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Begin New Search Topic Decarbonization Political Geography Global Focus

11. Does environmental policy uncertainty hinder investments towards a low-carbon economy?

Author:
Joëlle Noailly, Laura Nowzohour, and Matthias Van Den Heuvel
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
We use machine learning algorithms to construct a novel news-based index of US environmental and climate policy uncertainty (EnvPU) available on a monthly basis over the 1990-2019 period. We find that the EnvPU index spikes during the environmental spending disputes of the 1995-1996 government shutdown, in the early 2010s due the failure of the national cap-and-trade climate bill and during the Trump presidency. We examine how elevated levels of environmental policy uncertainty relate to investments in the low-carbon economy. In firm-level estimations, we find that a rise in the EnvPU index is associated with a reduced probability for cleantech startups to receive venture capital (VC) funding. In financial markets, a rise in our EnvPU index is associated with higher stock volatility for firms with above-average green revenue shares. At the macro level, shocks in our index lead to declines in the number of cleantech VC deals and higher volatility of the main benchmark clean energy exchange-traded fund. Overall, our results are consistent with the notion that policy uncertainty has adverse effects on investments for the low-carbon economy hindering progress to address the urgency of climate action.
Topic:
Environment, Finance, Economy, Investment, Institutions, and Decarbonization
Political Geography:
Global Focus

12. Navigating through hydrogen

Author:
Ben McWilliams and Georg Zachmann
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Hydrogen is seen as a means to decarbonise sectors with greenhouse gas emissions that are hard to reduce, as a medium for energy storage, and as a fallback in case halted fossil-fuel imports lead to energy shortages. Hydrogen is likely to play at least some role in the European Union’s achievement by 2050 of a net-zero greenhouse gas emissions target. However, production of hydrogen in the EU is currently emissions intensive. Hydrogen supply could be decarbonised if produced via electrolysis based on electricity from renewable sources, or produced from natural gas with carbon, capture, and storage. The theoretical production potential of low-carbon hydrogen is virtually unlimited and production volumes will thus depend only on demand and supply cost. Estimates of final hydrogen demand in 2050 range from levels similar to today’s in a low-demand scenario, to ten times today’s level in a high-demand scenario. Hydrogen is used as either a chemical feedstock or an energy source. A base level of 2050 demand can be derived from looking at sectors that already consume hydrogen and others that are likely to adopt hydrogen. The use of hydrogen in many sectors has been demonstrated. Whether use will increase depends on the complex interplay between competing energy supplies, public policy, technological and systems innovation, and consumer preferences. Policymakers must address the need to displace carbon-intensive hydrogen with low-carbon hydrogen, and incentivise the uptake of hydrogen as a means to decarbonise sectors with hard-to-reduce emissions. Certain key principles can be followed without regret: driving down supply costs of low-carbon hydrogen production; accelerating initial deployment with public support to test the economic viability and enable learning; and continued strengthening of climate policies such as the EU emissions trading system to stimulate the growth of hydrogen-based solutions in the areas for which hydrogen is most suitable.
Topic:
Climate Change, Energy Policy, European Union, Carbon Emissions, Decarbonization, and Hydrogen
Political Geography:
Europe and Global Focus

13. Can climate change be tackled without ditching economic growth?

Author:
Guntram Wolff, Simone Tagliapietra, and Klaas Lenaerts
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Higher levels of economic activity tend to go hand-in-hand with additional energy use and consumption of natural resources. As fossil fuels still account for 80 percent of the global energy mix, energy consumption remains closely related to greenhouse gas emissions and hence to climate forcing. This paper explores whether decarbonisation and economic growth are compatible or whether the world economy needs to grow less to be able to reduce greenhouse gas emissions fast enough to reach net zero in 2050. The literature provides profoundly different answers to this question, with scholars positioning along a spectrum that extends from the most optimist version of ‘green growth’ theories to sceptical ‘degrowth’ theories. While globally, CO2 emissions per unit of GDP are declining, the decoupling rate from 1995 to 2018 was only -1.8 percent annually. To achieve net zero by 2050, the rate would have to accelerate to -8.7 percent, assuming population and GDP growth projections as given, or by a factor of almost five. To keep GDP growth and population at their projections and thus reject the proposition of de-growth, decoupling would have to accelerate massively. Two avenues are crucial: reducing the energy intensity of production and/or the emissions intensity of energy. The huge fall in the price of renewable energy provides hope that decoupling can accelerate. Decoupling rates have accelerated in the last decade and decoupling is substantially faster in the European Union. In the EU, we estimate that decoupling only has to accelerate by a factor of 2.5. We do not think degrowth propositions advanced in the literature will be pursued and therefore focus on the main challenges that must be tackled to achieve decoupling. Unprecedented efforts are required to achieve green growth. But hoping for humanity to sacrifice growth appears unrealistic.
Topic:
Climate Change, Economic Growth, Fossil Fuels, Carbon Emissions, and Decarbonization
Political Geography:
Global Focus

14. Opportunities and Limits of CO2 Recycling in a Circular Carbon Economy: Techno-economics, Critical Infrastructure Needs, and Policy Priorities

Author:
Amar Bhardwaj, Colin McCormick, and Julio Friedmann
Publication Date:
05-2021
Content Type:
Special Report
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
Despite growing efforts to drastically cut carbon dioxide (CO2) emissions and address climate change, energy outlooks project that the world will continue to rely on certain products that are currently carbon-intensive to produce but have limited alternatives, such as aviation fuels and concrete. Recycling CO2 into valuable chemicals, fuels, and materials has emerged as an opportunity to reduce the emissions of these products. In this way, CO2 recycling is a potential cornerstone of a circular carbon economy that can support a net-zero future. However, CO2 recycling processes have largely remained costly and difficult to deploy, underscoring the need for supportive policies informed by analysis of the current state and future challenges of CO2 recycling. This report, part of the Carbon Management Research Initiative at Columbia University’s Center on Global Policy, examines 19 CO2 recycling pathways to understand the opportunities and the technical and economic limits of CO2 recycling products gaining market entry and reaching global scale. The pathways studied consume renewable (low-carbon) electricity and use chemical feedstocks derived from electrochemical pathways powered by renewable energy. Across these CO2 recycling pathways, the authors evaluated current globally representative production costs, sensitivities to cost drivers, carbon abatement potential, critical infrastructure and feedstock needs, and the effect of subsidies. Based on this analysis, the paper concludes with targeted policy recommendations to support CO2 recycling innovation and deployment.
Topic:
Economics, Energy Policy, Infrastructure, Carbon Emissions, and Decarbonization
Political Geography:
Global Focus

15. The Carbon-Neutral LNG Market: Creating a Framework for Real Emissions Reductions

Author:
Erin Blanton and Samer Mosis
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
As governments and companies consider options to decarbonize their energy systems, addressing greenhouse gas emissions from natural gas and liquified natural gas (LNG) will inevitably become a greater concern. Natural gas is viewed by some as potentially providing a bridge in a broad energy transition from dependence on fossil fuels to lower-emission sources. Even with advancements in renewable energy, many forecasts show natural gas will remain core to meeting global energy demand for some time, including as a backup fuel source for renewables.[1] But as the emissions profile of the natural gas value chain has become clearer, estimates of its footprint have increased, raising questions about natural gas’s transitory function. While gas will continue to have a prominent role in the energy mix,[2] without action to better account for, reduce, and offset natural gas and LNG emissions, the breadth and length of its use will increasingly come into question—including by countries with growing energy demand who see diminishing incentive to favor natural gas over high-emitting but fiscally cheap fuel sources, such as coal. Amid these considerations, discussions of value chain carbon intensity and greenhouse gas (GHG) accounting are becoming an important component of LNG trade, giving rise to the concept of “carbon-neutral LNG.” In the trade of carbon-neutral LNG, GHG emissions from supply and/or consumption are accounted for and offset by procuring and retiring carbon credits generated through GHG abatement projects, such as afforestation, farm/soil management, and methane collection.[3] Currently, carbon-neutral LNG makes up a slim portion of global LNG trade, with just 14 cargoes traded transparently since the first was sold in 2019, compared to over 5,000 cargoes of LNG being delivered globally in 2020 alone.[4] By examining the efficacy of the market at this early stage, as this commentary does, areas for improvement in the carbon-neutral LNG trade are highlighted. Procurement of carbon credits does not negate the emissions from natural gas and LNG, and accordingly, adoption of offsets should be paired with a broader and deeper reduction in the emissions intensity of these fossil fuels to ensure they remain conducive to meeting growing energy demand without needlessly jeopardizing global, national, and corporate efforts to reduce emissions. When considering this alongside the important role LNG and natural gas are likely to continue to play in meeting energy demand in key parts of the world during the transition period, it becomes clear that efforts must be made to scale GHG emissions mitigation throughout the value chain, such as through leakage reduction and employment of less carbon-intensive liquefaction technology, as well as to offset remaining emissions through the procurement and retirement of high-quality carbon credits. Serious questions remain about scaling the carbon-neutral LNG trade, including which emissions are accounted for, what methodology is employed in the emissions measurement and verification, and how the emissions are priced—either through a carbon credit or a carbon tax. If these questions are sufficiently addressed, natural gas and LNG may align better with global policy direction and emissions requirements. That is to say, GHG verification and mitigation will be critical to the sustainability of LNG in the decarbonizing global energy stack in the coming decade, with knock-on impacts on long-term LNG contract structure, trade flows, and market pricing. While this commentary does not prescribe policy to meet carbon neutrality or Paris Agreement goals specifically, it does examine an existing and growing market trade behavior that has the potential to assist countries dependent on natural gas in meeting their climate targets during this transitory period for the global energy system. Section 1 outlines the current state of the carbon-neutral LNG trade, while section 2 suggests a structure for LNG GHG accounting based on existing accounting methodologies. Section 3 discusses the different forms through which emissions mitigation can be integrated into the LNG trade, including a discussion on the risks of greenwashing. Section 4 highlights the implications of the growing carbon-neutral LNG market and provides recommendations to market participants and policy makers.
Topic:
Energy Policy, International Trade and Finance, Natural Resources, Carbon Emissions, and Decarbonization
Political Geography:
Global Focus

16. The Future of Carbon Offset Markets

Author:
Henry Lee and Abigail Mayer
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Corporations, organizations, and even governments are purchasing offsets to reduce their carbon footprint. This policy brief provides an overview of the offset process – who buys them, who produces them, and who certifies them; describes the emerging challenges facing this market; and makes recommendations for the future.
Topic:
Climate Change, Energy Policy, Carbon Emissions, and Decarbonization
Political Geography:
Global Focus

17. Net-Zero and Geospheric Return: Actions Today for 2030 and Beyond

Author:
Julio Friedmann, Alex Zapantis, Brad Page, Chris Consoli, Zhiyuan Fan, Ian Havercroft, Harry Liu, Emeka Richard Ochu, Nabeela Raji, Dominic Rassool, Hadia Sheerazi, and Alex Townsend
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
The case for rapid and profound decarbonization has never been more obvious or more urgent, and immediate action must match growing global ambition and need. An important new component of this discussion is the necessity of achieving net-zero global greenhouse gas emissions for any climate stabilization target. Until net-zero emissions are achieved, greenhouse gas will accumulate in the atmosphere and oceans, and concentrations will grow, even with deep and profound emissions reduction, mitigation, and adaptation measures. This places a severe constraint on human enterprise: any carbon removed from the earth must be returned to the earth.
Topic:
Climate Change, Environment, Green Technology, Carbon Emissions, and Decarbonization
Political Geography:
Global Focus

18. Carbon Pricing and the Elasticity of CO2 Emissions

Author:
Ryan Rafaty, Geoffroy Dolphin, and Felix Pretis
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
We study the impact of carbon pricing on CO2 emissions across five sectors for a panel of 39 countries over 1990-2016. Using newly constructed sector-level carbon price data, we implement a novel approach to estimate the changes in CO2 emissions associated with (i) the introduction of carbon pricing regardless of the price level; (ii) the implementation effect as a function of the price level; and (iii) post-implementation marginal changes in the CO2 price. We find that the introduction of carbon pricing has reduced growth in CO2 emissions by 1% to 2.5% on average relative to counterfactual emissions, with most abatement occurring in the electricity and heat sector. Exploiting variation in carbon pricing to explain heterogeneity in treatment effects, we find an imprecisely estimated semi-elasticity of a 0.05% reduction in emissions growth per average $1/metric ton (hereafter abbreviated as: ton) of CO2. After the carbon price has been implemented, each marginal price increase of $1/tCO2 has temporarily lowered the growth rate of CO2 emissions by around 0.01%. These are disappointingly small effects. Simulating potential future emissions reductions in response to carbon price paths, we conclude that – in the absence of complementary non-pricing policy interventions – carbon pricing alone, even if implemented globally, is unlikely to be sufficient to achieve emission reductions consistent with the Paris climate agreement.
Topic:
Climate Change, Carbon Tax, Carbon Emissions, and Decarbonization
Political Geography:
Global Focus

19. Maritime Challenges: Decarbonization and Geopolitical Tensions

Author:
Clarissa Lins and Guilherme Ferreira
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Brazilian Center for International Relations (CEBRI)
Abstract:
The maritime sector is key to the international economy and trade, accounting for almost ¾ of total freight activity. Shipping is also the most energy-efficient way to transport cargo. “In the coming years, structural changes are expected in the global economy and maritime scenario”, pointed out the speakers during the event “Maritime challenges: decarbonization and geopolitical tensions” held in partnership between CEBRI and the Norwegian Consulate General in Rio de Janeiro.
Topic:
Geopolitics, Economy, Maritime, Trade, Shipping, and Decarbonization
Political Geography:
Brazil and Global Focus