Rhein on Energy and Climate

In six months the 190-odd contracting parties of the International Framework Convention on Climate Change (IFCCC) will meet in Cancun (Mexico) for its 16th session since its creation in 1992.

Their track record has been deplorable. Neither the unending number of expert and ministerial meetings, often in exotic places, nor the Kyoto Protocol has done anything to slow, let alone reverse climate change.

It is therefore not surprising that nobody involved in the recent negotiations in Copenhagen and Bonn dares to give an optimist prognosis for the Cancun meeting and the following one scheduled to take place in South Africa in 2012.

Indeed, the likelihood of agreeing, in the medium-term future, on a comprehensive agreement with effective commitments and a serious enforcement mechanism is next to nil. For this to happen Humanity will have to be rapidly confronted with dramatic consequences from climate change. As long as Humanity does not really feel the crunch of climate change short-term economic/political concerns of all governments will make it unlikely to find a global consensus for effective action,

In the absence of a negotiated global solution it is necessary to consider alternative ways to cope with climate change.

In the coming decades climate change will be driven by four powerful forces:

  • Rising global energy demand;
  • Rising scarcity of oil and gas resources;
  • Rising concerns about energy security in major consumer countries;
  • Rising research in new energy technologies.

These forces will interact. They are likely to lead to the phasing out of fossil energy in the course of this century, but the process will be slower, possible much slower than climate experts consider compatible with safe climate conditions on the planet.

Global energy demand is set to rise by close to 2 percent annually until 2050, due to a further increase of population and higher living standards in emerging and developing countries. That should be fully applauded, if only the major share of this additional demand were neutralised by higher energy efficiency or covered from non-fossil sources to prevent C02 emissions from rising at the same rhythm as energy demand.

The basic technologies for C02-free energy exist and are being increasingly used, from hydro to wind, nuclear, solar power, biomass and carbon capture and storage (CCS) But some of these, in particular solar power, are still far too expensive for large-scale use, despite remarkable progress in reducing their costs. And others like nuclear power or CCS still pose considerable safety or leakage problems.

It is therefore normal that wind and solar energy are presently being used only in countries like Europe and the USA that impose buying obligations at favourable rates on power companies. Emerging and developing countries are hesitant to do so due to excessive concerns to keep electricity prices low.

It is equally normal for emerging countries to push the most competitive alternative energy sources: hydro and nuclear.

In recent years China has undertaken huge efforts to increase its hydro power capacity and it has appetite for more even at the risk of tensions with neighbouring countries. Brazil is equally determined to fully exploit its vast hydro power potential, which is sufficient to cover all its electricity needs.

The really novel development is the push for nuclear power, especially in Asia. According to IEA estimates, 112 nuclear power plants are presently in operation in Asia, a further 37 are under construction and more than 80 are being planned. The Asian nuclear power capacity is therefore likely to exceed that of the USA and Europe within a few decades. This is will increase the risk levels in the densely populated region and require the most scrupulous safety precautions to prevent any accident à la Chernobyl

The existing oil and gas reserves are expected to be progressively depleted in the coming five decades; and new ones will be hard to discover and only at substantially higher production costs and environmental risks (deep sea drilling, oil sands or heavy oil).

The long-term price trend for oil and gas will therefore continue to be upward, following the evolution since the 1970s. This trend will spill over to coal, though more slowly because of much bigger global reserves.

Major consumer countries (China, USA and EU) are therefore increasingly concerned about their long-term oil/gas security; the more so as the number of oil/gas suppliers, most of them in the unstable Middle-East, is bound to diminish further.

This concern, and not climate change, has propelled them to accelerate the development of alternative automotive technologies, in particular the electric engine, and make their transport sector independent from imported oil or gas and ideally C02 – free.

In parallel, efforts to raise energy efficiency and lower the costs of alternative energy go on unabated, with or without government support.

Europe, USA, China and India are racing for the global leadership in such technologies. They consider alternative energies indispensable for the world and for their industries as a new, important growth factor.

Combating climate change will only succeed under three conditions:

  • The costs of alternative technologies must continue falling;
  • The costs of fossil energies must continue rising;
  • The two curves should meet as soon as possible.

Governments should accelerate this process.

They should lend massive support to research on new technologies and subsidise the application of non-fossil energy technologies, thus accelerating the learning curve and the fall in market prices.

If fossil energy prices were to rise more slowly than necessary they should not hesitate to push the adjustment process by imposing gasoline/fuel/C02 taxes and/or C02 emission caps.

The developed countries will, of course, have to take the lead in accelerating the ongoing energy revolution. They have been the main culprits of climate change during the 20th century and dispose of the technical know-how and the financial resources to push the process. But they should line up with those emerging countries that have also acquired technological experience in alternative energy technologies like Brazil, China and India.

The USA remains crucial for the global climate. It has to abandon its addiction to fossil energy and realise that it can no longer afford to continue with its wasteful use of energy, making it by the far the biggest per-capita emitter on earth (20 tons compared to world-average of 4 tons). As long as the US political leadership proves incapable of convincing its citizens of such change and restrain the coal and oil lobbies it cannot expect China, India or Brazil to take forceful climate-relevant action.

This analysis leads to seven conclusions

First, to mitigate climate change Humanity has to take concrete measures concerning the way we consume and produce energy. There is no point fixing abstract climate targets, e.g. no rise of global temperatures beyond two centigrade or reducing greenhouse gas emissions by x percent.

Targets must be palpable and politically convincing. Long-term energy security, higher energy efficiency, the creation of a vibrant industrial sector for alternative energies or obtaining x percent of energy consumption from renewable or non-fossil sources would be the type of targets to guide national energy/climate policies.

Second, Humanity should aim at covering x percent of its energy demand from non-fossil, ideally renewable, sources by 2050, with developed countries going for a more ambitious objective (say 80 percent) than emerging/developing countries.

Citizens will accept such a target if policy makers will constantly insist on the need to provide enough energy for their children and grandchildren. The progressive depletion of fossil energy reserves and the very long lead time to replace them by non-fossil sources must become the focal point of the global energy debate.

Third, Humanity should focus its efforts on the deployment of alternative energy technologies and the best economic incentives to reach it. It should abandon the endless quarrels about emission reduction targets that nobody will seriously monitor. Emissions will fall automatically if the appropriate technologies and policies to push them are put in place.

Europe, China, USA have demonstrated what is possible at the national level. But in future it will be necessary to attain much higher global penetration levels.

Bans on obsolete lighting and strict fuel consumption standards for automobiles are good examples as well as the progress in hydro, wind and solar power. But large-scale replication leaves to be desired. The UN should advise all countries to introduce stringent energy efficiency standards for buildings and appliances and assist in the implementation.

Fourth, no formal meetings of the IFCCC contracting parties should be held after Cancun, as long as the USA, Canada, Australia, OPEC and Russia have not radically changed their energy policies. There can be no productive outcome without full engagement by theses parties!

Instead, the international community should multiply informal meetings focused on practical issues relating to the transformation of the energy systems. The IEA should take a lead in such discussions. To that end, China and India should be invited to join the IEA.

Fifth, the EU should announce its intention not to take binding commitments for reducing its C02 emissions under the Kyoto Protocol beyond 2013. It would continue to reduce green house gas emissions autonomously in the framework of its energy and climate policy until a profoundly amended international energy &climate convention will enter into force.

Sixth, the international community should review its envisaged financial commitments. It should set the priorities straight. Mitigating climate change must remain the overriding priority for the coming decades. That is where international funding should therefore go. Instead of financing ill-defined climate adaptation measures it should help developing and emerging countries to make their energy systems more efficient and introduce C02-free technologies, especially hydro, wind, solar and biomass. The World Bank should become the principal vehicle for financing such investments and redefine its financing priorities. It should be the financial conduit for channelling the annual $ 100 billions developed countries have “committed” after 2020, with most of that amount going to mitigation rather adaptation measures.

Seventh, saving the tropical forests will have to be a top priority. The EU and other countries concerned therefore should make the REDD programme operational and provide the necessary funding for those countries willing to take strict action against illegal logging.

This vision may seem unrealistic to those who have been involved in the endless tiring sessions of almost 20 years of climate diplomacy. But the 2 page “Copenhagen Accord” also constitutes a first departure from trodden paths. Though it still contains elements of the conventional climate approach it starts relating non-binding emission targets to the appropriate national energy policies.

In any event, international climate policy needs a profound rethinking. The EU should rise to the challenge and make the transformation of the energy systems not only a domestic priority but also a main pillar of its relations with the major energy consuming countries. In doing so it should, however, refrain from putting too much emphasis on its own instruments for tackling climate change. Its major instrument – emission cap and trade – may not be suitable for many countries because it requires a very efficient administration which is rarely to be found in the rest of the world.

Brussels 29.06.10 Eberhard Rhein

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