The challenging reality of global carbon intensity trends

For policy junkies, politicians and citizens interested in global energy trends and climate change issues, there is one resource that should be on everyone’s required reading list – the reports from the International Energy Agency.

In a policy arena that sees the solution side of climate discussions frequently lost in either inaccessible scientific analyses or passionate values debates that substitute beliefs for fact-based dialogue, the IEA provides a welcome array of carefully calibrated data and analysis of energy production and consumption trends. Using relatively easy-to-understand facts on global energy supply and demand, the IEA grounds its climate change analysis through the lens of real carbon output measures, which are then assessed against carbon output trajectories and the policy pathways required for a transition to lower carbon energy systems.

Unfortunately, when we look at the most recent publication from the IEA, Tracking Clean Energy Progress 2013, it quickly becomes evident that little progress is being made in lowering the carbon intensity of overall energy use:

“The picture is as clear as it disturbing: the carbon intensity of the global energy supply has barely changed in 20 years, despite successful efforts in deploying renewable energy.”

In fact, of the 11 broad energy areas monitored by the IEA in this annual report, half are clearly not on track to meet a 2DS (2 degree Celsius global temperature increase) threshold, and a further three need (significant) improvement. The only areas currently on track to meet the objective are renewable power and electric/hybrid vehicles. However, despite this, electricity generation from coal continues to outpace renewables by a significant margin, particularly in fast-growing economies like China and India. The IEA notes in both the 2012 Energy Outlook and the Progress 2013 report that aggressive energy efficiency improvements are needed as well as a steep drop in carbon intensity to meet 2DS targets and, further, that a 20% efficiency gain is possible using technologies available today. While a steep drop in carbon intensity drop is also required, the IEA observes that this is an enormous challenge - there will need to be a sharp break from a 40 year stable trend in carbon intensity. To meet the 2DS target, the chart below shows that carbon intensity would have to decline by 5.7% by 2020 and 64% by 2050 – a daunting task to say the least.

The Energy Sector Carbon Intensity Index (ESCII)

Looking more specifically at electricity generation, the report shows that despite significant increases in renewables, coal-fired generation continues to grow - by an astounding 6% from 2010-2012. Without changes in this trend, including adding carbon capture and storage to the mix, the aggregate global energy supply simply cannot get cleaner. Looking at this more closely, the IEA notes that about 50% of the coal fired generation built in 2011 used inefficient technologies. Furthermore, the use of natural gas to displace coal has been highly regional and extremely price sensitive – with Europe actually increasing coal fired generation at the expense of more costly natural gas in recent years, due to market-driven price signals. Finally, the IEA states that CCS (carbon capture and storage) research and deployment appears to have stalled, with eight projects cancelled over the past year.

One of the analytic strengths of the IEA is the organization’s ability to combine sound data analysis with clear policy prescriptions to meet policy objectives. While the challenge to meet a 2DS target is daunting, and getting harder every year as targets are missed, the IEA lays out a set of policy prescriptions in its latest report that could put the world’s energy/carbon trajectory on a path that would lessen the impacts of climate change. But can this be done without fundamentally altering parts of the economic framework underpinning our energy intensive world?

Based on the efforts and results to date, the answer would likely be no. The energy-economic growth-prosperity equation is one deeply embedded in our society, and energy transformations that are not grounded in efficiency (market driven) gains have proven a vexing challenge. Only time, and ongoing policy choices, will determine how successfully energy transformations can be implemented to ensure that the many benefits of greater global energy use continue - building a more prosperous and climate friendly future. The IEA, rightly and empirically, worries that we are not on track.