Net-Zero Carbon Emissions: Energy Sector

The Earth has been heating up since the 19th century, according to data from NASA.  Since the year 2000, this trend seems to have accelerated and 2020 is predicted to be the hottest year on record.

If the heating continues unchecked, it could have a devastating impact on the planet, causing food shortages, raising sea levels and sparking extreme weather.

The Paris Agreement has an objective to:

  • Hold the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels.

To achieve the desired temperature goal, the Paris Agreement calls for carbon dioxide (CO2) emissions to peak as soon as possible and reduce rapidly thereafter, leading to a balance between anthropogenic emissions by sources and removals by sinks (i.e. Net-Zero CO2 Emissions) in the second half of this century.

Greenhouse gases include CO2, methane, nitrous oxide and other gases that accumulate in the atmosphere and create the heat-reflective layer that keeps the Earth at a livable temperature. These gases form the insulation that keeps the planet warm enough to support life.

It’s no secret that CO2 is emitted whenever coal, oil, natural gas and other carbon-rich fossil fuels are burned.  Although carbon dioxide is not the most powerful GHG, it is the largest contributor to climate change because it is so common. In order to reduce CO2 emissions, there is a need to reduce the amount of fuel is used in the cars, homes, and lives.

The United Nations Environment Programme published report recently called “The Six Sectors Solution to Climate Change” .  This report unambiguously presages that:

  • The world is warming faster than at any point in recorded history;
  • As it was mentioned before that if that heating continues unchecked, it could have a devastating impact on the planet, causing food shortages, raising sea levels and sparking extreme weather;
  • But humanity can avoid the worst of those effects. The key is to limit global warming to an average of 1.5°C above pre-industrial levels. For reference, human-induced warming reached the 1°C mark around 2017; and
  • Hitting that 1.5°C mark will require the world to cut greenhouse gas emissions by 30 gigatonnes annually by 2030. Cutting direct carbon emissions from transport and industry will not be enough on its own. Countries must also more efficiently manage their land and resources, build smart cities, and curb deforestation and food waste.

The question is: How does the world do that?  Here is a graph based on this report which illustrates the six sectors and associated CO2 emissions:

Here is a different view of the global carbon emissions, emphasizing on the severity of each contributing sector and coming up a total for:

This article is dedicated to Energy Sector.

The production and consumption of energy is the largest source – 12.5 gigatonnes greenhouse gases annually which represent 29.5 percent of the total greenhouse gases – as illustrated in the graph presented above. 

This report suggests that:

  • The energy sector can cut greenhouse gases by 12.3 Gigatonnes (Gt) annually.  Humanity does not need to wait for new inventions.

Nevertheless, no single fuel or technology can enable the entire energy sector which includes Oil, Electricity, Natural Gas, Coal, Renewables, and Nuclear, to reach the targets for net-zero CO2 emissions.  Perhaps the focus should be to commission a wide range of fuels and technologies to individual parts of the every sector and to country-specific conditions.

According to the Global Energy Review 2020, published by the International Energy Agency (IEA) in April, 2020, global energy demand declined by 3.8 percent in the first quarter of 2020, with most of the impact felt in March as confinement measures related to the COVID-19 pandemic were enforced in Europe, North America and elsewhere.

Here is a brief description of the reduction in energy demand in the first quarter of 2020:

  • Coal Demand:  It was hit the hardest, falling by almost 8 percent compared with the first quarter of 2019;
  • Oil Demand:  It was also was hit strongly, down nearly 5 percent in the first quarter, mostly by curtailment in mobility and aviation which accounts for nearly 60 percent of global oil demand;
  • Gas Demand:  It was hit more moderately at around 2 percent as gas-based economies were not strongly affected in the first quarter of 2020;
  • Renewables Demand:  It was the only source that posted a growth in demand, driven by larger installed capacity and priority dispatch; and
  • Electricity Demand: It has been significantly reduced as a result of lockdown measures, with knock-on effects on the power mix.  Electricity demand has been depressed by 20 percent or more during periods of full lockdown in several countries, as upticks for residential demand are far outweighed by reductions in commercial and industrial operations.

The IEA looked at the full year, exploring a scenario that quantifies the energy impacts of a widespread global recession caused by months-long restrictions on mobility and social and economic activities.  Within this scenario, the recovery from the depths of the lockdown recession is only gradual and is accompanied by a substantial permanent loss in economic activity, despite macroeconomic policy efforts.  The result of such a scenario is that energy demand contracts by 6 percent, the largest in 70 years in percentage terms and the largest ever in absolute terms. The impact of Covid‑19 on energy demand in 2020 would be more than seven times larger than the impact of the 2008 financial crisis on global energy demand.  Accordingly, fuels will be affected:

  • Oil Demand:  It could drop by 9 percent, or 9 mb/d on average across the year, returning oil consumption to 2012 levels;
  • Coal Demand: It could decline by 8 percent, in large part because electricity demand will be nearly 5 percent lower over the course of the year;
  • Gas Demand: It could fall much further across the full year than in the first quarter, with reduced demand in power and industry applications;
  • Nuclear Demand: It would also fall in response to lower electricity demand; and
  • Renewables Demand: It is expected to increase because of low operating costs and preferential access to many power systems.

In IEA’s estimate for 2020, global electricity demand falls by 5 percent, with 10 percent reductions in some regions. Low-carbon sources would far outstrip coal-fired generation globally, extending the lead established in 2019.

It is critical to appreciate the fact that net-zero CO2 emissions require a conclusive change in the way energy is produced and consumed around the world as demonstrated in the Sustainable Development Scenario (SDS) designed by the IEA. At net-zero emissions, low-carbon electricity, bioenergy, hydrogen and hydrogen-based fuels combined provide more than 70 percent of final energy needs, about the same share as currently provided by fossil fuels.  These conditions are all met in the SDS:

  • The SDS holds the temperature rise to below 1.8 °C with a 66 percent probability without reliance on global net-negative CO2 emissions; and
  • This is equivalent to limiting the temperature rise to 1.65 °C with a 50 percent probability.

The IEA releases a World Energy Outlook report every year which, among other things, attempts to model global energy demand using various scenarios, including SDS.  It’s largely believed that SDS is the most likely reflection of the world’s energy future.  The SDS presents the most desirable scenario in terms of human and global safety whereby nations work together to successfully limit climate change, by transforming the energy market and addressing air pollution.

The IEA described SDS as an integrated approach to achieving internationally agreed objectives on climate change, air quality and universal access to modern energy.  However, under the SDS, the planet’s “Carbon Budget” will be exhausted as early as 2023 under a 1.5°C target and by 2040 under a 2°C objective.

Global CO2 emissions from the energy sector and industrial processes fall from 35.8 billion tonnes in 2019 to less than 10 billion tonnes by 2050 and are on track to net zero emissions by 2070.  The following graph illustrates the changes in global energy demand:

The following graph illustrates the predicted change in global energy demand – Increased, Decreased, and Net demand for Industry, Transport, and Buildings – based on the statistics provided by the IEA:

Energy companies as well as governments around the world are committed to achieving the desired temperature goal by implementing net-zero carbon emissions policies with the focus to limit the temperature increase to 1.5 °C above pre-industrial levels. For instance:

  • Australia’s major electricity and gas companies, including the owners of all coal-fired power plants in the national grid, have called on the Morrison government to set a target of net zero greenhouse gas emissions by 2050 in line with the Paris agreement. Furthermore, in a statement on Thursday, the Australian Energy Council said it supported the 2015 Paris deal, and recognized it meant developed countries needed to reach net zero emissions by mid-century. It was also reported that the energy council’s members accepted the science of climate change and the need to decarbonize the economy;
  • The number of North American energy companies setting net-zero absolute carbon emissions targets exploded during the second half of 2020, with utilities leading the way. Thanks to investors’ increasing concerns about environmental, social and governance issues, however, the oil and gas industry is beginning to catch up. Likewise, research by S&P Global Market Intelligence found that 21 of the 30 biggest utilities in the U.S., 11 of the 30 biggest metals and mining companies in the world, and 11 of the 30 largest oil and gas companies in Europe and North America have set net-zero targets by the middle of the century. This marks an increase from 13 U.S. utilities, eight global mining companies, and five oil and gas companies, as tallied by a Market Intelligence analysis published in July;
  • According to the European Commission’s JRC Technical Reports towards net-zero emissions in the EU Energy System by 2050: Between 2017 and mid-2019, 26 publications on energy scenarios, stemming mainly from governmental organizations or the private sector, present 67 scenarios for the EU energy system. About two-thirds of these scenarios follow deep decarbonization trajectories, reducing emissions by more than 80 percent by 2050; One-third (20 scenarios) meet the ambition of the “European Green Deal” to reduce emissions by at least 50 percent by 2030; and Another third (16 scenarios) with the strategic vision for the EU to become a climate neutral economy by 2050; and
  • The Government of Canada cannot achieve net-zero emissions on its own. This goal will require support and engagement from all parts of society, including provinces, territories, Indigenous Peoples, youth, and businesses. To ensure the country’s success, the Canadian Net-Zero Emissions Accountability Act would establish an independent advisory body to provide ongoing advice to the Government as Canada charts its path to net-zero by 2050.

It was interesting to review BP’s Statistical Review of World Energy 2020 which was published in June 2020.  It’s a unique report that covers energy data through 2019, and provides a comprehensive picture of supply and demand for major energy sources on a country-level basis.

Bernard Looney, Chief Executive Officer, stated that at BP, they are committed to playing their part.  They adopted a new purpose – to reimagine energy for people and the planet and they announced a new ambition to be a net-zero company by 2050 or sooner and to help the world get to net-zero. He believes that it can be achieved only by a radical shift in all our behaviours, by using resources and energy more efficiently and by implementing the full range of zero and low carbon energies and technologies at our disposal, including renewable energies, electrification, hydrogen, Carbon Capture Use and Storage (CCUS), bioenergy and many more.  These technologies exist today but the challenge is to use them at pace and scale.   

Kanata, Ontario, Canada 12 February 2021