Climate change and fossil fuels V Filip Černoch černoch @,mail.muni.cz Norway grants (supported by the NF-CZ08-OV-1-004-2015 project on CCS capturing - sharing of knowledge and experiences) CENTER FOR ENERGY STUDIES C0P21 pathways 150 Global COr emissions by world region, 1751 to 2015 Annual carbon dioxide emissions in billion tonnes (Gt). fs61 ň nil c-.ii rfifťifis in ?n 15 35.17" fcjitfi Icxiiies h 2014 j InlwnflBflfialartiiin si; Africa Asia and Pacific (other} Middle East Americas (other) Europe (other) India China Uniled States i t J ';b i7ßü 17.&ü i79ü 1 SOOi&iQ 'Kü iftM) 1 e*j 18501 Éôj löTQ isst ißoü 1 goo^io iscü last i94ú1950i«ď 1370 i9ôď ieeü2O002uiö DatB source: Carbon Dkwlde Informattofl Analysis Center (CDIWji; aggregation by world regen by Our World In Data. The Interactive dale visualizallon Is avallaü* et OurWarldinData.ofg. There you und 1ha raw data and mora visualization on tha tope. Licensed under CC-ÖY-SA. Climate change as a public policy problem Is uniquely global • Environmental problems usually regional (Beijing's smog, EU's industrial waste). • Climate change - impacts may be regional, but phenomenon is global. • The global nature of climate change also complicates any sensible climate policy. It is tough to get voters to enact pollution limits on themselves, when those limits benefit them and only them, but it is tougher to get voters to enact pollution limits on themselves if the costs are felt domestically, but the benefits are global = a planetary free riding problem. • Impact of climate change is not evenly distributed among regions and countries. Different vulnerability. CENTER FOR ■ ENERGY STUDIES! Climate change as a public policy problem Is uniquely long-term • The past decade was the warmest in human history. The one before was the second-warmest. The one before was the third-warmest. • Changes are evident. Arctic sea ice has lost half of its mass, three-quaters of this volume in only the past thirty years. •But the worst consequences of climate change are still remote, often caged in global, long-term averages. The worst effects are still far off — but avoiding these predictions would entail acting now. CENTER FOR ENERGY STUDIES Climate change as a public policy problem Is uniquely irreversible •Stopping emitting carbon now we still would have decades of warming and centuries of sea-level rise locked in. Full melting of large West Antarctic ice sheets may be unstoppable. •Over 2/3 of the excess C02 in the atmosphere that wasn't there when humans started burning fossil fuels will still be present a hundred years from now. Over 1/3 will be there in 1000 years. CENTER FOR ENERGY STUDIES Climate change as a public policy problem Is uniquely uncertain. • Last time concentration of carbon dioxide were as high as they are today, at 400 ppm, at Pliocene (3 million years ago). Average temperatures back then were around 1-2,5°C warmer than today, sea levels were up to 20 meters higher, and camels lived in Canada. •We wouldn't expect any of these dramatic changes today. The greenhouse effect needs decades to centuries to come into full force, ice sheets need decades to centuries to melt, global sea levels take decades to centuries to adjust accordingly. C02 concentrations may have been at 400 ppm 3 million years ago, whereas rising sea levels lagged decades or centuries behind. CENTER FOR ENERGY STUDIES Climate change as a public policy problem It is uniquely expensive • Around current climates masive investments and industrial infrastructures is build, that makes temperature increases costly. •The current models estimates that warming of 1°C will cost 0 5% of global GDP, 2°C around 1% GDP, 4°C around 4% GDP. • We could think about damages as a percentage of output in any given year. At a 3 percent annual growth rate, global economic output will increase almost twenty-fold in a hudred years • Or lets assume that damages affect output growth rates faster than output levels. Climate change clearly affects labor productivity, esp. in already hot countries. Then the cumulative effects or damages could be much worse over time. CENTER FOR ENERGY STUDIES Mitigation tools •Price based instruments (carbon pricing) - taxes on C02; taxes on inputs or outputs of procesess (fuel); subsidies for emission reducting activities; emission trading systems (cap and trade systems), feed in tariffs, green certificates... • Comand and control regulations - technology standards (biofuel blend mandate, minimum energy performance standards); performance standards (fleet average C02 vehicle efficiency); prohibition or mandating of central products or practices (bulbs, vacuum cleaners); certification, reporting requirements; land use planing... •Information and voluntary approaches - rating programmes, public information campaigns, education, awards. CENTER FOR ENERGY STUDIES Carbon pricing • To decrease demand we need to raise its cost. Trying to find the balance of the costs and benefits of carbon production, not to reducing it entirely. To internalize the externalities. • Instruments that reach throughout the economy, influencing all production and consumption decisions. • 1) figuring out how much carbon we want to put into the environment. 2) Then a cost must be applied: • applying tax on it (Pigouvian tax) • cap-and-trading • Both these systems raise some revenue that could be used to offset the negative macroeconomic impacts of energy price rises. CENTER FOR ENERGY STUDIES Carbon taxes • Norway — C02 tax introduced in 1991. Applied to oil products, emissions from oil and gas production and gas used for heating and transport. Sectors covered by EU ETS exempted from carbon tax, with exeption of the offshore oil and gas sector. From 2013 the tax level has been increased to offset the falling EUA price. • Japan — introduced in 2012 to raise revenue for energy efficiency and RES programmes, not as a direct price incentive. • Switzerland — C02 levy intended as an incentive for energy efficiency and for shifting toward cleaner heating and proces fuels (not to raise revenue). In place since 2008. Increased from 12 CHF/tC02 to 120 CHF/tC02. • British Columbia (Canada) - introduced in 2008 at USD10/ton, eventually reached USD30/ton. Revenue neutral, compensated by income and corporate tax cuts. Consumption fuels dropped by 5-15%, while in the rest of Canada increased by about 3%. GDP continued to increase. CENTER FOR ENERGY STUDIES Cap and trade systems • A government assigns to itself the right to put emissions into the environment. • It defines what it believes to be the socially optimal quantity of emissions. • The govevernment generates a number of permits equal to the amount of allowable emissions. • These permits are allocated to emitters to trade with them — market is created. = economically efficient, provides incentives for efectivity of the system. To develop technology that would allow one to reduce emissions at a cost lower than that of buying a permit, that spurs innovation and technological development. CENTER FOR ENERGY STUDIES NORTHWEST TERRITORIES _SA£KATCII ALBERTA— 9RIT1SH COLUMBIA. WASHINGTON- KAZAvISTAN REPUBLIC OFKOfiEA OREGON- CALIFORNIA^ mehcq RC-G ■/IRGINI colcueia CŮTE DIVOlRE :.-A. . _RIO DEJANĽRC l_£AO PAULO Cl LE ARC Ĺ NT \A NORWAY ľ SWEDEN 0Í sc/n- africa AUSTRALA i-■ latvia FC RTU GAL f//|í T | |* ^^Hu "ŕ CATALONIA. FRANCE ^ I Í^—SAITAMA FUJIAN TAIWAN SHENZHEN ÍLOVĽN *, LIECHTENSTEIN SWITZERLAND M y* Tdl \f íiľ Ld I Ixíll piÍLÍIIJj iliiLidCiVK implemented W itrieduled Tur iinplťiiiťiTLdLkx i 9 E^SI-riptrTMiirodorEchKlukdfci'-i-riplcTicnrjrlDn 0 E~5 ^^,bonc»irn(il«rierií:KlQraď>tdjkc 0 ijrbofi ■aa imptomamstl dt sďwJJcd 1ďt IrnpItTiUTjnori r// ^rtBnuK*Tip)crrienr«lar5i}wťiJĎd.E"S jridt-oori C4':-or E^S úr mrbcn uk under coreKjt'jrlúr ffi F3 iTip(«r*ťYú[l or BďwdulWL ta-bcri uk under cartsdu-jnin CENTER FOR ENERGY STUDIES Carbon tax vs. cap and trade system • Carbon tax: • Simpler to understand, easier to built, more transparent. • Keeps pushing for reducing the emissions despite technology development. • Is to be implemented more quickly. • Greater price predictability. •Cap and trade system • Avoids negative connotation of 'tax'. • Some companies are effective in lobbying for exemptions. • Known reduction of emissions, unknown price. CENTER FOR ENERGY STUDIES Global Greenhouse Gas Abatement Cost Curve for 2030 60 40 d) O20 Ü & 0 (/) o-20 u ■ c d) E-40 a> ■ re .Q <-60 -80 -100 Carbon capture and storage, reduced intensive agriculture conversion New building efficiency, Waste recycling, small pasture, grassland, soil Wind and solar power, forest restoration hydro, other efficiency and forest management improvement I _2_11 3 15 17 19 21 23 25 27 29 31 33 35 37 Hybrid cars, electricity from landfill gas, other industrial efficiency v Improved cropland ^ management, insulation retrofit (residential) Efficiency improvement, LED lighting, insulation retrofit (commercial) Abatement potential (GtC02e per year) CENTER FOR ENERGY STUDIES CCS technology May address the emissions in both energy and industrial sectors. •Capture CENTER FOR ENERGY STUDIES CAPEX of the US power plants (USD2014) BO50 Source: Global CCS Institute analysis CENTER FOR ENERGY STUDIES LCOE of the US power plant (USD2014) 264 Source: Global CCS Institute analysis CENTER FOR ENERGY STUDIES Existing units and units in preparation [] CLONAL CCS INSTITUTE 16 14 n 10 2- E LO 8 6 2 0 Identify Evaluate Define Execute Operate Total H United States 0 4 5 3 7 19 China 6 2 4 0 0 12 Europe 0 2 4 0 2 8 Canada 0 1 1 3 2 7 Australia 0 2 0 1 0 3 M Middle East 0 0 0 2 0 2 Other Asia 0 2 0 0 0 2 South America 0 0 0 0 1 1 Africa 0 0 0 0 1 1 Total e 13 14 9 13 55 CENTER FOR ENERGY STUDIES Stylized net global C02 emission pathways (GtC02/yr) - IPCC special report of 10/2018 CO2 emissions decline from 2020 to reach net zero in 2055 or 2040 1980 2020 2060 2100 CENTER FOR ENERGY STUDIES Climate Change Adaptation Needs, by sector Sector Adaptation strategies Water Expand water storage and desalination Improve watershed and reservoir management Increase water-use and irrigation efficiency and water re-use Urban and rural flood management Agriculture Adjust planting dates and crop locations Develop crop varieties adapted to drought, higher temperatures Improved land management to deal with floods/droughts Strengthen indigenous/traditional knowledge and practice Infrastructure Relocate vulnerable communities Build and strengthen seawalls and other barriers Create and restore wetlands for flood control Dune reinforcement Human health Health plans for extreme heat Increase tracking, early-warning systems for heat-related diseases Address threats to safe drinking water supplies Extend basic public health services CENTER FOR ENERGY STUDIES Climate Change Adaptation Needs, by sector Sector Adaptation strategies Transport Relocation or adapt transport infrastructure Energy Ecosystems New design standards to cope with climate change Strengthen distribution infrastructure Address increased demand for cooling Increase efficiency, increase use of renewables Reduce other ecosystem stresses and human use pressures Improve scientific understanding, enhanced monitoring Reduce deforestation, increase reforestation Increase mangrove, coral reef, and seagrass protection CENTER FOR ENERGY STUDIES Sources • IEA: C02 Emission from Fuel Combustion • IPCC: Climate Change 2013: The Physical Science Basic • Wagner, G.; Weitzman, M.L.(2015: Climate Shock: The Economic Consequences of a Hotter Planet • Figueres, Ch.-Ivanova, H.M.: Climate Change: National Interests or a Global Regime? • IEA: C02 Emission from Fuel Combustion • Carbon Brief • Center for Climate and Energy Solutions • Harris, J.M.; Roach, B.; Codur, A-M.(2017): The Economics of Global Climate Change. A GDAE module • Ritchie, H.; Roser, M.: C02 and other Greenhouse Gas Emissions. Our World in Data • Biermann, F; Boas, 1.(2010): Preparing for a Warmer World: Towards a Global Governance System to Protect Climate Refugees • Burrows, K.; Kinney,L.(2015): Exploring the Climage Change, Migration and Conflict Nexus CENTER FOR • Carbon Pricing Leadership ENERGY STUDIES