There is an element of déjà vu to the events in the White House Rose Garden last week. Just days into my new job as climate change adviser in Shell, then President George W. Bush announced that the USA was withdrawing completely from the Kyoto Protocol and would follow an alternative path forward in terms of climate action. At the time, he proposed a significant step-up in technology development through the National Climate Change Technology Initiative and a leadership role by the United States to work within the United Nations framework and elsewhere to develop with its friends and allies and nations throughout the world an effective and science-based response to the issue of global warming.

The June 2001 Bush announcement was widely expected and indeed, it helped spell the end for the Kyoto Protocol. The UNFCCC process fractured as a result, with some Parties continuing to pursue the Kyoto Protocol and all Parties brought back to the table to negotiate a new deal that worked for the United States. This gave birth to the Ad-Hoc Working Group on Long Term Cooperative Action, which together with the Kyoto Protocol arrangements could have potentially combined into a satisfactory global deal. Unfortunately, they didn’t, with the meltdown in Copenhagen being the outcome. But the pieces were reassembled, in large part led by the United States under President Obama, with the result being the Paris Agreement in December 2015. That process took over 14 years to complete.

Sixteen years on from the Bush announcement and again from the White House lawn, President Trump has now declared that the United Stated will exit the Paris Agreement, once again with the caveat that the Administration would be open to a renegotiation or even an entirely new agreement. The reasons given are largely the same as those of President Bush; unfairness, competitiveness concerns, negative economic impact, layoffs of workers and price increases for consumers. But the circumstances are very different this time around.

Looking 14 years ahead from today we will be in the 2030s. As my own analysis showed, that represents a period when we may start to see years in which the global average temperature rise could equal or exceed 1.5°C above the level in the mid-1800s. There isn’t any grace period remaining to reorganise, negotiate and agree yet another climate deal. Nor should that happen; the Paris Agreement is structured to reflect what countries are prepared to offer, with few requirements other than that successive mitigation offers should improve over time and ratchet towards the end goal of net-zero emissions in the second half of the century. The Agreement isn’t a good or bad deal for anyone; it simply reflects the progression required over time as nations either continue or begin to proactively manage emissions and eventually contain them.

The Paris Agreement is made up of national contributions (NDC), determined by nations per their domestic circumstances. This is the case for all countries, from the United States of America as the world’s largest economy through to Zimbabwe as one of the poorest. Although the Agreement asks for developed countries to continue with economy-wide absolute emission reduction targets, there is an expectation that all countries move in this direction and the Agreement encourages such movement. Several developing countries have structured their national contributions to reflect this and in the time since the negotiations concluded, more have implemented measures to that effect. For example, China is implementing a nationwide emissions trading system and emissions within their economy are now expected to peak well before 2030, ahead of their stated national contribution.

With all countries supposedly on a pathway towards absolute targets and eventually net-zero emissions, there is nothing left to negotiate other than the timeline along which this proceeds. Once again, the Agreement sets out the process for this, rather than Parties having to resort to yet another negotiating process towards an alternative agreement. There is a transparency framework, a stocktake process and a mechanism to facilitate implementation of and promote compliance with the provisions of the Agreement. Although the proposed mechanism is facilitative in nature and should function in a manner that is transparent, non-adversarial and non-punitive, it nevertheless offers the opportunity for a country such as the USA to negotiate more rapid convergence of effort.

Both Chancellor Merkel and President Macron, along with UNFCCC Executive Secretary Patricia Espinosa made it clear the morning after President Trump’s announcement that there would be no renegotiation of the Paris Agreement. While anything is possible in theory, a renegotiation would put an end to the Agreement and probably not deliver a replacement for a decade or more. They were right to reject the proposal; in any case, it simply isn’t necessary under the structure that exists.

Given all the above, the current Administration may still be concerned about the effort required by the United States to deliver its stated goal of a reduction of 26-28% in emissions by 2025 against a 2005 baseline, particularly when compared to some countries. Although the current surge in US natural gas production and its replacement of coal for power generation, the advance of renewable energy and the roll-out of electric vehicles are all contributing to a fall in US emissions, the target remains ambitious. While the prospect of success is visible within the energy transition that is underway, the United States could simply resubmit its national contribution. Various parts of the Paris Agreement and the accompanying Decision Text open the door to such a step, and former Secretary of State John Kerry, who negotiated the Agreement for the United States, said as much on the BBC shortly after the Trump announcement. Although successive national contributions are required to demonstrate increased ambition under the Agreement, this is the first such submission and therefore can be revised. Take, for example, paragraph 22 of the accompanying Decision Text to the Paris Agreement. It says;

  1. Invites Parties to communicate their first nationally determined contribution no later than when the Party submits its respective instrument of ratification, accession, or approval of the Paris Agreement. If a Party has communicated an intended nationally determined contribution prior to joining the Agreement, that Party shall be considered to have satisfied this provision unless that Party decides otherwise;

It would seem to be the case that the USA has ‘decided otherwise’. By resubmitting its national contribution, some semblance of renegotiation would be achieved, at least in part. A new contribution from the United States would still require an absolute target as this is required of developed countries under Article 4.4, but the number could have a much wider margin, covering the expectation of economic growth that the President alluded to in his speech on June 1st. Of course, this isn’t an ideal outcome from an emissions perspective, but it would keep the United States in the frame for some time to come and allow them to pursue further equivalency of effort through the implementation mechanism.

Should the USA end up on a path of true departure, this will still take until November 2020 to execute. A Party cannot serve notice of termination until three years after the Agreement enters into force and then there is a period of one year before their participation ends. While such a period does not extend beyond the term of the current Administration, it nevertheless represents a long time in politics.

In the meantime, some 190+ other countries will continue to implement their national contributions through a variety of approaches. The European Union, for example, is pursuing a reduction of 40% by 2030 against a 1990 baseline, utilising a cap-and-trade system for the large emission sources such as power stations. Even within the United States, the current energy transition will continue, with much the same result in terms of emissions in 2020 and possibly even 2025 as would have been the case with the national contribution in place. States and cities will likely see to this. Deactivation of the contribution is unlikely to spur new construction of coal fired power stations given the intense competitive pressure from natural gas and renewables. Even discounting current competition, there remains the prospect of future carbon constraints imposed at some point within the 50+ year lifetime of a new coal fired power station.

But the energy transition is just one element of the Paris Agreement; emissions management is at its core. This will require more than just an energy transition to implement, probably requiring large scale deployment of negative emissions technologies, including geological storage of carbon dioxide. This latter step may be the one that suffers following the US announcement.

The Paris Agreement can and likely will survive the events of last week. But if other nations don’t step up and look beyond their own energy transitions, focussing squarely on the need for a net-zero emissions outcome within the next 50-80 years, then the goal of the Agreement will be at risk.

Throughout the middle of May, the Parties to the Paris Agreement met in Bonn to continue negotiations relating to its implementation. Of particular interest to me were the discussions pertaining to Article 6, which contains the slightly opaque wording on transfers and mechanisms that could usher in a global carbon market.

While there was considerable emphasis on the respective roles of Article 6.2 (transferable mitigation outcomes) and 6.4 (a new emissions mitigation mechanism), quite some time was also spent on a legacy of the previous global deal, that being the Clean Development Mechanism of the Kyoto Protocol (CDM). It has now been twenty years since the CDM was first described and it has been operating in earnest for about half that time. Over 8000 CDM projects have been registered, representing some $300 billion of clean energy and emissions reduction investment, leading to the issuance of about 1.6 billion CERs so far (Certified Emission Reduction units). One estimate claims that the CDM has had a material impact on global emissions, with reductions of nearly 500 million tonnes CO2e in 2014, or 1% of global emissions – i.e. without the CDM global emissions would be 1% higher.

But the CDM has been fraught with problems, the most dramatic being a substantial fall in demand for the emission reductions that it offers; hence CERs now trade for just a few pennies per tonne of CO2. This is because of the failure of nations to seriously engage in the Kyoto Protocol and for those that did, such as the EU, the end result was the eventual cessation of imports of CERs into their economies. This led to the collapse of many project developers, the failure of hundreds of projects and a backlog of CERs that could still be issued for further trading. A great deal of time, money and political capital has been invested in getting the CDM to where it stands today, so not surprisingly there is some ill feeling over its demise and some attempts to recoup losses before moving on to something new.

So in Bonn, as negotiators pondered new arrangements under the Paris Agreement, questions were also raised about the CDM. For example;

  • Would it continue under the Paris Agreement?
  • Could the CERs it produced be carried forward as reductions under the Paris Agreement?
  • What would happen if existing projects continued to generate CERs yet sat within a Nationally Determined Contribution (NDC)?
  • Could the CDM be incorporated under Article 6.4?
  • Should Article 6.4 simply be a continuation of the CDM?

These are all valid questions, but there is also a risk that attempting to answer them and accommodate all Parties that have either invested in or received investment from CDM activities, might actually hamper the development of Article 6 itself. A broad solution for the CDM is needed.

Perhaps it is first worth considering whether demand will ever materialise for project based reductions? The initial concept of credits flowing into an emissions trading system and easing the local hunt for reductions has been severely challenged by the experience in the EU. In that system, the CDM added to an already growing allowance surplus, resulting in a depressed carbon price and triggering efforts to correct the system. Although domestically produced offsets feature in systems such as the California cap-and-trade, the unchecked flow of credits into large systems is unlikely to be the design model of the future. That leaves demand for credits coming from uncapped offset systems such as aviation’s CORSIA, but these are unlikely to be large enough to absorb the potential global supply of reductions. The global shipping industry may also establish a similar system at some point. In the longer term, international demand for reductions, but particularly those involving removal of carbon either directly or indirectly from the atmosphere, ought to materialize. It is highly unlikely that the end goal of net-zero emissions can be realized across the entire energy system without some form of carbon unit trading.

Long term credit demand around the net zero emissions goal points to the need for Article 6.4 as a means of generating such units, as well as Article 6.2 to introduce the necessary accounting behind their transfer. But there is some distance to travel between the CDM as it is today and such an end point. A first step perhaps lies within 6.2 which will establish the accounting procedure for cross border transfers of mitigation outcomes. That procedure will require an adjustment to both the NDC supplying the units and the NDC receiving them. Although the CDM was not devised along such lines, the only real possibility for allowing it to continue (or potentially wind down but still generating remaining units) will be to invoke such an accounting procedure. This would bring rigour to the origination of the units and give recipient countries the confidence that a global reduction in emissions had taken place. It would also encourage many developing countries to move rapidly towards quantification of their NDCs, which would then encourage further investment and trade around mitigation.

But the real salvation for the CDM lies with the Parties and their desire to create real demand and trade by invoking the full spirit of the Paris Agreement. Without a concerted effort to reduce global emissions through real policy implementation, there will be no market for such instruments.

A recent book and associated website discusses the steps necessary to address and even reverse the current warming of the climate system. The project, known as Drawdown, maps, measures, models, and describes the 100 most substantive solutions to global warming. For each solution, the Drawdown team describe its history, the carbon impact it provides, the relative cost and savings, the path to adoption, and how it works. Drawdown is that point in time when the concentration of greenhouse gases in the atmosphere begins to decline on a year-to-year basis.

Atmospheric carbon dioxide would likely stabilize before the world stops emitting (on a net basis) carbon dioxide from anthropogenic sources. This is because of the action of the oceans and the lag in carbon dioxide uptake that they exhibit. Net carbon dioxide emissions of 6-10 Gt per annum (currently 40 Gt per annum) are possible while atmospheric carbon dioxide plateaus, but emissions must eventually head to net-zero to see atmospheric carbon dioxide fall and for that trend to continue. Even then, the fall will be very slow given the quantity of carbon dioxide in the atmosphere and the rate at which the ocean can absorb it, at least until the surface layers are largely saturated. Further processes which involve fixing the carbon in ocean sediment and absorbing it through mineralization will play out over thousands of years.

Drawdown’ is a comprehensive piece of work and covers not just energy solutions such as replacing fossil fuel use with renewables, but also includes social changes such as the need for educating girls in developing countries.  Education is linked to infant mortality, birth rates and therefore long term population trends, which in turn impacts energy use and therefore emissions. Within the website is a listing of the approaches, starting with Refrigerant Management at the top of the list. A change in this area is claimed to be the equivalent of 90 Gt CO2, but this is a more complex story as refrigerants are, for the most part, short lived climate pollutants (SLCP). I discussed this in a post last October, shortly after the Parties to the Montreal Protocol had agreed the Kigali Amendment which covers these refrigerants.

While the list covers areas such as electricity generation, land use change and transport, it has very little to offer for industrial processes, but seems to rely on them completely to deliver systemic change. Building wind turbines, developing mass transit, deploying nuclear power stations, manufacturing insulation and automating buildings will require large scale manufacturing and significant production of chemicals and materials. Today, these activities alone account for some 8 Gt of global carbon dioxide emissions, or nearly the same as transport. New activities such as building hundreds of TWhrs of battery storage are likely to exacerbate these emissions. Included within this there are significant emissions from the processes themselves, such as the carbon dioxide from the reduction of iron ore to make iron / steel and the calcination of limestone to make cement.

These activities are amongst the most difficult to decarbonise and lead to the need for carbon capture and storage (CCS). Capturing and geologically storing the emissions from cement manufacture may be far simpler than trying to find substitutes, developing alternative process routes or trying to offset the emissions through reforestation. The one hundred solutions offered on the Drawdown website make no specific mention of geological storage of carbon dioxide, yet venture into areas such as air capture of carbon dioxide. While the latter may provide a useful conduit towards synthetic fuels, it will make no difference at all to atmospheric carbon dioxide if there isn’t large scale storage involved.

Drawdown’ is an interesting piece of work, but it doesn’t tackle the real challenge associated with net-zero emissions, let alone actual drawdown of carbon from the atmosphere. These issues are tackled with much greater rigour in the recent Shell publication ‘A Better Life With a Healthy Planet: Pathways to Net-Zero Emissions and in my forthcoming book ‘Putting the Genie Back: Solving the Climate and Energy Dilemma’.

Book cover

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While the PV inverter market is relatively mature, the digitalized PV industry is in its infancy.  Only a few leading equipment providers offer embedded intelligent software inside their equipment.  A digitalized smart PV plant provides several distinct benefits including: improved monitoring and information to operators, higher energy yields, lower failure rates, and lower O&M costs.  All these valuable enhancements complement existing digitalization of the BOS on both the DC side and the medium voltage side as well.  This means that monitoring is now possible on the complete PV plant level.

As more PV plants are connected to the grid, the need for customized management is also on the rise. Digitalization of the O&M activity is becoming even more critical to provide highly efficient actionable information to further improve the performance of each PV plant at competitive costs.  Web based monitoring solutions now complement traditional SCADA systems with even more analytical functions being added, thanks to the power of the cloud.

Since a PV plant has a lifespan greater than 20 years the back-end operations require strong relationships with equipment suppliers to ensure bankability of a PV project.  Over the past decade, Schneider Electric has built a strong knowledge base of PV plant operations, and is considered the global O&M provider with the most affiliated fleet of inverter OEMs per GTMs Research Spotlight.

The transformation of O&M through digitalization is happening via the integration of #IoT in equipment design, supported by SCADA, web monitoring, and data analytics.  The roles are evolving to reflect these changes; asset managers can now count on global O&M providers like Schneider Electric who can operate PV plant equipment under a single solid digital platform and enjoy lower cost of ownership and more competitive LCOE.



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