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The Top 5: Global CO2 Emissions Flat in 2016, though the Economy Grew

03.23.17 | Blog | By:

Happy Thursday friends!  Here’s my weekly take on the five most interesting developments in future fuels and vehicles trends over the last week:

  1. CO2 Emissions Stayed Flat in 2016: IEA says CO2 emissions stayed flat for a third straight year while the global economy grew, signaling a continuing decoupling of emissions and economic activity.
  2. Netflix for Cars: The Wall Street Journal reports that GM has been trying a “Netflix-like” service for cars, focusing on its Cadillac brand.
  3. IRENA and IEA Say CO2 Can by Reduced 70% by 2050: And, with a net positive economic outlook. Biofuels and electric vehicles will be critical for transport. Biofuels would play an increasingly important role in decarbonising the transportation sector, in particular road freight, aviation and shipping.
  4. How to Meet IMO Sulfur Reduction Requirements: Seatrade Maritime News reported this week on a forum in Singapore that discussed the potential for shipping to use scrubbers, LNG, methanol and marine gas oil or low-sulfur fuel oil to meet impending International Maritime Organization (IMO) Marpol Annex VI requirements to reduce sulfur to 0.5% by 2020.
  5. Biojet Reduces Air Pollution: A study published in Nature showed a fuel blend with 50% biofuel reduces soot particle emissions of the aircraft by 50 to 70% compared to conventional fuel. So biojet is needed not only to decarbonize transport but to reduce air pollution as well.

1. IEA: IEA Finds CO2 Emissions Flat for Third Straight Year Even as Global Economy Grew in 2016

Global energy-related carbon dioxide emissions were flat for a third straight year in 2016 even as the global economy grew, according to IEA, signaling a continuing decoupling of emissions and economic activity. IEA says this was the result of growing renewable power generation, switches from coal to natural gas, improvements in energy efficiency, as well as structural changes in the global economy.

Global emissions from the energy sector stood at 32.1 gigatonnes last year, the same as the previous two years, while the global economy grew 3.1%, according to IEA. CO2 emissions declined in the U.S and China, the world’s two-largest energy users and emitters, and were stable in Europe, offsetting increases in most of the rest of the world.

The biggest drop came from the U.S., where CO2 emissions fell 3%, or 160 million tons, while the economy grew by 1.6%. The decline was driven by a surge in shale gas supplies and more attractive renewable power that displaced coal. Emissions in the U.S. last year were at their lowest level since 1992, a period during which the economy grew by 80%. Global CO2 emissions from 1980-2016 are shown in the figure below.

In 2016, renewables supplied more than half the global electricity demand growth, with hydro accounting for half of that share, according to IEA. The overall increase in the world’s nuclear net capacity last year was the highest since 1993, with new reactors coming online in China, the U.S., South Korea, India, Russia and Pakistan. Coal demand fell worldwide but the drop was particularly sharp in the U.S., where demand was down 11% in 2016. For the first time, electricity generation from natural gas was higher than from coal last year in the U.S.

In China, emissions fell by 1% last year, as coal demand declined while the economy expanded by 6.7%. There were several reasons for this trend: an increasing share of renewables, nuclear and natural gas in the power sector, but also a switch from coal to gas in the industrial and buildings sector that was driven in large part by government policies combating air pollution.

IEA notes that two-thirds of China’s electricity demand growth, which was up 5.4%, was supplied by renewables — mostly hydro and wind – as well as nuclear. Five new nuclear reactors were connected to the grid in China, increasing its nuclear generation by 25%. In the European Union, emissions were largely stable last year as gas demand rose about 8% and coal demand fell 10%. Renewables also played a significant, but smaller, role. The United Kingdom saw a significant coal-to-gas switching in the power sector, thanks to cheaper gas and a carbon price floor.

Market forces, technology cost reductions, and concerns about climate change and air pollution were the main forces behind this decoupling of emissions and economic growth, shown in the figure below.

IEA says that while the pause in emissions growth is positive news to improve air pollution, it is not enough to put the world on a path to keep global temperatures from rising above 2°C. In order to take full advantage of the potential of technology improvements and market forces, consistent, transparent and predictable policies are needed worldwide.

2. The Wall Street Journal: GM Tries a Subscription Plan for Cadillacs—a Netflix for Cars at $1,500 a Month (Subscription Required)

The Wall Street Journal reported earlier this week that GM has been experimenting with a “Netflix for cars” subscription plan, called Book by Cadillac, which for US$1,500 a month covers ownership costs and allows members to trade in and out the line’s 10 models up to18 times a year. The story notes that GM has been among the industry’s “chief tinkerers” with the ownership model, anticipating that the century-old arrangement of consumers buying, insuring and repairing their own vehicles eventually will lose favor. In early 2016, it formed a car-sharing company called Maven and around the same time invested $500 million into ride-hailing service Lyft Inc., Uber Technologies Inc.’s main rival. Other companies could adopt similar subscription models going forward. Still, the proliferation of mobility offerings poses a longer-term threat to GM and other vehicle makers as more people find it easier to go without a car. Barclays Capital has said U.S. vehicle sales could decline by 40% over the next 25 years amid the spread of car sharing and self-driving vehicles.

3. IRENA: Perspectives for the Energy Transition: Investment Needs for a Low-Carbon Energy System

Global energy-related CO2 emissions can be reduced by 70% by 2050 and completely phased-out by 2060 with a net positive economic outlook, according to a study released this week from the International Renewable Energy Agency (IRENA) and the International Energy Agency (IEA). Read more about it here.

4. Seatrade Maritime News: Gas Oil, Low Sulphur, Hybrid Fuels, Scrubbers, Methanol, LNG… Which Ones Will Shipping Choose by 2020?

Seatrade Maritime News reported this week on a forum in Singapore that discussed the potential for shipping to use scrubbers, LNG, methanol and marine gas oil or low-sulfur fuel oil to meet impending International Maritime Organization (IMO) Marpol Annex VI requirements to reduce sulfur to 0.5% by 2020. The forum was jointly organized by International Bunker Industry Association (IBIA), Lloyd’s Register (IR) and Methanol Institute.

The use of exhaust gas cleaning systems (EGCS), or scrubbers, would allow ships to continue burning high-sulfur fuel oil as the abatement technology can remove 90-99% of sulfur oxides (SOx) but is not considered a long-term solution for shipping. The cost of equipping one 12-megawatt capacity engine with a hybrid scrubber system is around $3.5m, including engineering/design, installation/commissioning, and training and documentation. The cost would go up to $5.7m for a larger 36-megawatt capacity engine. LNG is expensive as well, and neither options cut enough CO2, attendees said. Methanol has been much less “marketed” to shipping companies but does comply with IMO sulfur limits, is available and the global bunkering infrastructure would only need minor modifications to handle methanol. Costs are also lower when compared to the need to build up LNG bunkering infrastructure.

Meanwhile, Hellenic Shipping News reports this week that the International Organisation for Standardisation (ISO) approved a new class of marine fuel specifications to allow 7% fatty acid methyl ester (FAME) biodiesel for class F grade marine fuel.

5. Nature: Biofuel Blending Reduces Particle Emissions from Aircraft Engines at Cruise Conditions (Subscription Required)

A fuel blend with 50% biofuel reduces soot particle emissions of the aircraft by 50 to 70% compared to conventional fuel, according to a study published in the scientific journal Nature. The findings are based on an international flight experiment between NASA, the German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt; DLR) and the National Research Council (NRC) of Canada. Aircraft engines emit soot particles and serve as condensation nuclei for small droplets and ice crystals, driving the formation of contrails.

The ice crystals of the contrails can remain for several hours in cold and humid conditions at altitudes of between 8 to 12 kilometers, and form high clouds known as contrail cirrus, according to the researchers. A study author notes that the soot emissions largely determine the number of ice crystals in contrails. The possibility of reducing the engine exhaust soot emissions by more than half using biofuels paves the way for reducing the climatic impact of contrails. So, aviation biofuels are needed not only to decarbonize transport (see earlier item on the IRENA/IEA study), but to reduce air pollution as well, something advanced biofuel producers should tout much more than they actually do.

Honorable mentions: the U.S. Energy Information noted this week that imports of biomass-based biodiesel (BBD) increased 65% in 2016 or 693 million gallons, a record.  EIA expects BBD imports to remain largely flat in 2017 because of the expiration of the blender’s tax credit, before increasing in 2018 as a result of increasing Renewable Fuels Standard (RFS) targets.  And, it appears the 2017 renewable volume obligation (RVO) targets set under the RFS will be implemented as finalized, now that the Trump Administration’s 60-day regulatory freeze has expired.

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