Category: Transport

An ambitious step-up on transport

dchone May 21, 2021

Last week the German government announced a step-up in their ambition to reduce emissions, with a new target date for net-zero emissions of 2045. This will bring with it an even faster transition in the coming decade to 2030, which the government outlined by sector as follows;

Sector	2019 reductions from 1990	2030 reduction goal relative to 1990
Electricity generation	45.5%	62.5%
Buildings	41.9%	66.7%
Transport	0.6%	42.1%
Industry	33.8%	50.7%
Agriculture	24.4%	35.6%
Other	76.3%	86.6%
Overall ambition	35.7%	56.5%

While most sectors have made significant progress to date, transport stands out as having not changed since 1990. The reality here is that the same basic energy service technologies are still in place for planes, trucks, ships and automobiles and that efficiency improvements have been broadly offset by demand growth, meaning no change in thirty years. In 1990 personal transport demand in the Eastern part of Germany would have been quite low, albeit rather inefficient, so the demand increase over the years would have been a factor. This is illustrated in the figure below (Source: Car ownership and usage trends in Germany – Response to the Commission on Travel Demand’s Call for Evidence: Understanding Travel Demand, Tobias Kuhnimhof, Institute of Transport Research at the German Aerospace Center (DLR), May 2017).

Key car stock and vehicle kilometres traveled trends in Germany since the early 1990

The goal for 2030 represents a very sudden and fast paced deployment of battery electric vehicles (BEV) or hydrogen fuel cell vehicles (FCEV), although the auto industry in Germany is not approaching this from a standing start. Over the past few years the likes of VW, Audi, BMW, Daimler and Porsche have been developing a new range of electric vehicles and releasing them into the market. In a recent statement by the CEO of Volkswagen Passenger Cars, he noted that 2020 was a turning point for Volkswagen and marked a breakthrough in electric mobility. Last year, the brand delivered nearly 134,000 battery electric vehicles (+197 percent versus 2019). However, despite a challenging market environment, Volkswagen delivered around 5.328 million vehicles across all drive systems to customers around the world, so this represents 2.5% of their production.

In Germany, transport emissions are 95% road based, with internal aviation, barges, coastal ships and trains making up the rest. Within the road sector, this breaks down to about 65% passenger vehicles, 25% heavy freight and 10% light commercial (N.B. this breakdown is approximate based on a variety of articles and EU data sources). As noted, many models of passenger BEV are now available to purchase and this is also becoming a reality for light commercial vans and small trucks, although the range isn’t as extensive at the moment. However, it is not the case for heavy freight trucks, where some BEVs and FCEVs have been demonstrated, but commercial availability is very limited.

So if we assume little change in the 5% non-road transport emissions and large scale rollout of heavy freight BEVs and FCEVs from 2025, the heavy lifting for the transport goal will have to be done by rapid uptake of passenger EVs and light commercial EVs. The overall picture from 2020 (pre-COVID) to 2030 could look like the table below;

Mode of transport	2019 total emissions (scaled to 100)	2030 emissions relative to 2020 scale
Passenger vehicles	62	30
Light commercial	9	5
Heavy freight	24	18
Non-road transport	5	5
Total	100	58
		(or 42% reduction)

Based on the above, the deployment calculation is relatively straight forward. In 2019 the sale of passenger BEVs in Germany was 65,000 units in a total market of 3.6 million units. However, in 2020 this number tripled to 194,000 units, so we enter the decade with BEV sales at around 5%. There are some 47 million vehicles on the road in Germany with, at best, 1% being electric (470,000 vehicles) at the start of 2021. Although sales of cars at between 3 and 4 million and a 47 million car fleet points to an average age greater than 10 years, assume nevertheless that 10% of the fleet is turned over each year – perhaps the German government will introduce policies to accelerate the retirement of older less efficient vehicles. The calculation will also assume, as a starting point, that 10% of the sales in 2021 are battery electric, or double the 2020 number.

The chart below shows how the fleet emissions change as sales change. As indicated in the table above, passenger vehicle emissions need to halve by 2030 such that Germany reaches its transport sector goal. That doesn’t happen until the deployment annual growth rate of BEVs reaches nearly 50%, or a doubling of sales every two years until 2027 when all passenger vehicle sales are BEV from then on.

A deployment rate that requires doubling production every two years is a formidable task. Although EV sales tripled in 2020 vs. 2019, this was from a very small base. Such a rate won’t be maintained as numbers climb. For rapid BEV growth it isn’t just about retooling the existing auto plants but also building new battery plants, sourcing the necessary minerals for the batteries (e.g. lithium, nickel, cobalt), ensuring sufficient infrastructure is available for battery recharging and most importantly, building customer confidence in the product. Should Germany fall behind this rate of deployment, the only remaining option will be much higher turnover rates for vehicles later in the decade, but that will mean temporarily producing new cars at a rate that is unsustainable in later years.

By 2025 Germany will need to produce nearly two million electric cars per year for domestic use, which will also mean battery production capacity of some 160 GWh (assuming an 80 KWh battery for each car). At the moment the battery ‘gigafactory’ pipeline for Germany has several projects, with the total approaching this sort of scale and there are plans for future production increases. The Fraunhofer Institute for Systems and Innovation Research ISI, even suggests that EU production capacities of 300 to 400 GWh could be achieved by 2025. The website Battery-News.de anticipates that the German market alone will account for more than 170 GWh of production capacity. By way of comparison, Europe currently has around 30 GWh of production capacity.This ambitious German plan for e-mobility is getting underway!

A ten year reduction challenge for the USA

dchone May 4, 2021

In April, at the opening of the White House Climate Summit, President Biden announced the United States Nationally Determined Contribution (NDC) for the period up to 2030, encompassing a target of greenhouse gas reductions 50-52% below 2005 levels. The US Greenhouse Gas inventory is available on the US EPA website and is summarised in the table below.

Sector and gases(Mt CO₂e)	2005	Latest data for 2019

CO₂ Fossil Fuel Combustion	5753.5	4856.7
CO₂ Non-Energy & Industrial	381	399.1
CH₄ from all sources	686.1	659.7
N₂O from all sources	455.8	457.1
HFCs, PFCs, SF₆, NF₃ from various industries	146.5	185.6
Total Emissions (Sources)	7423	6558.3

LULUCF Emissions	16.8	23.5
LULUCF Carbon Stock Change	(804.8)	(812.7)

Net Emissions (Sources & Sinks)	6635.0	5769.1

Given a baseline of 6635 Mt CO₂e, a 50% reduction in 2030 would require US emissions to be 3318 Mt or lower in that year. The 2019 data represents a reduction of 13% over 2005, so the reduction in the next 10 years must be nearly triple that of the last 15 years. The reduction seen to date from fossil fuel combustion is running slightly ahead of the overall improvement, with a reduction from 2005 to 2019 of nearly 16%.

The goal that President Biden put forward is aligned with a strategy that is designed to achieve a goal of net-zero emissions for the US in 2050. Recently, the Shell Scenario team released a US Sketch outlining one possible pathway to such an outcome. The Sketch is illustrated below (N.B. 2020 figures are a pre-pandemic view of US emissions which the US is approaching again as the recovery gains momentum).

The Sketch provides the opportunity to look at the nature of the transition required in the 2020s for the NDC. The Sketch energy system emissions in 2030 are 3440 Mt against a 2005 baseline of 6030 Mt (small differences in baselines result from different categorizations of emissions), or a reduction of 43%. While this isn’t exactly aligned with the NDC, it could be in that the NDC makes specific reference to a major expansion of sink capacity through enhanced soil carbon uptake in the agricultural sector.

Key elements of the journey to 2030 outlined for the US in the Sketch are as follows;

In 2020 (pre-COVID calculation) the US generated 3970 TWh of electricity, with 80% from coal, gas and nuclear. Solar and wind made up less than 10% of the total. By 2030 in the Sketch, the generation mix has shifted to natural gas and solar each making up about 25% of the total, with wind, nuclear and coal combined at around 40%. Notably, total electricity generation has increased to 5720 TWh, or 43% over 2020. This is in a pathway that still sees electricity system emissions at 600 Mt in 2035, the year President Biden has targeted for a zero emission system. His goal is about 5 years ahead of the Sketch.
The increase in electricity consumption comes from an increasing proportion of electricity in final energy, displacing gasoline in cars, natural gas in homes and coal in industry. Electrification is a major lever for decarbonisation. The proportion of electricity as final energy rises in a decade from 22% to 35%, breaking a near century long trend which if continued, would otherwise see it rise to 25% at most.
Over the 2020s, solar generation of electricity grows fastest, increasing by a factor of nearly 12 in a decade. The U.S. installed 19.2 gigawatts (GWdc) of solar PV capacity in 2020 to reach 97.7 GWdc of total installed capacity. With a utilisation factor of 15-20%, this could be expected to generate around 150 TWh of electricity, although the Energy Information Agency reported a total of 130 TWh (perhaps because the capacity at the start of the year was 79 GWdc). In any case, capacity by 2030 will need to grow to at least 1 TWdc, assuming some efficiency improvement in new installations compared to existing facilities. With a year-on-year installation growth of 30%, the US could be installing some 260 GWdc per year by 2030, bringing the total installed capacity to 1.2 TW by the end of that year. Very large scale energy storage will also have to deploy to support solar.
The Sketch also shows a three-fold increase in wind generation throughout the 2020s and importantly, no decline in nuclear generation. The latter becomes increasingly important as other non-intermittent generation sources decline in use.
Electric vehicle (EV) deployment is an important part of the trend towards electrification and it emerges rapidly in the Sketch. By 2030 the US will need to see 20% of all passenger vehicle use as electric, with hydrogen fuel cell vehicles rapidly appearing in the large SUV sector. At the moment, there are about 1.5 million EVs on the road, out of a total US passenger vehicle fleet of some 280 million. To reach a level of 20% EVs in terms of use, sales will need to climb rapidly from some 400,000 vehicles per year now, to over 13 million in 2030, or nearly 80% of all sales. This represents a year-on-year growth rate in EV sales of 42% through the decade.
Road freight makes less use of electricity, although it does impact the lighter end of the freight market. For larger, longer haul freight trucks, hydrogen emerges during the 2020s, with some 200,000 trucks on the road by end of the decade. This is still relatively small, but the sector is non-existent today. In the second half of the century in the Sketch, hydrogen becomes the dominant fuel for heavy road freight.
Natural gas, propane and oil are used widely in the US for cooking and/or heating in homes. Although the majority use electricity for cooking, heating is provided mostly by gaseous hydrocarbon fuels. In the US Sketch, heating and cooking in residences shifts from 13% electricity to 42% electricity in just a decade. Of all the transition tasks ahead, this may be the most challenging in that it involves convincing millions of households, individual consumers and landlords to change their behaviour, refit existing properties, invest money for the change and in some instances make use of a less preferred energy option.
While electricity already plays a significant role in light industry, this is not the case for heavy industry where very high temperatures and high thermal loads are often required for conversion processes. Heavy industry energy use in the US is currently three-quarters gas, coal and biomass and one quarter electricity. This begins to shift rapidly and by 2030 in the Sketch, 40% of energy demand for heavy industry is supplied by electricity. In addition, hydrogen is emerging, with the first industrial installations making commercial use of this fuel. While the amount is small in 2030 it could mean significant development, design and engineering of new processes in a limited amount of time. Alternatively, the amount could point to natural gas being topped up with hydrogen as a mixed fuel for industrial furnaces, prior to converting whole processes over to hydrogen based fuels.
The many changes across the energy landscape result in steep decline in the use of fossil fuels in the Sketch, with coal falling fastest. By 2030 there is a 40% reduction in coal use, a 14% reduction in natural gas and a 25% reduction in oil within the economy, compared to 2020 (pre-COVID) use.
But even by 2050 in the Sketch, natural gas and oil still play an important but significantly diminished role in the US economy. That points to the need for carbon capture and storage (CCS), both directly linked to facilities and indirectly as an atmosphere removal mechanism (e.g. BECCS). The US already has the most mature CCS industry in the world, underpinned by years of enhanced oil recovery using carbon dioxide. But an order of magnitude change is required here as well during the 2020s, with a shift from some 30 mtpa carbon dioxide stored to some 300 mtpa.

While the Sketch does not require nature based solutions (NBS) for the US energy system to reach net-zero emissions by 2050, natural carbon sinks do provide an additional lever to support the transition and the NDC also discusses this aspect of emissions mitigation. In the US, national forests cover 193 million acres, an area larger than Texas. Apart from their significant bioenergy potential, forests act as natural carbon sinks. The US could reduce CO₂ emissions by up to 300 million tons a year by 2050 through afforestation – the planting of new trees where there were none before. While new forests represent significant additional sinks, there is also potential to expand areas such as wetlands and mangrove swamps, and perhaps most importantly to encourage farmers to adopt practices that enhance soil carbon. The US NDC references this opportunity.

The rates of change outlined above are substantial, with year-on-year growth rates for several new energy technologies of 20-50%, depending on the sector. While growth at this level can be sustained when a sector is very small and this has been observed for renewable energy deployment, it becomes increasingly difficult as the sector grows and absolute levels of deployment become very large. Many of the sectors mentioned will face this issue during the 2020s. Nevertheless, the Sketch was designed to show what is possible given the right policy levers for innovation and deployment, sufficient and targeted financing and overall transition design.

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

Electric vehicles and 2030

dchone December 7, 2020

Over a decade ago in one of my very first posts in this blog, I responded to what appeared to be a working assumption in government that there would be between 1 and 2 million electric cars on the road in the UK by 2020. It was hard to imagine that this would be the case and harder to calculate a pathway that would deliver such an outcome. I noted at the time that after a dozen years and some significant stimulus, the number of hybrid vehicles on UK roads had risen to 300,000. So here we are in late 2020 and the number of battery electric vehicles on the road in the UK is around 200,000. There are plug-in hybrids in addition to this, roughly doubling the total population of plug-in vehicles to just under 400,000.

In recent weeks the UK government has significantly stepped up its ambition regarding passenger electric vehicle deployment, with a decision to ban the sale of internal combustion engine vehicles in 2030, albeit with some relaxation to 2035 for plug-in hybrid vehicles. The announcement prompted me to look back at the decade old post and to look at how the numbers stack up this time around.

With a population of some 67 million people, the UK has about 33 million cars or just under one car for every two people. This ratio has been rising slowly over the past few years, even as new car sales have edged downwards so we might expect something like 37 million cars in the UK fleet by 2030 for a population of 70 million. Assuming there isn’t a mad rush for internal combustion engine vehicles (ICE) in the years just prior to 2030, then in 2030 we could see some 2.6 million cars sold; more than in 2019 but only reaching the levels seen in 2015 and 2016 despite having 15-20% more cars on the road in total.

This means that in 2030, 2.6 million cars with a battery must be available for UK buyers. They could be pure battery electric (BEV) or plug-in hybrid (PHEV). While the PHEVs are popular today, will that still be the case in 2030? It could be that manufacturers are already abandoning that class of vehicle to simplify production lines, with a focus on ICE production for legacy markets and BEV production for the future. After all, there would be no place for the PHEV in the UK after 2035.

The UK buys about 3.5 – 4.0 % of global passenger vehicle production, so the purchase of 2.6 million vehicles would notionally require 70 million BEVs in production globally, or all passenger vehicle production. However, with a leading policy position on BEV uptake and local vehicle production of some 1.3 million vehicles per annum, the UK could be commanding a relatively higher percentage of the BEV market. This has been the case in Norway in recent years. Of course, other jurisdictions are also declaring earlier dates for the BEV transition, so there could be competition for the available vehicles. But let’s assume the UK can command 8% of BEV production in 2030, which would imply the need for global BEV production of 35 million vehicles in 2030.

Current global BEV production is 2-2.5 million per year, or 3.2% of total passenger vehicle production. That will need to grow by a factor of at least fifteen in ten years for the UK to meet its goal. If there is a limitation in the supply chain for BEVs it is most likely to be the battery. It won’t be the car body, wheels, suspension, electronics, steering system or even the motor (but it is a very different component to ICE) as the capacity for these exists today in one form or another. But large scale Li-Ion battery production is a new and growing industry that requires new supply chains, new sources of critical minerals like cobalt and new processing facilities to make compounds such as lithium hexafluorophosphate.

Cobalt supply might be challenging as most global production comes from one country, the Democratic Republic of the Congo. It is an important component of Li-Ion battery chemistry although battery manufacturers are taking steps to minimize the requirement. Early battery cathodes contained nickel, manganese and cobalt in equal proportions, but companies such as LG Chem are close to producing cathodes with 80% nickel and only 10% cobalt. Tesla’s first Model S, launched in 2012, was built with an average of 11 kg of cobalt per vehicle, but according to Benchmark Minerals that was down to about 4.5 kg in its successor car, the Model 3, which launched in 2018. Nevertheless, if production were to hit 35 million vehicles in 2030 and each vehicle required 5 kg of cobalt, that still amounts to 175,000 tonnes of cobalt. Current global cobalt production capacity is 150,000 tonnes but it is a widely used mineral.

BEVs aren’t the only products competing for Li-Ion batteries. By 2030 we should be seeing a variety of haulage trucks in the market, more electric buses, a continued escalation of consumer devices running on batteries and a surge in demand for grid scale battery packs to help manage renewable intermittency. While battery recycling will be a large industry in the decades ahead, this won’t be the case in 2030 as society will only just be starting the recycle the batteries being produced today, which represent a tiny fraction of 2030s demand.

Other factors will also come into play, but the size of the battery in every car will be important. Early BEV models were relatively small with limited range and had battery storage of around 25 kWh – the Nissan Leaf is a good example. That’s because batteries were very expensive. Today with battery prices falling rapidly, one Nissan variant known as the Leaf e+ has a 62 kWh battery pack. A review of multiple models from several manufacturers shows battery sizes heading towards 75-100 kWh. So let’s assume the average 2030 car has an 80 kWh battery with a range of around 500 kms.

Global Li-Ion battery manufacturing capacity today is around 400 GWh, or enough to make 6 million BEVs with a 62 kWh battery onboard. However, half that capacity is being split between consumer electronics, larger vehicles such as electric buses and home or grid energy storage. In the 2030 world of 80 kWh battery packs and production of at least 35 million vehicles, nearly 3 TWh of battery manufacturing capacity will be needed just for the BEVs. That might mean 5 TWh in total to cater for all the other applications. And therein lies the potential issue.

There is no doubt that battery manufacturing capacity is ramping up rapidly, but where might we be in 2030? A recent analysis by Wood Mackenzie looks at the current project pipeline for new manufacturing facilities and expects a quadrupling to 1.3 TWh by 2030. The same article that discusses the analysis also notes that this is not the most bullish forecast. Bloomberg New Energy Finance expects 1 TWh of battery production capacity by 2025, while Benchmark Minerals expects 1 TWh of capacity by 2022/2023, 1.35 TWh by 2025, and 2.5 TWh by 2030, with China’s CATL accounting for 332 GWh and Tesla, the fourth-largest producer, with 148 GWh of capacity in 2030. Based on current forecasts, nobody is expecting 5 TWh of capacity by 2030, although it is also fair to say that few in 2010 expected solar PV manufacturing capacity to be 160 GW per year by 2020.

So the bottom line for the UK government and its ambitious plans means that not only must the UK command an outsize proportion of the BEV market, but that Li-Ion battery production is at least double the most ambitious current estimates for 2030.

Finally, assuming the needed rapid growth in BEV sales takes place and the UK reaches 100% sales by 2030, the number of vehicles on the road in that year would still be less than 10 million, out of a total of perhaps 37 million. It will take another decade or more beyond 2030 to turn over the whole fleet, which makes the recently announced 2030 goal of a 68% reduction against 1990 all the more difficult.

Cities and climate action

dchone November 13, 2020

Cities may well be key to reaching the goals of the Paris Agreement and the Paris Metropole has an opportunity to lead climate action at the local, national and European levels. Given its association with the 2015 Paris climate agreement the area has important symbolic value in efforts to tackle climate change.

The third runway by the numbers

dchone March 4, 2020

Last week the project proposal for a third runway at Heathrow in London was put on hold after a successful court challenge based on climate concerns. The courts sided with the plaintiffs who argued that the proposal did not adequately demonstrate how its overall emissions impact would be managed given that the UK has now adopted a target of net-zero emissions in 2050. While the emissions from the project itself are modest, with cement probably being the largest component, the ongoing emissions from aviation expansion as a result of the project could be considerable on a cumulative basis over many years.

At this point I should note that the third runway at Heathrow has been a contentious project since it was first proposed and there are many reasons put forward as to why it should or should not be built. My focus here is on the expected expansion of aviation in and out of the United Kingdom and the resultant emissions. Aviation has grown rapidly over the half century since the introduction of the widebody Boeing 747 (by which point it had grown considerably since the first intercontinental jet services some twenty years prior), to the extent that there are now over four billion passenger flights per year globally.

Of course airlines, airports and aviation companies are responding to a strong demand signal from consumers (the UK is an island). In order to drive change consumers also need to understand their own externalities and be prepared to manage them, most likely by a cost passed through with the ticket purchase.

A 2017 UK Department of Transport assessment of aviation showed growth for both capacity constrained and unconstrained scenarios, with the low constrained case showing a 60% rise through to 2050 and the high unconstrained case showing a doubling of demand.

Heathrow consumes about 20-25 million litres of Jet-A1 every day, so a third runway would increase this by 50%, or some 10-12 million litres per day.

A double check based on aircraft efficiency and expected distance of travel gives a similar number. If we assume that the runway operates for 18 hours per day with a flight interval of 90 seconds, with 50% of the time being used for take-off, that implies 360 additional departing flights every day. If we then assume that every flight is dedicated to longer haul, say New York or Dubai, then that means about 37,000 litres of fuel per flight based on the improved efficiency for modern aircraft of about 2.2 litres per 100 km per passenger, 300 passengers and some 5,500 km of travel, or a total of just over 13 million litres per day.

The consumption of 13 million litres of Jet A-1, 365 days a year, will result in the release of about 12 million tonnes per year of carbon dioxide when combusted. So the question that needs to be asked is how the mitigation of 12 million tonnes per year will be organised such that it has reached net-zero by 2050.

The answer lies with the sector itself, not just the airlines that own the planes or the companies that make them or the airport that is building the runway or the fuel providers that sell Jet A-1. All these parties will have to collectively own the problem and set about solving it. There are already the beginnings of some answers, but efforts will need to be accelerated such that the question posed through the court in relation to the net-zero goal of the UK can be confidently answered. For example;

Various processes have been developed to produce bioJet, including those which use municipal waste as the feedstock. These are now starting to scale in some locations.
Air capture of carbon dioxide is emerging as a possible solution for sectors such as aviation. This would involve removing carbon dioxide from the atmosphere at a rate equivalent to its emission and committing to geological storage, delivering net-zero emissions. The DRAX power station in Yorkshire is piloting one form of this technology and Carbon Engineering is building a large scale version of a different approach.
There is some development underway for short haul electric planes, but long haul will need a very different solution. In my last post I discussed the option of hydrogen in aviation.

All the above are still in their early stages of development and deployment, with bioJet looking to be the most promising immediate option. Nevertheless, over the coming thirty years it should be possible to bring UK aviation emissions to net-zero through some combination of the above.

But who should be responsible for implementing the strategy? Within the aviation industry, a framework already exists under which all this could be managed.

The airlines have already agreed and are now beginning to implement the CORSIA framework under the auspices of ICAO. This sets out a journey through to 2035 which will see global aviation emissions limited to current levels. It includes a facility to balance emissions through a trading arrangement where they cannot be directly mitigated through fuel changes, although the final rules of this have yet to be agreed and will involve Article 6 of the Paris Agreement. In almost any aviation scenario there will be unmitigated aviation emissions in 2050. CORSIA will need to evolve further after this first phase to be aligned with the emerging net-zero goals in many countries with major aviation hubs. The trading arrangement will eventually need to focus on removal of carbon dioxide from the atmosphere in combination with geological storage.

This form of emissions challenge to projects and development may well become more frequent, not just from campaigners but also from regulators, as the governments they represent grapple with the task of getting to net-zero emissions. There will likely be a real shift in focus from the projects themselves and their subsequent operation (i.e. Scope 1 plus Scope 2 emissions), to the broader impact they have on societal emissions (i.e. Scope 3 emissions). That will place more onus on project developers to think through and then manage the broader implications of their actions.

Aviation futures

dchone February 18, 2020

The aviation industry accounts for nearly one billion tonnes of carbon dioxide emissions annually against a global total in excess of 40 billion tonnes, which means it is around 2.5% of total emissions. However it is a high growth sector without obvious alternative energy carriers, implying that as other emissions fall and aviation continues to rise, its fraction of the total increases rapidly. Should global emissions fall by 50% in the same time that aviation doubles, then that fraction becomes ten percent.

Perhaps for the reasons given above, there is a particular focus on aviation emissions, far more so than a sector such as steel where emissions are currently much higher and will likely continue to be for many years. Additionally and unlike sectors such as steel and cement which are seen as essential elements for the provision of basic services such as homes and clean water, some people view aviation as a luxury which isn’t entirely necessary for modern society, hence the calls for limiting air travel as a means of limiting emissions from the sector. I don’t see rationing as a realistic pathway forward; the ability to traverse the globe in under a day has become too valuable.

The aviation sector will need to find another way forward. The current focus is on sustainable aviation fuels, such as those made from waste and sustainably harvested biomass, or perhaps even synthetic hydrocarbon fuels derived from processes that chemically combine hydrogen (from electrolysis of water using renewable energy) and carbon dioxide (from direct air capture). This latter route is currently very costly given the state of the variety of technologies required and large scale use of biomass always raises questions around its origin, the overlap with agriculture for food and the emissions that might arise from land use to create the biomass. Nevertheless, both these routes are worth pursuing.

But what other options might exist for the industry in the decades ahead?

Apart from balancing the emissions from aviation with some form of atmospheric carbon dioxide removal (from growing trees to direct air capture and geological storage), other routes would have to involve a shift away from hydrocarbon based fuels.

One possibility that is currently gaining favour is the development of electric propulsion, with the plane using battery storage for the electricity. This is also problematic due to the very low energy density of batteries when compared to hydrocarbons, a subject I discussed in an earlier posting. Battery electric planes might emerge for very short haul flights (e.g. London City Airport to Rotterdam, a flight I take quite a few times each year), but it is improbable for longer haul travel due to weight constraints. Today, 80% of the aviation industry’s emissions come from passenger flights longer than 1,500km, which means that a long-haul alternative technology needs to emerge.

One possibility is to use hydrogen directly as a fuel, either in a fuel cell configuration which essentially means an electric plane, or in a jet turbine engine in the same way planes use fuel today. The latter route means that planes could still attain the speeds and altitude of current jets. Hydrogen is well suited to a gas turbine engine.

Hydrogen isn’t weight constrained as an energy carrier, but volume considerations may prove challenging. A new airframe shape would likely emerge as a result.

	Jet A-1	Current Li-Ion Battery	Emerging Li-Metal Batteries	Liquid Hydrogen
Energy MJ/kg	42.8	~0.7	~2	120
Energy MJ/litre	37.4	~2	~4	8

Today, the development of hydrogen for aviation appears limited, with the BBC reporting a decade ago that there was no future for the fuel, despite proof of concept. Cost seemed to be the major issue, but today the cost of renewable electricity has fallen sharply and electrolysis to produce hydrogen is seeing a resurgence of interest.

A trawl through various online resources reveals that hydrogen jet turbines have been demonstrated for over 60 years. The first such flight was a modified B-57 Canberra Bomber, with one jet engine powered by liquid hydrogen from a cryogenic wing suspended tank (shown below)

diagram-of-a-hydrogen-fuel-system-on-nacas-martin-b-57b-canberra-ce9f7f

Source: NASA

In the 1980s Tupolev modified a Tu-155 to act as a test vehicle for a variety of alternate fuels, which included liquid hydrogen. The Tu-155 first flew on 15 April 1988. It used hydrogen fuel and later liquified natural gas (LNG). It flew until the fall of the Soviet Union and is currently stored at Ramenskoye Airport near Zhukovskiy. The cryogenic tank was stored in the main fuselage of the plane, in part due to the volume constraint noted above.

TU-155-Liquid-Hydrogen-Aircraft-Design-Tupolev-2009

Source: Tupolev

In the mid to late 1950s Lockheed proposed a concept reconnaissance aircraft that operated on liquid hydrogen and a design was also proposed for a Lockheed L-1011 passenger plane some years later. This was in response to the oil shocks of the 1970s.

Source: Lockheed

Despite over sixty years of on-off development of hydrogen powered flight, hydrocarbon fuels remain the only energy carrier for commercial aviation. Today, the industry faces a long term challenge that may require it to revisit shelved technologies, applying new concepts and materials to the variety of issues that couldn’t be fully solved in the decades past. In the Sky Scenario, we imagine that the first hydrogen intercontinental flight takes place in the mid to late 2040s, with a new generation of planes entering service from about 2050. Even then, it takes decades more for this to become a mainstay within aviation, but then could well be the only technology of the 22^nd century. In the interim in Sky, biofuels and removal technologies (bioenergy with CCS in Sky or BECCS) are used to deliver a net-zero emissions aviation system.

What happened to that vacation offset?

dchone August 19, 2019

With many people in the Northern Hemisphere taking vacation at the moment, some may have clicked that button on the bookings website to offset the emissions from their air travel, cruise ship or even hotel. But what happens when the button is clicked?

In a recent article, the Guardian explored the nature of the voluntary carbon market and the wealth of project types that may be triggered as a result of that click. But they didn’t explore the very nature of the voluntary market from a carbon accounting perspective. This is where the Paris Agreement should change everything.

Today, as the Guardian article notes, that click leads to a project of some description executed through the voluntary carbon market. This is a market that has arisen over the years in the absence of cross-border compliance markets for regulating the emissions of carbon dioxide. Compliance markets are created and regulated by mandatory international, regional, and sub-national carbon reduction schemes such as the European Union’s Emissions Trading Scheme (EU ETS), the California Carbon Market and the largely defunct Clean Development Mechanism regulated by the Kyoto Protocol. By contrast, the voluntary markets function outside of the compliance markets and enable companies and individuals to purchase carbon offsets on a voluntary basis. For example, individuals who seek to offset their CO₂ emissions and companies who would like to become climate neutral can buy an equivalent in terms of carbon credits to “neutralize” or offset their carbon footprint.

The issue that isn’t explored by the Guardian relates to the legal title to the carbon reduction. In an emissions trading system, legal title belongs to the owner of the carbon unit created by the system, which then gives that owner the right to surrender it against their emissions in complying with the rules of the trading system. But in the voluntary market this isn’t as clear, even though the units are widely referred to as offsets which therefore implies that the reductions they represent belong to the emitter. The word offset is derived from financial markets where an offsetting transaction is an activity that, in theory, exactly cancels the risks and benefits of another instrument in a portfolio. Offsetting transactions are risk management tools that allow investors and other entities to mitigate the potentially detrimental effects that could arise if they cannot simply cancel the original transaction.

But what about the title to the reductions in a project activated through the voluntary carbon market? In the new world of the Paris Agreement, governments have created Nationally Determined Contributions (NDC) in which a plan is developed that shows how the country in question will reduce its emissions. For example, Kenya has stated that it will undertake an ambitious mitigation contribution and seek to abate its GHG emissions by 30% by 2030 relative to the business as usual scenario of 143 MtCO2eq; and in line with its sustainable development agenda. This is also subject to international support in the form of finance, investment, technology development and transfer, and capacity building.

When the click leads to a project in Kenya and that project is successfully executed, the emissions reduction achieved will be swept up in the assessment of Kenya’s greenhouse gas emissions at some point in the future when they are reporting out against the NDC to show how they have achieved their contribution to the Paris Agreement. As such, the voluntary project has been useful for Kenya, but its impact will have been reported as part of the Kenya NDC, which means that it isn’t technically an offset transaction against emissions in another place. This is because the project has helped Kenya and presumably eliminates the need for them to find yet more reductions in their economy to deliver on the NDC – the notional cap that they have placed on their emissions is, in part, fulfilled by the project. So the voluntary market is meeting a very specific need; it is helping finance reductions in other places against the NDC covering that location. This means it isn’t strictly an offset against emissions in the buyers location, even though a reduction clearly took place and was financed by the offset purchaser.

Under the Paris Agreement and Article 6, all this potentially changes, but it depends on the nature of the transaction. The voluntary market could continue as discussed above, as a financing mechanism for reductions in other places, or it could evolve into a fully accounted and tradable unit. In the latter case, when the unit is created in Kenya (perhaps under Article 6.4) and exported, it will trigger a change in their NDC and a change in the NDC of the country in which it is used in. Both NDCs will be adjusted such that overall global emissions remain on the same pathway. Paris is strict about double counting. The unit would also be formally recognized by both governments so title would transfer through the transaction, but the unit would now be helping the country in which the offset was purchased meet its NDC, rather than the country in which the project was executed.

A final case could see only the project host country adjust its NDC due to the export of the unit, but the importing country makes no change. The carbon title therefore remains with the offset purchaser. The unit is not used to help either country meet its respective NDC. When the unit is retired (held in perpetuity by the offset purchaser), it then represents a real offset against emissions and it takes the world slightly closer to the goal of the Paris Agreement than would otherwise have been the case.

It is still early days for the Paris Agreement and the rules of Article 6 for cross border trade of units have still to be agreed. As such, the voluntary market will continue under the current procedures. But as the Paris rules get going, expect to see things change. A further complication will be the application of these units towards flights where the emissions from the flight are already being accounted for through the new aviation emissions offset system, CORSIA, but that is for another post.

In the meantime, enjoy your vacation!!

Getting to net-zero emissions in the UK

dchone May 9, 2019

Last week the Climate Change Committee (CCC) in the UK released its much anticipated report which is recommending that the government revise its emissions goal to net-zero in 2050. The Committee notes that this is an appropriate UK contribution towards the global need of meeting the goals of the Paris Agreement. The recommendation also follows in the wake of the IPCC Special Report on 1.5°C, which identified 2050 as the year in which the global economy should attempt to reach net-zero emissions in order to limit warming to 1.5°C with a 66% probability.

The recommendation is a shift from the current UK target which would see the country reach an 80% reduction by 2050, in support of which the country is broadly on track to deliver the first 3 interim carbon budgets to 2022. However, as it looks past 2022 the CCC notes there is insufficient early development of some technologies for the heavy lifting ahead. Examples of this include carbon capture and storage (CCS) and hydrogen for a variety of uses.

Nevertheless, the state of technology development, deployment and availability has shifted since the time of the first UK target back in 2008. The cost of wind and solar has dropped significantly, offshore wind is now a viable proposition, many electric car models are available and while not in the UK, some 20 CCS facilities are now running in various parts of the world. All of the technologies required to do the job set out by the CCC are in plain sight, although a number still require significant UK development for deployment in this country. The CCC report is also very clear on this issue.

2050 is just over thirty years away and that same time period reflecting backwards marks the time that I first arrived in the UK with Shell. In the next 30 years the whole energy system will need to shift to achieve net-zero emissions, but how does that compare with the changes seen over the last 30 years. While two thirds of that period has not been covered by the Climate Change Act and its carbon budgets, all but three years have been covered by the UK ratification of the UN Framework Convention on Climate Change.

The Sankey diagrams below reflect the change over the period, although the most recent from the IEA are 2016, so they won’t show the last two years of renewable energy development.

Overall primary energy consumption has fallen, with the most visible change being the shift away from coal and towards natural gas in power generation. Both bioenergy and renewables have also added to the generation mix. Nuclear plays an important and steady base load function. Natural gas is now the dominant contributor to the current power generation sector and in the past year there have been periods where coal has not played a role at all. Back in 1989 coal made up most of the generating capacity. Oil demand within the UK has hardly changed over thirty years (slightly up) although production has halved.

As noted above, one feature that has surged since 2016 is the proportion of renewable energy in the generation mix. Recent figures from BEIS show that wind and solar have now exceeded nuclear on a quarterly basis.

In the final energy system, the changes are more nuanced. The overall share of electricity has moved from 16.7% of final energy to 20.4%, or a shift of 3.7% points in 27 years. The global rate of change is tracking at 2% points per decade, so the UK is well short of that pace of transition. A net zero emissions economy would likely need electricity to be the major component of final energy, say around 60%, so the UK rate of change will need to shift from 1.37% points per decade to around 11% points in each of the coming decades.

Transport hasn’t shifted at all in the past 30 years, with oil use in transport slightly increasing. Electricity is just starting to creep into this mix, but pure electric vehicles have reached only 0.7% (2018) of new car sales. Worryingly, the total number of petrol and diesel cars registered in the UK in 2018 was unchanged from 2013, a period which has seen the first major push to get consumers to go electric. Reaching net-zero emissions by 2050 will not just mean seeing all new purchases as electric, but seeing all new purchases from about 2035 onwards as electric. It can take up to 15 years to completely turn over the entire on-the-road fleet, although a future government could presumably accelerate this process with a buy-back-and-scrap scheme.

In the industrial sector, energy consumption has dropped by nearly a third, presumably through efficiency improvements as industrial output has hardly changed (see chart below). Importantly, electricity use has stayed largely the same. This means that the sector is gradually electrifying, although again the pace of change is below that required.
UK Industrial Production (1970-2019).

Then there are the tricky bits, where the UK has made only limited progress. The CCC notes that radical change is needed in home heating, including a shift to hydrogen and heat pumps, with support from much better home insulation. But residential natural gas use has marginally increased in 30 years, despite significant improvements in boiler efficiency and the use of electricity instead of gas for new apartment buildings. One highlight in this area is the recent milestone of one million homes now being supplied with biomethane.

The overall change in 30 years has been one of continually falling greenhouse gas emissions, with much of the gain coming from natural gas replacing coal and a fall in industrial energy use. While the impetus for change over the last 30 years was perhaps not as great as it is now, the overall shift is symptomatic of typical energy system dynamics; rapid adjustment has never been a feature, primarily due to the large capital stock involved. Outside the energy sector change over the same period has been dramatic. In 1989 there was no internet, no social media, hardly a mobile phone to be seen and televisions were defined more by their depth than their width. So can the UK reach these sorts of transition rates and achieve the goal of net-zero emissions by 2050?

In the power generation sector, zero emissions should be entirely achievable in that time frame. Renewables are surging and new nuclear capacity is now under construction (although even getting that started took a decade). Similarly, with the models on offer or on their way, passenger vehicles could be entirely electric and various cities across the UK have demonstrated that electric buses are now a viable option. But there is no real sign of change for heavy goods vehicles, shipping or aviation. Perhaps the biggest challenge sits with the use of natural gas in homes and industry. It is easy to use, clean, provides a very high heat load and is backed by extensive infrastructure. Hydrogen and electrification are potential pathways forward, but as noted the electrification rate of change has to shift by nearly an order of magnitude. For hydrogen there are promising signs of change with the government now funding a major programme on supply and conversion of existing facilities away from natural gas.

Finally, there is carbon capture and storage (CCS), which may be a simpler solution in many applications than attempting to dislodge natural gas. CCS in combination with direct air capture (still a nascent technology) may also be needed to balance out emissions in sectors such as aviation. Even the production of hydrogen may be easiest at scale from natural gas, which would then also require CCS. The UK has tried and tried again with CCS, but there is still no operational facility to show for all the efforts made. Yet the UK is both pipeline dense and geologically gifted in terms of storage potential, so deployment could proceed given the right incentives to begin.

The Climate Change Committee have put forward a bold recommendation, but it is not without immense challenge. It ought to be possible to achieve the 2050 goal of net-zero emissions, but it won’t happen without some significant nudging by the government in a number of key areas. Policy decisions over the coming five years may well set the scene for the next twenty, so there is everything to play for.

Powering remote activities

dchone March 28, 2019

Over the past three weeks I have been on a voyage from Cape Horn to the Cape of Good Hope, specifically Ushuaia to Cape Town. With good weather for most of the trip, we were fortunate to stop in the Falkland Islands, South Georgia and Tristan da Cunha (some pictures below). Each of these have communities ranging from a few people to two thousand in the case of Stanley and each has found its own solution to providing energy. Of course the other remote activity out here is the need of the ship itself which will have travelled for some 20 days without refuelling and carried 400 passengers and crew across the South Atlantic.

The Falkland Islands has the major settlement of Stanley, a couple of very small towns, a military garrison and numerous remote farms. The Islands have settled on wind power to displace diesel generators, achieving an average of 35-40% displacement and a peak of 54%. Rural wind power has also been a success for the remote farms. The next step is to look at the potential offered by modern energy storage technologies, although flywheels have been used since 2010 for some storage in association with the wind turbines. Given the geography and climate, neither solar or hydro have been a success, apart from some niche applications. But the Falkland Islanders also have a history of burning peat for heat, although this is in decline. Kerosine and diesel are the most common fuels used today.

South Georgia is completely different. Since 2008 South Georgia’s two settlements Grytviken and King Edward Point (KEP) have been powered by hydro electricity. On the slopes above Grytviken there is a dam, originally built by the whalers at the turn of the 20th century. The dam increased the capacity of Gull Lake to feed water to the first hydroelectric power plant in 1914. The electricity produced then was mainly used for lighting the whaling station. The plant was expanded in 1928 to reduce the station’s reliance on imported coal for steam to power the factory. The electricity produced was then used to power winches and other factory equipment. The new turbine house has been built just off the pathway from the settlement to Shackleton’s grave, with the only visible sign of it as a generating station being the small stream of water seemingly running from under the building and into the bay.

Tristan da Cunha has a single settlement of about 270 people and an export factory to process the fish and lobster that are caught around the island. Although much of the electricity system was replaced about a decade ago after a fire, an entirely diesel based system was rebuilt. In recent years some changes have taken place with the installation of a few home solar water heaters, saving on bottled LPG which is used to heat water in Tristan houses. A small solar farm was also constructed west of the fishing factory. It consists of 26 solar panels, aligned to face the northern midday sun and each capable of generating 250 watts, so a combined capacity of 6.5kW. The connection to Tristan’s electricity grid was made on 30th April 2015. There are further plans for change, but the logistics of getting equipment to Tristan is enormously challenging. The island can only be approached by sea and few ships stop there. As we discovered on a second stop there (to pick up a local government person so we could land on Inaccessible Island), weather can quickly close the port and conditions can persist for days. But the case for further change is strong, given the community dependency on the import of diesel fuel and LPG. The eventual solution for Tristan may be a combination of parts. Although there is excellent wind, it can be ferocious at times, bordering on hurricane conditions, which perhaps isn’t ideal for turbine operation. Solar can also be challenging, with thick cloud shrouding the island at times. And although there is ample rainfall, collecting this and channelling it through a hydro plant would also be very difficult given the geography.

This then brings the focus to the key dependency for all remote activities, the transport to get there and transport once there. As was the case for our vessel, all these locations are completely dependent on long distance, self-powered transport and that remains almost entirely powered by liquid fuels coming from petroleum. While renewables are starting to provide local energy solutions for remote activities, the energy for the transport associated with such activities has no immediate zero emission alternatives. Synthetic fuels, either from a biomass / biowaste starting point or formulated from hydrogen and carbon dioxide offer a simple drop-in possibility, but the bio-alternatives are still relatively small scale and the pure synthesis route is still at the pilot plant stage of development. It should be noted that large scale synthesis of fuels from hydrogen and carbon monoxide does exist, but the starting points are coal (SASOL in South Africa) or natural gas (Shell in Qatar). For a net-zero emission synthetic fuel, the hydrogen would need to be produced by electrolysis of water using renewable energy and the carbon extracted from the air as carbon dioxide.

Apart from synthetic fuels, the best prospect for change is perhaps hydrogen itself, in that there is good experience containing and carrying it and fuel cells can power even large motorised vessels such as ships. Nuclear exists on ships in the military, but after an attempt to demonstrate the feasibility of nuclear powered commercial ships in the 1960s, nothing more has come from this form of propulsion. The challenge will lie with the providers of heavy transport; shipping companies, airlines and aerospace companies and large road haulage entities. Perhaps like the remote activities themselves, different solutions will emerge over time for the various requirements faced. Some remote locations may even be well placed to provide hydrogen in that they could have an abundance of renewable electricity to put towards hydrogen production via electrolysis. Scotland’s Orkney Islands are starting to experiment with such a route forward, as recently reported by the BBC.

Albatross chick on West Falkland

King penguins on South Georgia

A king penguin colony on South Georgia

King penguins on South Georgia

Me on Tristan da Cunha

The worlds most remote inhabited island, Tristan da Cunha

Northern rockhopper penguins on Gough Island

Fur seal on Gough Island

Fur seals on Gough Island

Inaccessible Island

Birds returning in the evening to Nightingale Island

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.