Archive for the ‘Low carbon economy’ Category

The last of the three IPCC 5th Assessment Reports has now been published, but with a final Synthesis Report to come towards the end of the year. The “Mitigation of Climate Change” details the various emission pathways that are open to us, the technologies required to move along them and most importantly, some feeling for the relative costs of doing so.

As had been the case with the Science and Impacts reports, a flurry of media reporting followed the release, but with little sustained discussion. Hyperbole and histrionics also filled the airwaves. For example, the Guardian newspaper reported:

The cheapest and least risky route to dealing with global warming is to abandon all dirty fossil fuels in coming decades, the report found. Gas – including that from the global fracking boom – could be important during the transition, but only if it replaced coal burning.

This is representative of the general tone of the reporting, with numerous outlets taking a similar line. The BBC stated under the heading “World must end ‘dirty’ fuel use – UN”:

A long-awaited UN report on how to curb climate change says the world must rapidly move away from carbon-intensive fuels. There must be a “massive shift” to renewable energy, says the study released in Berlin.

While it is a given that emissions must fall and for resolution of the climate issue at some level, anthropogenic emissions should be returned to the near net zero state that has prevailed for all of human history barring the last 300 or so years, nowhere in the Summary Report do words such as “abandon” and “dirty” actually appear. Rather, a carefully constructed economic and risk based argument is presented and it isn’t even until page 18 of 33 that the tradeoff between various technologies is actually explored. Up until that point there is quite a deep discussion on pathways, emission levels, scenarios and temperature ranges.

Then comes the economic crux of the report on page 18 in Table SPM.2. For scenarios ranging from 450ppm CO2eq up to 650 ppm CO2eq, consumption losses and mitigation costs are given through to 2100, with variations in the availability of technologies and the timing (i.e. delay) of mitigation actions. The centre section of this table is given below;


Particularly for the lower concentration scenario (430-480 ppm) the table highlights the importance of carbon capture and storage. For the “No CCS” mitigation pathway, i.e. a pathway in which CCS isn’t available as a mitigation option, the costs are significantly higher than the base case which has a full range of technologies available. This is still true for higher end concentrations, but not to the same extent. This underpins the argument that the energy system will take decades to see significant change and that therefore, in the interim at least, CCS becomes a key technology for delivering something that approaches the 2°C goal. For the higher concentration outcomes, immediate mitigation action is not so pressing and therefore the energy system has more time to evolve to much lower emissions without CCS – but of course with the consequence of elevated global temperatures. A similar story is seen in the Shell New Lens Scenarios.

Subtleties such as this were lost in the short media frenzy following the publication of the report and only appear later as people actually sit down and read the document. By then it is difficult for these stories to surface and the initial sound bites make their way into the long list of urban myths we must then deal with on the issue of climate change.

In my previous post I responded to an article by environmentalist Paul Gilding where he argued that the rate of solar PV deployment meant it was now time to call “Game over” for the coal, oil and gas industries. There is no doubt that solar PV uptake is faster than most commentators imagined (but not Shell in our Oceans scenario) and it is clear that this is starting to change the landscape for the utility sector, but talk of “death spirals” may, in the words of Mark Twain, be an exaggeration.

In that same article, Gilding also talks about local battery storage via electric cars and the drive to distributed systems rather than centralized ones. He clearly envisages a world of micro-grids, rooftop solar PV, domestic electricity storage and the disappearance of the current utility business model. But there is much more to the energy world than what we see in central London or Paris today, or for that matter in rural Tasmania where Paul Gilding lives. It all starts with unappealing, somewhat messy but nevertheless essential processes such as sulphuric acid, ammonia, caustic soda and chlorine manufacture (to name but a few). Added together, about half a billion tonnes of these four products are produced annually. These are energy intensive production processes operating on an industrial scale, but largely hidden away from daily life. They are in or play a role in the manufacture of almost everything we use, buy, wear, eat and do. These core base chemicals also rely on various feedstocks. Sulphuric acid, for example, is made from the sulphur found in oil and gas and removed during the various refining and treatment processes. Although there are other viable sources of sulphur they have long been abandoned for economic reasons.


The ubiquitous mobile phone (which everything now seems to get compared to when we talk about deployment) and the much talked about solar PV cell are just the tip of a vast energy consuming industrial system, built on base chemicals such as chlorine, but also making products with steel, aluminium, nickel, chromium, glass and plastics (to name but a few). The production of these materials alone exceeds 2 billion tonnes annually. All of this is of course made in facilities with concrete foundations, using some of the 3.4 billion tonnes of cement produced annually. The global industry for plastics is rooted in the oil and gas industry as well, with the big six plastics (see below) all starting their lives in refineries that do things like converting naphtha from crude oil to ethylene.

The big six plastics:

  • polyethylene – including low density (PE-LD), linear low density (PE-LLD) and high density (PE-HD)
  • polypropylene (PP)
  • polyvinyl chloride (PVC)
  • polystyrene solid (PS), expandable (PS-E)
  • polyethylene terephthalate (PET)
  • polyurethane (PUR)

All of these processes are also energy intensive, requiring utility scale generation, high temperature furnaces, large quantities of high pressure steam and so on. The raw materials for much of this comes from remote mines, another facet of modern life we no longer see. These in turn are powered by utility scale facilities, huge draglines for digging and vast trains for moving the extracted ores. An iron ore train in Australia might be made up of 336 cars, moving 44,500 tonnes of iron ore, is over 3 km long and utilizes six to eight locomotives including intermediate remote units. These locomotives often run on diesel fuel, although many in the world run on electric systems at high voltage, e.g. the 25 kV AC iron ore train from Russia to Finland.

The above is just the beginning of the industrial world we live in, built on a utility scale and powered by utilities burning gas and coal. These bring economies of scale to everything we do and use, whether we like it or not. Not even mentioned above is the agricultural world which feeds 7 billion people. The industrial heartland will doubtless change over the coming century, although the trend since the beginning of the industrial revolution has been for bigger more concentrated pockets of production, with little sign of a more distributed model. The advent of technologies such as 3D Printing may change the end use production step, but even the material that gets poured into the tanks feeding that 3D machine probably relied on sulphuric acid somewhere in its production chain.

The US Submission on Elements of the 2015 Agreement has recently appeared on the UNFCCC website and outlines, in some detail, the approach the US is now seeking with regards “contributions”. Adaptation and Finance are also covered, although not to the depth of the section on Mitigation.

The submission makes it very clear that the US expects robust contributions from Parties, with schedules, transparency, reporting and review. There is also a useful discussion on the legal nature of a contribution. None of this is surprising as the US delegation to the recent COPs and various inter-sessional meetings has made it very clear that real action must be seen from all parties, not just those in developed countries.

But the submission makes no reference to the role of carbon markets or carbon pricing. Only in two locations does it even refer to market mechanisms and this is only in the context of avoiding double counting. This is coming from the Party that gave the world the carbon market underpinning of the Kyoto Protocol, which in turn has given rise to the CDM, the EU ETS, the CPM (in Australia) and the NZ ETS to name but a few, so perhaps reflects the current difficulty Parties are having keeping carbon price thinking on the negotiating agenda. 

I would argue that without a price on carbon emissions, the CO2 emissions issue will be much more difficult to fully resolve. Further to this, while individual countries may pursue such an agenda locally, the emissions leakage from such systems could remain high until the carbon price permeates much of the global energy system. This then argues for an international agreement that encourages the implementation of carbon pricing at a national level. The Kyoto Protocol did this through the Assigned Amount Unit, which gave value to carbon emissions as a property right. While there is no such “Kyoto like” design under consideration for the post 2020 period, the agreement we are looking for should at least lay the foundations for such markets in the future. The question is, how??

In the post 2020 world, carbon pricing is going to have to start at the national level, rather than be cascaded from the top down. Many nations are pursuing such an agenda, including a number of emerging economies such as China, South Korea, South Africa and Kazakhstan. Linkage of these carbon price regimes is seen as the key to expansion, which in turn encourages others to follow similar policy pathways and join the linked club. The reason this is done is not simply to have carbon price homogeneity, but to allow the transfer of emission reduction obligations to other parties such that they can be delivered more cost effectively. This allows one of two things to happen; the same reductions but at lower cost or greater reductions for the expected cost. The latter should ideally be the goal and is apparently the aspiration the USA has, given it states that the agreement should be “designed to promote ambitious efforts by a broad range of Parties.” The carbon price is simply a proxy for this process to allow terms of trade to be agreed as a reduction obligation is transferred.

All of this implies that the post 2020 agreement at least needs a placeholder of some description; to allow the transfer of reductions to take place between parties yet still have them counted against the national contribution. As it stands today, it is looking unlikely that explicit reference to carbon pricing or carbon markets will make its way into the agreement, but perhaps it doesn’t need to at this stage. On the back of a transfer mechanism, ambition could increase and a pricing regime for transfers could potentially evolve. If that happens to look like a global carbon market in the end, then so be it.

A flawed prediction?

One of the comments I quite often get at external events is that “The oil and gas industry has only got 20 years”. This doesn’t just come from enthusiastic climate campaigners, but from thoughtful, very well educated people in a number of disciplines related to the climate issue. A report by WWF a few years back took a similar but slightly less aggressive line, through the publication of an energy model forecast which showed that the world could be effectively fossil energy free as early as 2050.

It’s hard for anyone who has worked in this industry to imagine scenarios which see it vanish in a couple of decades, not because of the vested interest that we certainly have, but because of the vast scale, complexity and financial base of the industry itself. It has been built up over a period of 120+ years at a cost in the trillions (in today’s dollars), provides over 80% of primary energy globally, with that demand nearly doubling since 1980 and market share hardly budging. Demand may well double again by the second half of the century.

So why do people think that all this can be replaced in a relatively short space of time? A recent media story provides some insight.

As if often the case with the turn of the year, media outlets like to publish predictions. Once such set that appeared on CNN were by futurist Ray Kurzweil. He is described by CNN as:

. . . . one of the world’s leading inventors, thinkers, and futurists, with a 30-year track record of accurate predictions. Called “the restless genius” by The Wall Street Journal and “the ultimate thinking machine” by Forbes magazine, Kurzweil was selected as one of the top entrepreneurs by Inc. magazine, which described him as the “rightful heir to Thomas Edison.” Ray has written five national best-selling books. He is Director of Engineering at Google.

Kurzweil claims that:

By 2030 solar energy will have the capacity to meet all of our energy needs. If we could capture one part in ten thousand of the sunlight that falls on the Earth we could meet 100% of our energy needs, using this renewable and environmentally friendly source. As we apply new molecular scale technologies to solar panels, the cost per watt is coming down rapidly. Already Deutsche Bank, in a recent report, wrote “The cost of unsubsidized solar power is about the same as the cost of electricity from the grid in India and Italy. By 2014 even more countries will achieve solar ‘grid parity.'” The total number of watts of electricity produced by solar energy is growing exponentially, doubling every two years. It is now less than seven doublings from 100%.

That gives us just 14 years! But maybe not.

Kurzweil has compared the growth of the energy system to the way in which biological systems can grow. With huge amounts of food available, a biological system can continue to double in size on a regular time interval, but the end result is that it will either exhaust the food supply or completely consume its host (also exhausting the food supply), with both outcomes leading to collapse. Economic systems sometimes do this as well, but collapse is almost certain and there have been some spectacular examples over the last few centuries.

The more controlled pathway is one that may well see a burst of growth to establish a presence, followed by a much more regulated expansion limited by resources, finance, intervention, competition and a variety of other real world pressures. This is how energy systems tend to behave – they don’t continue to grow exponentially. Historically there are many examples of rapid early expansion, at least to the point of materiality (typically ~1% of global primary energy), followed by a long period of growth to some level which represents the economic potential of the energy source. Even the first rapid phase takes a generation, with the longer growth phase stretching out over decades.

Energy Deployment Laws

The chart above was developed by energy modelers in the Shell Scenario team, with their findings published in Nature back in 2009. The application of this type of rule gives a more realistic picture of how solar energy might grow, still very quickly, but not to meet 100% of global energy demand in just 14 years. The “Oceans” scenario, published last year as part of the Shell New Lens Scenarios, shows solar potentially dominating the global energy system by 2100, but at ~40% of primary energy (see below), not 100%. A second reality is that a single homogeneous system with everybody using the same technology for everything is unlikely – at least within this century. The existing legacy is just too big, with many parts of it having a good 50+ years of life ahead and more being built every day.

Solar in Oceans-2

As the EU Commission gears up to release its 2030 Energy and Climate White Paper in Davos week, there is considerable discussion regarding the emissions reduction target that will be recommended. Historically the EU has been keen on multiple targets, but in recent years this has backfired, with conflicting goals and multiple policy instruments leading to a weak carbon market and a lack of investment in one critical climate technology in particular, carbon capture and storage (CCS).

For the period 2020-2030, it is hoped that the EU will retreat on the number of targets and focus instead on a single greenhouse gas target that then becomes the main driver of change in the energy system. Such an approach could help restore the EU ETS and ultimately deliver the key carbon emissions goal at a lower overall cost, therefore also helping restore some EU positioning in terms of international competitiveness.

Most commentators are expecting the GHG target to be in the range of 35 to 40% from a 1990 baseline (vs. 20% for 2020), but there is very little discussion on how that target might be structured. There are two basic approaches;

  1.  Emissions must meet a particular goal in a given year.
  2. Cumulative emissions over a period of time must be below the baseline year on an average basis.

While a single statement such as “Emissions in 2020 must be 20% below 1990” is often used to cover both these cases, the goals are very different. This is a critical consideration as the EU sets out its position for 2030, but perhaps more importantly as future goals are tabled for the UNFCCC in Q1 2015.

The UNFCCC has, to date, monitored and reported on national objectives through the Kyoto Protocol, which is based on the second approach given above, i.e., cumulative emissions. In the Doha Amendment to the Kyoto Protocol, the EU commitment for the period 2013-2020 is a reduction of 20% below 1990. This is because the Kyoto Protocol is based on allowances (Assigned Amount Units or AAUs) and that these must be surrendered for each tonne emitted over the period. This is also how the atmosphere sees CO2 emissions – cumulatively. Every tonne matters as CO2 accumulates in the atmosphere over time. It doesn’t matter at all what the emissions are in a given year, only that the cumulative amount over time is kept below a certain amount. The EU ETS works in the same way – every tonne counts.

However, as if to confuse, the Doha Amendment also gives the EU Copenhagen pledge of a 20% (or 30% under certain conditions) reduction in greenhouse gas emissions by 2020 as a percentage of the reference year, 1990. In the particular case of the EU, due to the expectation of relatively flat emissions over the period 2013 to 2020, these two goals are very similar, such that the difference issue hasn’t really seen the light of day. Further to this, the Kyoto Protocol allows for carryover of AAUs from 2008-2012 into the 2013-2020 period, so the difference is further dampened. But when it comes to 2030, big differences could show up (see chart below).

 Eu Emissions Goal 2030

 In the case of a 35% target (for example), the brown line shows a pathway to this as a fixed goal in 2030, but equally any pathway would be okay as long as the emissions are 35% below 1990 levels in 2030. But on a cumulative emissions basis, assuming a linear reduction, this is only a 28% reduction for the period 2021 to 2030.

The green line equates to a 35% cumulative emissions reduction for the same period, but in the year 2030 a reduction of about 47% is actually needed to achieve this, a much more ambitious requirement then a simple 2030 goal.

Exactly what the EU says on January 22nd remains to be seen, with considerations such as the high level number itself and domestic vs. international action being the main discussion points. But the big difference might just lie in the eventual wording (“by 2030” or “through to 2030”) and the need to table commitments with the UNFCCC at some point, particularly if the latter still works on a cumulative basis after a global agreement is reached.

The other end of the spectrum

With Warsaw now a fading memory and the meager outcome still cause for concern that there really isn’t enough substance to build a robust global agreement upon, I signed up for The Radical Emission Reduction Conference at the Royal Society. This was held in London and put on by the Tyndall Centre for Climate Change Research. Given the academic reputation of the Tyndall Centre and of course the credentials of the Royal Society, I was hoping for a useful discussion on rapid deployment of technologies such as CCS, how the world might breathe new life into nuclear and other such topics, but this was far from the content of the sessions that I was able to attend.

Rather, this was a room of catastrophists (as in “catastrophic global warming”), with the prevailing view, at least to my ears, that the issue could only be addressed by the complete transformation of the global energy and political systems, with the latter moving to one of state control and regulated consumerism. There would be no room for “ruthless individualism” in such a world.  The posters that dotted the lecture theatre lobby area covered topics as diverse as vegan diets to an eventual return to low technology hunter-gatherer societies (but thankfully there was one CCS poster in the middle of all this).

Much to my surprise I was not really at an emission reduction conference (despite the label saying I was), but a political ideology conference. Although I have been involved in the climate change issue for over a decade, I had not heard this set of views on the issue voiced so consistently in one place. This was a room where there was a round of applause when one audience member asked how LNG and coal exporters in Australia might be “annihilated” following their (supposed) support for the repeal of the carbon tax in that country. A few of the key points coming from both the speakers and audience in the sessions I was able to stay for were;

  • The human impact of development is a function of three variables; population, technology and affluence (another version of the Kaya Identity), which therefore argued for affluence to be reduced, given that population couldn’t be and technology was in a progression of its own.
  • The recent World Trade Agreement in Bali was anti-climate in that the removal of further trade barriers would simply offer more opportunity for consumerism and therefore more emissions. This was cited as a “neo-liberal elitist trade agenda”.
  • The current energy system is “a lousy way of powering our economy”.
  • A climate movement is rapidly evolving and could be likened to the global anti-apartheid movement that developed throughout the 1970s and 1980s. This includes the current fossil fuel divestment advocates.
  • Markets would not and could not deliver the necessary changes to the current energy system, even with the introduction of carbon pricing.
  • Small and renewable is good. Even large scale renewable projects run by major utilities are seemingly unacceptable – local community generated renewable electricity is the only answer.

Another feature of the discussion was the view that like apartheid or the Berlin Wall, the change from the current state of the energy system to a zero emissions one (there is no 40% or 50% or even 80% reduction talk here) can happen overnight and be triggered in a similar way, i.e. a popular but peaceful uprising, hence the talk of a rapidly evolving “climate movement”.

The above is a flavour of the sentiment and there was plenty more, all articulated with great passion and deep concern. This is all very well and of course this group have every right to express their view, but for me the event highlighted one of the real problems associated with climate change; that it is an issue with a chasm between the two ends of the spectrum and the rest of us are left in the middle watching the exchange. Problematically, the chasm is a deeply rooted political one which questions the very role of government and the economic structure of society. Could anything be more difficult to arbitrate? Thinking back to Warsaw and although the UNFCCC is a more contained (and constrained) stage, elements of this divide play out there as well, which perhaps speaks to why there has been such limited progress.

None of this need be the case, which is probably why I felt a level of discomfort in the conference and why the UNFCCC process feels frustrating. Carbon pricing can make the difference, but we need to see it evolve and mature without the systematic attack it has endured to date (from all sides). Technology does have a key role to play, but it will take time for deployment on the scale necessary and both ends of that spectrum are essential – CCS on one side and zero carbon fossil fuel alternatives on the other. Finance is important, but big energy projects have attracted capital for decades so we shouldn’t position a required change in this as the critical enabler for success. Finally, patience is a virtue, like it or not this is now a project for the whole of the 21st century.

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.

Realities in the energy mix

There is an interesting article in The Economist this week which discusses the impact that renewable energy is having in Germany. As renewable energy use grows, there is the perverse effect that coal is staying put and natural gas is getting backed out. As a result, German emissions aren’t really doing much at the moment. They certainly aren’t continuing to fall.

 German Emissions

This is just one example of the overall challenge of actually seeing a sustained fall in fossil fuel use and therefore emissions. Another was highlighted in last week’s Economist, but not as an article, rather a call for tender in the rear of the magazine. India coal


Two Indian states called for interested parties to pre-qualify for the construction of 8 GW of coal fired power stations – just two examples of many similar cases around the world. These power stations, once constructed, might run for up to 50 years, delivering some 2.5 billion tonnes of CO2 to the atmosphere or nearly 700 million tonnes of carbon. Against a global cumulative limit of 1 trillion tonnes of carbon (for 2°C), of which 570 billion tonnes has been used, this one set of tender documents represents nearly 0.2% of the all-time remaining carbon emissions.

They will likely be built, as will many others, bringing much needed electricity to rapidly emerging economies. In this particular case, this development will deliver about the same electricity as all the currently installed wind and solar capacity in India. That’s about 22 GW, but with a load factor of about 0.3, gives something similar to 8 GW of coal.

Given its longevity, this facility should be built with carbon capture and storage, but there is no sign of that happening. While India has made great strides in renewable energy investment and energy efficiency, it has yet to tackle CO2 emissions from fossil fuel use. Given the growing Indian economy, fossil fuel use is also growing and alternatives aren’t even close to keeping pace with the overall demand. So far this century (13 years) Indian CO2 emissions have approximately doubled.

With COP19 in Warsaw just around the corner and then only two years before a comprehensive global deal is supposed to be agreed in Paris, developments like this raise the question as to what could possibly happen in such a short space of time to fundamentally turn the corner.

Despite the efforts made and the best of intentions, is it really conceivable that the deal in Paris in 2015 will change the terms of this tender, and others like it, to ones that requires CCS?

A very different pathway forward

During a future energy workshop that I attended recently the audience heard from Professor Jorgen Randers, from the Center for Climate Strategy at the Norwegian Business School. Although Professor Randers has been involved in scenario planning for many years, he introduced his lecture by saying that it was time to just do a realistic forecast of what is “going to happen” and be done with it. He held out little hope for any sort of coordinated global action on emissions, which basically meant that the world would just have to come to terms with its higher atmospheric CO2 future. What was interesting though was the forecast that he then proceeded to give – it certainly wasn’t the runaway apocalypse that some will have us believe we are in for. I should say that Professor Randers earnestly thought we need to do better than this, he just couldn’t see how it might come about.

The forecast he presented is available on his website ( He uses a very small number of key metrics to establish his outlook, but takes a different view on how they might develop. The starting point is population, which he sees reaching a plateau of 8 billion in 2040, at the low end of UN forecasts (but not outside the forecast) . This is because of declining fertility rates as women increasingly move into the workforce and seek careers. As the existing population ages the global death rate increases as well. This population trend is, not surprisingly, a critical assumption for his forecast.

Randers - population 

The next key assumption is that global GDP will begin to slow down, linked in part to the population assumption (the number of people in the 15-65 age bracket actually falls after 2035) and a second critical assumption that continuous improvement in labour productivity will eventually end as this metric plateaus (he noted that it has already started to). The result is global GDP also reaching a plateau in the 2050s and beyond. Linked to this is a plateau in consumption which is dampened by the need to spend a non-trivial amount of global GDP on adaptation and reconstruction (coastal cities etc.) as the climate changes and sea levels continue to rise. This latter point is an important self regulating part of the analysis.

Randers then turned his attention to energy use, shown in the chart below. With energy use per unit of GDP (efficiency) continuing its downward trend, global energy use peaks in 2040 and then declines.

Randers - energy 

The energy mix also changes over the period, with renewable energy coming on strongly, oil use reaching a long plateau around 2020 then declining quite quickly and both coal and natural gas use peaking in the 2030s. As a result CO2 emissions peak in 2030 and decline, dropping 10 billion tpa over the subsequent 20 years.

Randers - CO2 

All of this then feeds through to an eventual plateau in atmospheric CO2 and therefore temperature. Randers clearly recognizes that we shoot through 2°C, but the end point in his forecast is about 3°C, not the much higher levels of 4, 5 or even 6°C that some are concerned about. In effect, this is now a self regulating system, albeit one that has to deal with significant changes in sea level and other impacts.

There was no attempt to endorse any of this, quite the opposite. Randers also noted that some of his assumptions are seen as politically or socially unacceptable, such as the declining birthrate and an eventual plateau in GDP. As such, the forecast itself becomes something of a political hot potato.

Whether he is right or wrong isn’t really the point, what is interesting about the analysis is that some very small changes in basic assumptions can have a profound effect on the outcome. Pretty much anybody that has constructed even the simplest spreadsheet with built in growth rates recognizes this, but I hadn’t seen it applied in this manner before. Even though they may be outside our normal expectation, all of his assumptions fall within the bounds of credibility, so the forecast is essentially a valid one. A 3°C world is far from where we are today, but it is useful to recognize that our global climate / economic system is now essentially a single entity and that there may be an outcome which is very different to the alternate vision of “meltdown”.

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.