Post-Paris Pragmatism

The Paris Pact

In December 2015, an international agreement was reached whereby almost 200 nations, along with other political and commercial entities, agreed to significantly reduce annual greenhouse gases (principally carbon dioxide). Many also agreed to participate in a US$ 100 billion U.N. administered fund, intended to help less developed nations reduce emissions and abate damages due to climate change*. The sizes of each entity’s commitments vary widely.

President Obama’s commitment was for the U.S. to reduce greenhouse gas emissions to 25% – 28% below 2006 levels (the highest ever) by 2025, and to make substantial contributions to the U.N. administered fund. Neither the agreement nor President Obama’s commitments were submitted for ratification by the U.S. Senate; hence lack the obligatory nature of a formal international treaty.

Earlier this month (June 2017), President Trump announced that the U.S. will withdraw from the Paris agreement, apparently after substantial discussions with many people. The President’s decision was greeted with both applause and cat-calls, as one might expect. International reaction was almost entirely negative, since withdraw of U.S. support greatly weakens the viability of the Paris agreement.

The properness of the President’s decision has been widely discussed in the media. No need to add to that here. Rather, this post attempts to assess the pragmatic realities going forward, especially as those realities affect smaller manufacturers.

Going Forward

Regarding Emissions Reduction:

>> I think that achieving President Obama’s commitment for the U.S. to reduce emissions by 25% by 2025 is going to happen, Paris or no Paris. The advent of “fracking”, advances in renewable energy technologies and improvements in energy utilization efficiency all have too much momentum. The economics of power generation are rapidly favoring replacing the old with the new.

As you can see from this graph labeled “Energy-related carbon dioxide emissions”, U.S. emissions peaked near 6 billion annual metric tons about 2006. A 25% reduction by would mean emissions near 4.5 billion tons by 2025. The graph projects emissions around 4.9 – 5.3 billion tons for 2025, considering eight different cases. However, these extrapolations specifically exclude technical advances not already in place (or required to be in place by regulation or legislation) at the end of 2016.

CO@ Emissions Projections

Global CO2 EmissionsNevertheless, even if the U.S. and everybody else achieve their emissions reductions commitments in full, the concentration of greenhouse gases in the global atmosphere will continue to increase, not decline. This occurs because increasing populations and increasing per-capita incomes in the developing world will generate additional emissions well in excess of emissions declines in the economically developed nations.

The graph labeled “Figure 9-1”, where “OECD” refers to economically developed countries, illustrates this.

Projected Global Emissions>> President Trump has reversed the EPA’s Clean Power Plan, meaning that some coal fired electric generation plants will stay on stream longer than they would have otherwise. However, “fracking” (cheap natural gas) and rapid advances in renewable energy are making coal fired plants increasingly less economically attractive here in the U.S. However, “fracking” and cheap natural gas are not generally available worldwide, so, in many places globally, coal will remain a low cost choice for years to come. The graph labeled “ES-8. World energy related carbon dioxide emissions by fuel” illustrates this. Coal is dying, and has been dying since around 1950. But coal isn’t dead just yet.

>> You may recall that, prior to the election last November, then-candidate Trump chastised Ford Motor Company about Ford’s plans to move small car production (and jobs) from the U.S. to Mexico. Ford reversed their decision. Then, early this year, Ford’s then-CEO Mark Fields asked President-elect Trump to reconsider the EPA’s Corporate Average Fuel Economy (“CAFE”) program that mandates a series of increases in miles per gallon fuel economy for automobiles. Ford’s problem is that small cars are expensive to produce in the U.S. – and Ford needs to produce and sell a lot of them in order to sell a lot of large (and profitable) SUVs (the “corporate average” part of “CAFE”). To date, there has been no change in the CAFE requirements, nor do I, speaking personally, expect any.

>> It was the Obama administration’s policy to actively support research and development for emissions reduction technology. The Trump administration is expected to be less aggressive in doing so. Government supported R&D is, in my view, best applied to fundamental research and I expect that to be where most government R&D dollars will spent in the next several years. So, most practical, year over year advances in technology will continue to come from the private sector. 

The U.S. contribution to the U.N. climate change relief fund.

>> Take another look at the graph labeled “Figure 9-1”. Total global emissions are equal to the sum of the two lines. For 2012, for example, the sum of the two lines is about 13 + 19 = 32 billion metric tons. In order to reduce the concentration of greenhouse gases in the atmosphere, the sum of the two lines has to decrease year after year, not increase. Even if the U.S could somehow eliminate its entire 5 billion tons of emissions, that would not, by itself, be sufficient to stop the sum of those two lines from increasing.

>> Quite obviously, any viable solution lies requires substantial mitigation of expected future increases in emissions everywhere in the world. That is the purpose of the fund. However, there seems to be very little public discussion of how the fund will actually work: for example: what types of projects will be funded, on what basis the money will be dispersed, and how transparency of the disposition of the money will be assured.

The U.S. withdraw from the Paris agreements have likely confounded expectations as to who pays and how much. It is not clear how the less economically developed nations are actually going to reduce emissions, rather than continue to increase them. Perhaps the international private sector will take the lead in doing so.

So What?

The point here for pragmatists is that, Paris pact or no Paris pact, efforts to reduce greenhouse gas emissions are going to continue, regardless of individual views on the reality of Climate Change. The Trump administration is expected to be considerably less aggressive than its predecessor in forcing emissions reductions. Still, there is substantial pressure from governments abroad, from the U.S. private sector and from other interested groups to continue to push for reductions.

As usual in business, dangers and opportunities – of which there will be many, in operations and in marketing — are two sides of the same coin. Operate your business.

Chuck & Joan in ParisThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.


* “Climate Change”, as that term is used in the Paris agreements and almost everywhere else, refers to a set of negative events (changes in the global climate) caused by increases in the mean temperature of the Earth’s surface (“Global Warming”). The Paris pacts are predicated on efforts to restrain temperature increase to two degrees Celsius (2o C) compared to temperatures before the beginning of the Industrial Revolution, about 250 years ago. Increases in atmospheric greenhouse gas concentration are regarded as causing Global Warming.

Graphs are from the 2016 International Energy Outlook (IEO 2016) and the 2017 Annual Energy Outlook. Both are published by the U.S. Department of Energy and are available free on line at www.eia.gov

 

Getting to Drawdown

Drawdown

Book CoverDrawdown, [1] a new book edited by Paul Hawken, presents about 80 proven action areas for reduction of global greenhouse gas emissions. The book and its action areas take a notably comprehensive view by including greenhouse gases other than carbon dioxide, and by not limiting carbon dioxide emissions to those related to energy production. Each of the action areas is well researched, with quantitative projections for future greenhouse gas emissions reductions. About 20 “coming attractions” – emerging technologies – are also presented, but, appropriately, are not considered in a quantitative sense.

Since Climate Change is a set of anticipated negative effects from Global Warming, which is attributed to increased concentrations of greenhouse gases in the Earth’s atmosphere, it follows that reducing future emissions of greenhouse gases can delay those negative effects. Further, there are natural processes that remove greenhouse gases from the atmosphere (notably, but not exclusively, photosynthesis). If annual global emissions of greenhouse gases can be reduced sufficiently, then atmospheric concentrations of those gases can reach a point where natural removal processes, perhaps augmented with new technologies, can begin to be reduced — drawn down — year over year.

The book does not present a plan for systematically implementing the several action areas on a global scale, never mind the book’s subtitle. Realistically, creating such a plan, with an objective of achieving drawdown, is certainly not a simple matter. Effectively executing that plan is likely much tougher.

Challenges

There are a number of serious and fundamental challenges that creating and effectively executing a globally sufficient plan that should be expected. Here are two of them:

>> U.S. and the World: Over the coming decades, the U.S., along with other economically developed nations, faces a vastly different set of demographics than do less developed nations. Developed nations can expect slow population growth rates, aging populations and rather static economies. Less developed nations face more rapid population growth, along with rapidly rising expectations for economic growth. [2] This chart projects greenhouse gas emissions over the next several decades: [3]

IEO 2016 - Carbon Dioxide

As you can see, greenhouse gas emissions are projected to roughly correlate with population growth and economic growth, such that the U.S. cannot directly control reduction in global emissions sufficiently to achieve drawdown. Even if the U.S. were able to eliminate all of its emissions, global emissions would continue to rise. Direct control over sufficient emissions reductions to achieve drawdown lies among the many developing nations, each with its own interests and priorities. There, the U.S. can only indirectly influence emissions to some degree or another.

This does not mean that American emissions don’t matter or should not be reduced. It does mean that the U.S. alone cannot achieve global drawdown.

>> Urgent vs Important: Dr. Covey [4] taught many of us that the urgent almost always gets priority over the important. At the most zoomed out level, Climate Change competes for active attention with other potential global threats, such as global war, financial system collapse, terrorism or epidemic. Zooming in, Climate Change competes with the panoply of routine business issues – supply chains, customers, production, technology, industry issues, ad nausium — for the active awareness of business people.

Drawdown provides a ready collection of proven techniques and a rational objective: achieving drawdown. An executable plan for achieving that objective within a few decades is still needed.

Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.


[1] Paul Hawken, editor, Drawdown The Most Comprehensive Plan Ever Proposed to Reverse Global Warming, Penguin Books (2017)

[2] For more on this, see: Carbon, America and the World, this blog, http://jerasustainabledevelopment.com/2017/04/01/carbon-america-and-the-world/

[3] This chart is from the 2016 International Energy Outlook, published by the U.S. Energy Information Agency. Available on-line at www.eia.gov . The  chart is restricted to carbon dioxide emissions, rather than the more comprehensive view of greenhouse gases that Downturn takes. However, it does make the point that the U.S., of itself, cannot control reaching a condition of global drawdown.

[4] Covey, Stephen, Seven Habits of Highly Effective People, Revised Edition, Free Press (2004)

Petroleum and Pragmatism – Part 2

Last week’s post, Part 1 of Petroleum and Pragmatism, offered a zoomed out view of petroleum consumption as it affects the U.S. and the world, today and for the next several years. This post, Part 2, zooms in on petroleum, greenhouse gases and, as a consequence, the continuing debate on climate change.

Petroleum and the Transportation Sector

Petroleum provided about 28% of the primary fuel consumed in the U.S. in 2013. The great majority (about 90%) of that was used in the transportation sector. Petroleum derived fuels, especially gasoline, diesel fuel and jet aircraft fuel, offer a combination of physical properties that are especially desirable for mobile applications.

AEO 2015 Fig 10The chart labeled “Figure 10” is from the Annual Energy Outlook – 2015, [1] published by the U.S. Government Department of Energy in April 2015. Figure 10 breaks out energy consumption by mode of transportation. As you can see, light-duty vehicles (cars and light trucks), heavy-duty vehicles (primarily heavy trucks) and aircraft, taken together, accounted for 88% of energy use in the transportation sector in 2013.

Please notice that projected percentages for 2040 indicate both a substantial reduction in energy consumption for light-duty vehicles and an increase in heavy-duty vehicle fuel consumption. Also notice that the total energy consumed by the transportation sector is almost unchanged between 2013 and 2040 (energy use equivalent to 13.8 million barrels of petroleum per day in 2013, declining only slightly to 13.5 million barrels per day in 2040).

Petroleum, Greenhouse Gases and Climate Change

Petroleum derived fuels are close to 100% hydrocarbons, so greenhouse gas emissions from petroleum derived fuels — mostly carbon dioxide (CO2) – are just about directly proportional to petroleum consumption. Greenhouse gases are regarded as the primary driver of the climate change and its negative effects, as projected for coming years. In order to abate the dangers associated with climate change, President Obama has proposed to reduce America’s total greenhouse gas emissions by 25% – 28% by 2028.

AEO 2015 Fig 37The chart labeled “Figure 37” indicates total greenhouse gas emissions by sector for 2005 and 2013, along with projections for 2025 and 2040. Clearly, the emissions from the Transportation sector will need to decline much more than Figure 37 indicates.

Here are some comments on the obvious discrepancy between the President’s proposal and the figures presented in the Annual Energy Outlook – 2015:

>> The projections presented in Figure 10 and Figure 37 reflect the Annual Energy Outlook’s Reference Case. The Reference Case extrapolates historical data in light of demographic projections, macroeconomic projections and regulations in place prior to publication. Anticipated technical breakthroughs and regulations not yet finalized are not considered in the Reference Case. As examples: (1) The Corporate Average Fuel Economy (CAFE) regulations for light-duty vehicles are included and timely compliance is assumed (roughly 5% decrease in fuel consumption per model year through model year 2025). (2) New heavy-duty vehicle fuel economy standards proposed for years following 2018 are not final, hence are not considered.

>> Most, if not all major light-duty vehicle manufacturers have included diesel engines in their CAFE standards compliance plans. Volkswagen’s recent emissions problem with diesel engines and France’s decision to de-emphasize diesel engines in light-duty vehicles cast doubts on the future market acceptance of diesel powered light-duty vehicles. [2]

>> Electric vehicles, hybrids and bio-fuel powered vehicles are the only practical and available alternatives to petroleum fueled light-duty vehicles that come to mind. Electric vehicles, like those offered by Nissan, BMW and Tesla, if manufactured and sold in sufficient numbers, would dramatically reduce greenhouse gas emissions. I personally don’t like hybrids – given an adequate recharging infrastructure, I don’t see any advantage compared to all electric vehicles. I’m also less than enthusiastic about bio-fuels for light-duty vehicles. Toyota has introduced a fuel-cell powered light-duty vehicle – I admire Toyota, but I have not seen much action toward the necessary refueling infrastructure.

>> For heavy-duty vehicles, natural gas is my first choice. Natural gas is significantly cleaner than diesel fuel, emits less greenhouse gas than diesel fuel, and is readily available from domestic sources. The necessary refueling infrastructure is increasing daily.

>> As everyone has noticed, the price of gasoline has dropped by almost half over the last year or so. The operating economics of vehicles using $2.10 per gallon gasoline are hard to match – or even approach — with any other practical and available technology.

The advent of “fracking”, the migration of some non-transportation uses to natural gas and the discovery of new and extensive petroleum sources financed through years of high petroleum prices are all conspiring to keep petroleum prices low for the reasonably foreseeable future.

At the same time, cheap gasoline can be expected to motivate buyers to choose larger, more fuel hungry vehicles. Cheap gasoline can be expected to encourage people to drive more. Additionally, cheap gasoline can be expected to promote demand for more vehicles.

All of this means more greenhouse gas emissions, not less.

For Smaller Manufacturers

Look for several years of cheap petroleum products. If you have made greenhouse gas emissions reduction commitments, take another look at how those reductions will be accomplished.


Chuck - Vancouver3Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about pursuing Sustainability … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[1] The Annual Energy Outlook – 2015 is available for free download at www.eia.gov

[2] For more on VW, France and diesel engines see The Diesel Dilemma, this blog, http://jerasustainabledevelopment.com/2015/10/10/the-diesel-dilemma/