Category: Low carbon economy

A new era for aviation?

dchone October 9, 2017

The pressure to reduce carbon dioxide emissions and the prospect of a world running largely on renewable electricity has sent research and development teams in every sector back to their respective drawing boards to look at options that might exist for electrification. Perhaps the most challenging sector is aviation, where liquid hydrocarbon fuels are the only form of energy carrier available (mainly of fossil origin, but with some bio-origin fuels now appearing). The dependency on hydrocarbons is due to their high energy density and the challenge with fuel to weight ratio that planes have. However, fuel costs can represent up to 70% of total costs for an airline, so the business model tends to focus on efficiency as a primary consideration. Efficiency isn’t just about the plane itself, but about maximising passenger load, minimising extraneous weight, limiting taxiing and air traffic delays, using electricity for power at departure gates and optimising routes.

In the light of all the above, the idea of electrification in aviation is tantalizing, but there is little sight of this happening. At one end of the spectrum there is the prospect of single person electric drone taxis for short hops in cities, but after that there is nothing, until last week. EasyJet, in conjunction with the startup, Wright Electric, announced that they hoped to be flying a short-haul battery electric passenger plane within a decade.

The concept illustration looks impressive, but is this really feasible? Battery energy density is a key determinant and it is moving rapidly in the right direction. The energy density difference between the traditional Lead-Acid battery, still the standard for starting most cars and the best lithium based batteries is nearing a factor of 10, but lithium based batteries are still a long way from Jet A1 fuel as shown in the table below. The difference in energy density on a weight basis is around twenty times, in favour of Jet A1.

	Jet A1	Current Li-Ion Battery	Emerging Li-Metal batteries
Energy MJ/kilogram	42.8	~0.7	1.8
Energy MJ/litre	37.4	~2.0	4.3

Like an electric car, the efficiency of a battery electric aeroplane would be significantly higher than the combustion engine equivalent, although the starting point for a modern jet engine already exceeds that of vehicles. The chart below (IPCC Report on Aviation 1999, chart from 1991) shows that overall efficiency of jet aircraft falls in the range 20-40%, but significant improvements have been made since then. A modern Boeing 787 would show an overall efficiency approaching 50% on the same chart.

Even with near 100% efficiency for the battery electric aeroplane, the energy density of Jet A1 still gives that fuel a factor of ten advantage. As such, it will be distance that suffers, given there is a weight restriction for aeroplanes.

I am a regular traveler out of London City Airport and often see the Embraer 190 plane, which is similar in size to the easyJet concept photograph distributed with their announcement. But the Embraer 190 has a range of over 4,500 km, so one tenth of this gets near to the 335 mile range goal mentioned by easyJet, ideal for the flight I often take from London City to Rotterdam. So on paper, this would appear to work, but a plane with a range limit of a few hundred miles might significantly restrict the operational flexibility that airlines enjoy; for example, it couldn’t be swapped at short notice for a London City to Rome flight, should that be necessary.

Battery electric planes also bring with them a particular design change – apart from the obvious. Currently, planes land some 20% lighter than they take off, as they burn the fuel. With battery electric planes, they will land heavier than they take off, because the discharge of the battery means oxidation, meaning it gains mass. This will require very different landing gear.

Another facet of the EasyJet announcement is the desire to see these planes carrying passengers within 10 years. Given that the plane is concept only and doesn’t come from an existing family of similar planes, this may be ambitious. The 787 Dreamliner was announced in concept by Boeing in early 2003, finally receiving certification in late 2011. That’s nearly nine years for what is essentially a new version of an existing product, albeit with some significant changes such as the use of carbon fibre in the fuselage. But the 787 then had problems with its battery system for on-board electronics, leading to a temporary grounding and eventual regular flights from April 2013.

The 787 was not Boeing’s first attempt at a new aircraft following the 777 series. In the late 1990s it started development of the Sonic Cruiser, releasing a concept proposal in March 2001. With aviation business models changing rapidly at that time, Boeing abandoned this concept and instead moved to the 787, but this evolutionary process still consumed valuable design years. At least from one perspective, it could be argued that the 787 took over 13 years to go from concept to regular use.

The Wright Electric concept represents a revolutionary change in aircraft design and propulsion, so there is every chance that this may take longer than anticipated to get going. It will require extensive certification and testing by airlines, airports and the aviation authorities and may go through more than one design iteration, depending in part on the evolution of battery technology and the resultant changes in energy to weight and volume ratios. The story of the Mitsubishi Regional Jet is outlined here, and is a saga of changes and delays spanning 17 years. It is a conventional jet aircraft, but represents a first for Mitsubishi for a very long time.

A further ambitious aspect of this project is the notion that a start-up can take on the likes of Boeing and Airbus and find the necessary investors to back what is typically a multi-billion dollar investment in design, engineering, prototype development, manufacturing, testing and certification of a new aeroplane.

Behind all this is the pressing need for electrification across society, so this type of thinking and risk taking is essential. The question that remains though, is whether I will be able to ride in such a plane from London City Airport before 2030.

The battery that made headlines

dchone July 14, 2017

It is hard to imagine that something as mundane as a battery could make national headlines, but that is what happened last week in Australia. I was there for a family visit and as much as climate science gets debated in the media (see my previous post), it barely rates against the energy debate that has dominated the Australian headlines in recent months. The issue is the cost of electricity and the reliability of supply, both of which continue to be contentious subjects.

The cost of electricity has risen sharply in Australia over the last two years, but this has been coupled with supply problems that have led to blackouts in some parts of the country. This has been most visible in South Australia, which has closed all its coal fired power plants and invested heavily in renewable energy. The result is a wind / solar / natural gas power mix, backed up by an inter-connector with Victoria. For the most part this has been a workable solution, but when particular conditions coincide the result can mean blackouts or load shedding by some industrial customers. This usually involves periods of high load coinciding with low renewable energy availability at a time when some other part of the network is under stress, e.g. supply from the inter-connector. The problem is that this has happened enough times to become a major issue, leading to extensive media coverage, finger pointing and public outcry.

The reporting around this issue can be likened to the climate science debate I discussed in my last post – i.e. overly prone to hyperbole and lacking in basic facts. The solution that has been proposed for South Australia is the rapid construction of battery storage and into this foray stepped Elon Musk (CEO of Tesla). Some months ago, after power supply problems in South Australia hit the headlines yet again, he made the offer to build a major Lithium-Ion storage facility in 100 days, with no payment required if construction was delayed beyond that period. Not surprisingly this galvanized the government and led to a public tender for such a facility.

Last week the South Australia government announced that Tesla had won a tender to build a grid scale battery. The project will incorporate a 100MW peak output battery with 129 megawatt hours of storage alongside an existing windfarm, near Jamestown. Elon Musk flew into Adelaide for the announcement, which added to the fervour. What was interesting was the reaction in the media, ranging from support bordering on adulation to downright condemnation. Contrast the July 9^th Sun-Herald, where their social commentator Peter Fitzsimons noted;

Oh, how sweet it is. After all the haters, all the pile-ons, all the craven dinosaur politics which maintains that coal really does have a future, the SA government shimmies, shakes, steps left, steps right, bursts through into clear and announces its lithium battery deal.

. . . with political commentator Tim Blair in the Daily Telegraph on July 10^th, who starts a near full page article with the headlines;

Charge of the left brigade – People are falling over themselves to fawn over magic man Elon Musk’s battery absurdity but he is just the latest saviour to get the green light from eco worriers.

Neither are energy commentators of any note, but such is state of the energy transition debate in Australia that this doesn’t seem to matter. The controversy highlights the need for clear policy and thoughtful steps forward in implementing an energy transition, irrespective of the reasons driving such a transition, be they climate change, energy costs, local air quality or some combination of these and other needs.

In the case of South Australia, exuberance and some technology bias led to a rapid shift in the electricity system to a point where stability became a problem, which will now take some time to correct. The battery solution isn’t a full solution at all, but one of several measures that will be required to correct the imbalance that has been created. Alongside the Musk excitement, there was also the recent announcement that the government will build additional gas fired generation capacity at a cost of over A$300 million.

The South Australian electricity system operates at around 2-3 GW, with peaks and troughs depending on the time of day and year. Annual demand is some 14,400 GWh, or about 40,000 MWh per day. The initial battery capacity is 129 MWh. The gas capacity can add over 5,000 MWh per day if it operates continuously, or 13% of the demand. While the battery commanded all the headlines, it is clearly not a solution for extended periods of high demand or reduced supply, given that it can hold only 5 minutes of South Australian demand. However, it is an important step in the quest for a more balanced system that has very high levels (often >70%) of intermittent renewable energy. Further battery systems are likely, but a better balance between natural gas and renewable energy would appear to be the more achievable outcome in the short to medium term. It is also likely to be the more cost efficient outcome, given the ~A$100 million investment required (according to a local private source) for what will be the largest Lithium-Ion battery system in the world.

Drawdown, or not?

dchone June 14, 2017

A recent book and associated website discusses the steps necessary to address and even reverse the current warming of the climate system. The project, known as Drawdown, maps, measures, models, and describes the 100 most substantive solutions to global warming. For each solution, the Drawdown team describe its history, the carbon impact it provides, the relative cost and savings, the path to adoption, and how it works. Drawdown is that point in time when the concentration of greenhouse gases in the atmosphere begins to decline on a year-to-year basis.

Atmospheric carbon dioxide would likely stabilize before the world stops emitting (on a net basis) carbon dioxide from anthropogenic sources. This is because of the action of the oceans and the lag in carbon dioxide uptake that they exhibit. Net carbon dioxide emissions of 6-10 Gt per annum (currently 40 Gt per annum) are possible while atmospheric carbon dioxide plateaus, but emissions must eventually head to net-zero to see atmospheric carbon dioxide fall and for that trend to continue. Even then, the fall will be very slow given the quantity of carbon dioxide in the atmosphere and the rate at which the ocean can absorb it, at least until the surface layers are largely saturated. Further processes which involve fixing the carbon in ocean sediment and absorbing it through mineralization will play out over thousands of years.

‘Drawdown’ is a comprehensive piece of work and covers not just energy solutions such as replacing fossil fuel use with renewables, but also includes social changes such as the need for educating girls in developing countries. Education is linked to infant mortality, birth rates and therefore long term population trends, which in turn impacts energy use and therefore emissions. Within the website is a listing of the approaches, starting with Refrigerant Management at the top of the list. A change in this area is claimed to be the equivalent of 90 Gt CO2, but this is a more complex story as refrigerants are, for the most part, short lived climate pollutants (SLCP). I discussed this in a post last October, shortly after the Parties to the Montreal Protocol had agreed the Kigali Amendment which covers these refrigerants.

While the list covers areas such as electricity generation, land use change and transport, it has very little to offer for industrial processes, but seems to rely on them completely to deliver systemic change. Building wind turbines, developing mass transit, deploying nuclear power stations, manufacturing insulation and automating buildings will require large scale manufacturing and significant production of chemicals and materials. Today, these activities alone account for some 8 Gt of global carbon dioxide emissions, or nearly the same as transport. New activities such as building hundreds of TWhrs of battery storage are likely to exacerbate these emissions. Included within this there are significant emissions from the processes themselves, such as the carbon dioxide from the reduction of iron ore to make iron / steel and the calcination of limestone to make cement.

These activities are amongst the most difficult to decarbonise and lead to the need for carbon capture and storage (CCS). Capturing and geologically storing the emissions from cement manufacture may be far simpler than trying to find substitutes, developing alternative process routes or trying to offset the emissions through reforestation. The one hundred solutions offered on the Drawdown website make no specific mention of geological storage of carbon dioxide, yet venture into areas such as air capture of carbon dioxide. While the latter may provide a useful conduit towards synthetic fuels, it will make no difference at all to atmospheric carbon dioxide if there isn’t large scale storage involved.

‘Drawdown’ is an interesting piece of work, but it doesn’t tackle the real challenge associated with net-zero emissions, let alone actual drawdown of carbon from the atmosphere. These issues are tackled with much greater rigour in the recent Shell publication ‘A Better Life With a Healthy Planet: Pathways to Net-Zero Emissions’ and in my forthcoming book ‘Putting the Genie Back: Solving the Climate and Energy Dilemma’.

The USA and the Paris Agreement

dchone May 4, 2017

On April 26th the Washington DC based Center for Climate and Energy Solutions (C2ES) sent a letter to US President Donald Trump urging continued US participation in and support of the Paris Agreement. Shell was one of thirteen signatory companies. The arguments offered in the letter provided a perspective on the benefits that continued participation in the Agreement could bring to the business community in the United States, in the form of investment opportunity, cost minimization and risk management.

While these business benefits also translate into a benefit for the United States as a whole, the letter was not particularly specific on this matter. Benefits at a national level can be difficult to assess, but it is worth looking at these to get a full picture of where the Paris Agreement might take the US economy over the decades to come.

At its core, the Paris Agreement calls for a global shift to net-zero emissions of greenhouse gases, with carbon dioxide being the critical component of this given the scale and its accumulation in the atmosphere. The earlier net-zero emissions of carbon dioxide is reached, the lower the warming of the climate system is likely to be. That journey will require a major transition of the energy system, from one that emits carbon dioxide to one that doesn’t. This will require three core elements that have largely driven the economy of the United States over the last 150 years;

Innovation – the US has excelled in this area when challenged to do so, from the development of the first electricity grids by companies such as Edison Illuminating Company in the 1880s, through the moon landing in 1969 and the more recent landing of the Space X rocket on an ocean platform after launching a satellite into orbit. In the energy sector, this has included developments such as hydraulic fracturing (which enabled the rapid shift from coal to gas in the power sector), energy storage technologies, digital energy management and distributed energy systems. Particularly in the case of the USA, diverse, state level energy systems enable the unique ability to experiment with market and policy innovations on a smaller, sub-national scale.
Trade – the US is a trading nation and this is likely to be at the core of the implementation of the Paris Agreement. A world of net-zero emissions is not going to be a world of no emissions, but as the Agreement notes it will be one of balancing emission sources and sinks. Some form of trading, operating at significant scale, will be required to match these two parts. Significant trade will also arise from energy system deployment.
Scale-up – perhaps more than any other aspect of industrialization, the US has demonstrated time and again its ability to rapidly scale the solutions that innovation opens up. It has done this more recently with hydraulic fracturing for natural gas and now oil production, but during WWII the optimization and scale-up of various manufacturing disciplines led to Liberty Ship construction at the rate of three vessels per day. Today, we are seeing scale-up again with the construction of the Tesla Gigafactory in Nevada. More will doubtless follow.

A world heading towards net-zero emissions is one that the USA has the potential to thrive in;

It has vast natural resources, which almost certainly includes very significant geological storage capacity for carbon dioxide. That means the USA could position itself as a net-negative emissions economy, effectively selling stored carbon dioxide as an export. This would encompass its capacity for trade and scale-up in particular, as much of the innovation has already taken place, notably in the USA.
American innovation in the energy sector is well known, from the speedy development of nuclear power in the 1950s to the current rush towards ultra-low-cost solar PV and battery storage. Several start-ups are working new angles on nuclear fusion, an entrepreneurial approach to energy development that is hardly contemplated anywhere else in the world.
The USA is moving rapidly to become a major exporter of natural gas as LNG, a development that wasn’t even on the horizon just a decade ago. Natural gas demand could increase with energy consumers and national governments looking to reduce emissions, thereby offering the USA the opportunity to be a leader in the LNG space.
The US is the leading global developer of carbon capture, with more projects than any other country thanks to its sizable enhanced oil recovery industry. It has a mature and expanding carbon dioxide pipeline system, a key infrastructure requirement for the full development of CCS.

While none of the above specifically required the Paris Agreement as the enabler, there is equally no doubt that the UNFCCC process, fraught as it may sometimes appear, has catalyzed change in the energy sector over many years. For example, it has brought additional focus to renewable energy development, raised the profile of CCS and helped companies such as Tesla gain valuable traction as EV proponents.

The Paris Agreement has sharpened the emphasis on energy transition, along with other economic signals and drivers that continue to push the global economy forward. While the Agreement would continue without US involvement, the focus would be blunted to some extent, thereby weakening the global economic signal coming from it. With innovation, trade and scaled deployment at the core of the Agreement, those countries which excel in these areas, of which the USA is pre-eminent, may miss new growth opportunities.

Making the most of hydrogen

dchone February 24, 2017

As hydrogen refueling stations begin to appear, including one from Shell opening near London, Toyota makes its Mirai hydrogen fuel cell vehicle more widely available and iron ore smelters even look to hydrogen as an alternative reducing agent (rather than coal) that doesn’t involve carbon, it would appear that this important energy carrier is beginning to show its potential.

The final energy (i.e. energy we use) mix in use today is less than 20% electricity, in large part dictated by the need to transport, store and use energy well away and disconnected from the point of production. Vehicles are a common example of this, with the requirement to power them on the move. While electricity storage is coming of age with batteries, hydrogen offers an alternative route forward that provides much of the flexibility we have come to rely upon with liquid fuels.

Hydrogen also offers the possibility of providing intense heat very quickly in a confined area, such as required by various industrial processes. For these reasons, and as society looks to shift away from direct use of fossil fuels for the purpose of carbon dioxide mitigation or simply needs to augment the energy system with other carriers, hydrogen shouldn’t be ignored.

Hydrogen production comes via three routes. The first is as a by-product from some industrial processes (e.g. chlorine manufacture). When I first started work in a Shell refinery I was assigned to follow the operation of the platformer, a unit which increases the octane number of naphtha by creating cyclic ring compounds (aromatics). These have a lower hydrogen content than straight chain molecules, so hydrogen is a byproduct. For the most part this source of hydrogen is in full use, either within other processes in refineries or in neighbouring facilities.

The second is steam reforming of natural gas, which produces hydrogen and carbon dioxide. Most industrial hydrogen in the world today is produced via this route. The carbon dioxide is relatively pure and can be used or captured and stored, making the process very carbon efficient. In the Shell refinery in the Netherlands some carbon dioxide from its hydrogen manufacturing unit is sold to local greenhouses to provide the enhanced growing conditions that they need. In Alberta, Canada, one million tonnes per annum of carbon dioxide from the Shell Scotford Refinery hydrogen unit is captured and geologically stored.

Finally, hydrogen can be produced by electrolysis of water, an experiment almost everybody has done in chemistry class at school. This route has renewable energy enthusiasts very excited as it can provide a ready use of electricity when wind and solar production exceeds demand, a situation many grids may face as renewable energy penetration reaches very high levels. But this process suffers from a relatively low efficiency, with only a few percent of global hydrogen being produced via this route. Generating hydrogen by electrolysis is only (optimally) about 60% efficient and the use of this hydrogen in a car is (optimally) also only about 60% efficient, so two thirds of the energy input is lost. This can be improved to some extent if heat recovery methods are employed.

The economics of the electrolysis route can be difficult, particularly if it relies on renewable energy surpluses, which won’t always be available. That would leave the electrolyzer idle or having to use purpose generated electricity. Further, most current electrolyzers vent the oxygen that is made, which is effectively waste energy and explains why the process can only be 60% efficient if hydrogen is the only product being made.

The global oxygen industry is very large; today it is around 500+ million tonnes per annum, with the metallurgical industry being the largest consumer. Oxygen is typically manufactured by cryogenic distillation of air. In the context of a hydrogen economy based on electrolysis rather than steam reforming of natural gas, oxygen production would be significant. According to Toyota, the Mirai consumes 0.76 kg H2 per 100 km. Using these numbers as a basis, a 200 million vehicle hydrogen fuel cell fleet might consume 23 million tonnes of hydrogen per annum, which when produced by electrolysis would also generate around 180 million tonnes of oxygen, or around one third of the current demand. This of course presumes it can be efficiently captured and transported.

Significant production of oxygen may also benefit another facet of an energy system striving for net-zero emissions. Biomass could be used for power generation, but in an oxygen combustion system (i.e. combusting the biomass with pure oxygen rather than with air which is 79% nitrogen). This means that the waste gas would be mainly carbon dioxide, which in turn would lead to easier capture and storage. This could then be an important negative emission technology in the net-zero sum for the economy as a whole.

The hydrogen economy offers many new opportunities and it is good to see that it is starting to move forward. The Shell hydrogen refueling station that opened in Cobham, uses an on-site electrolyzer to produce its hydrogen, with the electricity coming from a certified green source. It is the first of three hydrogen stations Shell plans to open in the UK in 2017.

Being a climate change adviser

dchone September 6, 2016

Shell is often cited in climate change discussions, sometimes disparagingly simply because it is an oil and gas company, but increasingly as a company that has recognised that major changes in both the provision and use of energy across the globe will be needed to both meet demand and significantly reduce greenhouse gas emissions. Following from the Paris Agreement, it is hard to see how this won’t be the case. The leadership in Shell regarding climate change has always come from the top. The first major steps were taken in the period 1997 to 2001 when the foundations for change were established by former Chairman Sir Mark Moody-Stuart. He catalysed the necessary focus on the climate issue and had the foresight to establish a carbon trading desk within Shell Trading, just as the Clean Development Mechanism and the EU Emissions Trading system were in their early design stages. In 2005, then CEO Jeroen van der Veer created our CO2 team and gave it high visibility within the company. This eventually led to developments such as the Quest carbon capture and storage project in Canada. Today, we have a new energies business starting up. Our current CEO Ben van Beurden has also championed our position on issues such as government implemented carbon pricing and Shell has recently published scenario thinking on a net-zero emissions energy system of the future.

Within this journey of change, one question I am often asked is how I came into my job in Shell as Chief Climate Change Adviser and what it is like to perform such a role in the oil and gas industry. Some think that I might be a climate scientist, others picture the role as something of a fig leaf. In reality, neither is the case.

I started in Shell like many others, as a chemical engineering graduate in one of the 30+ refineries that Shell had back in 1980. The year in which I interviewed was one where all new chemical engineers were spoilt for choice – graduating classes had shrunk and demand was booming. But Shell offered a great value proposition – a global company with the very real prospect of a global career. My job offer was as a technologist in Geelong Refinery, a ~100,000 bbl/day facility just outside the city of Geelong, Australia and some 70 kms south-west of Melbourne. It was a complex refinery, with reforming, cracking, lube oil manufacturing, chemicals and various hydrotreating units. In the subsequent decade in the Downstream business I also worked in the global offices in The Hague and at Clyde Refinery in Sydney. Towards the end of this time I moved into the supply side of refining where the crude oil purchasing and refinery operating mode decisions are made based in part on linear programme models of the operation and the market it faces. This in turn led me to Shell Trading in London where I spent a decade trading Middle East crudes and managing the chartering of all the crude oil shipping that Shell required. Trading and shipping are at the very core of Shell, not just in terms of its operation as an oil and gas company, but in its DNA as well. After all, only a few hundred metres from where I live today, Marcus Samuel started his own trading business by procuring shells from sailors in the Port of London and making trinkets for people to buy when they visited English seaside towns such as Brighton and Torquay. This tiny enterprise, along with a similar entrepreneurial company in the Netherlands, eventually became the Royal Dutch Shell plc of today.

So twenty years after graduating I found myself with a solid background in what the company did, how the economics of the industry worked and perhaps most importantly how a critical component of the global energy system actually operated. What should I do with this expertise? I had my eye on the various functions in the Corporate Centre of the company and one in particular came up in mid-2001 which looked interesting. It was the role of Group Climate Change Adviser, a relatively new position that Shell had created in 1998 as it took its first steps to manage the business risk presented by climate change. In my interview for the position, my soon to be boss was pleased to meet someone who had worked in the refining business and had a good knowledge of the energy markets and trading. Even then it was clear that the development of policy would involve markets, and pricing, and present a real challenge to the incumbent businesses.

Like most in the company, I had imagined that this would be another 3-4 year assignment, but 16 years later I remain immersed in the climate change issue at Shell, although the role I originally took and the one I have now are worlds apart. Much has happened in that time externally, culminating in the Paris Agreement last December; internally the journey for the company has similarly progressed, although not without some tough questions along the way. Being part of all this over such a long period has been rewarding, a huge privilege and very challenging. It perhaps isn’t where I expected my career to go, but I can only look back and say that I am glad that it did. Some may think that a large corporation means a very restrictive and bureaucracy bound office life, but this is far from reality. I have a broad mandate and considerable freedom to engage externally on climate change, to publish my thinking on the issues that the world faces as it strives to manage emissions, but also to take all this back to colleagues within the company and challenge them as they try to run their businesses. Over time, I have also had considerable opportunity for travel, which has included every continent (yes, Antarctica as well) and over 30 countries.

From time to time, people considering a career in environmental management ask me where they should start and what steps they might take. I almost never recommend that they start in an environmental role. Rather, building real experience developing new projects, troubleshooting problems in existing facilities and understanding the economics of the energy industry is my steer. My own experience has led me to believe that such a grounding is essential in tackling major issues such as climate change. As a new graduate considering an energy career, these are the sorts of jobs that a company such as Shell will most likely offer. My advice would be to take one, and then look towards the longer journey of change.

Do we focus too much on electricity?

dchone July 28, 2016

A recent article posted on the GreenMoney e-jounal site argues that society is moving rapidly into a period of structural (and possibly abrupt) decline in fossil fuel use. The story, like many which argue along similar lines, draws on the current upward trend in renewable electricity deployment, noting that “Renewable energies have become too economically competitive for fossil fuels to contend with . . . “.

While this may be true at the margin when generating electricity, what does it mean for the energy system as a whole? Oil, gas and coal make up 80% of primary energy use (Source: IEA World Balance 2013), although it is often argued that this isn’t a representative picture as a significant percentage of the energy in fossil fuels is wasted as heat loss in power plants, which wouldn’t be the case for a technology such as solar PV. However, moving past primary energy and looking instead at final energy (i.e. the energy which we use to generate energy services such as mobility – so gasoline is a final energy whereas crude oil is primary energy) we see that oil products, natural gas and fuels such as metallurgical coal still make up two thirds of energy use, with electricity and heat comprising just over 20% of the mix. The balance is biofuels (comprising liquid fuels and direct use of biomass) and waste (IEA Sankey Chart for 2013).

Today electricity is generated primarily from coal and natural gas, with nuclear and hydroelectricity making up most of the difference. In 2014 the world generated 23,536 TWhrs of electricity, of which wind was 706 TWhrs (3%) and solar 185 TWhrs (<1%). Wind grew at 10% and solar at nearly 40% compared to the previous year (Source: BP Statistical Review of World Energy). This contrasts with an overall growth in electricity generation of 1.5% per annum. It is certainly possible to imagine a world in which solar and wind grow to dominate electricity production, but then we also need to imagine a world in which electricity grows to become the dominant final energy for renewables to dominate the energy system overall.

This is one of the key subjects that is dealt with in a recent Shell publication that I have worked on during this year; A Better Life With a Healthy Planet – Pathways to Net-Zero Emissions. For me, the most telling outcome of the scenario analysis and energy system modelling work behind the publication was that even in the latter part of the century when a net-zero carbon dioxide emissions state might be reached, electricity still only makes up ~50% of final energy. This means that 50% of final energy is something else!

The scenario presented shows a world that still requires several types of final energy to meet its needs. For example, liquid hydrocarbons still dominate in shipping and aviation, even as road passenger transport is hardly serviced by hydrocarbons at all. For road freight transport, a three way split has emerged between electricity, hydrocarbons and hydrogen.

Industry remains a large user of thermal fuels throughout the century, with key processes such as cement, chemicals and metallurgical process all dependent on their use for the foreseeable future. Electrification makes significant inroads to other types of industry, but this is far from universal. Hydrogen is a potential thermal fuel of the future, but processes might have to be modified significantly to make use of it. For example, it is possible for hydrogen to act as the reducing agent in iron smelting, but today this is a pilot plant scale research project.

Even the manufacture of hydrogen might take two routes, with competition through efficiency and cost determining the eventual winner. The first is the conversion of natural gas to make hydrogen, with the resulting carbon dioxide captured and geologically stored. Alternatively, hydrogen can be produced by electrolysis of water with renewable energy providing the necessary electricity.

Of course the continued use of fossil fuels to meet the needs of hydrocarbons in transport, industry and even power generation means extensive deployment of carbon capture and storage (CCS).

Meeting the aim of the Paris Agreement and achieving a balance between anthropogenic emission sources and sinks (i.e. net zero emissions) is a complex challenge and not one that can necessarily be serviced by wind and solar, or for that matter electricity, alone. Rather, we potentially end up with a more diverse energy system, much larger in scale than today, with a set of new processes (CCS), new industries (hydrogen based) and new sources (solar PV).

The UK 5th Carbon Budget

dchone July 7, 2016

In amongst the excitement created by the Brexit vote, on 30th June 2016 the UK Government met its statutory requirement and announced the details of the 5^th Carbon Budget which covers the period 2028-2032. The Government followed the recommendation of the Climate Change Committee and advised that the carbon budget for the 2028–2032 budgetary period is 1,725,000,000 tonnes of carbon dioxide equivalent. This assumes 590 MtCO2e covered by the EU ETS and subject to its carbon price and a nontraded share of 1,135 MtCO2e (excluding international shipping emissions). The overall budget represents a reduction of 56.9% below the 1990 baseline.

The UK is unique in the world with its carbon budget approach. This is the result of far reaching legislation enacted back in 2008 in the form of the Climate Change Act which requires the UK Government to establish a specific carbon budget for successive future periods. To date the UK is on track towards meeting the 2^nd Carbon budget, as described in a recently released summary of greenhouse gas emissions which covers the period up to the end of 2014. But the journey has been relatively easy so far. With the continued shift to natural gas and away from coal, the arrival of wind and to a lesser extent solar, the 2008-2009 recession and the higher cost of oil and gas in recent years driving real efficiency and demand reduction, UK emissions have fallen.

In 1990 UK CO2 emissions per kWhr of electricity generation were 672 grams, whereas today they are around 450 grams. As a result, emissions from power generation have fallen, even with current electricity demand higher than the 1990 level. By contrast, road transport emissions have remained about flat for 25 years although there has been a marked shift from gasoline to diesel. Another significant reduction has come from industry, but much of this is due to an overall reduction in heavy industry (steel making, refineries), in favour of services (media and finance) and high technology industry (e.g. aerospace).

With a large natural gas base and a diminished heavy industry sector, has the UK now reached an interim floor in terms of national greenhouse gas emissions? While there are still gains to be made in the electricity sector, future progress towards the goals of the 3^rd, 4^th and 5^th Carbon Budgets will require additional action in other parts of the economy.

The 5^th Carbon Budget requires nearly another 200 Mt per annum of reductions across the UK, compared to the 2^nd Carbon Budget period that we are currently in. Even with Hinkley Point nuclear and an ambitious renewables programme (which is reported as being off track http://www.bbc.com/news/science-environment-36710290 ), it is unlikely that power generation emissions would fall more than 100 MT per annum. A 200-250 gram per KWh goal by 2030, equivalent to about 50% natural gas and 50% nuclear/renewables would mean a fall of about 70 Mt. There may also be upward pressure on the sector as transport electrifies.

The above implies that the emission reduction focus will have to expand more rapidly into the transport and residential areas in particular. While the residential sector has been an area of action for some time with a focus on boiler efficiency and home insulation, the rate determining step here is turnover in housing stock or at least housing refurbishment, which can be very slow.

UK transport emissions have hardly budged over many years, although there has been some redistribution within the sector. A sharp single step reduction came during the 2008-2009 recession, but that fall has not been continued. Data since the late 2014 price fall in crude oil is not available yet, but that may put upward pressure on transport emissions. Between now and 2030 there is the opportunity for a single turnover of the vehicle fleet, but EV sales are still only very modest in the UK. In March 2016 there were some 67,000 registered plug-in cars in the UK, less than 0.2% of the fleet. During January to March 2016, some 11,750 new ultra low emission vehicles (ULEVs) were registered in the UK. Over the year to the end of March 2016, ULEVs represented 1.0% of all new registrations, compared with 0.8% over the previous year and 0.2% over the year before that.

The 5^th Carbon Budget represents a further landmark step for the UK, but it also means a shift in policy emphasis is required in the near term.

The Connected Man

dchone April 6, 2016

Back in September 1971, an article appeared in Scientific American on energy use. It remains very current today. Earl Cook was attempting to look at the limits to energy use and how that energy might be provided in a modern society. The article starts with the chart below that shows potential demand from various stages of human development.

Earl Cook Diagram

Today, we see human society spread right across the chart with substantial parts of the world in one of the versions of Agricultural Man, whilst many of us are in Technological Man. Global energy use stands at some 600 EJ, or about 80 GJ per person per annum whereas in 1971 the number was around 60 GJ. There are significant regional, national and even sub-national differences, with the USA at around 300 GJ and India at 30 GJ as two examples. It is also important to recognise that the Earl Cook chart applies more to the individual archetypes, rather than to national averages. At any point in time, the national average may include people in several categories and the individual demand may not be fully reflected in the national average if imports exceed exports in quantity or carbon intensity or both.

Cook pondered about where this energy might come from and what the limits of supply might be. Although resource constraint was a popular topic at the time (and another article in the same edition of the journal was by peak oil enthusiast M. King Hubbert), Cook concluded that environmental constraints may be more limiting than the resource itself. Although his focus was on more local environmental issues, his overall thinking was close to the mark as society now faces real constraints on emissions of carbon dioxide.

Yet we are far from done in terms of progression from Primitive Man to Technological Man.

Further on, Connected Man, which perhaps didn’t feature in Cook’s 1971 thinking, offers a very different outlook. Such a concept poses a real challenge – will Connected Man use even more energy than Technological Man with the introduction of a new Information category in the bar chart and further expansion within the other categories? Or perhaps Connected Man can break the trend above and bring such efficiency to the other categories that overall energy use per person falls, even as development progresses? That would be unprecedented (N.B. The Connected Man energy numbers are notional and for illustration purposes only).

Earl Cook Diagram (Connected Man)

Connected Man is starting to appear today, with the prospect of 20 billion connected devices comprising the Internet of Things as early as 2020. A trillion connected devices by 2050 would be a reasonable extrapolation from that; it represents less than 15% growth in such devices per annum. It may be much more than this, but the energy demanded by these is unlikely to be trivial, even as efficiency improves.

The real question is what such connectivity offers to the energy system as a whole? Can it also lower the energy use of Industrial Man as well as offering the prospect of leapfrog to a much lower energy demand end state than might have been anticipated for Technological Man? That might have a profound impact on expected global demand later in the century even as we collectively progress to Connected Man. Nevertheless, while 21^st century efficiency will very likely temper eventual energy use per capita, particularly against Cook’s 1970s estimates, the premise of rising energy demand at a global level still stands.

Earl Cook Diagram (Connected Man +)

Some post-Paris diplomacy

dchone March 16, 2016

President Obama and Canadian Prime Minister Justin Trudeau met last week for their first formal bilateral meeting since the latter was elected. With the success of the Paris Agreement behind them, the two leaders made their first steps together towards implementation with the announcement of a number of actions. A greater focus on methane emissions figured high on the list of things to do, but perhaps even more important than this was the recognition that co-opoerative action is required to implement the provisions within the Paris Agreement that are aimed at carbon market development. The joint statement released during the meeting made a very specific reference to this work;

Recognizing the role that carbon markets can play in helping countries achieve their climate targets while also driving low-carbon innovation, both countries commit to work together to support robust implementation of the carbon markets-related provisions of the Paris Agreement. The federal governments, together and in close communication with states, provinces and territories, will explore options for ensuring the environmental integrity of transferred units, in particular to inform strong INDC accounting and efforts to avoid “double-counting” of emission reductions.

The reference here is to Article 6 of the Paris Agreement, which allows for “internationally transferable mitigation outcomes” (ITMO) between Nationally Determined Contributions. Article 6 also establishes an emissions mitigation mechanism (EMM) which could well support the ITMO by becoming, amongst other things, a standardised carbon unit for transfer purposes. These are the sorts of areas where considerable thought will be required over the coming months.

The statement represents a big step forward for the United States and for the further development of carbon markets. The USA was amongst the very first countries to release its INDC, within which can be found the statement;

Use of markets:
At this time, the United States does not intend to utilize international market mechanisms to implement its 2025 target.

This was not a big surprise at the time. It was still early days for the resurgent political interest in the importance of government implementation of carbon pricing and therefore the supporting role that international carbon markets can play in helping optimise its use. But a great deal has happened in a year (the USA released its INDC on March 25th 2015), topped off with Article 6 in the Paris Agreement. This time last year that looked like an almost impossible dream, although several of us in the carbon pricing community dared to talk about it.

But perhaps it is the developments in North America itself that have raised the profile of cross-border carbon unit trade with the respective national governments. Although the California-Québec linked cap-and-trade system got going in 2014, it wasn’t until 2015 that Ontario showed a sudden interest in joining the system. At the April 2015 Québec Summit on Climate Change, Ontario announced its intention to set up a cap-and-trade system and join the Québec-California carbon market. The following September, Quebec and Ontario signed a cooperation agreement aimed at facilitating Ontario’s upcoming membership in the Québec- California carbon market. To add to this, during COP21 Manitoba announced that it would implement, for its large emitters, a cap-and-trade system compatible with the Quebec-California carbon market. Québec and Ontario then committed in Paris to collaborate with Manitoba in the development of its system bysigning a memorandum of understanding tothat effect.

Others US states and Canadian provinces may join, with Mexico also looking on in interest. This could in turn lead to a significant North American club of carbon markets; perhaps one even starting to match the scale and breadth of the 30 member EU ETS. Clubs of carbon markets are seen by many observers as the quickest and most effective route to widespread adoption of carbon pricing. The Environmental Defence Fund based out of New York has written extensively on the subject with their most recent paper being released in August last year.

With parts of the USA members of a multi-national club of carbon markets, the Federeal government is then effectively bound to build their use into their NDC thinking. There may be a significant flow of units across national borders, which will make it necessary to account for them through Article 6 and the various transparency provisions of the Paris Agreement.

But most importantly there is the economic benefit of doing this; a larger more diverse market will almost certainly see a lower cost of carbon across the participating jurisdictions than would otherwise have been the case. This could translate into a lower societal cost for reaching a given decarbonization goal or open up the possibility of greater mitigation ambition.