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Being a climate change adviser

Shell is often cited in climate change discussions, sometimes disparagingly simply because it is an oil and gas company, but increasingly as a company that has recognised that major changes in both the provision and use of energy across the globe will be needed to both meet demand and significantly reduce greenhouse gas emissions. Following from the Paris Agreement, it is hard to see how this won’t be the case. The leadership in Shell regarding climate change has always come from the top. The first major steps were taken in the period 1997 to 2001 when the foundations for change were established by former Chairman Sir Mark Moody-Stuart. He catalysed the necessary focus on the climate issue and had the foresight to establish a carbon trading desk within Shell Trading, just as the Clean Development Mechanism and the EU Emissions Trading system were in their early design stages. In 2005, then CEO Jeroen van der Veer created our CO2 team and gave it high visibility within the company. This eventually led to developments such as the Quest carbon capture and storage project in Canada. Today, we have a new energies business starting up. Our current CEO Ben van Beurden has also championed our position on issues such as government implemented carbon pricing and Shell has recently published scenario thinking on a net-zero emissions energy system of the future.

Within this journey of change, one question I am often asked is how I came into my job in Shell as Chief Climate Change Adviser and what it is like to perform such a role in the oil and gas industry. Some think that I might be a climate scientist, others picture the role as something of a fig leaf. In reality, neither is the case.

I started in Shell like many others, as a chemical engineering graduate in one of the 30+ refineries that Shell had back in 1980. The year in which I interviewed was one where all new chemical engineers were spoilt for choice – graduating classes had shrunk and demand was booming. But Shell offered a great value proposition – a global company with the very real prospect of a global career. My job offer was as a technologist in Geelong Refinery, a ~100,000 bbl/day facility just outside the city of Geelong, Australia and some 70 kms south-west of Melbourne. It was a complex refinery, with reforming, cracking, lube oil manufacturing, chemicals and various hydrotreating units. In the subsequent decade in the Downstream business I also worked in the global offices in The Hague and at Clyde Refinery in Sydney. Towards the end of this time I moved into the supply side of refining where the crude oil purchasing and refinery operating mode decisions are made based in part on linear programme models of the operation and the market it faces. This in turn led me to Shell Trading in London where I spent a decade trading Middle East crudes and managing the chartering of all the crude oil shipping that Shell required. Trading and shipping are at the very core of Shell, not just in terms of its operation as an oil and gas company, but in its DNA as well. After all, only a few hundred metres from where I live today, Marcus Samuel started his own trading business by procuring shells from sailors in the Port of London and making trinkets for people to buy when they visited English seaside towns such as Brighton and Torquay. This tiny enterprise, along with a similar entrepreneurial company in the Netherlands, eventually became the Royal Dutch Shell plc of today.

So twenty years after graduating I found myself with a solid background in what the company did, how the economics of the industry worked and perhaps most importantly how a critical component of the global energy system actually operated. What should I do with this expertise? I had my eye on the various functions in the Corporate Centre of the company and one in particular came up in mid-2001 which looked interesting. It was the role of Group Climate Change Adviser, a relatively new position that Shell had created in 1998 as it took its first steps to manage the business risk presented by climate change. In my interview for the position, my soon to be boss was pleased to meet someone who had worked in the refining business and had a good knowledge of the energy markets and trading. Even then it was clear that the development of policy would involve markets, and pricing, and present a real challenge to the incumbent businesses.

Like most in the company, I had imagined that this would be another 3-4 year assignment, but 16 years later I remain immersed in the climate change issue at Shell, although the role I originally took and the one I have now are worlds apart. Much has happened in that time externally, culminating in the Paris Agreement last December; internally the journey for the company has similarly progressed, although not without some tough questions along the way. Being part of all this over such a long period has been rewarding, a huge privilege and very challenging. It perhaps isn’t where I expected my career to go, but I can only look back and say that I am glad that it did. Some may think that a large corporation means a very restrictive and bureaucracy bound office life, but this is far from reality. I have a broad mandate and considerable freedom to engage externally on climate change, to publish my thinking on the issues that the world faces as it strives to manage emissions, but also to take all this back to colleagues within the company and challenge them as they try to run their businesses. Over time, I have also had considerable opportunity for travel, which has included every continent (yes, Antarctica as well) and over 30 countries.

Glacier calving

From time to time, people considering a career in environmental management ask me where they should start and what steps they might take. I almost never recommend that they start in an environmental role. Rather, building real experience developing new projects, troubleshooting problems in existing facilities and understanding the economics of the energy industry is my steer. My own experience has led me to believe that such a grounding is essential in tackling major issues such as climate change. As a new graduate considering an energy career, these are the sorts of jobs that a company such as Shell will most likely offer. My advice would be to take one, and then look towards the longer journey of change.

Infinite solar

An infographic published earlier this year asks the question “Could the world be 100% solar?”. The question is answered in the affirmative by demonstrating that so much solar energy falls on the Earth’s surface, all energy needs could be met by covering just 500,000 km2 with solar PV. This represents an area a bit larger than Thailand, but still only ~0.3% of the total land surface of the planet. Given the space available in deserts in particular and the experience with solar PV in desert regions in places such as California and Nevada, the infographic argues that there are no specific hurdles to such an endeavour.

Solar

However, solar PV is both intermittent and only delivers electricity, which currently makes up just 20% of final energy use. Oil products make up the bulk of the remaining 80%. As I noted in a recent post, even in the Shell net-zero emissions scenario, electricity still makes up only 50% of final energy. In that case, what might a 100% solar world really look like and is it actually feasible beyond the simple numerical assessment?

The first task is of course to generate sufficient electricity, not just in terms of total gigawatt hours, but in gigawatt hours when and where it is needed. As solar is without question intermittent in a given location, this means building a global grid capable of distribution to the extent that any location can be supplied with sufficient electricity from a location that is in daylight at that time. In addition, the same system would likely need access to significant electricity storage, certainly on a scale that far eclipses even the largest pumped water storage currently available. Energy storage technologies such as batteries and molten salt (well suited to concentrated solar thermal) only operate on a very small scale today.

The Chinese State Grid has been busy building ultra-high voltage long distance transmission lines across China and they have imagined a world linked by a global grid (Wall Street Journal, March 30 2016 and Bloomberg, April 3rd 2016) with a significant proportion of electricity needs generated by solar from the equator and wind from the Arctic.

OJ-AH932B_CGRID_16U_20160330062113

But could this idea be expanded to a grid which supplies all the electricity needs of the world? A practical problem here is that for periods of the day at certain times of the year the entire North and South American continents are in complete darkness, which means that the grid connection would have to extend across the Atlantic or Pacific Oceans. While the cost of a solar PV cell may be pennies in this world, the cost of deploying electricity from solar as a global 24/7 energy service could be considerable. The cost of the cells themselves may not even feature.

sunmap

But as noted above, electricity only gets you part of the way there, albeit a substantial part. Different forms of energy will be needed for a variety of processes and services which are unlikely to run on direct or stored electricity, even by the end of this century. Examples are;

  • Shipping currently runs on hydrocarbon fuels, although large military vessels have their own nuclear reactors.
  • Aviation requires kerosene, with stored electricity a very unlikely alternative. The fuel to weight ratio of electro-chemical (battery) storage, even given advances in battery technology, makes this a distant option. Although a small electric plane for one person for 30 minutes flight has been tested, extending this to an A380 flying for 14 hours would require battery technology that doesn’t currently exist. Still, some short haul commuter aircraft might become electric.
  • While electricity may be suitable for many modes of road transport, it may not be practical for heavy goods transport and large scale construction equipment. Much will depend on the pace and scope of battery development.
  • Heavy industry requires considerable energy input, such as from furnaces powered by coal and natural gas. These reach the very high temperatures necessary for processes such as chemical conversion, making glass, converting limestone to cement and refining ores to metals. Economy of scale is also critical, so delivering very large amounts of energy into a relatively small space is important. In the case of the metallurgical industries, carbon (usually from coal) is also needed as a reducing agent to convert the ore to a refined metal. Electrification will not be a solution in all cases.

All the above argues for another energy delivery mechanism, potentially helping with (or even solving) the storage issue, offering high temperatures for industrial processes and the necessary energy density for transport. The best candidate appears to be hydrogen, which could be made by electrolysis of water in our solar world (although today it is made much more efficiently from natural gas and the resulting carbon dioxide can be geologically stored – a end-to-end process currently in service for Shell in Canada). Hydrogen can be transported by pipeline over long distances, stored for a period and combusted directly. Hydrogen could also feature within the domestic utility system, replacing natural gas in pipelines (where suitable) and being used for heating in particular. This may be a more cost effective route than building sufficient generating capacity to heat homes with electricity on the coldest winter days. It is even possible to use hydrogen as the reducing agent in metallurgical processes instead of carbon, although the process to do so still only exists at laboratory scale.

But the scale of a global hydrogen industry to support the solar world would far exceed the global Liquefied Natural Gas (LNG) we have today. That industry includes around 300 million tonnes per annum of liquefaction capacity and some 400 LNG tankers. That amounts to about 15 EJ of final energy compared to the current global primary energy demand of 500 EJ. In a 1000 EJ world that we might see in 2100, a role for hydrogen as an energy carrier that reached 100 EJ would imply an industry that was seven times the size of the current LNG system. But hydrogen has 2-3 times the energy content of natural gas and liquid hydrogen is one sixth the density of LNG (important for ships), so a very different looking industry would emerge. Nevertheless, the scale would be substantial.

Finally, but importantly, there are the things that we use, from plastic water bottles to the Tesla Model S. Everything has carbon somewhere in the supply chain or in the product itself. There is simply no escaping this. The source of carbon in plastics, in the components in a Tesla and in the carbon fibre panels in a Boeing 787 is crude oil (and sometimes natural gas). So our infinite solar world needs a source of carbon and on a very large scale. This could still come from crude oil, but if one objective of the solar world is to contain that genie, then an alternative would be required. Biomass is one and a bioplastics industry already exists. In 2015 it was 1-2 million tonnes per annum, compared to ~350 million tonnes for the traditional plastics industry.

Another source of carbon could be carbon dioxide removed directly from the atmosphere or sourced from industries such as cement manufacture. This could be combined with hydrogen and lots of energy to make synthesis gas (CO +H2), which can be a precursor for the chemical industry or an ongoing liquid fuels industry for sectors such as aviation. Synthesis gas is manufactured today on a large scale from natural gas in Qatar and then converted to liquid fuels in the Shell Pearl Gas to Liquids facility. Atmospheric extraction of carbon dioxide is feasible, but remains as a pilot technology today, although some companies are looking at developing it further.

The solar world may be feasible as this century progresses, but it is far from the simple solution that it is often portrayed as. Vast new industries would need to emerge to support it and each of these would take time to develop. The LNG industry first started in the early 1960s and is now a major part of the global economy, but still only carries a small fraction of global energy needs.

The new Shell publication, A Better Life with a Health Planet: Pathways to Net Zero Emissions, shows that in 2100 solar could be a 300 EJ technology, compared to 2.5 EJ energy source today. This is in a world with primary energy demand of 1000 EJ.

 

Scenarios are part of and ongoing process used in Shell for more than 40 years to challenge executives’ perspectives on the future business environment. They are based on plausible assumptions and quantification and are designed to stretch management thinking and even to consider events that may only be remotely possible.

Debating the global temperature goal

  • Comments Off on Debating the global temperature goal

Within the Decision Text supporting the Paris Agreement, paragraph II.21 calls on the IPCC as follows;

21. Invites the Intergovernmental Panel on Climate Change to provide a special report in 2018 on the impacts of global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways;

This has prompted a number of academic institutions and climate scientists to start publishing on the issue of a 1.5°C goal, with much more likely to come in the months ahead. One such paper (Huntingford, C. and Mercado, L. M. High chance that current atmospheric greenhouse concentrations commit to warmings greater than 1.5 °C over land. Sci. Rep. 6, 30294; doi: 10.1038/srep30294 (2016).) was reported on recently by the BBC, under the heading Debate needed on 1.5C temperature target.

In fact the paper was about where we are today in terms of temperature and reaches a similar conclusion to the one that I reported on recently after attending an MIT Joint Program forum. At that meeting, the response to my question about current levels of warming was as follows;

. . . . current warming is around 1.1°C since pre-industrial times, but that there is more to the story than this. The climate system is not at equilibrium, with the oceans still lagging in terms of heat uptake. Therefore, if the current level of carbon dioxide in the atmosphere was maintained at some 400 ppm, the surface temperature would rise by another few tenths of a degree before the system reached an equilibrium plateau.

Similarly, the paper reported on by the BBC, argues much the same line;

There is strong evidence that even for current levels of atmospheric GHGs, there is a very high probability that the planet is committed to a mean warming over land greater than 1.5 °C relative to pre-industrial times. Such warming could be greater than 2.0 °C, and in particular for large continental regions away from coastlines.

While a debate about the global goal wasn’t a feature of the paper itself, the BBC interviewed the authors and reported that while they believed it to be a good idea to have an “aspirational” 1.5°C goal in the Paris agreement, that nevertheless if the world is to take 1.5°C seriously, then a serious discussion needs to be held about the implications of that goal. The author of the paper is quoted as saying “I think there needs to be a very thoughtful debate about what’s to be gained at these different temperature levels, if approaching the lower levels meant severely damaging the economy,”.

Such a discussion has been largely absent, replaced with a somewhat myopic focus on 2°C and now “well below 2°C, with a view to 1.5°C”. I discussed this at some length in my first book, drawing on the work of the MIT Joint Program in their 2009 report Analysis of Climate Policy Targets under Uncertainty. In that report the authors demonstrated that even a modest attempt to mitigate emissions could profoundly affect the risk profile for equilibrium surface temperature. This is illustrated below with five mitigation scenarios, from a ‘do nothing’ approach (Level 5) to a very stringent climate regime (Level 1).

Shifting the Risk Profile

An important feature of the results is that the reduction in the tails of the temperature change distributions is greater than the shift in the temperature goal (represented by the median of the distribution). 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 3.2 ºC (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). 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.

But the other focus of the Paris Agreement stands apart from such debate. As previously discussed in several postings, Article 4 calls for a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, i.e. a state of net-zero emissions. In fact such an outcome is eventually required irrespective of the temperature outcome; without it warming continues.

Net-zero emissions arguably brings a more practical focus to the task of emissions mitigation. It defines an end-point and allows a discussion on the pathway there, the types of technologies required and the shape of the energy economy once achieved. All of this features in the new supplement to the Shell New Lens Scenarios, A Better Life with a Healthy Planet: Pathways to Net-Zero Emissions.

image003
Scenarios are part of an ongoing process used in Shell for more than 40 years to challenge executives’ perspectives on the future business environment. They are based on plausible assumptions and quantification, and are designed to stretch management thinking and even to consider events that may only be remotely possible.

The last few weeks have seen a flood of Intended Nationally Determined Contributions (INDC) arrive at the UNFCCC offices in Bonn, presumably to be included in the assessment of progress promised by the UNFCCC Secretariat for release well before the Paris COP21.

There are now some 150 submissions and assessing them in aggregate requires some thinking about methodology. For starters, the temperature rise we will eventually see is driven by cumulative emissions over time (with a climate sensitivity of about 2°C per trillion tonnes of carbon – or 3.7 trillion tonnes CO2), not emissions in the period from 2020 to 2025 or 2030 which is the point at which most of the INDCs end. In fact, 2025 or 2030 represent more of a starting point than an end point for many countries. Nevertheless, in reading the INDCs, the proposals put forward by many countries give some clues as to where they might be going.

For Europe, the USA and many developed economies, the decline in emissions is already underway or at least getting started, with most having already said that by mid-century reductions of 70-80% vs. the early part of the century should be possible. But many emerging economies are also giving signs as to their long term intentions. For example, the South Africa INDC proposes a Peak-Plateau-Decline strategy, which sees a peak around 2020-2025, plateau for a decade and then a decline. Similarly, China has clearly signalled a peak in emissions around 2030, although with development at a very different stage in India, such a peak date has yet to be transmitted by that government.

Nevertheless, with some bold and perhaps optimistic assumptions, it is possible to assess the cumulative efforts and see where we might be by the end of the century or into the early part of next century. In doing this I used the following methodology;

  1. Use an 80/20 approach, i.e. assess the INDCs of the top 15-20 emitters and make an assumption about the rest of the world. My list includes USA, China, India, Europe, Brazil, Indonesia, South Africa, Canada, Mexico, Russia, Japan, Australia, Korea, Thailand, Taiwan, Iran and Saudi Arabia. In current terms, this represents 85% of global energy system CO2 emissions.
  2. For the rest of the world (ROW), assume that emissions double by 2040 and plateau, before declining slowly throughout the second half of the century.
  3. For most countries, assume that emissions are near zero by 2100, with global energy emissions nearing 5 billion tonnes. The majority of this is in ROW, but with India and China still at about 1 billion tonnes per annum each, effectively residual coal use.
  4. Cement use rises to about 5 billion tonnes per annum by mid-century, with abatement via CCS not happening until the second half of the century. One tonne of cement produces about half a tonne of process CO2 from the calcination of fossil limestone.
  5. Land use CO2 emissions have been assessed by many organisations, but I have used numbers from Oxford University’s trillionthtonne.org spreadsheet, which currently puts it at some 1.4 billion tonnes per annum of carbon (i.e. ~5 billion tonnes CO2). Given the INDC of Brazil and its optimism in managing deforestation, I have assumed that this declines throughout the century, but still remains marginally net positive in 2100.
  6. I have not included short lived climate forcers such as methane. These contribute more to the rate of temperature rise than the eventual outcome, provided of course that by the time we get to the end of the century they have been successfully managed.
  7. Cumulative emissions currently stand at 600 billion tonnes carbon according to trillionthtonne.org.

The end result of all of this are the charts below, the first being global CO2 emissions on an annual basis and the one below that being cumulative emissions over time. The all important cumulative emissions top out just below 1.4 trillion tonnes carbon.

Global CO2 Emissions Post INDC

Global Cumulative Emissions post INDCs

The trillionth tonne point, or the equivalent of 2°C, is passed around 2050, some 11 years later than the current end-2038 date indicated on the Oxford University website. My end point is the equivalent of about 2.8°C, well below 4+°C, but not where it needs to be. The curve has to flatten much faster than current INDCs will deliver, yet as emissions accumulate, the time to do so is ticking away.

Even with a five year review period built into the Paris agreement, can the outcome in 2030 or 2035 really be significantly different to this outlook? Will countries that have set out their stall through to 2030 actually change this part way through or even before they have started along said pathway? One indication that they might comes from China, where a number of institutions believe that national emissions could peak well before 2030. However, the problem with accumulation is that history is your enemy as much as the future might be. Even as emissions are sharply reduced, the legacy remains.

Nevertheless, we shouldn’t feel hopeless about such an outcome. Last week I was at the 38th Forum of the MIT Joint Program on the Policy and Science of Global Change and I was reminded again during one of the presentations of their Level 1 to Level 4 mitigation outcomes which I wrote about in my first book, 2°C Will Be Harder than we Think. These are shown below.

Shifting the Risk Profile

Taking no mitigation action at all results in a potential temperature distribution with a tail that stretches out past 7°C, albeit with a low probability. However, we can’t entertain even a low probability of such an outcome, so some level of mitigation must take place. While Level 1 remains the goal (note however that the MIT 2°C is not above pre-industrial, but relative to 1981-2000), MIT have shown that lesser outcomes remove the long tail and contain the climate issue to some extent. The INDC analysis I have presented is similar to Level 2 mitigation, which means the Paris process could deliver a very substantial reduction in global risk even if it doesn’t equate to 2°C. More appreciation of and discussion around this risk management approach is required, rather than the obsession with 2°C or global catastrophe that many currently present.

Of course, extraordinary follow through will be required. Each and every country needs to deliver on their INDC, many of which are dependent on very significant financial assistance. I looked at this recently for Kenya and India. Further, the UNFCCC process needs its own follow through to ensure that global emissions do trend towards zero throughout the century, which remains a very tall order.

The recent letter on carbon pricing from six oil and gas industry CEOs to Christiana Figueres, Executive Secretary of the UNFCCC and Laurent Fabius, Foreign Minister of France and President of COP 21 sent something of a tremor through the media world, to the extent that the New York Times picked up on it with an editorial on carbon taxation. The editorial transposed the CEO call for a carbon price into a call for a carbon tax (as is currently applied in British Columbia) and then set about building the case for a tax based approach and dismantling the case for mechanisms other than taxation; but their focus was on cap-and-trade (such as in California, Quebec and the EU ETS). The New York Times suggested that cap-and-trade doesn’t work, but apparently didn’t look at the evidence.

In January 2015 the EU ETS was ten years old. There were those who said it wouldn’t last and any number of people over the years who have claimed that it doesn’t work, is broken and hasn’t delivered; including the New York Times. Yet it continues to operate as the bedrock of the EU policy framework to manage carbon dioxide emissions. The simple concept of a finite and declining pool of allowances being allocated, traded and then surrendered as carbon dioxide is emitted has remained. Despite various other issues in its ten year history the ETS has done this consistently and almost faultlessly year in and year out; the mechanics of the system have never been a problem.

Effective carbon price
Comparing approaches and policies is difficult, but in general the various mechanisms can be rated as shown above. The most effective approach to mitigation is a widely applied carbon price across as much of the (global) economy as possible. Lost opportunities and inefficiencies creep in as the scope of approach is limited, such as in a project mechanism or with a baseline and credit approach; neither of which tackle fossil fuel use in its entirety.

The chart clearly shows carbon taxation and cap-and-trade competing for the top spot as the most effective mechanism for delivering a carbon price into the economy and driving lasting emission reductions. Both approaches work, so differentiating them almost comes down to personal preference, which can even be seen in the extensive academic literature on the subject where different camps lean one way or the other. My preference, perhaps influenced by my oil trading background, is to back the cap-and-trade approach. My reasons are as follows;

  • The cap-and-trade approach delivers a specific environmental outcome through the application of the cap across the economy.
  • Both instruments are subject to uncertainty, however the cap-and-trade is less subject to political change; conversely, taxation policy is regularly changed by governments. The New York Times made note of this with its reference to Australia, which has removed a fixed price carbon price that was effectively operating as a tax.
  • The carbon price delivered through a cap-and-trade system can adjust quickly to national circumstances. In the EU it fell in response to the recession and perversely has stayed down in response to other policies (renewable energy goals) currently doing the heavy lifting on mitigation. Why is this perverse; because the other policies shouldn’t be doing this job when a cap-and-trade is in place to do it more efficiently.
  • Acceptance is hard to win for any new cost to business, but particularly when not every competitor will be subject to that cost. The cap-and-trade system has a very simple mechanism, in the form of free allowance allocation, for addressing this problem for energy intensive (and therefore carbon intensive) trade exposed industries. Importantly, this mechanism doesn’t change the environmental outcome or reduce the incentive to manage emissions as the allowances held by a facility still have opportunity value associated with them.
  • Most carbon policies are being formulated at country or regional levels, rather than being driven by global approaches. Cap-and-trade systems are well-suited to international linking, leading to a more harmonized global price, while tax coordination is complex and politically difficult. Linking leads to a level playing field for industry around the world which fosters acceptance.

The economic effectiveness of both a carbon tax and a cap-and-trade system for carbon pricing means that countries and regions of all shapes and sizes have an implementation choice. For large, multi-faceted economies, the cap-and-trade system is ideally suited for teasing out the necessary changes across the economy and delivering a lowest cost outcome. At the same time it offers the many emitters considerable flexibility in implementation. Equally, for some economies or sectors where options for change are limited, the offset provisions that often feature in the design of an emissions trading system can offer a useful lifeline for compliance. Still, in some economies, a direct tax may be the most appropriate approach. Perhaps this is for governance reasons related to trading, or a lack of sufficient market participants to create a liquid market or simply to encourage the uptake of a fuel such as natural gas rather than coal.

The choice between these instruments isn’t as important as the choice of an instrument in the first place, which is why the letter from the CEOs is so important at this time.

The past few weeks, highlighted by the Business & Climate Summit in Paris and Carbon Expo in Barcelona, has seen many CEOs, senior political figures and institutional leaders call for increased use of carbon pricing. This is certainly the right thing to be saying, but it begs the question, “What next?”. Many countries are already considering or in the process of implementing a carbon pricing system, but still the call rings out. While uptake of carbon pricing at national level certainly needs to accelerate, one critical piece that is missing is some form of global commonality of approach, at least to the extent that prices begin to converge along national lines.

On Monday June 1st six oil and gas companies come together and effectively called for such a step in a letter from their CEOs to Christiana Figueres, Executive Secretary of the UNFCCC and Laurent Fabius, Foreign Minister of France and President of COP 21. Rather than simply echo the call for carbon pricing, the CEOs went a step further and specifically asked;

Therefore, we call on governments, including at the UNFCCC negotiations in Paris and beyond – to:

  • introduce carbon pricing systems where they do not yet exist at the national or regional levels
  • create an international framework that could eventually connect national systems.

To support progress towards these outcomes, our companies would like to open direct dialogue with the UN and willing governments.

The request is very clear – this isn’t just a call for more, but a call to sit down and work on implementation. The CEOs noted that their companies were already members of, amongst other bodies, the International Emissions Trading Association (IETA). IETA has been working on connection of (linking) national systems for well over a year (although the history of this effort dates back to the days of the UNFCCC Long Term Cooperative Action – LCA – workstream under the Bali Roadmap) and I am co-chair, along with Jonathan Grant of PWC, of the team that is leading this effort.

Late last year IETA published a strawman proposal for the Paris COP, suggesting some text to set in place a longer term initiative to develop an international linking arrangement. I spoke about this at length to RTCC at Carbon Expo in Barcelona.

DCH Interview

The strawman is what it implies, an idea. It could be built on to develop a placemarker in the Paris agreement to ensure that the framework mentioned by the six CEOs actually gets implemented in the follow-up from Paris – as the CDM was implemented in the follow-up from Kyoto.

From my perspective, this week wasn’t just about carbon pricing, but also about climate science. On the same day that the FT published its story on the letter from the oil and gas industry CEOs, The Guardian chose to run a front page story implying that I had tried to detrimentally influence (apparently being a former oil trader!!) the content of the London Science Museum’s Atmosphere Gallery, a display on climate science that Shell agreed to sponsor some years ago. The reporter had based his story on exchanges between Shell and the Science Museum staff when the gallery was looking to do a recent refresh.

I did engage in such a discussion and I did make some suggestions as to content which I thought was new and interesting since the Atmosphere Gallery was first established. Unfortunately The Guardian wasn’t able to publish my proposals as they were put forward during a meeting between me and two staff members from The Science Museum, so to complete the story I will publish them here. Although this particular piece of science dates back to a 2009 Nature article by Oxford University’s Professor Myles Allen and his team, it didn’t feature in the Gallery when it was first put together (the Advisory Panel met during 2009 as part of the design phase of the Gallery). But today, it is the foundation work behind the concept of a global carbon budget which has become a mainstream topic of discussion. My angle on this was to illustrate the importance of carbon capture and storage in the context of this science, but with an emphasis on the science itself. My discussion with The Science Museum staff members took place on 23rd June 2014 and I asked them to consider the following for the refresh of the gallery:

1. As background, three papers that have come from Oxford University:

  • Warming caused by cumulative carbon emissions towards the trillionth tonne

Myles R. Allen, David J. Frame, Chris Huntingford, Chris D. Jones, Jason A. Lowe, Malte Meinshausen & Nicolai Meinshausen

  • Greenhouse-gas emission targets for limiting global warming to 2°C

Malte Meinshausen, Nicolai Meinshausen, William Hare, Sarah C. B. Raper, Katja Frieler, Reto Knutti, David J. Frame & Myles R. Allen

  • The case for mandatory sequestration

Myles R. Allen, David J. Frame and Charles F. Mason

2. Consider using (or adapting) a trillion tonne video made by Shell where Myles Allen talks about CCS in the context of the cumulative emissions issue:

3. Consider putting the Oxford University fossil carbon emissions counter in the Atmosphere Gallery as this would help people understand the vast scale of the current energy system and the rate at which we are collectively approaching the 2°C threshold;

Trillionth Tonne

4. Reference the Trillion Tonne Communique from Cambridge:

5. Offer the use of the Shell “CCS Lift” (an audio-visual CCS experience) to help explain this technology to the gallery visitors.

My pitch to The Science Museum was that this approach offered a real opportunity to feature the Science Museum and the Atmosphere Gallery in the very public discussion on carbon budgets, get some good media attention in the run-up to Paris 2015 (e.g. through the very visible counter), tell the CCS story in context (the Myles Allen video and the CCS audio-visual display) and raise awareness of the cumulative nature of the problem (i.e. the science). In the end they decided not to use this material, but I stand by the proposal.

The last days of March have seen the start of submissions of Intended Nationally Determined Contributions (INDCs) to the UNFCCC. The United States, Switzerland, European Union, Mexico and Russia have all met the requested deadline of the end of Q1 2015. As is expected and entirely in line with the UNFCC request, the INDCs focus on national emissions. After all, this is the way emissions management has always been handled and reported and there is no sign of anything changing in the future.

As was to be expected, the United States submitted an INDC that indicated a 26-28% reduction in national emissions by 2025 relative to a baseline of 2005. This is an ambitious pledge, and highlights the changes underway in the US economy as it shifts towards more gas, backs out domestic use of coal, improves efficiency and installs renewable generation capacity. So far the USA national inventory indicates that the 2020 target is being progressively delivered, although it will be interesting to see whether this trend changes as a result of the sharp reduction in oil prices and a couple of summer driving seasons on the back of that.

US 2020 and 2030 Reduction Target

My own analysis in 2011 (see below) was that the USA would come close to its 2020 goal, but may struggle to meet it. The different overall level of emissions in the charts is the result of including various sources (e.g. agriculture) and gases, or not.

US 2020 Goal with 2010 data

Direct emissions represent just one view of US emissions. Some would argue that the national inventory should also include embedded emissions within imported products, but this introduces considerable complexity into the estimation.

Another representation of US emissions which is perhaps more relevant to the climate issue is the actual extraction of fossil carbon from US territory. As the climate issue follows a stock model, the development of global fossil resources and subsequent use over the ensuing years is a measure that is closer to the reality of the problem. The larger the resource base that is developed globally, the higher the eventual concentration of carbon dioxide that the atmosphere is likely to reach. This is because the long-term accumulation will tend towards the full release of developed fossil fuel reserves simply because the infrastructure exists to extract them and as such they will more than likely get used somewhere or at some time. This isn’t universally true, as the closure of some uneconomic coal mines in the USA is showing; or are they simply being mothballed?

A look at US carbon commitment to the atmosphere from a production standpoint reveals a different emissions picture. Rather than seeing a drop in US emissions since 2005, the upward trend that has persisted for decades (albeit it a slower rate since the late 1960s) is continuing.

US emissions based on extraction

In the case of measured direct emissions, reduced coal use is driving down emissions. But for the extraction case, additional coal is now being exported and the modest drop in coal production is being more than countered by increasing oil and gas production. Total carbon extraction is rising.

While there is no likelihood that national emission inventories will start being assessed on such a basis, it does nevertheless throw a different light onto the picture. In a recent visit to Norway it was interesting to hear about national plans to head rapidly towards net-zero emissions, but for the country to maintain its status as an oil and gas exporter. This would be something of a contradiction if Norway was not such a strong advocate for the development of carbon capture and storage, a strategy which will hopefully encourage others to use this technology in the future.

The first fridge in town

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The recent visit by President Obama to India and the resulting discussions on climate change between the President and Indian Prime Minister Narendra Modi have once again thrown the spotlight on India’s development pathway and its energy needs.

There were countless articles about the climate change discussions they had, but one story published by the BBC was particularly relevant and poignant. It was about Santosh Chowdhury, a gentleman who lives in the village of Rameshwarpur, on the eastern side of the country. He had just bought a fridge, which may seem uninteresting, but it was the first fridge in his village. There is one thing about refrigeration that is different to almost any other domestic energy consuming device, it requires fairly reliable 24/7 electricity. That means Mr Chowdhury, like many in his town who may now follow him, needs a grid connection and that grid has to be sending electrons his way all the time.

First fridge

This is the start of a long industrial chain that needs a modern energy system to support it. The fridge needs electricity on a 24/7 basis, which excludes the immediate application of renewable energy as the primary provider. Some sort of back-up or energy storage mechanism will be required. In India, given cost considerations, the baseload electricity will likely be generated with coal although it is clear that India are also looking towards nuclear. Solar energy will augment this and at certain times may provide for all Mr Chowdhury’s needs, but unless the town spends considerably more money and installs a more complex grid system with battery capacity, the dependency on coal will continue, at least in the medium term.

But the story doesn’t end there, given that electricity provides only about 20% of final energy needs globally and in India this falls to 15%. The lack of fridges in Rameshwarpur reflects the situation across the whole of India. The BBC article notes that only one in four of the country’s homes has one. That compares to an average of 99% of households in developed countries. In 2004, 24% of households in China owned a fridge. Ten years later this had shot up to 88%. India has about 250 million households, which approximates to 60 million fridges. By 2030 as population rises, people per household decline and fridge ownership approaches Chinese levels, India might have 400 million fridges.

So Mr Chowdhury’s purchase and others following, will mean that India needs to produce more fridges – lots more. In 2000 China was producing 13 million refrigerators per annum, but by 2010 this had jumped to 73 million. This means India needs more refrigerator factories and chemical plants to make the refrigerant. The refrigerators might be made of steel and aluminium which means mining or the import of ores, refining, smelting, casting, stamping and transport. All of these need coal, gas and oil. Coal in particular is needed for smelting iron ore as it acts as the reducing agent, producing carbon dioxide in the process. The intense heat required in the processes is most easily and economically provided by coal or gas, although given time electricity will doubtless make its way into these processes.

Oil will be needed as a transport fuel to ship all these materials from mines to refineries to manufacturing plants to distribution depots, then wholesalers, shops and finally Mr Chowdhury’s home. Although electricity is starting to appear in the transport sector for lighter vehicles, with the exception of railways it isn’t the energy provider yet for heavy transport. In India, rail transport is extensive and electrification is making good progress, but there is still much to be done.

With a refrigerator in the house, the BBC reports that family life for Mr Chowdhury will change. It will be easier, so his productivity in other areas may well rise. This could translate to more income, further purchases and perhaps the first opportunity for air travel in the years to come. That will certainly be powered by Jet A1.

There is no doubt that India is industrialising rapidly and Prime Minister Modi should be commended for his ambitious goal of 100 GW of solar capacity by 2020 and speeding up the nuclear programme, but this won’t stop carbon dioxide emissions from rising sharply in the near term; it is more a question of how high they rise and the more immediate actions that can be taken. I am reminded again of a tender call for 8GW of coal fired capacity in India that appeared in the Economist a while back. This is just one project of many.

India coal

Coming back to the discussions between Mr Obama and Mr Modi, it is clear to me that India faces a huge challenge, which should also be recognised as a global challenge to help them and others make a different set of energy choices. The start with solar is important but it may not be enough to keep coal emissions down in the medium term. So here are three suggestions from me to take India forward;

  1. Develop low cost village scale energy storage to support solar. This could also position India as a key supplier to Africa in the decades to come.
  2. In the short term,  favour natural gas over coal for electricity generation. This would make a real difference to power sector emissions and would help India bypass the severe air quality issues now being faced in China. It would also avoid the cost of retro fits later on.
  3. For the longer term, particularly for industry but also power generation, the real game changer could be carbon capture and storage. This is where more international focus is needed, especially in the development of funding mechanisms to support its deployment in developing countries.

The global energy system works on timescales of decades rather years. When considering the changes required in managing the climate issue, the short to medium term takes us to 2050 and the long term is 2100! As such, drawing long term conclusions based on a 2050 outlook raises validity issues.

A new Letter published in Nature (and reported on here) discusses the long term use of fossil fuels, further exploring the notion that certain reserves of oil, gas and coal should not be extracted and used due to concerns about rising levels of CO2 in the atmosphere. But the analysis only looks to 2050 in its attempt to quantify which reserves might be more penalised than others, assuming we are in a world that is actually delivering on the goal of limiting warming to 2°C. The authors drew on available data to establish global reserves at 1,294 billion barrels of oil, 192 trillion cubic metres of gas, 728 Gt of hard coal and 276 Gt of lignite. These reserves would result in ~2,900 Gt of CO2 if combusted unabated, with approximately two thirds of this coming from the hard coal alone.

The Letter draws on the original work of Malte Meinshausen, Myles R. Allen et. al. which determined that peak CO2 induced warming was largely linked to the cumulative release of fossil carbon to the atmosphere over time, rather than emission levels at any particular point in time. They determined that surpassing the 2°C global goal could be quantified as equivalent to the release of more than 1 trillion tonnes of carbon (3.7 trillion tonnes CO2), with their timeframe being 1750 (i.e. the start of the modern use of coal) to some distant point in the future, in their case 2500. Precisely when CO2 is released within this timeframe is largely irrelevant to the outcome, but very relevant to the problem in that the continued release of carbon over time, even at much lower levels than today, eventually leads to an accumulation with the same 2°C or higher outcome (the slow running tap into the bathtub problem). Hence, the original work gives rise to the sobering conclusion that net-zero emissions must be a long term societal goal, irrespective of whether the whole issue can be limited to 2°C. “Net-zero” language has now appeared as an optional paragraph in early drafting text for the anticipated global climate deal currently under negotiation.

As a point of reference, the associated Trillionth Tonne website shows the cumulative release to date (January 2015) as 587 billion tonnes of carbon, which leaves 413 billion tonnes (~1.5 trillion tonnes CO2) if the 2°C is not to be breached (on the basis of their midrange climate sensitivity). The chart below is extracted from the original Meinshausen / Allen paper and illustrates the relationship, together with the inherent uncertainty from various climate models.

Peak warming vs cumulative carbon
Further work was done on this by Meinshausen et. al. They attempted to quantify what the results mean in terms of shorter term greenhouse gas emission targets, which after all is what the UNFCCC negotiators might be interested in. While the overarching trillion tonne relationship remains, it was found;

. . . .that a range of 2,050–2,100 Gt CO2 emissions from year 2000 onwards cause a most likely CO2-induced warming of 2°C: in the idealized scenarios they consider that meet this criterion, between 1,550 and 1,950 Gt CO2 are emitted over the years 2000 to 2049.

This focus on a cumulative emissions limit for the period from 2000 to 2049 (which is arguably a period of interest for negotiators) has been picked up by the most recent Letter and it is the starting point for the analysis they present, although slightly refined to 2011 to 2050. The Letter has concluded that;

It has been estimated that to have at least a 50 per cent chance of keeping warming below 2°C throughout the twenty-first century, the cumulative carbon emissions between 2011 and 2050 need to be limited to around 1,100 gigatonnes of carbon dioxide (Gt CO2). However, the greenhouse gas emissions contained in present estimates of global fossil fuel reserves are around three times higher than this and so the unabated use of all current fossil fuel reserves is incompatible with a warming limit of 2°C. . . . . Our results suggest that, globally, a third of oil reserves, half of gas reserves and over 80 per cent of current coal reserves should remain unused from 2010 to 2050 in order to meet the target of 2°C.

Further to this, the Letter also deals with the application of carbon capture and storage (CCS) for mitigation and finds that;

Because of the expense of CCS, its relatively late date of introduction (2025), and the assumed maximum rate at which it can be built, CCS has a relatively modest effect on the overall levels of fossil fuel that can be produced before 2050 in a 2°C scenario.

The choice of 2050 is somewhat arbitrary, in that while it may be important for the negotiating process, it is largely irrelevant for the atmosphere. But running a line through the middle of the century and drawing long term conclusions on that basis does change the nature of the issue and potentially leads to high level findings that are linked to the selection of the line, rather than the science itself. Most notable of these is the finding regarding the use of oil, coal, and gas reserves up to 2050 rather than their use over the century as a whole.

The study notes that current global reserves of coal, oil and gas equate to the release of nearly 3 trillion tonnes of CO2 when used and based on this draws the conclusion that two thirds of this cannot be consumed if a global budget were in place that limits emissions to 1.1 trillion tonnes of CO2 for the period 2011 to 2050. The problem here is that the current reserves are unlikely to be consumed before 2050 anyway. The Shell New lens Scenarios contrast a high natural gas future with a high renewable energy future, but in both cases the unabated CO2 (i.e. before the application of CCS) released from energy use over the period 2011-2050 is about 1.6 trillion tonnes. Using this as a baseline reference point for the period to 2050 rather than total global reserves, would then lead to a different conclusion and a much lower fraction that cannot be used. In the case of the Shell Mountains scenario which has both lower unabated CO2 (high natural gas use) and high CCS deployment, the net release of CO2 from energy use over the period 2011-2050 is about 1.5 trillion tonnes. Of course we should add the other sources of CO2 (i.e. cement and land use change) to this for a complete analysis and also recognise that neither of the New Lens scenarios can resolve the climate issue within the 2°C goal (discussed in an earlier post here), but both are close to net-zero emissions by the end of the century.

Looking out to the end of the century also changes the findings with regards the application of CCS. Any energy technology, be it solar PV or CCS, will take several decades to reach a scale where it substantively impacts the energy system. During that build up period, its impact will therefore be modest and this is the observation made in the Nature Letter. But by 2050 CCS deployment could be substantial and in the Mountains scenario CCS reaches its peak by the end of the 2050s decade. Therefore, it is the use of CCS after 2050 that really impacts the total use of fossil fuels this century. From 2050 to 2100 net fossil fuel emissions in Mountains are ~560 billion tonnes CO2, far less than the period 2011-2050 and similar in scale to a post 2050 “budget” that would be remaining in a world that limited itself to 1 trillion tonnes CO2 over the period 2011-2050 (i.e. for a total of 1.5 trillion tonnes as noted above).

With such CCS infrastructure in place and given the size of the remaining ultimately recoverable resources (which the Letter puts at ~4,000 Gt for coal alone), fossil fuel use could continue into the 22nd Century hardly impacting the level of CO2 in the atmosphere, assuming it remains competitive with the alternatives available at that time. CCS in combination with biomass use, also offers the future possibility of drawdown on atmospheric CO2.

The big challenge is the near term, when fossil fuel use is meeting the majority of energy demand, alternatives are not in place to fill the gap and CCS is not sufficiently at scale to make a truly material difference. Of course if CCS scale up doesn’t start soon, then the long term becomes the near term and the problem just gets worse.

A sense of scale for 2015

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The year 2014 saw this blog grow to become an e-book, which looked at the huge challenge of limiting warming to a global 2 °C temperature rise. The book is available on Amazon, here (or in the USA, here).

As we head into 2015, the opening chapter of the book perhaps provides a useful backdrop to the UNFCCC deliberations to come in the lead up to Paris. In this excerpt, I discussed the enormous scale of the global energy system;

. . . . not everyone has the opportunity to witness large-scale energy production first hand, so perhaps a few examples will help. In the hour or two that you might spend with this book, a lot will happen in the world. It’s become a very busy place powered by a lot of energy. Just to keep up with current energy demand, the next two hours will see;

  • Four VLCCs (Very Large Crude Carrier) of oil loaded somewhere in the world. That’s more than enough oil to fill the Empire State Building.
  • About two million tonnes of coal extracted. Much of this moves by rail, but if it were a single train it would be about 200 miles long.
  • 800 million cubic metres of natural gas produced, which under normal atmospheric conditions would cover the area enclosed by London’s M25 to a depth of about a foot; i.e. after half a day everyone in London would be breathing natural gas.
  • 8-10 cubic kilometres of water passing through hydroelectricity stations, or enough water to more than fill Loch Ness.

Our immediate contact with this is the fuel for our cars, the electricity that lights our homes and powers our stuff and the oil or natural gas we use in our boilers. But there is more, much more. This includes the unappealing, somewhat messy but nevertheless essential chemical plants where products such as sulphuric acid, ammonia, caustic soda and chlorine are made (to name but a few). Combined, about half a billion tonnes of these four products are produced annually. Produced by energy intensive processes operating on an industrial scale, but concealed from daily life, these four products play a part in the manufacture of almost everything we use, buy, wear, eat and do. These core base chemicals rely on various feed stocks. Sulphuric acid, for example, is made from the sulphur found in oil and gas and removed during refining and treatment processes. Although there are other viable sources of sulphur, they have long been abandoned for economic reasons.

Then there is the stuff we make and buy. The ubiquitous mobile phone and the much talked about solar PV cell are just the tip of a vast energy consuming industrial system that relies on base chemicals such as chlorine, but also  materials such as steel, aluminium, nickel, chromium, glass and plastics from which the products are made. The production of these materials alone exceeds 2 billion tonnes annually. All of this is made in facilities with concrete foundations, using some of the 3 to 4 billion tonnes of cement that is produced annually.

The global industry for plastics is also rooted in the oil and gas industry. The big six plastics* all start their lives in refineries as base chemicals extracted from crude oil.

All of these processes are energy intensive, requiring gigawatt scale electricity generation, high temperature furnaces and large quantities of high pressure steam to drive big conversion reactors. The raw materials for much of this come from remote mines, another hidden key to modern life. These, in turn, are powered by utility scale facilities, huge draglines for digging and 3 kilometre long trains for moving the extracted ores. An iron ore train in Australia might be made up of 300 to 400 rail cars, moving up to 50,000 tonnes of iron ore, utilising six to eight locomotives. These locomotives 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.

This is just the beginning of the energy and industrial world we live in and largely powered by utility companies 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 that feeds 7 billion people, uses huge amounts of energy and requires its own set of petrochemical derived fertilizers and pesticides.  The advent of technologies such as 3D Printing may shift some manufacturing to small local facilities, but even the material poured into the tanks feeding that 3D machine will probably rely on sulphuric acid somewhere in the production chain.

On that note, happy New Year and enjoy the complete book. Hopefully more will follow in 2015.

* These are, polyethylene (PE), polypropylene (PP), polyvinyl chloride (PVC), polystyrene solid (PS), polyethylene terephthalate (PET) and polyurethane (PUR)

Putting the Genie Back