Mega - Energy transition: shaping humanity’s low-carbon future

Humans are driving as many as one million species to extinction.

Activities which rely on fossil fuels and intensive farming are disrupting the climate and triggering a catastrophic loss of fauna and flora.¹

That steep decline of wildlife population is due to degradation of the ecological niche – such as ambient temperatures and clean air – that is crucial for sustaining all life on Earth.

Humans, therefore, could well be the first species to have directly contributed to its own extinction through its actions.

That’s a stark warning from scientists who are increasingly losing hope that the world will meet the Paris goal of keeping temperature rises to 1.5C above the preindustrial era by 2050 through a sufficient reduction in greenhouse gas emissions.

The energy sector, responsible for nearly three quarters of global CO₂ emissions,² is particularly under scrutiny.

Over the past four decades, global energy consumption has more than tripled. In that time, the contribution of electricity and heat production to global CO₂ emissions has risen to nearly half of all fuel combustion, from a third back in 1980, according to World Bank.

As counterintuitive as it may sound, however, energy is an area which gives us a realistic hope the world will achieve a zero-carbon transition, according to Professor Hans B. (Teddy) Püttgen, a global authority on sustainable energy.

In his new book, “Electricity: humanity’s low-carbon future”,³ Prof. Püttgen argues that the world already has a number of innovative technologies to reduce emissions associated with energy and electricity production and consumption by two thirds in the two decades starting from 2015.

“By 2035, a determined deployment of technologies presently available, or already operational in pilot installations, can make significant contributions towards less carbon, improve energy access worldwide and reduce fossil fuel uses,” he writes in the book, co-authored with Yves Bamberger, a fellow of the National Academy of Technologies of France.
“Energy-wise, the priority is to decarbonise both the production and consumption of energy, while also ensuring improved access to reliable and affordable energy for those less favoured.”

To illustrate their point, Professors Püttgen and Bamberger use an unconventional approach. They create an imaginary country they call “Energia” – a nation of 50 million citizens in 2015 with a standard of living similar to that of developed economies.

Energia has implemented ambitious net zero objectives in line with the Paris Agreement and harnessed presently available technologies – such as heat pumps, electric vehicles, hydrogen as an energy vector, advanced power transmission systems and next-generation energy storage.

Between 2015 and 2035, the authors find that Energia's emissions can be reduced by 63 per cent while the production of low-carbon electricity increases by 42 per cent.⁴ During this period, the standard of living of Energia’s citizens is unaffected – which helped garner their broad acceptance.

“Energia’s 2035 energy mutation highlights the contribution that existing technologies can bring when properly deployed towards the priority to rapidly decarbonise our way of living,” the book reads.

The authors' findings are backed by a recent report by the International Energy Agency.

The Paris-based organisation estimates that novel technologies that are either already deployed or being developed have the potential to cut global energy sector CO₂ emissions by nearly 35 gigatonnes 2070, or 100 per cent of what’s required to realise sustainable transition in the same period.⁵

Prof. Püttgen says the integration of low-carbon energy, particularly from intermittent electricity sources, such as wind and solar, will require significant and broad-based investment into production and grids.

A general consensus is that these incremental investments could represent 1-2 per cent of the average worldwide GDP each year for several decades to come.

This compares favourably with 6.8 per cent of GDP, or USD6 trillion, that the world spends every year subsidising the global fossil fuel energy sector.⁶

“There are no excuses for not acting without further delay… A significant portion of the path towards a zero-carbon world can already be accomplished by 2035,” the book reads.

Carbon fee: meeting energy aspirations

Prof. Püttgen also believes rapid and profound decarbonisation cannot be done without the use of some form of carbon pricing.

Carbon pricing aims to quicken the pace of decarbonisation by making the use of emissions-intensive technologies more costly and providing financial incentives to businesses and consumers to switch to non-fossil fuel alternatives.

Despite its rich promise, carbon pricing has so far failed to take off since it was first proposed nearly half a century ago. Existing schemes cover barely a quarter of all annual global greenhouse gas emissions.

The social dimensions of such measures tend to be neglected too, as a straightforward carbon tax increases the net living cost of poorer households, for whom energy takes up a larger share of their spending.

In Energia, the government has introduced a carbon fee that is universally collected and redistributed towards households – or a Universal and Redistributed Carbon Fee (URCF).
 

In this system, the carbon fee would be paid based on the potential CO₂ emissions due to the combustion of a fossil fuel as it is initially introduced in any energy system.

The proceeds would be integrally redistributed to households in the countries applying the URCF, based on the number of persons living in each one.

Since the proceeds would be integrally redistributed to the population, it would not be perceived as yet another obscure government tax.

Countries implementing the URCF would be allowed to apply it to fossil fuel and/or equipment imported from countries without the URCF and then to redistribute the proceeds to their own population.

This should encourage more countries to adopt the URCF and ensure that the concept is gradually rolled out worldwide, thereby avoiding the market distortions which hamper present carbon tax and cap-and-trade systems.

Special provisions can be implemented for emerging economies.

In order to avoid market distortions, Prof. Püttgen recommends a simultaneous launch among at least 55 countries which represent 55 per cent of worldwide emissions, similar to what was done for the Kyoto and Paris agreements.

“It would be naive to believe that all countries worldwide would readily apply the carbon fee… yet its universal implementation is essential to avoid market distortions,” he says.

After six years of complex negotiations, policymakers reached what could be a breakthrough deal on carbon pricing at the UN summit in Glasgow.

Laying the framework for a robust, transparent and accountable market, the deal would allow state and private entities to help meet their Paris targets by buying offset credits representing emission cuts by others.

The agreement also directs some proceeds from the new global carbon offset trade to pay for climate change adaptation in developing countries.

After the summit, European carbon prices jumped to an all-time peak above EUR66 a tonne, raising hopes that a proper functioning carbon market could encourage polluting industries to wean themselves off fossil fuel and invest in cleaner technologies.

Prof. Püttgen also argues that the volatility of these prices, both their rate of change and amplitudes, makes it very difficult for industries to properly plan the often long-term investments in less-polluting technologies while maintaining short-term profitability as required by investors.

A URCF-type of carbon pricing should avoid volatility, he says.