Monday, 29 October 2012

From the Archives: New Fossil Fuel Sources and Climate Change

Over the past few months the debate about new fossil fuel sources has gotten pretty...intense. In the U.S. environmentalists are campaigning in the courts and in farmers fields to halt the Keystone XL pipeline, which will provide easier market access for petroleum from Canada's tar sands.  Here in the U.K. campaigners are working to slow the spread of hydraulic fracturing, which enables drillers to access abundant but otherwise difficult to access shale gas.

This is an important debate, and one I discussed in a blog post over three years ago. Rather than rehash that discussion, I will reprint that March 2009 post below:

Peak Oil: Will We Freeze or Roast? Originally posted 18 March 2009

When I was in graduate school in the early 1990s, M. King Hubbert was a name known only to fellow energy nerds. Now, he's so popular you can get regular news alerts.

Hubbert developed a mathematical model describing how production from an oil well or entire oil producing region tends to increase at a predictable rate, until it hits a - predictable - peak and then declines. Hubbert used his model to predict the year of peak oil output for the United States, and it has been used more or less successfully for other oil producing regions since then.

In addition to forecasting output growth for particular regions, the Hubbert Curve and peak oil theory can be applied to oil production for the world as a whole. But as recently as 2005, the International Energy Agency (IEA) dismissed the concept. Mainstream energy agencies tended to assume that oil production could increase indefinitely as new investment and technology are brought to bear. If a peak exists, they argued, we are nowhere near it.

This matters because when the world's leading climate scientists prepared their 2007 report on global warming trends and impacts, they turned to the IEA for their best estimates of fossil fuel consumption. The IPCC works by consensus, and its reports tend to refer only to the most authoritative sources. The IEA estimates showed that conventional fossil fuel use would continue to grow without end, and this prediction is reflected in all the pessimistic warnings about global temperature increases and climate change.

Times have changed. The IEA is now predicting that we will reach global peak oil between 2020 and 2030 (more pessimistic scenarios argue that we reached the global peak last year). So oil production will top out much earlier than anticipated.

Less petroleum production means fewer petroleum-related greenhouse gas emissions. In fact, manyindependent models suggest that, once peak oil (and coal) is factored in, we simply can't burn enough traditional fossil fuels to reach the worst-case global warming levels.

Let me repeat that: Most climate models that incorporate peak oil theory predict a temperature rise of less than 2 degrees Centigrade. A major change to be sure, but far less than the IPCC's "business as usual" scenario for global warming.

So, this is good news, isn't it? Climate change is solved because fossil fuel production will decline sooner than predicted, right?

Not so fast. What are we going to use for our vehicles when the oil starts to run out? Shall we simply switch off the lights and freeze?

In 2006, Alex Farrell and Adam Brandt, researchers at the University of California at Berkeley's Energy and Resources Group, published a paper that examined the cost, availability and climate change implications of substitutes for conventional petroleum. These are liquid fuels derived from heavy, difficult to process resources like tar sands, oil shale, and coal.

The Berkeley team found that it would be commercially viable to produce synthetic petroleum from these heavy fuels at oil prices of less than US $50 per barrel. What's more these resources are so abundant that they would keep pump prices relatively low.

In other words, peak oil means less petroleum, but not an end to fossil fuels. For those who worry that peak oil means society will collapse into "Mad Max" - style anarchy, that's good news.

The bad news is that these fuels have a much greater climate change impact than conventional oil. Using tar sands and heavy oil results in about 50% more CO2 per unit of energy than regular petroleum. Synthetic fuels made from coal nearly doubles the greenhouse gas emissions, and using oil shale could result in up to 3X the emissions per unit of energy. To quote the authors:

"Overall...the oil transition is not a shift from abundance to scarcity: fossil fuel resources abound. Rather, the oil transition is a shift from high quality resources to lower quality resources that have increased risks of environmental damage, as well as other risks."

Sadly, peak oil is not the solution to climate change. If anything, a poorly planned response to peak oil could accelerate global greenhouse gas emissions growth.

There is an alternative. We have the technical know-how to produce energy from low- or zero-emission sources. Solar, hydropower, wave and tidal, wind, and geothermal energy are clean sources of hydrogen and electricity, and carefully chosen biofuels can provide high energy-density liquid fuels.

Scaling up these clean energy technologies at the rate required to compensate for peak oil and limite climate change is a challenge. But as discussed in an earlier article, the required investments by governments, corporations and communities are no larger than other causes on which we have spent billions. The need is arguably as great, if not greater, because poorly planned energy investments made today will have a huge impact for decades to come.

Friday, 12 October 2012

Which FTSE 100 Company Has The Best Carbon Reporting?

(This is a guest post by Carbon Clear CEO Mark Chadwick, and was originally published via the 2Degrees Network.)

"Best" is clearly a subjective term... At Carbon Clear we have developed criteria for what we believe represents best practice in carbon management, and we score company reports to assess their carbon management maturity.

On Wednesday 17th October at 08:30am we will be announcing the results of our 2012 research and will reveal the top 20 companies from the FTSE 100. Our maturity model looks for more than just measurement and disclosure. We also look for broader signs of carbon management maturity, including reduction performance, engagement and strategy.

Last year's top 10 were the following:
  1. BSkyB
  2. M&S
  3. Aviva
  4. Pearson
  5. RSA
  6. GSK
  7. Hammerson
  8. Kingfisher
  9. Sainsbury
  10. Tesco
This year's results contain some surprises, some new entrants and some that have fallen in the rankings.

The event will be held at Carbon Clear's office near King's Cross, London and will run from 8:30 to 10:30 on Wednesday October 17th. See our website for more information.

If you’re from a FTSE 100 company, or are interested in improving your carbon management performance please contact Rachel Hunter (rhunter [at] carbon-clear [dot] com) or on 0203 589 9423 to request a place at the briefing.

Thursday, 4 October 2012

Mandatory Carbon Reporting: Lessons from the CRC

The UK's Mandatory Carbon Reporting requirement is expected to become law on 6th April 2013. As I mentioned previously, there are still a number of questions surrounding this proposed legislation. What is more, the final consultation is still open, meaning some details may yet change.

Carbon Clear conducted a survey last month on corporate attitudes to Mandatory Carbon Reporting. Worryingly, we found that the lack of specifics has led nearly 3/4 of respondents to adopt a "wait and see" approach to the legislation.

We've been here before, with the Carbon Reduction Commitment Energy Efficiency Scheme (CRC). When the first consultation was launched in 2006 for what was then called the "Energy Performance Commitment", most corporates ignored it.  By 2008, with the first qualification year underway, most companies with whom my team spoke were still in denial. "It will never pass into law," they claimed, "We're in the middle of an economic crisis!"

In March 2009, the full CRC consultation commenced and it became clear that the Labour Government wasn't going to back down.  And still many firms decided to wait and see.  At that point, the claim became, "The Tories are more business-friendly; they will cancel the scheme once they come into power."

Fast forward to October 2012, and as we all know the CRC hasn't been cancelled - at least not yet.  However, it has changed considerably since 2008. The timings have shifted repeatedly, the rules for purchasing allowances were only finalised in 2010, the league table has been amended, and the specifics of the reporting requirements have been updated.

Most notably, the CRC has changed from a type of cap-and-trade scheme into something that looks suspiciously like a carbon tax. While the £12/tonne CO2 payment represents only a small portion of most companies' energy spend, it will bring billions to a cash-strapped Treasury.

What is most interesting and relevant for businesses potentially affected by Mandatory Carbon Reporting, is that it is the outputs remain a work in progress: the inputs have remained remarkably consistent.  If your company is captured in the CRC, you must:
  • Define the organisation
  • Identify your locations
  • Locate supplies
  • Identify meters and suppliers, and
  • Prepare your evidence pack.
The consistency in the CRC's input requirements matters because the rest of the CRC rules were not finalised and did not come into force until March 2010 - only a month before the first compliance year started!Carbon Clear clients who started preparing for the CRC in 2008 and 2009 were generally well-prepared to meet the legislative requirements in April 2010. Some companies were even able to take reasonable steps in 2008 to ensure they did not quality for the CRC.

Those who took a "wait and see" approach until March 2010 (or later) found CRC compliance to be a significantly more stressful process.

Something similar seems to be happening with Mandatory Carbon Reporting.  The majority of companies so far have taken no steps to prepare, beyond setting up a watching brief.

I believe this is a missed opportunity. If history is any guide, the final Mandatory Carbon Reporting rules will only be released at the last minute. Companies that wait too long before taking action may be setting themselves up for unnecessary hardship.

While some uncertainty remains around the specifics, we already know what goes into Mandatory Carbon Reporting: firms must measure all their Scope 1 and 2 emissions for all Kyoto greenhouse gases. For some large and complex businesses, this will be easier said than done.

As I've stated previously, companies that already report their emissions to the Carbon Disclosure Project or other schemes will have a head start, even though the specific reporting outputs may differ.  Once you are collecting your data in a robust and consistent manner, it is a relatively simply matter to produce a range of different reports.

What is more, we consistently find that firms who measure their carbon emissions begin to look at their operations in a different light and identify valuable efficiency and cost saving measures that strengthen their bottom line. Indeed, a sound carbon monitoring and reporting system sets the stage for a well-designed carbon management programme and transforming your company into a climate change leader.

There are scores of detailed policy lessons we can learn from the CRC.  But the main lesson that we and our customers have learned is that uncertainty is no excuse for inaction. Indeed, early action is good for business.