Prioritising use of renewables

Using renewables in different ways produces very different emissions reductions. 

Use of renewables will be central to decarbonising most parts of the energy system.   But the amount by which each MWh of renewables reduces emissions varies greatly across sectors and applications.

This is illustrated in the chart below.  It shows the number of tonnes of emissions reduction from using 1MWh of renewables in various ways. The Climate Change Committee (CCC) has produced similar estimates (see end of this post), although for a slightly narrower range of uses. 

There is clearly significant variation around each of these values.  Estimates depend, for example, on efficiency of a fossil fuelled power plant, or the emissions from the petrol or diesel car that is being displaced by an EV.  And there may be changes over time as technologies improve, although some of these technologies are limited by the fundamentals of their processes.  Nevertheless, the broad picture is likely to remain similar. 

Chart:  Emissions savings from using 1MWh of renewables for various applications

Note:   The use of renewables will usually focus on electricity but in some cases may include a component of renewable heat. 

The chart shows that directly replacing fossil fuels (coal and gas) in power generation is highly effective in reducing emissions. Coal will be eliminated from power generation in the UK by 2025, but some UK renewables may displace coal plant elsewhere if exported, so coal in power generation is included on the chart.  Highly efficient end use applications, such as heat pumps and electric vehicles, also deliver large reductions per MWh. Carbon Capture and Storage (CCS) is an especially effective use of energy, because the energy is dedicated to capturing and permanently storing CO2 from flue gases, although there are of course other costs. 

Other applications of renewables are less effective.  Replacing natural gas with electricity for industrial heat, making “green” hydrogen by electrolysis for use in boilers, and Direct Air Carbon Capture and Storage (DACCS) all achieve smaller amounts of emissions reduction per MWh of renewables.  Least effective of any of these approaches is the manufacture of e-fuels, where green hydrogen is combined with CO2 to make liquid hydrocarbons using renewable electricity.   Making e-fuels results in up to thirteen times less emissions reduction per MWh compared with the other options. 

Implementing options producing less abatement per MWh risks diverting renewables away from those that produce more abatement, hampering overall emissions reductions efforts.  This risk applies for as long as availability of renewables is limited, which seems likely to be the next couple of decades at least given the vast scale up of renewables deployment that is needed (see previous post).

Those options to the right of the chart will require very abundant, and preferably very cheap, renewable energy if they are to make a significant contribution to total emissions reduction.  This is still many years away, and most likely to be where there is a good solar resource, though economic e-fuels production still seems likely to be some decades away at best.  Among other things there are limits to efficiency gains in e-fuels manufacture – making hydrogen then combining it with carbon dioxide to make fuel is intrinsically energy intensive.

A complementary perspective to Marginal Abatement Costs

This perspective is a useful complement to looking at cost per tonne of abatement, usually summarised in a marginal abatement cost (MAC) curve.  A MAC curve is a valuable guide to where there are low cost opportunities available, although policy needs to focus much more widely than on the cheapest abatement.  However, technological progress can lead to abatement costs falling over time, as for example they have spectacularly in the case of solar PV over the last ten years.  Furthermore, interactions across the system may change feasibility, costs and practical scale of available options. A variety of perspectives can help understanding the possible effects of changes, and so can contribute to mapping out more robust pathways and identifying the likely contributions of different options.

The perspectives anyway often indicate similar conclusions.  A high renewables requirement is reflected in high abatement costs.  Estimates of abatement costs are typically £550-1200/tCO2[i]or more for e-fuels, an order of magnitude more than CCS, at around £60-100/tCO2[ii]

Specifying “additional” renewables does not remedy the problem of high renewables use

In apparent recognition of this problem of diverting renewables from more productive abatement, it is sometimes specified that renewables for some applications must be “additional”.  However “additional” renewables still face the same issues, because they still divert renewables from other potential uses. Any funds used to build renewables for less effective abatement could instead be used to build renewables for more effective abatement.

What about surplus renewables? 

There may increasingly be times when electricity demand is met entirely from nuclear and renewables, and there is surplus low carbon power on the grid.  This may imply that all available sources of demand for renewable electricity have been fulfilled.  The surplus low carbon electricity could be applied in various ways.  However there will still be choices to  be made, because there will be alternative uses for the (limited) surplus on the system.

Can’t this all be left to the (carbon) market to sort out?

Many of these issues can be addressed to some extent letting by carbon markets do their job of finding least cost abatement.  However at present many technologies are at an early stage, and subsidies for early deployment are in place or planned.  In the UK these include contracts for industrial CCS, contracts for low carbon hydrogen, contracts for renewable electricity, a mandate for renewable fuels in surface transport and a mandate for sustainable aviation fuels.  Such measures have a strong rationale in principle, because carbon markets alone will not produce adequate deployment of new technologies.  However deciding which technologies to support and by how much inevitably means choices need to be made, and the sort of analysis presented here can be useful in helping form such judgements.

Carbon markets have a crucial role to play.  But early stage deployment requires a range of factors to be addressed in deciding where support for new technologies is best directed.  This should include the quantity of emissions reduction using renewables.

Adam Whitmore – 27th September 2021

Analysis by the CCC

The UK’s Climate Change Committee (CCC) has produced similar estimates to those presented here, though covering a somewhat smaller range of options[iii].  The relative performance of the options and the approximate savings are similar in the two pieces of analysis.  However the analysis in this post indicates somewhat less abatement per MWh in many of the cases, which appears to reflect more cautious assumptions.  

Notes


[i] Costs are currently highly uncertain due to the variety and early stage of development of the technologies.  Early stage estimates for other technologies have often been subject to appraisal optimism, understating the costs of early projects.  A recent article in Nature Climate Change included estimates of €800–1200/tCO2 at present.  https://www.nature.com/articles/s41558-021-01032-7?proof=t Other cost estimates show a range of e-fuel costs of £2000-4000/tonne, which is approximately £550-1100/tonne CO2 reduction. https://www.transportenvironment.org/sites/te/files/publications/2017_11_Cerulogy_study_What_role_electrofuels_final_0.pdf   ICCT estimates e-fuels costs of at least €3-4/litre by 2030 (approx. €3750-5000/t).  The potential for cost reduction is strongly dependent on the costs of the renewable energy needed for manufacture. 

[ii] CCS costs vary significantly because projects differ greatly, for example in the concentration of the CO2 being captured and the distance that the captured CO2 needs to be transported.  There are also few industrial capture projects yet operating, implying uncertainty in addition to the variety of costs.  The CCS cost estimates shown  are based on a range of sources, including recent IEA assessment, https://ieaghg.org/ccs-resources/blog/new-ieaghg-technical-review-towards-improved-guidelines-for-cost-evaluation-of-carbon-capture-and-storage, and estimates from GCCSI https://www.globalccsinstitute.com/wp-content/uploads/2021/03/Technology-Readiness-and-Costs-for-CCS-2021-1.pdf.  The upper end of the range for capture costs is provided by the Longship project, which is likely to be expensive due to project specific factors (transport and storage costs are assumed to be lower than for Longship).

[iii] https://www.theccc.org.uk/wp-content/uploads/2020/12/Sector-summary-Electricity-generation.pdf  See figure M5.4.

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