Saturday, 26 April 2014

The trillion tonne challenge: Think cumulatively, act immediately on infrastructure

By Catherine Leining, Policy Fellow, Motu Economic and Public Policy Research

In the international climate change negotiations, countries agreed to the global goal of limiting warming above pre-industrial levels to not more than 2 degrees C. According to the IPCC’s Fifth Assessment Report, to maintain a 66% chance of achieving that goal, cumulative anthropogenic CO2 emissions starting from the period 1861-1880 must remain below about 1 trillion tonnes of carbon (3.67 trillion tonnes of CO2). That drops to an even more restrictive budget when non-CO2 greenhouse gases are taken into account.

How are we tracking so far? By 2011, we had already spent half of the trillion tonne budget.

A paper by Harvey et al. (2013) published by the American Academy of Arts & Sciences sheds further light on this challenge. The authors used an energy model called EN-ROADS to simulate emission outcomes under a range of mitigation scenarios. They found that if we continued on our present course, we would cross the threshold by 2050 on an upward trajectory. This suggests that under business as usual by 2050, we would either need to have figured out how an estimated 9 billion people can thrive on zero net annual greenhouse gas emissions from that point onward or we would have committed ourselves to a future with very serious climate change impacts. If we held net annual emissions constant at today’s levels, we would buy ourselves only an extra decade beyond 2050 before exhausting the budget. Acting aggressively on energy efficiency and renewable energy combined would buy us two extra decades, and integrating a hypothetical game-changing energy technology would buy us a further five years.

Why don’t these ambitious scenarios take us further? The authors identify two key factors. First, the modelled rates of improvement in efficiency and renewable energy are swamped by the rates of growth in population and GDP combined with cheap coal. Second, because we are locked into energy-intensive infrastructure and capital stock turns over slowly, the uptake of new technologies would be too slow to significantly change cumulative emissions by 2050, although they would impact significantly on annual emissions by that time.

The problem of infrastructure lock-in is noted by the International Energy Agency in the 2011 World Energy Outlook. By as early as 2017, our existing long-lived infrastructure could lock us into our cumulative emission budget for 2 degrees C. The IEA reports, “Expressed another way, no new investment could be made after 2017 in new power generation, industrial capacity additions, new buildings, passenger and commercial vehicles, appliances, space heating and agricultural equipment unless it were zero-carbon. Any new emitting plant or facility installed after this point would require the early retirement of some existing plant or facility to create headroom for the new investment.” The IEA highlights the false economy of delaying investment in lower-emission infrastructure under a 2 degree C limit. For the power sector, the IEA finds, “In other words, for every $1 of avoided investment between 2011 and 2020, either through reduced low-carbon investment or adoption of cheaper fossil-fuel investment options, an additional $4.3 would need to be spent between 2021 and 2035 to compensate.”

Harvey et al. do leave us with a final scenario that is more hopeful. When the aggressive energy efficiency, renewable energy and new technology interventions are combined with a CO2 price of US$35 (~NZ$40 at a current exchange rate) per tonne starting in 2025 and a 50% reduction in emissions from land-use sectors and of more short-lived greenhouse gases, cumulative emissions remain below the trillion-tonne threshold through 2100, buying considerably more time for adjustment.

There are three key messages here.

First, managing cumulative emissions is the end game. We will need more than weak annual emission reduction targets that defer ambition in order to deliver the cumulative emission reductions that will be needed by mid-century. 'Last-minute' solutions won't work.

Second, we need to shift infrastructure investment toward low-carbon alternatives starting now if we want to avoid locking ourselves into a future of severe climate change impacts and/or major stranded assets. The fossil fuels that appear cheap today come with a hidden price tag. Effective emission pricing would help support this transition.

Third, we need to figure out how to translate a finite limit on cumulative global emissions into effective actions by governments, businesses and communities. Today's investment decisions need to lay the foundation for transformational rates of change in the coming decades while still meeting human development needs. Globally, we need to pursue emission reduction opportunities from energy efficiency, renewable energy and new energy technologies as well as emission pricing and other measures. We need to fundamentally rethink how we define our goals, how we measure our progress, and how we incentivise global collaboration to shift emission drivers across the chain of supply and demand.

To avoid lock-in to a high-emission future, we must think cumulatively and act immediately on infrastructure.

This post first appeared in the blog by Silver Lining Global Solutions.

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