Top 5: Doubling Down on the Energy Transition Post Pandemic

04.27.20 | Blog | By:

Hello friends! Here’s my monthly take on five most interesting developments in fuels and vehicles trends. What I try to do each month is select stories, studies and other interesting items that you may not have seen elsewhere but that really represents an important issue or trend that I think you would want to know about. Or, I try to poke behind the hype to provide a deeper understanding of what’s happening. Items I selected this month include:

  • Doubling Down on the Energy Transformation Post Pandemic: According to a new IRENA study, accelerating investment in renewable energy would help tackle the climate crisis, provide a post COVID-19 stimulus and would in effect pay for itself. IRENA notes that investments would deliver global GDP gains of US$98 trillion above a business-as-usual scenario by 2050 by returning between $3 and $8 on every dollar invested.
  • Warning Labels on Fossil Fuels?: The idea is gaining traction in Europe – and also in North America.
  • More Hydrogen Breakthroughs: This time, it’s a new material called a metal-organic framework (MOF) that can store more hydrogen than other adsorbent materials more cheaply and much more safely.
  • Soil Carbon Capture and Storage: Starting this month Cargill will be paying American farmers $35-45 per acre for capturing carbon in their field soils and cutting fertilizer runoff.
  • Assessing the Options for Decarbonized Shipping Fuels: A new study rates the technology readiness options for a wide range of fuel options.

1. IRENA: Global Renewables Outlook – Energy Transformation to 2050: What’s it going to be? Will the current pandemic kill the movement toward renewable energy and divestment away from fossil fuel investment and use, or will it spur governments, investors and other actors to double down? According to the International Renewable Energy Agency (IRENA), it should be the latter.

“The priority now remains to save as many lives as possible, bring the health emergency under control and alleviate hardship. At the same time, governments are embarking on the monumental task of devising stimulus and recovery packages. These are at a scale to shape societies and economies for years to come.

 

This response must align with medium- and long-term priorities. The goals set out in the United Nations 2030 Agenda and the Paris Agreement can serve as a compass to keep us on course during this disorienting period. They can help to ensure that the short-term solutions adopted in the face of COVID-19 are in line with medium- and long-term development and climate objectives.

 

Stimulus and recovery packages should accelerate the shift to sustainable, decarbonised economies and resilient inclusive societies. The Nationally Determined Contributions (NDCs) to be presented by the end of this year, as required under the Paris Agreement, should be the backbone of the stimulus package.”

According to its Global Renewables Outlook report released this month, accelerating investment in renewable energy would help tackle the climate crisis, provide a post COVID-19 stimulus and would in effect pay for itself. IRENA notes that investments would deliver global GDP gains of US$98 trillion above a business-as-usual scenario by 2050 by returning between $3 and $8 on every dollar invested.

As the figure below shows, under IRENA’s Transforming Energy Scenario (TES) US$110 trillion in investment would be required by 2050 directed primarily into scaling up renewables, electrification and other clean technologies. The TES aligns energy investments with the need keep global warming “well below 2oC”, in line with the Paris Agreement.

Source: IRENA, April 2020

An even deeper decarbonization pathway would require another US$20 trillion. Spending that would deliver returns between $US 50-142 trillion, as the figure below shows.

The Energy Transition: Benefits Compared to Costs

Source: IRENA, April 2020

Digging deeper into transport-specific decarbonization solutions noted in the report, what came up was biofuels, sustainable aviation fuels, electrification and synfuels from green hydrogen. Under the IRENA’s TES scenario, biofuels consumption would need to reach consumption of 652 billion liters/year by 2050. Current consumption is about 136 billion liters/year, most of that 1G. Oil demand would decline 22 million barrels per day (mbpd) by 2050. More than 1.1 billion electric vehicles would need to be on the road by 2050, up from the current 79 million.

Examples of Key Decarbonization Solutions

Source: IRENA, April 2020

IRENA notes that the transition to renewables, efficiency and electrification can drive broad socio-economic development. Recovery measures following the COVID-19 pandemic could include flexible power grids, efficiency solutions, EV charging, energy storage, interconnected hydropower, green hydrogen and other technology investments consistent with long-term energy and climate sustainability.

2. BMJ Publishing: We Need Health Warning Labels on Points of Sale of Fossil Fuels – The authors of this piece compare the impact of using fossil fuels on the climate to smoking in advocating for implementing warning labels on fuel pumps globally. The authors note:

“Introducing warning labels, framed as a health warning, could therefore be timely. The labels could use a grading system according to the estimated greenhouse gas emissions. Labelling should be culturally tailored, and informed by public consultations. This would, for example, take into account the needs of low and middle-income nations, such as the potential to use gas as a transitional fuel until zero-carbon alternatives become affordable to replace household solid fuels, thus reducing air pollution in countries such as India. The initial focus should be on high income nations that have contributed disproportionately to greenhouse gas emissions and on major sources of greenhouse gas emissions in emerging economies where they are rising rapidly.”

A few areas around the world are beginning to implement these kinds of warning labels. The authors note that in North Vancouver, Canada, “pictorial designs denoting biodiversity loss were ‘co-opted’ by the Canadian fuel industry and incorporated into a national ‘Smart fuelling’ initiative, with any threats to health omitted.” In Sweden, eco-labels will be mandatory beginning next month. The labels will show climate impact, the raw materials used for the fuel and their origin (see figure). The labels are part of a package of policies to reduce fossil fuel use, including tax on new high emission cars and subsidy for low emission ones.  In the U.S., the city of Cambridge, Massachusetts voted in January 2020 to make information about the environmental and human health impact of fossil fuel use mandatory on all self-service fuel pumps. A similar effort failed in Berkeley, California.  The authors note the explicit reference to health “is likely to increase the labels’ effectiveness, because messages about the climate emergency framed around health tend to be more persuasive than environmentally framed messages.”

3. Oil Price: Our Most Abundant Chemical Is the Future of Fuel – According to this report, researchers at Northwestern University have developed a new material called a metal-organic framework (MOF) to store more hydrogen than other adsorbent materials more cheaply and much more safely, reducing its flammability risk. MOF self-assembles into a multidimensional, ultraporous structure. As the lead author of the project, associate professor Omar K. Farha says, “envision a set of Tinkertoys in which the metal ions or clusters are the circular or square nodes and the organic molecules are the rods holding the nodes together.” As an illustration of what the material is capable of, the authors report that a sample of one gram has a volume equal to the volume of six M&Ms and a surface area equal to 1.3 football fields. “We can store tremendous amounts of hydrogen and methane within the pores of the MOFs and deliver them to the engine of the vehicle at lower pressures than needed for current fuel cell vehicles,” Farha says.

4. Reuters: Cargill-Led Fund to Pay U.S. Farmers for Carbon Capture, Exchange Credits – Starting this month Cargill will be paying American farmers $35-45 per acre for capturing carbon in their field soils and cutting fertilizer runoff, according to this Reuters article. The Soil & Water Outcomes Fund, a partnership with the Iowa Soybean Association and third-party verification company Quantified Ventures, will then sell the environmental credits created to polluters such as cities and companies, including Cargill itself. Farmers in Iowa have enrolled almost 10,000 acres in a pilot program this spring, but the group is aiming to expand the program next season and broaden it beyond Iowa.

5. Lloyd’s Register: Techno-Economic Assessment of Zero-Carbon Fuels – Lloyd’s Register (LR) and the University Maritime Advisory Services (UMAS) published this month their latest assessment of the current and future fuels available to shipping to help define optimum solutions as the industry seeks to decarbonize. The paper provides estimates of the economic viability (investment readiness) of zero-carbon fueled ships when compared with a reference ship using Low Sulfur Heavy Fuel Oil (LSHFO). It then analyzes the technology readiness of the vessel and bunkering technologies needed to support zero-carbon fueled ships. Finally, it provides high-level insight into the community readiness of zero-carbon fuels from the perspectives of lifecycle emissions and how the energy landscape is evolving in other sectors and what this means to the decarbonization of the shipping sector.

The paper notes that in the short term, biofuels look marginally more competitive than fuels derived from renewable electricity or from natural gas with carbon capture and storage (NG with CCS). However, there are significant challenges related to the sustainability and availability of biofuels, the paper notes. “Therefore, in the mid-long term, any biofuel pathway is uncompetitive and prone to restrictions or higher prices resulting from supply constraints and does not necessarily lead onto more resilient options such as hydrogen or ammonia derived from NG or renewable electricity.”

The authors also assessed the technology readiness for the various zero-carbon solutions and provide an insight into the current barriers to market. The objective of the assessment is to establish the current ‘readiness’ of technologies considered to be critical in the application of zero-carbon fuels for shipping. The authors examined the technology readiness of zero-carbon fuels and its usage regarding onboard procedures of bunkering, vessel storage, processing, conversion onboard and propulsion, shown in the figure below.

TRL Ranking for ZEV Technologies

Source: UMAS, April 2020

 

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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