Category: Carbon Dioxide Removal (CDR)

Article 6 and 1.5°C

dchone June 20, 2022

The 56th session of the UNFCCC’s Subsidiary Body for Scientific and Technological Advice took place in Bonn over the past two weeks and one of the features of the session was further progress in operationalising Article 6 of the Paris Agreement, particularly after completion of the rule-book at COP 26 in Glasgow. But like many other aspects of the Paris Agreement and the global effort to significantly reduce emissions, Article 6 is making good progress but not rapid progress, yet it is rapid progress that is needed. My colleague, Malek Al-Chalabi, was in Bonn for SBSTA 56 and together we thought it would be useful to reflect yet again on the critical importance of this somewhat overlooked corner of the Paris Agreement. Article 6 was the last piece of the Agreement to fall into place in December 2015 and the last part to have its rule-book agreed, taking three years longer than every other part of the Agreement (but addmitedly not helped by COVID-19).

The importance of Article 6 stems from the clear message delivered by WGIII of the recent IPCC 6th Assessment Report; that carbon dioxide removals (CDR) are vital if the world is to achieve 1.5°C, the more ambitious goal of the UN Paris Agreement. This includes direct air carbon capture and storage (DACCS), afforestation (NBS or nature-based solutions), and bio-energy with carbon capture and storage (BECCS).

Arguably, there is no net-zero emissions without Article 6. Not all countries will have the same geographic and geological ability to harness or deploy CDR options or reduce emissions at the same rate, and the majority of countries cannot expect to reduce emissions to zero such that CDR is not needed. This is where trade is relevant.

Trade underpins economic activity and offers society the flexibility to provide the wide range of goods and services that we all benefit from. Trade is often the underpinning reason for foreign direct investment. It encourages the business sector to engage in projects and activities outside their traditional base with a view to bringing goods and services into that base. Cooperation between nation states is often pursued through some form of trading arrangement.

Article 6 of the Paris Agreement is a tailored and comprehensive policy that can enable cost reductions for lowering emissions via trade between nations. It allows countries to work together via ‘cooperative approaches’ through its voluntary nature. An International Emissions Trading Association (IETA), University of Maryland, and Carbon Pricing Leadership Coalition (CPLC) study has shown that cost reductions from cooperative implementation under Article 6 can be achieved through improved economic efficiency over independent implementation of countries’ nationally determined contributions (NDCs). According to the trade models used by the University of Maryland, the potential benefit is up to ~$250 billion per year in 2030.

In addition to the direct commercial benefit, it is the ‘net’ of ‘net-zero emissions’ that Article 6 unlocks. Large scale cross border investment that would otherwise not take place can result from the development and trading of carbon removal units. This is why Article 6 is so important – it helps all sectors and Parties to the Paris Agreement reach net-zero emissions. This can be illustrated with a simple example shown below. The country and the aviation sector both have a target of zero emissions, but neither is able to realise that goal through direct reductions. A regional partner has untapped carbon removal potential, but no need to use it as emissions are already at zero. By cooperating through the trading provisions of Article 6, the end result is that net emissions of 200 units CO₂ across the three are brought to net-zero emissions.

While removals such as afforestation are well known, DACCS and BECCS have growing but still limited experience. That is why further international cooperation is needed alongside Article 6. In order to bring technologies like DACCS and BECCS to scale at an economic price and to further afforestation, cross border capacity building, joint research and development opportunities to pilot CDR options, and integrated policies and funding will also be required. This can make CDR more economically viable.

There are encouraging signs of international cooperation taking place, including countries agreeing to pilots and agreements using Article 6. However, these agreements are few and at the moment not used at scale. In order to maximize the use of Article 6, IETA has identified the following elements for governments to consider (see the full IETA paper here):

Announce whether and how the country will authorize Article 6 credits and/or accept towards the achievement of its NDC.
Provide a clear strategy and stable guidelines on which sectors, activities and vintages will be eligible for Article 6 credits.
Articulate how the use of Article 6 will help achieve the goals of the Paris Agreement.
Elaborate what policy framework the host country will adopt and how it will interact with the receiving country.
Establish an effective interaction between compliance instruments and the voluntary carbon market (VCM).
Support the emergence of a widely accessible traded market for carbon credits.
Ensure a suitable digital registry or other infrastructure for GHG accounting and reporting is in place.
Address key risks in the activity cycle and identify mechanisms to reduce them.
Emphasize the areas where capacity building is required and the role of international organizations.

Article 6 remains an innovative and new policy framework which has not been globally tested and used and it is understandable why some countries and regions may look to meet their own NDCs targets domestically instead of internationally. There are many areas to align, including how to formalize reporting mechanisms and ensuring that the deals that are made between countries (either directly or through business-to-business transactions) are set at prices and in frameworks that are transparent and benefit both.

However, if countries are to reach their NDCs independently of one another, it will be more expensive than working together and net-zero emissions will become an elusive goal. Article 6 has the potential to improve economic efficiency while helping reduce emissions across countries and sectors and provide access to opportunities only possible through cooperation. The opportunity exists to use it – and hopefully that can be maximized.

Creating a 21st century energy hub in Singapore

dchone February 17, 2022

About a year ago the Shell Scenario Team released the Energy Transformation Scenarios, which looked in detail at possible pathways the world might take in this century as society responds to climate change and other pressures. The scenarios were built on earlier work that focused on the more immediate changes that society could see in the 2020s as a result of the pandemic. But the global story is just the tip of the iceberg; there is a wealth of national and regional detail below the surface of the Energy Transformation Scenarios thanks to the team’s energy modelling capacity.

One region that is of particular importance to the energy system is Asia and within the region Singapore is a key oil products supply and distribution hub. Given its unique geographical location and history as a major trading port, Singapore supplies some 20% of global marine bunkers, 3% of aviation fuel and exports a sizeable portion of the oil products used throughout the region.

*Singapore is a major oil products supply hub today (Source: Shell analysis of various data sources)*

But as the energy system shifts and oil products are replaced with electricity and fuels such as hydrogen, how might Singapore adapt to the transformation and what might this mean for its role as an oil products supply and distribution hub? To help people think about these key questions for Singapore, Shell has released a new Scenario Sketch, Singapore: A 21^st Century Energy Hub. The Sketch makes extensive use of the regional and country data within the Energy Transformation Scenarios, setting out three possible scenarios for the region.

These scenarios are not forecasts, predictions or plans, but possible pathways that could emerge if certain trends take hold. Only one scenario meets the goals of the Paris Agreement, which implies that very deliberate steps will need to be taken to ensure the goals are met. Scenarios can help craft our thinking about the future and catalyse the actions required to shape a particular outcome.

The three scenarios are known as Waves, Islands and Sky 1.5 and they reflect the underlying trends that can be seen across society as a result of the pandemic.

Waves: A focus on wealth and economic recovery, but this results in a late start to the rapid transition required to reach net-zero emissions around the middle of the century. Rather, the energy required to support growth in the 2020s comes from conventional sources. The transition is rapid from the 2030s, with a clear focus on ending fossil fuel use rather than directly managing emissions. Net-zero emission is reached around the end of the century.
Islands: National sentiment shifts inwards and security issues prevail. The transition slows along with economic growth. Although the transition eventually takes hold, net-zero emissions is not reached until well into the 22^nd century.
Sky 1.5: The pandemic leads to structural change across society, significant green investment and a realisation that the broader health and well-being of society is fundamental. In this scenario the goals of the Paris Agreement are met.

All three scenarios see the role of electricity expanding, for example in transport, the further emergence of biofuels and the introduction of hydrogen as an energy carrier for certain applications. But the time lines are very different. However, these shifts in the energy system all challenge the supply and distribution model that Singapore has established for oil products and tend to favour local production. This is certainly the case for electricity, but may also be true for biofuels where feedstocks are available on a local level and hydrogen should electrolysers become the preferred mode of production. However, hydrogen supply may also lend itself to a distribution model if significant renewable electricity is available in a particular area, although this is not currently the case for Singapore.

The more immediate change for Singapore comes in the aviation and marine sectors, where airlines and shipping companies are beginning to plan and implement strategies to make use of sustainable fuels and develop possible roadmaps for hydrogen as a future energy carrier. Although progress is slow in Islands, both Waves and Sky 1.5 see early developments. This opens up the prospect of Singapore leading the way in supplying such fuels, maintaining its role as a supply hub.

In Sky 1.5 another opportunity emerges for Singapore through Article 6 of the Paris Agreement. A feature of Sky 1.5 is significant activity to develop carbon removals, both through reforestation and carbon capture and storage technologies. The use of removals to balance continued use of fossil fuels in some sectors is an important part of the global strategy for limiting warming to below 1.5°C in 2100, but catalysing the investment required for removals and directing the benefit to emitters requires a carbon trading market to emerge. With it’s strong history as a commercial and financial centre, Singapore could lead the way here, particularly as the region holds significant opportunity for removals and Singapore itself is a centre for the two sectors that may make greatest use of them, namely aviation and marine.

*Singapore could become a major carbon trading hub*

A feature that does emerge across the stories is just how long Singapore may find itself as an important regional distributer of oil products, even as the transition gather pace. The Asian region is still developing rapidly, with some 2 billion people (ASEAN and China) moving from modest to middle income and making use of a broader range of energy services in the process. Immediate growth in the region will draw heavily on existing energy sources and services, given their availability and scalability. Only in the fastest of transitions is this trend overcome with new energy sources scaling quickly enough to match new demand.

Where Singapore stands as an energy hub in 2050 and beyond has yet to be established. But now is the time for the bold decisions necessary to create the best possible future. Scenario analysis is a useful tool for understanding new trends and directions. We hope this publication helps inform readers about an otherwise uncertain future and positions them for the journey ahead.

Also check out the scenario infographic here.

Shell’s scenarios, including this Singapore Sketch, are not intended to be projections or forecasts of the future and they are not Shell’s strategy or business plan. When developing Shell’s strategy, our scenarios are one of many variables that we consider. Ultimately, whether society meets its goals to decarbonise is not within Shell’s control. This Singapore Sketch is based entirely on the data and findings of the Shell Energy Transformation Scenarios, released in February 2021. Please read the full cautionary note at: http://www.shell.com/investor and http://www.sec.gov

Article 6 at COP26

dchone October 11, 2021

My home country, Australia, seems to reside permanently in the international climate doghouse, but a closer look reveals that they have made steady progress on some of the less advertised fronts related to mitigation. This was highlighted again recently when the government’s Energy and Emissions Reduction Minister Angus Taylor announced that carbon capture and storage (CCS) projects would be eligible for emission reduction credits.

This might seem like a distraction to some, but Australia has been forging a clear path towards growing its carbon removal capacity for some years now. The Federal Emissions Reduction Fund (ERF) has long targeted opportunities in soil carbon, forest management and reforestation and now CCS is added to the list. Short of a miracle in energy technology development and deployment, the current mechanisms for energy supply do not hold within them a net-zero emissions solution available within 30 years, so it is only through the addition of direct carbon dioxide management in the form of removals that the goal of the Paris Agreement can be met. Unfortunately, this doesn’t seem to be widely appreciated, with the exception of the United States and their 45Q tax incentives for CCS, Canada with their early demonstration projects and Australia with its behemoth Gorgon CCS project, creation of the Global Carbon Capture and Storage Institute and domestic focus on removals. Other countries are now scrambling to establish similar initiatives, but are somewhat lagging.

The case for CCS and carbon removals is an easy one to make – it emerges from any credible analysis of the energy system that accounts for likely future energy demand, real world deployment rates and the expected fossil fuel legacy that will persist into the 22^nd century even as significant reductions in use are made. Depending on assumptions, removals can stretch to a trillion tonnes of carbon dioxide over the course of the century. It is only in a scenario with a very constrained future energy demand that removals become less important, but still don’t disappear. The chart below, which I have posted before, shows the four IPCC 1.5°C archetype scenarios (P1, a high sustainability consciousness develops across society, to P4, a technology driven society with high energy demand and technical solutions to environmental issues) and the Shell Sky 1.5 scenario – all require carbon removals. In the P1 scenario sink use is quite low, highlighted by an end to land based anthropogenic emissions and the subsequent development of the land as an enhanced sink from mid-century on, at about 5 Gt per year drawdown of carbon dioxide. P1 makes no use of geological storage. By contrast, the P4 scenario makes very extensive use of geological sinks with BECCS playing a substantial role even as land based emissions are eventually reigned in.

So how does all the above relate to COP26? Of course ambition is very much on the agenda and removals are required to deliver on that ambition, but so are many other steps. However, one of the features of carbon removals is that they will likely have to emerge through cooperative action between governments. Remaining emissions and the availability of removal sinks probably won’t exist in the same geographies, so a global trade in emission sinks will need to emerge. This would happen under Article 6 of the Paris Agreement, which still remains as unfinished business after the rulebook negotiations at COP24 in Katowice. Article 6 establishes a framework for cooperative action between countries in realizing their NDCs, which includes trading carbon units across borders.

The charts below illustrate how a standstill in global emissions (at 300 units in the illustration) is brought to net-zero through cooperative action between governments and the aviation sector. Large scale cross border investment results from the development and trading of carbon units, including removals, that would otherwise not take place. This is why Article 6 is so important – it helps all sectors and Parties to the Paris Agreement reach net-zero emissions.

While the UK Government has many ambitious plans for COP26, and Article 6 is certainly among them, I believe that agreement on the Article 6 rulebook is the most important outcome needed from Glasgow. Apart from its future value to society, an agreement on this difficult piece of rule-making would demonstrate that countries can work together to achieve an outcome that may not be in their immediate self-interest. Article 6 brings a rigour to emissions reporting and accounting that we must have for net-zero emissions. It introduces concepts such as carbon budgets and emissions inventory adjustments for trade to take place, which progressively caps the emissions of nationally determined contributions and forces them towards exact quantification, rather than narrative description. Of course nations aren’t required to use Article 6, it’s voluntary, but once they choose to they must also choose accounting rigour.

After the failure to agree on the Article 6 rule-book at Katowice, great progress was made at COP25 in Madrid, but final agreement still wasn’t possible. Nevertheless, a text emerged that would do the job, although it was entirely bracketed. But the text did capture the key elements that are required for Article 6 to function;

Removals specifically referenced.
A simple but robust approach for adjusting nationally determined contributions (NDC – the national plan for emissions reduction and adaptation put forward by a country) when an Article 6 transfer takes place.
A centralized accounting and reporting platform, with a clear focus on the avoidance of double counting of mitigation actions.
The creation of a supervisory body for the 6.4 mechanism.
Specifications for the design of a 6.4 activity and subsequent issuance of associated emission reduction units.
An approach to meet the requirements for adaptation funding required under 6.6 of the Paris Agreement.
A transition arrangement for ending the Clean Development Mechanism (CDM) of the Kyoto Protocol. The CDM has left several countries holding project carbon units that they are keen to monetize so as to support the underlying internal project investment.
A simple framework giving some structure to Article 6.8, the non-market approach cooperation.

Nevertheless, some disagreement between countries remains and these issue will need to be resolved in Glasgow.

There is a set of issues related to the scope of an NDC and whether some activities that are in addition to the NDC and involved in a transfer should be subjected to the same adjustments as the Madrid text outlines. This feels like a distraction for two reasons; the NDCs should rapidly expand to cover all activities within an economy and if there are activities still not covered by the NDC, they have no place under Article 6 anyway as this provision of the Paris Agreement is about cooperation to achieve NDCs.

Another tough issue has been the need to give meaning and substance to 6.4 (d) To deliver an overall mitigation in global emissions. The proposal in the Madrid text is to cancel a portion of the emission reduction units issued to the 6.4 activity, but this is unnecessarily punitive. It also risks pushing all activities into simple 6.2 transfers, which would undermine the whole purpose of having a project based mechanism which is more suited to many countries. The discussions in Glasgow simply need to recognize that, by definition, a 6.4 activity and related transfer with NDC adjustments always results in an overall reduction in global emissions. This is illustrated in the diagrams above and is the inherent purpose of an emissions trading structure.

Finally, there is the lingering problem of how best to wind up the CDM and what then becomes of the projects still delivering reductions and the legacy unused CERs sitting in registry accounts. For projects that continue to deliver reductions, the answer seems straightforward – they continue to operate, produce CERs and these are transferred under the provisions of 6.2, which ensures corresponding adjustments to NDCs. In the case of legacy units, I think the IPCC have answered the question, both in the 2018 SR15 and the 2021 AR6 reports. Both reports show that the temperature rise is now around 1.2°C and both offer a carbon budget requirement from 1.1.2018 and 1.1.2020 respectively to ensure that 1.5°C isn’t passed. By rebasing the climate issue in 2020 (in the case of AR6), anything that happened before that is now irrelevant in that it is part of the 1.2°C baseline. The carbon budget they developed has subsequently informed Parties on their NDC requirements and is already being used by the UNFCCC to assess the NDC gap . Adding pre-2020 units to current mitigation activities is simply undermining the carbon budget calculation.

With an agreement hopefully reached on Article 6 in Glasgow, the spotlight will then turn to national governments to open up the possibility of cooperative arrangements. This could come through linking of trading systems, opening up trading systems to external units and encouraging the private sector to develop mitigation projects through Article 6.4. Importantly, governments should also follow the lead of Australia and develop protocols for removals, as these are the units that will be in particular demand as net-zero emission goals and targets need to be met. Europe, in particular, will need to accelerate its removals thinking, an area where it is lagging in its mitigation efforts.

On to Glasgow!

The simple climate maths the IPCC didn’t fully explain

dchone August 19, 2021

When I first started delving into the issue of climate change about 20 years ago, the clarion call of the day was to reduce emissions by 50% by 2050. Today, as we all know, the call is for net-zero emissions by 2050. Last week we also heard again from the Intergovernmental Panel on Climate Change (IPCC) with the release of the first part of the 6^th Assessment Report (AR6), which the United Nations Secretary General called a ‘code-red for humanity’. But both the call in 2001 and again in 2021 are entirely consistent. It’s not the climate science that has changed, just the carbon maths associated with it.

As the IPCC clearly state in Part D of the Summary for Policymakers of AR6-WG I;

This Report reaffirms with high confidence the AR5 finding that there is a near-linear relationship between cumulative anthropogenic CO₂ emissions and the global warming they cause. Each 1000 GtCO₂ of cumulative CO₂ emissions is assessed to likely cause a 0.27°C to 0.63°C increase in global surface temperature with a best estimate of 0.45°C. This is a narrower range compared to AR5 and SR1.5. This quantity is referred to as the transient climate response to cumulative CO₂ emissions (TCRE). This relationship implies that reaching net zero anthropogenic CO₂ emissions is a requirement to stabilize human-induced global temperature increase at any level, but that limiting global temperature increase to a specific level would imply limiting cumulative CO₂ emissions to within a carbon budget.

While the biggest difference between now and 2001 is the shift in the goal from below 2°C to 1.5°C which in turn has contributed to the change in required emissions trajectory, this is not enough to explain the shift in the required outcome by 2050. That change is more a function of the cumulative carbon math associated with any level of warming.

To limit the temperature rise to 1.5°C, the notional carbon budget based on the above best estimate of TCRE is 1.5/0.45*1000 = 3330 Gt CO₂ and for 2°C it is 4440 Gt. This is effectively targeting the central estimate in a range and is a calculation you might do before emissions start. However, we already know from IPCC AR6 that cumulative emissions of 2390 Gt correspond to a 1.07°C temperature rise in 2010-2019 vs. 1850-1900. They also indicate that the remaining carbon budget from 1.1.2020 for 1.5°C is 400 Gt and 2°C is 700 Gt for a 67% likelihood, which implies an overall carbon budget of 2790 Gt for 1.5°C and 3090 for 2°C with a good degree of certainty.

In the following calculations and accompanying charts I will work on the basis of a simple linear reduction in emissions to net-zero from a particular point in time to calculate the overall cumulative emissions. Returning to 2001, the annual CO₂ emissions (from energy, cement and land use) were approximately 30 Gt, the cumulative emissions from 1850 at that time were about 1700 Gt and a linear reduction pathway from 2001 for 2790 Gt final cumulative emissions (1.5°C) means net-zero emissions in about 2073. This is illustrated in the chart below.

As noted for 2001, cumulative carbon dioxide emissions since 1850 were at 1715 Gt (Source: Our World in Data), which means net-zero emissions in 2073 for 1.5°C and 2123 for 2°C. Back in 2001 the focus was more on 2°C, so targeting well below 2°C, to completely avoid the 2°C threshold, would mean net-zero emissions around 2100 and therefore a 50% reduction in emissions by 2050 assuming a linear decline.

But twenty years later the story is very different. At the time of the IPCC Special report on 1.5°C cumulative carbon dioxide emissions had reached 2300 Gt, so a linear reduction to net-zero had a target date of 2040. For 2°C it was 2077. In fact the IPCC opted for scenarios with a steeper early reduction pathway, and therefore targeted 2050 for net-zero emissions, but that means a very steep early reduction of over 50% by 2030 to balance the longer tail to 2050. With twenty further years of rising emissions, a considerable portion of the 2001 carbon budget had been consumed and therefore the date for net-zero emissions had moved forward in time dramatically.

In fact, for each year that emissions don’t reduce, the requirement for net-zero emissions comes towards us by a year, effectively narrowing the gap for action by two years. The IPCC Special Report on 1.5°C was baselined from 1.1.2018, so another four years has passed (or will soon pass). Even the recent IPCC AR6 is two years out of date now in terms of its carbon budget baseline. This rapidly shifting picture is shown below. In 2015 the target year for 1.5°C is shown to be 2042, a gap of 27 years, but by 2019 the target year is 2038, a gap of only 19 years.

Should carbon dioxide emissions remain at 40 Gt (below the pre-COVID high) for the coming few years, the available carbon budget for 1.5°C is rapidly consumed, as illustrated in the chart below. By 2025 net-zero emissions would be required by about 2033 and by 2029 net-zero emissions would be required before 2030, in other words the available carbon budget will have been consumed.

All the above presupposes that emissions cannot go below zero in the future, thereby drawing carbon dioxide out of the atmosphere and eventually correcting any overshoot of the carbon budget and its associated temperature goal. But negative emissions are a possibility, through the implementation of large scale air capture systems with geological storage (BECCS or DACCS) and enhancement of natural carbon uptake in the biosphere via programmes such as those that increase global forest cover and improve soil carbon management in agriculture.

Today, the carbon budget is still a rather arcane subject, well understood by a few but not widely appreciated in terms of relevance to managing surface temperature. That understanding will need to improve rapidly so policymakers can develop better mechanisms to manage it, also ensuring large scale deployment of atmospheric drawdown practices and technologies.

Pathways to 1.5°C

dchone June 11, 2021

In 2018 when the IPCC released their Special Report on 1.5°C, they presented four archetype scenarios to help readers understand that there were fundamentally different approaches to limit long term warming to 1.5°C or below. The scenario pathways are shown below and vary significantly in their approach, time horizon and use of sinks.

All four scenarios (P1, P2, P3, P4) are based around the same carbon budget, or total cumulative emissions of 420 Gt from 1.1.2018 consistent with providing a 66% chance of limiting warming to 1.5°C. Whether the carbon budget is aligned with 420 Gt (67^th percentile) or 580 Gt (50^th percentile), it represents a very limited amount given that annual CO₂ emissions are in excess of 40 Gt, so these represent 10-15 years of emissions at current levels. Since this IPCC publication, a further 160 Gt will have been emitted by society by the end of 2021, meaning that the budget is reduced to 260 – 420 Gt.

In attempting to align with a very limited carbon budget, the P1 scenario imagines a world of falling overall energy use and a very rapid shift away from fossil fuels. There is no use of geological storage of CO₂ and a modest reliance on natural sinks, although in doing so the world must shift away from net-deforestation by the 2040s. By contrast, the P4 scenario sees increasing demand for energy and as a consequence, a much more difficult decarbonisation journey that involves considerable use of sinks in the second half of the century. Notably, the P4 scenario exceeds the carbon budget by quite some amount with peak emissions to the atmosphere of 900 Gt, before reining in the amount to 200 Gt by 2100. This results in P4 being a so-called overshoot scenario, in that the world exceeds 1.5°C during the century before returning to 1.5°C and below by the end of the century.

All the above might seem a bit academic, but it became very real recently when the IEA released their 1.5°C scenario and some commentators began comparing it to one of the very few other 1.5°C scenarios, notably Sky 1.5 from Shell.

In fact, the two scenarios are at near opposite ends of the P1 to P4 spectrum.

The IEA 1.5°C scenario looks at the period from 2020 to 2050 and presents a proposal for the problem of containing emissions to a 500 Gt carbon budget (the 580 Gt IPCC number less 80 Gt for the years 2018 and 2019). Apart from recognising that the land based system is likely to reduce this budget by a further 40 Gt over the period (i.e. reducing it to 460 Gt), the analysis limits itself to the energy system and the changes that would be required to meet a 460 Gt cumulative emissions constraint within a 30 year time frame. As is the case in similar scenarios, including Sky 1.5, their analysis assumes rapid electrification of final energy (e.g. electric cars instead of gasoline) and makes use of renewables and nuclear power generation to produce the electricity. They introduce hydrogen as an energy carrier, make use of bioenergy and include carbon capture and storage (CCS) where fossil fuel remains in use. For the latter, the IEA deploy CCS directly on facilities that use fossil fuels and indirectly through direct air capture for fossil fuel use in applications such as aviation.

All the above steps are well understood, but even given rapid and stretching deployment rates of all technologies, these steps are unlikely to contain emissions to less than 500 Gt in under thirty years. This is because of the expected increase in overall energy use, a consequence of economic growth, the general rise in population and the shift of billions of people from very low energy use lifestyles to at least modest energy use, a simple outcome of development and the provision of basic services like lighting, clean water, food refrigeration and some mobility.

As such, energy modelers looking at a very constrained time frame of 30 years must make the assumption that energy growth can be contained or even fall, as in the IPCC P1 scenario. This is exactly what the IEA have done to meet the carbon constraint. In the 1.5°C Scenario primary energy demand falls from 612 EJ in 2019 to 543 EJ in 2050, a drop of over 10%. Efficiency will certainly help deliver such an outcome and the use of renewable electricity gives the story a big boost as the thermal losses in power stations vanish, although new losses emerge through the use of transmission and storage. But the big story is the widespread assumption of behavioural change across society to reduce energy demand. The chosen measures include steps such as;

Ride-sharing in all urban car trips
Reducing motorway / freeway speeds to below 100 kph / 60 mph.
Increasing temperatures in air conditioned vehicles and buildings.
Lowering temperatures in heated buildings.
Replacing short flights with high speed rail.
Limiting long haul air travel to 2019 levels.

With low energy demand and high deployment rates of new energy technologies it then becomes possible to resolve the carbon budget within a 30 year time frame.

At the other end of the spectrum is the Sky 1.5 scenario, which tackles the problem of a limited carbon budget in a very different way. Sky 1.5 looks at the period from 2020 to 2100, an 80 year time frame, and starts with an expectation of rising global energy demand, even assuming significant energy efficiency improvements across society. The growth in population and the demand for energy services, including significant new demand from developing countries for basic services, cannot be contained and energy demand rises. This immediately poses a challenge in that rising demand more quickly consumes the available carbon budget at the front end, when alternative energy technologies and sinks have not been deployed.

Sky 1.5 also recognises that for many energy technologies, the 2020s still remain a period of development and limited deployment and even for more mature technologies such as solar and wind, a period of early growth where change on a global scale will remain limited.

The solution to this approach is to accept that, at least in the short term, the carbon budget may be consumed and the temperature it is linked to (1.5°C in this case) potentially surpassed for a period of time. The subsequent rapid deployment of sink capacity, both manmade in the form of air capture with geological storage and natural as reforestation, then offers the possibility of a period of net-negative emissions later in the century, to redress the imbalance and reduce cumulative carbon dioxide emissions and therefore temperature. This is the approach that Sky 1.5 takes, as do the IPCC P3 and P4 scenarios. Sky 1.5 takes this approach out of necessity, in that the scenario reaches a limit on energy technology deployment and does not foresee a fall in energy demand.

The end carbon budget for both the IEA 1.5°C scenario and Sky 1.5 are similar, but the IEA restricts itself to a thirty year time-frame, whereas Sky 1.5 operates over an eighty year time-frame. Sky 1.5 is also remodeled by MIT within their integrated assessment model to give a temperature outcome, rather than simply using the IPCC central estimate for a carbon budget. The two scenarios are attempting to answer the same question, but take very different approaches to doing so. There is no right or wrong here, just different ways of solving a tough problem.

Note: Scenarios don’t describe what will happen, or what should happen, rather they explore what could happen. Scenarios are not predictions, strategies or business plans. Please read the full Disclaimer here.

Exploring the energy future

dchone February 10, 2021

Three scenarios, Waves, Islands and Sky 1.5 explore the energy landscape out to 2100 and reveal very different possible pathways forward. All three are transformational in nature, with net-zero emissions now within sight, albeit on quite different timescales.

Accelerating the US energy transition

dchone January 21, 2021

Today a new energy transition is gaining pace in the US, built on the back of the falling costs of wind, solar and batteries. But what might a rapid transition to net-zero CO2 emissions look like in the US?

Carbon sinks and reform of the EU ETS

dchone November 19, 2020

On Wednesday morning of this week, POLITICO held a virtual event: “Energy Visions: Carbon removal and natural sinks in reaching climate neutrality by 2050”.

I was fortunate to have the opportunity to open the event with a few minutes of remarks to set the scene. This was followed by a discussion between the POLITICO moderator and Tina Bru, Norway’s Minister of Petroleum and Energy and then a panel session with;

MEP Bas Eickhout, Vice Chair of the Parliament’s Environment Committee and spokesperson for the Greens political group
Mauro Petriccione, European Commission Director General for Climate Action
Jannicke Gerner Bjerkås, CCS Director at Fortum
Gert-Jan Nabuurs, professor European Forest Resources, Wageningen University and Research IPCC Co-ordinating Lead Author

Although the panel couldn’t agree on how to handle the introduction of sinks into the EU as an emissions balancing mechanism, for me at least it is clear that the EU Emissions Trading System offers the simplest route forward. I have also written about this previously. See below for my opening remarks at the POLITICO event.

Good morning.
I want you to imagine for a moment that it is 2050, perhaps your autonomous electric car is already waiting in the driveway to shuttle you to the railway station, and as you step outside the house system shuts off most indoor electricity consumption. On your way to work you start thinking about an event your company had participated in a few days earlier; the last allowance auction under the EU Emissions Trading System. Now that the EU has reached net-zero emissions there would be no further allocation or auctions, in fact no more allowances.
But there is the familiar sound of planes at the nearby airport as the 787 and A350 departures continue, seemingly without pause. Although the first hydrogen fueled Boeing 808 and Airbus A500 planes can now be seen in the skies, a good proportion of air traffic still runs on jet fuel produced from crude oil. Biojet makes up the difference.
The railway station you use is in an industrial part of the city and the cement plant that was constructed there in 2030 using the most efficient process design of the day continues to operate, running on natural gas. It was built to supply concrete foundations for the gigantic 20 MW turbines in the burgeoning wind energy market.
These planes and industrial facilities are part of the 2050 EU landscape and continue to operate but do so in the absence of allowances under the EU Emissions Trading System. How will that be possible?
It is important to recognize that net-zero emissions in 2050 does not represent a point in time when there is no fossil fuel use and therefore no emissions. Today we are 70% dependent on fossil fuels for energy in the EU and although that number is clearly falling, it won’t be zero in 2050. In some cases the technologies required to remove dependence on fossil fuels don’t yet exist or are only at the earliest stages of their development. While some facilities using fossil energy should have carbon capture and storage operating by 2050, that won’t be true in all cases. Planes cannot do this and there will be regions within the EU where local at source carbon capture and storage either isn’t practical or cannot be implemented.
Rather, net-zero represents a balance between remaining emissions and the remote removal of carbon dioxide from the atmosphere. This can be achieved by 2050 in the EU, but we need the policy tools to guide us towards such an outcome. The EU Emissions Trading System is an excellent candidate for change.
Today the Emissions Trading System operates by surrendering allowances against emissions, but when the system ceases to have allowances in 2050, what happens? The Emissions Trading System needs to progress from an allowance-based system to one that manages net-zero emissions by requiring the surrender of sink based units against annual emissions. A sink unit wouldn’t be issued in the way an allowance is but would be created through projects that captured carbon dioxide from the atmosphere and permanently stored it. There are broadly three ways to do this;
One – through industrial projects that strip carbon dioxide from the atmosphere and store it geologically or use it in a way that offers near permanence, such as in making building materials.
Two – through the use of biomass to create energy but capturing and storing the carbon dioxide released in the process, which originated from the atmosphere as the biomass was grown. There is a bio-ethanol plant doing this today in the United States.
And three – by engaging in natural based projects such as rewilding and reforestation, or encouraging farmers to employ different grazing and cultivation techniques which help build soil carbon stocks.
Verified removal units from these types of projects will need to be part of the Emissions Trading System so that some parts of industry and various energy system services can continue operating past 2050. But the change to the trading system needs to be well before 2050, ensuring that enough capacity can be created by incentivising sink activity. A very early milestone would be establishing the certification process for removals within the EU.
Earlier this year Shell released a scenario Sketch illustrating a pathway forward for the EU to reach net-zero emissions by 2050. In that analysis, industrial bioenergy facilities with carbon capture and storage start to operate in the EU by 2035, which points to market signals emerging in the 2020s for project activity to start. We also showed that a gap between what can be achieved and what needs to be achieved for net-zero by 2050 also starts to emerge in 2035. This gap could be filled with nature-based sinks, at least until industrial capacity can catch up, but once again this will require a commercial carbon sink mechanism to incentivise action.
We shouldn’t forget about the period after 2050, at which point the world may require progressive regions such as the EU to extend their reductions into negative territory, in other words having more sinks than emissions. Trading of sinks could be a valuable export opportunity for the EU.
The EU Emissions Trading System is the right commercial lever to drive sink activity forwards, partly because of its carbon pricing structure but also because it must evolve to become a sinks and sources balancing system by 2050. As part of the current rethink of the trading system in preparation for 2030 and beyond, a sink mechanism should be included. Initially this could simply be the recognition of sink units from projects within the EU but should eventually be extended to global recognition of units. These would be transferred under Article 6 of the Paris Agreement along with the necessary safeguards to guarantee environmental integrity and the adjustment of trading partner carbon registries.
Without action in the 2020s to incentivise carbon sinks and subsequent follow-up in the 2030s, the EU may find itself unable to meet its net-zero emissions goal in 2050.
Thank you

A new goal for China

dchone September 28, 2020

China has set the goal of being carbon neutral by 2060. What might the transition look like and what has to happen in the 2020s to get started?

An alternative to allocating removal quotas

dchone August 12, 2020

Over the last few months I have posted a number of articles on carbon dioxide removal (CDR), highlighting the need for this set of practices and technologies in achieving the goals of the Paris Agreement. The discussion on CDR has also been growing in the academic community, as illustrated by a recent article in Nature Climate on equity considerations relating to the allocation of carbon dioxide removal quotas. Like many before it the article recognizes the necessity for CDR, but focuses on how to distribute the burden of implementing it at scale.

In calculating the required distribution of CDR quotas, the authors use a mid-range CDR cumulative allocation quota of 687 GtCO2 over the period 2018-2100 (as used in the IPCC SR1.5 P3 scenario) to 176 of the 197 UNFCCC parties following Responsibility, Capability and Equality principles. Under the Responsibility (or proportionality) principle, which relates historical emissions from a given country with responsibility to provide solutions to global warming, CDR efforts would increase with greater accumulated historical emissions. By contrast, the Capability (or ability-to-pay) principle establishes that countries better able to solve a common problem should contribute more, which implies wealthier countries are assigned a greater share of CDR efforts. Finally, according to the Equality (or environmental justice) principle, every individual should have the same right to be protected from pollution. Hence, equal per capita CDR is here enforced across countries irrespective of current (or past) emission levels and economic capability.

This is all well and good and the analysis is useful, but it falls foul of one major issue; the UNFCCC has almost no successful track record of distributing burden or enforcing compliance. The closest point that was reached in terms of targets and compliance were the requirements for developed countries within the Kyoto Protocol; unfortunately that didn’t end well. So while it is helpful to understand how the burden ought to fall, there is little chance of devising an international system of allocation to implement burden sharing. Rather, the world has settled on the architecture of the Paris Agreement which sees countries taking action according to their own nationally determined contributions (NDC) to the overall goal of limiting warming to well below 2°C. Nevertheless, within that structure there is some hope.

The Nature paper also makes the point that the capacity to implement CDR is not evenly distributed around the world. Geological storage of carbon dioxide is easier in some locations than others and the opportunity to pair bioenergy production with CCS for negative emissions may only reside in certain places. It is also clear that natural carbon storage through reforestation will only be possible at large scale in certain countries due to land availability and climate considerations. Small industrial states like Singapore are a great example of this. The country has set a course towards net-zero emissions in the second half of the century, yet its borders encompass significant hard to abate emissions and there is little or even no local capacity for CDR. What should they do?

So we have a problem of uneven supply and unclear distribution of demand, within the framework of the Paris Agreement. The solution to this problem is not one of allocation, but one of trade, making use of Article 6 of the Paris Agreement. It does of course depend on countries wanting the Paris Agreement to reach its goals, which requires that there is some sort of progressive implementation of a net-zero emissions goal within respective NDCs. The EU, UK, New Zealand and a handful of others have already set goals of 2050 for net-zero emissons. As noted above, Singapore is also on a pathway to net-zero, with current policy considerations placing that after 2050. By contrast, Bhutan is already carbon negative and Costa Rica plans to cross net-zero in the near term.

In a posting last year I showed how Article 6 and various forms of CDR could be used to reach net-zero emissions globally. The use of a trading option allows those with a clear goal of net-zero emissions to invest across borders to unlock removal potential that would otherwise remain dormant. There is no allocation or distribution of quotas, only the self-imposed requirement to reach net-zero emissions through a nationally determined contribution. We could imagine a gradation of such NDCs stretching from now (e.g. Bhutan) to 2100 (e.g. a heavily industrial emerging economy), but with all countries either investing in or delivering CDR capacity, driven by the market and its distributive capacity towards lowest cost outcomes.

The picture I developed to illustrate Article 6 starts like this, with no CDR in place;

. . . and ends up like this, with significant CDR capacity realised through cross border trade and investment.

While this is a simple illustration, it isn’t a world that depends on quotas and allocation, but it is a world that has a desire and willingness to get to net-zero emissions.