We must halve emissions by 2035

 From The Guardian

The world needs to cut carbon emissions by nearly a fifth in the next four years, and by close to half within a decade, to avoid overshooting climate targets by a disastrous margin.

Although the “window has closed” on holding temperature rises to 1.5C, in line with scientific advice, limiting the “overshoot” of that target is still possible, according to the UN Environment Programme (UNEP).


But countries are failing to translate their long-term targets on reducing emissions into short-term actions, a report on the “emissions gap” between climate goals and policies has found.

Global carbon output appears to have stalled: the emission levels in 2025 were broadly similar to those of the previous year. But UNEP analysts were wary of calling it a peak or plateau, given the vast uncertainties of geopolitics and an increased reliance on fossil fuels, despite strong growth in renewable energy.

Cutting greenhouse gases by 18% by 2030, and by 45% by 2035, would yield a good chance of limiting temperature rises to 1.7C above preindustrial levels. This would still allow events such as the record heatwaves of the last few months to become frequent and common, but could help prevent them from getting drastically worse.

Governments were warned for years that time was running out, said Inger Andersen, the executive director of UNEP. “[We used to say] there’s still an opportunity if we make this herculean effort [to stay within the 1.5C limit],” she said. “It’s now clear the herculean effort was not made. We procrastinated, and now we are saying this window has closed.”

Nevertheless, she urged countries to keep the 1.5C goal – the centrepiece of the Paris climate agreement. “We can make the overshoot as brief and as short as possible. It’s not time to throw in the towel and give up. This is about how to find our way back, as shortly and quickly as possible.”

Under Donald Trump, the US – the world’s second biggest emitter, after China – has withdrawn from the Paris climate agreement and is threatening to reverse its longstanding trend of falling greenhouse gas emissions.

Bill Hare, the chief executive of the Climate Analytics thinktank, said: “All governments have a job to do, but in particular it is time for major fossil fuel producers such as the US and Saudi Arabia, which produce 20-25% of fossil fuels globally, to stop playing politics and face the scientific reality. Right now they are looking at the fire, denying it exists and pouring more petrol on it, while their own citizens increasingly face searing heat, wildfires and other impacts.”

Other countries appear to have been affected by US intransigence – pledges made last year on greenhouse gases were noticeably weak, according to UNEP analysis. At the Cop30 climate summit in Brazil last November, governments were supposed to make fresh commitments under the Paris agreement to cut emissions. But the commitments made were nowhere near strong enough.

Even if all of those updated pledges were fulfilled, temperatures would still rise to 2.6C above preindustrial levels, according to UNEP’s projections, endangering life across swathes of the globe. Policy has also not kept up with pledges: on current policies around the world, temperatures would rise to 2.8C. Every five years of greenhouse gas emissions at current levels pushes up forecasts of global heating by 0.1C. Scientists also fear that the greater the margin by which we exceed 1.5C, the greater the likelihood of triggering tipping points in the climate system.

Mohamed Adow, the director of the thinktank Power Shift Africa, said: “The tragedy is that we have the solutions within our grasp. Solar and wind power are growing far faster than anyone expected, yet governments are still failing to move away from fossil fuels quickly enough. The technology is racing ahead while political leadership is dragging its feet.”

The shortfall in countries’ commitments is supposed to be corrected under a Paris agreement mechanism called the “global stocktake”, an assessment of emissions targets next scheduled for 2028. But that has also been thrown into doubt: this week, the UN’s Intergovernmental Panel on Climate Change failed to set a timetable to publish its latest report before the global stocktake, which would prevent governments from assessing their progress against the latest science.

Johan Rockström, the director of the Potsdam Institute for Climate Impact Research and one of the world’s leading climate scientists, said rows over the timing of IPCC reports must not be allowed to stall government action. “If all current national commitments are implemented, global emissions are projected to reach approximately 50 gigatonnes of carbon dioxide equivalent annually by 2035, when they should be below 35 gigatonnes. The science is already clear. Closing that gap is a question of political action, not a lack of scientific evidence,” he said.

One way identified by UNEP to limit warming quickly would be to cut methane, a greenhouse gas 80 times more powerful than carbon dioxide.

18% by 2030 translates to a compound 4.8% per annum reduction.  45% by 2035 is equivalent to 6.5% per annum reduction.  Yet emissions have only just peaked.  Maybe.

So, how achievable are these targets?  Electricity and heat are responsible for 33% of global emissions. Transport for 16%, fugitive emissions (i.e., gas leaks) for 7%.  

Roughly 40% of electricity comes from renewable sources, including hydro.  Suppose we aim for a 2/3rds reduction in total emissions from electricity by 2035.  That would cut total emissions by +-20%, and would require us to produce 80% of electricity from renewables and nuclear.  In other words, for the world as a whole, renewables as a percentage of total generation would have to rise by 4-5% per annum.  Some countries will not achieve this.  Some (the US, for example) are not even trying.  So the rest of us will just have to work harder.  But to raise the percentage of renewables in electricity by 4 or 5% per annum seems perfectly doable.  Australia, for example, is doing this.  If the percentage of wind and solar (currently 17%) rises by 15% per annum, i.e., to 19.6% in 2027, 22.5% in 2028, and 25.9% in 2029, and 29.8% in 2030, then we can do it, easily.  (For the percentage to rise by 15% a year, the absolute amount of renewable energy generated would have to rise faster, because electricity demand is growing.)

Source: Our World in Data

OWID gives different figures (+-25%) for the share of transport here.  So let's say +-20%, of which +-15% is from cars and trucks.  The world is heading fast towards 95% electric land transport.  (Air and sea are another matter.)  In China, for example, where EVs/PHEVs are now 2/3rds of new car sales, emissions from transport fell 16% in Q2, though this was exacerbated by behavioural changes due to the Iran War.  When car and trucks are 100% of sales (5 years?), the emissions of the total car/truck fleet will fall by 6.7% per year, assuming vehicles last 15 years.  Emissions from sea transport will also fall, as 40% of sea transport's emissions come from transporting fossil fuels.  Let's say that by 2035, we cut transport emissions by half.

Fugitive emissions will fall as less coal and gas is mined.  Another 2%?

Total emissions will only fall 32% (20% + 10% + 2%).  That's not enough, though it's much better than nothing.

Switching to renewables would accelerate if we had a carbon tax, which rose each year, and we also taxed imports from countries which didn't have one.  The EU has imposed a carbon border tax, and any country which gets its own carbon tax can avoid paying this tax, which means every country has an incentive to introduce one.

Targeting net-zero decades away has allowed politicians and companies to promise that they will some magical day far in the future achieve net-zero, while continuing to emit now.   And who will still be around in 35 years to make their excuses and explain why we failed?  Instead, every country should set an annual target — to reduce emissions by 5% every year.  That won't get us to net-zero by 2050, but nor will this current charade.  But it will get us on track to cut emissions by 45% by 2037.

It's doable.  Let's stop phiffing and phaffing and shilly-shallying and do it.

Things are getting very ugly

 

Source: Off Target, from the UN Environment Programme
Note:  I believe that the UN is using the convention that methane is 20 times as potent a greenhouse gas as carbon dioxide over 100 years.  The better way to count methane, I think, is its effect over 20 years, when it is 80 times as potent a green house gas as CO2.  This would significantly increase the percentage of emissions from agriculture above the ~20% shown in this table.

Next year, this humungous El Niño could drive temperatures to 1.7 or 1.8 degrees C above pre-industrial levels.  This is, of course, catastrophic.  Things will get very ugly, unless we redouble our efforts to slash emissions.  

What can we do?

First, what can governments do?

✔️ Set a renewable energy target.  The percentage of renewables+nuclear in electricity generation needs to rise by 6-8% a year, or more, if we are to eliminate electricity's emissions before it is too late.

Emissions from electricity generation are just under 30% of total global emissions.  We may not yet be able to go above 90 or 95% renewables in the grid, because we don't have long-term storage to offset periods of dunkelflaute, but we can certainly aim for 90%, and reconsider what we need to do next when we get there. 

How would this work?  Each utility would be required to reach the levels set in the RET each year.  Those which exceeded this target would get credits, those which didn't would have to buy credits, either from their more successful peers, or from the government.   This would encourage utilities to replace coal and gas with wind/solar/batteries/nuclear/hydro. I include nuclear, but in truth, it can't be built fast enough.  But if there is already nuclear available, it shouldn't be closed down. 

If we aim for a maximum of 10% fossil fuels in electricity generation within 10 years, we will have cut emissions by 27%.  And, remember, in principle, every use of energy can be electrified.  So removing fossil fuels from electricity generation is key.

✔️ Every country should introduce a carbon tax.  It doesn't have to be swingeing to start out with, but it should rise every year, and the pathway should be clear to everybody.  To prevent emission leakage — you tax your industries while others don't tax theirs — you must also tax imports from countries which do not have an R.E.T. or a price on carbon.  (See my posts on a carbon border tax)

✔️ We need to accelerate the replacement of petrol/diesel vehicles (ICEVs) with EVs.  15% of emissions come from transport.  Because even when we reach 100% of sales being EVs, it will take 10-20 years for all ICEVs on the roads to be replaced.  This is too long.  Most countries are nowhere near 100% EV sales, even though this percentage has risen sharply over the last 9 months.   To accelerate this process, we could, for example, ban the import of new and second-hand ICEVs, or slap 100% taxes on them.  By taxing new petrol cars and subsidising EVs, we would drive a wedge between the up-front costs of EVs and ICEVs.  Ethiopia has already done this.  This policy should apply to two and three-wheeled vehicles, too.  Countries which do this deserve reduced carbon border taxes.  And we should press on with bi-mode and battery trains and electric planes.

✔️ We need to replace oil- or gas-based household and industrial heating with heat pumps.  They're four times as efficient as gas, oil, or electric heaters, and so are cheaper to run, but they have higher up-front costs.  They will require government subsidy to start the revolution rolling.  

All of these combined will cut emissions by 50 or more.  If we also switch to low-emission steel and cement, the emissions cuts could reach 65%.

Second, what can you do?

✔️ The steps above will leave mostly agricultural emissions to be reduced, which (but see note on graphic above) are ~20% of emissions. This is too hard for governments to act on — now.   People love their meat too much to give it up.  But it won't go away.  When we've cut emissions by 70%, agriculture will dominate what's left over.  And action will no longer be postponable.  

✔️ Until then, you personally can cut beef, mutton, pork and cow's milk out of your diet, which would more than halve your emissions from the food you eat.  Even better: if land is freed from animal raising, it can be re-wilded, which reduces the level of Co2 in the atmosphere.  Negative emissions!  If you really care about global heating, this is something direct you can do.  You can only force governments to switch to renewables by acting collectively (by voting), and though we shouldn't give up trying to get collective action, we don't need anybody else's permission to eat less meat.  It's something you can start today.

The position is far from hopeless.  We have the technology to slash emissions from electricity generation and transport. What we lack is the will to act.  Perhaps the upcoming Godzilla El Niño will shift the political logjam.  Make it so.

Global warming *has* accelerated

 From Open Mind (Tamino)

I won't repeat the whole article.  Read it in full here.

My paper with Stefan Rahmstorf showing that global warming has accelerated was published in Geophysical Research Letters today. The main result is that global warming is NOT proceeding at the same old rate it has been since 1975. It’s going faster.

In this data set [from Berkeley Earth], 2025 turned out to be the 3rd-warmest year on record (as in the other data sets except NASA, where it came in 2nd). When I adjust the data to remove the estimated impact of el Niño, volcanic eruptions, and solar variation, I get this:

The trend is unaffected, but the noise level is much reduced, which enables us to estimate warming rates with less uncertainty. I’ve added a red line to this graph which is a modified LOWESS smooth of the adjusted data.

To test for acceleration we isolated the data since 1975, and the simplest way to test for it is to fit a parabola to the data; if the quadratic term is statistically significant, we can reject the null hypothesis, that the signal is just a straight line. Of course we must correct for autocorrelation of the noise, but still the quadratic term turns out to be strongly significant. We can safely reject the null hypothesis: there has been acceleration.

According to this model, the warming rate right now is the slope at the endpoint of the parabola, which is 0.28 ± 0.05 °C per decade (i.e. between 0.23 and 0.33 °C per decade, 95% CI). I will emphasize that this is the “best estimate” and those are the correct uncertainty levels IF (and this is a BIG IF) the data actually follow a parabola plus stationary noise. If not (which is the overwhelmingly likely case), we can consider the estimate good but not best, and the uncertainty levels are a lower bound on the actual uncertainty.

Another test for acceleration is to find the best fit of a continuous piecewise-linear function which is allowed to change slope at a time chosen by changepoint analysis. This is a challenge to evaluate statistically because we have to allow for autocorrelation and account for the extra degree of freedom to choose the changepoint time. But it can be done, and the best-fit model again turns out to be strongly statistically significant.

Both those models serve excellently to demonstrate the presence of acceleration. But I doubt they are best to estimate what the warming rate is right now, and what it will be in the near future. For that, I offer yet another model, which I will apply to the data since 1880, a continuous piece-wise linear fit (PLF) which is allowed to change its slope every 15 years from 1905 through 2010. I call this model “PLF15”

The PLF15 model not only estimates the signal value, it conveniently gives us an estimate of the average warming rate over each segment between the knots. I can plot the warming rate itself (which for this model is constant during each segment) along with light blue shading to show the uncertainty range.

All these graphs plot the warming rate in °C per year, but when quoting numbers I have followed the custom these days to talk about the rate in °C per decade. According to this analysis, the current estimated rate is 0.31 ± 0.07 °C/decade.

Which estimate is best? I don’t know, but I do know that even 0.24 °C per decade will take us past 2 °C right around the year 2050. The whole point of the Paris agreement is: DON’T GO THERE. My advice: fasten your seat belt, things are going to get ugly.

We need to redouble efforts to cut emissions, or things will get very ugly.  What can we do?

• Set a renewable energy target in every country.  The percentage of renewables+nuclear needs to rise by 6-8% a year, at least.  This will cut emissions by 27% (emissions from electricity generation are +-30% of total global emissions) within a decade.  We may not yet be able to go above 90 or 95% renewables in the grid, because we don't have long-term storage to offset periods of dunkelflaute, but we will have cut most emissions from electricity generation.  
• We must tax imports from countries which do not have an R.E.T. or a price on carbon.  (See my posts on a carbon border tax)
• We need to accelerate the replacement of petrol/diesel vehicles (ICEVs) with EVs.  This is a problem, because even when we reach 100% of sales being EVs, it will take 10-20 years for all ICEVs on the roads to be replaced.  This is too long.  Most countries are nowhere near 100% EV sales.   We could, for example, ban the import of new or second-hand ICEVs, or slap 100% taxes on them.   Ethiopia has already done this.  This policy should apply to two and three-wheeled vehicles, too.  Countries which do this deserve reduced carbon border taxes.
• In rich countries, we need to replace oil- or gas-based household and industrial heating with heat pumps.  Because they have high up-front costs, they will require government subsidy to start the revolution rolling.

All of these combined will cut emissions by 50 to 60%.  If we also switch to low-emission steel and cement, the emissions cuts could reach 70%.

That will leave (mostly) agriculture.  Put that in the too-hard basket for now--people love their meat too much to give it up.  But it won't go away.  When we've cut emissions by 70%, agriculture will dominate what's left over.  And action will no longer be postponable.

The hydrogen furphy

I've been suspicious about the hydrogen mania for a while now.   Michael Liebreich does a much better demolition job than I could.   But his recommendation to use green ammonia, made from green hydrogen, for long-term storage in electricity generation is very interesting.   And I don't share his doubts about using e-fuels for jets.  If e-fuels cost twice as much as jetfuel, so be it.  We survived without intercontinental jet flights before, and we could again.

[From BNEF]

By Michael Liebreich

Senior Contributor
BloombergNEF

Injecting some reality

Two years ago, BloombergNEF published my two-part primer on hydrogen, Separating Hype from Hydrogen. On the supply side, I was optimistic: green hydrogen (produced from renewable energy) would over time become cheaper than blue hydrogen (produced from natural gas but with carbon captured) and eventually cheaper than gray hydrogen (produced form natural gas without carbon capture).

On the demand side I was more skeptical. While clean hydrogen will be needed to decarbonize a number of use cases in industry, and perhaps for long-duration storage, I found it hard to identify any role for it in applications like land transportation or space heating. Since then, as I have done more work on industrial heat, I have even come to believe it has a limited role even there.

If my intention at the time was to inject some reality into discussions about hydrogen, I clearly failed. Rhetoric around hydrogen has become ever more overblown.

According to lobbying group the Hydrogen Council, citing a series of reports commissioned from McKinsey over the past three years, hydrogen can be expected to contribute more than 20 percent of emissions reductions needed for the world to reach net-zero emissions – a figure repeated by politicians and journalists seemingly without the slightest critical examination.

German Chancellor Olaf Scholz has called hydrogen “the gas of the future” and promised “a huge boom.” Japan’s Prime Minister Fumio Kishida has declared that “shifting to and developing a hydrogen society is critical for achieving decarbonization.” Frans Timmermans, the EU Executive Vice-President for the European Green Deal believes that “hydrogen rocks.” Jacob Rees Mogg, briefly UK Secretary of State for Energy this year, called hydrogen “the silver bullet”.

Public money is starting to flow. The EU has approved the first 13 billion euros ($13.7 billion) of the 430 billion euros ($450 billion) promised under its 2020 Hydrogen Strategy and is now working to launch a “Hydrogen Bank”. The US Inflation Reduction Act (IRA) provides a ten-year tax rebate per kilogram of green hydrogen worth $3, which will soon be more than the production cost itself. Free hydrogen anyone?

Of supreme import

In October this year the Hydrogen Council and McKinsey released another report entitled Global Hydrogen Flows, predicting long-distance transport of 400 million tonnes of clean hydrogen and its derivatives (calculated on a hydrogen-content basis) by 2050, out of total global production of 660 million tonnes of hydrogen. It is worth bearing in mind that today, 94 million tonnes of hydrogen are used annually, virtually all of it made from fossil fuels, creating 2.3% of global emissions. The vast bulk of today’s hydrogen never leaves the compound on which it is made, let alone cross an international border.

The idea of hydrogen imports as a way of decarbonizing major industrialized economies is enormously seductive – so much so that Germany and Japan have made it central to their decarbonization strategies. Here’s Japanese PM Kishida again: “Japan aims to commercialize an international hydrogen supply chain by producing hydrogen in bulk at low cost in countries blessed with bountiful renewable energy resources coupled with marine transport infrastructure.”

Chancellor Scholz is promoting hydrogen imports not just as a way of decarbonizing the German economy, but as a replacement for Russian gas. In August he and Canadian Prime Minister Justin Trudeau flew to Newfoundland and Labrador to sign an agreement to “create a transatlantic supply chain for hydrogen well before 2030, with first deliveries aiming for 2025”. As I write this, German Economy Minister Robert Habeck is on a five-day trip to Namibia and South Africa to secure hydrogen supplies.

The problem with this vision of large-scale imports of hydrogen is that the physics of hydrogen is unlikely to play ball.

The unbearable lightness of hydrogen

In February this year, Kawasaki Heavy Industries’ Suiso Frontier arrived in Kobe, Japan carrying the world’s first ever cargo of liquid hydrogen from Australia. Did this momentous occasion herald the start of a brave new world of trade in liquid hydrogen, as the press coverage suggested? In a word, no.

Set aside the A$500 million ($334 million) cost of the project; set aside the fact that most of the hydrogen on board the Suiso Frontier was made from coal; and set aside the fire that broke out on board while loading. The 1,250 cubic metres of hydrogen carried by the Suiso Frontier contained just 0.2% of the energy content of a single large LNG carrier. Okay, the first ever LNG cargo, carried 63 years ago from the Calcasieu River on the Louisiana Gulf to the UK, consisted of a similarly picayune 2,475 tonnes. Surely liquid hydrogen can be scaled up in the same way as LNG has been? Kawasaki Heavy Industries, builder of the Suiso Frontier claims it has already lined up the first order for a much larger, 160,000 m3 carrier from Nippon Kaiji Kyokai.

This is where the physics of liquid hydrogen step in. Although the scaled-up vessel would carry 60% of the volume of an LNG Q-Max, it would carry only 22% of the energy.

Hydrogen has very good gravimetric energy density – the amount of energy carried per unit weight. On this measure, hydrogen beats diesel, petrol and jetfuel by a factor of around three, and LNG by a factor of 2.7 – which is why it makes a great rocket fuel. However, it has very poor volumetric energy density – the amount of energy carried per unit volume. It’s worth remembering that while a cubic meter of water weighs 1,000 kilograms; a cubic meter of hydrogen weighs only 71 kilograms.

On a volumetric basis, hydrogen’s energy density is a quarter that of jet fuel, and only 40% of that of LNG. Since ships are volume constrained (think Suez Canal, Panama Canal, etc.), this inevitably means more trips. Even if Kawasaki Heavy Industries was to scale its hydrogen carrier to the same size as a Q-Max, it would need to make 2.5 deliveries to carry the same amount of energy as one cargo of LNG. You don’t need to know anything at all about shipping to know that 2.5 times the trips are going to cost you 2.5 times as much.

But this is only the start. A liquid hydrogen carrier will inevitably be more expensive than an LNG carrier. Its load will be at -253C instead of -162C, and all pipes, valves, pumps and tanks have to resist hydrogen embrittlement. And because liquid hydrogen is both colder and lighter than LNG, the liquid hydrogen ship would have up to nine times more boil-off en route (these ships let some of the load boil off as heat enters the tanks, and then use that as fuel for their engines), unless you add either much more insulation or a complex cryogenic recycling system.

Overall, you would be wise to assume that the seaborne segment of your hydrogen trade will cost around four times the cost of LNG per unit energy.

It’s the physics, stupid

But that only deals with the seaborne segment. We still have to talk about liquefaction and regasification.

Liquefying hydrogen is a is a hugely energy-hungry process, made complex by the quirks of hydrogen physics – things like its negative Joule-Thomson Effect (unlike most gases, hydrogen gets warm when it expands and cold when compressed) and ortho-para isomer conversion (without which liquid hydrogen re-evaporates, irrespective of insulation). Liquefaction of hydrogen currently consumes 30-40% of its energy content, versus no more than 10% for LNG. Ways to improve this are being researched, but nothing can change the fact that liquefying hydrogen is, quite simply, a bear.

As for regasification, again the plants will be more expensive than for LNG. They need to operate at lower temperatures; all valves, pumps, pipes and tanks have to resist embrittlement; and compressors have to be of larger capacity because pressurizing hydrogen gas requires more work than pressurizing natural gas. European politicians, scrambling to build new terminals to receive LNG in replacement of Russian gas, are suggesting that these terminals will be repurposed to receive hydrogen or its derivatives. This is nonsense. You can re-use the docks and infrastructure, and any distribution pipelines can be upgraded, but 70% of everything else has to be scrapped.

In summary, while LNG approximately doubles the cost of gas delivered by pipeline, shipping liquid hydrogen will cost four to six times more than LNG. In other words, you can’t power an economy on imported liquid hydrogen, and that is not because of things that can be fixed – scale, technology, cost of capital and so on – but because of the underlying physics: volumetric density, liquefaction temperature and interactions with other materials.

It’s a gas, gas, gas!

If importing hydrogen in liquid form is out, what about importing hydrogen as a gas?

Here, things look much better. Gaseous hydrogen is already transported by pipeline – all the pipes, pumps, valves and tanks need to be appropriately engineered, but the economics are not terrible. Just as well, given the volume of hydrogen we are going to need at industrial “hydrogen hubs” for industrial uses and to provide long-duration back-up power.

Just replacing the current production of gray and black hydrogen would create demand for 94 million tonnes of clean hydrogen. Pipeline imports are well-placed to meet a decent proportion of this.

There is, however, a caveat. The longest natural gas pipeline in the world (excluding side branches) is Brazil’s National Unification Gas Pipeline (GASUN), just under 5,000 kilometers long. In their report on hydrogen trade, McKinsey and the Hydrogen Council predict 40 hydrogen “trade routes” connecting the globe. Those serving Europe by pipeline from Norway, North Africa and the Gulf are certainly feasible (the one from Russia is clearly off the cards for decades). However, none of the longer trade routes linking the US West Coast with Asia, the US East Coast with Europe, or the Gulf, Africa or Australia with Asia are likely to carry a single cubic meter of gaseous hydrogen.

There are a few companies proposing to carry compressed hydrogen gas by ship. This would allow them to avoid the cost and complexity of liquefaction but would expose them to the same problems of lower volumetric energy density, only more so. Provaris Energy has designed a ship carrying hydrogen gas at 250 bar. But this translates to just 25 kilograms of hydrogen per cubic meter – just over a third of the very poor volumetric density of liquid hydrogen. Scaled up to the size of a Q-Max, their ship would carry around one seventh of the energy. Seven ships to do the work of one, you can imagine what that does to costs.

There may be some niche applications for shipping gaseous hydrogen, for instance moving stranded supplies between islands, but it is not going to happen in more than homeopathic quantities.

The exotics

There are other ways of transporting hydrogen beyond liquid and gas. We’ll get on to derivatives of hydrogen in a moment, but first I want to deal with the exotics – liquid organic hydrogen carriers (LOHCs) and metal hydrides. Here the goal is to load hydrogen into a chemical or metal carrier, which allows it to be transported at ambient temperatures and pressures. On arrival the hydrogen is released and the carrier returned to the point of origin.

One promising LOHC is benzyl toluene, being marketed as a solution for hydrogen shipping by a company called Hydrogenious. But again it has a volumetric density problem. One cubic meter of benzyl toluene can only be loaded with 54 kilograms of hydrogen – which means four times as many trips for each energy cargo as you would have with LNG. In addition, loading hydrogen into the organic solvent is an exothermic process, generating heat where you don’t need it, and then you need to add energy at 300C at the arrival location to extract it – using up around 30% of the delivered energy.

That’s not to say LOHCs are not interesting: they could perhaps find a role in long-duration stationary storage – not everywhere has the salt caverns or depleted gas fields required to store gaseous hydrogen, but any tanker farm would be able to handle benzyl toluene and there may be options to store and reapply the process heat between cycles. There may even be a modest import market for LOHCs, to replenish long-duration storage tanks.

Metal hydrides offer the hope of transporting up to twice as much fuel per cubic meter as liquid hydrogen – but each family of hydrides studied so far has shown disadvantages: cost, gravimetric density, time to charge, absorptive capacity, heat required to release the hydrogen and so on. It would be a brave investor who thought we were going to move hydrogen at scale this way, when 50 years of research has not yielded as single commercial application.

First derivatives

Next up, hydrogen derivatives – e-methane, e-methanol. These are certainly easier to transport – drop-in replacements for their fossil equivalents. Their problem is high production cost. For each of them you need a source of clean hydrogen – whether blue, green, pink or red (from nuclear power, whichever color code you use) or whatever – plus a source of carbon nearby, and then you need to combine them into molecules of varying degrees of complexity.

The cheapest source of carbon would be captured from the combustion of fossil fuels – but that would make no sense as it would not be compatible with net zero. The only thing that could possibly make sense would be to use direct air capture (DAC) or secure carbon from a bio-based source, so that when it is burned it just returns to the atmosphere.

A bit of systems thinking, however, shows that even this makes no sense. Take e-methane. By the time you have gone to the cost of securing your carbon, why not just sequester it, instead of incurring further costs in producing hydrogen and combining them into your derivative. You could then just deliver plain old fossil gas to the importing country – along with a carbon credit if needed. That would be identical from a climate perspective and vastly cheaper.

Methanol can and must be made in future using clean hydrogen. Some of it will be made where hydrogen is cheap and exported, but only for use cases where it will be consumed as methanol. In 2022, global production of methanol was 110 million tonnes – but adjusting for molar weights, that is equivalent to just 14 million tonnes of hydrogen. Should demand double and a third of that get traded internationally, only a 9 million-tonne import market by hydrogen mass would be created. That barely scratches the surface of the Hydrogen Council’s 400 million tonnes.

E-methanol also represents a potential pathway to decarbonize shipping – but ammonia and waste-based biofuels both look like being cheaper. Even using nuclear power for the world’s largest ships would most likely be cheaper than e-methanol. Global shipping fuel demand today is around 300 million tonnes per year; let’s suppose, optimistically, that demand increases by 50% by 2050, that 20% is replaced by methanol, and a third of that methanol is traded internationally. Once you adjust for the molar mass and energy content of methanol, that would only create annual demand for another 8 million tonnes of hydrogen imports.

e-Fuels

Some continue to promote e-fuels as the solution for land transportation, particularly in Germany and Japan. They point to the fact such fuels require no changes in consumer behavior, highlight the millions of jobs that depend on the internal combustion engine and claim that scrapping 1.4 billion internal combustion vehicles on the world’s roads would be unaffordable.

Their arguments have no merit. First, those 1.4 billion vehicles will be scrapped anyway before whichever year countries select for net zero. In most cases, electric vehicles are already competitive on a total-cost-of-ownership basis with petrol and diesel. E-fuels, by contrast, will still be three to five times as expensive in 2050, driven by their production complexity and the efficiency losses at each production stage. Yes, Porsche is building a pilot project in Chile to produce e-fuels, but theirs is not exactly a cost-conscious customer base.

The fact is that those jobs associated with internal combustion engine manufacturing will be disappearing anyway, the only question is whether they are lost to other technologies or to China. As for behavioral change, most EV users like the fact that they can charge anywhere, rather than having to visit a gas station every week.

Flights of fancy

Time for a deep dive into hydrogen’s potential use in aviation. Airbus has said that it “considers hydrogen to be an important technology pathway to achieve our ambition of bringing a zero-emission commercial aircraft to market by 2035,” and this month, Rolls-Royce and EasyJet made the news by testing a turboprop engine on pure hydrogen.

It turns out that running an aircraft engine on hydrogen is not the difficult bit – the Soviet Union did it back in 1988, not on a test bench but in the air. The real problems are caused, once again, by the physics of hydrogen.

With just 25% of the energy density of kerosene, replacing the maximum take-off fuel load for a long-haul aircraft would require more space than the entire swept volume of its fuselage – a non-starter. For short-haul flights, the focus of Easyjet’s interest, the fuel tank would take up around a third of the fuselage. That means ticket prices 50% higher than now, even before paying for the higher costs of the plane, the cost of the liquid hydrogen, and cost of its ground handling equipment. In total, expect a doubling or tripling of prices.

The real show-stopper, however, is getting the fuel to the airport. Liquid hydrogen transfer lines exist, but there is no way to keep miles of pipeline at -253C and handle the safety issues of any potential leaks. That leaves road tankers or gas pipelines.

Let’s do a thought experiment: try to replace all 20,000 tonnes of jet fuel delivered daily to Heathrow airport with 7,200 tonnes of liquid hydrogen. By tanker truck, that would mean 2,300 daily movements of liquid hydrogen in West London. The safety and traffic implications don’t bear thinking about. Now the only option is to bring the hydrogen in by gas pipeline, and liquefy it on site. But that would require 2.7GW of electrical power, according to engineer and Oxford University ammonia expert Dr. Mike Mason – approximately the output of a new nuclear power station the size of Hinkley C, plus a lot of pylons. And then you need to dump enough heat to raise the temperature of the Thames by 18 degrees C.

The bottom line is that liquid hydrogen could perhaps end up powering a few executive jets – startup ZeroAvia certainly hopes so – but not aviation as we know it. The only substantial role for hydrogen in aviation would be through the production of e-fuels. These are certainly technically feasible – UK company Zero Petroleum has already made some – but they look like being at least twice as expensive as sustainable aviation fuels (SAF) based on agricultural or forestry waste.

If potential volumes of SAF are limited by feedstock availability, then there is a market opportunity for hydrogen in aviation fuels, if not, there isn’t. Global aviation fuel demand was around 300 million tonnes in 2019, which translates to 46 million tonnes on a hydrogen mass basis. If demand grows by 50%, 25% is met by e-jetfuel and one third of that is shipped internationally, that only generates 6 million tonnes of traded hydrogen.

Moan, moan, ammonia

That brings us, finally, to ammonia – the last option for those hoping to develop substantial long-distance hydrogen imports.

Around 190 million tonnes of ammonia are produced each year, mainly for fertilizer and as a chemical feedstock, almost all of it from fossil feedstock. Around 10 percent of current production is already traded internationally but this only comes to around three million tonnes by hydrogen mass.

Switching to clean ammonia for fertilizer production will without doubt drive a big increase in traded hydrogen. Where there are pipelines, hydrogen can be made where renewable power is cheap and imported in place of natural gas and used to make ammonia at the destination. Where there are no pipelines, green ammonia or finished fertilizer will be produced and shipped instead.

Supposing the fertilizer market grows by half by 2050, all of it goes low-carbon and a third of it ends up being shipped internationally, that would increase ammonia trading from 18 to 95 million tonnes per year – a lot of ammonia. This will be a relief for those investing in ammonia projects in Chile, Canada, Namibia and South Africa: their output may not find much use in the energy sector, but at least they should have access to a very substantial market. It is, however, only 17 million tonnes on a hydrogen mass basis.

Back to shipping fuels. Since ammonia will be cheaper than methanol, as discussed, let’s be optimistic and say half of the volumes described above are replaced with ammonia, and a third of it is traded internationally. That would drive an additional 25 million tonnes of demand by hydrogen mass.

Japan’s big bet

Japan is betting that imported ammonia will be used to generate power. Its national decarbonization plan is based on retaining its coal-fired power stations, but fueling them with increasing proportions of ammonia – first 20%, then 50%, then 100% by 2050. So confident is it – and so keen to keep selling its technology internationally – that it is encouraging Vietnam and other South-East Asian countries to keep building coal-fired power stations. Will the bet pay off?

Let’s look first at ammonia made from green hydrogen. That means generating wind and solar power; using it to produce hydrogen (80% efficiency); making ammonia via the Haber-Bosch process (70% efficiency); liquefying it (90% efficiency); shipping it (90% efficiency); and burning it to generate power (45% efficiency). Your end-to-end efficiency will be an astonishingly poor 20%. Although it might be possible to improve the efficiency of each of stage, the tyranny of multiple process steps means your end-to-end efficiency is hard to budge.

What 20% end-to-end efficiency means is that the resulting power will cost five times as much as the original power – and that is before accounting for capital invested in all those process stages and maintenance. In addition, combustion of ammonia produces nitrous oxides – hazardous to health and powerful greenhouse gases in their own right.

Now, ammonia from blue hydrogen. You eliminate the electrolysis stage, so your end-to-end efficiency is a little higher at 26%, but you have the extra cost of carbon capture and sequestration, so the resulting power cost is going to be about the same. The real question, however, is why bother? Why not just ship the natural gas to Japan instead of ammonia – LNG has 1.7 times the volumetric energy density of ammonia, so you need fewer cargoes. Then you capture the CO2 at the other end, and either sequester or send it back to the point of origin on the same ships. You have the same climate impact, approximately the same cost of carbon capture and sequestration, but significantly greater efficiency and lower shipping costs.

The bottom line for ammonia as a fuel for power generation, whether co-fired or pure, is that no economy can be internationally competitive based on the resulting power prices. My estimates are in line with the more detailed modelling work undertaken by BloombergNEF: BloombergNEF found that 100% ammonia-fired power in Japan would cost around $260 per megawatt-hour in 2030 and $200 by 2050 – around double the cost of renewable energy.

The fact that Japan could generate large amounts of renewable energy – in particular, offshore wind – at much lower cost points to the role that clean ammonia could in fact play in the country’s power system: providing back-up. Bill Gates likes to quote Vaclav Smil on the three-day cyclones that hit Tokyo almost every year – which would shut down renewable generation and leave it short of 22GW of power. He laughs at the idea that batteries could fill the resulting gap, and he is correct to do so. However, the gap is only 1,600 GWh, which could be generated from a million cubic meters of ammonia – an amount that could be brought in on just four Q-Max-sized carriers.

So, while basing Japan’s economy on electricity generated from imported ammonia is an economic non-starter, storing a few million tonnes of ammonia and using it for long-duration storage looks a lot more realistic.

Conclusions and implications

This has been a long journey and we have covered a lot of ground. I want to leave you with a few conclusions by way of summary.

The only way to move hydrogen economically is as a gas, by pipeline. Forget liquid hydrogen: it will struggle to find any role in the future energy or transport systems because of its poor volumetric energy density and difficulties with handling. It will have no role at all as a traded commodity.

Ammonia will be traded and transported, primarily for use in fertilizer production, plus as a shipping fuel. It will not be imported to power bulk power generation, but will be imported and stored to deliver long-duration storage. Some LOHC might also be imported, but only where it is stored for resilience purposes.

Clean methanol will be made near to sources of cheap clean hydrogen and some of it will be shipped around the world for use as a chemical feedstock. E-fuels – whether methanol, petrol, diesel or kerosene equivalents – will not be shipped around the world in meaningful volumes because their cost will severely limit their uptake, with the possible exception of aviation.

Totting up the various future hydrogen trade flows covered here, it is clear that the Hydrogen Council/McKinsey figures of 660 million tonnes of clean hydrogen production and 400 million tonnes of long-distance transportation are out by a factor of at least three. In addition, given that China and India have only pledged net zero by 2060 and 2070 respectively, such flows that do materialize will take decades beyond 2050.

The implications reach far beyond the question of international trade in hydrogen and its derivatives. The prohibitive cost of long-distance imports means that energy-intensive industries will inevitably migrate to regions with cheap clean energy. It is inconceivable for any country to import iron ore from Australia or Brazil, hydrogen from Australia, the Gulf, Canada or Africa, and make steel at a globally competitive cost. Magical thinking will be no defense against de-industrialization.

Finally, it is worth noting that none of this calls into question the fact that clean hydrogen will be required to decarbonize certain sectors, which will eventually create more than 100 million tonnes per year of demand. Just as railway mania left the world with railways, electricity mania left the world with power networks, and the dot-com bubble left the world with broadband fiber, so hydrogen mania will leave the world with a lot of clean hydrogen.

The worry is that, along the way, we are going to waste huge amounts of money on the wrong use cases for hydrogen and the wrong infrastructure in the wrong places. Worse than wasting money, we will also be wasting time – and that is the one thing we don’t have. Let’s be smart.

Selah.

Michael Liebreich is the founder and senior contributor to BloombergNEF. He is also the CEO and chair of Liebreich Associates, founding managing partner of EcoPragma Capital and an advisor to the U.K. Board of Trade.

Source: BNEF

 

Biggest climate election law

From Energy Monitor

Three major changes to EU climate legislation have become law following their final adoption by the EU Council on 25 April, heralding some big changes for businesses and citizens in the coming years. The trio is the key component of the ‘Fit for 55‘ package proposed in the summer of 2021 – to put the EU on a path to reducing its greenhouse gas emissions by 55% by 2030, relative to 1990 levels – and implements European Commission President Ursula von der Leyen’s flagship EU Green Deal.

German MEP Peter Liese, who represented the centre-right European Peoples Party in the negotiations, called the now-adopted ‘Fit for 55’ package “the biggest climate protection law of all time”, dwarfing the US’s Inflation Reduction Act in terms of regulatory change.

CBAM: the world’s first carbon border tax

The move that will get the most international attention is the adoption of the world’s first carbon border tax, called the Carbon Border Adjustment Mechanism (CBAM). Goods imported into the EU from countries with less-stringent climate legislation will have an import duty levied on them to avoid the phenomenon of “carbon leakage” where European companies could move production out of the EU to avoid a carbon price or face unfair global competition if they do not. The EU has given it an unwieldy name because calling it a tax or tariff would have required a unanimous vote in the Council, which would have seen a veto, and also would have been more easily challenged at the World Trade Organization.

Under the political deal reached between the European Parliament and EU Council (national governments) in December 2022, the levy will begin in 2026 and initially apply to imports of steel, cement, aluminium, fertilisers, electricity and hydrogen, which was not in the Commission’s initial proposal but was added by the Parliament. During negotiations, the Parliament also insisted on adding provisions for CBAM’s future application to processed products such as cars, screws and bolts. There is a provision too for applying the levy to indirect emissions from activities like land use change “under certain circumstances” – to be defined, it was a major sticking point in the negotiations and opposed by several national governments including Germany.

Free allowances in the EU Emissions Trading System (ETS) for the industries affected by CBAM will be phased out, the reasoning being that the new regime will protect them in future and the free allowances will no longer be necessary. However, the final phase-out schedule is less generous to industry than the Commission’s initial proposal. Under the deal, free allowances will be cut in half by 2030 and entirely phased out by 2034. The Commission originally envisioned a more gradual phase-out until 2035. Eurofer, the steel sector association, has warned the accelerated timeline “risks wiping out a large part of EU steel exports worth €45 billion [$49.7bn]”.

'Fit for 55' package: a new ETS for buildings and transport

The second law coming onto the books is the launch of a new carbon market covering emissions from fuels used in cars and buildings from 2027. This new ETS will exist alongside the current EU ETS. Under the deal reached in December, the price of carbon from home heating and transport fuels will be capped at €45 per tonne (/t), to avoid the risk of an escalating price making fuel unaffordable for vulnerable parts of society and prompting a 'yellow-vests'-style backlash. The plan is expected to add €0.10 per litre to the price of petrol and diesel. The negotiators also added a provision stating that if energy prices are exceptionally high, the new scheme will be delayed by a year to 2028.

Separately, the main EU ETS has seen its requirements tightened for the current trading period of 2021 to 2030, requiring industrial sectors covered by the system to cut their emissions 62% below 2005 levels by 2030 – a big step up from the existing 43% target. That move is expected to bring the price of carbon back up to €100/t over the coming years, up from current levels of €80–85.

A Social Climate Fund for a 'just' transition

The third 'Fit for 55' element to be enacted this week is an €86.7bn Social Climate Fund to protect vulnerable households and avoid a backlash to the EU's energy and climate agenda. That was increased during negotiations from the €72.2bn originally proposed by the Commission. EU countries will have to submit 'Social Climate Plans' after consulting with local and regional authorities, businesses, unions and civil society.

The Fund will finance temporary direct income support to tackle the increase in road transport and heating fuel prices from the new ETS – with a limit of up to 37.5% of the total estimated price tag of each national plan. It will also cover long-lasting structural investments, including into buildings renovation, the integration of renewable energy, infrastructure for zero and low-emission vehicles, and public transport. The Fund will start in 2026, one year before the carbon price on road and heating fuel kicks in. It will initially be financed via the revenues obtained from auctioning 50 million EU ETS allowances, estimated at around €4bn. Once the new ETS starts up, the fund will be financed from the sales of allowances to cover road and building emissions, up to an estimated €65bn, with an additional 25% contributed from national budgets.

Europe's adoption of a carbon border tax will encourage other countries to introduce carbon taxes and their own carbon border taxes.  Why not pay taxes to yourself instead of the EU?   For example, the UK could easily avoid a CBAM by introducing its own carbon price, and applying it to imports from non-EU countries, while raising revenue from its own carbon tax.  The same calculus applies to other countries, too.  It's a major step forward.  

Extending a carbon price to cars and buildings is also essential.

The truth is that regulations aren't always effective.  But if everybody pays a price on carbon, it's a powerful incentive to minimise carbon emissions.

Click to see clearer image

See also the Carbon Border Adjustment Mechanism explainer from the EU.

Eu votes for "green tariffs" on imports

From The Age

The European Union has struck a political deal to impose carbon tariffs on imports of polluting goods such as steel and cement, in a world-first scheme which aims to support its domestic industries against those from countries with weak climate laws.

The 27-member bloc last year proposed a law to impose a green levy from 2026 on imports of steel, cement, fertilisers, aluminium and electricity, to prevent domestic industry from being undercut by cheaper goods made in countries with weaker environmental rules.

As part of an all-night sitting of European Parliament measures will now also apply to imported hydrogen, and some downstream products such as screws and bolts and similar articles of iron or steel.

The scheme, known as the carbon border adjustment mechanism, has faced criticism from countries with high-carbon exports including Australia, China, Turkey, India as a protectionist measure, although Brussels has said countries could be exempted if they have a domestic carbon price akin to the EU’s, or similar climate change targets. Europe’s target under the Paris accord is to reduce net greenhouse gas emissions by at least 55 per cent on 1990 levels by 2030.

The measure comes amid heightened trade tensions with the United States over the Inflation Reduction Act’s subsidies for green technologies, which the EU has said could disadvantage European firms.

Brussels argues the new schemeis designed to be in full compliance with World Trade Organisation rules and plans for it to apply from October 1 next year, but with a transition period, where the obligations of the importer shall be limited to reporting.

Before the end of the transition period the European Commission will assess whether to extend the scope to other goods at risk of carbon leakage, including organic chemicals and polymers, with the goal to include all goods covered by the current European emissions trading scheme by 2030. They will also assess the methodology for indirect emissions and the possibility to include more downstream products.

Companies importing goods into the EU will be required to buy certificates to cover their embedded carbon emissions. The scheme is designed to apply the same carbon cost to overseas firms and domestic EU industries - the latter of which are already required to buy permits from the EU carbon market when they pollute.

Mohammed Chahim, European Parliament’s lead negotiator on the law, said the border tariff would be crucial to EU efforts to fight climate change.

“It is one of the only mechanisms we have to incentivise our trading partners to decarbonise their manufacturing industry,” he said. “On top of this, it is an alternative to our current carbon leakage measures, which will allow us to apply the ‘polluter pays’ principle to our own industry. A win-win situation.”

Some details on the law, including its start date, will be determined later this week in related negotiations on a reform of the EU carbon market.

Australian industry has said the country had little to fear in the medium term from implementable border adjustments by the EU because only 0.25 per cent of trade with Europe was affected by the current proposal.

However, the scheme will likely expand and similar schemes in the United States, Japan or other economies could affect much more trade.

Australia’s Department of Foreign Affairs and Trade has said it would examine the EU’s proposal to see whether it is WTO compliant.

The department said it was committed to participating in multilateral discussions that promote trade, build sustainable supply chains and share knowledge.

Charity groups have criticised the EU for introducing the measure without lifting climate funding to developing economies, which will likely be hit hardest by the scheme.

Oxfam EU Tax expert Chiara Putaturo said Europeans were responsible for double the carbon emissions as the poorest half of the world.

“Yet, the EU just agreed to pass the buck to those least responsible by forcing them to pay a tariff despite being hardest hit by the climate crisis. EU countries did not even accept to channel revenues to climate finance funds,” she said.

“The EU and EU countries need to increase climate finance funds, especially now that poor countries are going to bear the cost of the carbon tariff.”

Oxfam's criticism is completely wrong.  If developing countries impose a carbon price on their own steel, they won't have to pay green tariffs in the EU.  It's quite simple:  either they pay the tax to themselves, or they pay tax to the EU.  Which makes more sense?  This measure will encourage other countries to introduce their own carbon price.  Which will be a good thing.

Finished coils of rolled steel at BlueScope's Port Kembla steelworks in NSW.CREDIT:BLOOMBERG

Cost of carbon capture and storage in the US

 Carbon capture and storage is costly.  According to this analysis (below), it will add $50 to $60 to the cost of coal-fired electricity, and $80-$90 to gas-fired.  Lazard's estimate of the cost of new coal is $112/MWh, without subsidy, carbon tax or CCS.  So unless there is a tax credit (= subsidy), forcing coal power stations to introduce CCS will put up the cost of electricity from new coal power stations to ±$170/MWh (1 MWh of coal-fired electricity produces roughly 1 tonnes of carbon).  And the operating cost of existing coal will rise from $41/MWh to $100/MWh.  This compares with the cost of wind + solar + 4 hours of storage of around $40/MWh.   If, instead of a subsidy for CCS, we introduce a carbon tax/price on carbon high enough to make CCS worthwhile, the cost of power from coal will rise anyway.   Either way, coal will just be priced out of the market more quickly.  

A reminder: the EU price on carbon is roughly US$73/tonne.  And the EU  is determined to levy a carbon border tax on imports from countries which don't have a price on carbon, which will drive the global adoption of a carbon tax.  After all, why pay a carbon tax to Europe when you could pay it to yourself?

From The Royal Society

We model the costs of carbon capture and storage (CCS) in subsurface geological formations for emissions from 138 northeastern and midwestern electricity-generating power plants. The analysis suggests coal-sourced CO2 emissions can be stored in this region at a cost of $52–$60 ton−1, whereas the cost to store emission from natural-gas-fired plants ranges from approximately $80 to $90. Storing emissions offshore increases the lowest total costs of CCS to over $60 per ton of CO2 for coal. Because there apparently is sufficient onshore storage in the northeastern and midwestern United States, offshore storage is not necessary or economical unless there are additional costs or suitability issues associated with the onshore reservoirs. For example, if formation pressures are prohibitive in a large-scale deployment of onshore CCS, or if there is opposition to onshore storage, offshore storage space could probably store emissions at an additional cost of less than $10 ton−1. Finally, it is likely that more than 8 Gt of total CO2 emissions from this region can be stored for less $60 ton−1, slightly more than the $50 ton−1 Section 45Q tax credits incentivizing CCS.

The Royal Society. 
Dating from a time when architecture produced beautiful buildings as a matter of course.

G-20 countries still support fossil fuels

 From BNEF

Bloomberg Philanthropies and BloombergNEF today released a new Climate Policy Factbook outlining the progress that each G-20 member country has made toward moving to a low-carbon economy. The report was released to increase transparency and inform policy priorities ahead of upcoming international climate negotiations, including the G-20 Summit and Ministerial Meetings, the 75th Session of the U.N. General Assembly, and COP26.

The Climate Policy Factbook highlights three concrete areas in which immediate government action is needed to limit global warming to 1.5 degrees Celsius: 1) phasing out support for fossil fuels, 2) putting a price on emissions, and 3) encouraging climate risk disclosure. In each of these areas, the report found that the policies of many G-20 countries were significantly off course.

“Winning the fight against climate change requires urgent and bold action across every industry, and we need governments to lead the way,” said Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies and the UN Secretary-General’s Special Envoy on Climate Ambition and Solutions. “Our hope is that G-20 members take this report to heart, use its recommendations to hit their Paris Agreement targets, and show the world the health and economic benefits of building a resilient, sustainable global economy.”

Global groups have been leading the call for robust and credible climate action, especially in these three specific areas ahead of critical climate events this fall. The Net Zero Assets Owners Alliance, which comprises international institutional investors committed to transitioning investment portfolios to net-zero greenhouse gas emissions by 2050, recently came out in support of the adoption of carbon pricing mechanisms to regulate emissions globally. The Alliance has repeatedly called on governments to implement the robust and credible climate policies needed to ensure the objectives of the Paris Agreement are met, as well as manage the costs of climate change and safeguard the stability of the global financial system.

Dr Günther Thallinger, Member of the Board of Management of Allianz SE and Chair of the UN-convened Net-Zero Asset Owner Alliance said: “As of today, policy frameworks across most G-20 countries are not sufficient to drive real economy to net-zero transition to achieve 1.5C with reasonable likelihood. The new NDCs and 2050 net-zero targets from some G-20 countries are warmly welcome, however pledges and targets alone will not be sufficient to change course. The development and publication of credible 2030 emission reduction plans, which create a rising price on carbon and have clear regulatory standards, including on climate-related financial disclosures are urgently needed.”

Phasing out support for fossil fuels, particularly coal, and shifting funding to renewables is core to the COP26 goals and a crucial step to accelerating the clean energy transition. However, the report finds that governments of all 19 individual country members of the G-20 continue to provide substantial financial support for fossil-fuel production and consumption. Although G-20 governments have announced ambitious climate commitments to reach the goals of the Paris Agreement, those same countries have continued providing support for coal, oil, gas, and fossil-fuel power, including $3.3 trillion between 2015 and 2019. At today’s prices, that sum could fund 4,232GW in new solar power plants – over 3.5 times the size of the current U.S. electricity grid.

G-20 nations collectively cut fossil fuel funding by 10% from 2015 to 2019, with eight member nations making notable progress in reducing their fossil fuel subsidies by 10% or more (Argentina, Germany, Italy, Saudi Arabia, South Africa, South Korea, Turkey, and the U.K.). However, to remain in line with the Paris Agreement goals in the lead-up to COP26, the G-20 cannot rely on the actions of a few nations. Every G-20 country must take immediate action to end support of fossil fuel projects and accelerate their coal phaseouts. During the same timeframe (2015-19), eight members increased their support – notably Australia, Canada, and the U.S. – encouraging the use and production of fossil fuels, distorting prices, and risking carbon ‘lock-in’ – where assets funded today continue to emit high levels of emissions for decades ahead.

To effectively lead the phaseout of coal and other fossil fuels ahead of COP26, G-20 countries must also implement emission pricing mechanisms to hold polluters accountable for the true social cost of their actions. To date, 12 G-20 countries have established nationwide prices on greenhouse gas emissions either by a carbon tax or market-based mechanisms, with France and Germany making the most progress in terms of share of emissions covered by a carbon tax or market. This is partially due to their participation in the E.U. Emissions Trading System (ETS), and their own national policies that increased the share of emissions covered by an emission price.

Eight of the countries that have adopted emission pricing have produced mixed results due to lax policies, with either the carbon price set too low or the concessions to emitters too generous. For example, in the U.S., state-level programs cover less than one-tenth of national emissions, collectively, and prices are relatively low. Several G-20 countries, such as Saudi Arabia, Russia, and Brazil, have yet to put a price on greenhouse gas emissions.

Enforcing globally accepted climate-risk disclosure frameworks, like that of the Task Force on Climate-related Financial Disclosures (TCFD), is critical to ensuring climate risks and opportunities are assessed accurately, so financial institutions can consider and price the impact of climate externalities into their credit risk and valuation models. While the G-20 has voiced support for voluntary climate-related reporting, few members have legislated it. Central banks also play an important role in climate-related disclosure alongside their respective G-20 governments by integrating climate risks into the ‘stress tests’ they routinely conduct to test financial institutions’ health and assessing their stability under potential climate scenarios.

“Given that the G-20 accounts for nearly three-quarters of global emissions, progress from those governments in these three areas would mark a huge step forward toward tacking climate change. So far, they have yet to step up to the plate,” commented Victoria Cuming, head of global policy at BloombergNEF and lead author of the factbook.

Countries which say they support the goals of the Paris Agreement, but continue to subsidise fossil fuels are faking it.   When the carbon border tax becomes widespread, these subsidies will have to taken into account.

Climate panic

 From The Economist

The ground under the German town of Erftstadt is torn apart like tissue paper by flood waters; Lytton in British Columbia is burned from the map just a day after setting a freakishly high temperature record; cars float like dead fish through the streets-turned-canals in the Chinese city of Zhengzhou. All the world feels at risk, and most of it is. Six years ago, in Paris, the countries of the world committed themselves to avoiding the worst of climate change by eliminating net greenhouse-gas emissions quickly enough to hold the temperature rise below 2°C. Their progress towards that end remains woefully inadequate. But even if their efforts increased dramatically enough to meet the 2°C goal, it would not stop forests from burning today; prairies would still dry out tomorrow, rivers break their banks and mountain glaciers disappear. And even if everyone manages to honour their pledges, there is still a risk that temperatures could eventually rise by 3°C above pre-industrial levels.

What happens when climate panic occurs?  I feel that that isn't far away.

Well, for a start, net-zero by 2050 will be unceremoniously dumped, and the net-zero target will be brought forward by at least a decade.  The world would go on a war footing to cut emissions.  

Just how fast could we cut emissions?  To cut emissions by 50% by 2030 would require that emissions would have to fall by a cumulative 7.5% per annum.  Could we do that without a catastrophic collapse in economic activity?  Well, in a word, yes.  

Roughly 30% of the world's emissions come from baseload electricity and another 12% from variable electricity (gas peaking).  Wind and solar are already cheaper than coal and (in gas-importing countries) than gas too.   We can take the grid to 85% wind and solar with 4 hours of storage.   The remainder could be supplied by nuclear, hydro, biomass, wave power or green gas (hydrogen or green ammonia or green methane, produced from surplus renewable electricity).  And climate panic may well reduce public hostility to nuclear power.  Existing nuclear generators will prolly be allowed to continue.  SMRs (small modular reactors) may be built, though they're unlikely to be ready in time.

Another 16% of global emissions come from road transport.  Governments could simply ban the sale of new internal combustion engine cars, lorries and buses, and they probably will, not from 2030 or 2035 bur from 2025 or earlier.  They will set stringent annual targets to get to this point, or they will introduce big subsidies for EVs, or both.  With climate panic, a slow recasting of our economies will be ditched in favour of a very rapid adjustment.  With an average life of 10 years, it will take 10 years for the whole fleet to transition to plug-ins, so that process will have to be accelerated.  There will be 'cash for clunkers' programs, designed to take aging petrol cars and trucks off the roads.  Petrol (gasoline) will be taxed more heavily.  ICEV licence fees will be upped.

And governments will be looking at every source of emissions.  Iron and steel will have to switch to making steel with green hydrogen or methane.  Air travel will be taxed heavily unless it's electric or fuelled by carbon-neutral jetfuel.  

All land clearing and forest burning would have to stop immediately.  The world would have to apply sanctions in the form of diplomatic pressure and import tariffs and bans to the countries  where this is worst: Australia, Brazil, Indonesia, Borneo.  And don't think we won't.  As climate panic builds, the pressure to conform will be irresistible.

Agriculture won't be given a free pass any more, either.  Cows will be fed seaweed, to cut emissions.  Governments may even become frightened enough to tax meat. 

But above all, the world needs a carbon tax and an end to fossil fuel subsidies.  The EU's border carbon tax will be a powerful goad for the rest of the world to introduce their own carbon taxes.  Climate panic will remove any opposition to their spread.  Climate free-loaders will get short shrift.

Together, these measures could cut emissions by 90%.   Most of that could happen in the first 10 years.  And these measures, rapidly effected, would in fact limit the rise in global temperatures to 1.5 degrees  above pre-industrial levels.

The world has been repeatedly warned.  The warnings have been brushed off or ignored.  Instead of a gradual adjustment over decades, starting decades ago, we have phaffed and dithered and allowed ourselves to be lied to by oil and coal companies.  And now a modest  1 or 2% a year decline will not do.  We will need a 15% per annum decline to cut emissions by 90% by 2035, to prevent temperatures rising by more than 1.5 degrees.  

As the Economist says: 'There will be nowhere safe.'  And the public is beginning to realise this, and is both frightened and angry.  Expect serious steps to cut emissions.