Archive for the ‘South Korea’ Category

The in-tandem announcement last week by the USA and China caught many by surprise, resulted in lots of applause and back slapping and then raised questions as to which country has the tougher or easier deal. A bit of simple analysis offered below may help answer that question.

In the long period between Kyoto and Copenhagen as commentators saw that the Kyoto Protocol probably wasn’t going to be sufficient to rein in global emissions, various ideas (re)appeared as to how the future reduction burden should be shared, particularly amongst countries with widely different development pathways. One idea that gained considerable prominence was known as Contraction and Convergence. In fact this idea was first proposed in 1990 by the Global Commons Institute (GCI).

Contraction refers to the ‘full-term event’ in which the future global total of greenhouse gas emissions from human sources is shrunk over time in a measured way to zero net-emissions within a specified time-frame.

Convergence refers to the full international sharing of the emissions contraction-event, where the ‘emissions-entitlements’ for all countries result from them converging on the declining global per capita average of emissions arising under the contraction rate chosen.

Last week the USA announced reductions of 26-28% by 2025 relative to 2005 and China announced a peaking in emissions by 2030. There really isn’t enough information given to fully dissect this, but a few simple assumptions makes for an interesting observation. For starters, I have assumed that energy emissions are a proxy for total emissions, in part because energy information is so readily available whereas information on methane, other GHGs and land use is much more difficult to piece together. The second assumption is that the 2020-2025 annual rate of reduction in the USA of about 2% p.a. continues through to 2030 (i.e. a reduction of 37% in 2030 relative to 2005) and the third assumption is that China exhibits a noticeable “glide path” towards a 2030 peak, rather than extreme growth that comes to a shuddering halt. At least for energy emissions, the picture looks something like the one below, but in the language of convergence, i.e. emissions per capita.

Emissions per capita USA and China

What becomes apparent is that the USA and China appear to have adopted a “Contraction and Convergence” approach, with a goal of around 10 tonnes CO2 per capita for 2030, at least for energy related emissions. For China this means emissions of some 14.5 billion tpa in 2030, compared with the latest IEA number for 2012 of 8.3 billion tonnes, so a 75% increase over 2012 or 166% increase over 2005. It also has China peaking at a level of CO2 emissions similar to Europe when it was more industrial, rather than ramping up to the current level of say, the USA or Australia (both ~16 tonnes). By comparison, Korea currently has energy CO2/capita emissions of ~12 tonnes, so China peaking at 10 is some 17% below that.

If the USA and China stayed in lockstep after 2030 with the same reduction pathway that plays out in the USA over the period 2020-2030, that might mean 6.6 tonnes CO2 per capita by 2040, or 9.5 billion tpa for China, which is still slightly higher than the current level.

Redrawing the Energy-Climate Map

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

International Energy Agency, June 2013

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

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

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

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

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

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

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

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

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

doha_skyline_560px

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

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

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

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

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

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

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

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

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

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

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

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

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

But that might take some political courage!

I have just got back from the annual Council meeting for the World Business Council for Sustainable Development (WBCSD) where it was good to hear the new President, Peter Bakker, talking about a much more focused and serious response from the organisation to key issues such as climate change. During the week real challenge has come from the likes of Paul Gilding and Will Steffen of The Stockholm Resilience Centre. The latter is well known for the development of the Planetary Boundaries framework, which seeks to quantify the limits on a set of critical parameters impacting the stability of the conditions of the Holocene period (which has seen the development of human civilization during a 10,000 year period of relative global stability).

The nine Planetary Boundaries are shown in the figure above and are;

  • Stratospheric ozone depletion
  • Nitrogen cycle
  • Phosphorous cycle
  • Global freshwater use
  • Change in land use
  • Biodiversity loss
  • Atmospheric aerosol loading
  • Chemical pollution
  • Climate change (level of CO2 in the atmosphere)

These have become a useful metric, but Will Steffen admitted that the complexity of the subject has been a challenge. A further challenge to simplify the structure has been posed back to the Stockholm Resilience Centre. They have taken up this challenge and revisited the approach, reducing it to three critical metrics. They are as follows;

  • Climate change – rather than just measuring this in terms of CO2 in the atmosphere, the metric is the global heat balance. Because of increasing levels of greenhouse gases in the atmosphere, the atmosphere is no longer in heat balance, rather there is more heat coming in than going out. This situation needs to be brought back into check.
  • Biodiversity – this is key to the production of goods and services from the biosphere, including most critically food for human consumption.
  • Introduction of novel entities – this is about the introduction of new “stuff” into the environment.  Perhaps one of the best examples of this was the use of Chlorinated Fluoro-carbons (CFC). These offered tremendous economic benefit but with no concept of the damage that would be done to the ozone layer. Will Steffen made an interesting observation about this and noted that we missed a major catastrophe almost by chance. CFCs could well have been BFCs or bromine based. Had this been the case, the more reactive nature of bromine would have devastated the ozone layer by the time the interaction was unravelled, with no chance of recovery. Fortunately this wasn’t the case, but the point was clear.

The nine boundaries work still stands and will continue to be critical to their thinking, with this new model more an “aide memoire” to the bigger picture.

P.S. This is becoming old news now, but in the same session at the WBCSD meeting, a comment was also made about Hurricane Sandy, its impact and climate change. The view expressed was that these are linked for three reasons;

    1. This was by far the biggest hurricane ever recorded north of the Carolinas. It was driven by increasingly warmer waters in the Atlantic.
    2. It should have tracked out into the Atlantic as many hurricanes have done, but didn’t because of a large blocking high pressure system. There is growing evidence that the appearance of such high pressure systems is linked to the change in ice cover in the Arctic. 2012 saw the lowest September Arctic sea ice cover on record.
    3. New York infrastructure was built in a different era. Even the 20cms of additional sea level over the past century made a significant difference to the water volume in the storm surge and the consequent flooding of lower Manhattan and other low lying areas.

C2ES also released a paper on this subject during the week, which you can view here.


Korea and Australia dance to the same tune

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Apart from Australia announcing the details of its carbon pricing mechanism and eventual transition to an ETS, there was also news this week from a huge regional trading partner, South Korea. The South Korean cabinet has approved a plan to cut carbon emissions 30% below expected levels in 2020. In support of this, the government has submitted a bill to parliament that includes plans for an ETS from 1st January 2015. The bill also has a chance of passing, given that the ruling party enjoys a comfortable majority – but don’t expect this to be a walk in the park. The Korea Herald reported:

Korea outlined action plans to tackle climate change on Tuesday (12th July), breaking down reduction targets for high-emitting sectors in the medium term. The pan-governmental plan was devised to put the country’s low-carbon, green growth initiatives in motion, which President Lee Myung-bak launched in 2009 with a goal of cutting greenhouse gas emissions by 30 percent through 2020 from 2007 levels.

For the transportation sector, the target was set at 34.3 percent below business-as-usual levels. The government also aims to slash 26.9 percent from buildings, 25 percent from the public sector and 18.2 percent from industries, while saving 26.7 percent by switching to renewable electricity sources.

Under the plan, the government will multiply use of solar and wind energy, smart grid, as well as carbon capture and storage technology, which involves seizing carbon dioxide from power plants and other industrial facilities using coal and gas, compressing and sequestrating it underground or under the seabed.

It also plans to expand highly efficient facilities at residential and industrial complexes, and supplies of clean fuels such as liquefied natural gas, plastic scrap and biomass.

As for transport, the government will foster public transportation and electric and hybrid vehicles, while stepping up fuel efficiency standards for vehicles by 2015 to 140 grams per kilometer from the current 159 grams.

“We tried to draw up reasonable and fair measures to reduce emissions through collaboration between involved ministries, field research and public meetings,” the government said in a statement. “We’ll solidify Korea’s image as a leader in green growth.”

Green growth has been one of the key policies of the Lee administration as the country’s main economic force transitions from smokestack industries to high-tech.

Korea is the world’s No. 9 polluter, with annual emissions from Asia’s fourth-largest economy doubling between 1990 and 2007 to 610 million tons, slightly greater than Australia’s.

With the green growth vision, the government wants to stay at about 637 million tons through 2020, which is set to expand to 813 million tons.

By sector, the government expects the largest slice to come from industries with 56 percent of the total in 2020. Buildings came second with 22 percent, followed by transportation with 13.2 percent, agriculture, forestry and fisheries with 3.6 percent and public institutions with 2.3 percent.

To reach its goal, it has been promoting environmentally friendly investment and technologies, while establishing a comprehensive act on green growth.

But the government faced a setback as it postponed the adoption of a carbon trading scheme known as “cap-and-trade” after 2015 amid fierce opposition from industries that it would cost too much, thus hampering their growth.

Under the system, companies are required to release emissions above a government-imposed cap and to purchase extra credits from those that discharge below their quota.

“The government will strive to minimize negative impacts of emission-related regulations on the industry’s competitiveness and national economy,” it said.

Together with New Zealand, this raises the prospect of a significant carbon trading regime developing outside of Europe. What is perhaps more interesting though is how these schemes might link together in the 2020s and then how this linkage could be leveraged to generate emission reduction projects. Such an opportunity was highlighted in the recent WBCSD publication, Carbon Pricing, which I have mentioned in previous postings. In the WBCSD publication the example given was as follows:

 Today, Australia exports iron ore to Asia where it is smelted with coal to produce wrought iron and finally steel. In future years, a carbon price operating within Asian and Australian economies could encourage the development of the necessary process for the production of the steel in Australia using natural gas, where that fuel is prevalent, rather than coal, as is the case in Asia today. The transfer of allowances from Asia to Australia, assuming linked carbon trading systems, would underpin any additional emissions in that country, but overall emissions between the two would be lower, thus making the project an attractive proposition.

South Korea is one such economy that smelts iron ore from Australia and uses coal to do so. CO2 emissions from coal make up nearly half the emissions from the economy as a whole and fuel switching will be one of the early mechanisms implemented to reduce emissions.

 

The switch from coal to gas in steel making is technically possible by utilizing the DRI process (Direct Reduced Iron) and while South Korea may see such a move as a relocation of jobs, Australia would undoubtedly welcome the opportunity. Building a new plant in Australia with domestic natural gas and transferring allowances through a linked system offers an alternative to the fuel switching taking place in South Korea itself, which would require the gas to be delivered as LNG.

Don’t expect changes like this to happen just as these systems leave their respective starting blocks, but as linkages develop and international goals start to become recognized and delivered on, such optimization driven by the price of carbon becomes a real possibility.