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 3^rd 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

2. 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

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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 – 9^th 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/

 

Europe’s phase out of coal

Europe is progressing with phasing out hard coal and lignite in power generation, but needs to move further faster, especially in Germany and Poland

Reducing coal use in power generation and replacing it with renewables (and in the short run with natural gas) remains one of the best ways of reducing emissions simply, cheaply and quickly at large scale.  Indeed, it is essential to meet the targets of the Paris Agreement that the world’s limited remaining cumulative emissions budget is not squandered on burning coal and lignite in power generation.

Europe is now making progress in phasing out coal.  The UK experience has already illustrated what can be done with incentives from carbon pricing to reduce coal generation.  Emissions from coal have reduced by more than 80% in the last few years, even though coal plant remains on the system[i].  However, many countries, including the UK, are now going further and committing to end coal use in power generation completely in the next few years.  The map below shows these commitments as they now stand.  Most countries in western Europe now have commitments in place. (Spain is an exception.  The government is expecting coal plant to be phased out by 2030, but currently does not mandate this.)

Map: Current coal phase-out commitments in Europe[ii]

Source: Adapted from material by Sandbag (see endnotes).

In some countries there is little or no coal generation anyway.  In other countries plants are old and coming to the end of their life on commercial grounds, or are unable to comply with limits on other pollutants.  In each case phase-out is expected to go smoothly.

However, the largest emitters are mainly in Germany and Poland and here progress is more limited.  Germany has now committed to coal phase-out.  But full phase-out might be as late as 2038.  Taking another 20 years or so to phase out such a major source of emissions is simply too long.  And Poland currently looks unlikely to make any commitment to complete phase out.

This means the Europe is still doing less than it could and should be doing to reduce emissions from coal and lignite.  As a result, EU emissions are too high, and the EU loses moral authority when urging other nations, especially in Asia and the USA, to reduce their emissions further, including by cutting coal use.

Several things are needed to improve this situation, including the following.

• Further strengthening the carbon price under the EUETS by reducing the cap. I looked at the problem of continuing surpluses of allowances in another recent post, and accelerated coal closure would make the surplus even greater.  Although the rise in the EUA price in the last 18 months or so is welcome, further strengthening of the EUETS is necessary to reduce the risk of future price falls, and preferably to keep prices on a rising track so they more effectively signal the need for decarbonisation.
• Continuing tightening of regulations on other pollutants, which can improve public health, while increasing polluters’ costs and therefore adding to commercial pressure to close plant.
• Strengthening existing phase out commitments, including be specifying an earlier completion date in Germany.
• Further enabling renewables, for example by continuing to improve grid integration, so that it is clear that continuing coal generation is unnecessary.

As I noted in my last post, making deep emissions cuts to avoid overshooting the world’s limited remaining carbon budget will require many difficulties to be overcome.  There is no excuse for failing to make the relatively cheap and easy reductions now.   Reducing hard coal and lignite use in power generation in Europe (and elsewhere) continues to require further attention.

Adam Whitmore – 18^th June 2019

[i] See https://onclimatechangepolicydotorg.wordpress.com/2018/01/17/emissions-reductions-due-to-carbon-pricing-can-be-big-quick-and-cheap/

With and updated chart at:

https://onclimatechangepolicydotorg.wordpress.com/carbon-pricing/price-floors-and-ceilings/

[ii] Map adapted from Sandbag:

https://sandbag.org.uk/wp-content/uploads/2018/11/Last-Gasp-2018-slim-version.pdf

and data in:

https://beyond-coal.eu/wp-content/uploads/2018/11/Overview-of-national-coal-phase-out-announcements-Europe-Beyond-Coal-November-2018.pdf

and https://www.eia.gov/todayinenergy/detail.php?id=39652

How well is the UK on track for zero emissions by 2050?

By 2020 the UK will have very nearly halved its emissions over 30 years.  Reducing emissions by the same amount over the next 30 years will get the UK very close to zero.  However this will be very much more difficult.

A robust net zero target has been recommended for the UK …

A recent report by the UK’s Committee on Climate Change (CCC), the Government’s official advisory body, recommends that the UK adopts a legally binding target of net zero emissions of greenhouse gases by 2050[i], that is remaining emissions must be balanced by removal from the atmosphere.  If the Government agrees, this will be implemented by amending the reduction mandated by the Climate Change Act, from an 80% reduction from 1990 to a 100% reduction.

The target has several features that make it particularly ambitious.  It:

• sets a target of net zero emissions covering all greenhouse gases;
• includes international aviation and shipping;
• allows no use of international offsets; and
• is legally binding.

This is intended to end the UK’s contribution global warming.  It has no precedents elsewhere, although in France a bill with comparable provisions is under consideration[ii].

Progress to date has been good …

The UK has made good progress so far in reducing emissions since 1990.  Emissions in 2018 were around 45% below 1990 levels, having reduced at an average rate of about 12.5 million tonnes p.a. over the period.  On current trends, over the thirty years from 1990 to 2020 emissions will be reduced to about 420 million tonnes p.a., 47% below their 1990 levels.  Emissions will thus have nearly halved over the 30 years 1990 to 2020, half the period from 1990 to the target date of 2050.

Chart 1 shows how the UK’s progress compares with a linear track to the current target of an 80% reduction, to a 95% reduction and to a 100% reduction.  (For simplicity I’m ignoring international aviation and shipping).  The UK is currently on a linear track towards a 95% reduction by 2050.

Chart 1: Actual UK emissions compared with straight line progress towards different 2050 targets

 

Source: My analysis based on data from the Committee on Climate Change and UK Government.  Data for 2018 is provisional[iii]

The largest contributor to the total reduction so far has been the power sector.  Analysis by Carbon Brief[iv] showed that the fall in power sector emissions has been due to a combination deploying renewables, which made up about of third of generation in 2018, reducing coal use by switching to natural gas, and limiting electricity demand growth.

Industrial emissions have also fallen significantly.  However some of this likely represents heavy industry now being concentrated elsewhere in the world, so likely does not represent a fall in global emissions.  Emissions from waste have also fallen, due to better management.

Reducing emissions will be relatively easy in some sectors …

There are also reasons for optimism about continuing emissions reductions.  Many technologies are now there at scale and at competitive prices, which they were not in previous decades.  For example, falling renewables costs and better grid management, including cheaper storage, will help further decarbonisation of the power sector.  Electrification of surface transport now appears not only feasible, but likely to be strongly driven (at least for cars and vans) by economic factors alone as the cost of batteries continues to fall.

But huge challenges remain …

Nevertheless important difficulties remain for complete decarbonisation.

CCS is identified by the report as an essential technology.  However, as I have noted previously, it has made very little progress in recent years in the UK or elsewhere[v].  CCS is especially important for decarbonising industry.  This includes a major role for low carbon hydrogen, which is assumed to be produced from natural gas using CCS – although another possibility is that it comes from electrolysis using very cheap renewables power, e.g. at times of surplus.  CCS also looks to be necessary because of its use with bioenergy (BECCS), to give some negative emissions, though the lifecycle emissions from this will require careful attention

Decarbonising building heating, especially in the residential sector, continues to be a challenge.  The report envisages a mix of heat pumps and hydrogen, perhaps in the form of hybrid designs, with heat pumps providing the baseload being topped-up up by burning of hydrogen in winter.  I have previously written about the difficulties of widespread use of heat pumps[vi], and low carbon hydrogen from natural gas with CCS is also capital intensive to produce and therefore expensive to run for the winter only.  The scale of any programme and consumer acceptance remain major challenges, and the difficulties encountered by the UK’s smart meter installation programme – by comparison a very simple change – are not an encouraging precedent.

Emissions from agriculture are difficult to eliminate completely, and no technologies are likely to be available by 2050 that enable aviation emissions to be completely eliminated.  This will require some negative emissions to balance remaining emissions from these sectors.

Policy needs to be greatly strengthened …

Crucially several of the necessary transformations are very large scale, and need long lead times, and investment over decades.  There is an urgent need to make progress on these, and policy needs to recognise this.  This includes plans for significant absorption from reforestation, as trees need to be planted early enough that they can grow to be absorbing substantial amounts by 2050.

The UK’s progress on emissions reduction so far has been good, having made greater reductions than any other major economy[vii].  And technological advances in some areas are likely to enable substantial further progress.  However much more is needed.  In particular policy needs to look now at some of the difficult areas where substantial long-term investment will be needed

Adam Whitmore – 22^nd May 2019

 

 

[i] https://www.theccc.org.uk/2019/05/02/phase-out-greenhouse-gas-emissions-by-2050-to-end-uk-contribution-to-global-warming/

 

[ii] The CCC report notes that Norway, Sweden and Denmark have net zero targets, but they allow use of international offsets (up to 15% in the case of Sweden).  France has published a target similar to the UK’s in a bill.  The European Commission has proposed something similar for the EU as a whole, but this is a long way from being adopted. California has non-legally binding targets to achieve net zero by 2045.  Two smaller jurisdictions (Costa Rica, Bhutan) have established net zero targets but these are expected to be achieved mainly by land use changes.  New Zealand has a draft bill to establish a target, but eliminating all GHGs will be difficult because of the role of agriculture in the New Zealand economy.

 

[iii] https://www.gov.uk/government/statistics/provisional-uk-greenhouse-gas-emissions-national-statistics-2018  The change from 2017 to 2018 is applied to the data series from 1990 produced by the CCC (the two data series differ very slightly in their absolute levels).

 

[iv] https://www.carbonbrief.org/analysis-uk-electricity-generation-2018-falls-to-lowest-since-1994

 

[v] https://onclimatechangepolicydotorg.wordpress.com/2018/04/25/a-limited-but-important-medium-term-future-for-ccs/

 

[vi] https://onclimatechangepolicydotorg.wordpress.com/2015/05/18/reducing-the-costs-of-decarbonising-winter-heating-needs-to-be-a-priority/

 

[vii] https://onclimatechangepolicydotorg.wordpress.com/2017/05/09/uk-emissions-reductions-offer-lessons-for-others/

 

The EUETS has not been fully fixed

The reforms introduced to the EUETS for Phase 4 improve its functioning, but without further reform a chronic surplus looks likely and the risk of low prices remains.

The changes to the EUETS that were agreed in late 2017 make significant improvements to its design.  The temporary doubling of the intake rate for the MSR will reduce the surplus in the market more quickly.  And the provision to cancel allowances from the MSR when it exceeds a defined size will avoid the number of allowances in the MSR growing indefinitely.  The price of EUA’s has risen, although they remain below the levels needed to stimulate many efficient emissions reductions.  These changes have led some to conclude that the problems with the EUETS have been resolved.

However, major risks remain.  The cap for Phase 4 (which runs through the 2020s) was set on the basis of an overall reduction in emissions from 1990 levels of 40% by 2030[i].  In practice, emissions now look likely to reach around 50% below 1990 levels by 2030, and possibly to go lower than this if additional policies are put in place.  This looks likely to result in emissions remaining well below the cap throughout Phase 4.

This is illustrated in Chart 1 below, which shows three scenarios included in a recent report by climate NGO Sandbag[ii] (to which I contributed).  The correspond to overall reductions from 1990 levels of 50%-58% by 2030, rather than the 40% reduction on which the cap was set.

Many of the additional emissions reductions are from the sectors covered by the EUETS.  In particular increased renewables and decreased coal and lignite burn in power generation are the largest contributors to reduced emissions.  Consequently, in each scenario emissions remain well below the cap throughout the 2020s.

Even the European Commission’s own modelling suggests a 46% reduction in emissions from 1990 levels now looks likely.  This, while a somewhat smaller decrease than shown in these scenarios, would nevertheless likely result in emissions below the cap throughout the 2020s.

Chart 1: Projected EUETS emissions under three scenarios compared with the cap

Source: Sandbag

With emissions so persistently below the cap the surplus, after decreasing to 2020, begins to grow again, and continues growing to 2030 (see Chart 2).  It does so despite the operation of the MSR.

Chart 2: Projected cumulative surplus under three scenarios

Source: Sandbag

With such a large and persistent surplus there is a clear risk of prices weakening. This is especially the case later in the decade, where reductions in coal use in power generation seem likely to reduce the need for generators to buy emissions as a hedge to cover forward contracts, which may in turn further reduce demand for allowances.

The problem of the chronic surplus arises because the cap is both undemanding and rigid. There are at present no mechanisms for automatically resetting it, and no measures such as price containment which might limit how low prices could go.

The best way to deal with this problem is simply to reduce the cap in around the middle of Phase 4. This would be in line with the principles of the Paris Agreement, which envisages signatories to the Agreement adjusting their commitments over time to bring them more into line with the agreed temperature targets.

Chart 3 shows the effect of resetting the cap in 2026 to match actual emissions.  Under the Base Case the surplus begins to reduce rapidly as a result of the cap being reset.  Such an approach could readily be made consistent with other reforms, such as introducing a price floor in the EUETS.

Chart 3: Effect on the surplus of reducing the cap in 2026 (Base Case)

Source: Sandbag

While the 2017 reforms to the EUETS were a major step forward they are unlikely to prove sufficient.  Further measures will be needed to make sure the EUETS is robust as emissions continue to fall.

Adam Whitmore – 9^th April 2019

 

 

 

[i] With a 43% reduction from 2005 levels in the sectors covered by the EUETS.

[ii] https://sandbag.org.uk/wp-content/uploads/2019/03/Halfway-There-March-2019-Sandbag-3.pdf

 

Simple approximations can link emissions and temperature rise

Some simple indicators based on stylised emissions tracks help show clearly the consequences of different rates of emissions reductions.

A simple relationship allows the overall objectives – limiting temperature rises and reducing emissions – to be linked in a straightforward way[i]. Over relevant ranges and timescales temperature rise varies approximately linearly with cumulative emissions of CO₂, after adjusting for the effect of other greenhouse gases.  Specifically, for every 3700 GtCO₂ emitted (1000GtC) the temperature will rise by about 2.0 degrees[ii] (with estimates in the range 0.8 to 2.5 degrees)[iii].  This is the transient climate response to cumulative emissions (TCRE).

There has been around a 1.0 degree rise in temperatures to date[iv].  This means the remaining total of cumulative emissions (“carbon budget”) needs to be small enough to keep further temperature rises to around 0.5 to 1.0 degrees if it is to meet targets of limiting temperature rises to 1.5 to 2.0 degrees.

The remaining carbon budget for meeting a 1.5 degree target (with 50% probability) is around 770 GtCO₂.  The remaining carbon budget for meeting a 2 degree target (again with 50% probability) is 1690 GtCO₂[v].  This is illustrated in Chart 1, which shows temperature rise (median estimates) against additional emissions from 2018.

There are many uncertainties in the estimates of the remaining carbon budget.  These include different estimates of the climate sensitivity, variations in warming due non-CO₂ pollutants, and the effect of additional earth system feedbacks, including melting of permafrost.  These can each change the remaining carbon budget by around 200GtCO₂ or more.

Chart 1: Temperature rise from additional emissions

 

Source: adapted from Table 2.2 in http://report.ipcc.ch/sr15/pdf/sr15_chapter2.pdf

To look at the implications of this simple relationship we can make the following assumptions about future levels of emissions.  These are simplistic, but like all useful simplifications, allow the essence of the issue to be seen more clearly.

1. Net emissions continue approximately flat at present levels (of around 42 GtCO₂a.[vi]) until they start to decrease.
2. Once net emissions start decreasing they continue decreasing linearly to reach zero – when any continuing emissions are balanced by removals of CO₂ from the atmosphere. They then continue at zero. There are of course many other emissions tracks leading to the same cumulative emissions.  For example, many scenarios include negative total emissions, that is net removal of carbon dioxide from the atmosphere, in the second half of the century.
3. Relatively short-lived climate forcings, such as methane, are also greatly reduced, so that they eventually add about 0.15 degrees to warming[vii].

Chart 2 shows various temperature outcomes matched to stylised emissions tracks.  Cumulative emissions are the areas under the curves.  To limit temperatures rises to 1.5 degrees, emissions need to fall to zero by around 2050 starting in 2020, consistent with the estimates in the recent IPCC report[viii].

For limiting temperature rises to 2 degrees with 50% probability, zero emissions must be reached around 2095.  To reach the 2 degree target with 66% probability emissions need to be reduced to net zero about 20 years earlier – by around 2075 from a 2020 start.  |To reach a target of “well below” 2 degrees is specified in the Paris Agreement emissions must be reduced to zero sooner.

Chart 2: Stylised emissions reduction pathways for defined temperature outcomes (temperatures with 50% and 75% probability)

This simplified approach yields some useful rules of thumb.

Each decade the starting point for emissions reductions is delayed (for example from 2020 to 2030) adds 0.23 degrees to the temperature rise if the subsequent time taken to reach zero emissions is the same (same rate of decrease – i.e. same slope of the line) – see Chart 3 below. This increase is even greater if emissions increase over the decade of delay.  This is a huge effect for a relatively small difference in timing.

Delaying the time taken to get to zero emissions by a decade from the same starting date (for example reaching zero in 2070 instead of 2060) increases eventual warming by 0.11 degrees.

Correspondingly, delaying the start of emissions reductions increases the required rate of emissions reduction to meet a given temperature target.  For each decade of delay in starting emissions reductions the time available to reduce emissions to zero decreases by two decades.  For example, tarting in 2020 gives about 75 years to reduce emissions to zero for a 2 degrees target.  Starting in 2030 gives only 55 years to reduce emissions from current levels to zero once reductions have begun, a much harder task.

Chart 3: Effect of delaying emissions reductions (temperatures with 50% probability)

These results are, within the limits of the simplifications I’ve adopted, consistent with other analysis (see notes at the end for further details)[ix].

How realistic are these goals? Energy infrastructure often has a lifetime of decades, so the system is slow to change.  Consistent with this, among major European economies the best that is being achieved on a sustained basis is emissions reductions of 10-20% per decade.  While some emissions reductions may now be easier than they were, for example because the costs of renewables have fallen, deeper emissions cuts are likely to be more challenging.  This implies many decades will be required to get down to zero emissions.

All of this emphasises the need to start soon, and keep going. The recent IPCC report emphasised the challenges of meeting a 1.5 degree target.  But even the target of keeping temperature rises below 2 degrees remains immensely difficult.  There is no time to lose.

Adam Whitmore – 23^rd October 2018

Notes

[i] This analysis draws on previous work by Stocker and Allen, which I covered a while back here: https://onclimatechangepolicydotorg.wordpress.com/2013/12/06/early-reductions-in-carbon-dioxide-emissions-remain-imperative/

[ii] This is the figure implied in Table 2.2 in http://report.ipcc.ch/sr15/pdf/sr15_chapter2.pdf.  All references to temperature in this post are to global mean surface temperatures (GMST).

[iii] IPCC Fifth Assessment Report, Synthesis Report, Section 2.2.4 for the range.  The central value is that which appears to have been used to construct Table 2.2 of http://report.ipcc.ch/sr15/pdf/sr15_chapter2.pdf

[iv] The IPCC quotes 0.9 degrees by 2006-2015, which is consistent with 1.0 degrees now.

[v] Table 2.2 of http://report.ipcc.ch/sr15/pdf/sr15_chapter2.pdf

[vi]  http://report.ipcc.ch/sr15/pdf/sr15_spm_final.pdfC1.3

[vii] See IPCC 1.5 degree report Chapter 2 for details.

[viii] http://report.ipcc.ch/sr15/pdf/sr15_spm_final.pdf summary for policy makers, see charts on p.6

[ix] See for example work by Climate Action Tracker https://climateactiontracker.org/global/temperatures/, and and the Stocker and Allan analysis cited as reference (i) above.  The recent IPCC report Chapter 2 Section C1, concludes:  In model pathways with no or limited overshoot of 1.5°C, global net anthropogenic CO₂ emissions decline by about 45% from 2010 levels by 2030 (40–60% interquartile range), reaching net zero around 2050 (2045–2055 interquartile range). For limiting global warming to below 2°C CO₂ emissions are projected to decline by about 20% by 2030 in most pathways (10–30% interquartile range) and reach net zero around 2075 (2065–2080 interquartile range). Non-CO₂ emissions in pathways that limit global warming to 1.5°C show deep reductions that are similar to those in pathways limiting warming to 2°C.”  References in this paragraph to pathways limiting global warming to 2C are based on a 66% probability of staying below 2C.

 

 

Emissions reductions from carbon pricing can be big, quick and cheap

The UK carbon tax on fuel for power generation provides the most clear-cut example anywhere in the world of large scale emissions reductions from carbon pricing.   These reductions have been achieved by a price that, while higher than in the EU ETS, remains moderate or low against a range of other markers, including other carbon taxes.

The carbon price for fuels used in power generation in the UK consists of two components.  The first is the price of allowances (EUAs) under the EUETS.  The second is the UK’s own carbon tax for the power sector, known as Carbon Price Support (CPS).  The Chart below shows how the level CPS (green bars on the chart) increased over the period 2013 to 2017[i].  These increases led to a total price – CPS plus the price of EUAs under the EUETS (grey bars on the chart) – increasing, despite the price of EUAs remaining weak.

This increase in the carbon price has been accompanied by about a 90% reduction in emissions from coal generation, which fell by over 100 million tonnes over the period (black line on chart).   Various factors contributed to this reduction in the use of coal in power generation, including the planned closure of some plant and the effect of regulation of other pollutants.  Nevertheless the increase in the carbon price since 2014 has played a crucial role in stimulating this reduction in emissions by making coal generation more expensive than gas[ii].  According to a report by analysts Aurora, the increase in carbon price support accounted for three quarters of the total reduction in generation from coal achieved by 2016[iii].

The net fall in emissions over the period (shown as the dashed blue line on chart) was smaller, at around 70 million tonnes p.a. [iv] This is because generation from coal was largely displaced by generation from gas. The attribution of three quarters of this 70 million tonnes to carbon price support implies a little over 50 million tonnes p.a. of net emission reductions due to carbon price support.   This is equivalent to a reduction of more than 10% of total UK greenhouse gas emissions.  The financial value of the reduced environmental damage from avoiding these emissions was approximately £1.6 billion in 2016 and £1.8 billion in 2017^[v].

Chart:  Carbon Prices and Emissions in the UK power sector

The UK tax has thus proved highly effective in reducing emissions, producing a substantial environmental benefit[vi].  As such it has provided a useful illustration both of the value of a floor price and more broadly of the effectiveness of carbon pricing.

This has been achieved by a price that, while set at a more adequate level than in the EU ETS, remains moderate or low against a range of other markers, including other carbon taxes.  CPS plus the EUA price was around €26/tCO₂ in 2017 (US$30/tCO₂).  The French the carbon tax rose from €22/tCO₂ to €31/tCO₂ over 2016-2017. In Canada for provinces electing to adopt a fixed price the carbon price needs to reach CAN$50/tCO₂ (€34/tCO₂) by 2022[vii].  These levels remain below US EPA 2015 estimates of the Social Cost of Carbon of around €40/tCO₂ [viii].

This type of low cost emissions reduction is exactly the sort of behaviour that a carbon price should be stimulating, but which is failing to happen as a result of the EU ETS because the EUA price is too low.  More such successes are needed if temperature rises are to be limited to those set out in the Paris Agreement.  This means more carbon pricing should follow the UK’s example of establishing an adequate floor price.  This should include an EU wide auction reserve for the EUETS.  The reserve price should be set at somewhere between €30 and €40/t, increasing over time.  This would likely lead to substantial further emissions reductions across the EU.

Adam Whitmore – 17^th January 2018

Notes:

[i] Emissions date for 2017 remains preliminary.  UK carbon price support reached at £18/tCO₂ (€20/tCO2) in the fiscal year 2015/6 and was retained at this level in 2016/7.  In 2013/4 and 2014/5 levels were £4.94 and £9.55 respectively.  This reflected defined escalation rates and lags in incorporating changes in EUA prices. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293849/TIIN_6002_7047_carbon_price_floor_and_other_technical_amendments.pdf and www.parliament.uk/briefing-papers/sn05927.pdf

[ii] http://www.theenergycollective.com/onclimatechangepolicy/2392892/when-carbon-pricing-works-2

[iii] https://www.edie.net/news/6/Higher-carbon-price-needed-to-phase-out-UK-coal-generation-by-2025/

[iv] Based on UK coal generation estimated weighted average emissions intensity of 880gCO2/kWh, and 350gCO₂/kWh for gas generation.

[v] 50 million tonnes p.a. at a social cost of carbon based on US EPA estimates of $47/tonne (€40/tonne).

[vi] There is a standard objection to a floor in one country under the EUETS is that it does not change of the overall cap at an EU level so, it is said, does not decrease emissions.  However this does not hold under the present conditions of the EUETS, and is unlikely to do so in any case.  A review of how emissions reductions from national measures, such as the UK carbon price floor, do in fact reduce total cumulative emissions over time is provided was provided in my recent post here.

[vii] The tax has now set at a fixed level of £18/tonne.  It was previously set around two years in advance, targeting a total price comprising the tax plus the EUA price.  There was no guarantee that it would set a true floor price, as EUA prices could and did change a good deal in the interim.  Indeed, in 2013 support was set at £4.94/tCO2, reflecting previous expectations of higher EUA prices, leading to prices well below the original target for the year of £16/tCO2 in 2009 prices (around £17.70 in 2013 prices). See https://openknowledge.worldbank.org/handle/10986/28510?locale-attribute=en.  The price is also below the levels expected to be needed to meet international goals (see section 1.2), and below the social cost of carbon as estimated by the US EPA (see https://onclimatechangepolicydotorg.wordpress.com/carbon-pricing/8-the-social-cost-of-carbon/ and references therein).

[viii] Based on 2015 estimates.

New long term targets for emissions reduction are needed.

The UK and other jurisdictions need to set target dates for reaching net zero greenhouse gas emissions.  These need to be reinforced by new targets for 2060 that are at least close to zero, and by reaffirmed or strengthened targets for 2050.

Ten years ago setting emissions reduction targets for 2050 was a major step forward …

2018 sees the tenth anniversary of the UK’s Climate Change Act[i].  This remarkable piece of legislation established a legally binding obligation for the UK to reduce its greenhouse gas emissions by 80% from 1990 levels by 2050, with obligations along the way in the form of five year carbon budgets.  So far progress has been remarkably good, though significant challenges remain.

Other jurisdictions also adopted 2050 targets at around the same time.  In 2005 California also set a target of an 80% reduction from 1990 levels[ii].  In October 2009 the EU established a long term EU goal for reducing emissions by 80-95% from 1990 levels by 2050[iii].

At the time these targets were path breaking.  However, ten years on there are good reasons for reviewing and extending them.

But now the world has moved on …

• When the targets were established, the period to 2050 seemed long enough to give appropriate strategic guidance to policy makers and investors. However, future dates are now ten years closer.  A 2060 target now gives about the same time horizon for planning as the 2050 targets did when they were established.
• The Paris Agreement sets targets to limit temperature rises which imply stringent limits on cumulative emissions. It also sets a goal of net zero global emissions in the second half of the century.
• A fifth or more of the world’s carbon budget that remained in 2008 has since been used up[iv], increasing the urgency of emissions reductions.

Extending targets to reflect these changes would have some clear benefits … 

Together these changes imply a strong case for setting new targets now.

The most compelling target would be a date by which emissions must fall to net zero.  Such a target would make it clear to all sectors that they need to completely decarbonise by a specified date.  At the moment emissions of up to 20% of 1990 levels are allowed even in 2050.  This allows each of those sectors where decarbonisation is more difficult – for example parts of industry, agriculture or residential heating – to largely continue in a belief that there will still be plenty of room for them within the 2050 emissions limit, even though this cannot be true for most sectors.  This in turn allows them to continue to believe they can carry on indefinitely without taking the steps needed to decarbonise.  A date for reaching zero makes it clear this can’t happen.

Setting stringent target for 2060 – at or close to zero – would also give investors in low carbon infrastructure greater confidence, and deter investment in higher carbon alternatives. In the case of the UK and California, a simple extrapolation of their current targets would suggest a 2060 target of a 93% reduction from 1990 by 2050, reaching zero by 2065.

As part of the process of setting these longer term goals the existing 2050 targets need to be at least reaffirmed and preferably tightened.  If this is not done there is the risk that policy makers will simply see the problem as having become more distant, and delay action.  This is the last thing that the climate needs.

2050 targets may also need to be revised …

As a first step, the EU’s target of 80-95% cuts clearly needs to be made more precise.  The current uncertainty of a factor of four in the level of emissions allowed in 2050 is too wide for sensible policy planning.

However the events of the last ten years also raise the question of whether the stringency of the 2050 targets need to be increased, with implications for later periods.  The UK Government’s former Chief Scientific Adviser Sir David King and others have suggested that there is a strong case for the UK seeking to reach net zero emissions by 2050[v].  The difference in cumulative emissions in declining linearly to net zero by 2050 instead of by 2065 is substantial, at a little over 3 billion tonnes – equivalent to about 8 years of current UK emissions.

The goal of reaching zero emissions by 2050 is clearly desirable in many ways.  However there is a risk that it may have unwanted side effects.  The government’s advisory body, the Committee on Climate Change has pointed out that policies are not in yet place even to meet current goals for the fifth carbon budget in around 2030[1].  The route to net zero emissions in 2050 – just over 30 years from now – looks even less clear.  Indeed reaching that goal even by 2065 remains challenging.  If even tighter targets are introduced they may come to be regarded as unrealistic, which may in turn risk weakening commitment to them.  A somewhat slower emissions reduction track may prove a relatively acceptable price to pay for retaining the credibility and integrity of the targets.

Whatever the judgement on this, the need for longer term targets is clear.  Governments need to set dates for reaching net zero emissions.  These need to be supported by targets for 2060 that specify continued rapid reductions in emissions after 2050, and by reaffirmation of 2050 targets, tightening them as necessary.  These new targets will in turn help stimulate the additional actions to rapidly reduce emissions that are ever more urgently needed.

Adam Whitmore – 6^th November 2017

 Notes:

[1] https://www.theccc.org.uk/publication/2017-report-to-parliament-meeting-carbon-budgets-closing-the-policy-gap/

[i] https://www.theccc.org.uk/tackling-climate-change/the-legal-landscape/the-climate-change-act/

[ii] https://www.arb.ca.gov/cc/cc.htm

[iii] https://www.consilium.europa.eu/uedocs/complementary measures_data/docs/pressdata/en/ec/110889.pdf

[iv] The calculation is based on data in the IPCC Fifth Assessment Report, Synthesis Report.  This quotes a  cumulative budget of 3700 billion tonnes of CO₂ for a two thirds probability of staying below 2 degrees.  Of this 1800 billion tonnes had been used by 2011.  Assuming CO₂ emissions of roughly 40 billion tonnes p.a. including land use gives a remaining budget in 2008 of 1920 billion tonnes.  Over the subsequent ten years about 400 million tonnes CO₂, which is just over a fifth of 1920 billion tonnes, have been emitted.

[v] http://www.independent.co.uk/environment/ministers-greenhouse-gas-emissions-fail-cut-environment-greg-clark-chief-scientist-david-king-a7969496.html