Communique released recently by the World Coal Association and the Polish government. Of course Warsaw is the location of the COP 19 Climate Change Conference and the Polish government will preside over the event. For many environmental NGOs and others the Communique was a step too far, with “outrage” emanating from some green groups.

On the surface, there is a contradiction between coal use and managing global emissions. After all, coal is the most carbon intense fossil fuel and its global use has risen sharply in recent years along with a corresponding rise in emissions. If it were not for this significant increase in coal use, renewable energy would actually be making inroads into the global energy mix and taking some measureable market share. In reality, it isn’t. But the Communique argues that increasing the efficiency of coal combustion can go a long way towards addressing its increased use. The text also makes some reference to carbon capture and storage and clean coal, but its focus is solidly on efficiency.

Like it or not, coal use is going to continue, but arguing for increased efficiency as an approach to managing its emissions is where the criticism should be leveled, not at the idea that coal use is potentially compatible with a very low emission future.

Increasing the efficiency of coal use is really where the whole issue of rapidly increasing global emissions started, so it is very unlikely to be the place where it stops. It was William Stanley Jevons who noted that coal use increased as efficiency improved. Jevons Paradox is the proposition that technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource. In 1865 Jevons observed that technological improvements that increased the efficiency of coal use led to increased consumption of coal in a wide range of industries. He argued that, contrary to common intuition, technological improvements could not be relied upon to reduce fuel consumption. There are more modern versions of this analysis, one of which I wrote about in a post last year.

While individual coal plants may well become more efficient as a result of a global efficiency initiative, total coal use and therefore the total accumulation of emissions over time will likely rise. This then pushes us faster towards some fixed amount of atmospheric warming (as this is directly related to cumulative emissions over time).

So the Warsaw Communique is barking up the wrong tree, even as it opens up the valid discussion about growing global coal use in the face of a desire to see emissions fall. The focus of the Communique should have been Carbon Capture and Storage, not efficiency. CCS is the bridge technology between a world that will use more coal but also wants to reduce emissions. There are more than enough people already barking up the efficiency tree, but precious few trying to hold a real conversation about CCS.

A Communique that focused on CCS would have been a real achievement and a welcome addition to the COP. Unfortunately the Communique that did emerge may turn out to be an “own goal”.

In my posting last week I talked about the climate action paradigms that exist. This followed on from a business association meeting where it was clear that there were two very different schools of thought on the issue of reducing emissions. One is to focus on energy efficiency and renewables and attempt to race fossil fuels out of the market. This felt to me as rather wishful thinking, given both the scale of the existing industry and its competitiveness. The other is to recoginise the reality of the fossil fuel industry and begin to impose an increasingly stringent requirement on it to manage (i.e. capture and store) emissions, ideally through a carbon price. This would then draw in energy alternatives and accelerate improvements in energy efficiency.

I can certainly understand those who take the view that the promotion of renewable energy is a must. While I don’t agree that it will significantly (if at all) drive down global fossil fuel consumption (and therefore emissions) in the short to medium term, it is nevertheless clear that this energy is essential to help bolster overall global supply and therefore meet development needs.

But some seem to take the view that energy efficiency itself is a viable emissions reduction strategy and therefore interchangeable with technologies such as carbon capture and storage (CCS). I saw an example of this at another industry group meeting very recently. In a discussion about energy efficiency a guest speaker talked about the closure of older less efficient power stations in China. A slide was put up which claimed emission reductions in China of 100 million tonnes as a result. Of course China’s emissions haven’t reduced at all and I doubt very much that even one gram less of coal is being burned as a result of these closures. The likely reality is that the same coal is being used more efficiently in newer power stations to generate even more electricity. Nor is the move likely to result in a long term emissions reduction as the coal system in China (mines, railroads, import terminals etc.) is pretty much at maximum capacity all the time, so there is a huge incentive to make better use of the available coal. At least for a Chinese power generator, waiting for more coal supply may not be the favoured route for generating more electricity. 

This is not unlike government attempts to cut deficits. Many countries have seen deficits rise constantly in absolute terms since the idea of deficit spending was first introduced. Yet successive governments have all implemented efficiency drives to “reduce the deficit” and claimed some success. The problem is that the reductions are more often than not against projected spending rather than current spending, so a reduction can be claimed at the same time as the reality of an absolute increase in spending. As such, the total deficit continues to rise. Real deficit reduction will probably only come with major structural changes in government policy (e.g. welfare, defense etc.), but these are much more difficult to implement. At least with government spending there is a relief valve of sorts in that the economy can grow and therefore the cumulative deficit can shrink as a fraction of GDP. Unfortunately this isn’t the case with the atmosphere.

The IEA did a bit of this in their recent report, Redrawing the Energy-Climate Map. They projected a particular “business as usual” emissions by 2020 and then illustrated how a focus on energy efficiency could reduce this. Nevertheless emissions continue to rise, but the chart seemingly shows energy efficiency as the most important contributing factor to change. The question that really needs to be asked is “Which fossil fuel production actually declined or new project shelved because of this?”. Only then are cumulative emissions potentially impacted. A further perverse outcome is that when viewed in such a short timeframe, when technologies like CCS can make almost no difference because of the implementation time lag, some observers leave with the message that energy efficiency is the major contributor to tackling global emissions.

 IEA Energy Efficiency

 

One unintended consequence of energy efficiency policy can be to exacerbate the emissions problem. A colleague of mine produced an analysis of this about a year ago and I wrote about it in a post at that time. In the worst case, an energy efficiency improvement in the power generation supply chain can actually incentivize the resource holder (e.g. coal mine) to expand the resource base and therefore the potential tonnes of carbon that will ultimately be released into the atmosphere. This won’t always be so, but it’s an interesting take on the issue.

Energy efficiency is a key driver for development, primarily through the reduction in cost of energy services. This increases access and availability of energy and therefore spurs development. Arguably it has been the single most important element of the industrial revolution, underpinned of course by key inventions along the way. But we now seem to have got it into our heads that this is also a critical part of the solution set for climate change, when it may not be at all.

Last week I attended the official launch in London of a book I reviewed recently, The Burning Question. Both authors were at the launch and they gave a great overview of the energy and climate predicament we have collectively managed to get ourselves into. Key to their message is that carbon emissions are growing exponentially and that no amount of energy efficiency or alternative energy investment is going to change that pathway anytime soon, rather both approaches may be exacerbating the problem. Of course they did make the point that all exponential systems eventually collapse or at best plateau, but in the meantime emissions continue to rise with no immediate sign of change. As I noted in my initial review, the authors paint themselves into something of a difficult corner and don’t give a great deal of insight as to how to get out, but carbon capture and storage looms large in their thinking. The book follows a line of thought that I have been developing in this blog over the last couple of years, best described here and here.

The morning after the book launch I found myself at a business association meeting where the subject of climate action was top of the agenda for the day. As if in follow-up to the previous evening, we quickly got on to the role of carbon capture and storage (CCS) for mitigation, vs. the apparently more attractive premise (to many people) that the focus must be on energy efficiency and renewables, with carbon capture and storage in more of a mop-up role at the end. The efficiency / renewables approach has been played out in numerous scenario exercises, most notably in that presented by WWF (with the support of Ecofys) in their 2011 report “100% Renewable Energy by 2050”. In all such cases and particularly that one, a natural progression of change within the energy system doesn’t feature, rather a “war time footing” scenario is advocated. This specific report was also presented to the meeting.

I contrast this with the recent Shell New Lens Scenarios which I discussed in a March posting. These do follow a natural progression forward, driven by social concerns, legislative change and energy economics. The conditions behind the Oceans scenario result in higher uptake of efficiency and much faster renewables deployment.  However, these are not strong enough to offset all of the extra pressures for energy demand growth from developing markets in particular.  As a result, fossil energy growth is similar to that of Mountains for the next several decades, and so without the strong stimulus for CCS in Mountains, the Oceans scenario results in higher cumulative CO2 emissions over the century and therefore additional warming. The reasons are somewhat similar to those articulated in The Burning Question.

This leads to thinking about climate action in terms of two paradigms. One recognizes the sobering reality of the global energy system as outlined in The Burning Question and seeks to address the issue through a combination of measures, prioritizing a robust carbon price in the energy system and placing a strong emphasis on carbon capture and storage. This tackles the issue from the fossil fuel end, which has the consequence of managing emissions directly (the CCS bit) and drawing in alternatives and reducing demand as pricing dictates (the carbon price bit). The other approach is to tackle the issue from the alternatives end, which results in forced efficiency measures and subsidized renewable energy coming into the mix. Following the logic of The Burning Question, this is like putting the energy system on steroids which pumps up global demand and potentially even forces emissions to rise.

Back then to the business association meeting which, at least in part, was also attended by a prominent official in the global climate process. The inevitable question as to the role of CCS arose and a debate around mitigation priorities got going. Many, including the official present in the room, took the view that efficiency and renewables were critical to the change process required and that this is where the emphasis must be.

 Of course the real sweet spot is somewhere in the middle, where there is a strong attack on emissions through carbon pricing and CCS, but in combination with a more rapid displacement of fossil energy with alternatives such as solar and nuclear. This isn’t easy to achieve as the social conditions for one are somewhat counter to those needed for the other. This is one paradox that also comes out of the New Lens Scenarios. Nevertheless, if those in leadership positions are sitting at one end of this spectrum rather than squarely in the middle, will we ever get a solution that actually addresses the problem head on? Perhaps The Burning Question needs to be distributed more widely!

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!

There are many books and thousands of reports on climate change, carbon economics, energy transformation and the like, but few encapsulate the issue as well as a recently released book by Mike Berners-Lee and Duncan Clark, The Burning Question. Judging by the recommendation on the cover, even Al Gore liked it.

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Rather than speculate on the potential severity of climate events or try to convince readers that simple changes in consumer behaviour and green, job creating investment will solve everything, the book takes a thought provoking but dispassionate look at the global energy system. The authors discuss the role of fossil fuels and the carbon emission limits that we know we should meet and set out to explain the rock and the hard place that we find ourselves between. The rock in this case is the trillion tonne of carbon limit for cumulative emissions over time and the hard place is the abundance of fossil fuels, the rate at which we use them and the relative ease with which more becomes available as demand rises.

Berners-Lee and Clark present a compelling set of stories which show how fossil fuels dominate the global energy market, why it is proving almost impossible to displace them (on a global basis) and why strategies such as improving energy efficiency and deploying renewables  are not effective approaches to try and limit global emissions. In fact they make the point that in some instances the reverse happens – emissions just rise faster.

The tag line on the cover includes the teaser  “So how do we quit?” (using fossil fuels). Do they really know? As the book unfolds and the problem they describe mounts in both complexity and difficulty, there is almost the feeling of a thrilling ending around the corner. SPOILER ALERT. Sadly this is not quite the case, but they do give some useful advice for policy makers trying to get to grips with the issue and the book itself gives the reader a very different perspective on the energy-climate conundrum (although hopefully one that the readers of this blog have picked up over time, but here it is all in one book).

I assume that for similar reasons to my own line of thinking (but after beating around the bush about it for 181 pages) they do finally land on a key thought:

In the course of writing this book we have come to think that the most undervalued technology in terms of unlocking international progress on climate change is carbon capture – both traditional CCS for point sources such as power plants and more futuristic ambient air capture technologies for taking carbon directly out of the atmosphere.

It would appear that The Inconvenient Truth and CCS are indeed inextricably linked. Clark and Berners-Lee don’t go so far as to argue that CCS is the convenient answer, but the message on CCS is a strong one. Nevertheless, geoengineering makes a surprise entrance at the end!!

Overall, this is an excellent discussion which is both easy to ready and hugely informative. It is well worth putting it on the summer reading list.