The low carbon society challenges and opportunities


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The low carbon society challenges and opportunities

  1. 1. The Low Carbon Society –Challenges and Opportunities Andrew Sentance Professor of Sustainable Business Warwick Business School Making Science Work Conference Exeter, 3rd December 2009
  2. 2. Outline• The challenge of the “Low Carbon Society”• Implications for economy and key sectors• Policy instruments and measures• Key steps and business opportunities
  3. 3. Carbon emissions per headCO2 per capita, 2005 values 25 20 15 10 2050 target 5 2-2.5 T 0 il y S K na a lia n a a ce a az an pa ad re di si U U ra hi an us In Br Ko m Ja an st C Fr R er Au C GSource: OECD
  4. 4. Sustainable global emissions scenarios Annual greenhouse gas emissions (GtCO2e) 70 60 50 40 30 2016:4% 20 10 Increased early grow th 0 2000 2010 2020 2030 2040 2050 Year2016:4 trajectory with global emissions peaking in 2016 with subsequent reduction in total emissions of 4% subsequentSource: Climate Change Commission
  5. 5. World GDP growth and CO2 emissions from energy Average annual growth rates, percent GDP 5 Carbon Dioxide Emissions 4 3 2 1 0 70s 80s 90s 2000-08Note: Carbon dioxide is measured in millions of tonnesSource: World Bank and BP Statistical Review
  6. 6. Greenhouse gas emissions, by sourceGlobal GHG emissions in 2000 = 42GT CO2 equivalent 5% 3% 25% Power 14% Industry Transport Buildings Land use* Agriculture* Waste* 18% 14% Other 8% 13%Source: Stern Review (2006) * Non-energy emissions
  7. 7. Key steps• “Decarbonisation” of power sector and transport• Big shift in energy efficiency of industry, buildings & appliances• Cutting non-energy emissions from agriculture, changes in land use & waste
  8. 8. Decarbonisation of power sector• Hydro, wind, wave/tide & solar• Bio-fuels and bio-mass• Carbon capture and storage• Energy storage schemes• Nuclear power
  9. 9. CO2 emissions from global transportTotal CO2 emissions in 2000 = 5.6 GT 2% 12% Cars and vans 10% Freight trucks 2-3 wheelers 45% Buses 6% Water Aviation 2% Rail 23% Source: Stern Review (2006)
  10. 10. Transport carbon emissionsExcluding international aviation and shipping CO2 emissions CO2 per capita Transport as % of total (million tonnes) (tonnes/head) CO2 emissionsUnited States 1813 6.1 31%Canada 160 5.0 29%Australia 80 3.9 21%France 135 2.2 35%United Kingdom 129 2.2 24%Italy 119 2.0 26%Japan 268 2.0 21%Germany 159 1.9 19%Russia 206 1.4 13%Brazil 138 0.7 41%China 332 0.3 7%India 96 0.1 8%Source: OECD
  11. 11. Transport – cutting emissions• Reduce travel• How we travel – time shift, mode shift and behavioural change• Carbon efficiency of individual modes
  12. 12. UK carbon “taxes”£/T of CO2, 2009 values300250200150100 50 0 Domestic Climate EU ETS Stern carbon Air Motor fuels-50 gas change levy permits price passenger duty
  13. 13. CO2 emissions by UK transport modeGrams per passenger km Current 2050 potential 180 160 140 120 100 80 60 40 20 0 Car Rail - Rail - Bus Air - Air - Air - electric diesel longhaul shorthaul domesticSources: Committee on Climate Change, 2008; CfIT (2007); and author’s estimates.Note that 2050 figures are illustrative – based on 90% decarbonised electricity
  14. 14. Contribution of energy efficiency• Potentially massive increase in requirement for very low carbon energy• Significant shift in energy efficiency will reduce the “load” on the future low-carbon energy system• Key areas: energy distribution; transport; buildings; appliances & industry• Potential “rebound” effect• Regulatory and pricing interventions needed to drive investment and behaviour change
  15. 15. Building the “low carbon society” Economic Instruments Behavioural Low Carbon Technology & Structural Society Change Political Frameworks
  16. 16. “It is not from the benevolence ofthe butcher, the brewer, or thebaker, that we expect our dinner,but from their regard to their owninterest.” Adam Smith, Wealth of Nations, 1776
  17. 17. Technology – potential drivers• Consumer demand• Strategic vision• Carbon pricing• Regulation and standards• Government policy and financial support
  18. 18. Technology – barriers• Consumer confusion• Conflicting business strategies• Inadequate long-term price signals• Uncertain regulation• Unclear or inconsistent policy approaches
  19. 19. Economic instruments• Emissions trading• Carbon taxes• Energy taxes• Incentives for developing and embodying low carbon technologies• Energy efficiency incentives
  20. 20. Potential size of carbon markets 20000 18000 Million tonnes CO2 emissions, 2002 Total emissions from fossil fuels 16000 Emissions from power and industrial sectors (estimated) 14000 12000 10000 8000 6000 4000 2000 0 European Union United States of China, India, G7 EU25, Jap, Aus, OECD Top 20 Global (25) America Mexico, Brazil, Can, USA emitters South Africa (+5) Extending EU ETS to power and industrial sectors in Top 20 countries would create a market of US$90-350 bn
  21. 21. Emissions trading – key conditions• Comprehensive geographically• Wide sectoral coverage• Long-term framework of caps/targets to drive investment• Robust monitoring and reporting• Strong institutions to underpin credibility and protect against political interference
  22. 22. Emissions trading in practice• EU ETS is best established scheme, but targets and framework relatively short-term• Sector coverage limited – transport, agriculture and domestic energy use largely excluded• Prices have been volatile and emissions reductions have been modest• Political pressures and influences on allocation process• Copenhagen – a major opportunity to move ahead with global emissions trading?
  23. 23. Key steps to Low Carbon Society• Twin track approach: major shift in energy efficiency, while decarbonising energy & transport• Massive expansion of low/zero carbon electricity supply, using a wide range of technologies• Electrification of road transport, alongside increasing use of bio-fuels• Heavy investment in low carbon technologies will be required – especially in energy sector and transport• Wide range of economic & regulatory instruments to be developed, providing consistent & long-term price signals
  24. 24. Business opportunitiesStrategic driver: There is No Alternative (TINA) to the LCS1) Key energy and transport sector challenges – technology, infrastructure, systems and support2) Helping households and firms identify and deliver energy efficiency improvements3) Developing market infrastructure for carbon trading, pricing and decision-making4) Supporting policy-makers in developing and delivering new and innovative tools and frameworks5) Educating, informing and advising the public and the business community on LCS change agenda