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Two views on mitigation economics

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The annual Forum held by the MIT Joint Program on the Science and Policy of Global Change is always an interesting event, with excellent presentations and lively debate ensuing. The recent Forum held in Boston in early October was no exception thanks to a discussion on two very different approaches to triggering the necessary mitigation of carbon dioxide emissions.

The debate started with a presentation on cumulative emissions and the clear link to atmospheric warming. This comes back to the “stock” vs. “flow” nature of carbon dioxide into the atmosphere which I have written about here and is the foundation of my recent book. The key to the issue is that as CO2 is a stock addition to the atmosphere, it doesn’t matter when or where the CO2 is emitted for the same net accumulation. As a result, the eventual accumulation will tend towards the full release of known fossil fuel reserves simply because the infrastructure exists to extract them and as such they will get used somewhere or at some time.  This also implies only one remaining path forward (given that non-use is unlikely) for stabilizing atmospheric concentrations of CO2; capturing and storing the CO2 when the fuels are used (i.e. Carbon Capture and Storage or CCS)

The above line of reasoning led one participant to propose that the simplest solution to the climate issue was to mandate sequestration, starting with a small amount for each tonne of CO2 emitted, say 1-2%, but progressively increasing this throughout the century until 100% is reached. Tradable CCS certificates (where one certificate represents one tonne of CO2 stored) could be used to distribute the benefits of individual large projects amongst many, particularly in the early years when the sequestration requirement from an individual emitter would still be small. Further, it was argued that this was economically more attractive than the widespread use of a carbon price, which would have to get to higher levels (probably more than $50/tonne) than current systems are offering to trigger even the first CCS project.

In the case of CCS certificate trading, which might trade in the range $50-$100 per tonne of stored CO2 early on, the cost for an individual emitter would nevertheless be initially small. If this was started in 2020 at 1% and reached 15% sequestration by 2030 (i.e. 100% by mid 2080s), the average cost over the period 2020-2030 to an emitter would be $8.50 per tonne of CO2, even with CCS certificates trading at $100 each. This is about the current level of the EU ETS which of course is unlikely to see any CCS projects at such prices.

For a carbon pricing approach, the CO2 price would have to be somewhat higher than the current level in the EU ETS to trigger CCS activity, which would likely delay its implementation and in any case probably cause grief within the system simply because of the higher price and its claimed impact on industry, competitiveness and consumers. It was argued in the MIT debate that this latter effect could well mean that it becomes politically unacceptable to ever let direct pricing mechanisms get to the level required for CCS.

The carbon pricing economists in the room responded to this, arguing that the direct pricing approach was more efficient in that it would allow a range of other mitigation options to play out in the interim before CCS was actually needed. This brought the response that only under the circumstances of uniform carbon pricing with full global reach might this be true; although with the caveat that in the context of an accumulation problem, there were no other mitigation options other than CCS and not using the fuels in the first instance. Partial reach (e.g. the EU ETS and China ETS) of carbon pricing, while significant, might simply introduce a trade distortion, rerouting fossil fuels to other parts of the world and eventually resulting in the same accumulation in the atmosphere. The claim was that carbon pricing tended to address the problem on a flow basis rather than stock basis and measured success as reduced emssions in the location where it operated, rather than reduced accumulation in the atmosphere over the long term. By contrast, it was argued that any application of CCS, even on a local basis, dealt directly with accumulation.

There wasn’t a resolution to the issues discussed above, but the discussion was a great example of the early development of policy thinking. Carbon pricing has dominated the debate for many years and rightly so, but as the science shifts in its emphasis and focuses more specifically on the root causes, policy will eventually have to adjust as well.

The release of the IPCC 5th Assessment Report Synthesis document on Sunday was a useful reminder of the wealth of measurements, observations and science behind the reality of the anthropocene era and the impact it is having on global ecosystems. While some may embrace this material as proof of society’s “wicked ways” and others may contest it on the grounds of conspiracy or hoax, the real job at hand is to find a way of dealing with the challenge that is posed. Within the 100+ pages of text of the longer report, two parts in particular highlight the scope of what needs to be done.

Within 1.2.2:

Despite a growing number of climate change mitigation policies, annual GHG emissions grew on average by 1.0 GtCO2eq (2.2%) per year, from 2000 to 2010, compared to 0.4 GtCO2eq (1.3%) per year, from 1970 to 2000. Total anthropogenic GHG emissions from 2000 to 2010 were the highest in human history and reached 49 (±4.5) GtCO2eq yr-1 in 2010.

Within 3.2 and 3.4:

Global mean surface warming is largely determined by cumulative emissions, which are, in turn, linked to emissions over different timescales. Limiting risks across reasons for concern would imply a limit for cumulative emissions of CO2. Such a limit would require that global net emissions of CO2 eventually decrease to zero.

There are multiple mitigation pathways that are likely to limit warming to below 2 °C relative to pre- industrial levels. Limiting warming to 2.5 °C or 3 °C involves similar challenges, but less quickly. These pathways would require substantial emissions reductions over the next few decades, and near zero emissions of CO2 and other long-lived GHGs over by the end of the century.

The IPCC have now fully embraced the cumulative emissions concept and taken it to its logical conclusion; near zero emissions within this century. This wasn’t explicitly mentioned in the 2007 4th Assessment Report, but was only really there by inference in the mitigation scenario charts that extend beyond 2050. Anyway, the reference is very clear this time around.

This represents a formidable task given the other half of the problem statement also shown above; that emissions are rising faster than ever. There is a second uncomfortable truth buried within this paragraph, which is the implication that current mitigation policies aren’t working.

So there we have it in a nutshell;

Emissions are rising faster than ever, current policies to stop this aren’t working, but we need to be at zero in 85 years.

Eighty five years is the lifetime of an individual. It means that someone born today will need to see a radical change in energy production within the course of their life, to the extent that it is constantly changing for all 85 years, not just locally but everywhere in the world. Arguably someone born in England around 1820 saw this as the industrial revolution unfolded and the Victorian era took hold. But someone born in 1930 hasn’t actually seen a fundamental change in the energy system, rather an enormous scaling up of what was starting to become commonplace at the time of their birth.

This is the issue that I explore in my new book and which is tackled in the Shell New Lens Scenarios released last year. Both the scenarios show that this puzzle is solvable, albeit in very different ways and with different policy approaches but with different levels of success. A critical factor in both scenarios is the timing and deployment rates of carbon capture and storage (CCS). The earlier this starts and the faster it scales up, the higher the chance of limiting warming to around  2°C. This is also highlighted in the IPCC Synthesis Report which says in Section 3.4;

Many models could not limit likely warming to below 2 °C over the 21st century relative to pre-industrial levels, if additional mitigation is considerably delayed, or if availability of key technologies, such as bioenergy, CCS, and their combination (BECCS) are limited (high confidence).

CCS is of course dependent on a price for carbon dioxide or in its absence a standard of some description to implement capture and storage. These policies are largely absent today, despite over two decades of effort since the creation of the UNFCCC. There are certainly some major carbon pricing systems in place, but most are delivering only a very weak carbon price signal and none are leading to large scale rollout of CCS or show any signs of doing so in the near future. Rather, the emphasis has been on promoting the use of renewable energy and increasing the efficiency of energy use. Both of these policies will bring about change in the energy system and efficiency measures will almost certainly add value to most, if not all economies, but it is entirely possible that large scale adoption of these measures doesn’t actually cause global CO2 emissions to fall.

The IPCC have also put a cost on this policy failure in Table 3.2, which shows mitigation costs nearly one and a half times greater in a world which does not deploy CCS. This high cost comes about because the only way to resolve the scenario models is to limit economic activity as means of mitigation; CCS rollout prevents that from happening.

Another way of looking at this is to imagine the actual climate change consequences of delaying CCS rollout, since the likelihood of limiting economic activity is very low. A back calculation from the Shell scenarios implies that every year large scale rollout of CCS is delayed, 1 ppm of atmospheric CO2 is added to eventual stabilisation. This comes about from the cumulative nature of the problem. As such, a 30 year delay means accepting an eventual concentration of CO2 that is some 30 ppm higher than it need be which in turn has consequences for impacts such as sea level rise.

The negotiators now preparing to head to Lima for COP20 and then to Paris a year later may well be poring over the pages of data and dozens of graphs in the 5th Assessment Report, but the message is nevertheless a simple one, although requiring some bold steps.

My new book, Putting the Genie Back, goes to some length picking apart the climate issue and then explaining why carbon capture and storage (CCS) is such a critical part of the solution set. It eventually becomes clear when you really think it about and consider three things;

  • The huge scale of the fossil fuel based energy system;
  • The way carbon dioxide accumulates in the atmosphere and;
  • The extraction economics of fossil fuels.

But few of us have the time to really think about an issue such as climate change, let alone read books on the subject or attend seminars, lectures and climate conferences (although quite a few of these don’t mention CCS at all and some barely acknowledge the need for a carbon price). Rather, in this word of social media, 140 character tweets and 24/7 News Channels, we often get just a few minutes to come to terms with a concept and form an opinion. As such, is it possible to explain the role of CCS in such a short amount of time?

With an eye on the UN Climate Summit and then the opportunities in the lead-up to COP21 in Paris, the World Business Council for Sustainable Development (WBCSD) has given it a try. The media they have used is video, working with an exciting graphics company called Carbon Visuals. The challenge was to help the audience understand why CCS is important in just a few minutes, not just by being told so, but by being convinced.

Carbon Visuals focussed on two key aspects of the climate issue, that being the huge scale of fossil fuel use and the way in which CO2 from this use accumulates in the ocean / atmosphere system, with further accumulation likely due to the global fossil resource base still to be extracted to meet energy needs.

The visuals depicting scale are very attention grabbing, to help the viewer recognise that fossil fuel use is highly unlikely to diminish in the near term or even vanish in the longer term. For example, daily global coal use alone buries Midtown East Manhattan.

Coal mountain

This is then contrasted with renewable energy, which while growing very rapidly, isn’t even outpacing the growth in fossil fuel use, let alone forcing it down.

The animation steps up a notch when it comes to depicting CO2, which bursts out of Central Park and literally buries New York as it accumulates. These spheres are something of a Carbon Visuals “trademark”, first appearing in an excellent video they made about New York City emissions.

CO2 pile in NYC

Finally, the animation puts this into perspective in terms of global accumulation and the likelihood of exceeding the trillion tonnes of carbon threshold (and therefore 2°C), unless of course large scale deployment of CCS takes place to mitigate such an outcome. Of course a great deal has to happen for this scale of CCS to be built, starting with more widespread application of carbon pricing.

CCS Animation

You can watch the animation here and look in more detail at the images and thinking behind it here.

Betting everything on one colour

In my last post I provided a short review of the IPCC 5th AR, WGIII on Mitigation, with the emphasis on one table which showed how much more expensive mitigation will be over this century without carbon capture and storage. Unfortunately, this pearl from the IPCC didn’t get much coverage. Looking another layer down into the WGIII Technical Report, Chapter 6, the CCS case is very clear;

As noted above, the lack of availability of CCS is most frequently associated with the most significant cost increase (Edenhofer et al., 2010; Tavoni et al., 2012; Krey et al., 2014; Kriegler et al., 2014a; Riahi et al., 2014), particularly for concentration goals approaching 450 ppm CO2eq, which are characterized by often substantial overshoot. One fundamental reason for this is that the combination of biomass with CCS can serve as a CDR technology in the form of BECCS (Azar et al., 2006; van Vliet et al., 2009; Krey and Riahi, 2009; Edmonds et al., 2013; Kriegler et al., 2013a; van Vuuren et al., 2013) (see Sections 6.3.2    and 6.9  ). In addition to the ability to produce negative emissions when coupled with bioenergy, CCS is a versatile technology that can be combined with electricity, synthetic fuel, and hydrogen production from several feedstocks and in energy‐intensive industries such as cement and steel. The CCS can also act as bridge technology that is compatible with existing fossil‐fuel dominated supply structures (see Sections 7.5.5, 7.9, and 6.9   for a discussion of challenges and risks of CCS and CDR). Bioenergy shares some of these characteristics with CCS. It is also an essential ingredient for BECCS, and it can be applied in various sectors of the energy system, including for the provision of liquid low‐carbon fuels for transportation (see Chapter 11, Bioenergy Annex for a discussion of related challenges and risks). In contrast, those options that are largely confined to the electricity sector (e.g., wind, solar, and nuclear energy) and heat generation tend to show a lower value, both because they cannot be used to generate negative emissions and because there are a number of low‐carbon electricity supply options available that can generally substitute each other (Krey et al., 2014).

Importantly, this isn’t just about the cost of mitigation, but about the feasibility of meeting the global 2°C goal. As such, you would expect that CCS should figure at the top of the agenda at a climate conference, but this is rarely the case – in fact, in my experience it is only the case when the conference is actually about CCS.

On May 4-5th, the global climate fraternity will meet in Abu Dhabi for the Abu Dhabi Ascent, the first and only preparatory conference for the UN Secretary General’s Climate Summit on September 23rd in New York. The objectives of the meeting are as follows;

The objective of the Abu Dhabi Ascent is to provide an opportunity for all Governments to be fully informed about the Climate Summit, including how they can bring bold announcements and actions to the Summit, as requested by the Secretary-General. The Ascent will be the only meeting before the Summit in which Governments, the private sector and civil society will come together to explore international and multi-stakeholder efforts that have high potential for catalysing ambitious action on the ground. The Secretary-General set two objectives for the Summit: to catalyse ambitious action on the ground to reduce emissions and strengthen climate resilience, and to mobilize political momentum for an ambitious, global, legal agreement in 2015.

That certainly sounds like a conference where CCS would get some air time, but no, the agenda only includes the following;

  • Energy Efficiency
  • Renewable Energy
  • Short-Lived Climate Pollutants (SLCPs)
  • Transportation
  • Cities
  • Agriculture
  • Forests
  • Climate Finance
  • Adaptation, Resilience and Disaster Risk Reduction (DRR)
  • Economic Drivers

Top of the list is my “old favourite”, energy efficiency, a great way to spur economies and stimulate economic growth, but almost certainly a red herring in the drive to contain cumulative emissions over the course of this century. My real favourite, carbon pricing, is there but well hidden under the obscure heading of “Economic Drivers”. As noted, CCS isn’t there at all.

We might imagine a world of clean, efficient renewable energy and we will need that, but it isn’t obtainable today and possibly not even by the end of this century. It will take time to evolve as the current energy system has evolved over the last 200 years. But the CO2 issue presents us with a pressing problem today that somehow needs a solution. The concern is that in the casino we live in, we seem to be betting all our chips on one colour, green, which might be a gamble too far. The even money bet on CCS and alternatives (renewables, nuclear) is what is needed.

The learning from IPCC WGIII and their scenario analysis seems to be lost on those who are leading the challenging process to bring nations together to solve the climate issue. There is something almost comical about this situation – perhaps an echo from Dr. Strangelove would be “You can’t talk about CCS here, this is a climate conference!”.

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;

 IPCC WGIII Table SPM2

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.

With much anticipation but little more than 24 hours of media coverage, the Intergovernmental Panel on Climate Change (IPCC) released the next part of the 5th Assessment Report, with Working Group II reporting on Impacts, Adaptation and Vulnerability. The report started with the very definitive statement;

Human interference with the climate system is occurring . . . 

But this was immediately followed by a statement that set the scene for the entire assessment;

. . . . and climate change poses risks for human and natural systems.

The key word here is “risk”. This report attempted to explain the risks associated with rising levels of CO2 in the atmosphere and demonstrate how the impact risk profile shifts depending on the eventual change in surface temperature and the response to this through adaptation measures. Unfortunately, the subtlety of this was largely lost in the media reporting.

For example, although the Guardian did use the “risk” word, it chose to open one of its many stories on the new report with the statement;

Australia is set to suffer a loss of native species, significant damage to coastal infrastructure and a profoundly altered Great Barrier Reef due to climate change . . . .

This was under the headline “Climate change will damage Australia’s coastal infrastructure“.

The IPCC report didn’t actually say this, rather it presented a risk assessment for coral reef change around the coast of Australia under different emission and temperature scenarios. This was summarised, along with a wide variety of other impact risks, in a useful chart form with the Australian coral extract shown below.

Coral reef risk

Of course it is the job of the media to translate a rather arcane and technical report into something that a much larger number of people can understand, but it is nevertheless important to retain the key elements of the original work. In this case, it is the risk aspect. With very few exceptions, there is no “will” in this subject, only “could”. Some of those “could” events have a very high level of probability (the IPCC use the term “virtually certain” for 99% probability), but this still doesn’t mean it is certain.

There has been an increasing tendency to talk about climate change in absolutes, such as “stronger hurricanes”, “more violent storms” and “a profoundly altered Great Barrier Reef”, when in fact this isn’t how the science describes the issue. Rather, it is how the media and others have chosen to describe it. This isn’t to say that these risks should be dismissed or ignored, they are real and very troubling, but the outcomes are not a given. Hopefully as others have time to digest the latest IPCC work, this aspect of the story becomes more prominent.

Taking this a step further though, it would appear that even the IPCC have chosen to present the risks with a slight skew. Although they are completely transparent about all the material they have used to build their case, the final presentation in the risk charts doesn’t tell the full story. They have chosen to present only two scenarios in the summary document, the 2 ºC case and the 4 ºC case. There is much to say between these and arguably, the space between 2 and 4 is where the real risk management story lies.

This was analysed in 2009 by the MIT Joint Program, in their report Analysis of Climate Policy Targets under Uncertainty. The authors demonstrated that even a modest attempt to mitigate emissions could profoundly affect the risk profile for equilibrium surface temperature. In the chart below five mitigation scenarios are shown, from a “do nothing” approach to a very stringent climate regime (Level 1, akin to the IPCC 2 ºC case). They note in the report that:

An important feature of the results is that the reduction in the tails of the temperature change distributions is greater than in the median. For example, the Level 4 stabilization scenario reduces the median temperature change by the last decade of this century by 1.7 ºC (from 5.1 to 3.4 ºC), but reduces the upper 95% bound by 3.2oC (from 8.2 to 5.0 ºC). In addition to being a larger magnitude reduction, there are reasons to believe that the relationship between temperature increase and damages is non-linear, creating increasing marginal damages with increasing temperature (e.g., Schneider et al., 2007). While many estimates of the benefits of greenhouse gas control focus on reductions in temperature for a reference case that is similar to our median, these results illustrate that even relatively loose constraints on emissions reduce greatly the chance of an extreme temperature increase, which is associated with the greatest damage.

 Temperature uncertainty

There is a certain orthodoxy in only looking at 2 and 4 ºC scenarios. It plays into the unhelpful discussion that seems to prevail in climate politics that “it must be 2 ºC or it’s a catastrophe.” I posted a story on this late last year. As it becomes increasingly clear that the extreme mitigation scenario required for 2 ºC simply isn’t going to happen, society will need to explore the area between these two outcomes with a view to establishing what can actually be achieved in terms of mitigation and to what extent that effort will shift the impact risk. Maybe this is something for the 6th Assessment Report.

As politicians from all parties don Wellington boots and wade through flooded fields and streets in southern England, the subject of climate change is rising up the agenda. While all but a very few have stayed away from direct attribution of the England floods to climate change, it is also clear that nobody has a good set of words that describe the current situation and the link, or otherwise, to the climate issue. Rather, politicians seem to be stumbling through the discussion, grappling for the correct language to talk about linkage but not to drift into attribution.

The starting point is somewhat loaded, in that the issue itself is now referred to more widely as climate change, rather than global warming. Although both have been part of the lexicon since the 1970’s, the climate reference has certainly won the day (Google Ngram Viewer, see below). It brings with it an expectation that change is underway, whether it is or isn’t for a particular location. Global warming more accurately describes the core issue, i.e. that the atmosphere / ocean system is warming in response to increasing levels of carbon dioxide, but it’s arguably less emotive and exciting. It also doesn’t fully describe the full scope of the CO2 issue. Ngram - Climate vs Warming

Exactly how and by how much the climate will change as a result of ocean and atmosphere warming remains to be seen, although a wealth of science, analysis, and computer modeling certainly doesn’t point to a static situation. Some locations may see very distinct and obvious changes over time, others may see very little. The problem is that we are all very impatient, whereas warming and its consequences will be a long, slow drawn out affair with mixed impacts on specific locations. As a result, the temptation to jump to conclusions is almost overwhelming.

The MIT Joint Program on the Science and Policy of Global Change has been actively exploring how best to talk about uncertainty. Perhaps their most successful tool is the Greenhouse Gas Gamble “wheel of fortune”, which tries to put the uncertainty around warming into terms that people can understand. The Joint Program website offers a nice tool where the reader can “spin” the wheel and see the distribution of results through to 2100, both under a business as usual scenario and with a robust set of policy measure applied throughout the world.

 Greenhouse Gas Gamble

 

As the wheel is spun more and more times, a distribution emerges, which then gives some sense of the changes that may be in store for us. Most importantly, one feature of the “With Policy” case that is highlighted is the complete disappearance of the tail of the distribution, which in the “No Policy” case shows that very high temperature rises are possible. By contrast, even in the world where we take no action on climate at all, there is still some chance, albeit vanishingly small, that the temperature rise will be modest.

 Greenhouse Gas Gamble with spins

 

Tools similar to this could be developed for regional issues, such as precipitation in the UK, drought in Texas and heatwaves in Australia. They won’t be perfect, but may help in better understanding and more importantly, explaining what is going on. For example, even a historical distribution of precipitation for the winter period in southern England with the current winter shown would do a far better job in contextualizing the deluge we are aving, than vaguely saying it was a record and arguing that it might be climate change. A single point sitting several standard deviations away from an otherwise normal distribution would put it in the same category as the 2003 European heatwave, whereas a marginal outlier in a tight distribution might be viewed with less concern.

It may well be the case that the flooding in England is a result of enhanced warming from higher levels of CO2 in the atmosphere. Equally, it may just be part of the chaotic system we call “the weather”. Either way, a more informed discussion needs to take place, supported by data and helpful tools to unravel the messages contained within it.

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.

What to make of 2013?

It’s difficult to sum up 2013 from a climate standpoint, other than to note that it was a year of contrast and just a little irony. Overall progress in actually dealing with the issue of global emissions made some minor gains, although there were a few setbacks of note along the way as well.

  • The IPCC released the climate science part of their 5th Assessment Report and that managed to keep the media interested for about a day, after which it was back to issues such as health care, economic growth, Euro-problems and assorted regional conflicts. Importantly, the report introduced into the mainstream the much more challenging model for global emissions, which recognizes that it is the long term accumulation that is important, rather than emissions in any particular year.
  • The global surface temperature trend remained stubbornly flat, despite every indication that the heat imbalance due to increasing amounts of CO2 in the atmosphere remains in place and therefore warming the atmosphere / ice / ocean system somewhere, although where exactly remained unclear. The lack of a clear short term trend became a key piece of evidence for those that argue there is no issue with changing the concentration of key components of the atmosphere, which further challenged the climate science community to provide some answers.
  • The UNFCCC continued to put a brave face on negotiations that are being seriously challenged for pace by most of the worlds declining glaciers while the world’s largest emitter, China, often thought of as blocking progress at the international level kicked off a number of carbon pricing trial systems in various parts of the country.
  • Australia elected a government that proudly announced on its first day in office that the carbon pricing system which was finally in place and operating after eight years of arguing would be dismantled, only to be confronted by the fact that the country sweltered under the hottest annual conditions ever recorded in that part of the world.
  • Several very unusual global weather extremes were reported, including what may be the most powerful ever storm to make landfall, yet there was a distinct lack of desire by scientists and commentators to attribute anything to the rising level of CO2 emissions in the atmosphere, except perhaps for the UNFCCC negotiator from the Philippines who went on a brief hunger strike in response to devastation that hit parts of his country.
  • The EU carbon price remained in the doldrums for the entire year, although did show a few signs of life as the Commission, Parliament and various Member States teased, tempted and taunted us with the prospect of action to correct the ETS and set it back on track. In the end, the “backloading” proposal was passed by the Parliament and will likely be adopted and implemented, but the test will be whether or not the Commission now has the backbone to propose and unconditionally support the necessary long term measures to see the ETS through to 2030 as the main driver of change.
  • For the first time that I had seen, a book was released that finally got to grips with the emissions issue, yet somewhat alarmingly failed to find any clear route out of the dilemma we collectively find ourselves in. “The Burning Question”, by Mike Berners-Lee and Duncan Clarke recognized how difficult the emissions challenge has become and questioned those who trivialize the issue by arguing that more renewable energy and better efficiency is all that is needed to solve the problem. Clearly a book for those who designed the hallway posters [Link] at COP19 in Warsaw to read. Closer to home, new Shell Scenarios released in March [Link] 2013 did chart a pathway out of the emissions corner that Mike and Duncan painted themselves into, but the much discussed 2°C wasn’t quite at the end of it.
  • The IEA put climate change back in the headlines of their World Energy Outlook, with a special supplement released in June outlining a number of critical steps that need to be taken to keep the 2°C door open. Unfortunately they hadn’t taken the time to read “The Burning Question” and consequently positioned enhanced energy efficiency as a key step to take over this decade.
  • In North America both the US and Canadian Federal governments continued to head towards a regulatory approach to managing emissions, while States and Provinces respectively continued to push for carbon pricing mechanisms. California and Quebec linked their cap and trade systems to create a first cross border link in the region.
  • The World Bank Partnership for Market Readiness continued its mission of preparing countries for carbon markets and carbon pricing, with numerous “works in progress” to show for the efforts put in to date. But the switch from early trials and learning by doing phases to robust carbon trading platforms underpinning vibrant markets remains elusive.

 These were all important steps, particularly those that tried to broaden or strengthen the role of carbon pricing. On that particular issue, 2013 saw both positive and negative developments, with progress best described as “baby steps” rather than anything substantial. With a change in the European Parliament, mid-term elections in the US and Australia in the process of unwinding, it is difficult to see where the big carbon pricing story in 2014 will come from. Perhaps the tinges of orange (see below) now beginning to appear in South America will flourish and green with COP20 being held in that region towards the end of the year.

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A final contribution from Warsaw

As most will have seen from various media reports, delegates to COP 19 in Warsaw continued negotiating the outcome until late Saturday night. The key sticking points were “loss and damage” and the shape of national actions that would ultimately form the foundation of the 2015 deal (for implementation post 2020).

The agreement from the Doha COP (3/CP.18) to create a mechanism for “loss and damage” related to climate change was delivered on, but probably fell far short of what many developing country negotiators were hoping for. Those at the extreme of this may have been interpreting it as a formula to assess the climate component of national reparations from a given event or weather trend and then bill emitters accordingly, but this is not how the problem was addressed by the negotiators in Warsaw. Rather, the Warsaw International Mechanism for Loss and Damage establishes an advisory and information sharing body with an executive committee that must report annually to SBSTA and SBI and make recommendations. At least for now, this issue has been kicked into the long grass, but it will return in 2016 when it is subject to review at COP 22.

As noted, the second major sticking point was over the nature of national mitigation actions post 2020. The agreed text seeks to have these tabled in the next 18 months, i.e. by Q1 2015. Specifically the text says:

To invite all  Parties to initiate or intensify domestic preparations for their intended  nationally determined contributions,  without prejudice to the  legal nature of the contributions, in the context  of adopting a  protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties towards achieving the objective of the Convention as set out in its Article 2 and to communicate them well in advance of the twenty-first session of the Conference of the Parties (by the first quarter of 2015 by those  Parties ready to do so) in a  manner that facilitates  the clarity, transparency and understanding of the intended contributions, without prejudice to the legal nature of the contributions;

Reaffirming the mandate agreed in Durban which aims to see all countries treating mitigation similarly, the negotiators landed on the wording “prepare contributions”, rather than some countries being asked for specific reduction targets or commitments and others for appropriate (to their development status) actions. The latter would have been a retreat back towards the strict developed / developing country division of the Kyoto Protocol, so this wording is a positive development in that sense.

But the compromise word of “contribution” has its own issues and is not the same as “commitments”. The two words have very different meanings;

Commitment: the state or quality of being dedicated to a cause, activity, etc., or, an engagement or obligation that restricts freedom of action. 

Contribution: a gift or payment to a common fund or collection (e.g. the part played by a person or thing in bringing about a result or helping something to advance).

What the world has settled on is essentially a voluntary role for nations as this is the essence of a contribution, rather than the obligation that arises from a commitment. Perhaps we all knew this, but it is now becoming clear that nobody has any particular requirement to do anything with regards mitigation. It is certainly looking unlikely that this choice of wording is preparing nations for what is necessary if they are indeed going to achieve the objective of the Convention as set out in Article 2:

. . . . stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.

While there is certain to be a long argument at some point about the exact level of stabilization that is necessary, the above statement nevertheless requires that anthropogenic emissions are eventually reduced to about zero (or at least net zero), in that without such a reduction stabilization is not really possible. It is also likely to be the case that this needs to happen during this century so as to avoid an excessive global temperature excursion and therefore dangerous anthropogenic interference with the climate system (the official line here is of course 2°C, which implies net zero emissions rather sooner than the end of this century, but still in the second half).

A further aspect of the intended global agreement is that while it currently lacks any structure, it will seemingly require contributions now that eventually deliver on the needs of the Convention (although the 2015 outcome will probably only cover the period 2020-2030).  In theory and if negotiators followed this line of argument, it would give nations only one variable left to play with in determining said contributions, that being the date at which they intend to reach net zero emissions. Statements of this magnitude hardly fall into the category of voluntary efforts, rather they become national obligations that may well restrict freedom of action in the future, at least at a national level. That sounds very much like a commitment.

It could therefore be argued that the frantic last hours of a long COP that started out with very low expectations have delivered a challenging legal paradox. Of course it will be unraveled by a focus on the word “towards”, in that it implies a 2015 agreement that doesn’t require a statement of zero emissions now, but at least a pathway that eventually gets there. But this is meant to be a global agreement for the long term, not another interim step towards real action. Whether or not the 2015 agreement embraces a concept such as “net zero emissions” remains to be seen, but if it does then it is hard to see that “contributions” will be a robust approach to getting there. If it doesn’t embrace the concept then it won’t be the global agreement the world actually needs, which means that “contributions” will probably do for now but stabilization of greenhouse gases in the atmosphere will continue to remain elusive.