The Green RacePast experience, learning for the futureDavid HoneSenior Climate Change AdviserGroup CO2<br />
2<br />
Is this really happening?<br />
Fossil fuel use grows – emissions continue to rise<br />Data: BP Statistical Review of World Energy<br />
Progress is being made in developing alternative energy<br />Data: BP Statistical Review of World Energy<br />
But alternative energy is hardly keeping up<br />Data: BP Statistical Review of World Energy<br />
But alternative energy is hardly keeping up<br />Data: BP Statistical Review of World Energy<br />
The story in the 21st century<br />Large-scalehigh-impactevents<br />ºC<br />6 -<br />5 -<br />4 -<br />3 -<br />2 -<br />...
Energy Technology Deployment(Shell scenario projections also shown)<br />
“Laws” of Energy Deployment<br />Law 1<br />When technologies are new, they go through a few decades of exponential growth...
Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />EU Emissions Trading...
Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />UK Carbon Floor Pric...
Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />UK Carbon Floor Pric...
Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />UK Carbon Floor Pric...
What does this mean ?<br /><ul><li>There are physical limits to the rate at which new technologies can be deployed.
Governments need to design a robust and long term policy framework with a clear objective to encourage change in the energ...
Patience is a virtue.</li></li></ul><li>A policy framework to consider<br />B<br />Cost of abatement<br />€ / tonne CO2e<b...
A policy framework to consider<br />B<br />Cost of abatement<br />€ / tonne CO2e<br />Abatement<br />MTonne CO2e<br />Carb...
A carbon price in the economy<br />Goods and services pass into the economy, with the price of CO2 embedded<br />$<br />CO...
New technologies<br />19<br />Discover & Develop<br />Must be well funded to drive innovation.<br />Demonstration (at scal...
New energy technologies – e.g. CCS<br />20<br />Discover & Develop<br />Need to refocus and rapidly expand R&D.<br />Demon...
A structured policy approach is needed<br />21<br />
A structured policy approach is needed<br />Broad energy production and use R&D support<br />
Even modest first steps are proving very challenging<br />23<br />
New technology mechanisms evolve (e.g. for CCS)<br />China adopts carbon pricing mechanisms<br />CDM evolves to includes s...
Energy politics and policies in the 21st Century<br /><ul><li>Reducing emissions needs to remain a clear and unambiguous o...
Carbon price mechanisms are effective and can deliver the necessary reductions.
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David Hone at Sustentavel 2011

  1. 1. The Green RacePast experience, learning for the futureDavid HoneSenior Climate Change AdviserGroup CO2<br />
  2. 2. 2<br />
  3. 3. Is this really happening?<br />
  4. 4. Fossil fuel use grows – emissions continue to rise<br />Data: BP Statistical Review of World Energy<br />
  5. 5. Progress is being made in developing alternative energy<br />Data: BP Statistical Review of World Energy<br />
  6. 6. But alternative energy is hardly keeping up<br />Data: BP Statistical Review of World Energy<br />
  7. 7. But alternative energy is hardly keeping up<br />Data: BP Statistical Review of World Energy<br />
  8. 8. The story in the 21st century<br />Large-scalehigh-impactevents<br />ºC<br />6 -<br />5 -<br />4 -<br />3 -<br />2 -<br />1 -<br />0 -<br />Global temperature rise<br />Higher<br />Very<br />Low<br />Fossil energy<br />87.0%<br />market share<br />Fossil energy adds 2.3 btoe p.a.<br />Non-fossil adds 0.3 btoe p.a.<br />Fossil energy<br />86.8% market share<br />1990<br />Data: BP Statistical Review of World Energy<br />
  9. 9. Energy Technology Deployment(Shell scenario projections also shown)<br />
  10. 10. “Laws” of Energy Deployment<br />Law 1<br />When technologies are new, they go through a few decades of exponential growth, which in the 20th Century was characterized by scale-up at a rate of one order of magnitude a decade (corresponding to 26% annual growth). Exponential growth proceeds until the energy source becomes ‘material’ - typically around 1% of world energy.<br />Law 2<br />After ‘materiality’, growth changes to linear as the technology settles at a market share. These deployment curves are remarkably similar across different technologies.<br />
  11. 11. Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />EU Emissions Trading System delivers a carbon price into the EU economy<br />Cost to society<br />$<br />
  12. 12. Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />UK Carbon Floor Price<br />EU Emissions Trading System delivers a carbon price into the EU economy<br />Cost to society<br />Renewable Energy Targets<br />Member State Coal Policy<br />$<br />
  13. 13. Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />UK Carbon Floor Price<br />Energy Efficiency Directive<br />Nuclear Energy Policies<br />EU Emissions Trading System delivers a carbon price into the EU economy<br />Cost to society<br />UK Carbon Reduction Commitment<br />Renewable Energy Targets<br />Local carbon taxes<br />Member State Coal Policy<br />$<br />
  14. 14. Our response is to “adjust” the system and add layer upon layer of policy, which can raise costs<br />UK Carbon Floor Price<br />Energy Efficiency Directive<br />“Green” politics and policies<br />Nuclear Energy Policies<br />EU Emissions Trading System delivers a carbon price into the EU economy<br />Cost to society<br />UK Carbon Reduction Commitment<br />Renewable Energy Targets<br />Local carbon taxes<br />Member State Coal Policy<br />$<br />
  15. 15. What does this mean ?<br /><ul><li>There are physical limits to the rate at which new technologies can be deployed.
  16. 16. Governments need to design a robust and long term policy framework with a clear objective to encourage change in the energy system.
  17. 17. Patience is a virtue.</li></li></ul><li>A policy framework to consider<br />B<br />Cost of abatement<br />€ / tonne CO2e<br />Abatement<br />MTonne CO2e<br />C<br />A<br />Energy efficiency measures, land use practices - primarily driven by standards and regulation.<br />Higher cost technologies still moving down the cost curve. Needs a carbon price with additional support.<br />Large scale abatement within the electricity sector, transport fuels and some areas of industry. Needs a carbon price to drive deployment.<br />
  18. 18. A policy framework to consider<br />B<br />Cost of abatement<br />€ / tonne CO2e<br />Abatement<br />MTonne CO2e<br />Carbon price policy drives project implementation from left to right across the abatement curve <br />C<br />A<br />
  19. 19. A carbon price in the economy<br />Goods and services pass into the economy, with the price of CO2 embedded<br />$<br />CO2<br />Emitters buy allowances from or pay tax to the government<br />$<br />$<br />Revenue passes<br />through the treasury and<br /> may be used to offset costs to the consumer, e.g. tax reduction.<br />
  20. 20. New technologies<br />19<br />Discover & Develop<br />Must be well funded to drive innovation.<br />Demonstration (at scale)<br />A critical step in the early commercialization of a technology<br />Deployment<br />Driven by new features and price.<br />Benefit to deploy<br />Earlier deployment through demonstration<br />100<br />80<br />60<br />Technology cost<br />40<br />20<br />Alternative product<br />0<br />1<br />10<br />100<br />1000<br />Number of installations<br />
  21. 21. New energy technologies – e.g. CCS<br />20<br />Discover & Develop<br />Need to refocus and rapidly expand R&D.<br />Demonstration<br />No early adopters and high start-up costs so this phase will need help.<br />Deployment<br />Typically driven by the CO2 market<br />CO2 price<br />Earlier deployment through demonstration<br />100<br />80<br />60<br />Technology cost<br />40<br />20<br />Power generation without CCS<br />0<br />1<br />10<br />100<br />1000<br />Number of installations<br />
  22. 22. A structured policy approach is needed<br />21<br />
  23. 23. A structured policy approach is needed<br />Broad energy production and use R&D support<br />
  24. 24. Even modest first steps are proving very challenging<br />23<br />
  25. 25. New technology mechanisms evolve (e.g. for CCS)<br />China adopts carbon pricing mechanisms<br />CDM evolves to includes sectors<br />CDM<br />Linkages develop between all systems and more systems appear<br />Forestry mechanism<br />Japan technology standards<br />Norwegian ETS<br />Expanding EU-ETS<br />EU-ETS<br />Danish-ETS<br />New Zealand ETS<br />UK-ETS<br />Australian ETS / carbon price<br />State and/or Federal carbon pricing<br />Global shipping “cap-and-trade”<br />Linking can enable a global carbon market . . . <br />2000 2005 2010 2015 2020 2025<br />Pre-Kyoto Kyoto Post 2012<br />Linkage framework<br />
  26. 26. Energy politics and policies in the 21st Century<br /><ul><li>Reducing emissions needs to remain a clear and unambiguous objective.
  27. 27. Carbon price mechanisms are effective and can deliver the necessary reductions.
  28. 28. Layering of additional policies can add to the cost and weaken the carbon price signal.
  29. 29. A clear long term policy framework is required.
  30. 30. Complimentary policies can enable new technologies (e.g. CCS) and ready them for deployment.
  31. 31. Constantly changing the framework undermines its purpose.</li></li></ul><li>http://blogs.shell.com/climatechange<br />
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