Archive for the ‘UNFCCC’ Category

Is the UNFCCC ADP on track?

This week (March 10th-14th) in Bonn, parties to the UNFCCC are meeting under the direction of the Fourth Part of the Second Session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP 2.4). In short, this is the process that is trying to deliver a global deal on climate change over the next 20 months when the world comes together at COP 21 in Paris. The last attempt at such a monumental feat ended in tears in Copenhagen in December 2009.

One might imagine that a process with only a few months to reach a solution on a major global commons issue would be deeply imbedded in the economics of Pigouvian pricing, or at least attempting to see how the global economy could be adjusted to account for this particular externality. However, as we know from the Warsaw COP and previous such meetings that this isn’t the case, rather it is an effort just to get nation states to recognize that a common approach is actually needed.

The pathway being plied in Warsaw resulted in the text on “contributions”, which at least attempts to create a common definition and set of validation rules for whatever it is that nation states offer as climate action from within their own economies. More recently the USA set out its views on the nature of “contributions”. This process is at least trying to get everyone in a common club of some description, rather than having several clubs as has been the case since 1992 when the UNFCCC was created. The diplomatic challenge for Paris will be to find the most constraining club which everyone is still willing to be a member of and then close the doors. Once inside, the club rules can be continually renegotiated until some sort of outcome is realized which actually deals with emissions. This ongoing renegotiation will be for the years after Paris, it won’t happen beforehand or even during COP 21.

But ADP 2.4 in Bonn seems to have gone off-piste. Looking through the Overview Schedule, what can be seen is a series of meetings on renewable energy and energy efficiency. While this may be an attempt to highlight particular national actions as a template for others to follow, it is nevertheless symptomatic of a process that isn’t really dealing with the problem it is mandated to solve; limiting the rise in the level of CO2 in the atmosphere.

At best, the ADP has become a derivative process, or perhaps even a second derivative process. Rather than confronting the issue, it is instead dealing with tangents. Holding sessions on renewable energy is a good example of this behaviour. The climate issue is about the release to atmosphere of fossil carbon and bio-fixed carbon on a cumulative basis over time, with the total amount released being the determining factor in terms of peak warming (i.e. the 2°C goal). The first derivative of this is the rate of release, which is determined by total global energy demand and the carbon intensity of the energy mix. The second derivative is probably best described as the rate of change of the carbon intensity of the global energy mix, although this can be something of a red herring in that the global energy mix can appear to decarbonize even as emissions continue to rise, simply because demand change outpaces intensity change.

Energy efficiency is perhaps yet another derivative away from the problem. It deals with the rate of change of energy use, but this has further underlying components, one being the rate of change of energy use in things such as appliances and the other the rate of change of the appliances themselves. Efficiency isn’t good at dealing with the immediate rate of energy use in that this tends to be dictated by the existing stock of devices and infrastructure, whereas efficiency tackles the change over time for new stock. That new stock then has to both permeate the market and also displace the older stock.

Focussing on renewable energy deployment and efficiency is a useful and cost effective energy strategy for many countries, but as a global strategy for tacking cumulative carbon emissions it falls far short of what is necessary. Yet this is where the UNFCCC ADP 2.4 has landed. It also seems to be difficult to challenge this, as illustrated by one Tweet that emanated from a Bonn meeting room!!

 Twitter: 10/03/2014 16:47

shameful: US sells concept of “clean energy” (including gas, CCS) at renewable workshop. what hypocrisy / hijacking of process. #ADP2014

 

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

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

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

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

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

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

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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The other end of the spectrum

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

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

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

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

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

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

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

While there was plenty of talk at COP 19 about financing, national ambition, increasing pre-2020 ambition and adaptation, another core subject that struggled for high-level attention (the other one being CCS) was the idea of carbon pricing, specifically delivered through carbon markets. This is one of those subjects that an observer of the process would expect to see appearing in almost every discussion, yet it didn’t make it out of the SBSTA working group meetings. This meant that the high level discussions towards the end of the COP (when the national delegations are typically bolstered by the presence of a Minister) didn’t get to hear about carbon pricing at all (or CCS).

There is no doubt that carbon pricing appears on many national agendas, with of course the EU leading that trend through the 2005 start of the EU ETS. Parts of the US and Canada, New Zealand, Kazakhstan (pilot phase) and a few others have already incorporated carbon pricing within parts of their energy systems and China, South Africa and others are in various stages of preparing for it. These are positive developments, but carbon pricing really only works at its most efficient when coverage is both widespread and coordinated, otherwise leakage (in various forms), arbitrage and rent-seeking can undermine local implementation. Further to this and as I have discussed in previous postings, if carbon pricing isn’t a core element of the eventual climate policy framework, then emissions may not go down at the necessary rate or if they do decline it will likely be at a much higher cost than would otherwise have been necessary.

Carbon pricing is also the potential lever for large scale financing of mitigation projects, as has been seen to some extent with the CDM. By far the largest flow of finance to projects in developing countries has come through the application of the CDM and subsequent sale of CERs on international markets, not through public financing of projects through funds, development aid and the like. While these latter approaches are also important, they will never be sufficiently large or aggressive enough to underpin the scale of global mitigation required. Well over a billion CERs have been created since the start of the CDM, which equates to some $10 billion in carbon financing and possibly $30-$70 billion in underlying project financing.  But even discussions on the CDM in Warsaw were lacklustre, with some CDM negotiators continuing to think and operate as if the year was 2006 and demand for CERs was on an rise. At the beginning of the Warsaw talks, there was some discussion amongst negotiators about having the Green Climate Fund (GCF) utilise the CDM as a results-based financing tool, and allowing the CDM to become a ‘net mitigation tool’ for non-Annex 1 countries to utilise as they prepare for tabling contributions next year and in 2015. In the end, no such language emerged from Warsaw, which raises the prospect of even this mechanism struggling to survive in the post 2015 world.

One could argue that carbon pricing is simply part of national implementation and therefore shouldn’t feature at the UNFCCC level, but as noted above, that is not an efficient approach. There is a potential role for the UNFCCC to create a framework which both encourages the use of carbon pricing and coordinates its implementation through linkage, leading eventually to the much desired “global carbon market”. Within the current negotiations, the only place a UNFCCC role might be created is through the New Market Mechanism (NMM) within the Framework for Various Approaches (FVA). Some thoughts on this can be found here (Carbon Pricing, the FVA and the NMM), where the FVA/NMM is proposed to include a linking framework for all countries to use.

 NMM and FVA

There is also a second argument that linkage can be achieved bilaterally, such as California and Quebec have negotiated and Australia had proposed with the EU (presumably now defunct given the repeal of carbon legislation now underway in Australia). But bilateral linkage runs its course very quickly before multilateral discussions are required. For example, if Quebec now reached out to another party to link to, California would have to be involved given the existing link, so a trilateral discussion would be needed. This would quickly get very complex and large potential linking partners such as the EU would have to shift to a multilateral approach of some description.

So what happened to carbon markets in Warsaw? The short answer is not much.

The FVA and NMM discussions ground to a standstill in the first week. Concerns about basic form and function of the FVA dogged the discussion, compounded by other concerns relating to whether these were pre or post 2020 mechanisms. In the end, the FVA and NMM discussions were postponed until the regular SBSTA meetings in June. The UNFCCC posting on the FVA and NMM in Warsaw shows nothing more than the input documents that were available prior to the COP, with no conclusions whatsoever.

On a positive note this delay at least offers more time to develop FVA and NMM thinking along the “carbon market” lines outlined above, rather than have a weak agreement that precludes such a possibility and leaves them languishing as information sharing bodies – an entirely possibly outcome from this process. But the lack of attention to carbon pricing and carbon markets in the context of a global deal that is meant to rapidly drive down global emissions is worrying. There remains of course the sterling efforts of the World Bank and their Partnership for Market Readiness, but initiatives such as these won’t be sufficient without some overarching policy action to create the markets in the first place.

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.

Selling CCS at a climate conference

As COP 19 rolls on in Warsaw, both delegates and observers that I have talked to are seeing little agreement, despite the sometimes upbeat assessment coming from the UNFCCC. It may well be late on Friday or even Saturday before something appears from this COP.

Meanwhile the side event and external (to the formal COP) conference programmes continue. It is through these processes that participants can meet and discuss various aspects related to climate change. This being a meeting about climate change, it might be expected that attendees would be interested in hearing about carbon capture and storage (CCS), but it turns out this is a hard sell here. The problem seems to start at the COP venue itself, where the meeting room banners feature various approaches to energy and environmental management. CCS doesn’t get a mention.

 COP Banners

All I could find were Energy Efficiency, Renewable Energy Sources, Air Protection and Water & Wastewater Management.

This theme continues in many presentations, speeches, dinner conversations and panel discussions. While CCS does of course feature when organizations such as GCCSI hold events, at more general climate solution events it struggles to hold its own. Rather the focus is solidly on energy efficiency and renewables. Neither of these are anything close to sufficient solutions to the climate problem as it stands today, yet you could sometimes come to the conclusion that this is what the COP is actually about.

Energy efficiency has transformed global industry since the first day of the industrial revolution. Everything we do is possible through a combination of technology innovation and energy efficiency, from power stations to vehicles to mobile phones. The result of this has been tremendous growth, but with it has come a continuous rise in greenhouse gas emissions, particularly CO2. We use more goods and services, buy more stuff and travel further than at any point in human history and there is no apparent let up in this trend as it continues to pervade the entire global economy. But now energy efficiency is being sold as a mechanism for reducing emissions, throwing into reverse a trend that has been with us for over 200 years and fundamentally challenging economic building blocks such as Jevons Paradox. A parade of people representing business organizations, environmental NGOs and multilateral institutions will wax lyrical about energy efficiency. In one presentation an airline industry spokesperson talked about the tremendous improvements in efficiency the industry was making, through engine design, light weighting, route optimization and arrival and departure planning. There is no doubt that this is happening, but it is also bringing cheaper air travel to millions of people and of course forcing up emissions for the industry as a whole. There is no sign of this trend reversing itself. Adding a carbon price to the energy mix is the way to change this trend and still make energy efficiency improvements. 

The renewable energy story is told in a similar way. While there is also no doubt that the application of renewable energy is bringing benefits to many countries, offering distributed energy, providing off-grid electricity and supplementing the global energy supply in a tangible way, the global average CO2 intensity of energy has remained stubbornly the same since the 1980s when it dropped on a relative scale (1990 = 100) from 107 in 1971 to 100 in 1987 (Source: IEA). It was still at 100 in 2011. This is not to say it will never change, but simply advocating for renewable energy is very unlikely to take us to net zero emissions before the end of this century. The fossil fuel base on which the economy rests is also growing as demand for energy grows. As recent IEA World Energy Outlooks have repeatedly shown, much of this new demand is being met with coal. The only way to manage emissions from coal is the application of CCS, yet this seemingly falls on deaf ears here in Warsaw.

When CCS does get a mention, it is increasingly phrased as CCUS, with the “U” standing for “use”. In her one upbeat mention of CCS that I have heard, UNFCCC Executive Secretary also referred to it as CCUS. In another forum, one participant even talked about “commoditizing” CO2 to find a range of new uses. The problem is that CO2 really can’t be used for much of anything, with one modest (compared to the scale of global emissions) but important exception. The largest use today is for enhanced oil recovery where the USA has a mature and growing industry. It was originally built on the back of natural CO2 extracted from the sub-surface, but the industry now pays enough for CO2 that it can provide support to carbon capture at power plants and other facilities (usually with some capital funding from the likes of DOE).  This has helped the US establish a CCS demonstration programme of sorts.

There are other minor industrial gas uses (soft drinks), some scope for vegetable greenhouses such as the Shell project in the Netherlands (which provides refinery CO2 to Rotterdam greenhouses for enhanced growing, rather than have them produce it by burnaing natural gas) and a technology that quickly absorbs CO2 in certain minerals to make a new material for building, but all of these are tiny. The problem is that CO2 is the result of combustion and energy release and therefore any chemistry that turns it into something useful again requires lots of energy – nature does this and uses sunlight. Even if such a step were possible, this wouldn’t change the CO2 balance in the atmosphere, just as any bio process doesn’t change the overall balance in the atmosphere. Only sequestration, either natural or anthropogenic, changes that balance.

“Show me the money” or CO2 mitigation at COP 19 ??

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After the first week of the Warsaw COP, an observer could be excused for wondering what exactly the thousands of delegates meeting here were actually discussing. The closest the assembled negotiators, NGOs, business people and UN staff came to seriously talking about CO2 mitigation was when Japan announced its new 2020 target, an increase of 3% in emissions vs. 1990 (but positioned as a decrease of 3.8% vs. 2005 emissions). The change in target by Japan is a consequence of their decision to stop all use of nuclear power following the Fukushima disaster.

Curiously, the Japanese announcement was criticized by China, with their climate negotiator Su Wei saying: “I have no way of describing my dismay” about the revised target. The European Union also expressed disappointment and said it expected all nations to stick to promised cuts as part of efforts to halt global warming. Christiana Figueres, the Executive Secretary of the UNFCCC told Reuters that, “It is regrettable.” Somewhat predictably, she forecast that Japan’s planned investments in energy efficiency and renewable power would prove that the target could be toughened.

The Japanese decision sent one other major ripple through the football stadium holding the COP, that being the realization that national pledges are wide open to correction and change as circumstances dictate. Given that “pledge and review” is the likely foundation of the global deal that negotiators are aiming for in 2015, the Japanese move brings into question if such an approach has any legitimacy at all. Had the original Japanese target been underpinned by carbon market instruments with the robustness that we expect of financial markets, they might have felt compelled to buy the difference, which would have at least financed equivalent compensating mitigation actions in other parts of the world (although that being said, Canada took no such action when it failed to meet its goals under the Kyoto Protocol, it just rescinded its ratification instead).

But Japan and CO2 was a momentary distraction from the real discussion, money. This has appeared in a variety of forms and is endemic within the process. There is endless questioning about the $100 billion pledge made in Copenhagen;

In the context of meaningful mitigation actions and transparency on implementation, developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries.

. . . with the most often repeated phrase from many countries being akin to “Show me the money”. Of course, the intention of the Copenhagen Accord was never to have $100 billion per annum deposited in the Green Climate Fund by Annex 1 countries, but to develop approaches which would see at least $100 billion per annum in mitigation and adaptation investment flow to developing countries, leveraged by instruments such as the Green Climate Fund. Unfortunately this interpretation of the pledge is largely ignored.

show-me-the-money-38mm 

Money also rears its head in the Loss and Damage discussion where agreement was reached in the dying hours of the Doha COP to agree a mechanism for this in Warsaw. The horrors appearing across the media of the aftermath of Typhoon Haiyan in the Philippines has of course focused minds on this discussion. In their various opportunities to speak in the plenary sessions, many nations called for the Loss and Damage issue to be rapidly progressed in Warsaw. 

Even within the discussions on technology transfer there is a renewed call from some nations for the opening up of patents (money) on a variety of “climate friendly” technologies.

The other half of any COP is the side event programme and here CO2 mitigation didn’t get much of an airing either. There were many side events on financing and adaptation and those on energy primarily focused on energy efficiency and renewables, neither of which offer a direct path to measurable and sustained CO2 mitigation. By contrast, the few side events on carbon capture and storage were rather sparsely attended.

The rather sparsely attended but content rich GCCSI event on CCS developments.

The rather sparsely attended but content rich GCCSI event on CCS developments.

 Even the “Green Climate” exhibition in the Palace of Culture was principally focused on energy efficiency in buildings, solar PV and waste management. However, Shell at least kept the CCS flag waving with its novel CCS lift / elevator (something of a virtual ride to 2 kms below the surface where CO2 could be safely stored).

The Shell CCS “lift” in the Palace of Culture and Science in Warsaw.

The Shell CCS “lift” in the Palace of Culture and Science in Warsaw.

So to week 2 of the Warsaw COP, which will likely end in the usual rush to a declaration of some description at the end, although in the very last hours of Week 1 on Saturday night the collected negotiators came away with nothing agreed on FVA and NMM.

What to make of COP 19?

The flight from London to Warsaw this week gave me a chance to flick through the latest World Energy Outlook from the IEA (I couldn’t use the word “read” here as that would barely be possible on a flight to Melbourne, let alone Warsaw) and read a number of articles in the principle introductory publication to COP 19 (Climate Change – The New Economy), which amazingly enough was available in the BA Lounge at Heathrow.

 Climate Change - The New Economy

Further to these publications, UNEP released their 2013 Gap Report on Wednesday afternoon at a side event in the football stadium where the COP is being held (it doubles as a convention centre).

The COP publication contains a series of articles from various stakeholders, all extolling the virtues of one particular technology over another as a means of delivering the needed emission reductions over the coming decades (e.g. efficient lighting!!). But on opening the publication there is a two page advertisement for a much more efficient and clean coal bed methane to liquids process  under the heading “You will be amazed what we can do with coal”, followed by a two page spread from WWF titled “Help Save the Fridge”, with an expansive picture of pack ice in Spitsbergen. This rather sets the scene for the tensions that may well run right through this particular conference.

The document then continues with messages from the Polish Minister for the Environment (the COP President) and Christiana Figueres, Executive Secretary of the UNFCCC. Ms. Figueres’ article outlines with great exuberance how climate change represents “the mother of all opportunities” and goes on to note that more than 30 countries have climate legislation and 100 countries have renewable energy regulations. Of course she needs to be optimistic, how else could anyone face up to the reality of increasing global coal use and the task of delivering a deal that needs to bring global emissions to somewhere near zero later this century.

The contrast between these realities is highlighted by the UNEP Gap Report and the IEA World Energy Outlook. The Gap Report clearly recognizes that current national actions will not put us on a trajectory that looks anything like 2°C, but it then outlines a wide range of actions that UNEP claim could potentially be taken to reverse this trend. Although the Gap Report notes that timing is now very tight, it nevertheless goes on to outline reduction potentials across all the major emitting sectors (including agriculture) that add up to 17 GtCO2e per annum (middle of the range) below “business as usual” in just six years. This would take us well below current emissions and reverse a trend, almost overnight, that has been a reality for over 200 years.

 Bridge the GAP

 

The IEA also present a 450 ppm scenario, as they always have, but perhaps a more realistic scenario is their New Policies case. This scenario assumes the continuation of existing policies and measures (like the ETS in Australia !!!) as well as cautious implementation of policies that have been announced by governments but are yet to come into effect (e.g. the ETS in Korea). Given the pace of energy policy change over the last decade and the time it takes to debate, agree and implement new policies, this is probably a much fairer assessment of what is to come. Under this scenario, CO2 emissions in the energy sector rise from 31 GT in 2011, to 34.5 GT in 2020. This is quite a modest increase of just 1.2% p.a. which may well have been (almost) realized between 2011 and 2012 (see previous post), but that depends entirely on whose data is used. However, it isn’t the reduction that UNEP is saying is still possible.

This isn’t exactly news, but despite the wealth of optimistic publications and climate-speak here in Warsaw, the 2°C pathway remains out of reach. Perhaps the two page spread in the front of the COP publication was inserted as a sobering but much needed reminder of how the energy system is actually developing. Until delegates and observers come to terms with this and plan for it rather than attempt to swim upstream against the deluge, it is hard to see real progress being made. There continues to be a lot of criticism of the fact that Poland is holding this conference while at the same time continuing to run its economy on coal, but hopefully this actually helps ground the process in the difficult reality that is the current global energy system.

Perhaps the BBC and others are having a fit of pre-COP optimism, but two recent stories would lead the reader / listener to the view that the world is at last turning the corner on emissions.

This started with BBC coverage of a report from the Netherlands Environment Agency which provided an assessment of global emissions for 2012, one of the most up to date reviews of global greenhouse gas emissions. While the report showed actual global emissions of carbon dioxide from fossil fuel use and limestone calcination (cement) reaching a new record of 34.5 billion tonnes in 2012, it noted that the increase in  emissions in that year slowed down to 1.4% (corrected due to the leap year), which was less than half the average annual increase of 2.9% over the last decade. The BBC argued that this development signals a shift towards less fossil-fuel-intensive activities, more use of renewable energy and increased energy saving.

 Global CO2 Emissions

Not to pour cold water on this, but the recent publication by BP of their Statistical Review of World Energy didn’t show such a marked change, although the rate of increase was certainly down. The chart below shows how the rate of increase (according to BP) has changed over the years, but it’s hard to argue that we have broken out of the long term range.

CO2 Emissions year on year change

The BBC followed this with a BBC World report, including an interview with David Kennedy, CEO of the UK Committee on Climate Change, where they argued that the world is turning a corner in terms of climate cooperation, clean energy deployment and ultimately emissions. The evidence for this was rather scant, but included a look at a very sophisticated heat capture system in Norway which exchanges heat from waste domestic water in Oslo. They also presented a chart which showed the world decarbonisation trend, i.e. CO2 per GDP, and drew solace from the fact that the Chinese decarbonisation rate was increasing (note that CO2 per GDP requires estimates of both global CO2 emissions and global GDP and that these numbers can vary from source to source). The BBC did note that the world “has much more to do”, but that there is finally cause for optimism.

The reality check on all this comes from PWC, with their new report Busting the Carbon Budget. They also focus on decarbonisation rates, but looking forward rather than back (where, unlike the BBC, they had no cause to celebrate at all). PWC note that if the world maintains the current decarbonisation rate of about 0.7% per annum, the global carbon budget for a 2°C pathway (IPCC RCP2.6 scenario) will be depleted by 2034, just 20 years away. Meeting RCP 2.6 now requires a decarbonisation rate of 6% per annum. Meeting the budget for the less ambitious RCP 4.5 scenario requires rates of 3% and even “meeting” the RCP 8.5 (4°C) scenario budget still requires decarbonisation rates which are double current practice.

The PWC report delves into national data as well and notes that Australia, the USA and Indonesia are the only three countries that have recently come close to the needed decarbonisation rates but that not one country has managed to sustain such a rate for five years. PWC finds that energy efficiency is the bright spot in that almost all of the change in carbon intensity can be attributed to efficiency improvements. For me, this is a cause for concern, in that intensity improvements are therefore masking that lack of progress on real energy mix decarbonisation. Efficiency will drive GDP, which in turn can give the appearance of decarbonisation when in fact there isn’t any. PWC note that CO2 per unit of energy consumed has remained at approximately the same level for five years.

The PWC review of mitigation highlights a number of home truths;

  1. The shale gas revolution in the USA is causing US coal to shift to other parts of the world (which highlights the need for more widespread adoption of carbon pricing).
  2. Biofuels consumption is largely confined to the Americas.
  3. There is a slow rise in renewable energy but reliance on fossil fuels is effectively unchanged.
  4. Nuclear is losing ground following Fukushima.
  5. There has been negligible progress in the deployment of CCS technology.

PWC conclude with the statement “Crucial is the collective will to act.” According to the BBC and the UK CCC we may be turning the corner in the regard, but let’s wait until COP 19 in Warsaw next week to see how that one develops.