Top 5: The Decarbonization Edition

11.26.19 | Blog | By:

Hello friends! Here’s my monthly take on five most interesting developments in fuels and vehicles trends. Items I selected include:

  • Decarbonizing Transport in the U.S.: The strategy suggested here includes mandates not only for EVs, but also for hydrogen, fuel economy standards across modes and transportation demand management strategies.
  • Achieving Net Zero Globally: The IEA says it’s going to take a range of different actions across sectors with no single or simple solution.
  • Switching Dependencies?: China leads the world in battery manufacturing capacity with one single company beginning to dominate ―CATL. Are we good with that?
  • Decarbonizing Shipping: IRENA is out with a new report noting that there is no clear winning fuel for decarbonizing shipping.
  • Renewables Investment Dropped: They dropped largely given an economic slowdown in China but coal plant construction fell to its lowest level in a decade.

1. Forbes: How To Reach U.S. Net Zero Emissions By 2050: Decarbonizing Transportation ― This article by Energy Innovation shows what actions need to be taken to decarbonize transportation by 2050. They include an EV and hydrogen vehicle sales mandate, fuel economy standards and transportation demand management (TDM) and are shown in the chart below.

Source: Energy Innovation

An EV sales requirement that also includes a phase out of internal combustion engine vehicles (ICEVs) would abate 73% of transportation carbon emissions. The phase out would have to happen now to achieve net zero by 2050. And, it would require 100% of all newly-sold cars, SUVs, motorcycles, buses, and rail locomotives, as well as 50% of medium- and heavy-duty trucks, to be all-electric by 2030. A hydrogen vehicle sales mandate would abate 13% of carbon emissions and require 50% of newly-sold, medium- and heavy-duty trucks must use hydrogen fuel cells by 2040.

TDM would abate 13% of emissions and would include policies such as properly funding public transit, congestion pricing, limiting parking spaces in cities and zoning for higher density residential and commercial development near transit hubs and along major transit corridors, among other measures. Fuel economy would abate 3% of emissions and would include ships and aviation.

The net zero pathway reduces overall transportation sector energy use about two-thirds from 2018 to 2050, and well over half of the energy used in 2050 is zero-emission electricity or hydrogen. Under the net zero pathway, the remaining emissions come predominantly from aircraft, with a significant contribution from medium and heavy trucks, as their long lifetimes mean the fleet has not fully turned over after the 100% clean energy requirement took effect. Other vehicle types, particularly freight ships, also continue to emit GHGs through 2050, shown in the chart below.

Source: Energy Innovation

Mitigating remaining freight truck emissions simply requires allowing enough time post-2050 to complete the U.S. truck fleet turnover. Reducing aircraft emissions may be accomplished by strengthening international aircraft fuel economy standards, reducing air travel, and development and deployment of aviation biofuels, according to Energy Innovation. For ships, zero-carbon hydrogen or hydrogen-derived fuels are a promising technological route.

Completely ignored in this analysis but I think very important is the role of low carbon and now carbon negative fuels in helping to achieve net zero in all transport sectors, especially in challenging sectors such as heavy-duty trucking, shipping and aviation. We are at an interesting place where analyses like this tend to shut the door on these fuels just as companies are beginning to emerge from the “valley of death” into large scale commercialization. And, as last month’s post showed, we’re learning more about improving farming practices and the potential to sequester carbon in soils. That impacts 1G biofuels such as corn ethanol. They also shut the door on further innovation of the ICEV.

2. IEA: What Would What would it take to limit the global temperature rise to 1.5 °C? ― Here’s another view of what it would take to achieve net zero, but this time on a global basis and from the IEA. I find it to be a more realistic view as right from the outset the Agency says there are “no single or simple solutions to achieve net zero.” Rather, action across all sectors, utilizing a wide range of energy technologies and policies, is needed. That includes energy efficiency improvements with massive investment in renewables – led by solar PV – take the lead, but there are also prominent roles in this scenario for carbon capture, utilization and storage (CCUS), hydrogen, nuclear and others, which is shown in the figure below.

IEA notes that if negative emissions technologies (e.g. CCUS) of the sort mentioned above could be deployed at scale, then emissions could actually go below zero.

3. The Wall Street Journal: The Key to Electric Cars Is Batteries. One Chinese Firm Dominates the Industry. ― Who is it? It’s CATL. The company now has the most lithium-ion production capacity in the world which will increase further by 2023, outpacing the current leader, LG Chem, as shown in the chart below.

The article talks about the growth of the Chinese battery industry and the automaker acquiescence to Chinese government demands to use domestic-produced batteries, not just for the Chinese market, but globally.  And they have a massive head start. This article notes that the U.S. and Europe are trying to catch up. In the U.S., automakers are looking at developing battery production facilities and policymakers are beginning to take steps to secure domestically mined metals for battery production. In Europe, policymakers are forming a consortium of public authorities to help develop a vehicle battery industry there, with several plants now under development and at least €1 billion ($1.1 billion) in public money flowing into the sector.

4. IRENA: New Report Identified Clean Energy Options for Global Shipping Industry ― The International Renewable Energy Agency (IRENA) says in a new report that cutting carbon emission levels in 2008 by half in 2050, in line with IMO goals (the Initial Strategy announced in 2018), requires a combination of clean energy options and alternative fuels based on renewables. IRENA notes that:

  • The International Monetary Fund forecasts that between 2019-2024, global GDP will grow at an average rate of 3.6% per year. Similarly, global trade volume is estimated to grow at 3.8% per year over the next five years. Under this context, in the absence of suitable mitigation policies, the IMO states that GHG emissions associated with the shipping sector could grow between 50% and 250% by 2050.
  • Bulk and container carriers, as well as oil and chemical tankers, represent 20% of the global shipping fleet; together these vessels are responsible for 85% of the net GHG emissions associated with the shipping sector. Seven ports are responsible for nearly 60% of the bunker fuel sales around the world, with Singapore delivering as much as 22% of today’s total bunkering. Accordingly, any shift towards the use of cleaner fuels should consider the needs for infrastructure adjustments at the main bunkering ports.
  • A shift from heavy fuel oil (HFO) to a clean fuel would require many actions and considerations, including adjustments to the refueling structure in around 100 ports (these account for 80% of global freight) and the replacement/retrofitting of around 25,000 ships.
  • Various fuel solutions are under discussion, with no clear winner to date. On the one hand, there are various advanced liquid and gaseous biofuel options, while on the other, there are hydrogen and hydrogen derivatives, such as methanol, ammonia and power-to-liquids applications.

Finally, IRENA notes that, “There is no clear-cut path to decarbonisation. Cutting CO2 emissions in half is therefore likely to require a combination of approaches, including the use of alternative fuels, upgrading of onshore infrastructure, and reducing fuel demand by improving operational performance. The shipping sector is in a strategic position to tackle climate change and could play a leading role in the transition to a zero-carbon economy. Large scale deployment of low-carbon fuel infrastructure in the shipping sector could also create the necessary momentum to decarbonise other sectors.”

5. Bloomberg New Energy Finance: Climatescope 2019 ― A cool down in China and several other major economies depressed 2018 clean energy investment across emerging nations and kept overall deployment rates flat year-on-year. Meanwhile, coal-fired generation surged in the 104 markets BloombergNEF said in its annual Climatescope survey. However, for the second year in a row, emerging nations built more clean than fossil-fueled power-generating capacity. Construction of new coal-fired power plants fell to its lowest level in a decade. Excluding China, clean energy installations grew by 21% year-on-year to hit a new record. Other findings in the survey included:

  • In the 102 non-China/India economies surveyed by Climatescope, just 38% of new 2018 capacity added was clean. In almost half the 83 markets that recorded capacity growth in 2018, fossil fuels represented the main technology type deployed.
  • In 2018, new clean energy financing for emerging markets totaled $133 billion, down from the peak of $169 billion in 2017. When excluding the three biggest markets (China, India and Brazil), clean energy investment jumped to $34 billion in 2018 from $30 billion in 2017. Most notably, Vietnam, South Africa, Mexico and Morocco led the rankings with a combined investment of $16 billion in 2018.
  • Among the clean technologies, solar led the way with 66GW installed in 2018, followed by wind with 29GW. Small hydro, biomass and geothermal combined saw 12GW added to emerging economies. Fossil fuel-fired capacity accounted for just a third of all new capacity added in developing nations in 2018. Large hydro and nuclear together account for 12% of the capacity installed.

Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.

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