Low-carbon revolution facing new challenges

Gerard Wynn LONDON: Trends in global economic growth and rising CO2 emissions rule out optimism that climate targets can be met, even while the world gets to grip with energy security.

The continuing financial crisis and record high oil prices in 2008 haven’t driven a low-carbon revolution which green lobbyists and agencies including the UN urged three years ago.

In fact, the opposite seems to be happening.

The world may have found a sticking plaster, at least, to peak oil with rising production of offshore crude, onshore tight oil, shale gas and tar sands, but increased output of such fossil fuels conflicts with the goal of limiting climate change.

Renewable energy grew faster in percent consumption than any other energy source in 2010, but only from a lower base: in absolute terms, growth was dwarfed ten-fold each by coal and natural gas, and five-fold by oil, show data from the energy firm BP.

One way to consider a trend in cleaning up global economic growth is through the ratio of CO2 emissions to global GDP, which should fall over time as economies become more efficient.

But a long-run global decline in that so-called “carbon intensity” has slowed since 2007 across almost all regions — including the European Union, North America, OECD countries, NON-OECD and globally.

Only China is continuing to drive faster CO2 cuts per unit of output, driven by ambitious Beijing targets.

That slowing of the global trend is also evident across decades, with carbon intensity falling more slowly from 20002010 than 1990-2000.

That’s grim for a globally agreed target to limit more dangerous global warming, which should see global CO2 output peak by 2020 at the latest and start falling thereafter to keep less predictable climate change in check.

Carbon intensity falls over time as the higher value-added, less carbon-emitting service economy grabs an ever bigger share of world GDP from polluting heavy industry.

The question is: when will it fall to levels which cause global CO2 emissions to stop rising? As it turns out, no time soon. There’s little prospect of a peak, and then falls, in CO2 output short of something of an economic miracle, or disaster.

Global CO2 emissions would stop rising when carbon intensity falls at the same rate as GDP grows.

The International Monetary Fund forecasts GDP growth through 2017 of around 4 percent annually or more.

There’s no precedent for such a decline in carbon intensity outside China in the 1990s, when the country was shutting smaller coal plants under an efficiency program which cleaned up easy wins, and saw carbon intensity fall by an annual average of 5.8 percent.

China’s carbon intensity fell by just 1.7 percent annually in the next decade, show World Bank GDP data accounting for purchasing power parity and removing the effects of inflation.

Beyond 2017 we can assume a calmer, long-run rate of GDP growth of 3.5 percent.

Unfortunately, there

is no precedent for such declines in global carbon intensity either.

The Chinese experience in the 1990s and beyond appears to mirror a broader picture where the world’s ability to clean up is diminishing, even as agreed climate goals require the opposite.

That puts into focus a global energy strategy, which appears all but absent in a program to grab whatever’s out there, based primarily on cost where fossil fuels win in the short-term absent a global carbon price, and because the cost of green energy is almost all in upfront capital.

The International Energy Agency last year reinforced the need for a more coherent strategy, in its set-piece annual report, estimating that without a rapid roll-out of low carbon alternatives by 2017 the world’s energy infrastructure would already lock in all “permissible” CO2 emissions to 2035.

That means any additional energy generation would have to be zero carbon, or replace but not add to existing, emitting infrastructure: a tall order.