David Hone

Last week saw the launch of a new initiative in the United States, “Energy Citizens”, which aims to create a significant lobby against the passage of climate change legislation in the USA and most specifically the recent House bill, the American Clean Energy and Security Act of 2009, or “Waxman-Markey” as it is more widely known. “Energy Citizens” kicked off with a well attended rally in Houston last Tuesday, has its own website and is strongly supported by an organisation that Shell US belongs to, the American Petroleum Institute. More rallies, events and advocacy initiatives are planned.

Whilst I am not an American, nor do I have any issue with the democratic process in the USA, what is at stake in this debate goes far beyond American shores and will have a profound impact on the global response to climate change for at least a decade and possibly a great deal longer. So, as an employee of the energy sector for nearly 30 years this “world Energy Citizen” also wants a word.

The clutch of EU Directives that were passed last year (ETS Phase III, CCS, Renewables) or are in the pipeline (Buildings) pretty much resemble the totality of what is proposed under Waxman-Markey. The two sides of the Atlantic are learning from each other as they move forward with ambitious plans to address energy use and begin the tough task of managing greenhouse gas (GHG) emissions. A key element in both programmes is a GHG cap-and-trade system (a mechanism originally developed and successfully deployed in the USA to reduce sulphur emissions).

Cap-and-trade legislation is now under development or in place in many parts of the developed world (including of course the USA on both counts) and if implemented could cover nearly a third of global fossil fuel CO2 emissions by 2013. In the EU it has been in place since 2005 and although it took a while to establish itself has given rise to a robust and growing carbon market with stakes in many countries through linked projects. It is working, it is beginning to drive change, it is creating new businesses and business models and there is no sign that the EU economy is suffering as a result. New wind projects are appearing across the continent, nuclear power is being given a new life, biofuel investment is rising and there is a major push to bring new technologies such as carbon dioxide capture and storage into the energy mix. A wide range of new financial and service organisations are also being created, including verifiers, (offset) project developers, CO2 consultancies and market participants.

It is also true that electricity prices across much of the EU have risen as a result of the EU-ETS – in the UK this is about 1 pence per kWh (or one and a half US cents) – but equally this is helping drive the new investment that is now taking place. This and the overall hike in electricity cost as a result of generally higher energy prices are also making families more conscious of the need for energy efficiency measures which in turn has led to a wide range of consumer initiatives in response, some developed by government but many created by business to meet that new demand.

I agree that Waxman-Markey is still some way from the right solution, but equally it is not headed in the wrong direction either. For example, it still needs to find a better balance between free allocation and auctioning in the face of international competition, but so too did the EU-ETS as Phase III was thrashed out by the European Parliament last year. There were times last year when stakeholders looked at what was on the table and thought “You must be joking!!”, but reason prevailed in the end and the necessary deals were struck – industry accepted the provisions for trade exposure, the power generators are facing up to the reality of auctioning and individual member states walked away from Brussels happy with the deal they had secured in terms of national burden and state aid provisions. Importantly, the cap-and-trade approach has been shown to be flexible enough to accomodate all of this without underminig the overall environmental goal being sought.

But is the “Energy Citizens” oganisation helping the rally attendees and signatories learn about this or recognise the importance of developed countries taking the lead on emissions mitigation?? Probably not – which of course is the unfortunate side of all this.

There have been similar concerns about jobs and  energy prices in the EU, but this is a two way street – and that is now being recognised. Whilst there will be some shift in energy prices, the resultant investment in efficiency and new energy infrastructure will have a positive benefit for consumers and in the longer term the new industries that are created should offset any job changes that may occur in existing sectors.

What is really required now is positive and proactive bipartisan engagement by industry and others in the development of this relatively new instrument.

I have been in Sao Paulo this week at Sustentavel 2009, perhaps the premiere Sustainable Development event in Brazil, if not all of South America. At the opening I represented the World Business Council for Sustainable Development and then on the first day of presentations I participated in the main climate change panel session.

What is clear is that there is a passion in Brazil for sustainability – from the huge issues they face in the Amazon region to the road congestion in Sao Paulo. Talking with delegates at Sustentavel, it is also clear that the country faces an interesting future in terms of greenhouse gas emissions.

According to the IEA, in 2006 fossil energy CO2 emissions in Brazil were 332 million tonnes. Reportedly (from delegates at the conference), this represents some 25% of overall CO2 emissions in Brazil, which puts emissions from deforestation at about 1 billion tonnes per annum and total emissions at some 1.3 billion tonnes. Such a figure, if correct, would put total Brazilian emissions at about the level of Japan and India.

From an energy perspective (i.e. putting to one side for the moment emissions from deforestation) Brazil is one of a handful of countries globally that is managing a development pathway that is compatible with a 450 ppm trajectory – i.e. keeping emissions below 2 tonnes per capita even as it continues to develop. Although emissions per capita have risen since 1970, there has been a plateau of sorts more recently. Brazil has achieved this through its large-scale use of renewables, namely hydroelectricity and biomass, the latter both as a source for transport fuel (ethanol) and electricity. Although CO2/KWhr jumped from 50 gms to 88 gms between 1990 and 2000, it fell back to 81 gms in 2006.

Looking forward, continued expansion of hydroelectricity is under pressure. Although only 30% of theoretical capacity has been utilised, new projects are taking some 10 years to complete owing to increasingly stringent permitting requirements. Meeting future electricity demand may mean that the country needs to draw increasingly on alternative sources, particularly natural gas which is being discovered offshore. CO2 emissions from natural gas use more than doubled between 2000 and 2006.

In the transport sector, ethanol and now bio-diesel use is continuing to grow. Between 2000 and 2006 oil demand was flat despite a nearly 20% increase in both GDP and overall energy demand. Brazil still has a formidable potential for increasing ethanol and bio-diesel production, even as it grapples with the issue of deforestation. Brazilian ethanol also has a very low CO2 footprint owing to the use of bagasse as a fuel in the ethanol plants, many of which also produce electricity for the local community. But Brazil is also on the verge of becoming a new petro-economy. Offshore discoveries now amount to some 70 billion barrels of oil equivalent. If consumed this will result in emissions of 25 billion tonnes of CO2 or the equivalent of an additional 1-1.5 ppm in atmospheric CO2. In addition, there may be further CO2 emissions after removal from contaminated offshore natural gas.

What solutions lie in Brazil’s future? The first priority is of course to address deforestation, but one option that doesn’t immediately jump out of the page but could be pivotal for Brazil is the application of carbon dioxide capture and storage. Whilst Brazil is a low CO2 economy, CCS could help it remain so whilst letting the country make best use of the resources it has. For example, CCS applied offshore is a potential solution to the CO2 that will be removed from any contaminated natural gas.

Longer term, CCS could be tied in with the nations huge biomass potential (even after deforestation is addressed) to possibly deliver a negative CO2 economy by 2050. Gasification of biomass is a technology gaining ground today. As in the gasification of coal it produces syngas, which can then be used for electricity generation, with a high purity CO2 stream remaining. When sequestered, with biomass as the original feedstock, the process is effectively removing CO2 from the atmosphere. Most biofuel processes (e.g. manufacture of ethanol) also produce bio-CO2 that could be captured and stored. These approaches may be pivotal in the quest for atmospheric stabilisation at safe levels.

So although Brazil has real sustainability challenges ahead, particularly in the area of deforestation and the further expansion of hydroelectricity, it also offers tremendous opportunity for managing emissions on a very large scale. Certainly the willingness is there, you could feel it at the conference. Now that needs to be turned into political action to drive the solutions forward.

The first of a series of United Nations Framework Convention on Climate Change (UNFCCC) meetings in the lead-up to Copenhagen took place in Bonn over the last ten days. The next meeting will also be in Bonn in June. In total there will now be five meetings prior to Copenhagen itself.

There are some observers who spend every waking moment over the whole period of a meeting attending every workshop (but many run in parallel), furiously taking notes and becoming completely absorbed within the process. I am not one of them, but if that is the sort of report you are looking for then I can highly recommend the Earth Negotiations Bulletin. I spent just a day in Bonn this time although one colleague was there for quite a bit longer. Nevertheless, with some targeted meetings and attendance at one or two of the formal gatherings it is possible to get a feeling for what is going on. Reading some of the excellent summaries on ENB helps as well.

Taking the pulse of the UNFCCC negotiations isn’t easy. To start with, it’s difficult to know exactly where to find it but when you do, the diagnosis is weak but racing. The first question to ask is “Where are the actual negotiations taking place?“. Whilst country after country will stand and make declarations of some sort or other in the formal meetings, outside of this some important bilateral meetings are underway. These discussions are perhaps paving the way for the difficult deals that have to be done, such as between the USA, the EU and China. But equally, these deals will probably not be consumated by the people attending this UNFCCC meeting – more powerful hands are going to have shake on these. These are the deals that will set the stage for the next 10-20 years;

• What reductions will developed countries make and by when? See my previous posting for some thoughts on this.
• How long before big developing countries start adopting real targets?
• How much help (i.e. money) will developed countries have to put on the table to encourage the rapid global take-up of big play technologies such as carbon capture and storage?
• What is fair and equitable when it comes to responsibility for emissions?
• . . . . and a big one – how to combine the dual track discussions going on – Track 1 looking at the next round of commitments under the Kyoto Protcol, which the USA cannot participate in (as they are not a signatory) and Track 2 looking at the nature of the long term action that needs to take place, which the USA is now very much re-engaged in. Having the USA sign the Kyoto Protocol is almost certainly a non-starter (simply not deliverable domestically), but chucking the whole thing in the bin would undo years of work that needs to move forward – not in emissions reduction per se, but in the global institutions needed to support large scale reductions.

All this isn’t to say that meetings such as the one that has just finished in Bonn are a waste. They are not. Slowly but surely the infrastructure around which the big deal must operate is being agreed upon. The delegates are working hard on this, putting in long hours, hence the racing pulse.

So where to from here? The meeting in June will see the first real negotiating text put on the table, so the pace will quicken and the stakes will be raised even higher.

By year end we will have had a G8 meeting and possibly a second G20 meeting (mentioned by President Obama in his closing address at the G20 last week). Gordon Brown made a clear reference to a comprehensive deal in Copenhagen in his G20 statement. The Major Economies Meeting, initially a Bush side-show on climate change will almost certainly have new life breathed into it under Obama. This much smaller group of countries represent about 80% of global emissions, so the right people will be in the room. The next meeting is scheduled for April 27-28 in Washington.

So it remains a wait and see game. But if the G20 outcome is any guide, we might just have a set of leaders at the table at this particular moment in time who can pull this off.

Let’s hope so!

Whilst we hear much about the rapidly vanishing sea ice in the Artic, Antarctica seems to go relatively unnoticed. Until recently that is. The following BBC articles point to the growing problems there as well. Don’t forget the rule of thumb that warming at the poles is about twice that of the global average (i.e. 1 deg.C globally translates to 2 deg.C polar).

http://news.bbc.co.uk/2/hi/science/nature/7843446.stm

http://news.bbc.co.uk/2/hi/science/nature/7843170.stm

http://news.bbc.co.uk/2/hi/science/nature/7851276.stm

Last week saw two major events in the climate change calendar – the UNFCCC meeting in Poznan (COP 14) and the meeting of heads of state of the European Union where the final compromise text for the EU Energy and Climate package was agreed. The UN climate change conferences also have something of a trade-fair atmosphere to them. Sitting in one of the many meeting areas doing e-mail or talking with colleagues, it isn’t long before a young environmental idealist thrusts a flyer in your hand advertising a side event or bringing your attention to an important issue. One such flyer alerted the reader to the need for developed countries to take on a 40% reduction target by 2020 (followed up by a zero emissions target for 2050). It is no doubt true that such a target is needed for 2020 to robustly respond to the scientific findings on climate change, but the question must be asked if we have even the remotest of hopes of achieving such a massive reduction. The young lady distributing the flyer couldn’t answer that question when I posed it.

This then takes us back to what is happening in Brussels, where a 20% reduction by 2020 is the cornerstone of the deal. The 20% reduction in emissions by 2020 (compared to 1990) represents a huge challenge for the EU. As of 2006, EU CO2 emissions stood at 4.02 billion tonnes, compared to 4.13 billion tonnes in 1990 (IEA data), or a 2.7% reduction.

Today, the EU has some 500 big power plants, several thousand industrial facilities, 250 million cars and upwards of 30 billion m2 of not very efficient building space. To reach the 2020 EU emissions reduction goal and continue to meet EU energy needs, all of the following will need to happen (as an illustration of the scale  – other pathways are also possible):

1. Near doubling of year on year energy efficiency improvement across the economy (i.e. Mega-Joules/€ of GDP), shifting from 1.5% p.a. for the period 1990/2006 to 2.7% p.a. from this year forward.

2. Retire (or convert – see below) some 40 big coal fired power stations.

3. Build (or convert existing) 20 big coal fired power stations with carbon capture and storage and establish this as a fully commercial technology. Today, not one such facility exists anywhere in the world.

4. Build another 25 large natural gas power stations.

5. Ensure no drop in nuclear power as many existing stations come due for retirement – a small expansion (4 more plants) is probably desirable, paving the way for further growth in this industry.

6. Establish a large-scale solar power generation sector utilising widespread solar PV and concentrated solar thermal.

7. Install ~100,000 2 MW wind turbines (or equivalent – e.g. the tidal barrage in the UK).

8. Improve average vehicle on-road (i.e. entire stock on the road in 2020) efficiency by ~35%. Given a vehicle life of >12 years, this means a ramp up in efficiency starting now.

9. Introduce low CO2 footprint sustainable biofuels and expand their use to ~10% of the vehicle fuel mix. Add to this some 14 million electric (or hydrogen) vehicles.

10. Increasingly use electricity as the end-use energy source of choice – i.e. instead of burning natural gas or heating oil at home and in office buildings.

11. Replace as required other retiring energy infrastructure.

Now consider that we have just 4000 days in which to do all of this!