Category: Green growth

Developing countries hold the key to reaching Net Zero Emissions

dchone September 1, 2023

A guest post by my scenario team colleagues Thomas Akkerhuis and Georgios Bonias

In a few days, leaders from the world’s largest economies will gather in India for the 2023 G20 summit. The G20 Presidency has included Green Development as one of the main themes of the summit with a specific mention on ‘ensuring just energy transitions for developing countries’. At the same time, given the volatility and uncertainty in energy markets, many countries are looking to secure their own energy sources, with fossil fuel extraction as part of plan. Looking forwards, how might the emerging and least developed parts of the global economy respond to the call for green development, net-zero emissions and much lower use of fossil fuels? Looking back, it’s important not to forget that today’s developed economies largely sprang to life on the back of coal, then oil, and later naturl gas, with no CO₂ emission constraints to consider.

A few months ago, Shell published The Energy Security Scenarios, which explore two different pathways for the energy transition, driven by the global shift towards a security mindset.

Sky 2050 – a very rapid transition where global climate security overcomes shorter-term national concerns.
Archipelagos – where national security concerns create ongoing headwinds in an otherwise rapid transition.

To help explore how different countries might navigate through the transition, four different archetypes were identified, with nations behaving in similar ways when they share similar vulnerabilities to energy supply disruption and energy price volatility. In both scenarios, the security mindset leads to aggressively competitive, rather than co-operative, decarbonisation.

The archetypes are:

Green Dream – which can be observed in the European Union. The EU’s wealth enables it to deal with energy price volatility, but its advanced economies and depleted oil and gas resources make it highly vulnerable to energy supply failures. These countries seek security by driving hard to end the use of fossil fuels.
Innovation Wins – which can be seen in countries like the USA and major energy resource holders like the United Arab Emirates. These countries are often self-sufficient in energy so are not vulnerable to supply failures, but their political systems are exposed to swings in the energy price. These countries do not feel so threatened in the short term, but invest heavily in innovation and infrastructure as longer-term solutions to their energy needs and the needs of their energy customers.
Great Wall of Change – which is mainly relevant to China. China is insulated from both supply and price concerns by several factors: the size of its economy, its large coal reserves, and the scale of the investments it is making in its own energy supply and infrastructure. China takes a cautious approach, aware of the need to move away from coal – by far the most emissions-intensive fossil fuel – and carefully monitoring global energy market developments. It looks to use its manufacturing strength to grow its position as a global low-carbon energy powerhouse.
Surfers – which subdivides into Emergent Surfers, like India and Brazil, and Rising Surfers being the world’s least developed economies. The latter includes most countries from the African continent, and they are more focused on establishing the basic foundations for development, such as infrastructure. Surfers countries do not produce significant amounts of energy and so they are vulnerable to both energy supply disruption and price swings. Emergent Surfers quickly adopt new technologies while Rising Surfers focus more on access to energy. Surfers seek out partnerships and try to ride the waves of opportunity created by other archetype groups.

We have used the archetypes to explore how people, wealth and energy are distributed. The Green Dream and Innovation Wins archetypes currently account for 23% of the global population but almost 60% of global energy demand and 63% of the global GDP. On the other hand, Surfers countries make up more than half of the world population but only about a third of the global energy demand and GDP.

The skewness of GDP distribution, favouring Innovation Wins and Green Dream, comes at a cost, being the large contribution to global anthropogenic CO₂ emissions that these countries have made. Based on our analysis of data from 1850 onwards, the cumulative CO₂ emissions for countries in these archetypes are more than 600 tonnes per current inhabitant, while for the Great Wall of Change archetype they are about 140 tonnes. For Emergent Surfers countries the number is just above 100 tonnes of CO₂ and for Rising Surfers around 30 tonnes.

The share of the different archetypes in annual CO₂ emissions has been going through significant changes in recent decades, reflecting the changing dynamics in the global economy. In practice, CO₂ shares are even more skewed. For example, China’s emissions are partially due to product demand in Innovation Wins and Green Dream. The same is true for land use change emissions, where Brazilian deforestation is partially a result of global food demand.

Given that countries in the Great Wall of Change and particularly in the Surfers archetypes are expected to have strong economic growth in the coming years and decades, we looked at the CO₂ profiles that these countries will need to have, according to the Sky 2050 scenario, in order for the world to be at NZE by 2050. Historical data for all archetypes are shown in grey lines and the possible future pathways, based on the Sky 2050 scenario analysis, are shown in colour.

The key message coming from this analysis is that developing countries will need to achieve their projected economic growth following pathways of much lower CO₂ emissions than today’s developed countries did over the last 100 years. If countries in the Great Wall of Change and Surfers archetypes were to follow similar CO₂ emissions pathways as the Green Dream and Innovation Wins countries when reaching similar levels of GDP/capita, then global CO₂ emissions at 2050 would be close to 80 Gt per year, which is double of today’s levels, instead of NZE as is required to stop global warming. Much lower CO₂ pathways can be achieved in three ways:

Use fewer energy services compared to developed economies at a similar level of income.
Use energy services that consume less energy (higher efficiency).
Use energy services that make use of cleaner energy (lower fossil fuel share)

The first is not a viable option and therefore we do not make use of it. However, some economies may appear to follow this pathway, but in reality a modal shift is taking place. For example, shared ownership of vehicles has never been established at scale in the USA or EU, but it could emerge in parts of Africa. However, this doesn’t mean that people travel less. Clean electricity will address both the second and third points: electrified energy services are often much more energy efficient, and when the electricity is clean, that brings the additional benefit of emissions reduction. For the non-electrified parts of the energy system, low life-cycle emission hydrocarbons (such as biofuels) and hydrogen can still address the third point.

So what happens in the two scenarios?

Sky 2050 must, by necessity, embrace an energy system leapfrog for developing counties simply to reach net-zero globally by 2050. But despite national security interests prevailing in Archipelagos, broadly the same trend is followed. For the Rising Surfers group in Archipelagos, per capita fossil fuel use never gets to the levels seen in any of the other archetypes due to the growing availability and falling cost of alternative energy technologies. For example, as Rising Surfers develop in Archipelagos:

Coal never dominates the electricity sector as it has in most other developed regions. This is further supported by the high potential for solar energy production that many countries in the Rising Surfers group have.

The use of hydrocarbon fuels for mobility in Rising Surfers will peak far below the Green Dream / Innovation Wins levels.

The buildings sector in Rising Surfers will switch directly from traditional biomass to clean electricity – skipping phases of coal-fired power and gas-fired boilers.

In theory, the transition is possible given the progress in technology and the lower carbon energy options which are becoming available nowadays. Rising Surfers are well positioned in some important ways. For example, Africa, having less than 30% of the global land area, has an estimated 58% of the global resource potential for solar energy. This is a useful contrast with Innovations Wins and Green Dream who have built their wealth on traditional sources of energy. In Sky 2050, by 2100, almost 30% of global direct air capture capacity is located in these countries, potentially generating huge revenue through removals trade under Article 6 of the Paris Agreement. From an energy demand perspective, their climate will eliminate an important portion of heating demand in buildings sectors which is often provided by direct combustion of natural gas. By contrast, air cooling is already an electricity based energy service. Efficiency will grow due to urbanization trends, with over 80% of the Rising Surfers’ population living in cities in the second half of the century (vs. less than half today).

But here will also be barriers. Although some green technologies are cheaper than their fossil fuel counterparts, many are not, or require significant upfront investment. Building an electricity grid that can handle increasing electrification and the intermittency of solar will be a challenge. It will be critical and fair to have mechanisms through which developing countries can be supported in this alternative pathway and the new energy technologies made widely available as quickly as possible. This will be one of the many challenges faced by the G20 when they meet in India. The world’s ambition to reach net zero emissions by 2050 will depend on it.

Note: Shell Scenarios are not predictions or expectations of what will happen, or what will probably happen. They are not expressions of Shell’s strategy, and they are not Shell’s business plan; they are one of the many inputs used by Shell to stretch thinking whilst making decisions. Read more in the Definitions and Cautionary note. Scenarios are informed by data, constructed using models and contain insights from leading experts in the relevant fields. Ultimately, for all readers, scenarios are intended as an aid to making better decisions. They stretch minds, broaden horizons and explore assumptions.

How quickly can a synthetic aviation fuel industry emerge?

dchone May 15, 2023

In late April, the European Parliament and EU Member States reached agreement on new mandates for sustainable aviation fuels through to 2050. Under the final agreement, the percentage of sustainable aviation fuel (SAF) that must be blended with kerosene will start at 2% by 2025, moving to 6% by 2030, 20% by 2035, 34% by 2040, and reaching 70% by 2050. A dedicated sub-target for synthetic fuels derived from green hydrogen will also come into force from 2030. Although the final wording and requirements for these mandates have yet to be released, the headline numbers are clear even if the detail isn’t – starting at 1.2%, the synthetic fuel requirement will be scaled up to 5% by 2035, reaching 35% by 2050.

SAF is going to require a huge effort and should rightly be the immediate focus of attention, largely because of the state of technology and the amount of effort that has gone into preparing the groundwork for a SAF industry. But while the overall SAF target is challenging, given the small quantities produced today, the synthetic fuel mandate looks daunting. In EU parlance, synthetic fuels are renewable liquid and gaseous transport fuels of non-biological origin, meaning liquid or gaseous fuels which are used in the transport sector other than biofuels or biogas, the energy content of which is derived from renewable sources other than biomass. In the aviation industry this presumably means two types of fuel;

Hydrogen as a direct fuel derived from renewable energy sources.
Synthetic kerosene (also known as an e-fuel), produced by combining hydrogen derived from renewable energy sources (via electrolysis of water) and carbon from the atmosphere (via direct air capture or DAC), with the energy required for the capture and final synthesis also coming from renewable sources such as wind and solar PV.

For 2030, hydrogen as a direct fuel is a non-starter given that the planes don’t yet exist and probably won’t do so until 2040 at the earliest, although we might see some small commuter versions before that. So for 2030 and probably 2035, this mandate is really only about e-fuels. The synthesis of such a fuel is discussed in detail in a paper by Kraan et al., An Energy Transition That Relies Only on Technology Leads to a Bet on Solar Fuels, Joule (2019), with the energy schematic they developed shown below. This is to produce one barrel of fuel (5.5 GJ solar fuel on the right of the schematic).

The illustration above presumes feasibility and the availability of a wide range of thechnologies at large scale. In reality, that isn’t the case today. Clearly solar PV and synthesis technologies exist at scale, but Direct Air Capture (DAC) is still to be demonstrated at scale (i.e. 1 million tonnes per annum or more) and hydrogen electrolysis is only just reaching the sort of scale required for synthetic fuel production. As such, the discussion below should be viewed in that context and not just be a question of quickly building the necessary facilities.

In 2023 we can expect EU aviation fuel consumption to be somewhere around 1 million barrels per day, which includes both internal EU demand and international aviation bunkers for flights departing from the EU, for passenger and freight movements. So a 1.2% synthetic fuel mandate means the production of at least 12,000 barrels per day of e-fuel within seven years, or over 4 million barrels (600 kt) produced in 2030.

Jet fuel is mainly carbon in terms of weight, so 600 kt is about 500 kt carbon and 100 kt of hydrogen. This amount of hydrogen (but in practice more is needed) will require multiple 200 MW electrolyser projects, each similar to the project recently announced by Shell in Rotterdam that will produce 60,000 kg per day of green hydrogen, currently Europe’s largest such project. The Shell project will begin operation in 2025 after two years of construction, along with offshore wind capacity built in the Hollandse Kust Noord area.

The 500 kt carbon equates to nearly 2 million tonnes of atmospheric carbon dioxide capture in 2030, which is a scale of capture that doesn’t currently exist in the world. However, Occidental and its subsidiary 1PointFive announced in late 2022 they plan to begin detailed engineering and early site construction for their first large-scale DAC facility with start-up expected in late 2024. Upon completion, the DAC plant will be the world’s largest of its kind and is expected to capture up to 500,000 metric tons of carbon dioxide per year.

However, the provisions of the EU Directive on these types of fuels allows for other sources of CO₂ to be used, but in some cases for a limited time period. Up until 2041 it will be possible to use CO₂ from sources such as industry where allowances have already been surrendered against such emissions. It is also permissible to use the captured CO₂ from the production or the combustion of biofuels, bioliquids or biomass fuels. These provisions mean that an immediate relaince on DAC as a source of carbon for synthetic fuels isn’t required.

Producing sufficient hydrogen and capturing enough carbon dioxide is energy intensive and is just the start. These then must be combined to make the synthetic fuel, which takes even more energy and more hydrogen than the molecular weight of jet fuel points to. For example, a hydrogen based reaction is required to convert the carbon dioxide to carbon monoxide, which is required for the subsequent synthesis reaction. If the facilities designed to do this make use of Fischer-Tropsch technology, jet fuel won’t be the only product. Its yield might be as much as 67% (with the other 33% being lighter and heavier hydrocarbons, but this will require an optimised catalyst), which means that for the above jet fuel requirement the picture becomes more complex and bigger. The required production of synthetic fuels rises to 18,000 barrels per day, of which 12,000 is jet fuel.

The synthesis plants are not simple projects either, although the underlying technology is tried and tested in facilities such as the Shell gas-to-liquids synthesis plant in Qatar. That unit takes natural gas and breaks it down into hydrogen and carbon monoxide (synthesis gas) before recombining these into longer chain hydrocarbon molecules such as for jet fuel. That facility operates on a very large scale, producing some 150,000 barrels per day of product (of which some is suitable for jet fuel use). Building smaller versions is possible, although even the first Shell synthesis pilot plant, built 30 years ago in Malaysia and still operating today, produces 14,700 barrels of oil product per day. Even smaller scale gas-to-liquids is also possible, with Petrobras operating such a unit in a remote location as a pilot for the conversion of associated gas from oil production into useful liquids.

Given the rapid scale up of the synthetic fuel mandate (4x from 2030 to 2035), the sensible approach will be for the EU to build reasonably large from the start. A first facility might be the size of the Shell Malaysia unit (the illustration shows an 18,000 b/d unit but this is still small by global refining standards), but would also require about 3 GW of green hydrogen capacity and three million tonnes per annum of DAC. Apart from the synthesis unit which is arguably smaller than the desirable scale for modern refining, the hydrogen and DAC units are unprecedented in size. However, both hydrogen and DAC are scalable technologies, with the latter currently deployed on a modular basis, and as noted above DAC isn’t an immediate requirement.

Building an 18,000 b/d synthesis facility, 3 GW of hydrogen electrolyser capacity and 3 MT per annum of DAC combined with large scale renewable energy production (say 6 GW of offshore wind) is a formidable project, costing many billion euros and taking years in terms of planning, approvals, financing and construction. Such a project will also stretch the available technologies, given that DAC in particular doesn’t yet operate at scale anywhere. But the EU needs to start at least five such projects over the coming 2-5 years, not just to meet the synthetic fuel mandate of 2030, but also with an eye on the 2035 mandate and beyond.

How might Article 6 work in practice?

dchone October 11, 2019

This is a critical year for Article 6 of the Paris Agreement. The ‘rule book’ wasn’t agreed at COP24 in Katowice, so the focus of negotiations at COP25 in Santiago will largely be on Article 6. This is the section of the Paris Agreement that sets out the framework under which cooperative action can be organised between Parties with a view to achieving their Nationally Determined Contributions (NDC). While cooperative action could take many forms, Article 6 is being negotiated as a carbon trading framework. There are very significant benefits in doing this, as recently shown in new work from the University of Maryland.

There are a number of interpretations of how Article 6 should work, hence the lack of agreement in Katowice, but the text in the Paris Agreement is really very clear. As I recently discussed, the underlying issue is the implication of the rules. A simple illustration helps explain Article 6 and can show why it is so important, why robust accounting is essential and why it can help deliver an overall reduction in global emissions.

In the illustration below, we have three countries (A, B and C) and the aviation sector. They each have a goal of zero emissions, but that is not the current state they find themselves in.

County A still has considerable emissions (100 units) from its heavy industry sector, but with no local abatement opportunities. As such, it is stuck and unable to make further reductions.
Country B has reached zero emissions but has not developed local options to easily sequester carbon dioxide as it has no need to do so.
Country C is undeveloped and has no emissions, but needs to develop energy infrastructure.
The aviation sector still has emissions (200 units) despite efficiency improvements and perhaps some fuel substitution. It has no immediate opportunities for further reductions.

These countries and sector decide to make use of Article 6 of the Paris Agreement to achieve their goals, enhance ambition and achieve further reductions. Investors develop a large scale air capture project in Country B, with geological storage. Emissions for Country B fall to -100, but they transfer units to Country A using Article 6.2 which underpins the original investment. Both A and B adjust their inventories accordingly with each now achieving net-zero emissions.

A similar transaction is executed between Country B and the aviation sector, but this time using afforestation as a natural sink. Country B remains at net-zero emissions as it adjusts its inventory and the aviation sector emissions can now be reported as 100 units. The transfer of nature based units, again using Article 6.2, has delivered real reductions for the sector.

But aviation still needs to take further action and as such encourages project developers to implement an avoided emissions project in Country C using the mechanism under Article 6.4. The project investment delivers reduction units that are then sold to the sector, bringing emissions to net zero. However, because of the need for a corresponding adjustment to their own inventory under the rules of 6.4, Country C now finds itself with 100 units of emissions, despite having no physical emissions in the country itself. This is because of the strict accounting rules of the Paris Agreement that are designed to ensure an eventual net zero outcome.

So in this example, Country C opts for a transfer from Country B under Article 6.2, with Country B further developing its natural sink potential to allow the transfer to take place.

After making all the local reductions that were possible and then utilizing the cooperative trading approaches offered by Article 6, the overall outcome across the countries and the sector is net zero emissions, which aligns with their desired goals.

Article 6 has delivered in many ways;

An overall reduction in global emissions has been achieved, with emissions falling from 300 units to net zero.
Ambition has been enhanced, with the countries and the sector all able to confidently target a net zero emissions outcome instead of stopping short of that goal.
Economic activity across the countries has been enhanced, with jobs and investment resulting from the transfers and project activity. Importantly, no country or the sector has had to reduce its economic output to meet emissions goals.
No double counting has taken place and clear carbon emissions accounting has ensured that the actions are visible to all and pass the critical test of environmental integrity.
Project developers have made use of the capabilities of Article 6.2 and 6.4 and invested with confidence, knowing that the transaction and supporting accounting systems behind Article 6 would deliver a return on their investment, without delay and without withholding of units.
The transaction under 6.4 delivered valuable revenue to another developing country through its share of proceeds provision (Article 6.6).

While the above is a very simplified illustration, it nevertheless shows the importance of the market oriented aspect of Article 6 in delivering the goals of the Paris Agreement. In addition, there is Article 6.8 which will be used to deliver non-market oriented approaches, such as the Kigali Amendment to the Montreal Protocol. With regards the market provisions of Article 6, early and clear implementation of the rule-book, embracing the clear intent of the Paris Agreement as shown above, is the essential next step.

Stock, flow and cobalt. Issues for the EV transition.

dchone July 11, 2018

In Shell’s recently released Sky Scenario, around 1 billion electric passenger vehicles (EVs) could be on the roads as early as the 2040s. These 1 billion vehicles will each need a battery and while there are different battery chemistries available, it is likely that these batteries will need to include the vital element cobalt, a material that confers upon the battery good cycle ability and power output.

The new Tesla Model S has a Nickel-Cobalt-Aluminium Lithium Ion battery which contains just under 5 kg of cobalt, the lowest cobalt content of the various batteries that Tesla use.

While cobalt use per battery has fallen, with one manufacturer releasing information on the possible development of a cobalt free battery, some industry insiders believe that the Tesla Model 3 use of 10% cobalt in the battery cathode (8:1:1 Nickel:Cobalt:Manganese) is the minimum required for safety and battery longevity reasons.

If 8:1:1 were to be the dominant battery chemistry in the coming decades, an interesting dilemma emerges for automakers as they pursue electric vehicle development and rapid deployment. A look at global cobalt reserves, published recently in the BP Statistical Review of World Energy but drawing on data from the US and British Geological Survey, shows a current estimate of some 7 million tonnes, or 7 billion kilograms of cobalt. This is against current global production of 140 thousand tonnes, which has doubled over the last decade, giving a reserve to production ratio of 52 years.

The cumulative amount of cobalt (the stock) needed to be mined for passenger vehicle batteries will depend on the eventual number of cars in service (or batteries produced) and the amount of cobalt per battery. This stock is unrecoverable until cobalt is no longer used in batteries (or until cars transition again to some other propulsion mechanism), but it is reused repeatedly as older cars are scrapped, the cobalt recovered and recycled as new cars are built (the flow).

As the EV transition depicted in Sky gets going, the draw on cobalt increases and the stock builds. For example, by 2040 in Sky, 12.7 trillion vehicle kilometres are supplied by EVs, which could mean about 800 million to a billion vehicles on the basis of current usage patterns. At 4 to 5 kg each, that would require nearly 4 billion kilogrammes of cobalt, or more than half the global reserves. Before 2050 in Sky, the current global reserve of cobalt would be exceeded by EV deployment, without considering all the other demands for cobalt.

The above model assumes 100% recycle of cobalt as well, although this has little early impact in that recycle in 2040 will only come from production of EVs in the 2020s, which is still low compared to the potential 2040 stock. In any case, recycle is largely about annual flow, not stock. But an alternative model could emerge, which would see a much lower stock requirement for cobalt and therefore lessen the need to find alternatives, even with the same demand for passenger transport.

Autonomous vehicles offer the potential for vehicle sharing. If autonomous technology emerges rapidly, then the total number of cars in society can sharply decline under a vehicle sharing model, in that each car is used for a high percentage of the day, rather than parked awaiting the single use by its owner. While an individual car would likely have a much shorter life, say two to three years instead of fifteen, the stock requirement for materials such as cobalt would be much lower.

If by 2040 the number of EVs serving the above 12.7 trillion km demand is 100 million instead of 1 billion, then each vehicle would be driving 127,000 km per annum, leading perhaps to a two-year life after which there is either major refurbishment or even replacement. Annual production, or flow, of vehicles might remain largely unchanged, depending on the ratio of vehicles shared to vehicles owned and the life of a single vehicle under a high usage scenario. Whether the trend is towards refurbishment or replacement, the important materials such as cobalt are recycled and the total stock required by society is a fraction of the traditional ownership model. In a 100 million vehicle system, the required stock of cobalt could be as low as 500 million kilograms, just a fraction of current estimates of global reserves.

The above discussion introduces a new dimension into EV scenario thinking for auto manufacturers. The future might be dictated more by total vehicle stock considerations, in that manufacturers could encourage an alternative ownership model as the more cost-effective route forward to balance the demands on certain materials like cobalt. The alternative requires a continual search for different battery designs or seeking new deposits of hard-to-find minerals.

Note: Scenarios are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Please read the full cautionary note in http://www.shell.com/skyscenario.

Not all roadmaps follow viable roads

dchone April 5, 2017

There is certainly concern in the academic community that the world is following an emissions pathway which will result in overshoot in comparison with the Paris goal to limit warming of the climate system to well below 2°C. Because of this, considerable effort is being expended on developing pathways and roadmaps that may help change that course; but not all are viable. One example emerged recently from a group of researchers representing the Stockholm Resilience Centre, the Royal Swedish Academy of Sciences, the International Institute for Applied Systems Analysis, the Potsdam Institute for Climate Impact Research and the Australian-German Climate and Energy College, School of Earth Sciences, University of Melbourne. This is a distinguished group, without a doubt.

They propose a global decadal roadmap based on a simple heuristic — a ‘carbon law’— of halving gross anthropogenic carbon-dioxide emissions every decade. In addition, they propose an expansion of the renewable energy base by keeping the historical doubling times of around 5.5 years constant in the next three decades. This would yield full decarbonisation in the entire energy sector by ~2040, with coal use ending around 2030–2035 and oil use, 2040–2045. The proposed transition also calls for rapidly scaling up carbon dioxide removal by technical means from zero to at least 0.5 GtCO2/year by 2030, 2.5 by 2040, and 5 by 2050.

While the pathway proposed and its component parts do illustrate the Herculean (their terminology for the period 2020-2030) efforts required to limit warming to 1.5°C, their proposal also stretches past the point of feasibility. This starts with the premise that carbon emissions must halve each decade, which means the biggest effort is required in the first decade. This is the opposite of an outcome that a technology pathway might deliver. For example, some months ago I looked at the theoretical pathway required in the passenger automobile sector to rapidly reduce emissions to near zero in under 40 years [Link]. If this is translated into emissions for that sector, on the basis of each internal combustion engine passenger vehicle doing 10,000 miles per annum and emitting some 4 tonnes of CO2, then the emissions profile would be approximately as given in the chart below (Blue line). The red dotted line represents a halving of emissions each decade, as the ‘carbon-law’ pathway proposes. As manufacturing of electric vehicles scales up in the early years, the impact on emissions is small, but after 2030 when the internal combustion engine vehicle stock begins to fall sharply, the emission reduction accelerates. The biggest drop in emissions is in the decade 2040-2050, not 2020 to 2030 as the ‘carbon law’ dictates.

The second major issue with the proposed roadmap is the notion of doubling of renewable energy capacity every five or so years. While this has been the case in the early years of renewable energy deployment, it will not continue through to full deployment. This is simple to test by considering the last doubling, when renewable energy capacity would need to shift from half its final level of deployment to full deployment in just five years. This would require an extraordinary scale up of manufacturing capacity for wind turbine blades and solar PV cells. But after five years that capacity would then be redundant as no further major deployment of renewable energy would be required. The investors in the manufacturing facilities would be left with stranded assets had the investments been made

While it is certainly the case that initial deployment of new energy technologies can take place at exponential rates, once the technology reaches material deployment (>1% of the energy system), the rate increase begins to decline, although the absolute level of deployment may well continue to rise. This is a typical pathway for growth rates and has been seen at national level, for example in China. The very high annual growth rates of a decade ago have passed, but absolute annual growth is higher today than it was in 2007.

Limiting warming to well below 2°C or even to 1.5°C will certainly require very rapid change in the energy system, but this may still follow historic patterns of deployment, even if the overall rate of change can be accelerated to levels not seen in prior transitions. Those transitions have followed hard to break deployment ‘laws’ that may yet guide the current transition.

What can really be done by 2050?

dchone February 11, 2015

The calls for action are becoming louder and bolder as the weeks continue to countdown towards COP21 in Paris. Perhaps none have been as bold as the recent call by The B Team for governments to commit to a global goal of net-zero greenhouse gas emissions by 2050, and to embed this in the agreement to be signed at COP21 in Paris.

The B Team is a high profile group of business and civil society leaders, counting amongst its number Richard Branson (Virgin Group of Companies), Paul Polman (CEO of Unilever) and Arianna Huffington (Huffington Post). The team is not just looking at climate change, but the even larger challenge of doing business in the 21^st Century; shifting from Plan A which requires business to focus on profit alone, to Plan B which encompasses a more holistic set of objectives around financial performance, sustainability and business as a force for good to help solve challenging social and environmental goals. It is perhaps the next big step forward in what was originally termed “sustainable development”.

Without wanting to question the broader motives of The B Team, I do challenge their view that the climate issue can be resolved in just 35 years. For some this may sound like a long time, but it is the span of just one career. In fact it is the span of my career in the oil and gas industry from when I started work in Geelong Refinery in Australia in 1980. At least in one industry today, IT, everything has changed in that time, but that is not true elsewhere. In 1980 there were no personal computers in Geelong Refinery; today it probably can’t run without them, although the distillers, crackers and oil movement facilities being run by them have hardly changed and in many instances are precisely the same pieces of equipment that were running in 1980. In almost every other industry, the shift has been gradual, perhaps because of the installed base which of course wasn’t an issue for personal computing and mobile telephony. I suspect that this is true in Mr Polman’s own industry (household products) and it is certainly true in Mr Branson’s. In 1980 I flew on my first trip to London on a 747 and today I am in San Francisco, having arrived here on a 747, albeit a slightly longer, more sophisticated, efficient and larger capacity one than the 1980 model, but still a 747 burning many tons of jet fuel to get here. During his time in office which started with the election in 1980, Ronald Reagan replaced the existing Air Force One 707 with a 747 which still flies today but which Mr Obama has just announced will be replaced with a 747-8. Those planes will likely fly for some 30 years, as will all the other planes being built today, with many just entering the beginning of their production runs (787, A350, A380), rather than heading towards the end as we might be with the 747 series. There are also no serious plans for the jet engine to run on anything other than hydrocarbons for the foreseeable future (i.e. 50+ years) and even the attempts to manufacture bio-hydrocarbon jet fuels are still in their commercial infancy.

So why would we think that everything can be different in just 35 years? There is no doubt that to quickly and decisively solve the climate issue and have a better than even chance of keeping the surface temperature rise below 2°C that we need to do this, but that doesn’t mean we can. To start with, there has to be tremendous political will to do so and to be fair, this is clearly what The B Team is trying to foster by making the call. But political will isn’t enough to turn over the installed industrial capacity that we rely on today, let alone replace it with a set of technologies that in some instances don’t exist. The development and deployment of radical new technologies takes decades, with the energy industry able to make that change at about half the rate of the IT industry. Even the latter has needed nearly 50 years to invent (ARPANET in 1969) and extensively deploy the internet.

We are now seeing real progress in the sale of electric cars, but even there the numbers don’t stack up. To completely outpace conventional vehicle manufacture and replace the entire legacy stock of on-road vehicles will take about 50 years, assuming a ramp up of global electric car production of at least 20% p.a. every year until all internal combustion engine manufacturing is phased out. While this might be conceivable for personal transport, the progress on finding an alternative for heavy transport, including ships, is slow.

For medium to heavy industry that relies almost completely on hydrocarbon fuels for high temperature operations in particular, there are no easy alternatives. Electricity could be an option in some instances, but almost all operations today choose coal or natural gas. For smelting, coal is essential as it provides the carbon to act as a reducing agent for the chemical conversion of the ore into a pure metal.

Perhaps the area in which rapid progress will be seen is electricity generation, where a whole range of zero emission technologies exist. These include wind, solar, geothermal, tidal, nuclear and carbon capture and storage. But even with complete success in this one area, we shouldn’t forget that electricity is less than 20% of the current global final energy mix. This will surely rise, but it is unlikely to reach 100% in 35 years given that it has only moved from 11% to 18% the last 35 years.

Shell’s own New Lens Scenarios show that significant progress can be made between now and 2050, but not in terms of a massive reduction in emissions, although that process is clearly underway in the Mountains Scenario by then (see below). Rather, the time to 2050 is largely filled with the early deployment of a range of new energy technologies, which sets the scene for rapid reductions to net-zero emissions over the period 2050-2100. Another critical development for the near-term is a complete global policy framework for carbon pricing. Even assuming big steps are made between now and Paris in even getting this into the agreement, the time for implementation is a factor that must be recognised. With a fast start in Paris, the earliest possible date is 2020 in that this is when the global agreement kicks in, but even the EU ETS took 8 years between initial design and full operation, similarly the CDM alone took over 10 years to fully institutionalize. Expanding full carbon pricing globally in the same period is challenging to say the least.

The aspiration of the B Team is laudable, but not really practical. The Paris agreement should certainly be geared around an end-goal of net-zero emissions but the realistic, albeit still aggressive, time span for this is 80+ years, not 35 years.

Energy reality meets Climate Reality

dchone September 16, 2014

In its enthusiasm to spread the word about the rapid uptake of renewable sources of energy, the Climate Reality Project recently circulated the picture below. It references the amount of wind energy, in particular, that is now being generated in the German State of Schleswig-Holstein.

This is Germany’s northernmost state and borders both the North Sea and the Baltic, so benefits from the windy climate that this geography offers. It is well known as Germany’s windiest area

In recent years and as part of the overall push to generate more renewable energy in Germany, considerable wind energy capacity has been installed in this region. While the current level of generation from wind is laudable, this is far from 100% renewable energy. The actual milestone that the state has reached was more accurately described as follows;

The Northern German coastal State of Schleswig-Holstein will be able to mathematically meet its electricity demand fully with renewable energy sources this year if wind yields reach at least average levels, Robert Habeck, Minister of Energy said when presenting a new study last week (May 2014).

This means that the amount of wind (and solar) electricity generated in Schleswig-Holstein will be equal to total demand, but these may not match in terms of timing. At certain times the state will export surplus wind generated electricity into the grid and at other times it will need to draw from the grid to meet its needs, particularly during periods of little wind. Nevertheless, it is quite an achievement, even though it highlights the need for a substantial backup system for renewable electricity generation.

But there is a second major reality associated with “100% renewable energy” statements. We live in a global economy that is only partly powered by electricity, to the extent that even if this electricity is generated entirely from renewable sources, the percentage of renewable energy in the final energy mix will still be less than 20% (see below). Even in OECD countries where electricity is more widely used, this only rises by a few percentage points.

The largest slice of final energy (i.e. energy that is used by the final consumer for the delivery of an energy service, e.g. mobility) is oil, used mainly for mobility in road vehicles, planes, trains and ships. Natural gas and coal are also very large, used primarily for industrial processes such as steel making, chemical plants and similar. Natural gas is also used extensively throughout the world as a residential fuel for boilers and direct home heating.

Coming back to Schleswig-Holstein, the actual percentage of renewable energy in the final mix is probably higher than most areas, not just because of its renewable electricity production but also because of the availability of biomass from the agricultural sector. In Germany as a whole, even if all the electricity was sourced from renewable energy (but it isn’t) and adding to this the biofuel and waste energy sources, a level of ~27% renewable energy would be reached. For Schleswig-Holstein with its current level of renewable generation, that probably translates to ~30% today.

That’s an impressive feat, but it isn’t 100%.

The hairdryer conundrum

dchone September 8, 2014

Last week the UK media put a lot of effort into reporting on the EU ban on the sale of the most powerful vacuum cleaners and then extended the discussion to possible future action on other high end appliances that consume a lot of energy, such as powerful hair dryers, kettles, toasters and so on. This was also in a week when there was an extraordinary amount of other news to report on as well, ranging from ISIS to celebrity photo leaks, so it wasn’t as if they were short of content. Yet kettles seemingly won the day.

Some media outlets were just outraged at the broader idea of Brussels interfering yet again, but others began a discussion about the effectiveness of the measure, with The Guardian resorting to the headline “Will banning high-powered kettles and hairdryers help climate change efforts?”.

The intention behind the legislation stems from the EU Energy Efficiency Directive, which in turn is part of the 20/20/20 for 2020 package – i.e. 20% reduction in GHGs, 20% renewable energy and 20% improvement in energy efficiency. The package aims to meet a number of energy related policy objectives, but the big three are climate, competitiveness and security of supply.

The Telegraph also reported on the issue and was able to quote EU Energy Commissioner, Günther Oettinger, who said that legislation preventing consumers from buying high-wattage appliances was necessary to fight climate change. To quote;

“We haven’t got round to these devices yet, we want curb power consumption,” he told Bild newspaper. “All EU countries agree that energy efficiency is the most effective method to reduce energy consumption and dependence on imports and to improve the climate. Therefore there needs to be mandatory consumption limits for small electrical appliances.”

Unfortunately it isn’t quite this simple. While using energy more efficiently may well improve EU competitiveness and, provided there is no domestic efficiency driven rebound, might even lower the dependence on imports, the impact on “climate change” will likely be zero. This is because of the “stock” nature of the carbon dioxide problem in the atmosphere and the scale of energy demand globally. Nevertheless, there is the notion expressed by many, that as efficiency effectively drives down local energy use (e.g. in a household or factory), mandating efficiency must be part of the policy mix to reduce global carbon dioxide emissions. Efficiency is a vital part part of economic growth, but it’s relationship to carbon dioxide emissions is much more complex.

I have written about this many times before and perhaps the explanation that I keep returning to as to why people accept the above notion is an examination of the Kaya Identity, which although correct in its presentation of carbon dioxide emissions in the economy leads to a flawed conclusion as to what to do about them. The International Energy Agency (IEA) followed this line of thinking in their 2013 report, Redrawing the Energy-Climate Map. Like many others, they projected what business-as-usual emissions would be by 2020 and then argued that a focus on energy efficiency could reduce this, effectively claiming an emissions reduction. Nevertheless emissions continue to rise. This reasoning appears to show energy efficiency as the most important contributing factor to change, yet in reality the original projection represents a situation that may never have occurred. The economy requires improvements in energy efficiency to drive growth, which is why efficiency is so important, but that doesn’t mean emissions reduce in the sense that the eventual load on the atmosphere is impacted. If energy efficiency really is a route to a lower concentration of carbon dioxide in the atmosphere, then it needs to pass one clear test, i.e. which known fossil fuel resource will be left in the ground (or a proposed extraction project shelved) because of this? Only then are cumulative emissions potentially impacted, which is the real driver of the climate issue.

One unintended consequence of energy efficiency policy can be to exacerbate the emissions problem. In the worst case scenario, an energy efficiency improvement in the power generation supply chain can incentivize the resource holder (e.g. coal mine) to expand the resource base and therefore increase the potential tonnes of carbon that will be released into the atmosphere.

Efficiency mandates have had both positive and negative consequences over time.

In many instances they have spurred innovation, leading to the introduction of new products and also reducing the cost of energy services. Air conditioning is a good example, with innovation spurred by programs such as Japan’s Top Runner approach. But this has also made air conditioning much more affordable and therefore more widely available, which in turn has resulted in enormous demand for airconditioners, more settlement and development in hot arid areas and therefore more energy use. This efficiency drive has offered huge benefits to society, but one of them has not been to help manage the accumulation of carbon dioxide in the atmosphere.
In the USA, the introduction of tough CAFE standards for vehicles in the 1970s and 1980s was partly blamed for the rise of the SUV or light truck. As these were not covered by the standard, they offered a loophole for both the manufacturers and their customers to have larger vehicles without having to invest heavily in new technology to make them more efficient.

The vacuum cleaner mandate is already having a perverse effect. There is a rush to the shops to buy a powerful machine before they vanish, which rather undermines the whole effort . . . . . .

A very different pathway forward

dchone September 11, 2013

During a future energy workshop that I attended recently the audience heard from Professor Jorgen Randers, from the Center for Climate Strategy at the Norwegian Business School. Although Professor Randers has been involved in scenario planning for many years, he introduced his lecture by saying that it was time to just do a realistic forecast of what is “going to happen” and be done with it. He held out little hope for any sort of coordinated global action on emissions, which basically meant that the world would just have to come to terms with its higher atmospheric CO2 future. What was interesting though was the forecast that he then proceeded to give – it certainly wasn’t the runaway apocalypse that some will have us believe we are in for. I should say that Professor Randers earnestly thought we need to do better than this, he just couldn’t see how it might come about.

The forecast he presented is available on his website (www.2052.info). He uses a very small number of key metrics to establish his outlook, but takes a different view on how they might develop. The starting point is population, which he sees reaching a plateau of 8 billion in 2040, at the low end of UN forecasts (but not outside the forecast) . This is because of declining fertility rates as women increasingly move into the workforce and seek careers. As the existing population ages the global death rate increases as well. This population trend is, not surprisingly, a critical assumption for his forecast.

The next key assumption is that global GDP will begin to slow down, linked in part to the population assumption (the number of people in the 15-65 age bracket actually falls after 2035) and a second critical assumption that continuous improvement in labour productivity will eventually end as this metric plateaus (he noted that it has already started to). The result is global GDP also reaching a plateau in the 2050s and beyond. Linked to this is a plateau in consumption which is dampened by the need to spend a non-trivial amount of global GDP on adaptation and reconstruction (coastal cities etc.) as the climate changes and sea levels continue to rise. This latter point is an important self regulating part of the analysis.

Randers then turned his attention to energy use, shown in the chart below. With energy use per unit of GDP (efficiency) continuing its downward trend, global energy use peaks in 2040 and then declines.

The energy mix also changes over the period, with renewable energy coming on strongly, oil use reaching a long plateau around 2020 then declining quite quickly and both coal and natural gas use peaking in the 2030s. As a result CO2 emissions peak in 2030 and decline, dropping 10 billion tpa over the subsequent 20 years.

All of this then feeds through to an eventual plateau in atmospheric CO2 and therefore temperature. Randers clearly recognizes that we shoot through 2°C, but the end point in his forecast is about 3°C, not the much higher levels of 4, 5 or even 6°C that some are concerned about. In effect, this is now a self regulating system, albeit one that has to deal with significant changes in sea level and other impacts.

There was no attempt to endorse any of this, quite the opposite. Randers also noted that some of his assumptions are seen as politically or socially unacceptable, such as the declining birthrate and an eventual plateau in GDP. As such, the forecast itself becomes something of a political hot potato.

Whether he is right or wrong isn’t really the point, what is interesting about the analysis is that some very small changes in basic assumptions can have a profound effect on the outcome. Pretty much anybody that has constructed even the simplest spreadsheet with built in growth rates recognizes this, but I hadn’t seen it applied in this manner before. Even though they may be outside our normal expectation, all of his assumptions fall within the bounds of credibility, so the forecast is essentially a valid one. A 3°C world is far from where we are today, but it is useful to recognize that our global climate / economic system is now essentially a single entity and that there may be an outcome which is very different to the alternate vision of “meltdown”.

The Burning Question: A review

dchone May 31, 2013

There are many books and thousands of reports on climate change, carbon economics, energy transformation and the like, but few encapsulate the issue as well as a recently released book by Mike Berners-Lee and Duncan Clark, The Burning Question. Judging by the recommendation on the cover, even Al Gore liked it.

Rather than speculate on the potential severity of climate events or try to convince readers that simple changes in consumer behaviour and green, job creating investment will solve everything, the book takes a thought provoking but dispassionate look at the global energy system. The authors discuss the role of fossil fuels and the carbon emission limits that we know we should meet and set out to explain the rock and the hard place that we find ourselves between. The rock in this case is the trillion tonne of carbon limit for cumulative emissions over time and the hard place is the abundance of fossil fuels, the rate at which we use them and the relative ease with which more becomes available as demand rises.

Berners-Lee and Clark present a compelling set of stories which show how fossil fuels dominate the global energy market, why it is proving almost impossible to displace them (on a global basis) and why strategies such as improving energy efficiency and deploying renewables are not effective approaches to try and limit global emissions. In fact they make the point that in some instances the reverse happens – emissions just rise faster.

The tag line on the cover includes the teaser “So how do we quit?” (using fossil fuels). Do they really know? As the book unfolds and the problem they describe mounts in both complexity and difficulty, there is almost the feeling of a thrilling ending around the corner. SPOILER ALERT. Sadly this is not quite the case, but they do give some useful advice for policy makers trying to get to grips with the issue and the book itself gives the reader a very different perspective on the energy-climate conundrum (although hopefully one that the readers of this blog have picked up over time, but here it is all in one book).

I assume that for similar reasons to my own line of thinking (but after beating around the bush about it for 181 pages) they do finally land on a key thought:

In the course of writing this book we have come to think that the most undervalued technology in terms of unlocking international progress on climate change is carbon capture – both traditional CCS for point sources such as power plants and more futuristic ambient air capture technologies for taking carbon directly out of the atmosphere.

It would appear that The Inconvenient Truth and CCS are indeed inextricably linked. Clark and Berners-Lee don’t go so far as to argue that CCS is the convenient answer, but the message on CCS is a strong one. Nevertheless, geoengineering makes a surprise entrance at the end!!

Overall, this is an excellent discussion which is both easy to ready and hugely informative. It is well worth putting it on the summer reading list.