Archive for the ‘UNFCCC’ Category

It’s all about the transition

The ambition embodied within the Paris Agreement argues for the need to reach a state of net zero anthropogenic emissions around the middle of the century, although the text of the Agreement is less stringent and points to the second half of the century for a balance between sinks and sources. Either way, this presents a formidable challenge.

Looking at a modern developed economy today, it is possible to imagine a state of much lower emissions, or even net-zero. The technologies to have a zero emission power sector are readily available and have been for some time; look at the level that nuclear power reached in France as early as the 1980s. Today we also have carbon capture and storage and scalable renewable energy. Vehicle electrification is now coming of age and it is not difficult to imagine a future where this dominates, with heavy transport potentially using hydrogen. Homes can also be electrified and the service sector / secondary industry economy that drives the developed world today is primarily electricity based.

But the manufacture of goods still represents a large part of the global economy. Material goods represent one facet of our economy and certainly one that is critically important in the early stages of development of most economies. For example, between 2004 and 2014 some 350 million refrigerators were produced and went into use in China with a further 250 million exported. Production in 2000 was just 12 million units. China is now the world’s 6th largest exporter (2014 by value) of refrigerators, but this is just one sixth of US refrigerator exports.

The same is true when it comes to the refining and fabrication of the raw materials that developed and developing country secondary industry requires. These products all demand considerable use of fossil fuels for combustion based processes such as smelting, refining, base chemical manufacture and similar. Nevertheless, we could perhaps imagine a world based on 3D printing using various exotic materials (graphene, certain polymers etc.) as the raw material for manufacture. But even in this world considerable chemical plant capacity and therefore process heat would be required to manufacture the printer feedstock, but carbon capture and storage could handle emissions from these sources.

China grew rapidly on the back of large scale manufacturing and at the same time it built vast swathes of infrastructure; from cities such as Shanghai and Chongqing to the high speed rail networks that now connect them. Between 1995 and 2015 cumulative emissions from China amounted to some 130 billion tonnes of carbon dioxide, or 100 tonnes per person. For the most part, this wasn’t for personal domestic use (i.e. home electricity and heating), but to make products for consumers in China and for export which in turn finances domestic infrastructure for the future. The process is far from complete, but China is already starting to look to other economies to make its raw materials and supply finished products as it attempts to develop its service sector.

The situation for the least developed economies is not dissimilar to China 30 years ago. Some 3 billion or more people live in circumstances where little or only modest levels of infrastructure exists. While they may now have basic renewable energy for lighting and some other services, their standard of living remains far below other parts of the world. The development pathway in front of them may well be similar to the one that China embarked on in the 1980s. That pathway might even be funded by products made for the Chinese economy as its service sector grows and energy use reaches a plateau or even falls slightly.

The 100 tonnes per person of development emissions is perhaps the hardest to decarbonise. It is from steel mills, cement plants, chemical plants, manufacturing industry and heavy goods transport. These are the backbone industries and services for development, many of which have long gone from developed economies. They may also be quite expensive to decarbonise, which is problematic for economies in the earlier stages of rapid development. This development also leads to a degree of lock-in as once industries are created and jobs are in place there is a strong desire to keep them; the recent concern as the last major UK steel plant shed more jobs is an example. The same industries are also needed to continue making a wide range of products, from cars to iPhones, for consumers in the rest of the world.

One particular challenge for post-Paris implementation of the Agreement is this 100 tonnes per person of development emissions and the lock-in that follows. While the net-zero goal looks feasible and can be imagined as a longer term outcome, the interim emissions bulge as development continues and the supporting industries required for infrastructure are put in place may take us well beyond 2°C rather than the goal of well below. Further to this, the energy demand that will be created just to fuel the energy transition itself could be significant as hundreds of lithium mines open, solar PV factories expand and new vehicle technologies are offered to the public.

Article 6 within the Paris Agreement makes mention of a Sustainable Development Mechanism that results in emissions reductions. Such a mechanism could be an important part of the solution set for this problem. More on that to follow.

The highlight of the Paris Agreement is without question the ambition embodied within it. This had its foundation with the Alliance of Small Island States (AOSIS) and their deep concern regarding future sea level rise. But the issue snowballed as the conference progressed, supported by a strong dose of techno-optimism that was prevalent throughout the halls of the Le Bourget Conference Centre. The text that was agreed upon is important, with the goal embodied in to distinct sections;

Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;

Parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recognizing that peaking will take longer for developing country Parties, and to undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century . . .

In a post written before the conclusion of COP21, I assessed that a 1.5°C goal would require a rapid forty year transition to net-zero anthropogenic emissions and a period until at least the end of the century with negative emissions via BECCS (bioenergy and CCS) and DACCS (direct air capture and CCS). But the pathway proposed by the Agreement itself isn’t quite as ambitious, even while it aspires to a 1.5+°C outcome. Rather, it proposes achieving a balance between anthropogenic emissions and removals by sinks in the second half of the century. This may not be sufficient to achieve the 1.5+°C goal, with a key deciding element being the role of natural sinks.

The 1.5+°C pathway issue is highlighted in a paper published by the MIT Joint Program in July 2013. MIT deliberately avoided the use of negative emissions technologies, partly due to concerns about their scalability but also preferring to test the impact of natural sinks on the outcome. Of these, the ocean is the major short term sink because of the imbalance between levels of CO2 in the ocean and the atmosphere.

MIT analyzed four pathways that result in net zero anthropogenic emissions. These are shown in the chart below (fossil energy CO2 emissions only) against a business as usual trajectory based on the 2010 post-Copenhagen national pledges.

  1. An immediate drop to net zero by 2015, starting in 2010 (Natural only after 2015).
  2. A very rapid drop to net zero by 2035, but with growth from 2010 to 2030 (Natural only after 2035).
  3. A more extended drop to net zero by 2060, with the decline commencing in 2010 (Alternative).
  4. The IEA 450 scenario, with emissions peaking around 2020 and reaching net zero by 2070 (IEA 450).

MIT Scenarios - CO2 emissions

Pathway 3 is of particular interest. In this case anthropogenic emissions are at net zero by 2060, although starting to decline from 2010 when energy emissions are at 30 Gt CO2 per annum (it is now 2016 and they are at ~33 Gt). This scenario sees temperatures rise above 2°C by mid-century, but then decline as the ocean takes up significant quantities of CO2 from the atmosphere but with nothing being added from anthropogenic sources.  After some 20-30 years, as the ocean’s upper layer comes into balance with the atmosphere, uptake of CO2 slows. Mixing into the deep ocean is much slower but will continue for hundreds to thousands of years.

Back in 2010 the cumulative emissions from 1750 (to 2010) stood at some 532 billion tonnes carbon, which means that Pathway 3 approximates a 1.5°C outlook as the area under the curve from 2010 to 2060 (energy, cement and land use) represents an additional 250 billion tonnes of carbon emissions, giving a total of some 780 billion tonnes. The relationship between carbon emissions and temperature is about 2°C per trillion tonnes. The chart below shows the modelled pathway which results in an end-of-century temperature rise of 1.5°C.

MIT Scenarios - Temperature

The natural sink is therefore very important, offering some 0.5°C (see the light blue line in the chart above) of temperature reduction following an overshoot. This is possibly the only way in which 1.5°C can be met,  although significant anthropogenic sinks may also be developed (including reforestation) later which could offer the same drawdown. As such, with the Paris Agreement potentially not making use of this and instead only providing for emissions to fall to a level which matches the ability of sinks to take up carbon emissions, the task of meeting 1.5°C becomes considerably more difficult.

The same is true of the IEA 450 Scenario. With 2010 now behind us, the future equivalent of the Alternative pathway which saw reductions from 2010 onwards is probably the red 450 line (reductions from 2020), which overshoots to 2.7°C before achieving something of a plateau at 2°C. But to bring this down further by the end of the century and therefore comply with the Paris Agreement would also require the major application of anthropogenic sinks, such as via CCS and rapid reforestation.

This discussion may be something of a moot point today because the job of rapidly reducing emissions hasn’t even started and arguably we have at least 40+ years to think about where the endpoint should be. Nevertheless, as nations begin to reflect on the Paris outcome in the coming months and relook at their respective reduction pathways, the long term end point does become relevant because energy infrastructure planning requires a multi-decadal outlook. In its initial formulation of a long term carbon budget, the UK did need to look forward to 2050 but that was from a 2008 starting point. With a new starting point of 2020 or thereabouts, a 2060 or even 2070 end-point may well be considered.

There is of course a disturbing flip side to this story – continued rapid uptake of CO2 by the ocean also gives rise to increasing levels of ocean acidification.

COP21: A success within the success

From the moment Laurent Fabius nervously banged his gavel on Saturday 12th December, the newswires, bloggers and analysts have been writing about the success of COP21 and the ambitious nature of the Paris Agreement. Without doubt, more will be written in the weeks and months ahead. But the deal was done and many parts made it possible.

Deal done

In the end it is the detail and implementation that will count. One critical aspect of implementation received a major boost from a short but very specific piece of text within the Paris Agreement; Article 6 might just be the additional catalyst that is needed for the eventual emergence of a global carbon emissions market and therefore the all-important price on carbon.

The Paris Agreement was never going to be the policy instrument that would directly usher in a global price on carbon; carbon pricing is a national or regional policy concern. But the Agreement could offer the platform on which various national carbon pricing policies could interact through linkage, bringing some homogeneity and price alignment between otherwise disparate and independently designed systems. The case for this was initially put forward through collaboration between the International Emissions Trading Association (IETA) and the Harvard Kennedy School in Massachusetts. A number of papers coming from the school underpinned a Straw-Man Proposal for the Paris Agreement, authored by IETA in mid-2014 and eventually published at the end of that year. The straw-man didn’t mention carbon pricing or emissions trading, it simply proposed a provision for transfer of obligation between respective INDCs, in combination with rigorous accounting to support said transfer.

. . . . . may transfer portions of its defined national contribution to one or more other Parties . . . . .

In addition, the straw-man proposed a broader mechanism for project activity and REDD+. The IETA team worked hard during 2015 building the case for such inclusions in the Paris Agreement. A number of governments, business groups and environmental NGOs came to similar conclusions; Paris needed to underpin carbon market development. After all, fossil fuel use and carbon emissions are so integrated into the global economy that only the power of the global market could possibly address the problem that has been created.

Roll on twelve months and the Paris Agreement now includes Article 6, which provides the opportunity for INDC transfer between Parties and a sustainable development mechanism to operate more widely and hopefully at greater scale than the Clean Development Mechanism (CDM) of the Kyoto Protocol. In the case of the transfer, Article 6 says;

. . . . . approaches that involve the use of internationally transferred mitigation outcomes towards nationally determined contributions . . . . .

While not exactly the same as the original IETA idea, it does the same job. Of course, like every other part of the Paris Agreement, this is just the beginning of the task ahead. The CDM within the Kyoto Protocol was similarly defined back in 1997, but it was not until COP7 in Marrakech in 2001 that a fully operational system came into being. Even then, the CDM still required further revisions over the ensuing years.

Exactly how the transfer between INDCs materializes in a UNFCCC context is not clear today, although such a transfer is a prerequisite for cross border linking, such as between California and Quebec or what might eventually become multiple US States and multiple Canadian Provinces. The good news for now is that the provision is there and its use can be explored and developed over the coming year before the COP convenes again in Marrakech in 2016. The eventual goal remains the globally linked market.

Global market

COP21: Targets, goals and objectives

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As the negotiators struggle on in Paris at COP21, the question of the long term goal has emerged. What should it be, how should it be structured and will it send the necessary signal to drive future national contributions.

The idea of a goal goes back to the creation of the UNFCCC. There is the original text agreed when the Convention was first written in 1992, i.e. “. . . stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system . . . “. At COP16 in Cancun, the Parties to the UNFCCC reformulated this as a numerical goal; the need to limit warming of the climate system to no more than 2°C above the pre-industrial level with consideration for reducing this to 1.5°C as the science might dictate. This seems very clear, but in fact offers little immediate guidance to those attempting to establish a national or even global emissions pathway.

The climate system is a slow lumbering beast and the global temperature could take years or even decades to settle down once there is stabilization of carbon dioxide (and other greenhouse gases) in the atmosphere. It could be decades after that before we are collectively sure that no further temperature rises will take place. But the science has shown that the eventual rise in temperature is strongly related to the cumulative emissions of carbon dioxide over time, starting when emissions were negligible (say 1750) and running through several centuries (e.g. to 2500). Myles Allen et. al. from Oxford University equated 2°C to the cumulative release of one trillion tonnes of carbon, which offers a far more mechanistic approach to calculating the point at which 2°C is reached. So far, cumulative emissions amount to some 600 billion tonnes of carbon. However, even this approach has uncertainty associated with it in that the actual relationship between cumulative emissions and temperature is not precisely known. If emissions stopped today, it is very unlikely (but not a zero chance) that warming would continue to above 2°C, but if emissions were to stop when the trillion tonne threshold is reached then there is only a 50% chance that the temperature would stay below 2°C. The agreement in Cancun doesn’t cover uncertainty.

The Oxford University team have developed a website that counts carbon emissions in a bid to familiarize people with the concept. As of writing this post, it was counting through 596 billion tonnes and provided an estimate that 1 trillion tonnes will be reached in October 2038. The INDCs already reach out to 2030 and as they stand, will not put the necessary dent into the global emissions profile that is needed to avoid passing one trillion tonnes. In terms of energy system development, 2038 is in the medium term. Most forecasts out to this period, including the IEA New Policies Scenario which factor in the INDCs, show energy demand and emissions rising over that period, not falling.

In line with the Cancun Agreement, a number of Parties have maintained the need to lower the goal to 1.5°C, but particularly those from low lying island states who are justifiably concerned about long term sea level rise. This goal is being voiced more loudly here in Paris. Using the relationship developed by Allen et. al., this implies that 1.5°C would be exceeded if cumulative carbon emissions passed 750 billion tonnes, which could happen as early as 2027. This would imply a massive need for atmospheric CO2 capture and storage over the balance of the century for the simple reason that cumulative emissions could not be contained to such a level by energy system reductions alone.

More recently the concept of net zero emissions (NZE) has emerged. This is the point in time at which there is no net flow of anthropogenic carbon dioxide into the atmosphere; either because there are no emissions at all or if emissions remain because they are completely offset with a similar uptake through carbon capture and storage or reforestation and soil management. Emissions are likely to remain for a very long time in sectors such as heavy transport, industry and agriculture. NZE has been closely linked to 2°C, but in fact any temperature plateau, be it 1.5°C or even 4°C requires NZE. If not, warming just continues as atmospheric CO2 levels rise. There is now a discussion as to when NZE should be reached – as early as 2050 (but practicality must be a consideration), or perhaps by the end of the century. However, what is actually important is the area under the emissions curve before NZE is achieved, less the area under the curve after it is reached, assuming emissions trend into negative territory with technologies such as direct air capture or bioenergy with carbon capture and storage (DACCS or BECCS). The date at which NZE is reached is important, but not necessarily an indicator of the eventual rise in temperature. Just to complicate matters further, although the world needs to achieve NZE eventually, it may be the case that net anthropogenic emissions do not have to be zero by 2050 or 2100 to meet the 2°C  goal because of carbon removal arising from natural sinks in the oceans and terrestrial ecosystems.

Other proposals put forward by Parties and some observers simply call for an urgent peaking of emissions. This is important as well, but again it doesn’t tell the full story. What happens after the emissions peak is critical. A long slow decline to some plateau would be positive, but unless that plateau is close to NZE, then cumulative emissions continue to build, along with the associated warming. Other proposals argue for emissions to be at some reduced level by 2050, which presumes a certain follow-on trajectory equating to 2°C or thereabouts.

Where the Parties land in this discussion remains to be seen, but with only days left and the complexity of goal setting becoming apparent, this may end up being an issue for the years ahead rather than one that can be fully resolved in Paris in a week. 2°C may have to do for now.

Emission pathway

 

As COP21 starts and the negotiators face the task of reaching an agreement, one of the most important points of discussion will be the review and recalibration of INDCs. Many organisations, including some business based ones (i.e. We Mean Business), are arguing for a five yearly review of the national contributions. If strictly adopted, this might mean that the first round of INDCs are already under review before they formally commence (i.e. 2020), such that the global emissions outcome by 2025 is already lower than current INDC projections would project. An alternative is a 10 year review, such that the first deviation from current INDC projections becomes apparent in the early 2030s.

There are practical considerations associated with this. Many who view the energy industry from the outside have consistently had expectations for rapid change. For example, the UNFCCC itself has continued with its pre-2020 workstream even as the time for meaningful change has diminished. This isn’t to argue that nothing can happen between now and 2020, but it is unlikely that much extra can now happen in that time frame. The energy industry is built on long lead times, project cycles that can stretch out to a decade and capital cycles that are often laid out years in advance of actual spending. Sometimes this can be disrupted, particularly when there is a sudden shift in market price structure, but that is not the normal pattern of change.

There is also the reality of policy development timelines needed to trigger change. For example, the EU is in the midst of a three year (at least) examination of the climate and energy needs for the period 2020 to 2030, which requires green papers, white papers, various stakeholder consultations, draft legislation, parliamentary committee discussion, a parliamentary vote, Member State agreement and transfer to national legislation. It is unlikely that this would be revised as soon as 2018-2021 having just reached agreement on the entire package in 2016 and finalised EU wide adoption in 2017. The institutional capacity may not exist for constant revision.

But there is an overriding thought which should take priority – the emissions and therefore eventual temperature impact of moving to a more aggressive review timetable. It is very clear that the current round of INDCs do not deliver a 2°C pathway – many analysts and the UNFCCC have concluded that. The INDCs also say little to nothing about the past 2030 period, so future INDCs or review of current INDCs will be needed.

A relatively basic analysis can give some insight as to the climate value of review and the benefit of conducting that on a five year basis or a ten year timetable. I put this together as outlined below;

  • There isn’t really a clear emissions trajectory for the current round of INDCs, at least not after 2030. For the purposes of this analysis I have assumed that they result in peaking of global emissions in the 2030s, followed by the beginnings of a decline to 2040 and beyond. Some would argue that even this is optimistic.
  • The 2°C pathway reaches net-zero emissions in about 2080, then enters a period of negative emissions through the use of a technology such as BECCS (biomass energy with carbon capture and storage).
  • In the case of a five year correction process, I assumed that every five years the UNFCCC looks at progress against a 2°C pathway (which of course will change over time, but I haven’t got into that detail) and after each new round of submissions the INDC pathway, as it would be at that point in time, shifts a quarter of the way further towards the 2°C pathway. The result is an emissions trajectory that starts to deviate from the current INDC pathway by 2025.
  • In the case of the ten year correction process, the same happens but on a ten year cycle, with the intervening five year period declining at the same rate as the previous five year period. Because of the slower turnaround in the process, I also assumed that after a more protracted INDC discussion, the shift in the pathway is relative to the 2°C line as it was five years earlier, rather than at the time. As such, there is a bit more lag built into the process and emissions remain the same as the current INDC pathway until after 2030.

INDC Review Pathways

  • The chart above shows the four potential pathways; 2°C, the current INDCs extended out for several decades and the corrected pathways, based on five year and ten year correction cycles.

As shown, the uncorrected INDC pathway is a 3+°C scenario, whereas both the five year and ten year correction pathways are about 2.5°C and both arrive at a net zero emissions outcome around the turn of the century. As such, it is clear that a review cycle can change everything and has the potential to deliver a clear outcome rather than an open ended emissions tail stretching well into the 22nd century.

But the difference between them is 0.15°C, or a cumulative 280 million tonnes of CO2 over the balance of the century. While this is not insignificant, the more important goal for the negotiators should be to agree a clear review and recalibration process, rather than be too focussed on the precise timeliness of it.

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.

Final steps towards Paris?

The last ten days have seen a rush by nations to publish their Intended Nationally Determined Contributions (INDCs), with the much anticipated INDC from India amongst those submitted. On Monday October 5th, the Co-Chairs of the ADP also released a proposal for a first draft of a new climate change agreement for Paris. So it has been a very busy few days, but are we any closer to a deal and could that deal have sufficient ambition to bend the emissions curve?

The India INDC is telling as an indicator of where the developing world really is, versus where the rapidly emerging economies such as China now find themselves. In the case of the latter group, there is thinking towards an emissions peak with China indicating that this will be around 2030 and continuing signals from the academic and research community in that country indicating that it may well be earlier. One such article appeared recently in the Guardian. But for the much poorer developing countries the story remains very different.

The submissions from India is 38 pages long, but of this some 28 pages is supporting evidence and context, explaining the reality of Indian emissions, the need to grow the economy to take hundreds of millions out of poverty and the expected use of fossil fuels to power industry, including areas such as metal smelting, petrochemicals and refining. With a focus on efficiency in particular, India expects to achieve a 33 to 35 percent reduction in CO2 intensity of the economy, but in reality that means a rise in energy related emissions to around 4 billion tonnes or more by 2030, up from some 2+ billion tonnes per annum at present (1.954 Gt in 2012, IEA). This could be tempered by a further element of their contribution which aims to increase forest sinks by some 3 billion tonnes of CO2 in total through to 2030.

There has been considerable speculation as to the renewable energy component of India’s INDC, with a hope that this would show enormous progress in solar deployment in particular. The INDC took the somewhat unusual route of talking in capacity additions, rather than generation (and therefore emissions). India aims to achieve 40% cumulative electric power capacity from non-fossil fuel based resources by 2030. This is significant, but less than it might appear. In a very simple example where 100 GW of generating capacity is comprised of 40 GW solar PV and 60 GW coal, the generation mix might be around 14% renewables and 86% coal. This is assuming a 20% capacity factor for the solar PV (maximum is 50% with day-night) and 80% capacity factor for the coal.

India has also put a considerable price tag on their INDC, with a mitigation effort of some US$ 834 billion through to 2030. In a previous post I looked at the costs assumed in the Kenyan INDC, which came to some $25 billion, but for a population of ~60 million (average through to 2030). With a projected population of some 1.5 billion by 2030, the finance side is in the same ballpark as the Kenyan INDC, albeit on the higher side.

Finally, the last few days have seen new draft text appear – shortened dramatically from some 80 pages to a manageable 20. But references to government led carbon markets, carbon pricing systems or even the use of transfer mechanisms between parties are largely missing. Article 34 of the Draft Decision does hint at the need to rescue the CDM from the Kyoto Protocol by referring to the need to build on Article 12 of the Protocol, but it will be of little use if there isn’t substantial demand for credits in developing and rapidly emerging economies. Simply creating a new crediting mechanism or even bringing the CDM into the Paris agreement won’t on its own direct the finance to the likes of Kenya and India. That demand and related finance flow will only come if the developed and emerging economies are building emissions trading systems (such as in China) and have the ability and confidence to transfer units related to it across their borders. So a great deal of work remains to be done.

 

 

Where are the carbon market provisions?

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With just 100 days to run until COP21 in Paris and a tenth of that available for formal negotiations, the various national delegations met in Bonn last week to try and push forward the 80+ pages of text, replete with hundreds of bracketed options, into something that looks like a climate treaty. By all media outlet accounts progress was slow. Although the process hasn’t reached the point where alarm bells are ringing, the political pressure is mounting with UN Secretary General Ban Ki-Moon set to confront world leaders at the end of September in New York.

A key issue that remains under discussion yet with little to show for months of effort is that of the role of carbon pricing in the Paris agreement. While the decision to implement a carbon price within a national economy will always remain a sovereign one, encouragement from the top is nevertheless important. After all, if a carbon price doesn’t make its way into the global energy system, it’s difficult to see significant curtailment of fossil carbon extraction taking place or equally, widespread deployment of carbon capture and storage to directly manage emissions when fossil fuels are used. This message has been sent loudly from all quarters, including business organisations, multilateral agencies such as the World Bank, NGOs and legions of observers in the academic community. The start of the session in Bonn coincided with an article from the Harvard Kennedy School in Cambridge, Massachusetts which argued that encouraging linkage of heterogeneous national systems should be a key element of the Paris agreement. Professor Rob Stavins and his colleagues aren’t seeking a complex structure, but a simple provision. The article concludes that;

“. . . . the most valuable outcome of Paris regarding linkage might simply be the inclusion in the core agreement of an explicit statement that parties may transfer portions of their INDCs to other parties and that these transferred units may be used by the transferees to implement their INDCs. Such a statement would help provide certainty both to governments and private market participants. This minimalist approach will allow diverse forms of linkage to arise, among what will inevitably be highly heterogeneous INDCs, thereby advancing the dual objectives of cost effectiveness and environmental integrity in the international climate policy regime.”

Such a provision would encourage (carbon) price discovery through market transactions at both inter-governmental and inter-company levels, which in turn could be passed through the energy supply chain, thereby shifting investment decisions. This isn’t a big ask, yet it seems to be a step too far for the national negotiators, even from countries with a long history of market development and support.

This is exactly what the International Emissions Trading Association (IETA) has been advocating for since this time last year and while many of the Parties to the UNFCCC have nodded their heads in agreement, very little has happened. IETA reports from Bonn that the mitigation group under the ADP produced a table that outlines the various issues that fall under the ‘mitigation umbrella’ which Parties want to include in the core Paris Agreement. That table is organised into three columns:

  • A column of issues that are largely agreed by Parties to be in the core Agreement,
  • A column of issues which require ‘further clarity’ on placement in the core Agreement,
  • A column of issues that will be in Decisions at the COP in Paris.

Carbon markets- including their function, governance, accounting, usage eligibility and future work programme all currently fall into the “further clarity” column, where Parties are still debating how to proceed. On the positive side (there is a real need to be upbeat about something) IETA notes that at the start of the mitigation session, some fifteen Parties mentioned the importance of an explicit recognition of market mechanisms in the core of the Agreement. They included the EU, the US, Marshall Islands (on behalf of AOSIS), Columbia, New Zealand, Norway, Tuvalu, Brazil, Australia, Switzerland, South Korea, Japan and Panama. After hearing Parties’ views the co-facilitators proposed to set up a spin off group led by Brazil to look further at joint implementation (i.e. transfers, trading etc.) and market mechanisms (e.g. the CDM is a market mechanism). This probably should have happened a year ago, but like the rest of the agreement it is coming down to the wire.

So the Paris agreement inches forwards and with it the fate of a global carbon market, at least for the near to medium term. The next and presumably last (no others are currently scheduled) negotiating session before Paris is in mid-October.

Do we have a wicked problem to deal with?

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Two recent and separate articles in Foreign Affairs highlight different routes forward for tacking the climate issue. One, by Michael Bloomberg, argues that the mitigation solution increasingly lies with cities (this isn’t just about city resilience) and the other puts the challenge squarely in front of the business community.

These are just two in a salvo of pre-Paris articles that seek to direct the negotiations towards a solution space, including some by me and other colleagues arguing the case for carbon pricing systems. The articles reminded me of a similar article in 2009, the Hartwell Paper, in which a group of UK economists cast the climate issue as a ‘wicked problem’, but still went on to propose a very specific solution (a big technology push funded by carbon taxes). That paper also built its argument on the back of the Kaya Identity, which I have argued simplifies the emissions problem such that it can lead to tangential solutions that may not deliver the necessary stabilization in atmospheric carbon dioxide. Nevertheless, there is still merit in focusing on a specific way forward – at least something useful might then get done.

But the description of the climate problem as ‘wicked’, is one that deserves further thought. The use of the word wicked in this context is different to its generally accepted meaning, but instead pertains to the immense difficulty of the problem itself. Wikipedia gives a good description;

A problem that is difficult or impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognize. The use of the term “wicked” here has come to denote resistance to resolution, rather than evil. Moreover, because of complex inter-dependencies, the effort to solve one aspect of a wicked problem may reveal or create other problems.

It is also important to think about which problem we are actually trying to solve. For example, it may turn out that the issue of climate change is immensely more difficult to solve than the issue of carbon dioxide emissions. There is now good evidence that emissions can be brought down to near zero levels, but this doesn’t necessarily resolve the problem of a changing climate. Although warming of the climate system is being driven by increasing levels of carbon dioxide in the atmosphere, the scale on which anthropogenic activities are now conducted can also impact the climate through different routes. Moving away from fossil fuels to very large scale production of energy through other means is a good illustration of this. In a 2010 report, MIT illustrated how very large scale wind farms could result in some surface warming because the turbulent transfer of heat from the surface to the higher layers is reduced as a result of reduced surface kinetic energy (the wind). This is because that energy is converted to electricity. This is not to argue that we shouldn’t build wind turbines, but rather to highlight that with a population of 7-10 billion people all needing energy for a prosperous lifestyle, society may inadvertently engage in some degree of geoengineering (large-scale manipulation of an environmental process that affects the earth’s climate) simply to supply it.

Even narrowing the broader climate issue to emissions, the problem remains pretty wicked. Inter-dependencies abound, such as when significant volumes of liquid fuels may be supplied by very large scale use of biomass or when efficiency drives an increase in energy use (as it has done for over 100 years), rather than the desired reduction in emissions.

An approach to managing wicked problems (Tim Curtis, University of Northampton) first and foremost involves defining the problem very succinctly. This involves locking down the problem definition or developing a description of a related problem that you can solve, and declaring that to be the problem. Objective metrics by which to measure the solution’s success are also very important. In the field of climate change and the attempts by the Parties to the UNFCCC to resolve it, this is far from the course currently being taken. There is immense pressure to engage in sustainable development, end poverty, improve access to energy, promote renewable technologies, save forests, solve global equity issues and use energy more efficiently. Although these are all important goals, they are not sufficiently succinct and defined to enable a clear pathway to resolution, nor does solving them necessarily lead to restoration of a stable climate. The INDC based approach allows for almost any problem to be solved, so long as it can be loosely linked to the broad categories of mitigation and adaptation. The current global approach may well be adding to the wickedness rather than simplifying or even avoiding it.

The short article referenced above concludes with a very sobering observation;

While it may seem appealing in the short run, attempting to tame a wicked problem will always fail in the long run. The problem will simply reassert itself, perhaps in a different guise, as if nothing had been done; or worse, the tame solution will exacerbate the problem.

In climate change terms, this translates to emissions not falling as a result of current efforts, or even if they do fall a bit this has no measurable impact on the continuing rise in atmospheric carbon dioxide levels.

But that is not to say we should give up, as the counter to this observation is that having defined a clear and related objective to the wicked problem that is being confronted, declare that there are just a few possible solutions and focus on selecting from among them. For me, that comes down to implementing a cost for emitting carbon dioxide through systems such as cap-and-trade or carbon taxation. As such, I am about to release a second book in my Putting the Genie Back series, this one titled Why Carbon Pricing Matters. It will be available from mid-September but can be pre-ordered now.

Why Carbon Pricing Matters

Assessing the INDCs

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It is now just 100 days until COP21 in Paris.

The summer months have seen many Intended Nationally Determined Contributions (INDCs) submitted to the UNFCCC prior to the assessment deadline of October 1st. This is the date when the UNFCCC secretariat will start work on a synthesis report on the aggregate effect of the INDCs as communicated by Parties. Many organisations are already offering assessments of progress, with most basing this on reductions through to 2030 against a notional 2°C pathway.

However, the climate system doesn’t care about 2030 nor does it respond to changes in annual emissions. The real metric is cumulative emissions over time, with each trillion tonnes of carbon released into the atmosphere equivalent to about 2°C rise in temperature rise (this isn’t precisely linear, but it is a reasonable rule of thumb to use). This means that any assessment must look well beyond 2030 and make some bold assumptions as to where the emissions pathways then go. It also means that the wide variety of pledges using metrics such as the share of renewable energy in the power generation mix, installed solar capacity or emissions per GDP, whilst important in the context of energy system development, offer limited insight into the trend for cumulative emissions.

A good example of this comes from looking at the INDC from China. They have pledged the following;

  • To achieve the peaking of carbon dioxide emissions around 2030 and making best efforts to peak early;
  • To lower carbon dioxide emissions per unit of GDP by 60% to 65% from the 2005 level;
  • To increase the share of non-fossil fuels in primary energy consumption to around 20%; and
  • To increase the forest stock volume by around 4.5 billion cubic meters on the 2005 level.

From an energy emissions context, only the first part of this pledge is really important, but little information is given allowing an assessment of its real impact on the climate system. Some big assumnptions will have to be made.

According to the Oxford Martin School carbon emissions counter, global cumulative emissions now stand at nearly 600 billion tonnes of carbon (2.2 trillion tonnes CO2). Back in November 2014 when China and the USA announced their climate deal, I speculated that the Chinese side of the Sino-US deal could see their emissions rising to as much as 14.5 billion tonnes CO2 per annum by 2030 based on the following assumption;

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

Of course China could still peak at lower levels than this and the economic downturn they currently seem to be facing may ensure this. Nevertheless, two reduction pathways following 2030 give a very different cumulative outlook for the period 2015-2100. It is this cumulative outcome that matters, not where China might happen to find itself in 2030. While the period up to 2030 is important, it only tells a fraction of the story. Chinese emissions over that period will likely add some 50 billion tonnes of carbon to the global cumulative total, but this is small compared to their potential remaining cumulative contribution (i.e, before they are at net-zero emissions). The two pathways below illustrate the difference;

  1. A plateau for about a decade, followed by a long slow reduction through to near zero by 2100 means cumulative emissions from 2015 are around 800 billion tonnes of CO2, or 220 billion tonnes of carbon. In this scenario, Chinese emissions alone take the global carbon emissions total to 820 billion tonnes.
  2. A sharp decline from 2030 to zero before 2080 gives cumulative emissions of 550 billion tonnes, or 150 billion tonnes carbon. In this case the global total rises to 750 billion tonnes carbon based on Chinese emissions alone.

Either way, China will have a profound impact on global cumulative emissions. But this fairly simple analysis illustrates that the period from 2030 onwards is where the real story lies, which to date isn’t covered by any of the INDC submissions. For a 2°C outcome, even the lower of the two scenarios above leaves little carbon space for the remaining 7+ billion people living on the planet throughout the 21st century.

Impact of Chinese Cumulative Emissions