My home city of Paris is holding the Cop21 summit until tonight, where most nations are gathered to discuss ways to contain global warming to a rise of 2 degrees. There is even a coalition to contain warming to 1.5 degrees, with the USA as one strong proponent. Several things caught my eye around the Cop21 summit:
- Global Co2 emissions are falling for the first time ever (?) in economic expansion: I think they have peaked. Sadly, the stock of greenhouse gases will continue to increase
- Developing countries, led by China, are no longer adhering to the mantra of pollute now, clean later. This means they are going to pollute less than expected which in turns means that optimistic scenarios are probable
- Consensus is building for a carbon tax among industrialists which means that for the first time, politicians have an open road to finally act.
But first, let me tell you one key thing: I believe in climate change and its consequences.
The most under reported event of 2015 is the fact that global greenhouse gases emissions look to have peaked this year, despite a global economic expansion of 3.1% and a global population growth of 1.1%. This follows a stagnation in 2014 despite a 3.4% global GDP growth. This breaks a cycle of a 2% annual rise in emissions since 1990 (and 2.4% annually since 2000).
The main culprit of the rise in emissions was China (emissions up 7.8% annually since 2000 and 6.1% annually since 1990). It is responsible for ⅔ of the rise in emissions globally since 2000. There is hope though. In China, emissions rises were mainly due to the infernal trio of power generation, industry and transportation. Power generation depends on coal for 80% of its input.
Good news, annual coal consumption growth is now stagnating: poor power plants are shut down, the remaining ones being more efficient. Industrial use of fossil fuels, such as metallurgical coal should now decline as Chinese use of these materials has peaked. For instance, Chinese steel demand peaked in 2013. It is falling 3.5% this year and will fall 2% next year according to the World Steel Association.
Finally, while the Chinese auto market boomed (2015 sales doubled compared to 2009’s for instance, at more than 20m units a year), emission standards are finally becoming more stringent. In 2007, China introduced its China-III emission standards which were as demanding as the Euro 3 standards introduced in 2000 in the EU, a 7 year delay. The new China-5 standards (I hope you noted how they went from a Roman to an Arabic digit), to be introduced nationally in 2018 but already compulsory since February 2013 in Beijing and April 2014 in Shanghai, match the EU Euro 6 standard introduced in September 2014, reducing the gap to a bit more than 3 years but ahead for the first time in major Chinese cities.
Developing countries are leading climate change fight
Another very important factor in the containment of emissions in the fact that major developing countries now put climate as the top of their agenda. China is in this group, the world’s worst emitter with 30% of the global total. In China, air quality has become so poor that it threatens the very dominance of the Communist party. China has the most ambitious programmes in favour of a greener economy, starting with cleaner power generation. By 2020, the country ambitions to have 300 GW of installed capacity in hydropower (damn), 200 GW in windpower (phew) and 100 GW in solar (blush). 500GW of capacity or roughly the installed capacity (all fuels combined) of the Benelux, France, Germany and the UK or a bit less than half the US.
But China is not alone. Many emerging countries have recently cut energy subsidies: Cameroon, Ivory Coast, Egypt, Haiti, India, Indonesia, and Malaysia have slashed their support to fossil fuels in recent months. This is needed given the $500+ bn spent yearly supporting fossil fuels. Even Saudi Arabia, probably the worst offender relating to energy subsidies is considering cutting them. This would reduce its current $100bn subsidy bill but mean that local motorists would no longer pay $0.05 per liter of gasoline.
The Carbon Tax
Of course, whatever politicians may want to achieve can often be defeated by lobbyists. In this case though, corporations are starting to reverse their thinking. Check these 59 multinationals signing a call for a carbon tax . Polluting industries such as Global Aviation or the Finnish Industries (emitting lots of Co2 via their paper and steel mills) are participating.
Let’s not kid ourselves: a carbon tax is another way to reduce competition from shakier rivals. However, the joint action means that politicians will not hide inaction for long.
There is good hope that pessimistic projections on global warming can be defeated. I would even expect that a far-reaching agreement be signed tonight to conclude the summit since all major economies are aligned. To finish, another data point making me optimistic: the energy intensity per unit of GDP (see below). The world keeps being a more efficient user of resources. Developing economies use much more resources to create one unit of growth, making environmentalists fear for the future. For instance, India needs 4x more energy to create one unit of GDP than Europe. However, if intensity falls back quickly, then the energy use of these countries may rise very slowly and could be compensated by developed countries and green technologies.
Well done to the participants. I thought there were two people not looking but having received several “3s”, I had to look again and found a third person indeed. A chocolate box is going to Switzerland (you have to appreciate the irony) this week-end.