The week in energy: climate shock

The difference between 1.5C and 2C of global warming may not sound that much, but according to the scientists working on the reports of the Intergovernmental Panel on Climate Change, it matters a lot. A "special report" from the IPCC, published on Monday, showed some of the reasons why. At 1.5 ° C warming, starting before the industrial revolution, the Arctic could in all likelihood once a century be free of sea ice. With 2C warming this would be expected at least once every decade. At 1.5 ° C of the warming, the coral reefs are expected to drop by another 70-90%, but at 2 ° C they are expected to drop by more than 99%. Climate policy has taken this difference into account: under the Paris 2015 agreement, the governments of the world have not only committed to keep the global average temperature rise well below 2 ° C, but also to "make efforts "to limit it to 1.5 ° C.

The IPCC report this week gave an idea of ​​how colossal these efforts should be. Chapter 2 is devoted to "mitigation pathways compatible with 1.5C"; in other words, possible futures in which the greenhouse effect has a good chance of staying within that limit. All of these scenarios contain what the summary of the report for policy makers' fast and far-reaching transitions in energy & # 39; and refers to infrastructure, land and industrial systems. The details vary, but the 90 scenarios for 1.5C that are assessed in the report all provide for a sharp fall in the consumption of fossil fuels and a rapid growth of renewable energy. In the median scenario, fossil fuels fall from 84 percent of the global energy supply in 2020 to just 36 percent in 2050. Renewable energy sources rise accordingly in the median scenario of 15 percent of the global energy supply to 61 percent in the Netherlands. 2020-50. Nuclear power also plays a growing role in all these possible futures, rising from 2 percent of global energy to 4 percent in the median scenario, although in extreme cases an outlier projects a more than tenfold increase in nuclear generation, to about 14 percent of the total energy supply in the world. As the IPCC says, these shifts are not necessarily unprecedented in terms of the pace of change – industries have changed rapidly in the past – but they are second to none in terms of the scale of the rotation that would be needed, with so many having to be changed at the same time .

Even that underestimates the level of difficulty of the challenge, because the report notes that all scenarios that limit warming to 1.5 C project a significant use of carbon dioxide removal techniques. There are many, ranging from reforestation to the capture of carbon dioxide from the air, but the IPCC warns that the large-scale deployment of it is "subject to multiple feasibility and sustainability problems". The current trajectory of the world, with greenhouse gas emissions after a pause in 2015-2016, puts us on the right track to pass even the higher goals of Paris, so that by the end of the century an increase of 3C on the world temperature is achieved. .

This graph from the summary of the report for policy makers gives an idea of ​​how many changes are needed to maintain that limit of 1.5C. After rising for centuries, the net carbon dioxide emissions would have to drop to zero by 2055 to give a 50 percent chance of staying within 1.5C, or a 66 percent chance in 2040.

If you want to know more about the report and its implications, there are reviews from the World Resource Institute, Carbon Brief, the Center for Climate and Energy Solutions. And if you want less, The Onion has covered you.

It was a fitting coincidence that one of the two winners of the Nobel Prize for Economics from Sveriges Riksbank, awarded by the Royal Swedish Academy of Sciences on Monday, was William Nordhaus of Yale University, whose work was very influential at the IPCC. He made his name on the economy of environment and energy, and is worth reading about many topics – for example, he is excellent in oil markets – but the specific work that earned him the price was his development of integrated assessment models, which describe how the global economy and the climate interact.

His book The Climate Casino, This week cheap on Amazon, is a very good introduction to the basis of the economy of climate change, although despite the name is not primarily focused on the risks & # 39; s and uncertainties. For an approach that emphasizes insurance against catastrophic climate risk, try Climate shock by Gernot Wagner and Martin Weitzman.

Paul Romer, who shared the prize with Mr Nordhaus, won it for his work on technology and long-term economic growth, but also gave his view on climate change and argued that "once we start producing [fewer] We will be surprised at carbon emissions that it was not as difficult as expected. "

The IPCC warning was quickly followed by Hurricane Michael, who landed in Florida, with sustained wind speeds of 155 miles per hour and minimal pressure recorded at 919 millibars, making it the third most intense storm to cover the continental Hit US since the filming started in 1851. This week's IPCC report noted that scientists had little confidence in what effect the greenhouse effect had had on the number of tropical cyclones in the last forty years. However, studies have suggested that it is more than likely that 3-4C of global warming would mean fewer tropical cyclones, but more highly intense storms.

Closing around 700,000 barrels per day of oil production in the Gulf of Mexico as a precaution against the storm pushed oil prices momentarily higher on Tuesday, but the trend during the week has gone down, because the jitters of the stock market worry about the global growth. . Opec has lowered its forecasts for the growth of demand for this year and next year in its latest Monthly Oil Market Report. The International Energy Agency did the same in its monthly report, but suggested that the pressure on raw materials could "be with us for some time and probably be accompanied by higher prices".

Fatih Birol, executive director of the IEA, presented that prospect in his speech to the Oil & Money conference in London earlier in the week, suggesting that "expensive energy is back". The other noteworthy speech at the event was given by Bob Dudley, chief executive of BP, who used his keynote address as "petroleum executive of the year" to launch a protest against the requests for divestment of companies using fossil fuels. . for energy security.

On Friday, Brent held crude oil at about $ 80 a barrel, supported by the rebound in equity markets. An important uncertainty for the market is precisely how poor Iranian oil exports have been hurt by the restoration of US sanctions for its nuclear program. Elizabeth Rosenberg, who used to work on sanctions with the American Treasury, argued in the journal Foreign Affairs that the EU would not be able to circumvent the revived series of restrictions. However, Iran is looking for creative routes to ensure that its crude oil can still find customers. In Forbes, Ellen Wald quoted information from to state that Iran "exported much more oil to many more destinations than we have been able to believe".

The indignation about the disappearance of the journalist Jamal Khashoggi led some executives to distance themselves from business enterprises in Saudi Arabia. Ernest Moniz, the former US secretary of energy, said he ceased his role in the governance of the planned "new generation" future city of Neom, and some speakers and sponsors decided to withdraw from the Future Investment Initiative later this month. in Riyadh. The Financial Times said along with other media organizations that it would not cooperate with the FII conference while the disappearance of Mr. Khashoggi remained unexplained.

other visions

Nick Butler – Cyber ​​attack is the biggest risk for energy

Anjana Ahuja – Warnings for climate disasters were greeted with global silence

Clyde Russell – War against coal is warming up, but China is still the key

Liam Denning – A $ 2tn Saudi Aramco IPO is becoming less and less realistic

Brandon Arnold – Energy company editors: avoiding mistakes from the past

Michael Shellenberger – Anti-nuclear bias of UN and IPCC is rooted in fears from the Cold War of atomic and population bombs

Quote of the week

"It seems that expensive energy is back and back at the wrong time for the global economy … Global economic growth is losing momentum, there are large currency issues in emerging countries and trade tensions between big players."

Fatih Birol, executive director of the International Energy Agency, explains his warning that oil prices may enter the "red zone".

Graph of the week

This is a William Nordhaus classic, from his 1998 paper, Do Real-Output and Real-Wage Measures Reality Reality: The History of Lighting Suggest Not. Technological progress has brought astonishing changes in the availability of artificial light, from the sesame oil lamps used in Babylon in 2000 BC, to the first gas lamps used in the 1790s, to the LEDs we use today. One way to think about that progress is as a dizzying drop in the cost of light, measured in the number of hours you would have to work to buy one lumen. This graph shows how strong that fall has been since the industrial revolution. In the Middle Ages, an average person might have had to work 10 hours to afford a thousand hours of light. In 2000, that was about a third of a second.