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David Hone

Climate Change Advisor for Shell

Hello and welcome to my blog. There's lots said about why climate change now confronts us, and what it means, but the real issue is what to do about it. Plenty is said about that too, but there's not enough discussion on the practical aspects of implementation. Focusing on energy, that's what my blog sets out to achieve.

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Double counting or dual accounting?

dchone September 13, 2021

With growing demand from investors, customers and other stakeholders for companies to become net-zero and/or sell net-zero emission goods and services, there is increasing interest in the voluntary carbon market as a source of carbon offsets. This is because today, very few, if any, goods and services are provided without fossil fuels somewhere in their value chain. Simply storing goods in a warehouse puts fossil fuels into the value chain, because of the construction of the building. And even looking forwards, fossil fuels will remain embedded in global supply chains to some extent for several decades, if not a century.

The voluntary market has been slow to scale over the past two decades, but it is now growing rapidly. There have been ongoing concerns related to the quality of the carbon units that emerge from it. For example, do the carbon units represent real reductions? Would these reductions have happened anyway? Nevertheless, it is poised for more growth, driven by corporate commitments to achieve net-zero emission targets. This means that the voluntary market is poised to become a critical mechanism for helping deliver global emission reductions, to the extent that a special task force was created to address the concerns and put in place practices and approaches for rapid future scaling. The Taskforce was initiated by Mark Carney, UN Special Envoy for Climate Action and Finance; is chaired by Bill Winters, Group Chief Executive, Standard Chartered; and is sponsored by the Institute of International Finance (IIF). The final report was released recently and you can find it here.

One of the many discussion points within the report is how a carbon unit should be viewed with regards actions already underway or planned within the host country for the project. For example, the report discusses the need for a future voluntary market governance body to consider whether or when it may be necessary for projects to demonstrate additionality to the Host Country’s nationally determined contribution (NDC) under the Paris Agreement and the appropriate instruments to implement such a requirement (e.g. corresponding adjustments).

While the quality of carbon units is very important, some perspective on the role and shape of the voluntary market is also needed. The corresponding adjustment is a mechanism under the Paris Agreement to prevent double counting at country level and to maintain environmental integrity against the NDCs. The use of corresponding adjustments is set out clearly within Article 6 of the Paris Agreement. It is designed to work at country level where a defined NDC exists and I discussed this at some length in a 2020 post and in a 2019 post.

By contrast, the voluntary market operates at company level. The same emission activities (sinks and sources) can be viewed through two entirely different accounting approaches, one for countries and one for companies. So is the demand for Paris Agreement adjustments in the voluntary market mixing the voluntary and regulatory worlds in a way that is helpful or damaging to the voluntary market?

The voluntary market is a means of channelling capital into emission mitigation projects and it measures the results of that with the issuance of carbon credits that recipients can use as they see fit. Those carbon credits have no immediate value in a regulatory world as the recipient cannot use them to meet compliance obligations nor are they recognised by other jurisdictions. The recipient simply requires them to show that the sum total of their market and investment activities is net-zero emissions. This is a simple model, but one that has worked over time, albeit in a relatively limited way.

In the voluntary world, when a company sells a carbon neutral product in (say) the UK, there are emissions from the product in the UK and this is offset with a unit that might represent a sink from (say) forestry activity in (say) Kenya. These are combined to deliver the claim of carbon neutrality by the company in question. But that forestry activity will also lead to a larger sink in the Kenya official GHG inventory for their Paris Agreement commitments, thereby helping Kenya meet its NDC. Similarly, the emissions from the product use will likewise be counted in the UK inventory, setting back attainment of its NDC.

The two sets of accounts remain in good shape without a corresponding adjustment. Kenya measures its emissions and sinks and reports them under the Paris Agreement and the UK measures its emissions and sinks and similarly reports them. Even though the voluntary carbon neutral claim used a Kenya sink in the UK, the UK inventory doesn’t recognise it as it is counted in the Kenya inventory. Rather, the UK must report the product emissions in its NDC and take action to mitigate it such that their NDC goal is met.

Importantly, the company offering the carbon neutral product isn’t a country, it reports at a company level. The UK’s emission from the product the company is providing and Kenya’s sink from the company investment are added together by the company and reported as it’s footprint, which has nothing to do with the Paris accounting.

None of this is double counting, it’s dual accounting.

If however, the UK had used the Kenya sink and reported it under its inventory for the purposes of its NDC, then Kenya would need to do a corresponding adjustment. But this isn’t happening in the voluntary market.

Further, imagine what would be required if Kenya did need to commit to a corresponding adjustment for the use of its sink in the UK voluntary market. The company making use of the unit could ask the UK to accept the unit under Article 6 and have Kenya implement a corresponding adjustment, but the UK may not necessarily want it. So then the company would have to ask Kenya to do the corresponding adjustment anyway.

The sale in the voluntary market and the corresponding adjustment would require Kenya to find a further reduction somewhere in the economy to balance their NDC, which would create an economic cost beyond that which they had budgeted for the delivery of the NDC. While the project itself would benefit from the sale of the voluntary unit, the economy is penalised, which in turn would likely require the project developers to fund the difference. This then raises the cost of carbon units in the voluntary market and potentially diminishes investment into projects. It also means turning the voluntary market over to governments, because they will rightly seek scrutiny of local developments that result in changes to their Paris Agreement accounts.

The solution is to recognise that the voluntary market and the Paris Agreement are two distinct ways of looking at the same set of emitting activities and sinks. The voluntary market offers a mechanism for people and companies to invest in the attainment of NDCs through the purchase of carbon neutral goods and services. This is a positive development and it should be encouraged, particularly because some developing countries and most least developed economies, where many such voluntary market projects lie, are asking for help to finance their NDCs. Further, in the country where the carbon neutral goods and service are provided, the process raises emissions mitigation awareness. However, it will be essential to build understanding with voluntary market participants that the activity they are engaged in may be helping other countries attain their NDC and not necessarily the country they are living in. This can also help build wider appreciation for the role of carbon trading. But penalizing the voluntary market with requirements that stem from a completely different accounting structure may not be helpful and might have the perverse effect of slowing down emission reductions and choking off an expanding flow of climate finance into developing countries.

Eventually the voluntary market may merge into a framework regulated under Article 6, but for now these are two very different approaches to emissions management. Neither has matured yet, so an early melding of the two may not be in the best interests of overall carbon market development.

  • Carbon capture & storage
  • Carbon Dioxide Removal (CDR)
  • Climate Science

The simple climate maths the IPCC didn’t fully explain

dchone August 19, 2021

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

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

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

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

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

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

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

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

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

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

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

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

  • Battery storage
  • Electric Vehicles
  • Electricity

Battery trends

dchone August 2, 2021

Two key advantages of fossil fuels are the energy density of the fuel itself and the ease of storing energy that a molecule based fuel offers. Most homes have a huge energy store sitting in the car gasoline tank in the garage, or perhaps in an LPG / propane tank in another part of the house. The ease of storage makes transport relatively simple, with everything from passenger cars to A380 planes dependent on the need to carry fuel with them. But as the shift away from fossil fuels gathers pace and electricity grows in importance as the energy carrier of choice, one critical technology emerges that we all already use but will grow in size and scale – battery storage. We need batteries to store electricity for portable use and to store electricity at city level scale to manage the power grid, particularly as intermittent renewable sources become prevalent.

Battery technology dates back to around 1800, but domestic batteries were made popular over 100 years ago with the introduction of the AA battery in 1907 by the American Ever Ready Company, following on from their successful D cell flashlights. Today, we use batteries for a variety of household devices, but battery use across society is set to expand rapidly as the energy transition gathers pace. Further, as battery technology improves, these handy energy stores are making their way into more and more devices and applications.

In 2010, global battery production was less than 5 GWh, but with the arrival of the electric car and the growth in grid storage, production in 2020 was nearly 400 GWh (Source: Wood Mackenzie). There is also a significant and growing pipeline of Gigafactory projects, with manufacturing capacity around 1.3 TWh by 2030 based on known and expected projects. But what about the demand potential?

Numerous auto manufacturers have signalled their intent to bring internal combustion engine (ICE) passenger car manufacturing to an end, with dates between 2030 and 2040 often cited for the full switch to electric vehicles (EV). As a stretch, let’s assume that all passenger ICE production ends by 2035, which by then might mean 70 million EVs produced globally per year. If each car requires an 80 kWh battery, then that’s 5.6 TWh of new capacity required each year. Although recycling of batteries and battery components will eventually change the manufacturing landscape, that won’t be the case in the first half of the 2030s. At that time the availability of material for recycling will be the result of production today, which is a tiny fraction of our assumed production in 2035.

Grid storage requirements are a significant unknown. In a report published earlier this year by the research firm Frost & Sullivan, they predict additional global grid battery storage capacity additions will likely reach 135 GWh (0.14 TWh) in the next nine years from the 8.5GWh annual capacity additions that were recorded last year. But capacity additions are scaling rapidly, with the much talked about Tesla installed 100 MWh facility in South Australia in 2016 now easily eclipsed by multiple 300-400 MWh projects. In a 2020 study released by RethinkX, they estimated that for areas of the United States, a shift to 100% wind and solar would require some 40-90 average demand hours of battery storage. In 2020 US electricity demand was 4300 TWh, which would imply around 30 TWh of battery storage. However, it is possible that there is overlap between grid storage and EV storage, which by 2035 might have reached 12 TWh sitting in US garages and at charging points (assuming at least 50% EV penetration by then).

Assuming a rapid transition, the US alone might need 20-25 TWh of installed storage capacity by 2035, with global installed capacity perhaps reaching 100 TWh by that time. That would require a 35% year-on-year expansion of battery production capacity for the next 15 years as shown in the chart. That means in 2035 global battery production is close to 100 times current levels. It also requires manufacturing capacity in 2030 of 8 TWh, six times that of the current project pipeline for new facilities.

Batteries require particular minerals and chemistry, which today consist of lithium, nickel and cobalt in the current generation of Li-Ion batteries. The chemistry of batteries is the subject of extensive research, which points to much lower requirements for these minerals per kWh of storage. A recent analysis by  the European Federation for Transport and Environment (Transport & Environment (2021), From dirty oil to clean batteries) states that over the period 2020 to 2030 the average amount of lithium required for a kWh of EV battery drops by half (from 0.10 kg/kWh to 0.05 kg/kWh), the amount of cobalt drops by more than three quarters, with battery chemistries moving towards a lower cobalt content (from 0.13 kg/kWh to 0.03 kg/kWh). For nickel the decrease is less pronounced – around a fifth – with new battery chemistry moving towards a higher nickel content as a fraction of the total, but still a decline per kWh (from 0.48 kg/kWh to 0.39 kg/kWh).

On the basis of the 2030 numbers above, production of 20 TWh (20,000 GWh in the chart above) battery storage per year in the early 2030s would need;

MetalEarly 2030s additional annual demand, million tonnesCurrent global production, million tonnesRequired increase in global production
Lithium1.00.0910 times
Cobalt0.60.154-5 times
Nickel7.82.74 times

This is a significant step-up in metals production, with history pointing against achieving it.

Data Sources: BP and statista.com

Metals supply could well become a limiting factor in the energy transition given the potential demand for electricity storage. These levels of production increase are feasible over time, but in the space of 10-15 years they represent double to triple the historical trend, although that is true for almost everything in attempting to reduce emissions by 40+% in a decade. The above analysis also doesn’t account for other demands on batteries; from vans and trucks, small ships, barges, small planes, household and commercial devices and so on.

Equally, we shouldn’t discount innovation and different directions of travel. Apart from a slower energy transition, other factors that might influence the outcome are a more rapid evolution of battery chemistry towards more widely available minerals and/or a shift away from chemical batteries to other storage and balancing solutions in the electricity grid. However, don’t expect to see a truly novel solution scale sufficiently in just a decade. The first commercial Li-Ion battery was marketed in 1991 and has taken 30 years to scale to current levels. it was based on research and development over the previous 20 years.

In any case, the decade ahead could well be a period of rapid change and expansion for the global mining industry.

  • Climate Science
  • Energy Transition
  • IPCC

Are we now range bound on temperature?

dchone July 6, 2021

In my last post I discussed the recent IEA 1.5°C Scenario that sets out what is required to reach net-zero emissions by 2050 and manage the transition within a carbon budget of 500 Gt CO2. The IEA have shown that while this is a relatively straightforward calculation to do (and last year I presented a similar one), the resulting energy transition pathway is extraordinarily difficult to imagine, let alone achieve. While such a pathway might be technically possible, is it actually plausible? Is society socially ready to embark on such a journey and inflict such large scale change upon itself?

A new report coordinated through the University of Hamburg’s Center for Earth System Research and Sustainability (CEN) in close collaboration with multiple partner institutions and funded by the Deutsche Forschungsgemeinschaft (DFG) attempts to answer the question of plausibility. In the annual Hamburg Climate Futures Outlook, researchers make the first systematic attempt to assess which climate futures are plausible, by combining multidisciplinary assessments of plausibility. The inaugural 2021 Hamburg Climate Futures Outlook addresses the question: Is it plausible that the world will reach deep decarbonization by 2050? The authors discuss the outcome in their own blog post, found here.

The methodology employed isn’t a direct technical analysis of the pathway steps, but rather an assessment of a number of social drivers that would be required to underpin such a transition. The authors conclude that deep decarbonisation by 2050 isn’t currently plausible, meaning that warming will exceed 1.5°C. None of the drivers show enough momentum to bring about deep decarbonisation by 2050 and they find that some drivers are currently inhibiting progress.

The authors combined their assessment of social plausibility with the latest set of socioeconomic future emissions scenarios (SSPs) and the latest physical science research on climate sensitivity to show that warming lower than 1.7°C and higher than 4.9°C by the end of the century as currently not plausible. The lower figure of 1.7°C relative to pre-industrial levels corresponds to the lower bound of the 90% uncertainty range in a low emissions IPCC scenario (SSP1-2.6) and  the higher figure of 4.9°C corresponds to the upper bound of the 90% uncertainty range of a higher emissions IPCC scenario (SSP3).

Source: Hamburg Climate Futures Outlook 2021

Reframing this around central estimates for the scenarios gives a plausible range of 1.8°C to 3.8°C for warming by the end of the century. The original Shell Sky 2018 scenario also had a central estimate of about 1.8°C.

While the lower end of the range was analysed by the Hamburg team in terms of social plausibility, the upper end was not (see chart below); presumably that is a task still to be done.

Source: Hamburg Climate Futures Outlook 2021

However, the upper end of the range has been the subject of social plausibility analysis in a recent paper released by the MIT Joint Program on the Science and Policy of Global Change and discussed in this blog. That analysis was led by MIT, with me and my colleague Martin Haigh as contributing authors. A scenario called Growing Pressures was developed to illustrate how and why there is now an inevitable trend towards near zero emissions, catalysed by the physical reality of a rising average surface temperature. Near (net) zero emissions means that warming will stop and the temperature will plateau, but only a rapid shift to near (net) zero emissions will deliver the 1.5°C. The question the analysis sought to answer was what the highest plausible warming outcome might be given that an energy transition is clearly underway and there is real concern growing across society around the issue of climate change.

While political trends, such as populism or leaning to the left or right, tend to come and go over time and social norms shift around as the decades pass, the temperature trend is essentially a monotonic increasing function. As such, the influence it has on our consciousness will only grow over time.  The cascade can be simplified as follows;

  • Climate changes;
    • Global surface temperature continues to rise, and impacts become more apparent.
    • Sea level keeps rising with visible consequences.
  • Concern rises;
    • Voter pressure on cities, states and countries to develop ‘green’ policies.
    • Shareholders pushing companies to take on net-zero emission goals and targets.
  • Local and national governments pursue (piecemeal) interventions;
    • Ongoing actions under the UNFCC under the banner of the Paris Agreement and the emergence of net-zero emissions (NZE) as a framing concept.
    • Incentives and mandates drive down the cost of new energy technologies and lead to further uptake.
    • Large established NZE policy frameworks continue to operate (e.g. EU, California) and some new NZE policy frameworks emerge (e.g. China by 2060).
  • Technology marches on;
    • Renewable energy access becomes cheaper.
    • Developments in physics, chemistry and materials sciences (e.g. PV, storage).
    • Rapid and broadening digitalization of society.
  • Markets rule;
    • Financial markets distance themselves from fossil fuel investments, but particularly coal, and climate-related financial disclosures bring increasing transparency.
    • Demands by businesses and consumers for lower carbon footprint products and some preparedness to pay for this.
    • Development of markets to support low-carbon investment (e.g. nature-based solutions).
    • Alternatives to coal, oil and gas becoming increasingly competitive.

While each of these will undoubtedly vary over time, their ongoing combined effect gives rise to a scenario of continuous change and transition. The central estimate temperature outcome for Growing Pressures is 2.7°C in 2100 leading to a 2.8°C plateau in 2150, well below the 3.8°C central estimate upper threshold discussed above.

Source: MIT Joint Program

Combining the findings of the these two separate analyses indicates that at the current stage of the energy transition, the warming outcome is now range bound between 1.8°C and 2.7°C in 2100, based on central estimates. That range is partly dictated by the development and availability of energy technologies, but is perhaps overwhelmingly driven by social plausibility, as discussed by the Hamburg team and in the MIT report.

The range may well narrow as time goes by. In the short term, if emissions don’t fall quickly, society will rapidly consume the available carbon budget for 1.5°C and then upwards. As was shown in the IPCC 2018 Special Report on 1.5°C (SR15) report and again by the IEA in their own NZE2050 scenario, that budget is less than 500 Gt CO2 for 1.5°C of warming and is currently being consumed at the rate of over a gigaton every ten days (41 Gt per year). However, as the temperature rises and it becomes apparent to society critical thresholds are being passed, that in turn increases the drivers in the Growing Pressures scenario, as well as opening the social plausibility for nearer term reductions. Under such circumstances, repeating the two analyses in 2030 could well see a much narrower range, perhaps 2.0°C to 2.5°C.

None of the above is meant to argue that such a range is a good thing; the IPCC made it plain in their SR15 that we need to stay as close to 1.5°C as possible. However, the analyses are nevertheless important as they act as a signpost to help guide us forwards and they demonstrate that the energy transition is having an impact.

You can read the MIT report here.

Featured image courtesy of the UK Met Office.

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.

  • Carbon capture & storage
  • Carbon Dioxide Removal (CDR)
  • Climate Science

Pathways to 1.5°C

dchone June 11, 2021

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

Source: IPCC SR15

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

Source: IPCC SR15

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

Source: IPCC SR15

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

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

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

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

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

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

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

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

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

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

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

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

  • Electric Vehicles
  • Energy Transition
  • Germany

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;

Sector2019 reductions from 19902030 reduction goal relative to 1990
Electricity generation45.5%62.5%
Buildings41.9%66.7%
Transport0.6%42.1%
Industry33.8%50.7%
Agriculture24.4%35.6%
Other76.3%86.6%
Overall ambition35.7%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 transport2019 total emissions (scaled to 100)2030 emissions relative to 2020 scale
Passenger vehicles6230
Light commercial95
Heavy freight2418
Non-road transport55
Total10058
  (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!

  • Battery storage
  • Carbon capture & storage
  • Coal

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)2005Latest data for 2019
CO2 Fossil Fuel Combustion5753.54856.7
CO2 Non-Energy & Industrial381399.1
CH4 from all sources686.1659.7
N2O from all sources455.8457.1
HFCs, PFCs, SF6, NF3 from various industries146.5185.6
Total Emissions (Sources)74236558.3
LULUCF Emissions16.823.5
LULUCF Carbon Stock Change(804.8)(812.7)
Net Emissions (Sources & Sinks)6635.05769.1

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.

  • Biofuels
  • Electricity
  • Energy efficiency

A very different pathway forwards for India

dchone March 31, 2021

As COP 26 approaches, the UK government (as President of the COP) and the UNFCCC are encouraging as many countries as possible, in accordance with Paragraph 36 of the Paris Agreement Decision Text, to communicate mid-century, long-term low greenhouse gas emission development strategies. These should ideally include a net-zero emissions goal for the same time period as such ambitious national contributions are required from all countries to meet the 1.5°C goal of the Paris Agreement. To date, about 30 such strategies have been posted on the UNFCCC website.

For India, a mid-century goal of net-zero emissions points to a fundamentally different development pathway to one that might have been imagined just a few years ago. While the busyness and intensity of traffic and commerce in Indian cities like Mumbai and Delhi give the impression of a country bound to fossil fuels, the reality is very different. With around 1.4 billion people in total and a large rural population engaged in agricultural activities, per capita CO2 emissions – at 1.8 tonnes per person in 2015 – are around a ninth of those in the USA and around a third of the global average of 4.8 tonnes per person.

However, overall, India is now the planet’s third-largest emitter of CO2, behind China and the USA. Some costs of the country’s dynamic growth are increasingly visible, namely major congestion in urban centres and declining air quality.

The emissions focus should be on where India might go, rather than where it has been. For example, there are about 3 billion tonnes of steel in use within the country, in buildings, cars, appliances, pipelines and industrial plants. But as India aspires to be a developed economy, that number will likely rise to around 15 billion tonnes. Every other country has built its steel infrastructure with coal as the energy source, but if India does the same that could add another 24 billion tonnes of CO2 to the atmosphere globally, based on production emissions of about 2 tonnes of CO2 per tonne of iron. A good proportion of this would come from smelters in India, many of which may not have even been built yet. This is 6% of the IPCC 1.5°C carbon budget globally and would create a significant emissions spike, even considering efficiency improvements in smelting and optimised recycling. It will also add to the local environmental stresses that people in India feel each and every day. So a different smelting pathway should be considered and that is just one aspect of India’s future national development.

Similarly, the Indian electricity sector is largely based on coal fired generation, but here there are visible signs of change as solar and wind become the preferred choices for new generation capacity. By 2020, India had all but met its Nationally Determined Contribution goal of 40% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030 (solar, wind, nuclear, hydro, biomass). Whether its cars, trucks, housing, factories or commercial buildings, the story is largely the same; what is yet to come far exceeds what is already there.

This points to a strategic emissions focus for India that is very different to countries with substantial legacy infrastructure. Rather than needing to dislodge the status quo, India has the opportunity to embark on a different development pathway based around cleaner energy technologies and efficiency. These future choices will be important, not just at the national level when making important infrastructure decisions, but also in homes. At the household level, ownership of domestic appliances such as washing machines, refrigerators and air conditioners is relatively low, varying between 15% and 30%, depending on the appliance. As the country develops over the coming 30 years, appliance ownership may well head towards the 90% level seen in much of the world. Once in use these appliances will consume energy, so the choice of model and efficiency rating will be important. These appliances could add 300-500 terrawatt-hours a year to electricity demand, nearly a third of that generated in 2019, but lower efficiency choices might double this amount.

But what might such a development pathway look like? Over recent months the Shell scenario team and Shell India have worked with The Energy and Resources Institute (TERI) of India to illustrate what the future could hold. In this collaboration the team developed a Net-Zero Emissions (NZE) scenario, the principle focus of the work, to examine whether adequate opportunities exist to fully decarbonise the energy sector; areas where India’s energy sector does not have enough choices for full decarbonisation by 2050 are also highlighted. From a second scenario, Towards Net-Zero (TNZ), barriers to change that might emerge are revealed. Energy efficiency, electrification and a switch towards decarbonised fuels are the three main pillars of India’s energy strategy, with the need for a transformative move towards renewable electricity, hydrogen and bioenergy as key fuels. This analysis indicates that the industrial and heavy transport sectors are likely to face limits in achieving full decarbonisation, primarily due to technological constraints which leave residual emissions in the system. This necessitates the need for carbon removal options to achieve net-zero emissions, including both technical and natural solutions.

An overview of the pathway reveals both radical and very rapid change. For example, in India today, there is a successful programme of solar PV installation under way, but by 2030 as solar starts to dominate the generation mix in the NZE scenario, it will need to be matched by large-scale energy storage to manage intermittency. More than 1,000 gigawatts of solar PV, 700 GW of which with matching storage, needs to be installed through the 2020s, far exceeding the amount of solar PV installed over the last decade. This level of deployment is challenging, even in global terms. In 2019 global solar module production was about 140 GW, but growing at some 20% per year. Even if growth continues at this rate through the 2020s, the demand in India for modules under NZE would still equate to 20% of global supply. Embodied within the pathway is a monumental challenge, but one that is worth aiming to achieve.

The scenario analysis was released last week and can be found here. The analysis incorporates both the pathway forwards and the policy framework required to get there.

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.

  • Climate Science
  • Energy Transition
  • Net zero emissions

Growing pressures

dchone March 18, 2021

The task of getting to net-zero emissions by 2050 has become the rallying cry behind COP 26 and considerable diplomatic effort is now being applied to the push to get countries to sign up to such an outcome. But plans and outcomes aren’t always aligned, however plans often set the scene for outcomes that at least align with the intention.

Thinking back even a decade, the concept of net-zero emissions barely registered in the political consciousness. In the Copenhagen Accord of 2009, there is only mention of ‘deep cuts in global emissions are required according to science, and as documented by the IPCC Fourth Assessment Report with a view to reduce global emissions so as . . . . ‘ and in the IPCC 4AR, while some of the scenarios show emissions falling to zero late in the second half of the century, this wasn’t a key message for policymakers. Rather, the key message in 2007 in relation to mitigation in the long term, i.e. after 2030, was;

  • In order to stabilize the concentration of GHGs in the atmosphere, emissions would need to peak and decline thereafter. The lower the stabilization level, the more quickly this peak and decline would need to occur. Mitigation efforts over the next two to three decades will have a large impact on opportunities to achieve lower stabilization levels.

By the time the IPCC Special Report on 1.5°C (SR15) appeared in 2018, the key mitigation message was very different.

  • Reaching and sustaining net zero global anthropogenic CO2 emissions and declining net non-CO2 radiative forcing would halt anthropogenic global warming on multi-decadal time scales. The maximum temperature reached is then determined by cumulative net global anthropogenic CO2 emissions up to the time of net zero CO2 emissions and the level of non-CO2 radiative forcing in the decades prior to the time that maximum temperatures are reached.

Moreover, a timeline to 2050 was proposed in SR15 for reaching net-zero emissions.

The history for this change is a separate discussion, but it perhaps started with the simple recognition that climate change is a stock problem and that the stock will only stop growing (and therefore stop the problem getting worse) when the flow into the atmosphere is the same as the flow out, i.e. net-zero. The science community has always known this, but the concept has taken some time to register more widely. I first discussed this in a blog post and made mention of net-zero emissions in 2009.

Today, with society having done little to arrest the flow of carbon dioxide into the atmosphere, the timing for net zero has been brought forward from late in the century to around 2050, based simply on the relationship between temperature and cumulative emissions, or stock. Both companies and policymakers are now focused on the actions required for net zero as 2050 is, in many cases, within their long term planning horizon window for major capital investment.There is growing pressure on all parties to do something, which leads to the declarations of net-zero emissions goals from many countries, with presumably many more to come.

The effort required to achieve an outcome of net-zero emissions by 2050 will be extraordinary, which might raise the question of why countries are being so ambitious (apart from the fact that it is necessary). One answer is perhaps because now, versus just a few years ago, we are heading there anyway; it is just a question of when the goal is reached.

One of the key observations that emerges from the recently released Shell Energy Transformation Scenarios is that within the course of about a century all three scenarios (namely Waves, Islands and Sky 1.5) reach net-zero emissions. In Sky 1.5 is it in in the late 2050s, in Waves around 2100 and Islands perhaps the 2120s (by extrapolation as the Shell World Energy Model doesn’t extend past 2100). The recognition of net-zero emissions as a possible inevitable outcome has been on my mind for some time now and I felt that it needed further analysis. To that end, Shell supported a project by the MIT Joint Program on the Science and Policy of Global Change to look at the implications of where the energy transition is taking society.

The analysis MIT did recognises that there is now a cascade of growing pressures operating in society, starting with the physical reality of a rising average surface temperature. While political trends, such as populism or leaning to the left or right, tend to come and go over time and social norms shift around as the decades pass, the temperature trend is essentially a monotonic increasing function. As such, the influence it has on our consciousness will only grow over time.  The cascade can be simplified as follows;

  • Climate changes;
    • Global surface temperature continues to rise, and impacts become more apparent.
    • Sea level keeps rising with visible consequences.
  • Concern rises;
    • Voter pressure on cities, states and countries to develop ‘green’ policies.
    • Shareholders pushing companies to take on net-zero emission goals and targets.
  • Local and national governments pursue (piecemeal) interventions;
    • Ongoing actions under the UNFCC under the banner of the Paris Agreement and the emergence of net-zero emissions (NZE) as a framing concept.
    • Incentives and mandates drive down the cost of new energy technologies and lead to further uptake.
    • Large established NZE policy frameworks continue to operate (e.g. EU, California) and some new NZE policy frameworks emerge (e.g. China by 2060).
  • Technology marches on;
    • Renewable energy access becomes cheaper.
    • Developments in physics, chemistry and materials sciences (e.g. PV, storage).
    • Rapid and broadening digitalization of society.
  • Markets rule;
    • Financial markets distance themselves from fossil fuel investments, but particularly coal, and climate-related financial disclosures bring increasing transparency.
    • Demands by businesses and consumers for lower carbon footprint products and some preparedness to pay for this.
    • Development of markets to support low-carbon investment (e.g. nature-based solutions).
    • Alternatives to coal, oil and gas becoming increasingly competitive.

While each of these will undoubtedly vary over time, their ongoing combined effect gives rise to a scenario of continuous change and transition. The resultant MIT ‘Growing Pressures’ scenario is built on a series of simple premises; for example, if by 2050 the push-back by financial markets in combination with the falling cost of renewables means that new coal fired power station development ceases globally, then by about 2100 at the latest coal fired generation of electricity will have ceased (because the power stations built up to 2050 would have been largely decommissioned by then). An overview of the premises is shown below, set against the Growing Pressures emissions trajectory.

Progression towards net-zero emissions in the Growing Pressures scenario (Source: MIT Joint Program)

The premises are not meant to be the fast pace changes needed to limit warming to 1.5°C, but an assessment of events that are now seemingly locked into our collective energy system future as a result of the growing pressures. This then establishes a new baseline from which to think about mitigation actions and to assess the progress that is being  made towards a better outcome.

With net-zero emissions looking more like an inevitable outcome than an aspiration, the framing of the climate issue may also change. Looking at the IPCC 5th Assessment Report, readers were presented with a series of impact risk tables that gave the impression of a binary outcome, i.e. society could take action and limit warming to 2°C or accept the consequences of 4°C of warming.

Risk assessment example in IPCC 5th Assessment Report (Source: IPCC)

But the Growing Pressures scenario limits warming to around 2.8°C (central estimate), effectively eliminating the IPCC central outcome of 4°C. In less than a decade the framing of the climate issue has moved from being somewhat unbounded in terms of temperature rise, to one that is bounded between central estimates of 1.5°C and 2.8°C. Both the Shell Waves and Islands scenarios fall within this range and of course Sky 1.5 is at the low end of the range (i.e. 1.5°C).

MIT assessed scenario outcomes (Source: MIT Joint Program)

This finding is not an argument for just letting events play out; 2.8°C would have serious consequences in terms of adaptation. Rather, the finding illustrates that change is underway and highlights the steps needed to accelerate that change. It also strengthens the hand of policymakers as they encourage adoption of a net-zero emissions goal by as many countries as possible.

Returning to this analysis in a decade hence might see the boundaries contract further. Scenarios that continue historical trends of unfettered fossil fuel use no longer seem relevant when a shift toward a low-carbon society is already under way. The task in front of society is now about the pace of change, not whether change can happen.

You can read the MIT report here.

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.

Featured image courtesy of the UK Met Office.

  • Carbon capture & storage
  • Energy Transition
  • Mitigation

The importance of sinks

dchone March 2, 2021

A review of the 2018 IPCC Special Report on 1.5°C shows that all four archetype scenarios (P1, P2, P3 and P4) make use of sinks – or the ability to remove carbon dioxide from the atmosphere and store it geologically or retain it within the land. The reasons for needing to do this fall into two categories;

  1. The point at which net-zero emissions is required (i.e. 2050) comes before all anthropogenic emissions can be stopped, so remaining emissions have to be balanced with sinks to remove the same amount of carbon dioxide from the atmosphere as added by remaining sources.
  2. By the time net-zero emissions is reached, the carbon dioxide load in the atmosphere has exceeded that associated with 1.5°C of warming, so sinks are required to lower atmospheric levels at a faster rate than natural decline, ensuring a 1.5°C or lower outcome by the end of the century.

The four scenarios are shown below.

Diagram

Description automatically generated
Source: IPCC SR15

In the P1 scenario sink use is minimal, highlighted by an end to land based anthropogenic emissions and the subsequent development of the land as an enhanced sink from mid-century on, at about 5 Gt per annum drawdown of carbon dioxide. P1 makes no use of geological storage. By contrast, the P4 scenario makes very extensive use of geological sinks with BECCS playing a substantial role even as land based emissions are eventually reigned in. But why is there such a difference in sink use between these scenarios?

A deeper dive into the four stories reveals an interesting trend – an almost linear relationship linking cumulative sink capacity to 2100 with the growth in final energy demand (measured as the increase in 2050 demand over 2010 demand).

This trend points to two aspects of the energy transition which are in turn related to the two reasons for needing sinks outlined above;

  1. As energy demand increases and emissions rise from sectors of the economy where no large scale mitigation solutions currently exist, perhaps a sector like aviation, greater and greater sink capacity will be required.
  2. With energy demand rising quickly and a starting dependency on fossil fuels to meet that demand, the carbon budget that equates to 1.5°C is exceeded well before the point of net-zero emissions, which then means extensive sink capacity is required to remove this carbon from the atmosphere and meet 1.5°C later in the century.

That then brings into focus the question of energy demand. In the Energy Transformation Scenarios released recently by Shell, all three scenarios show rising energy demand through the century, although in the Sky 1.5 story this is curtailed from the 2070s onwards due mainly to efficiency practices and rapid electrification (which can also lead to greater efficiency). 

Energy demand growth across all three Shell scenarios contrasts with the IPCC range, where the P1 archetype imagines a fall in energy demand. But a fall in energy demand over the next thirty years is in sharp contrast with history, where energy demand has only ever risen, even as very significant efficiency gains have spread throughout society.

For comparison, over the last 30 years (to 2019), world total primary energy grew by 68%. This derives from GDP growth of 180%, and a Shell assessment of total energy service growth of 130%. In a discussion on energy growth, it is important to focus on non-OECD countries, because that is where the relationship of GDP growth to energy service growth is strongest. OECD countries are not far from the point where energy service growth is matched by energy service efficiency improvement and hence energy demand stays flat. In the last 30 years, non-OECD primary energy growth was over 80% of the global total and in the next 30 years we may see non-OECD growth making up almost all of the global energy demand increase. But this is the portion of the word where population increase continues in many countries and where access to energy is growing at a rapid rate. This in turn creates new demand for energy services. In short, we are more likely to underestimate energy demand than overestimate it.

There are also other reasons for continued energy demand growth.

  • Efficiency rebound on a macro scale is widespread and often not recognised. For example, when I was growing up in Australia in the 1960s, air conditioned cars hardly existed. I still remember when we lived outside the country in an American community (in SE Asia) in 1967 and I got in my first air conditioned car; I really couldn’t believe such a thing was possible. Today, you can’t buy a car without air conditioning. So in the 1960s we had maybe 50 million upscale cars globally with expensive inefficient air conditioners, but now we have over one billion cars with cheap efficient air conditioners. That’s lots more energy than the 1960s.
  • Society continues to find and adopt new and interesting ways to consume energy. When energy is available, it gets used. Think how much more energy intensive our life is compared to our parents or grandparents. One example – millions of people around the world are starting to adopt and make use of Bitcoin, but the media recently reported that Bitcoin ‘mining’ at various sites around the world collectively consumes more electricity than the Netherlands.
  • Adoption of new technologies can lead to explosive growth in energy services. The internet and all the servers and devices connected to it is one such example. It didn’t really exist thirty years ago, at least not as a consumer service.

Even with significant energy efficiency improvement over time, the Sky 1.5 scenario which is comparable with IPCC P1 to P4 in terms of temperature rise (i.e. 1.5°C), sees final energy demand increasing by 49% in 2050 relative to 2010. The scenario also employs significant sink capacity globally to achieve an outcome of 1.5°C in 2100. The cumulative total across nature based and manmade carbon dioxide removal to 2100 is around 1,000 Gt for Sky 1.5. Plotting this on the chart above, we see that although Sky 1.5 has a similar, but slightly higher final energy demand than P4, it makes less use of sink capacity by about 20%.

Both Sky 1.5 and IPCC P4 demonstrate the considerable sink capacity required for a 1.5°C outcome, unless energy demand can be significantly curtailed in the near term and rapid solutions found and deployed for current hard-to-abate sectors.

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.

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