The UN-led Paris Agreement that came into effect in 2016 focused the world’s attention on the need to ‘decarbonize’ the global economy.  But what is decarbonization and is it achievable?

By Fady Jameel, Deputy President and Vice Chairman, Abdul Latif Jameel

The UN-led Paris Agreement that came into effect in 2016 focused the world’s attention on the need to ‘decarbonize’ the global economy.  But what is decarbonization and is it achievable?

In simple terms, decarbonization refers to the reduction – or even better, the removal – of greenhouse gas emissions (principally carbon dioxide (CO2), methane (CH4) but also others) from the activities that operate our global economy.

Under the Paris Agreement, the aim is to reduce world greenhouse gas (GHG) emissions to half the level they were in 1990.  To achieve this challenging goal, it will be necessary to reduce the amount of GHGs emitted by human activity to the same levels that trees, soil and the oceans can absorb naturally, with a target of net-zero emissions by the end of the century.

At the UN Climate Action Summit in New York in September 2019, UN Secretary-General Antonio Guterres announced that 77 countries had committed to net-zero carbon emissions by 2050.  Some, such as the UK, France, Sweden and Norway, have introduced legislation to that effect.  For others, the goal is, at the moment at least, let’s say ‘aspirational’.

It is a transformation that cannot come soon enough.  Recent research by the World Meteorological Organization (WMO) indicates that the speed of climate change is accelerating, with data indicating that the last five years (2015-2019) have been the warmest on record[1].

During the same period, CO2 emissions have risen to record highs.  According to data from the Global Carbon Project, annual CO2 emissions in 2018 actually spiked by 2.1 per cent — owing in part to increased demand for coal and steel in fast growing markets such as China, India and Indonesia[2].

At the same time, the pace of the rise in sea levels has increased significantly.  Data recently published by Climate Central, an independent non-profit organization of leading scientists and journalists, indicates that up to 300 million people could be living with annual floods by 2050, rising to as many as 640 million by 2100[3].

Quick wins versus long-term gains

By far, the biggest contributor to carbon emissions is the energy sector, which accounts for 72 per cent of all emissions [see chart below]. It is logical, then, that one of the best ways to reduce emissions to 2030 is by moving to cleaner sources of power.

Traditionally, this has tended to mean converting coal-fired power plants to gas-fired power plants, as coal-fired plants emit, on average, around 900g of CO2 per kilowatt-hour, while gas-fired plants emit around 500g.[4]  

Transport is another big contributor to global emissions, and there have been great gains in the fuel efficiency of internal combustion engines.

Unfortunately, however, neither gas-fired power plants nor more efficient internal-combustion engines will get us to where we need to be – net-zero emissions – by 2070.  In order for us to meet the Paris Agreement targets, power plants would have to emit a maximum of 50g of carbon per kilowatt-hour, just one tenth of the emissions of a typical gas-fired plants.  Similarly, we need to drive zero-emission vehicles, not merely more efficient gas-burning vehicles, especially when some estimates have the number of vehicles worldwide doubling by 2050.

This is the dichotomy at the heart of the climate change debate.

To successfully achieve so-called ‘deep decarbonization’ over the longer term, we have to be prepared to take fundamental action now, which is likely to be painful, expensive and disruptive to our existing economic and social models.  Such actions will not provide any immediate, obvious short-term gain, but will provide a solid foundation for achieving our longer-term emissions-reduction objectives.

Greenhouse Gas Emissions by Sector

The alternative approach, one which seems to have been the basis of most initiatives over the past few decades, could be called ‘decarbonization lite’, where we embrace less disruptive ways to modestly reduce emissions, quickly and at relatively low cost, in order to get a quick and easy win.  But which on their own, will not be enough to achieve our longer-term targets

It hardly needs stating which of these approaches appeals most to governments tied to four or five-year election cycles.

Jeffrey SachsAccording to Jeffrey D Sachs, Director of the Earth Institute at Columbia University in the US, switching coal for gas, or introducing more efficient gas-burning vehicles – ‘low-hanging fruit’, as he describes it – means we “risk putting ourselves into a high-carbon trap”[5].

“The low-hanging-fruit pathway achieves a steep reduction by 2030.  It probably does so at lower cost than the deep-decarbonization pathway, because the conversion to zero-carbon electricity (for example, wind and solar power) and to electric vehicles might be more costly than a simple patch-up of our current technologies.

 The problem is that the low-hanging-fruit pathway will achieve fewer reductions after 2030.  It will lead into a dead end.  Only the deep-decarbonization pathway gets the economy to the necessary stage of decarbonization by 2050 and to net-zero emissions by 2070”.

In response to this, the Deep Decarbonization Pathways Project has brought together energy research teams in the 16 highest-carbon-emitting countries to chart practical pathways to decarbonize in their own countries and limit global warming to 2oC or less, in line with the Paris Agreement.

Although country-specific in their detail, these pathways, which are designed to be both technically feasible and affordable, identify three main strategies to achieve decarbonization on a global scale:

  • Major advances in energy efficiency, using smart materials and smart (data-based) systems
  • Zero-carbon electricity, drawing on the best options for each country’s specific circumstances and resources (wind, solar, geothermal, hydro, nuclear, and carbon capture and storage)
  • Eliminating internal combustion engines and switching to electric vehicles, alongside a general shift to electrification or advanced biofuels

“A key question for Paris, therefore,” says Sachs, “is not whether governments achieve 25% or 30% reductions by 2030, but how they intend to do it”.

Unsurprisingly, given the urgency and gravity of climate change, the huge steps needed to transition to a global decarbonized economy will have a significant effect on economies and societies around the world. 

Governments will need to prioritize reskilling the workforces of entire industries to enable a transition to high-quality, more sustainable occupations.  This requires foresight, investment and commitment from central governments and business alike. 

Public spending and economic policies must ensure that vulnerable and low-income communities are not disproportionally affected by decarbonization measures.

We may also need to redefine our definition of national success.  Is continual, year-on-year GDP growth, for example, a true signifier of success in this new, decarbonized world? 

Creating climate equality

There is a view that, by prioritizing decarbonization, developed nations are, in effect, denying less-developed nations the carbon-fueled benefits of progress they themselves have profited from over more than two centuries.

It’s a tragic dual irony that many of the countries on the front line of catastrophic climate change – in regions like Africa, the Indian sub-continent and South-East Asia – are the least equipped to respond to the challenges, and have also had the least input into creating these conditions in the first place.

According to Philip Alston, UN special rapporteur on extreme poverty and human rights, the poorest half of the world’s population (around 3.5 billion people) is responsible for just 10% of the world’s greenhouse gas emissions, while the richest 10% of the global population is responsible for almost 50%.

CO2 Emissions

In other words, the richer nations that contribute the most to climate change are able to afford much more effective mitigation measures than poorer ones, who have contributed relatively little to global warming.  As a result, says Alston, the world is increasingly at risk of “climate apartheid, where the wealthy pay to escape overheating, hunger and conflict [caused by the escalating climate-change crisis] while the rest of the world is left to suffer”.

Fortunately, investment in sustainable, less carbon-intensive infrastructure is now recognized as a central driver of growth and the delivery of sustainable development goals and the Paris Agreement.  The G20 has adopted “strong, sustainable, balanced, and inclusive growth” as its goal, and major development finance institutions are now beginning to shift their capital towards sustainable investments that can help to drive growth in developing markets without ramping up carbon emissions.   There is also growing evidence that decarbonization does not have to come at the expense of development, and that it is possible for countries to increase GDP while still reducing carbon emissions.

Decoupling GDP from EmissionsA 2017, report sponsored by Boston-based sustainability advocacy group Ceres found that climate-warming CO2 emissions from US power generators declined between 2005 and 2015, as the companies shifted away from coal and toward renewable energy sources and natural gas.  Emissions dropped further in 2016, putting them near the same level they were in 1990.  Despite this, GDP grew steadily over the same period. [6]

“The decoupling of economic growth from emissions growth is really encouraging,” said Dan Bakal, Director of Electric Power for Ceres.  “You can achieve these reductions while growing the economy – and trying to reverse these trends would be an uphill battle.”

Adding further evidence to this debate is a 2018, working paper from the International Monetary Fund, which found that some countries, including France, UK and Germany, can be said to have achieved an absolute decoupling, with trend emissions either stable or actually declining and hence no longer correlated with the upward trend in output.”[7]

Governments can also use fiscal policy as a powerful tool to encourage more emissions-friendly behaviors, without hindering GDP growth.

GDP and CO2 Emissions in SwedenIn Sweden, for example, pricing carbon through CO2 taxation has been the main policy instrument to drive fossil fuel consumption down – and it has done so significantly over the last 25 years[8].

The CO2 tax in Sweden was first introduced in 1991, alongside already existing energy taxes.

This has gradually been significantly increased, from €29 in 1991 to €125 in 2014 for households and services.  

The effect on fossil fuel consumption has been especially noteworthy in terms of district heating, where the use of biomass for fuel increased from 25 per cent in 1990 to nearly 70 per cent in 2012.

With some of the highest level of CO2 tax worldwide, Sweden provides strong evidence that decoupling GDP growth from CO2 emissions is possible and that CO2 tax is an efficient way of decarbonizing energy use.

Ramping up renewables

The shift comes as renewable energy sources — including hydroelectric, wind, solar, biomass, and geothermal — are contributing more to the energy mix across the globe.

“The majority of new capacity that’s added is renewable,” Bakal said, “and the shift away from coal has continued.”

A number of trail-blazing countries are already showing what is possible.  Costa Rica, for example, has generated all its electricity from renewable sources for most of 2019, and expects to be completely carbon neutral by 2021[9], while Iceland’s electricity is almost 100 per cent generated from renewables, such as geothermal energy, and has been since 2015[10].  Sweden, with plentiful hydroelectric power, has achieved a 54 per cent share of renewable sources in the country’s energy mix[11].

Australia, too, has made great strides.  Its highly successful renewable energy program will contribute to a predicted 4 per cent reduction in greenhouse gas emissions over the next three years[12].  An achievement, I’m proud to say, in which Fotowatio Renewable Ventures (FRV), part of Abdul Latif Jameel Energy, has played an important role.  FRV is involved in six solar projects in Australia and has invested over US$ 700 million in the country’s renewable energy sector since 2012. 

Another of the main renewable energy sources – wind power – is already making a huge contribution to power generation globally, and there is the potential for it to contribute even more as part of the decarbonization agenda.

Global installed wind-generation capacity onshore and offshore has increased by a factor of almost 75 in the past 20 years, jumping from 7.5 gigawatts (GW) in 1997 to some 564 GW by 2018, according to IRENA‘s latest data[13].

Harnessing hydrogen

The increasing popularity of electric vehicles is hugely encouraging – over 1.1 million plug-in electric vehicles (PHEV) were sold globally during the first six months of 2019 alone[14] – but if they run on electricity produced by fossil fuel powered power stations, they are not cutting carbon emissions, simply moving them upstream.  This is where hydrogen could play a big role, not only for transportation, but also for industry and domestic heating and cooling.

Hydrogen offers the prospect of helping to decarbonise the transport, heat and industrial sectors while providing a use for surplus renewable power.  IRENA estimates that it could supply 6 per cent of final energy consumption by 2050, while industry body the Hydrogen Council says this could be as high as 18 per cent[15].

The challenge lies in decarbonizing hydrogen production itself.  Renewable energy can be used to produce hydrogen via electrolysis, but this is expensive and would require vast amounts of renewable power.  On the other hand, producing hydrogen via steam methane reforming (which uses high levels of heat to ‘crack’ methane into carbon and hydrogen) is cheaper and more immediately scalable – but its carbon emissions are high.

This is typical of the technical-financial-sustainable tightrope that we will have to walk as we work towards a decarbonized future.

Turning a negative into a positive

Realistically, even with the most stringent policies and incentives, it will take decades to decarbonize by cutting emissions alone.  Fortunately, there is another key tool to help us on that journey – using Carbon Capture and Storage (CCS) to neutralize emissions before they get into the atmosphere and transform the captured carbon into value-added products.

CCS is critical for us to achieve net-zero emissions – and the technology is in place for us to start doing that now, with some power stations already ‘trapping’ their carbon emissions using CCS technology.

Rather than treating CO2 as waste, the CCS process converts it into commercially viable products, creating new revenue opportunities.  Global demand for CO2 is around 200 million tonnes (Mt) per year.  Uses include urea production, carbonated drinks, water treatment and pharmaceutical processes.  New or growth markets could include use of CO2 as a feedstock or as working fluid in some processes (including in power generation), conversion to polymers or carbonates, concrete curing and mineral carbonation.  Research is also being conducted on the potential to turn CO2 into transport fuels.[16]

Refining and developing this technology on an industrial scale will require huge amounts of investment.  If we can demonstrate that CO2 can be transformed into valuable products, not just a harmful waste, the investment argument suddenly becomes much easier.

Choices for a brighter future

There are many choices we can make today that will affect whether we can be close to a zero-emissions energy system in 2050.  While some of them are not economically – or politically – viable at present, making the right choices will ultimately help to drive the economy, protect the environment and safeguard our societies in future.Choices for a Brighter Future

It’s a balancing act – and the stakes could not be higher.  But we need to start making these choices now.  As climate activist Greta Thunberg told the UN General Assembly in 2018:

“Until you start focusing on what needs to be done, rather than what is politically possible, there is no hope.”

[1] The Global Climate in 2015-2019, WMO, September 2019

[2] Global Carbon Budget, Global Carbon Project, 2019

[3] Flooded Future, Climate Central, October 2019

[4] Comparison of lifecycle greenhouse gas emissions by different electricity sources, World Nuclear Association, accessed November 28, 2019

[5] World Economic Forum, ‘What’s the path to Deep Decarbonization?’

[6] Ceres, ‘Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States’

[7] The Long-Run Decoupling of Emissions and Output: Evidence from the Largest Emitters, IMF Working Paper WP/18/56, 2018

[8] World Bank blogs, ‘Sweden: Decoupling GDP growth from CO2 Emissions is Possible’

[9] Data published by Instituto Costarricense de Electricidad, September 2019

[10] Data published by the Government of Iceland, accessed November 28, 2019

[11] Data published by the Swedish Energy Agency, accessed November 28, 2019

[12]Australia’s carbon emissions set to drop”, Australian National University, October 2019

[13] Renewable Capacity Statistics 2019, International Renewable Energy Agency, 2019

[14]Global EV sales for the first half of 2019”, EV Volumes, accessed November 28, 2019

[15] Hydrogen: A Renewable Energy Perspective, IRENA, September 2019

[16] Five keys to unlock CCS investment, International Energy Agency, 2017

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