Today we see a huge focus on renewable energy and energy efficiency as solutions for reducing CO2 emissions and therefore addressing the climate issue. Yet, as I have discussed in other posts, such a strategy may not deliver the outcome people expect and might even add to the problem, particularly in the case of efficiency. I am not the only one who has said this and clearly the aforementioned strategy has been operating for some 20 years now with emissions only going one way, up.
A question that perhaps should be asked is “why have many arrived at this solution set?”. Focusing on efficiency and renewable energy as a solution to climate change possibly stems from the wide dissemination of the Kaya Identity, developed in 1993 by Japanese energy economist Yoichi Kaya (pictured above). He noted that:
Or in other words:
Therefore, by extension over many years (where k = climate sensitivity):
In most analysis using the Kaya approach, the first two terms are bypassed. Population management is not a useful way to open a climate discussion, nor is any proposal to limit individual wealth or development (GDP per person). The discussion therefore rests on the back of the argument that because rising emissions are directly linked to the carbon intensity of energy (CO2/Energy) and the energy use per unit of GDP (Energy/GDP or efficiency) within the global economy, lowering these by improving energy efficiency and deploying renewable energy must be the solutions to opt for.
But the Kaya Identity is just describing the distribution of emissions throughout the economy, rather than the real economics of fossil fuel extraction and its consequent emissions. Starting with a simple mineral such as coal, it can be picked up off the ground and exchanged for money based on its energy content. The coal miner will continue to do this until the accessible resource is depleted or the amount of money offered for the coal is less than it costs to pick it up and deliver it for payment. In the case of the latter, the miner could just wait until the price rises again and continue deliveries. Alternatively, the miner could aim to become more efficient, lowering the cost of pickup and delivery and therefore continuing to operate. The fossil fuel industry has been doing this very successfully since its beginnings.
The impact on the climate is a function (f) of the total amount delivered from the resource, not how efficiently it is used, when it is used, how many wind turbines are also in use or how many people use it. This implies the following;
This may also mean that the energy price has to get very low for the miner to stop producing the coal. Of course that is where renewable energy can play an important role, but the trend to date has been for energy system costs to rise as renewable energy is installed. A further complication arises in that once the mine is operating and all the equipment for extraction is in place, the energy price has to fall below the marginal operating cost to stop the operation. The miner may go bankrupt in the process as capital debt is not being serviced, but that still doesn’t necessarily stop the mine operating. It may just get sold off to someone who can run it and the lost capital written off.
This doesn’t have to be the end of the story though. A price on the resultant carbon emissions can tilt the balance by changing the equation;
When the carbon price is high enough to offset the profit from the resource extraction, then the process will stop, but not before. The miner would then need to invest in carbon capture and storage to negate the carbon costs and restart the extraction operation.
What this shows is that the carbon price is critical to the problem. Just building a climate strategy on the back of efficiency and renewable energy use may never deliver a reduction in emissions. Efficiency in particular may offer the unexpected incentive of making resource extraction cheaper, which in turn makes it all the more competitive.
It seems to me that your rationale is based on “supply-side” efficiency, where, of course, greater efficiency leads to lower cost which leads to a potential to switch demand towards that particular energy source…..
The energy/GDP term in the Kaya identity relates to the energy intensity of the “demand-side”. Clearly a reduction here will lead to a reduction in emissions (assuming that it is fossil fuels that are displaced). Yes of course total emissions have risen, despite efficiency gains, as a result of increasing population ang increasing GDP (affluence). However they would have risen even further without efficiency improvements.
Your formula assumes that demand is infinite, ie merely a question of production cost, which is clearly not the case!
Yes I know about the Jeavons effect…. But in practice, in my work with real organisations on energy efficiency, I have never encountered a situation where efficiency has led to an increase in energy consumption!
I wish you would not disparage efficiency so much. If you go to DECCs “my2050” models based on David mcKays work you will see that the demand-side is critical to achieving the required emissions reductions…. As is, potentially, CCS, although this is as yet unproven at the necessary scale…..
It isn’t my intention to disparage energy efficiency, quite the opposite. It has been the essential component of modern development. But I don’t think it helps reduce emissions in the macro cumulative sense. It certainly reduces demand at the micro level and it may even help reduce emissions on an annual basis for a country such as the UK, but both of these are very different to long term cumulative emissions which is what drives warming of the atmosphere.