Addressing the drivers of emissions growth and making money.
With prospects for real action coming out of Rio+20 looking dim, it’s important to be clear on why emissions as growing. This blog post, the fifth of an eleven-part series on CSRwire that summarizes key lessons from the new book Cold Cash, Cool Climate: Science-based Advice for Ecological Entrepreneurs, explains.
The three biggest contributors to warming
Another way to think about the scope of the climate challenge is to examine the underlying drivers of emissions. Figure 1 (which is Figure 2-15 from Cold Cash, Cool Climate) shows the contributions of different factors to warming by 2100 in the MIT no-policy case.
The three biggest contributors to warming in the 21st century are expected to be fossil carbon (from burning coal, oil, and natural gas), methane (from pipeline leaks, anaerobic decomposition, and agriculture), and nitrous oxide (mainly from agriculture).
Figure 1: Contribution of warming effects from different sources, 2000 to 2100, MIT no-policy case
For carbon dioxide, the main terms are land-use changes, cement production, and combustion of fossil fuels. For the first two (as well as for many of the non-CO2 warming agents), economic activity and population growth directly drive those emissions, but the way we choose to manage those drivers also plays a role.
For example, cement can be produced in ways that significantly reduce CO2 emissions, and the productivity of agriculture can be improved in many ways, making it less likely that additional forested land would need to be cleared for these purposes. Social and policy changes can also affect emissions growth, for example, by reducing population growth, changing the types of foods we eat, or changing the composition of GDP towards less carbon intensive development (some examples include shifting towards more service and information-based economies or using zoning policies to affect land-use patterns).
The Kaya Identity
It is common to think about energy-related carbon emissions (which are by far the largest source of carbon emissions) as the product of 4 terms: Population, wealth, energy intensity, and carbon intensity. I show these terms in the following equation:
• Carbon emissions = total energy related carbon emissions (in billions of metric tons of carbon)
• Population = the number of people (in millions);
• GDP per person = the average wealth of each person, expressed as Gross Domestic Product (in inflation adjusted dollars per person);
• Energy per dollar of GDP = the amount of total primary energy needed to generate one unit of wealth (in Exajoules or EJ [1018 joules] per million dollars); and
• Carbon emitted per unit of energy = the carbon intensity of primary energy supply (in billions of metric tons of carbon per EJ of primary energy).
This equation is known as the Kaya identity. There are more complicated forms of it and there are complexities in applying it, but for our purposes here it’s good enough. It shows that changes in population, wealth, energy intensity of economic activity, and carbon intensity of energy supply all influence total emissions.
You don’t need to know much about the details to put it to use. For example, if you hold everything else constant but double wealth per person over some time period, you’d expect energy-related carbon emissions to also double. If you double wealth per person but halve energy use per GDP (by capturing more energy efficiency) then you’ll keep carbon emissions constant.
We can use this formula to show the most important expected contributors to fossil carbon emissions in the 21st century. Figure 2 shows the results, and they may surprise you. I’ve plotted the ratio of the values for each component in the Kaya identity for 2100 to those in 2000 from the MIT no-policy case.
Future Scenarios for Carbon Emissions
Population increases by 60 percent, and GDP per person by almost a factor of six, leading total GDP to increase by a factor of 9.6 (about half as much as it did between 1900 and 2000). Primary energy per unit of GDP falls to about 40 percent of its base year value, but total primary energy consumption still increases by almost a factor of four (because population and GDP per person both increase). Carbon intensity of energy production doesn’t change much in the MIT no-policy scenario, so it doesn’t have much effect on the results. These factors reflect a world in which the richest countries continue to prosper, while the poorest make great strides toward modernity, with average wealth per person in 2100 comparable in inflation-adjusted terms to that in many developed countries today.
These trends reflect typical expectations for growth in these parameters, with population peaking at almost 10 billion people, and primary energy use growing at about 1.3 percent/year. Inflation-adjusted (real) GDP grows at 2.3 percent per year, implying a change in the energy/GDP ratio of about -1 percent/year, which tracks historical trends from 1900 to 2000.
Figure 2: Ratio of year 2100 to year 2000 values for key drivers of emissions in the MIT no-policy case.
Opportunities For Entrepreneurial Innovation
There are myriad opportunities for entrepreneurial innovation affecting each of the four terms of the Kaya identity, so don’t limit your thinking to just improvements in energy efficiency or the carbon intensity of energy supply.
New ventures can reduce population growth (by bringing vaccines, clean water, family planning, or education to those without them), change the nature of GDP growth (by affecting settlement patterns, eating habits, and other consumer choices), or affect several drivers all at once. To achieve the emissions path represented by the Safer Climate case (which will likely keep the earth from warming more than 2 Celsius degrees from preindustrial times), we’ll need to reduce population growth and change the way we generate GDP, in addition to increasing rates of improvement in energy and carbon intensity several fold over historical trends.
Next installment: Harnessing the power of "working forward toward a goal".