3E Intelligence

The world needs a tenfold increase of carbon productivity between now and 2050 says a new climate change study by McKinsey’s Global Institute. This is comparable to the historic increase of labour productivity since the beginning of the industrial revolution, only it needs to be done over 40 years instead of 150. That said the interesting report “The Carbon Productivity Challenge” starts from the assumption that keeping below the 500 ppmv CO2 equivalent level is enough to prevent significant risks to our climate (for another view, see www.350.org ). So the challenge is probably even more dramatic.

One of the most fascinating finds of the study is that the world sustainable level of per-capita emissions lies at 2.2 tonnes CO2e per year (or 6 kg of CO2e per day). Currently per-capita emissions in the EU-27 are at 9.6 tonnes (US 21.5 tonnes). This daily “emission budget” (which we need to reach if we want to stick to “safe” levels according to McKinsey) would mean we would have to choose between the following alternatives: doing a 20-40 km car ride, 10-20 hours air conditioning, buying two new T-shirts (not including the drive to the shop) or eating 2 meals a day. Challenging enough for you?

Another report presented this week and written by McKinsey for German industry giant Siemens highlights the leadership role of cities for reducing greenhouse gases. The study “Sustainable Urban Infrastructure” focuses on London and concludes that the city can reduce its greenhouse gas emissions by 44% in 2025 with existing technology solutions which mostly pay for themselves.

I am a bit surprised today to see WWF taking the side of globalisation champion Peter Mandelson, as the European Commission decided to retain its duties on energy-efficient light bulbs imported from China for one more year. The Commission decided to give in to its Vice-President, Günther Verheugen, who had been defending the anti-dumping duties to protect German business interests (Osram). Peter Mandelson and WWF wanted to abolish the duties. See the Commission’s press release.

WWF’s press release reads as follows (extract only):

“WWF, the global conservation organisation, considers this proposal disappointing, unfair and seriously inconsistent with the ambitious EU targets to improve energy efficiency in Europe and to curb climate change.

“This is narrowly protectionist and sends a regressive message to developing country producers that they will be excluded from markets for cleaner products created by the higher environmental standards expected by European consumers”, says Eivind Hoff, WWF Trade and Investment Advisor. “This case shows a severe contradiction in EU policies: on the one hand, Europe has committed to an ambitious energy efficiency objective and on the other hand it continues to impose taxes on imports of green products such as the energy-efficient light bulbs from China”.

With a rapid switch to more efficient lamps, 23 million tonnes of CO2 could be saved per year, equivalent to 0.5% of EU greenhouse gas emissions.”

I certainly do not agree with the short-term nationalistic motivation of Verheugen in this dossier but there are some arguments based on sustainability criteria which WWF seems to be (partially) overlooking.

First, what are the environmental costs (not only the explicit ones, but also the hidden costs) of importing these light bulbs from China? The Chinese light bulbs are only so much cheaper because the transport costs for this kind of trade are way too low. WWF seems to have foreseen this question in its press release as they write: “Production and transport account for less than one per cent of the total global warming impact through the life cycle of a CFL-i used in Europe, regardless of whether it is produced in China or in Europe“. Where does WWF get this information from? I hope not from the Osram lobbying papers.

Secondly, as WWF admits itself, Chinese CFL-i lamps have a shorter life span and carry more mercury than European-made ones. I agree with the green organisation that this should be solved by using more stringent minimul requirements, but as these do not yet exist, what about disencouraging their coming on our markets for now?

Last but not least, China remains unwilling to start reducing its carbon emissions pointing to the US’ bad example and the “historical responsibility” of the West. Some greens have rightly so defended trade-related sanctions for big emitters who are unwilling to do their bit to protect our climate. Why should China be left off the hook?

The light bulb debate seems to have become one of those political symbol dossiers which politicians are able to sell to the public as proof of their good intentions to “tackle the problem” without having to understand all the complexities of the issue (a bit like the “roaming dossier”  in telecommunications policy should prove that the EU is good for consumers).

The publication of a new US report on global oil and gas supplies yesterday confirms that the world economy is on the verge of a new “oil shock”. Coming ten days after the IEA’s gloomy prediction of increasing oil supply tightness by 2012, the National Petroleum Council’s report “Facing the hard truths about energy” admits that serious energy efficiency policies and a global framework for managing greenhouse gas emissions will be needed to deal with the growing oil demand/supply gap.

The report is all the more remarkable because its authors are some of the most active oil industry “cheerleaders” such as ExxonMobil’s former chairman Lee Raymond and energy expert Dan Yergin. Both of them have in the past tried to ridicule all “Cassandra callings” on the situation of the global oil and gas market.

With oil prices at record levels again and Goldman Sachs predicting a crude oil price of 95$ by the end of the year, it seems clear that it will not take long anymore before the “last oil shock” (David Strahan) will get as high on the political agenda as climate change is now.

Further reading:

• Financial Times: High oil prices threaten to linger
• New York Times: Oil Industry Offers Sobering Outlook on Supply
• The Oil Drum and the Energy Bulletin have very critical reviews of the NPC report

German government plans for a 40% reduction of greenhouse gas emissions and a 3% yearly improvement of energy efficiency will lead to the “de-industrialisation” of the country, warns the German Federation of Industries BDI. The warning came a few days before Chancellor Merkel’s third energy summit between government and industry representatives.

The summit is supposed to lay down the targets and direction of Germany’s energy policy until 2020. Industry’s main criticism is that Mrs Merkel’s government does not have a real concept and should re-assess its nuclear power policy.

More on this in German Handelsblatt.

• Former US President Bill Clinton announced the creation of a 5 billion $ programme for making existing building in 15 major cities more energy-efficient. Great, but why is it that all these Presidents and Prime Minister always wake up AFTER they have been in power? I wonder what “green cause” Tony Blair will embrace. More on Clinton’s Energy Efficiency Building Retrofit Program in the New York Times and the Clinton Foundation web site
• Europe might lead the world in climate targets but certainly not in private investments for clean energy. Venture capital investment in the US stands at 2.1 billion $ in America and only 499 million $ in Europe, writes Planet Ark.
• Fascinating but gloomy reading in the Oil Drum. Modelling expert professor François Cellier explores the relationship between population growth, resource depletion and world economics and predicts that we are heading for global collapse. “In order to avoid the collapse, we need to get out of the exponential growth pattern as fast as we can. We ought to behave as if fossil fuels had already become essentially unavailable, using this precious commodity only for purposes where they are absolutely essential and to help us create a sustainable energy infrastructure for the future. Such an approach will immediately make us poorer. It will be uncomfortable; but remember, this will happen sooner or later anyway, whether we like it or not, and the longer we continue in our current exponential growth pattern, the more painful the subsequent adjustment will be.”

• Better assessment of the environmental impacts of wind farms is needed, according to a new US study undertaken by the National Research Council for the American Congress. Wind energy can reduce greenhouse gas emissions but strong growth of wind parks could become a danger for some bat and bird species. The American Wind Energy Association reacted to the report saying there is a need to study the impact of all energy sources on wildlife. More on Reuters
• The US Senate is to vote later this month on a joint proposal by senator Pete Domenici (Republican) and Jeff Bingaman (Democrats) intended to expand the use of alternative fuels, capture carbon to reduce greenhouse gas emissions and use energy more efficiently. Both senators received broad partisan support for their “energy savings bill” in the Senate’s Energy and Natural Resources Committee. The EU would be well advised to follow all the energy and climate change activities in the American Congress if it wants to retain its world leadership position on these issues.
• YouTube has 7 video clips on the press conference of the IPCC Working Group III report from last week. The summary of policy makers is available here.

With a new Green Paper, the European Commission has started a debate on the use of market-based instruments such as eco-taxes to reach its climate change and energy security targets. One of the objectives is to convince EU member states to shift taxation burdens from labour unto the environment and energy. But as taxation decisions have to be taken by unanimity, it is questionable whether this Green Paper will ultimately lead to any real EU-wide action.

Are all actions to mitigate climate change also useful to secure a country’s energy supply? Or could energy supply policies lead to more greenhouse gas emissions? There is a political reluctance to discuss these issues as the myth is created that climate change policies will automatically also be good for energy security and vice-versa. A new report by the Paris-based International Energy Agency takes a critical look at the interactions between both new priority policies.

Improving the energy-efficiency of buildings is one of the most-effective ways of tackling global warming and secure energy supply. The UN’s Environment Programme has an impressive new report with concrete policy recommendations.

Commission President Barroso clearly has a good doctor who helped him shake off his climate change fever as quickly as you and I can say “European emissions trading scheme”.

In an article in the British Telegraph yesterday, Barroso is said to have taken the side of all these innocent citizens who might become victim to feverish climate preachers such as Mr. Gore or rising UK stars Miliband and Cameron. According to the Telegraph, the Commission President opposes ideas to tax air travel and any other initiatives (such as studying the possibility of personal carbon rationing) as this would undermine personal freedom and run the risk of “turning people against the cause”. And what about these poor industries then, Mr President, who now have to carry the entire burden in the fight against climate change? Do they not deserve some of your liberal compassion?

Truth is: our dear Commission President does still not really understand the urgency of the challenge and the need for behavioral changes at ALL levels of society.

One consolation: he is not the only one in the Commission or the only politician whose climate change fever seems to be more linked to the media attention for the topic than to a genuine understanding of the destructive effects of global warming on future economic prosperity.

Moreover, his own commission colleagues, although seemingly committed to fight climate change, are not ashamed (and probably not even aware) of endorsing new EU measures which run counter to the so-called ambitious climate change objectives Brussels has triumphantly announced a few weeks ago. One example: this week’s “Open Skies” agreement between the EU and the US, which will lead to more air flight and has no clauses whatsoever to compensate for the increased greenhouse gas emissions as a result thereof.

“Mijnheer de President, wel te rusten, slaap maar lekker in je mooie Witte Huis” (famous protest song in the 60s by Dutch Boudewijn de Groot) [Good night Mr. president and sleep well in your nice White House, or in the Berlaymont, in this case )

In war, countries always seem to find a leader who mixes vision with courage to mobilise populations to overcome even the worst disasters. So where is the next-generation leader able to take global leadership on the way to the new low-carbon economy?

It is surely not any one of the current European heads of state or government who are gathered in Brussels these days. Sorry Mr Blair, Monsieur Chirac or Frau Merkel but when the history books about the energy descent will be written, your names will be long forgotten.

So will the real leader stand up? Currently I see only three candidates, although all three might also fail if they can not break the mold of traditional 20th century politics:

1. German environment minister Sigmar Gabriel, who wrote a fascinating and inspired “memorandum for a new deal for the economy, environment and employment”;
2. British rising star and secretary of state for environment David Miliband, whose recent lecture at Cambridge University urged the EU to become the “Environmental Union” ; or
3. David Cameron, the Conservative leader who “greened” in 6 months the whole political and media landscape in the UK.

All bets are open! Main prize: a footnote in the same post-fossil fuel history books.

Just one month after the European Commission presented its lofty ambitions for a new EU strategy to combat climate change and secure energy supply, member states are effectively trying to bury the dream of a common European energy policy.

In preparations for the Energy Council meeting of ministers on 15 February it has become clear that protecting domestic power interests still weighs more than any European ideals for a common energy approach. Under the excuse of “flexibility”, most member states claim the right to define their own “energy mix” (how much oil, gas, coal, nuclear or renewables do we use?) and therefore want to reject any “binding” targets for the use of renewable energy sources (20% by 2020 was the Commission’s proposal).

Please stay in your beds for a “long Valentine” was the plea of WWF Europe to the ministers and “make love, not CO2″ . The EU: “Lucy in the Sky with Diamonds?”