Author Archives: adamwhitmore

Seven Years On

The last seven year have seen too little progress on solving the climate change problem, despite some welcome developments.  Much more rapid progress is now needed.

It is now seven years since I started this blog – my first post was on 3rd March 2013.  It seems a good time to take a look at what has gone well and what has gone badly over that period in efforts to reduce climate change.  So here are seven ways in which things have gone badly, and seven ways in which they have gone well.

Things that have gone badly over the last seven years

  1. Annual CO2 emissions from energy and industry have increased over the last seven years, continuing the long-term trend, when they need to be decreasing rapidly.

Chart 1: Emissions of CO2 from energy and industry (excluding land use)

Source: EDGAR  https://edgar.jrc.ec.europa.eu/booklet2019/Fossil_CO2andGHG_emissions_of_all_world_countries_booklet_2019report.pdf

  1. Deforestation has not fallen – if anything it’s increased.

This not only bad for the climate, it’s bad for biodiversity and the wider stability of ecosystems.

Chart 2: Tropical primary forest loss (million hectares)

See:  https://www.bbc.co.uk/news/science-environment-48104037

  1. Over 15% of the remaining carbon budget has been used since 2013, even on the most optimistic view[i].

In 2013 the remaining carbon budget (that is, total cumulative CO2 emissions that remain possible while limiting global mean surface temperature rises to 2 degrees) was around 1900Gt CO2.  It is now around 1600Gt CO2.The remainder is getting used up ever more quickly as emissions continue to rise.

  1. Large amounts of high carbon infrastructure are still being built.

This includes large amounts of new coal-fuelled power generation. This risks lock-in of emissions for decades.

  1. There is a lack of progress with developing and implementing low carbon technologies in many sectors

Most emissions intensive industries, notably steel, have made little progress in changing their processes to reduce emissions.  One of the main technologies likely to be needed for decarbonising industrial emissions, CCS, has seen very little deployment, with only about an additional 10 mtpa[ii] stored from projects coming on line since 2013.  The largest contributor to the increase has been the Gorgan project, which is natural gas production, so not likely to be part of a net zero emissions world.  10 mtpa is only about 0.02% of global emissions.  CCS is also likely to be essential for achieving negative emissions from Bioenergy with CCS (BECCS), among other things.  There has also been only very limited progress to date on deploying low carbon hydrogen.

  1. China appears to be making emissions reduction less of a priority.

Among other factors, recently slowing economic growth seems to have focussed attention in China towards economic stability and energy security rather than the threats from climate change.

  1. Most countries have targets that are far too weak

Existing pledges under the Paris Agreement imply a continuing increase in global emissions rather than the rapid decrease that is needed[iii].

This is a daunting list of problems.  However, there is also some good news, although in all cases it would be even better if positive trends were happening faster.

Good news from the last seven years

  1. Costs of low carbon technologies have fallen rapidly, and continue to fall.

Wind and solar electricity are in many cases now competitive with, and often cheaper than, electricity from new fossil fuel generation.  Falling battery costs will enable to the electrification of surface transport and help balance the grid.

This seems to me to be by far the greatest cause for optimism.  Low carbon options will simply become the default choice for new investment in many cases, and policies to reduce emissions will increasingly be working to support a trend that is driven by economic as well as environment imperatives.

  1. Some countries have put binding targets in place for net zero emissions.

The UK already has such a target for 2050, seeking to end the UK’s contribution to climate change.  The EU seems likely to formalise a similar target very soon.

  1. Some countries have cut emissions significantly, showing what can be done.

The UK has cut its annual emissions by nearly 20% since 2013[iv], with the largest component of this being a reduction in coal use in the power sector, a change readily replicable elsewhere.

  1. Public concern about climate change has risen while scepticism about the science has largely disappeared, at least outside the USA and a few other countries.

85% of UK voters are now concerned about climate change[v] with over a quarter ranking it among their top three issues[vi].  This was reflected during the recent general election campaign[vii] in all parties offering policies to reduce emissions to net zero .  Over time this should create the political space for some of the more challenging policies that will be needed to reduce emissions to close to zero.

  1. Additional policies are being put in place, and carbon pricing is increasingly widespread.

For example, almost all major economies now have renewables targets, and there are over 50 carbon pricing systems in place around the world.

  1. Governments increasingly see economic opportunities in decarbonisation rather than costs.

The opportunities created by new industries are increasingly recognised as part of wider industrial policy.

  1. The Paris Agreement has been signed.

Almost all countries have now committed to limit temperature rises to below 2 degrees and to make a contribution to reaching that target, recognising different national circumstances.  Some may consider this is the main piece of good news over the past seven years.  However its effectiveness remains to be proven, and its success looks likely to depend on some of the other trends I’ve highlighted, notably falling costs for low carbon technologies.

Looking at these trends together, I am both less optimistic and more optimistic than I was in 2013.  I am less optimistic because seven years of rising emissions and continuing investment in high carbon infrastructure have made the challenge of limiting climate change even greater than it was.  But I am more optimistic because there is greater recognition and acceptance of the problem, more is now being done (though still nowhere near enough) and, above all, because low carbon energy is rapidly becoming cheaper than high carbon energy.  As a result it looks likely that emissions from the energy sector will eventually be greatly reduced and even halted entirely.  This may make it easier to focus on reducing other emissions as well, especially those from deforestation.

But eventually will be too late.  Much damage is already being done to our world.  More will inevitably follow. This will include the loss of irreplaceable parts of the natural world.  Given rising emissions, and how much of the carbon budget has been used up, it now looks practically impossible to keep temperature rises to 1.5 degrees, and difficult, though still possible, even to limit them to 2 degrees.

However it could still get much worse.  The task now is to avoid the worst of the risks by keeping emissions and accompanying temperature rises as low as possible, including keeping global temperature rises to below 2 degrees.  With a lot of effort and a little luck there is still time (just) to achieve this.  But the task has never been greater or more urgent.

Adam Whitmore – 9th March 2020

[i] For a 50% chance of remaining below 2 degrees, based on cumulative CO2 emissions.  See https://onclimatechangepolicydotorg.wordpress.com/2018/10/

[ii] https://www.globalccsinstitute.com/resources/global-status-report/

[iii] https://climateactiontracker.org/global/cat-emissions-gaps/

[iv] https://www.theccc.org.uk/publication/reducing-uk-emissions-2019-progress-report-to-parliament/

[v] https://www.ipsos.com/ipsos-mori/en-uk/concern-about-climate-change-reaches-record-levels-half-now-very-concerned

[vi] https://www.bbc.co.uk/news/science-environment-50307304

[vii] https://onclimatechangepolicydotorg.wordpress.com/2019/11/25/the-uks-political-consensus-on-climate-change/

 

The need to focus on production based measures of emissions

Consumption based accounting for emissions can provide valuable insights, but focussing on production based accounting is the right approach for most policy work.

There has been much discussion of whether it is more useful for policy purposes to measure emissions on a production basis or consumption basis. Production based accounting looks at emissions from a jurisdiction, including in making goods for exports.  Consumption based accounting looks at emissions from the entire production chain for all the goods and services consumed in a jurisdiction.  This means including emissions occurring elsewhere in the manufacturing process – looking at the total carbon footprint.  For example, if a car includes steel made in another jurisdiction, then the emissions from that steel production will be counted under a consumption based approach.  However, to exclude double counting, consumption based accounting should exclude emissions from making exports.

Many advocate for the use of consumption-based accounting for judging policy, as representing the full impact of consuming goods.  However, while both approaches have merit, there are good reasons for preferring production-based accounting for most policy making.

The international policy architecture that covers emissions reduction is based on commitments by governments under the Paris Agreement to reduce emissions from within their borders, a production-based approach.  This architecture does not appear likely to change. This means that production-based accounting must at least play a significant role in efforts to reduce emissions.

Furthermore, this international policy architecture is based on sound principles.  It reflects that fact that while the effect of emissions is global, control over emissions is largely national.  This means production-based accounting makes more sense, as it puts measurement where the control is.

It is possible to influence emissions elsewhere, for example by introducing border adjustments and product standards in some cases, most likely mainly for bulk commodities.  This could in principle extend to limiting consumption emissions in some cases.  For example, imports of steel could be included in the EUETS (see here), restricting total emissions from steel consumption in Europe.  However in most cases the ability to control of emissions still fundamentally lies with production.

Finally, the economic benefit of production usually accompanies the emissions.  For example, if steel production relocated from Europe to China the economic benefits of that production also relocate.

Without either the direct control over the emissions from production, or the economic benefits of production, it does not seem appropriate to hold jurisdictions responsible for emissions beyond their borders (although imposing border taxes or similar measures on some types of emissions may make sense to prevent carbon leakage).  Put bluntly, reducing emissions resulting from (for example) Chinese production for export is and should be China’s responsibility, not that of importing countries.  And when, for example, it is said that the UK has reduced its emissions by around 40% since 1990 (a production-based figure) this is both accurate, and a good measure of the progress that has been made, even though a significant proportion of this has been due to changes in economic structure.

This is not intended to suggest that no attention should paid to consumption-based accounting. Consumption-based emissions have fallen less rapidly than production emissions from the UK, as industry has relocated.  This does indicate the need to put continuing pressure on exporters to the UK to reduce their emissions.  It also helps individuals to make different choices, and to put pressure companies to produce lower carbon products.

Indeed, from the point of view of an individual seeking to take action to reduce their carbon footprint consumption-based emissions can provide valuable insights into the appropriate choices. And there are of course good reasons for reducing consumption of many goods, with benefits that go beyond limiting climate change.  And policies to reduce consumption can clearly have many merits as well.

However, the main focus needs to be on each country putting its own house in order, and that means focusing on reducing emissions within its borders.

Adam Whitmore – 19th February 2020

 

 

Can hydrogen be cheaper than natural gas?

Making hydrogen from natural gas inevitably means hydrogen is more expensive than natural gas.  But if hydrogen is made using electricity from renewables, it could become cheaper than natural gas, at least during periods of surplus low carbon electricity supply. 

This is the third of three posts about hydrogen in a low carbon economy.

Making hydrogen from natural gas, the main approach at present, inevitably means that low-carbon hydrogen is more expensive than natural gas per unit of energy.  This is because there are additional costs involved in making the hydrogen, and these will remain even if there is substantial technological progress.  The major costs are:

  • The capital and operating costs of the reformer that converts natural gas to hydrogen
  • Energy losses in the reforming process.
  • The additional cost of CCS, essential to make the hydrogen low carbon in this way.
  • Some emissions will remain, even with CCS, imposing an additional cost from carbon pricing, and requiring measures to absorb carbon in a net-zero economy.

These additional costs mean that hydrogen produced in this way is inevitably more expensive than natural gas – typically by a factor of two or more, even allowing for technological progress.  This is likely to be a barrier to displacing natural gas with hydrogen.

The other route for making low carbon hydrogen, electrolysis, is now more expensive than using reformers.  As a result, it accounts for only a very small fraction of total manufacture.  When the UK’s Committee on Climate Change looked at the potential role of hydrogen in a net zero emissions economy in the UK it concluded that reforming is likely to continue to predominate, because electrolysis is likely to remain more expensive, and would require very large amount of low carbon electricity[i].

But could the costs of electrolysis come down by enough to make it competitive?

The costs of electrolysers have already come down markedly, by around 40% in developed economies according to an estimate from BNEF, with costs in China already lower still.  The potential for further cost reductions from experience is likely to be very large, because the size of the market for hydrogen is likely to grow to many times its current size, and electrolysis could take a larger share of this larger market.  This could lead to large cost reductions of the type already seen for wind power, solar power and batteries.

The main barrier to reducing the cost of electrolysis to below that of reforming is the price of low carbon electricity.  Electricity is typically more expensive per unit of energy than natural gas, and this makes is difficult to compete as a source of hydrogen. However, the costs of renewables continue to fall, and as they become a larger part of the system, periods of surplus will become more common.  In these periods electricity is likely to become very cheap, perhaps with a price at or close to zero.  Hydrogen manufacture becomes a means of storing the energy in this surplus electricity.

This may give opportunities for lower cost hydrogen manufacture using cheap renewable electricity, provided the electrolyser is sufficiently cheap and flexible to enable economic low load factor operation.  Eventually electrolysis could become cheaper than reforming, at least at times.

It is even possible to that low carbon hydrogen from electrolysis could become cheaper than natural gas.  This would require very low cost electricity, most probably during periods of substantial surplus on the grid.  However, as renewables costs continue to fall, especially for solar, electrolysis could even be competitive when electricity systems are not in surplus.

However, the materiality of this will depend on the amount of surplus and very low cost renewables relative to the scale of hydrogen demand.  In the UK at least there is unlikely to be enough surplus renewables power to make the large amounts of hydrogen required for a net zero emissions economy.

Whatever the eventual outcome, policy should recognise the uncertainties.  It should allow for the possibility of cheaper hydrogen from electrolysis, and the impact this might have.

Adam Whitmore – 23rd January 2020

 

 

 

[i] https://www.theccc.org.uk/wp-content/uploads/2018/11/Hydrogen-in-a-low-carbon-economy.pdf

 

Border Carbon Adjustments are moving up the political agenda

Border Carbon Adjustments have been discussed for many years.  However they are now receiving renewed political impetus.  This is especially so in Europe, as the new head of the European Commission has asked for proposals on BCAs to be developed.

A new report, of which I am the principal author, looks at the design issues raised by BCAs, their advantages, and the potential difficulties with their implementation.

It covers a range of issues, some of which have received limited discussion to date, including:

  • The different ways of implementing BCAs – tariffs, different types of allowances, and relationship to consumption taxes
  • Dealing with imports from jurisdictions with their own carbon pricing
  • Phasing in of BCAs
  • Use of different benchmarks for different purposes (BCAs vs. free allocation)

The report, including a summary table of the issues that need to be addressed, can be found here:

https://sandbag.org.uk/project/the-abc-of-bcas/

Adam Whitmore – 4th December 2019

The UK’s political consensus on climate change

The major political parties all make commitments in their general election manifestos on policies to reduce greenhouse gas emissions.  

All the UK’s main political parties have now published their manifestos for the forthcoming general election on 12th December.  These include their programmes on climate change.

The most remarkable feature of the manifestos is the similarities between them.  All make specific commitments on climate change.  All envisage reaching net zero emissions.  All see an increased role for renewables, see the need to improve building insulation, and recognise the role of land use.  All refer to the opportunities created by a green economy.  Compared with only a few years ago this is substantial progress.  Of course, commitments set out now may never be implemented in government, but the fact that parties need to make such commitments is a sign of the increased recognition of what needs to be done.

The table below summarises some of the main points from each manifesto.

2019 UK general election manifesto commitments on climate change 

  Conservatives Labour Liberal Democrats Green
Net-zero target date 2050 2030s 2045 2030
Renewables 40GW of offshore wind by 2030 90% renewable electricity and 50% renewable heat by 2030, including roll out of heat pumps and hydrogen 80% of electricity from renewables by 2030 70% of electricity from wind by 2030.
Buildings £9.2 billion on improving energy efficiency Upgrade insulation for almost all of 27 million homes, zero carbon standards for all new homes Insulate all of Britain’s homes by 2030, new homes to be built to a low carbon standard, £6 billion p.a. on home insulation and low carbon heating A million homes a year to near zero carbon, improved insulation for all who need it, roll out of heat pumps
Surface Transport Consult on earliest date for phasing out sale of petrol and diesel cars Improve public transport. Aim to end sales of petrol and diesel cars by 2030. Invest in public transport, and make sure all new cars are electric by 2030 Major shift to public transport. All new vehicles zero carbon by 2030
Industry £800 million on CCS, support gas for hydrogen Invest in new technology Supporting CCS and new low-carbon processes for steel and cement Start deployment of CCS
Land Use 75,000 acres p.a. of additional trees Ambitious programme of tree planting Planting 60 million trees a year 700 million new trees by 2030.
International and supporting action International partnership to tackle deforestation Assess emissions in imports and suggest policies to tackle them. Require companies to set targets compatible with the Paris Agreement Economy wide carbon tax, with border tax on embedded carbon

Reaching net-zero emissions by 2050 will be very difficult, requiring huge transformations of the UK energy system alongside changes in land use.  Reaching net zero earlier, and especially in 2030 or the 2030s as proposed by the Greens and Labour, seems impractical.  Otherwise, there is much to welcome among what is proposed.

However, there are significant differences between the parties along with the similarities.  The proposals from the Conservative party appear weaker than the others, and the manifesto does not contain a clear programme for the necessary scale of transition towards net zero emissions.  The other parties’ programmes look similar in many respects.  However, looking at the detail, the Liberal Democrats’ programme looks to provide the best set of policies, judged on a combination of comprehensive coverage, likely effectiveness, and realism.

The inclusion of extensive proposals from all parties for reducing emissions is an encouraging sign of how far the debate has come.  However, the real test will come when the next government must decide on implementation.

Adam Whitmore – 25th November 2019

 

 

Cheap, abundant solar power looks increasingly likely to transform prospects for decarbonisation

Cheap, widely available electricity from solar PV in the coming decades looks increasingly likely.  It could transform the world’s energy system, and prospects for reducing carbon dioxide emissions.

Only a decade ago solar was a niche source of energy, accounting for a tiny fraction of world electricity consumption.  It was also very expensive.

Since then its status has been transformed.  The installed base grew by a factor of about 17 between 2010 and 2018, with consecutive doublings of cumulative installed capacity every two years or so.  By 2018 output was over 2% of world electricity demand, and continuing to grow rapidly.

Over the same period prices came down by a factor of four.  Analysis by the International Renewable Energy Agency (Irena) shows average prices to have fallen from $240/MWh in 2010 to around $60/MWh in 2018 (see chart, which also shows that prices for wind power have also fallen, but by a much smaller proportion).

Chart 1:  Global average prices resulting from auctions for solar and wind, 2010-18

Source: Irena[i]

Some recent solar PV contracts are already well below the level found by Irena.  Prices are below $20/MWh in some cases (see Table 1).

Table 1:  Some contract prices for solar PV in 2019

Location Price ($/MWh)
California 1 22.0
California 2 20.0
Brazil 17.5
Portugal 16.5
Dubai 17.0

Source: press reports[ii]

The reasons for the differences between these costs and the higher costs shown by Irena appear to include:

  • Comparing global averages with world’s lowest cost. For example, the Portuguese contract is an outlier, with most contracts in Europe remaining above $50/MWh.  Similarly, the Dubai project may benefit from cheap land, and perhaps low-cost capital.
  • The inclusion of incentives reducing some of the contract prices. For example, the California projects’ prices would likely be closer to $30/MWh without production tax credits available to the projects.
  • Continued fall in costs since 2018

So how far could solar PV costs go in the long term?

Projecting cost trends following such large changes is inherently uncertain.  However there seems no clear reason why changes as large as those that have already taken place should not happen again.  Costs fell by 75% between 2010 and 2019 in response to capacity increasing by a factor of 17, following a typical experience curve.   There is scope for a similar increase in capacity – a factor of about 17 would take solar to around 40% total electricity production, plausible over the next few decades.  This may lead to a similar reduction in costs of around 75%.

Indeed cost reductions may occur much more quickly than that.  The transformation to date has happened very rapidly, and there may be as yet more unrealised gains as more fundamental R&D, which is longer lead time, comes through.

There may also be potential for currently higher cost locations where the industry is relatively undeveloped to catch up with the best.  This may reduce average costs, even if the best projects do not reduce costs as rapidly.

Conversely, some efficiency gains, such as those in construction costs of large scale installations may be one-offs, and similar gains may not be possible in future.  These limits have not been binding so far, but may be more so in future.

Taking these considerations together, a very rough and ready estimate would suggest widespread availability of unsubsidised solar power at prices at around $10/MWh or less within the next 2 or 3 decades or so, and possibly much more quickly than that.

This would make solar the among the cheapest form of large scale, high value energy the world has ever seen.  By comparison, annual average crude oil prices dropped to $7/MWh (in $2019) only briefly at the end of the 1960s before the oil crises of the 1970s took effect and prices increased[iii].  Oil is currently around $25/MWh ($60/bbl), and is a less valuable and versatile form of energy than electricity.  Coal may in some cases be cheaper per MWh but is expensive and inefficient to convert to electricity, so total fuel costs may exceed even some current solar costs.  Coal is also, of course, highly polluting, with expensive CCS required to reduce its emissions.

What are the implications of this?

To bring low carbon energy prices to close to the levels prevailing for high carbon energy in the era of cheap oil would be potentially transformative for emissions reduction.  Effects would be widespread and may include the following.

  • The generally expected route of decarbonising the power sector and electrifying end use becomes much easier with plenty of cheap low carbon electricity. This is supported by falls in the costs of batteries, which will help solar based systems cope with large daily variations in output.  Land availability for solar is not a constraint globally, but maybe in certain places where population density is high and there are other uses for land.
  • It will also support electrification of transport, helped by electric cars being much more efficient than internal combustion engines anyway.
  • Hydrogen is more likely to be produced by electrolysis than by natural gas reforming with CCS, especially as large amounts of surplus solar may be available at times of peak production. And with cheap electricity, hydrogen use is likely to be focussed on applications where its specific qualities are needed, for example some industrial processes requiring high flame temperatures.
  • CCS is also likely to be focussed on a few special classes of emissions, especially those from industrial processes.

Some things seem likely to remain true even with cheap solar …

  • Wind power is likely to continue to play an important role for reasons of system security, diversity, and different locations of resource.
  • Improving energy efficiency, especially in buildings, will continue to be worthwhile, as it makes the transition to lower emissions easier in many respects.
  • The emissions reduction challenge remains daunting, not least because of the scale of the transformation required is formidable, and existing assets are long lived.
  • Long-haul aviation looks likely to continue to be a challenge, perhaps requiring synthetic fuels or biofuels.
  • Land use emissions from deforestation and agriculture remain a large problem.

So far modelling of the energy system seems to have largely ignored the possibility of very cheap solar being widely available.  This is an area which needs much more consideration.  Nothing gives greater hope for solving the climate change problem than the prospect of abundant cheap low carbon electricity.

Adam Whitmore – 18th November 2019

[i] https://www.irena.org/publications/2019/Jun/Renewable-energy-auctions-Status-and-trends-beyond-price

[i] See here for contract prices quoted in the table and commentaries.

https://pv-magazine-usa.com/2019/09/30/solar-plus-storage-pricing-record-set-in-california/

https://www.pv-tech.org/news/brazils-solar-price-record-seen-as-global-renewable-milestone

https://reneweconomy.com.au/coal-and-gas-on-notice-as-us-big-solar-and-battery-deal-stuns-market-60011/

https://www.energy-reporters.com/opinion/by-adding-solar-portugal-pushes-all-in-on-renewables/

https://reneweconomy.com.au/solar-pv-prices-fall-to-record-lows-in-tender-for-900mw-solar-park-in-dubai-51069/

[iii] Based on $12/bbl (source: BP statistical review of world energy) and 1.7MWh per bbl of crude oil

Hydrogen and heat pumps may both play a role in UK building heating

Low carbon hydrogen and electricity via heat pumps may both play a large role in decarbonising building heating in the UK.  Ways forward are needed that maintain optionality around solutions while more is learnt about the right mix.

This is the second of three posts looking at the potential role of hydrogen in residential heating in the UK.

Decarbonising building heating in the UK poses a range of challenges.  First, the required transition is very large scale.  There are around 27 million households in the UK, with many more commercial buildings, small and large.  This implies around a million or more premises a year on average need to be converted to low carbon heat between now and 2050.

Along with scale, there is cost.  Replacing the UK’s heating system is expensive both on in total and by household, even if the existing natural gas network can be used for hydrogen.   This challenge is made more difficult by the high seasonality of heating demand (Chart 1).  Building natural gas supply chains, reformers to produce hydrogen from natural gas, CCS, low carbon electricity and heat pumps all involve major capital investment.  Running this for only part of the year – the colder months – increases unit costs substantially. The chart below shows daily gas and electricity demand from non-daily metered (i.e. small) customers.  Demand for energy from gas, the major source of building heating at present, is about two or three times electricity demand during winter, and is much more seasonal.

Chart 1: Heating demand is highly seasonal …

Source: BEIS (2018) ‘Clean Growth – Transforming Heating’ https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/766109/decarbonising-heating.pdf

Furthermore, the transition to low carbon heat needs to be made largely with the UK’s existing building stock, which is mainly old and often badly insulated.  Improved insulation is a priority in any programme, but there are practical and cost constraints on what can be done with existing buildings.  (Buildings also need to be able to cope with the increased prevalence of heat waves as the climate warms, but that is a separate topic.)

Finally, building heating directly affects people’s day to day lives, so consumers’ acceptance is critical.  On the whole the present system, based mainly on natural gas boilers, works quite well except for its emissions.  Any new system should preferably work as well or better.

The leading candidates for low carbon heating in buildings are electricity, almost certainly using heat pumps to increase efficiency, and low carbon hydrogen.  Biomass seems unlikely to be available either at the scale or cost that would be needed for it to be a major contributor to low carbon heating, though it may find a niche.  District heating networks require low carbon heat and this must draw on the same ultimate set of sources of heat.  Waste heat from nuclear, once discussed as a possibility, no longer seems likely to be either practical or cost effective.

Recently the Committee on Climate Change (CCC) analysed the costs of decarbonising heat in 2050 using different approaches.  They looked at electricity, hydrogen, and combinations of the two.  The analysis concluded that a 50% increase over current costs was likely (Chart 2).  The remarkable thing about the analysis is that this cost was similar for all of the options considered.  Any differences were well within the uncertainty of the estimates.

Chart 2: Costs of different modes for decarbonising building heating …

Source:  Committee on Climate Change

With no large cost difference leading to one or the other option being preferred there is a need to test each option out to see which works better in practice.  Mixed solutions may be appropriate in many cases.  For example, hydrogen may be useful in providing top-up heat even if heat pumps are providing the baseload, or may be the only solution for some poorly insulated properties for which heat pumps don’t run at high enough temperatures.

The CCC’s analysis includes expected cost savings.  The transition to low carbon heat will clearly be more acceptable if this cost can be reduced further.  In particular there seem likely to be both technical advances and large economies of scale in heat pump manufacture and installation, and the costs of low carbon power may fall by more than assumed by the CCC.  As the analysis stands, a 50% increase is clearly politically difficult, especially when there do not seem to be advantages for the customer, and potentially some drawbacks.  However, this is less than a 2% p.a. compound increase in real terms over a 30 year period, which might be politically feasible if introduced gradually spread across all consumers.

With such large changes in demand between summer and winter, seasonal storage is a major issue for reasons of both cost and practicality.  This is an under-researched area, and needs further work.  There are various possibilities – storage of hydrogen itself in salt caverns, storage of hydrogen as ammonia or storage of heat in ground sinks, but each has its problems and the scale involved is very large.

A final uncertainty is the form which hydrogen production will take.  At the moment methane in reformers predominates and, with the addition of CCS, may continue to do so.  However both the costs of low carbon electricity and of the electrolysis are decreasing rapidly.  Over the long term this may become the main pathway for hydrogen production.

These uncertainties imply that building heating poses a particularly difficult set of choices for policy.  It is not clear what route, or mix of routes is the right one.  The transition needs to be quite rapid relative to the lifetimes and scale of existing infrastructure, and it involves the need for consumer acceptance.  There are also potentially strong network and lock in issues.

The best approach is likely to be to develop several types of solution in parallel, maintaining optionality while learning, and being prepared for some approaches to be dead ends.  The implications of this include the need for roll out of low carbon heat sources in some districts now to get an idea of how they will work at scale.

Some of this is happening, much more is needed.

Adam Whitmore -29th October 2019.

 

Comparison of cost estimates with previous analysis by this blog.

Around four and a half years ago I looked at the costs of decarbonising domestic heating in the UK in winter using low carbon electricity.  I concluded that switching to low carbon heat would add 75% or more to domestic heating bills, with some drawbacks for consumers (I also looked at higher cost case, but this case no longer seems likely due to the fall in the costs of low carbon electricity, especially offshore wind, since the analysis was done.)  I suggested that this meant that the transition would be difficult and that reductions in capital costs were necessary.

This analysis is broadly consistent with the CCC analysis quoted here, which suggests a 50% increase on current costs.  The estimates are roughly similar given the large uncertainties involved , the inevitable differences is assumptions, and different basis of the estimates.  In particular the CCC analysis factors in reductions in costs of low carbon heating likely by 2050, whereas my previous analysis was based on current costs to make the point that cost reductions are necessary,  Consequently it would be expected that the CCC analysis would show a smaller cost increase relative to current costs.  Also, the CCC’s analysis may exclude some costs – estimates such as these have a tendency to go up when you look at them more closely.  Equally it may understate the cost reductions possible over decades.