Category: Carbon budget

New business models required

December 6, 2022

With COP27 now behind us and no significant changes to Nationally Determined Contributions (NDC) on offer (e.g. from China), various commentators are now remarking that meeting the goal of 1.5°C may be in doubt. This means passing the 500 Gt carbon budget that the IPCC linked to the 1.5°C goal.

I have discussed this in many earlier posts, for example here and here. However, passing 1.5°C in the short term certainly isn’t the end of the story.

Many recent IPCC scenarios also show 1.5°C being breached, but deploying removals later in the century to draw carbon dioxide out of the atmosphere is then used in the scenario to reverse the balance and at least meet the 1.5°C goal by 2100. In the IPCC Special Report on 1.5°C released in 2018, all four model pathways required some form of future removal, ranging from very little in P1 to significant in P4, depending on the lifestyle and transition pathway the particular scenario embraced and the level of overshoot of 1.5°C. Both nature based and technological removals are required. In the 2018 report technological removals were shown as bioenergy processing with carbon capture and storage (BECCS), but today we could realistically envisage both BECCS and direct air capture with CCS (DACCS) playing a role. The latter has advanced considerably in just five years.

Source: IPCC SR15 Summary for Policy Makers

So as well as requiring CCS to get to net-zero emissions, society will almost certainly have to consider removals as a technology to deliver negative emissions globally, i.e. after the goal of net-zero emissions is achieved. Large scale removals might also offer the much longer-term prospect (i.e. in the 22nd century) of winding the atmospheric carbon dioxide levels back towards pre-industrial levels.

While global net-negative emissions on a scale that shifts the atmospheric concentration of carbon dioxide is technically possible, the contrast with the very limited scale of deployment of BECCS and DACCS today seemingly takes the task into the realms of science fiction. Yet a century ago the scale on which energy is generated now would also have seemed like science fiction, so the task should not be dismissed. Nevertheless, the longer term could require these technologies and changes in land use to scale to many billions of tonnes of carbon dioxide removal per year. The question this poses is not whether it is possible, but how can it be made to happen.

Carbon capture and storage has become a commercially available technology over the past twenty years, yet global deployment remains very limited. The technology itself isn’t the issue, it is the lack of sustainable business models for deployment. There is a carbon price in Europe, but for many years it languished at just a few Euros and other similar systems currently operating throughout the world typically maintain prices at levels well below what is required for CCS and therefore, not surprisingly, well below the levels required for a 1.5°C transition. Bespoke CCS deployment policies are almost non-existent outside the United States. In the USA a specific tax-credit mechanism exists at the Federal level and the California Low Carbon Fuel Standard will allow the use of credits based on DACCS. As a result the USA is the global leader in CCS deployment and the pipeline of projects looks impressive, largely based on the revised tax credit available through the Inflation reduction Act. There are also DACCS projects emerging and a BECCS ethanol facility has operated in Illinois for some time now.

CCS requires a very long term business model, based on some form of market pull. Today the support for CCS comes largely from direct government grants and support mechanisms for early stage technology, but there is always a limit to such incentives. However, with net-zero emissions now becoming a clear goal in most energy system policy frameworks, a more sustainable model is likely to emerge as businesses seek to mitigate their own emissions, either due to direct policy requirements or indirect consumer preference for zero carbon emission goods and services. A balance will be found between the cost of new technologies such as green hydrogen for industry and making use of CCS in industries that continue to use fossil fuels. Society will find ways to absorb these costs over time as net-zero emissions is reached and whether this results in large or small scale deployment of CCS remains to be seen, depending on the relative costs between competing pathways.

But the next stage of the CCS journey, possibly commencing as early as the 2040s for some, will be to deliver net-negative emissions via DACCS and BECCS, i.e. drawdown of carbon dioxide from the atmosphere. While this may seem like a long way off, the history of creating basic CCS business models points to the need for an early start. The journey probably commences at the UNFCCC level, where a framework for net-negative emissions would need to be established including a global goal, some form of burden sharing agreement between nations and a discussion on the role of nature versus the role of technological drawdown solutions. Unfortunately, with history as a guide, this could take some time. But perhaps the bigger challenge will be for national governments to cascade the need into the economy and find ways to spread the cost of net-negative emissions across society within goods and services and even through taxation. This may not be popular given the net cost of the task, yet with no immediate tangible benefit. Imposing deep emission reduction goals is still proving to be a difficult task in some economies today, let alone asking the population to pay for atmospheric drawdown of carbon dioxide. However, the very long term benefit can be measured in practical terms, such as avoiding metres of sea level rise.

With the prospect of a 1.5°C overshoot scenario looking likely, future biological and geological storage of atmospheric carbon dioxide becomes essential. This task may lead to the development of huge industries engaged in such activities, or very little activity at all, depending on the policy frameworks and business models that emerge.

Revisiting the climate budget maths

November 7, 2022

As COP27 gets underway this week, world leaders will be descending on Egypt with a further round of speeches, promises and pledges to keep 1.5°C alive as a goal to strive for. But as each day passes and global emissions continue at around the rate of 40 gigatonne per year (Gt/y), the simple maths behind the carbon budget gets more and more difficult.

In the IPCC 6th Assessment Report WGI summary the climate scientist authors developed Table SPM.2, shown below, which detailed the remaining carbon budget from 1st January 2020 for a given eventual global warming, relative to 1850-1900. In the case of 1.5°C this is 500 Gt. The permitted budget changes depending on the level of warming and the likelihood of the outcome. So a 2°C outcome with a 67% likelihood offers a budget of 1150 Gt, or over twice that for 1.5°C at 50% likelihood.

Source: IPCC 6th Assessment Report WGI Summary for Policy Makers

While a number measured in hundreds of billions of tonnes (or half a trillion in the case of 1.5°C with 50% likelihood) may seem very large, when set against current annual global emissions of over 40 Gt/y, it is around a dozen years. This means we are knocking on the door of 1.5°C right now. In fact, the 1.5°C carbon budget is being consumed by society at such a pace, that just during the time COP 27 is held, another 1 Gt of the 500 Gt will have been used.

Over time, the consumption of the carbon budget is measured in terms of cumulative emissions, or in a chart of annual emissions vs. time in years it is the area under the line. This then gives us a simple way of looking at the carbon budget and establishing what different trajectories might mean in terms of outcome.

The chart above starts at 2020 and goes through to 2070. In each of 2020, 2021 and 2022 the emissions are either known or almost known, so they are represented in grey as budget consumed. The total is about 120 Gt, with 2020 being the lowest due to the sharp COVID related downturn in March, April and May of that year. With the simplified assumption that emissions won’t be negative at some future time (but of course they may be and undoubtedly will need to be), the linear trajectory for 1.5°C now requires a step down in emissions in 2023 to 40 Gt, then a rapid reduction to 20 Gt in 2030 followed by net-zero emissions in 2047. By contrast, a direct linear reduction from current levels to net-zero emissions in 2050 means a 1.6°C outcome.

Three other combinations are also shown:

  • A plateau in emissions to 2030 then a quick linear descent to net-zero in 2050 results in 1.7°C of warming.
  • A further rise in emissions to 2030, then a fall to net-zero in 2060 gives 1.9°C of warming.
  • If a further rise is followed by net-zero emissions in 2070, then we might expect 2°C of warming.

Given the acceleration of the energy transition in recent years and the new pressures now being placed on fossil fuel use through both price and supply concerns, there are reasons to believe that the transition could accelerate further. It will certainly need to. In the last 15 years the share of coal, oil and natural gas in the primary energy mix has dropped by just 2 percentage points, a trend that would require 600 years to get to zero. By contrast, a 1.6°C outcome requires that rate of change to rise by a factor of 20 to nearly 3 percentage points per year. This is the challenge that leaders at COP 27 need to focus on.

Could the transition drive emissions up?

July 12, 2022

One question that comes up quite regularly about the energy transition is the amount of energy, and therefore emissions, required for the transition itself. This is the energy required for making solar PV modules, wind turbines, batteries and so on. Further up the supply chain there is also the energy required for the additional minerals, such as the lithium, nickel, cobalt and copper found in an electric vehicle (EV). These not only have to be mined, but also go through extensive industrial transformation and refining processes to make the actual materials required for the end use. Today, most of these processes use oil, coal and gas for energy, giving rise to carbon dioxide emissions.

Perhaps the most energy intensive part of the energy transition is the manufacture of lithium-ion batteries, now being widely deployed in EVs. Some commentators have even questioned the effectiveness of the EV as a mitigation route, particularly when the battery is made in China (currently a heavy reliance on coal for energy) and the vehicle is driven in a country with a high electricity emissions intensity (e.g. a country like Poland still largely dependent on coal fired power stations). The problem with this argument is that transitioning in a series of steps (e.g. first decarbonise the electricity supply, then start deploying electric cars) would take decades longer than transitioning in parallel steps (i.e. decarbonising the electricity supply at the same time EVs are deployed). Nevertheless, the parallel approach could drive up emissions in the short term, the question is by how much?

The manufacture of batteries for EVs provides a good example of the problem. In a recent article, MIT report that the Tesla Model 3 holds an 80 kWh lithium-ion battery and the CO2 emissions for manufacturing that battery would range between 3120 kg (about 3 tons) and 15,680 kg (about 16 tons), depending on the manufacturing location. The article notes that the vast majority of lithium-ion batteries—about 77% of the world’s supply—are manufactured in China, where coal is the primary energy source. That means most batteries are currently made with CO2 emissions at the higher end of the range, although as battery factories spring up across the world and particularly in the EU and US, that picture will change.

Bringing together a few assumptions about battery manufacture, EV deployment and embedded CO2 in both manufacture of EV batteries and driving EV cars, it is possible to get a back-of-the-envelope view of the scale of the issue. I will assume the following;

  • EV production rises from current levels (some 7 million vehicles per year) to all EV production globally by the mid-2030s (i.e. no more internal combustion engine cars are built after that time). This is an aggressive transition, but probably the minimum that is required for a 1.5°C goal.
  • Higher CO2 emission battery manufacture is currently at 77%, but the share declines to 40% by 2060 and the higher CO2 emissions also fall by 75% over the same timeframe as the manufacturing system decarbonises.
  • Lower CO2 emissions manufacture is therefore 23% now, but rises to 60% by 2060 and the manufacturing CO2 emissions fall to zero by 2050. Decarbonising industry to such an extent will require a variety of technologies, with carbon capture and storage playing a critical role.
  • The 80 kWh battery delivers 300 miles of range and the average vehicle travels 10,000 miles per year.
  • The electricity supply which EVs use is on average 0.4 tonnes CO2 per MWh now, falling to zero by 2060. The actual global average grid intensity is higher than 0.4 today, but EVs tend to be driven in lower intensity regions at the moment, e.g. the EU, California etc.
  • An EV produced today has a 15 year life.
  • The EV mitigates emissions from internal combustion engine vehicles at a rate of 120 gms/km. As a simplification, this doesn’t change throughout the calculation. It assumes that smaller cars are replaced earlier and that the average fleet efficiency of internal combustion vehicles improves over time.
  • The battery represents a net increase in car manufacturing emissions with other emissions in the manufacturing process about the same for both EVs and internal combustion vehicles.

The calculation is for net-emissions, which is;

[Battery manufacturing emissions] + [Indirect EV emissions during driving] – [Gasoline / Diesel emissions backed out by EVs] = Net Emissions

What we see from the charts below is that global passenger car emissions rise before they start falling when net-emissions cross the zero line. This happens in 2035. Clearly the year in which this happens depends on the assumptions made, with the CO2 from internal combustion vehicles not being used being a key determinant. For example, if this is raised to 180 gm CO2/km, the crossover point is around 2030.

The outcome certainly points to the longer term benefit of the EV transition, with global cumulative emissions over 25 Gt lower in 2060 than they would otherwise be. This is a material reduction when thinking about a 500 Gt carbon budget for 1.5°C. However, it also highlights an issue with the current global goal to reduce emissions by 45% by 2030 relative to 2010, as set out in the Glasgow Climate Pact; the EV revolution that we are currently in the midst of is unlikely to contribute to that reduction. If anything, it could make the task even more difficult.

In a post some time back I noted that the only real opportunities for change which could make a material difference to global CO2 emissions by 2030 are where replacement technologies are already being manufactured at scale or where governments are prepared to create social change. This quickly reduces the options to only three major opportunities: 

  • Significantly curtailing coal-fired power generation through replacement with renewables; 
  • Replacing internal combustion engine vehicles with electric vehicles; and 
  • Ending deforestation. 

Passenger vehicle emissions account for 4 Gt, or 10%, of global CO2 emissions today. If change in this sector can’t deliver any net reductions by 2030 and potentially adds to global emissions, then it calls into question any possibility of a 45% reduction in 8 years. Almost perversely, if EV production could be ramped up in the short term, the problem for 2030 gets worse while the longer term net global cumulative emissions picture gets better.

None of the above is to meant to argue against an EV transition, it is clearly the right way to go. But like many other aspects of the energy transition, it is more complex than it looks.

Blockchain, carbon emissions and NFTs

May 16, 2022

At a recent emissions trading workshop, there was a great deal of discussion about the new kid on the block, carbon trading and non-fungible tokens (NFT). I should say up front that this is not a particular area of expertise for me, so this post represents my observations on the subject, however blockchain is becoming a tool to support the energy transition.

According to Wikipedia, an NFT is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. The NFT can be associated with a particular digital or physical asset including but not limited to, art, songs, and sport highlights and a license to use the asset for a specified purpose. In the case of the voluntary carbon market, the NFT represents a carbon removal or carbon reduction. So it might represent the storage of carbon in a tree, or in a geological formation. NFT ledgers claim to provide a public certificate of authenticity or proof of ownership and a license to use the asset for a specified purpose. That use could be as an offset against emissions generated by the holder of the NFT.

There is no doubt that carbon markets, be they regulatory or voluntary, require a mechanism of some description to track creation, ownership and surrender of emission reduction units, credits and trading system allowances. This normally emerges as a transaction log and in the case of regulatory systems such as the EU Emissions Trading System, is centrally managed by government and also contributes to the compliance process where units must be surrendered against some obligation. Within the Kyoto Protocol architecture which spanned multiple countries and regulatory systems, an international transaction log (ITL) was created by the UNFCCC and it was used to track all cross border transfers of units available within that system (AAU, CER, ERU, RMU) and therefore effectively link the national registries. On their website the UNFCCC states that the International Transaction Log (ITL) connects registries and secretariat systems that are involved in the emissions trading mechanism defined under the Kyoto Protocol and its Doha amendment. One of the key mandates of the ITL is to ensure an accurate accounting and verification of transactions proposed by registries in order to support the review and compliance process of the Kyoto Protocol.

Within the voluntary carbon markets there is no such global registry, but rather a series of registries that align with the particular voluntary market platform used to create the credit. These are summarised here. For example, the Verra Registry was launched in April 2020 and is the cornerstone for the implementation of Verra’s standards and programs. It facilitates the transparent listing of information on certified projects, issued and retired units, and enables the trading of units. It is the central repository for all information and documentation relating to Verra projects and credits. The Verra Registry also ensures the uniqueness of projects and credits in the system.

So along comes blockchain and NFTs, which by all accounts at the workshop, can certainly do the job of tracking carbon units and ensuring integrity – but the current systems also do this and have been doing it satisfactorily for some time. It feels like the new kids on the block are a solution looking for a problem, but at least as far as unit tracking goes, there isn’t a particular problem. That isn’t to say that the current system is perfect, it isn’t, or that NFTs won’t be an improvement on the current processes, in fact they may well be more suited to the task.

But the problem that does exist is perhaps one that blockchain and its associated tools could solve, yet it is highly complex. It’s the core of the climate issue – the carbon budget. The carbon budget for a certain rise in global average surface temperature is the limit on the cumulative carbon dioxide release, less removal of carbon dioxide from the atmosphere, prior to the point of net-zero emissions. In August last year the Intergovernmental Panel on Climate Change (IPCC) informed readers of its 6th Assessment Report that the carbon budget for 1.5°C of warming was now only 500 GT, based on cumulative emissions from 1.1.2020. Today, that will have reduced to about 400 GT. For 2°C of warming it is now about 1340 GT of carbon dioxide from now.

The risk associated with carbon markets based on a variety of different baselines, credit standards, allowance allocation mechanisms and even basic structure is that they don’t add up to anything close to the carbon budget available, so we collectively overspend the budget and therefore overshoot the temperature goal, even with supposed broad use of carbon units. In an extreme hypothetical scenario, we could end up with more voluntary market carbon credits than emissions, but with atmospheric CO2 still rising. That risk doesn’t change simply by applying NFTs to the credits that are created. The risk also exists with the current Nationally Determined Contribution (NDC) process of the Paris Agreement, where each country has effectively determined their own carbon budget, their own national baseline year and their own pathway forward. The sum of the NDC carbon budgets does not currently equate to the task at hand. The Global Stocktake process that is now underway will highlight the mismatch, but the Paris process has no tools at its disposal to solve the problem other than peer pressure and diplomacy.

An alternate way for the global voluntary carbon market to evolve would be to use the tools associated with blockchain to tokenise the carbon budget, rather than tokenise the current credit system. A single global ledger would also resolve the current problem of having fragmented carbon registries. The carbon budget tokens would then act like allowances in an emissions trading system, with a surrender process linked to emissions taking them out of the market permanently. The value of a unit in a market is a function of its availability (or scarcity) and we know that the carbon budget has a defined limit in this regard. That immediately delivers scarcity and this scarcity is then enforced using blockchain which ensures that each unit of the carbon budget can only be claimed once. While the carbon budget can be expanded via removals, considerable effort is required to do this, with an associated cost. Two possibilities (and doubtless there are many others) for NFTs and carbon budgets are as follows:

  1. Target the global carbon budget, effectively turning the budget into a global cap and trade system. But this is inherently difficult as there is no current mechanism to distribute the carbon budget between nations, companies or even people. However, fractionalized ownership of carbon credits could be an enabler for bringing more liquidity into the market. The further challenge with such an approach for the global carbon budget is the initial creation and distribution of the tokens. There will be a finite number, but no one party should benefit from the creation of the tokens; after all the carbon budget is a global commons problem. Further, there can’t be an agency such as the UN or UNFCCC selling the initial tokens as that would require a transfer of funds that many governments wouldn’t tolerate or is simply not feasible constitutionally. What if the global budget was tokenised by DAOs (Decentralized Autonomous Organization) on a piecemeal basis, with NFTs existing and available to use by those who chose? The DAOs might be companies, cities, states or even whole countries on a voluntary basis, with NFTs granted in return for the entity adopting a carbon budget.
  2. Tokenise the implied carbon budget under an NDC, even though the sum of the current NDCs is leading to the global 1.5°C carbon budget being overdrawn. This approach could add considerable value to the voluntary market. A current issue in the voluntary world is the question of who owns and makes use of a carbon credit. Clearly if a project is launched in a particular country the emissions profile of that country will change, which in turn will be reflected in the reporting of its own emissions for the purposes of showing delivery of its NDC under the Paris Agreement. But if the reduction is contributing to a Paris Agreement objective, how can it also be made available to the voluntary market and in what context should the voluntary market use it? I discussed this issue in an earlier posting, but irrespective of how this matter is settled, a reduction unit is really only of value if more is known about the context of the reduction. This is why an allowance in an emissions trading systems has value – the market fully understands the context within which the unit was created and the scarcity associated with it. This is not the case with voluntary units extracted from a project that might represent a tiny part of the emissions of an economy, where information on total emissions is hard to come by. But if the project sat within an NDC and the emissions associated with the NDC sat in a clear accounting framework, then the reduction units would have context and the use of them either within the country or outside the country could be clearly understood by the market and priced accordingly.

None of the above would be simple to implement and option 1 might be impossibly difficult. But remaining within a carbon budget is entirely the purpose of emissions management and therefore the world needs some collective effort to achieve this. Management requires good accounting and transparency but today there is still very little management of carbon budgets, with systems like the EU ETS being the exception rather than the rule. While the workshop I attended was entirely about NFTs associated with voluntary reduction units, this feels like a rather simple problem for a sophisticated 21st century digital mechanism to target. The much harder application would be carbon budget management and the benefit to society would shift from modest to immense.

The lesser told story of COP26

November 18, 2021

The much anticipated but delayed COP26 has come and gone, with many articles and commentary focussing on whether 1.5°C is still alive. I commented on this at the start of COP26 and although some additional enhanced NDC pledges have been made since then and there is a new goal to end deforestation by 2030, the situation remains largely unchanged. Apart from one thing! COP26 delivered an agreement on Article 6 of the Paris Agreement.

Article 6 was the last piece of the Paris Agreement to be negotiated back in 2015 and true to form it has become the last piece of the rule book to be completed. So why has it proved so contentious and why does it help keep 1.5°C alive?

The Article outlines ways in which some Parties can choose to pursue voluntary cooperation in the implementation of their nationally determined contributions (NDC), but the sub-sections 6.2 and 6.4 have been negotiated primarily as carbon market instruments, designed to allow trading between Parties, through linking of emissions trading systems and cross border investment in mitigation and removals to create tradable carbon credits. Simply put, carbon markets and trading of carbon units unleashes a commercial engine that can operate on a scale far surpassing the limits of local domestic action. It helps align the energy transition with other global commercial activities, offering the potential for lower overall costs to society which in turn can enhance ambition. Trade is a powerful tool that is at the heart of the global economy and carbon trading can serve to unlock mitigation opportunities that would otherwise be neglected. As I discussed in a recent post, a potential future standstill in global emissions is brought to net-zero through Article 6 cooperative action between countries and the aviation sector developing carbon removal opportunities in various parts of the world. Trade requires price discovery, so indirectly Article 6 helps in the development of liquid carbon markets and carbon pricing, although these don’t emerge from Article 6 itself but from national systems which are open to Article 6 transfers.

The newly agreed rules behind 6.2 are simple but powerful and importantly bring clarity to the issue of environmental integrity. Article 6.2 allows transfers between counties in carbon designated units, thus impacting the NDCs of the buyer and the seller. The buyer is able to meet NDC goals more cost effectively and the seller receives an income stream for domestic mitigation activities. This may seem like a straightforward approach to mitigation, so why has it proved so difficult to negotiate?

The rule for a transfer between Parties requires an adjustment to the related NDCs which brings with it a need to account for each NDC in carbon budget terms. Over time, this drives the Paris Agreement to operate more like a rigorous cap-and-trade system rather than a collection of national mitigation activities presented as a list of actions. With national actions based on a carbon budget architecture, transparency is vastly improved and actions are increasingly focused on mitigation rather than simply supplying more clean energy. The two may align but are not necessarily the same. With so much at stake, negotiators have been careful to get the rules right. Further, carbon budgets are easy to add up and derive a global total, which then puts pressure on the Parties when that budget exceeds the available capacity of the atmosphere for a given temperature limit. Ultimately, it may also open up the highly contentious question of who can use the remaining budget. While the Paris Agreement isn’t operating like this today, widespread use of Article 6 could accelerate such a development.

Article 6 also brings with it a mechanism to assign common units to a mitigation project,  carefully defining it in terms of tradable carbon credits. These would be issued by a Supervisory Body operating as part of the Paris Agreement implementation.  While 6.2 is essentially a bilateral transfer approach, 6.4 is a multilateral mechanism, introducing a notional Paris carbon currency. However, transfer of these units between countries will still follow the rules of 6.2. Article 6.4 follows on from the similar Clean Development Mechanism of the Kyoto Protocol, but with a clearly quantified transfer approach.

Both 6.2 and 6.4 are voluntary in that attainment of NDCs can be realised without them, but when used they bring the power of trade to the job of mitigation. Analysis of the benefits of such an approach by the University of Maryland found that international cooperation under a well-functioning Article 6 of the Paris Agreement could save as much as $250 billion per year by 2030. Translating this back into the potential for greater mitigation becomes tangible and meaningful in the already very narrow window of opportunity for limiting warming to 1.5°C.

Glasgow doesn’t mean job done on Article 6, but it does set the stage for activities to commence. The onus is now on national governments to encourage the use of these mechanisms, by allowing their mitigation activities to be open to Article 6 transfers. This could start with well-developed systems such as the EU ETS recognizing 6.4 units, particularly if they are associated with carbon removal projects which the EU will need to meet its goal of net-zero emissions by 2050. Successful implementation could also allow the EU to consider an earlier NZE goal if required to keep 1.5°C in play. But given that the Article 6 rule book was finally agreed in the United Kingdom, perhaps the British government might be the ones to step up and allow Article 6 to flourish within the new UK ETS. After all, in the wake of Brexit trade has become the topic of the day in the UK.

Article 6 has been a hard won policy development, but it’s completion in Glasgow makes COP26 a success, even as some commentators have pronounced some disappointment with the precise wording of the Glasgow Climate Pact. We should thank the negotiators for their efforts over many years and reward their long nights at various COPs with rapid and successful implementation.

The last chance COP? Some more carbon budget maths!

November 1, 2021

With world leaders and thousands of delegates and observers meeting in Glasgow for COP26, there is much talk of this being the last chance to save 1.5°C. It wouldn’t be the first time a COP has been described as the last chance we have, but in the case of COP26 and 1.5°C, it is a fair assessment of the situation. It all rests on the available carbon budget which I discussed in a recent post.

In the August 2021 6th Assessment Report from IPCC WGI, the carbon budget analysis for 1.5°C was published, as shown in the table below. 

Estimates of historical CO2 emissions and remaining carbon budgets (Source: IPCC)

In its recent NZE 2050 scenario, the IEA used the mid range figure of 500 Gt from 1.1.2020 as the carbon budget for the analysis, although we should recognise that for a greater degree of certainty of not exceeding 1.5°C a lower number is more desirable. But we are two years on from the baseline of 1.1.2020 with cumulative carbon dioxide emissions since that time of some 80 Gt, so from 1.1.2022 which is now just a few weeks away, the carbon budget for 1.5°C is closer to 400 Gt. This sits against global annual carbon dioxide emissions of over 40 Gt, comprising 33 Gt from fossil fuel use, 3 Gt from the calcination of limestone for cement manufacture and 6 Gt as a result of land use change practices, which includes ongoing deforestation.

So with at most 400 Gt of remaining budget and it diminishing by 1 Gt every 9 days (so 1.5 Gt while COP26 is on), the challenge facing the conference is huge. 2021 (originally 2020 in the Paris Agreement but delayed due to COVID-19) is the year in which countries are asked through the Paris Agreement to reassess their initial Nationally Determined Contributions and to increase ambition in light of the prevailing science. Indeed, that process is well underway and a quick look at the UNFCCC NDC Registry will show many new submissions, with more appearing each day. 

A quick analysis of the NDCs reveals that in the 2020s global society is likely to consume much of the remaining carbon budget for 1.5°C, which implies that the temperature goal is breached soon after the decade is over (although it may be some years after that the IPCC and WMO confirm this). Just ten medium to large emitting countries account for some 200 Gt in the 2020s, based on the emissions pathways they have announced through their existing or revised NDCs and assuming that these are delivered. That list includes China, the USA, India, the EU, Australia, the UK, Canada, Korea, Japan and Russia. These ten make up about two thirds of current global energy system emissions. China is the largest, with emissions currently around 10 Gt per year. Their revised NDC was submitted last week and brings forward their peaking of emissions to ‘before 2030’. I have assumed that their emissions plateau now, then being falling in 2027 and drop to 9 Gt per year by 2030.

Most of the countries outside my ten, albeit not all, either have modest current emissions and are therefore likely to see short term increases as development continues, or at best will plateau at their current levels. This includes Brazil, Indonesia and all of the African (1.3 Gt energy emissions in 2019) and Middle East (2.1 Gt energy emissions in 2019) countries. The 10+ Gt per year for nine years that these countries represent is around 100+ Gt, so that takes the total to 300+ Gt. Add to this international aviation and marine bunkers over a decade and another 15-20 Gt of the budget is consumed. The total by 2030 is therefore becoming perilously close to 400 Gt and will certainly exceed the tighter 67% and 83% numbers in the table above. At best the NDCs might see carbon dioxide emissions at around 30 Gt per year by 2030, with a remaining budget of 60-80 Gt going into the 2030s and beyond.

While there is a very strong focus at COP26 on net-zero emissions in 2050, the real challenge for 1.5°C is within this decade. The next round of NDCs won’t be submitted until 2025 if the Paris schedule is maintained, by which time another 160-200 Gt of carbon dioxide could have been emitted based on a global plateau at current levels. This really will be too late to make changes for 1.5°C, so it has to be in 2021 with COP26 acting as the catalyst for change.