Insights / The challenges of decarbonisation: How does a country go carbon neutral?

The challenges of decarbonisation: How does a country go carbon neutral?

15th September 2017

Thanks to the huge role that electricity plays in our day-to-day lives, we – our businesses and homes – have become dependent on it.

However, our dependence on electricity is problematic. To supply demand, power stations have traditionally relied on the combustion of carbon-heavy fuels like coal and oil.

These fuels are carbon-intense, and burning them has negative environmental consequences. Low- and zero-carbon energy sources such as wind, solar, hydropower and biomass do not have the same effects.

The move to renewable sources signalled the start of the process of decarbonisation – reducing the carbon-intensity of the electricity we use – which seems to be well underway.

The challenges of decarbonisation: How does a country go carbon neutral?

Indeed, a report published by PwC found that the UK decarbonised “at the fastest rate among G20 countries” in 2016.

The report found that the carbon intensity of the UK economy fell by 7.7% in 2016, almost three times the global average of 2.6%, largely driven by a rapid fall in coal consumption and improved energy efficiency.

Another report, published by JPMorgan, highlights two of the most significant progressions in renewable energy globally:

These are promising figures, but the report also underlines the problematic nature of decarbonisation and the challenges of the process to the wider economy.

It breaks down energy use by sector: residential, industrial, electrical generation, and transport. While renewable sources are playing a significant role in electricity generation and the decarbonisation of the energy sector, the other areas are not yet undergoing decarbonisation to the same extent.

Here, we take a look at the decarbonisation challenges facing each sector.

Decarbonising electricity generation

The decarbonisation of electricity is well underway, thanks to the rapid uptake of renewable energy technologies across the world, itself due to the sharp fall in costs.

This is largely an arena of positive developments, and the sector where decarbonisation is most advanced.

The reduction in use of carbon fuels and the exponential growth of renewable energy sources is helping several countries to reduce emissions and the carbon-intensity of their electricity.

There are a number of positive examples; Costa Rica has run for hundreds of consecutive days on renewable sources alone, while Icelandic electricity is 100% renewable. Sweden has also achieved a 52% share of renewable sources in the country’s energy mix.

For decarbonisation to work, the continued shift away from fossil fuels is essential. The use of biomass instead of coal, the growing popularity of wind and solar power, and the shift to cleaner fuels like natural gas – which emits, on average, half as much CO2 as coal – are all important going forwards.

Storage technology will also be important, allowing for the storage of huge amounts of energy over long periods of time.

The JPMorgan report estimates that storage technologies could help to reduce emissions massively, by as much as 60% in prime locations with ideal conditions (though this figure is dependent on variable weather conditions).

As such, solving the intermittency issue of renewable energy sources is essential to the further decarbonisation of the electricity sector.

However, electricity generation accounts for 30% of fossil fuel use, and a similar proportion of carbon emissions. As such, it isn’t the biggest obstacle to a zero-carbon future. Energy use across the industrial, transport, and residential and commercial sectors accounts for the greater share of emissions.


Decarbonising the transport network

Where the electricity network is succeeding, the transport network is struggling.

The global transport system is run primarily on carbon-based fuels (petroleum/diesel), and until electric vehicles are more widely used, the transport sector will continue to be problematic.

Flights and freight, trains and cars are all part of the same system, and represent a large proportion of carbon emissions.

The tide is beginning to turn, however; in some cities, petroleum fuels are being targeted in an attempt to tackle air pollution in urban areas.

Poor air quality in London and Paris has the seen the capital cities take drastic action, with the latter planning to ban diesel vehicles from 2040. Transport for London (TfL) figures for 2017 show that London is home to 71 full electric buses and more than 2500 electric hybrids – the largest fleet of low-carbon buses in any major city the world.

There has also been a committed drive to improve cycling infrastructure across the capital, and in November the iconic black taxi will be replaced by a new fleet of electric-hybrid cabs.

In the UK in particular, the increased use of renewable energy is reducing the carbon intensity of electricity. This means that electric vehicles in the country are now half as polluting as they were five years ago, according to the Electric Insights report published by Drax and Imperial College London.

The increase in the number of electric vehicles also offers the additional benefit of grid flexibility through added storage capacity; this is called an ancillary grid service. Electric vehicles could help to stabilise the grid by storing excess energy generated by renewables, discharging it at a late time.

The biggest challenge faced here is developing batteries that hold enough charge to compete with petroleum-fuelled vehicles, in terms of distance and mileage.

The second challenge is in developing fast-charge options which make “filling up” an electric vehicle as quick and easy as filling up a standard petrol or diesel motor.

In other capitals cities, there is also a determination to make transport cleaner. Amsterdam and Copenhagen are famous for their cycling infrastructure, but in Santiago, Chile and Mexico City, Mexico, new schemes have been introduced to promote reduces pollution from vehicles.

Ultimately, shifting the focus to cycling and electric vehicles (or hydrogen cars) in cities will help to reduce the carbon intensity of transport and reduce emissions in urban areas, too.


Decarbonising commercial and residential spaces

Commercial and residential properties are becoming more energy efficient, which is helping to reduce carbon intensity and energy consumption.

In commercial spaces – offices, retail stores, businesses and so on – there are different challenges to reduce energy intensity and improve environmental impact. In both instances, practical policies can help to reduce energy use.

Workplaces can also play an important role in the decarbonisation of travel by taking part in government-backed cycle schemes, encouraging car-pooling and offering flexible working arrangements.

For residences, this has mostly been led by efficiency improvements in electrical goods; the introduction of energy efficiency ratings on white goods has gone some way to improve consumer awareness of energy consumption.

There is also the experimentation with cleaner construction materials, and more energy efficient windows and doors have helped to reduce heating costs and thereby lowering energy intensity.

Regardless of the space, the next challenge in the residential and commercial sector could be the shift towards a decentralised grid. This would see homes and businesses begin to generate their own electricity through small-scale installations of photovoltaic solar and battery storage.

These are already available – in the US through companies like Tesla and in the UK from Ikea – but because of the early stage of the technology, costs are still high. As the technology develops, however, it will become more affordable and could become the standard in a society focussed on decarbonisation.

The large-scale roll out of decentralised storage would help to reduce carbon emissions, as electricity from renewable sources could be stored and used when needed in place of electricity generated by carbon fuel source like coal.


Decarbonising industrial processes

Decarbonising industry represents perhaps the greatest challenge, as it currently requires a lot of carbon-heavy fuels for production.

As it stands, electricity represents a small percentage of industrial energy consumption, but academics have argued that electricity should displace carbon-heavy fuels in industrial applications.

The industrial manufacture of chemicals, heavy metals, construction materials like bricks, cement, and glass, and the production of plastics are all energy- and carbon-intensive, according to the JP Morgan report. So how can the production process be made cleaner and greener?

A report published by Lund University suggests that, in principle, industrial processes can become almost zero-carbon with the mass introduction of Carbon Capture & Storage technologies. It is not a clear-cut journey, however, with significant challenges ahead when it comes to the electrification of the economy.

In the construction industry, too, attempts are being made to minimise environmental impact, particularly by experimenting with new techniques and technologies.

Carbon sequestration involves the capture of waste carbon dioxide (CO2) from power stations and other sources, before storing it.

CO2 has traditionally been captured and injected into oil wells to maximise extraction. It is fitting, then, that the gas can also be captured and stored, mitigating its negative environmental impact.

A number of companies across countries including the US and Australia are using carbon sequestration as part of their business model. One such company is using carbon dioxide collected from California’s largest power station to create limestone for the construction industry.

This is the early days of carbon sequestration, however, so while these practices are not currently widespread, they may become more popular (and more efficient) in the future.


Going forward

While the shift towards renewable energy sources is helping to decarbonise the global economy by reducing the carbon intensity of the energy, there are further challenges ahead for other sectors.

All of the above sectors are interconnected, and so a holistic approach is needed to ensure consistent reductions across the board. One of the key challenges is the development and affordability of storage technologies.

Following this could come the advanced development of electric vehicles, which will rely on improved batteries to make them competitive with petrol and diesel cars. When batteries are sufficiently developed, this will help further decarbonise the production of electricity generation by making decentralised generation and storage more common.

There are also lessons and inspiration to be taken from other countries. In Germany and Denmark, renewable energy sources and interconnectors to the electrical grids of neighbouring countries have helped to lower the share of carbon-intense energy sources.

Clearly there are challenges ahead, but the progressive use of cleaner energy sources such as biomass and the development of new technologies will eventually lead to the further decarbonisation of the economy.