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Decision Making COP 26 decisions on the carbon market and their implications The developing world post-COP 26 Is divestment from Oil & Gas Companies the best way to reduce their emissions Chicken or the Egg Emerging Technologies The importance of clean firm power to accelerate decarbonization amid the energy supply crisis The Case for Decentralised Bioenergy Systems post-COP26 The Energy Consumption of Blockchain Technology “Decarbonization Of Energy Systems With Alternative Energy Storage Technologies” “Biomethane & Agriculture: what we can learn from Western Europe's errors.”





Our planet: A new orbit

Edition 11 | Winter 2021



News in Brief


Global leaders met at the U.N. climate change conference in Glasgow—the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change. New initiatives were announced such as the Global Methane Pledge, signed by 100 countries committing to cut their collective methane emissions by 30% by 2030. Countries also committed to ending deforestation by 2030, backed by $17 billion in investments.

Global gas prices struggle to recover from Covid-19, as the inability to meet a sudden increase in demand has caused wholesale prices to reach record highs. In response to shortages, China ordered coal mines to expand their production levels to produce 220 million tonnes a year of extra coal, a 6% increase from 2020. China has also turned to Russia and Indonesia to import 230% higher amounts of coal than a year ago. China is under fire for approving new coal power stations as other countries try to curb greenhouse gases.

UK gas market prices reached an all-time high of £4.50 per therm, about nine times higher than December of 2020. Household bills reached a record high in October after the price cap set by Ofgem reached an average of £1,277 a year for a dual fuel bill. The price cap is expected to rise by 50% in April, and climb above the £2,000 mark by the end of 2022. The bill hike could plunge millions of households into fuel poverty.

Global renewable power capacity growth is on track to set another annual record in 2021, driven by the additions in solar PV. Solar PV accounts for more than half of renewable power expansion in 2021, contributing to the 3% increase on 2020’s growth in renewables. The International Energy Agency forecasts the growth of renewables to account for 95% of the increase in global power capacity through 2026.


The UK’s Net Zero Strategy establishes an ambitious goal of fully decarbonizing UK power systems by 2035. Carbon capture usage and storage (CCUS) and hydrogen are central to the strategy. The government has already set up the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme to fund the UK's new hydrogen and industrial carbon capture business models. It has pledged to provide up to £140 million to fund the scheme. Private investors and market participants anticipate further government consultation around the Net Zero Hydrogen Fund, Hydrogen Business Models and the Low Carbon Hydrogen Standard in 2022.


The EU Commissioner for the internal market, Thierry Breton says the bloc will need to invest 500 billion euros in new nuclear energy facilities by 2050. The EU also plans to label gas and nuclear energy as ‘green’, which has sparked controversy. Germany called the plan “absolutely wrong”, as nuclear plants can cause environmental disasters and large amounts of nuclear waste. Germany is in the process of phasing out nuclear completely, while France has pledged to reduce its reliance on nuclear power by shutting down 12 nuclear reactors by 2035.


Electric vehicle manufacturer Rivian was valued at $66 billion at its IPO. The automobile company has been backed by Amazon while launching a fleet of electric delivery vans. Rivian aims to sell to commercial fleet customers other than Amazon by 2023. They will also sell fleet versions of their R1T electric pickup truck and R1S electric SUV, competing with Ford’s commercial version of the F-150 Lightning, as well as a fleet management platform called FleetOS and a charging infrastructure solution.


The London School of Economics and Political Science became the first Carbon Neutral verified university in the UK. The university’s direct emissions reduced by 44% since 2005. This was helped by a £4.8 million investment since 2015 towards energy efficiency measures for campus and residence buildings, including upgrading Building Management Systems, installing LED lights, fitting solar panels, and replacing boilers and chillers. In addition, LSE has procured all the electricity it uses from 100% renewable sources since 2009.






Decision Making

COP26 decisions on Carbon Markets and their implications

In 2015, under the Article 6 of the Paris Agreement, two new international carbon markets were decided on. During COP26 in Glasgow, technicalities and guidelines for these new markets were finalised, which allows for the full implementation of the Paris Agreement [1].

Under Article 6.2 of the Paris Agreement, the first carbon market allows countries to voluntarily trade greenhouse gas (GHG) reductions or sequestration amongst each other. A country that has overachieved its climate pledges can sell the extra emission reductions to another country that can use it to reach its own climate targets (Fig. 1) [2]. Under Article 6.4, the second mechanism creates a carbon market where emission reductions from either states or private entities can be traded, which will be governed by a UN body [3].

Trading GHG reductions can help countries and private entities efficiently meet their emission reduction targets, which for countries are known as nationally determined contributions (NDCs) [4].


What are carbon markets?

Carbon markets put a price on GHG emissions and allow the subsequent trading of either carbon credits or carbon offsets. Tradability is one of the greatest advantages of carbon markets since it allows for economically efficient GHG reductions. Emissions reduction (or offset) will occur where the abatement costs for one unit of emissions are lowest. Due to lax environmental laws and regulations, abating emissions in developing countries is often cheaper than abating the same amount of emissions in developed countries where, thanks to tight regulation, the easy gains are already implemented. Utilising this cost-effective mechanism could either dramatically reduce the cost of achieving a given emission reduction target or reach a more ambitious target with the initial cost [5].

The fear of economic upheaval caused by an abandoning of coal prompted India to change a clause’s wording from “phase out” to the “phase down” of coal, causing great controversy at the COP26 [3]. Ultimately, this reflects the incongruity between the reality for developing countries and the pace expected of them.

Yet, some conditions must be met to assure the integrity of carbon offsets and carbon markets.

GHG reductions that are traded on a carbon market must be additional, measurable, and permanent to guarantee the integrity of the market.

If a GHG reduction or offset project would not have happened without the revenues of selling so-called carbon credits on a carbon market, the project and thus the GHG reduction is deemed additional [6]. Moreover, a measurable baseline must be defined. The baseline refers to the amount of GHG emissions that would have occurred, had the reduction or offset project not been implemented and it is essential for calculating the amount of GHG reduction the project achieves [7]. Furthermore, any reduction of GHG emissions that result in carbon credits, must be permanent. Generally, 100 years is an internationally recognised norm for permanence [8].

In a nutshell, carbon markets allow for the cheapest emissions reduction to occur, as long as certain quality criteria are met to assure the integrity of GHG reductions.

The case of the Clean Development Mechanism

The Clean Development Mechanism (CDM), established under the Kyoto Protocol [9], was one of the first carbon markets [8]. The CDM creates certified emissions reductions (CER) certificates arising from emission reduction projects in developing countries, which can then be traded. It allows developed countries to buy CERs originating in developing countries to meet their own emission reduction targets, which they committed to under the Kyoto Protocol [8]. However, the quality and integrity of the CDM are contentious. A 2016 study [10] questioned the additionality and accuracy of emissions reductions of up to 85% of all issued CER credits of the CDM between 2013 and 2020, dealing a considerable blow to the environmental integrity of CERs. Moreover, the CDM is currently the crediting mechanism that issued most carbon credits, meaning the findings are not only worrisome for the CDM itself but also for the entire carbon offset industry [8]. The fact that the United Nations (UN) developed the CDM adds to the worry. The new carbon market will need to learn from and address the CDM’s shortcomings.

What is the new agreement about?

The Paris Agreement states some conditions which the two new carbon markets have to meet which are: 1. They must raise ambition in mitigation actions and achieve an overall mitigation effect. 2. Double counting of emission reductions must be avoided. 3. A part of the money generated (“share of proceeds”) in the secondary market (Article 6.4) must be channelled towards adaptation funding in developing countries.

After six years of unsuccessful negotiations, COP26 saw an agreement on the “rulebook” for the new carbon markets. Firstly, some carryovers of old emission reduction credits, which were generated under the CDM but are widely seen as very low in quality will be allowed to be traded on the new markets. The use of old CDM credits is limited to those generated after 2013, yet the exact number of old certificates that can be traded in the new carbon market is not known exactly [11]. The carryover credits impede the environmental integrity of the new markets and will likely depress carbon credit prices, which discourages new GHG reduction projects. However, the outcome could have been worse if CDM credits generated before 2013 would have been allowed to be carried over as well.

Moreover, there is a general problem with ambitious NDCs and emission reduction trading. Every country decides how ambitious it wants to be regarding its domestic emission reduction (i.e. NDC). This gives countries an incentive to set themselves less ambitious NDCs because they can sell any emission reduction that goes beyond its NDC and generate export revenue [12] (Fig.1).

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Fig. 1: BAU: Business As usual, ITMO: Internationally Transferred Mitigation Outcomes

Thirdly, it has been agreed that five percent of the proceeds (“share of proceeds”) from the voluntary carbon market (Article 6.4) will be funnelled to the UN Adaptation Fund which finances climate change adaptation projects in developing countries [11].

Overall, the first condition has not been met entirely. The carryover of low-quality CDM credits and the incentive for countries to set unambitious NCDs is a pressing concern. Moreover, some countries and non-governmental organisations would have liked to include the first carbon market (Article 6.2) in the “share of proceeds” agreement.

Figure 1 graphically depicts the carbon trade between two countries under Article 6.2 of the Paris Agreement. Country A outperformed on its emission reductions. The outperformance (positive difference between emissions target and actual emissions) can be sold to Country B, which underperformed on its emission reductions (negative difference between emissions target and actual emissions).

Moreover, Figure 1 shows that both countries have an incentive to set themselves “unambitious” NDCs. If Country A’s emission target would be 90 instead of 80, it could sell 10 more units of emission reductions. Similarly, if Country B’s emission target would be 80 instead of 70, it would have to buy 10 units less of emission reductions.

The figure also shows how double counting will be avoided using corresponding adjustment. Country A’s emission reduction sales will be added back to its own emissions (on an accounting basis – not literally). Similarly, Country B’s emissions will be reduced by the amount of emission reductions it buys (again on an accounting basis).

References

[1.]( United Nations Framework Convention on Climate Change. COP26 Reaches Consensus on Key Actions to Address Climate Change [Internet]. UNFCCC; 2021 [Internet]. )

[2.] ([Internet].Schneider L, Füsseler J, Kohli A, Graichen J, Healy S, Cames M, Broekhoff D, Lazarus M, La Hoz S, Cook V. Robust Accounting of International Transfers under Article 6 of the Paris Agreement. German Emissions Trading Authority at the German Environment Agency [Internet]. 2017 [cited 2022 Jan 04]; Figure 1, Application of corresponding adjustments to reported emissions; p. 28. )

[3.] ( After COP26: India’s crucial decade [Internet]. The Third Pole. 2021 [cited 12 December 2021]. )

[4.] (Bordoff J. The Developing World Needs Energy—and Lots of It [Internet]. Foreign Policy. 2021 [cited 12 December 2021]. )

[5.] (Fickling D. It's Now Possible to Grow Rich and Go Green [Internet]. BloombergQuint. 2021 [cited 12 December 2021].)

[6.] (Can low-income countries leapfrog to clean energy technologies? | New Scientist [Internet]. Newscientist.com. 2021 [cited 12 December 2021]. )

[7.] (Klapper L. Mobile phones are key to economic development. Are women missing out? [Internet]. Brookings. 2021 [cited 12 December 2021]. )

[8.] Arndt C, Arent D, Hartley F, Merven B, Mondal A. Faster Than You Think: Renewable Energy and Developing Countries. Annual Review of Resource Economics. 2019;11(1):149-168.

[9.] (Renewable energy leapfrogging: the better way forward. [Internet]. Climate Reality. 2021 [cited 12 December 2021].)

[10.] (India criticised over coal at Cop26 – but real villain was climate injustice [Internet]. the Guardian. 2021 [cited 12 December 2021]. )

[11.] (India at COP26 says its solar energy capacity increased 17 times in 7 years; now at 45 GW [Internet]. The Hindu. 2021 [cited 12 December 2021].)

[12.] Majid M. Renewable energy for sustainable development in India: current status, future prospects, challenges, employment, and investment opportunities. Energy, Sustainability and Society. 2020;10.

[13.] (COP26: Climate finance for fueling Renewable Energy in the Global South [Internet]. Power For All. 2021 [cited 12 December 2021].)

[14.] Vanegas Cantarero M. Of renewable energy, energy democracy, and sustainable development: A roadmap to accelerate the energy transition in developing countries. Energy Research & Social Science. 2020;70:101716.


The developing world post-COP26: Can developing countries leapfrog to renewable energy?

The pressure is on. Global climate action has had to confront multiple key issues over the past few months, with the unveiling of shocking emissions projection data in the UNFCCC report, culminating in crucial debates at the COP26. Since the conference in Glasgow, the focus has largely turned towards developing countries where energy consumption will grow the most.

Despite contributing the least to historical cumulative emissions, developing countries have the most to lose from climate change.


It is estimated that 132 million people would be pushed into poverty by 2050 if climate change goes unchecked [1] and extreme weather and drought causes livelihoods to deteriorate. While the future is concerning, so is the present health of developing economies. Over the pandemic, the external debt of developing countries reached USD $10.6 trillion in 2020, equivalent to a third of their GDP [1]. Therefore, the question is not only how the developing world can reduce their emissions, but how this can be fair and just while enabling the same opportunities for economic growth that today’s industrialized countries experienced. The COP26 draws attention to three main motives in particular:

1) End coal fired projects

23 countries have established new commitments to phase out coal power, with the backing of international private banks and public finance to retract financial support for coal power by the end of 2021 [2]. For the developed world, coal power is mostly uneconomic. In the US, 80% of coal plants would be cheaper to operate if switched to renewable energy generation [1]. However, the case for developing countries differs. In Asia, younger plants are cheaper to operate and are crucial for industrialization and economic development. For example, India is 70% reliant on coal energy in addition to providing extensive fossil fuel subsidies.

The fear of economic upheaval caused by an abandoning of coal prompted India to change a clause’s wording from “phase out” to the “phase down” of coal, causing great controversy at the COP26 [3]. Ultimately, this reflects the incongruity between the reality for developing countries and the pace expected of them.

2) Stop expanding oil production

Oil dependent economies in the developing world such as Angola, Congo, Timor Leste all rely on oil for more than 60% of their fiscal revenues [1]. The International Environment Agency claims that no new oil and gas fields can be developed if the world aims to reach net-zero by 2050. This puts a significant amount of pressure on the lower-income, oil reliant economies. Simultaneously, developing countries face the challenge of high growth in energy demand as the population grows, with projections for the African continent reaching 2 billion by 2050 [4]. Currently, more than 800 million people lack access to electricity. Therefore, if existing energy systems based on coal, oil and gas are dismantled, there has to be an alternative method of prioritizing universal access [4].

3) Speed up renewable energy deployment

As energy consumption is expected to increase by 50% by 2050, renewable energy alternatives have to be able to meet demand. The shift of financing away from fossil fuels could potentially redirect USD $17.8 billion to the clean energy transition [2]. Funding could support the development of electricity storage for different renewables, as well as the necessary technologies. Advantageously, reduced costs of renewable generation have changed the narrative. Renewable energy is now seen as a way to boost economic development as well. In this new context, delaying the switch to zero-carbon power does not give emerging economies a chance to catch up with richer countries the way one would imagine [5]. Instead, it is hindering their development by tying them down to higher-cost power when cheaper alternatives are available. This combination of pressure and opportunity for developing countries leads to a further question: can the developing world leapfrog to renewable energy?

Leapfrogging

While global climate action may be attempting to overcome several hurdles at once, the focus must remain on how to create a fair and just path for climate action. The need to rapidly curb emissions has to be reconciled with meeting the demand for energy and basic universal access in low-income countries. Currently, 2.5 billion people still use traditional sources of energy such as burning wood and dung [4]. Leapfrogging is the idea that the developing world can become prosperous by skipping the fossil-fuel-reliant stage of industrialisation and directly adopting renewable energy. This is not an idea just confined to theory. For example, the telecommunications sector never really experienced the use of landlines in low-income countries [6]. Instead, these countries went straight to adopting mobile phones. With mobile phone penetration at 83% amongst adults in developing economies [7], there are reasons to believe that countries can leapfrog to renewable energies that are low cost, reliable, environmental and well suited to serving rural populations.

The cost of renewables have declined drastically over the last decade (see fig. 1). The levelized cost of electricity for solar PV and wind have decreased by 81% and 62% respectively between 2010-17 [8]. Alongside the lowering of costs, investments in renewable power generation increased to USD $300 billion by 2017 [8]. Of this investment sum, developing countries accounted for 63%, mainly in China, India and Brazil [8]. On a smaller scale, renewable energy has been useful for equipping households, health clinics and schools with basic solutions. These include solar panels for a few hours of water pumping, lighting or other low electrical demand processes. Over the last decade, the offerings have expanded to include village level mini-grid systems often spearheaded by private companies. On a national level, the prioritisation of renewable energy generation has proven to be sustainable for developing countries. For example, since 2009, Morocco pursued an ambitious renewable energy program based on solar PV that allowed it to increase renewable energy to a 42% share of its national energy network, staying ahead of the global average of 30% [9].

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Fig. 1: Graph showing LCOE for energy types between 2010-17 (Arndt C, Arent D, Hartley F, Merven B, Mondal A. Faster Than You Think: Renewable Energy and Developing Countries. Annual Review of Resource Economics. 2019;11(1):149-168.)

Challenges and next steps

The opportunities are prominent, yet there are challenges in how these can be effectively leveraged. A closer look at the energy sector in India highlights some of these. India is expected to be one of the top emitters, and only recently established its net-zero for 2070. India’s energy demand will grow faster than any other country over the next 20 years [10]. So far, its solar energy capacity has increased 17x in 7 years, now at 45GW capacity [11]. The country aims to have renewable energy make up 50% of its total electricity by the end of the decade. However, their focus has been only on decarbonising the grid and not within transport, agriculture and construction- all high emitting industries [3]. To catalyse India’s renewable energy sector, the right policies such as subsidies are needed to improve the attractiveness of low-carbon options [12].

Moreover, we require a big scale-up of finance from donors. Economic and financial strains caused by the COVID-19 pandemic could significantly hamper future investments in renewable energy projects. So far, the developed world has failed to provide the promised USD $100B in annual climate finance. In order to achieve its targets, India estimates it will require USD $1 trillion dollars in financial assistance over the period of transition [13]. The private sector is expected to play a large enabling role of providing 70% of climate financing for the future, according to the International Energy Agency. Other developing countries are making further demands for investments and the transfer of technologies required to unlock synergies between power, transportation, heating and cooling systems [14]. Infrastructure will need to be developed as well. For example, solar and wind investments rapidly increased in Vietnam but plants could not operate fully due to grid efficiency constraints [6]. Encouraging FDI is one viable option for India, however the regulatory changes needed to create an open and attractive market must follow [4].

Leapfrogging is not just an optimistic but a proven strategy for developing countries to progress. It could be a viable option in the post-COP26 world. However, as developing countries reorient their commitment towards renewable energy, the financial and technical support from the developed world is crucial for a fair and just energy transition.

References

[1.]( Espinosa S. At COP26, leaders got a climate reality check. Here’s what they must do next. [Internet]. Brookings. 2021 [cited 12 December 2021]. )

[2.] ([Internet]. Unfccc.int. 2021 [cited 12 December 2021]. )

[3.] ( After COP26: India’s crucial decade [Internet]. The Third Pole. 2021 [cited 12 December 2021]. )

[4.] (Bordoff J. The Developing World Needs Energy—and Lots of It [Internet]. Foreign Policy. 2021 [cited 12 December 2021]. )

[5.] (Fickling D. It's Now Possible to Grow Rich and Go Green [Internet]. BloombergQuint. 2021 [cited 12 December 2021].)

[6.] (Can low-income countries leapfrog to clean energy technologies? | New Scientist [Internet]. Newscientist.com. 2021 [cited 12 December 2021]. )

[7.] (Klapper L. Mobile phones are key to economic development. Are women missing out? [Internet]. Brookings. 2021 [cited 12 December 2021]. )

[8.] Arndt C, Arent D, Hartley F, Merven B, Mondal A. Faster Than You Think: Renewable Energy and Developing Countries. Annual Review of Resource Economics. 2019;11(1):149-168.

[9.] (Renewable energy leapfrogging: the better way forward. [Internet]. Climate Reality. 2021 [cited 12 December 2021].)

[10.] (India criticised over coal at Cop26 – but real villain was climate injustice [Internet]. the Guardian. 2021 [cited 12 December 2021]. )

[11.] (India at COP26 says its solar energy capacity increased 17 times in 7 years; now at 45 GW [Internet]. The Hindu. 2021 [cited 12 December 2021].)

[12.] Majid M. Renewable energy for sustainable development in India: current status, future prospects, challenges, employment, and investment opportunities. Energy, Sustainability and Society. 2020;10.

[13.] (COP26: Climate finance for fueling Renewable Energy in the Global South [Internet]. Power For All. 2021 [cited 12 December 2021].)

[14.] Vanegas Cantarero M. Of renewable energy, energy democracy, and sustainable development: A roadmap to accelerate the energy transition in developing countries. Energy Research & Social Science. 2020;70:101716.


Is divestment from Oil & Gas companies the best way to reduce their emissions?

Over the past ten years, an increasing number of institutions have sold their participation in publicly traded fossil fuel companies as part of a global divestment campaign. Divestment, simply understood here as the opposite of investment, is the act of removing investment capital from a given company, usually by selling the bonds and/or stocks owned in this company. For instance, in February 2021, Trinity College Cambridge announced that it will divest all the shares in publicly-traded fossil fuel companies in its £1.5B portfolio by the end of the year. In doing so, Trinity College joined a group of more than 1500 institutions, mostly religious groups (The Church of England, among others) and educational institutions (Harvard University, among others), who committed to divest from fossil fuel companies. [1]

While divestment campaigns are usually built on a moral claim, such as the campaign to divest from South African companies during the last years of apartheid in the 1980s; an often-heard argument for fossil fuel divestment is that it will reduce the available capital of fossil fuel companies. Following that rationale, fossil fuel companies are forced to reduce their carbon emissions to “green” their image and attract investment again. This is more or less what happened in 2019-2020 when investments in fossil fuels dropped. Major public oil companies including BP, Total, Shell, Repsol and Equinor announced that they would reach “net-zero emissions” by 2050.

After those commitments, which satisfied most investors’ ESG concerns, and as the forecasted demand for energy was set to bounce back in 2021, investment in fossil fuels grew in 2021. This increasing investment might persist in 2022 just as the demand for coal, which has been known for years as one of the “dirtiest” sources of energy, is projected to reach all-time high consumption in 2022 as a result of the post pandemic economic recovery in China.

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Source: IEA (2021) World Energy Investment [2]

Therefore, looking at what has happened in the past two years, one might question if divestment has been an effective method to reduce the GHG emissions from fossil fuel companies.

In addition, the fact that US oil stocks rose faster than clean-tech or renewables in 2021 also invites cautiousness regarding the divestment rationale which stipulates that divestment reduces the share price of fossil fuel companies and starves them from capital [3].

Looking back at the divestment campaign against the tobacco industry in the 2000s, one can observe the extent to which the economics case for divestment is true. Publicly-traded tobacco companies such as Philipp Morris and British American Tobacco have been targeted by divestment campaigners for almost two decades. Yet, they are still performing well on the stock markets thanks to a very high dividend yield, usually between 5% and 7% (most industries are below 3%). As a result, those tobacco companies still attract investors looking for exceptional returns.

The tobacco divestment campaign caused a situation where the financial institutions which divested can absolve themselves of responsibility for funding an industry responsible for the deaths of 8 million people a year, according to the WHO, but their divestment has done nothing to stop the problem of smoking today [4].

The obvious parallel between tobacco and fossil fuels thus questions the real purpose of divestment: a moral action aimed at stigmatising those who finance ‘harmful’ industries? Or a death blow to the ‘harmful’ industries, which are eventually deprived of capital?

Based on the example of the tobacco industry, it appears that divestment alone, without the kind of strong regulatory action that had accompanied the anti-apartheid divestment campaign in the 1980s, cannot deprive a targeted industry of capital. In the current regulatory conditions, it is thus unrealistic to expect that divestment will seriously harm the debt availability of publicly-traded fossil fuel companies. On a moral level, however, it is clear that divestment is a very efficient way to stigmatise harmful industries and force them to improve their image [5]

Nonetheless, looking at the trajectory of GHG emissions from the burning of fossil fuels over the past decade, one might wonder if improving the image and reputation of fossil fuel companies is enough to tackle the climate emergency.

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Source: IEA (2021) GHG Emissions from Energy [6]

This is why some environmentally-minded investors are turning to another form of pressure to force fossil fuel companies to effectively reduce their carbon emissions: shareholder activism. Put simply, shareholder activism is almost the opposite of divestment. When an individual, an investment fund, or any other agent owns a common share in a company, they are entitled to rights such as receiving a dividend, inspecting the company’s record, attending annual meetings, and voting on key corporate matters. It is the latter right that is used by activist shareholders. In a publicly-traded company, few investors usually attend annual meetings to vote on corporate matters, which leaves room for activist shareholders, even if they are a minority, to use their voting right to legally impose change.

The successful campaign conducted in May 2021, by the “activist” hedge fund Engine n°1 to force the American Oil giant Exxon Mobile to appoint climate-oriented directors has demonstrated the huge potential impact of shareholder activism. Engine n°1, a relatively small fund that owned only 0.02% of the shares in Exxon, pushed for the nomination of four new directors to the board of Exxon at the company’s annual general meeting in May 2021. While the four proposed directors had experience in the Oil & Gas industry, they were also known to have successfully implemented strategies to reduce GHG emissions in their previous roles. The goal of the activist fund was, through the nomination of these new directors, to force Exxon to reduce its GHG emissions. Before the day of the vote, Engine n°1 managed to convince other Exxon’s shareholders to join the campaign, most notably the pension fund CalSTRS, which backed the nomination proposal. Eventually, despite owning only 0.02% of the shares, Engine n°1’ placed two of its nominees on the board of Exxon, while a third one joined later.

Engine n°1 vs Exxon Mobil, which has since made its mark in the financial press as a "David versus Goliath" case of shareholder activism, demonstrated the unintended impact that fossil fuel investors can have. Since the nominations of its new board members, Exxon has started to build a new Carbon Capture plant in Houston and has made other strategic steps toward reducing its GHG emissions.

In summary, the example of shareholder activists like Engine n°1 seems to show that the most efficient tool to reduce emissions from publicly traded fossil fuel companies is not divestment but investment. This slightly counter-intuitive conclusion is promoted by environmental advocacies such as Rethinking Choices. Its members argue for turning shares in fossil fuel companies into “an act of planetary stewardship”, by donating all dividends from those shares to environmental charities and taking part in annual meetings to vote for the adoption of GHG emission reduction strategies. In all cases, whether shareholder activism or divestment, this article has attempted to shine a light on positive investing approaches to the energy transition.

References

[1.]( EAccording to the Global Fossil Fuel Divestment Commitments database )

[2.] (https://www.iea.org/data-and-statistics/data-product/world-energy-investment-2021-datafile )

[3.] ( “Four trends that defined the 2021 energy sector”, Derek Brower, Myles McCormick and Amanda Chu, in Financial Times, DECEMBER 23 2021)

[4.] (https://www.who.int/en/news-room/fact-sheets/detail/tobacco )

[5.] Oxford University report “Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets?” (2013)

[6.] (https://www.iea.org/data-and-statistics/data-product/greenhouse-gas-emissions-from-energy-highlights#highlights )


The Chicken or the Egg?

Do we alter the electricity infrastructure to increase electric vehicle market penetration or promote the adoption of electric vehicles in order to reach net zero emissions?

The Paris Agreement at COP21 highlighted that despite the reductions in carbon emissions recorded in other sectors, carbon emissions recorded in the transport sector had steadily increased, trending toward a 50% increase by 2030 [1]. Globally, the transport sector is still heavily dependent on fossil fuels: the transport sector accounts for around 17% of the world’s emissions. Thus, the topic of electric vehicles (EVs) has been the focal point of discussions in decarbonising the transport sector. However, there have been many critiques about the plausibility of transitioning to EVs and whether we should (1) change the electricity generation grid or (2) facilitate the transition to EVs by dismissing the emissions of the unchanged electricity generation mix? Will the transition be of environmental benefit? And what comes first: introducing large-scale EV adoption to facilitate decarbonisation through fiscal policies, or changing the infrastructure to stimulate the adoption of electric vehicles?

Therefore, the chicken and the egg problem applies to the issue of electric vehicle adoption. Policy and decision-makers currently working on promoting ‘clean’ transport alternatives are stumped with this problem.

Policy and decision-makers currently working on promoting the diffusion of EV are stumped with the “chicken and egg” problem: the promotion of infrastructure-dependent technologies such as electric vehicle charging stations.

This chicken and egg dilemma can prohibit the successful dissemination of EVs, hindering the efforts of decarbonising the transport sector by prolonging the time required to achieve Paris Agreement emission targets.

So, do we change the grid or increase the market penetration to promote the decarbonisation of the grid?


Environmental Impact

Electric vehicles are known to produce no tailpipe emissions, making them an ideal alternative to conventional vehicles to achieve net zero emissions. However, we often do not understand the idea that the electricity generation grid that powers EVs is often composed of ‘dirty’ energy sources that are still continuously producing carbon dioxide [2]. Approximately, 61% of our current electricity mix comprises of oil, gas and coal and 91% of our transport sector is fueled by fossil fuels [2][3].

This represents the ‘chicken’ aspect of the argument: the question becomes whether we should change our electricity generation grid for better renewable energy source integration to power our EVs to achieve net neutrality in the transport sector [3].

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Figure 1: Electricity Production Globally by source [2]

If the intention to transition to EVs is for the purpose of decarbonising the transport sector to reach the Paris Agreement goal, it is vital to approach transport decarbonisation from the source, not from the end product.

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Figure 2: Emission breakdown in each transport sector, where passenger vehicles are dominating (45.1% = 864 million tonnes) [2]

The fear of economic upheaval caused by an abandoning of coal prompted India to change a clause’s wording from “phase out” to the “phase down” of coal, causing great controversy at the COP26 [3]. Ultimately, this reflects the incongruity between the reality for developing countries and the pace expected of them.

The Fear of the Unknown – Consumer Attitude and More

One of the main fears surrounding adoption of EVs is the charging location and fear of stranded assets. With any situation, the farther something is from our space of convenience, the less likely you would be incentivised to use it.

The lack of EV uptake from consumers has been surveyed extensively, and the main reasons for the low uptake are the anxiety about range and insufficient charging facilities in close proximity to people’s households [3].

Therefore, to increase the market penetration of EVs, the support of increased charging facilities is required to combat the range anxiety and facilitate the transitioning towards decarbonising the transport sector. Paradoxically, local and government bodies in many nations such as Australia and Belgium failed to address consumer concerns regarding charging infrastructure, resulting in poor uptake of EV. This leaves high-emitting nations unable to effectively decarbonise their transport sectors [4].

Consumer confidence has drawn out the dilemma further as it often acts as a barrier in implementing succinct changes to transition to electric vehicles. Therefore, it is necessary to understand whether having more accessible charging points is an incentive for consumers to purchase an electric vehicle and allow their respective regions to transition.

Poor Policy Intervention

Now, the “egg” appears in this dilemma. Do we promote the importance of having greater involvement from public stakeholders to diffuse such risks and increase the adoption of electric vehicles in order to facilitate decarbonisation in the road vehicle fleet? [5].

Invisible Policy Absent EV policy is a major barrier to escalating the diffusion of electric vehicles and eventually meeting emission reduction targets. Additionally, a lack of incentives to promote the proliferation of renewable energy sources prohibits EVs from being purely net zero.

Policymakers often attempt to overcome this situation by proposing subsidies. However, these policymakers often forget to account for the importance of consumer purchases (i.e., EV purchasing) with respect to infrastructure alterations [5]. For example, in the United States of America, the federal government spent billions of dollars on tax incentives to increase the market penetration of EVs and their respective charging stations. However, without altering the grid, the emission reduction was quite minimal, and the main type of EV purchased was hybrids—EVs powered by an internal combustion engine and electric motor, whereby the battery is charged through the excess kinetic energy from braking [6]. These types of EVs are independent from the grid; therefore, it does not help increase the spread of adequate recharging infrastructure, nor does it encourage policymakers to decarbonise the electricity generation grid [6].

Countries as well as companies have struggled to assist in decarbonising their transport fleet due to such circumstances [5]. Without the support of adequate policy, leading companies such as Shell are hindered from assisting nations to switch to EVs and eventually reach net zero levels within their target period.

Case Study – Shell Regarding EV charging worldwide, Shell has set a target of operating over 500,000 EV charging stations by 2025, with 80,000 currently functioning as of this writing for households and firms. For the UK, Shell has planned to install 50,000 by 2025 in collaboration with Ubricity. According to the International Energy Association, more than 10 million EVs were on the roads worldwide, with the greatest growth in China—enabling Shell to capitalise on the rise of EVs in China by supporting infrastructure [5][6].

Despite many regions being a new space of opportunity for this infrastructure, the Oceania region, including New Zealand and Australia, are threats to this initiative. The concept of range anxiety is highly prevalent due to households having greater road time than European nations, making consumers reluctant to tap into the EV market [8]. Additionally, due to the premium cost of EVs—and without the support of fiscal incentives to purchase electric vehicles—the adoption rate will be minimal, counteracting the actions of rolling out charging stations. Therefore, diffusing EV charging infrastructure may result in a loss, and it may eventually be a threat to Shell’s bottom line and their efforts to reach carbon neutrality [6][7].

Concluding Remarks

If the electricity generation grid does not become less emission-intensive, regarding both CO2 and CO2 equivalents, the role of EVs as an environmental alternative is insignificant.

The potency of local pollutants such as sulphur dioxide, methane, and particulate matter can often exceed the greenhouse potency of CO2, which is not often regulated. Therefore, the technology and infrastructure of electrification must be altered to research the threshold of having the potential to both increase the uptake of electric vehicles and decarbonise the transport sector. Without a doubt, this transition to EVs requires the mobilisation of large funds to achieve successful market penetration, and it differs from region to region; however, the core principle remains regardless of the location. EVs cannot be a singular solution—it requires a strategic and multi-dimensional approach that accounts for consumer confidence, choices, infrastructure necessities, and fiscal initiatives.

Therefore, what comes first? Transformation of our infrastructure or transformation of our policy?

Given these choices and perspectives, it is evident that both the ‘chicken’ and the ‘egg’ needs additional focus; however, this discussion highlights the importance of comprehensive policy tapping into consumer preferences to accelerate this transition. This refers to the ‘egg’ perspective.

Without solving the policy perspective, it will inhibit further progress in decarbonising our grid and increasing the adoption rate of electric vehicles. In turn, the focus on policy will unlock other opportunities to facilitate this transition, thus diffusing the chicken and egg dilemma [9].

References

[1.]( United Nations Framework Convention on Climate Change. COP26 Reaches Consensus on Key Actions to Address Climate Change [Internet]. UNFCCC; 2021 [Internet]. )

[2.] ([Internet].Schneider L, Füsseler J, Kohli A, Graichen J, Healy S, Cames M, Broekhoff D, Lazarus M, La Hoz S, Cook V. Robust Accounting of International Transfers under Article 6 of the Paris Agreement. German Emissions Trading Authority at the German Environment Agency [Internet]. 2017 [cited 2022 Jan 04]; Figure 1, Application of corresponding adjustments to reported emissions; p. 28. )

[3.] ( After COP26: India’s crucial decade [Internet]. The Third Pole. 2021 [cited 12 December 2021]. )

[4.] (Bordoff J. The Developing World Needs Energy—and Lots of It [Internet]. Foreign Policy. 2021 [cited 12 December 2021]. )

[5.] (Fickling D. It's Now Possible to Grow Rich and Go Green [Internet]. BloombergQuint. 2021 [cited 12 December 2021].)

[6.] (Can low-income countries leapfrog to clean energy technologies? | New Scientist [Internet]. Newscientist.com. 2021 [cited 12 December 2021]. )

[7.] (Klapper L. Mobile phones are key to economic development. Are women missing out? [Internet]. Brookings. 2021 [cited 12 December 2021]. )

[8.] Arndt C, Arent D, Hartley F, Merven B, Mondal A. Faster Than You Think: Renewable Energy and Developing Countries. Annual Review of Resource Economics. 2019;11(1):149-168.

[9.] (Renewable energy leapfrogging: the better way forward. [Internet]. Climate Reality. 2021 [cited 12 December 2021].)

[10.] (India criticised over coal at Cop26 – but real villain was climate injustice [Internet]. the Guardian. 2021 [cited 12 December 2021]. )

[11.] (India at COP26 says its solar energy capacity increased 17 times in 7 years; now at 45 GW [Internet]. The Hindu. 2021 [cited 12 December 2021].)

[12.] Majid M. Renewable energy for sustainable development in India: current status, future prospects, challenges, employment, and investment opportunities. Energy, Sustainability and Society. 2020;10.

[13.] (COP26: Climate finance for fueling Renewable Energy in the Global South [Internet]. Power For All. 2021 [cited 12 December 2021].)

[14.] Vanegas Cantarero M. Of renewable energy, energy democracy, and sustainable development: A roadmap to accelerate the energy transition in developing countries. Energy Research & Social Science. 2020;70:101716.



Emerging Technologies

The importance of clean firm power to accelerate decarbonization amid the energy supply crisis

Decarbonizing the power sector is crucial to reach net-zero emissions and support the electrification of the buildings, transportation and industrial sectors.

Given that wind and solar energy is variable, it must be complemented with clean “firm” resources which are available throughout the year and help meet electricity demand at all times [1].

Such resources include hydropower, geothermal, long-duration energy storage, and biomass, but we will mainly focus on nuclear power in this article. Amid soaring natural gas and electricity prices in Europe, clean firm resources have regained the spotlight as key decarbonization solutions. For instance, the surge in energy prices has contributed to the European Union being close to designating nuclear power as a “green” resource in its sustainable finance taxonomy [2].

Clean Firm Resources in the Generation Mix

Variable renewable energy (VRE) resources can, at low penetration levels, displace firm fossil fuel generation. VRE resources have near-zero marginal generation costs, and will be dispatched by grid operators in priority over fossil fuel resources. However, as VRE penetration increases, more renewable energy output will occur during periods with low fossil fuel generation. During periods of low VRE availability (such as during evenings, when solar generation is ramping down and we reach peak demand), clean firm resources can be rapidly dispatched to address imbalances between supply and demand and further displace fossil fuel generation [1]. In contrast, in a fully decarbonized power mix without clean firm resources, it is necessary to oversize wind and solar capacity along with short-duration energy storage to constantly meet electricity demand [1]. To illustrate the value of clean firm resources, we compare the actual electricity generation mix in California on July 15, 2021, with a simulated mix with higher nuclear and hydropower generation [3].

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Figure 1: Actual Generation Mix in California on July 15, 2021

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Figure 2: Simulated Generation Mix with More Baseload and More Hydro

Given that clean firm resources are always available, they are valuable in displacing natural gas generation – particularly during low VRE availability and peak demand periods. In Figure 1, natural gas and hydropower generation ramps up when renewable energy output starts to decrease at 17:00 PM and demand reaches its highest levels (37,000 MW). In Figure 2, we increased nuclear generation by 2,500 MW and hydropower generation by 50% across all hours. We then subtracted natural gas supply by the equivalent increase in hydropower and nuclear generation. These assumptions resulted in nuclear assuming more baseload demand (or the minimum levels of electricity demand) over the course of the day while hydropower, a more flexible resource, becomes more valuable in meeting the demand ramp-up between 14:00 PM and 21:00 PM. For reference, in Figure 2, hydropower and nuclear, respectively, met 9% and 13% of the peak demand while natural gas supply was limited to 29% (compared to 39% in Figure 1).


Germany’s Nuclear Phase-Out

With those simulations in mind, we look at Germany – who decided to fully phase-out nuclear power by 2022. Taken in 2011, this decision made Germany increasingly reliant on natural gas. Currently, natural gas accounts for 17% of Germany’s power generation mix, compared to 9% in 2005 [4]. Former Chancellor Angela Merkel recently admitted that it will be an “ambitious and challenging task” to undertake the clean energy transition while phasing-out nuclear power, but argued that natural gas will be the “stopgap technology” [5]. Since 2011, Germany has retired 11 GW of nuclear capacity [6]. Simultaneously, nuclear’s share in the power generation mix dropped to 11% in 2020 – compared to 21% in 2010 [4]. Figure 3 highlights historic nuclear power generation and its share in the overall generation mix [4].

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Figure 3: Nuclear Power Generation and Share in Generation Mix

Even though VRE resources have grown tremendously in Germany (from 2% in 2000 to 31% in 2020, as shares in the generation mix), the nuclear phase-out and the resulting dependence on coal and natural gas has restricted large emission reductions in the power sector [6]. As seen in Figure 4, since 2000, Germany has had the highest carbon intensity of electricity generation compared to Spain, France and the United Kingdom [7]. In 2019, Germany emitted 19 grams of CO₂ per kilowatt-hour – compared to 10 grams in France, where nuclear amounts to approximately 75% of electricity generation.

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Figure 4: Carbon Intensity of Electricity Generation by Country

Even though VRE resources have grown tremendously in Germany (from 2% in 2000 to 31% in 2020, as shares in the generation mix), the nuclear phase-out and the resulting dependence on coal and natural gas has restricted large emission reductions in the power sector [6]. As seen in Figure 4, since 2000, Germany has had the highest carbon intensity of electricity generation compared to Spain, France and the United Kingdom [7]. In 2019, Germany emitted 19 grams of CO₂ per kilowatt-hour – compared to 10 grams in France, where nuclear amounts to approximately 75% of electricity generation.

High Natural Gas Prices: Clean Firm Resources as a Solution?

The growing dependence on natural gas has left Germany exposed to the energy supply crisis impacting Europe. Natural gas prices are extremely high due to multiple reasons including that Europe had a colder winter in 2020 and wind speeds were low through late 2021 – leading to increased gas demand [8]. In addition, demand has been increasing as countries restart economic activity after lifting COVID-19 restrictions. In parallel, supply has been constrained as gas exporters such as Russia and Algeria have not increased their supply to meet the increasing demand. In addition, supply has been affected by maintenance work on natural gas infrastructure in Norway, among other reasons [8].

Within this context, French President Emmanuel Macron announced in October that France will invest 1€ billion to deploy small modular nuclear reactors (SMR) with “better waste management” techniques by 2030 [9]. President Macron argued that SMRs would generate less nuclear waste than conventional reactors and that this waste can be managed more cost-effectively [10]. As a baseload power resource, nuclear had protected consumers in France from the more acute spikes in electricity and gas prices witnessed in Europe. However, 17 out of the 56 nuclear reactors in France are currently not operational due to maintenance and technical issues, leading to a higher reliance on imports as well as more coal, gas, and oil-fired power generation [11]. Consequently, wholesale electricity prices in France reached higher than €350/MWh in December 2021 - highlighting the crucial role that clean firm resources play in maintaining price stability and decarbonizing the power system [12].

Residential customers in France pay less for electricity consumption than other countries in Europe, as seen in Figure 5 [13]. We note that among the countries in Figure 5, Germany has the highest energy carbon intensity (see Figure 4) and retail electricity rates. The opposite is true for France, who has the lowest carbon intensity and retail rates – highlighting the value clean firm resources provide to reduce electricity prices.

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Figure 5: Residential Retail Electricity Prices in 2020

Role of Clean Firm Resources in Electrification

Electrifying the transportation, buildings and industrial sectors is a crucial pathway to achieve net-zero emissions. Given the intermittent nature of solar and wind, clean firm resources will be essential in constantly meeting incremental electricity demand resulting from electrification. In October 2021, the French transmission system operator (Réseau de Transport d'Électricité, RTE) released a scenario analysis on potential electricity generation mix to achieve net-zero by 2050. In its base scenario, RTE estimated that to reach net-zero, electricity’s share in the overall energy consumption mix must increase from 25% to 55% (or from 400 TWh to 645 TWh) [14]. Given that France already has a largely decarbonized electricity system, it estimated that electrifying the industrial, buildings and transportation sectors could alone decrease the country’s greenhouse gas emissions 35% by 2050 [14]. In addition, RTE found that decommissioning all nuclear plants, something Germany plans to complete by 2022, would seriously compromise France’s ability to reach net-zero by 2050. RTE argued that this constraint could only be alleviated by largely accelerating renewable energy deployment and imposing extremely stringent energy efficiency measures [14].

Conclusion

Overall, clean firm resources have an extremely important role to accelerate decarbonization. They will support VRE resources in ensuring that electricity demand is constantly met with clean power generation – helping displace fossil fuel resources. Amid the energy supply crisis, it is more crucial than ever to decrease our reliance on natural gas and clean firm resources can help achieve that.

References

[1.]( Sepulveda, N. A., Jenkins, J. D., de Sisternes, F. J., & Lester, R. K. (2018). The Role of Firm Low-Carbon Electricity Resources in Deep Decarbonization of Power Generation. Joule, 2(11), 2403–2420. )

[2.] (Energy Monitor. (2021) )

[3.] ( California ISO - Supply, Today’s Outlook. (2021). CAISO. )

[4.] (IEA. (2021). Germany - Countries & Regions )

[5.] (Rinke, A. (2021). Reuters (Merkel defends nuclear power exit despite climate challenges). Reuters.)

[6.] (International Energy Agency. (2020). Germany 2020 - Energy Policy Review. )

[7.] (Our World in Data. (2021). Our World in Data. )

[8.] (Oxford Institute for Energy Studies. (2021). Why are Gas Prices so High? )

[9.] (France 2030. (2021). elysee.fr.)

[10.] (Clean Energy Wire. Macron’s nuclear plans illustrate Franco-German rift in EU energy policy – op-ed. (2021). )

[11.] (IBloomberg. (2021). Europe Faces Dire Winter as Nuclear Outages Deepen Energy Crunch. Bloomberg.)

[12.] (Reuters. (2021). Reuters (France faces power crunch once mild weather ends, grid operator says).)

[13.] (Statista. (2021). Statista (Global household electricity prices 2020, by select country). )

[14.] (RTE-France. (2021). Futurs énergétiques 2050 : les scénarios de mix de production à l’étude permettant d’atteindre la neutralité carbone à l’horizon 2050. RTE.)


The Case for Decentralised Bioenergy Systems post-COP26

What is ‘Bioenergy’ and ‘Decentralisation’?

Bioenergy refers to any energy source, material, or product which was made, in whole, by natural biological and ecological processes. In advanced economies, investments in bioenergy focus on anaerobic digestion (AD) facilities that give biomethane and biogas as a byproduct from agricultural waste, manure, seed crops, energy crops, or food waste. These AD plants are generally extremely large and powered through agricultural waste and energy crops.

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Figure 1: The 2.8 MW ReFood Biogas Plant Project in South Yorkshire, UK.

Decentralisation in this context means transferring energy production from large industrial-scale biogas companies to several smaller systems that rely on local food waste or the food waste of a specific company looking to use greener electricity or heating. Such systems are worth considering given the climate crisis and relevant new objectives set in the COP26 negotiations in Glasgow. COP26, the 2021 climate negotiations between the members of the Paris Agreement, focused on green fuels and the urban environment more prominently than ever in the history of these negotiations. COP26 established the ‘Urban Climate Action Programme’, ‘Race to Zero’, and ‘Race to Resilience’, with £27.5M dedicated to the Action Programme, and over 1,000 cities participating in the ‘Race to Zero’ Coalition [1]. These programs are designed to aid sustainable growth and emission reduction in developing cities, with the Race to Zero and Race to Resilience focusing on efficient and reliable clean power in its signatory countries by 2030. Such a focus on swift adaptation of urban environments calls for systems that are easily installed and small enough to fit in urban cities around the world.

In addition, for the first time in the history of the Paris Agreement, the COP26 negotiations directly targeted the phasing out of “inefficient fossil fuel subsidies” [2] as well as establishing a new “mid-century net zero” target. With a clear mandate to begin limiting government support to the fossil fuel industry, this serves as a promising avenue for the development of biofuels and bio-based energy markets.

It is for this reason that this article explores the potential and desirability of decentralising bioenergy, creating small-scale systems that turn food waste into renewable energy closer to the use point than with large-scale industrial biogas plants. Though the technology for this concept would require initial support, such decentralisation would allow for unprecedented energy efficiencies, local engagement in climate change mitigation, and a “two-in-one” effect, where nature-based solutions and low-carbon energy are pursued through the same bioenergy system.


Food Waste Supply Chains

Food waste management is one of the most heavily regulated types of waste due to its ability to spread disease and negatively impact human health and environment, if not properly dealt with. In the UK, many EU countries, and the US, waste management is unequally developed across different states and councils. This means that even if we successfully develop enough AD plants to allow for 100% food waste recycling, certain councils and states with disorganised waste systems would still struggle to recycle and gain access to this low-carbon energy opportunity. The local council's access to long-term waste contracts, labour, and efficient technologies all play a part in uncoordinated growth in waste systems across different local councils, meaning both the project finance for AD plants and waste markets must rapidly develop to meet any targets set by international treaties. Decentralisation, offering small-scale biogas plants near sources of food waste creation, is a potential way around this.

It is generally agreed among industry experts that there is an inadequate supply of industrial-scale AD plants to deal with the country’s waste. This shortage of electricity generation plants coupled with the uncoordinated systems of waste management across the UK, which differ between local councils, makes such an ambition very difficult to achieve in the set timeframe if the UK takes a centralised approach. This is particularly true given the increasing need to decrease our reliance on oil and gas for heating and electricity generation. This can be solved by giving specific buildings or local councils smaller systems which turn their food waste into heat and electricity as close to the end-user as possible.

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How Decentralisation Can Work for Bioenergy

Decentralisation of biogas production has a range of benefits and challenges. Firstly, while biogas plants act as a cheap and reliable source of energy and heating, it typically takes 10-30 days to produce biogas from organic waste. As a consequence, there may be a lag between biogas production and demand for power at times [6]. However, this is not hugely problematic because when food waste production is lower than the energy demand, the biogas can still be mixed with natural gas to “green” our heating systems. The increase in smart metres and Artificial Intelligence in predicting energy demand also helps in making such small-scale systems more reliable.

In some ways, decentralisation of biogas is already taking place in some sectors of the UK. In November 2021, four distilleries were awarded grants equalling £11.3M in total to develop biofuel gasification and green hydrogen systems for their operations [7]. Also, in September, Bright Biomethane, a biogas and biomethane company, opened its first small-scale bio-CNG biogas upgrader to help agricultural businesses to ‘green’ their fleets [8]. This system removes carbon dioxide, hydrogen sulphide and other contaminants in biogas to leave purified biomethane which is interchangeable with natural gas. This approach to biogas and biomethane production which is targeted and on a small-scale allows industries and communities to decarbonise hard to abate areas faster and with less start-up costs than with conventional industrial-scale systems.

Whether decentralisation should be council-led or part of property development is an interesting problem. The difference here would be between a council having small systems to meet the area’s energy and heat consumption, or whether apartment buildings and homes would be given their own biogas generator. Either solution could be viable, and aligns with COP26’s focus on decarbonising the built environment, particularly as over half the world population is expected to live in cities by 2040. If biogas plants become part of residential and commercial property development, this would allow both businesses and residents to have access to low-cost and low-carbon energy quickly and efficiently. Also, if the UK took this commercial route on small-scale AD, it would arguably be more able to achieve its ban on new gas boilers by 2023, which many are criticising as ‘unachievable’. Commercial AD systems can power apartments or homes by cost-effectively generating heat and electricity. This is becoming increasingly important as gas prices surge across Europe. Alongside decreased energy bills and diversification of heat and energy generation, decentralised biogas may help to stabilise heating prices and shield consumers from gas spikes in the winter.

The future of biogas and biofuel in the new energy economy is a very important question following COP26’s bold move to phase out long-standing fossil fuel subsidies, which amounted to almost £5.9 trillion in 2021 [9]. Additionally, COP26’s first-ever mention of ‘nature-based solutions’ [10] highlights that not only do we need to decarbonise our energy systems, we need to ensure that we engage with natural biological processes in doing so. Biofuel and biogas production offers a solution to both. UK food waste statistics from households alone indicate a massive opportunity for further AD deployment, and statistics for the retail, hospitality, food manufacture and farming sectors stress this potential. The quickest way to unlock this potential is, arguably, to focus on targeted systems that abate specific sectors - including transport fleet, distillery or community - rather than waiting for large industrial-scale systems which can take years to finance and build before commercial operations begin. Also, as mentioned, when growth in biogas generation is based mainly on food waste rather than energy crops, we must ensure that the growth in the market does not negatively impact staple food prices nor places additional stress on soil or farming land. The biogas market can also act as an avenue into truly ‘green’ hydrogen, as steam reformation of biogas can give hydrogen as its product. With deadlines on the climate change crisis getting tighter, and COP26 emphasising on important issues concerning our fuels, the biogas market would benefit greatly from a new approach to energy generation: our growing food waste problem needs to be addressed, and we should use nature-based biological processes like AD to produce energy and heat close to the consumer who created the waste in the first place.


References

[1.]( George, Sarah. “COP26: Six Things You Need to Know from Cities, Regions and Built Environment Day.” Edie Newsroom, 21 Nov. 2021)

[2.] (Vaughan, Adam. “COP26: World Agrees to Phase out Fossil Fuel Subsidies and Reduce Coal.” NewScientist, Environment, 13 Nov. 2021 )

[3.] Department for Environment Food & Rural Affairs. UK Statistics on Waste. Government Statistical Service, 15 July 2021.

[4.] (Food Surplus and Waste in the UK – Key Facts. WRAP, Oct. 2021 )

[5.] (R Dray, Sally. Food Waste in the UK. 12 Mar. 2021)

[6.] Dittmer, Celina et al. “Modeling and Simulation of Biogas Production in Full Scale with Time Series Analysis.” Microorganisms vol. 9,2 324. 5 Feb. 2021, doi:10.3390/microorganisms9020324

[7.] ( “Four UK Distilleries Receive Share of £11.3m Government Fund.” Bioenergy Insight, 26 Nov. 2021 )

[8.] (“Small Scale, Big Impact.” Bioenergy Insight, 26 Nov. 2021)

[9.] Parry, Ian et al. “Still Not Getting Energy Prices Right: A Global and Country Update of Fossil Fuel Subsidies”, International Monetary Fund, Working Paper 21/236, 24 September 2021.

[10.] (NATURE - COP26. )



The Energy Consumption of Blockchain Technology

The potential for blockchain technology to profoundly disrupt the world is enormous. The financial system is often seen as the most vulnerable industry primed for disruption. This technology has the potential to disrupt a variety of industries, including aerospace and defence, supply chain and logistics, and energy management, most notably decentralised micro-grid systems.


A blockchain is a technology that serves as the basis for digital assets. Bitcoin and Ethereum, the two most popular digital assets, account for 59% of the entire industry. This article will discuss the energy consumption of blockchains, more precisely the bitcoin blockchain. Bitcoin is a digital currency that can be transferred directly between users through the peer-to-peer bitcoin network, eliminating the need for intermediaries.

Mining, the process through which new bitcoins enter circulation, is a critical component of the bitcoin creation process. Bitcoin miners validate transactions by utilising computers to solve complex cryptographic equations. These authenticated transactions are grouped into blocks and added to previous immutable blocks to create a chain of blocks referred to as a blockchain. With the exponential growth of bitcoin's price and popularity, as well as the increasing volume of transactions, the energy consumption of this industry has become very topical in recent years.

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Figure 1: Bitcoin energy consumed in country rankings. Research conducted by the University of Cambridge Centre for Alternative Finance. Country data from the U.S. Energy Information Administration.

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Figure 2: The Bitcoin and Ethereum PoW mining energy consumption compared to the Ethereum PoS mining after the transition. Source: The Ethereum Foundation

Bitcoin mining is arguably one of the most profitable industries on the planet now, as seen by the increasing number of mining companies going public in recent years across North America and the growth of state-sponsored or supported mining operations, as seen in El Salvador and the US state of Texas.

To critics, bitcoin mining uses a great deal of energy and is hazardous to the environment. According to these sceptics, the negative consequences of Blockchain technology, notably bitcoin mining, far outweighs the benefits. Globally, industries are being pressed to decrease their reliance on non-renewable energy sources and carbon emissions. As digital assets grow more prevalent, their high energy consumption has become a source of contention, with passionate arguments on both sides.

According to the University of Cambridge Centre for Alternative Finance's Bitcoin Electricity Consumption Index (BECI), Bitcoin currently consumes close to 110 Terawatt Hours per year, accounting for 0.55% of global electricity consumption.(Cambridge Bitcoin Electricity Consumption Index (CBECI), 2021). This is roughly equivalent to the annual electricity consumption of Pakistan and the Netherlands. At face value, this is alarming and warrants further discussion. This piece will dive deeper into how to make bitcoin mining greener and environmentally sustainable. However, first we must address some common misunderstandings about blockchain energy use.


Location Agnostic and Different Consensus Mechanisms


Bitcoin miners are not confined to specific locations, they can operate anywhere in the world with sufficient internet connection. As renewable energy sources become more cost-competitive, PoW miners will increasingly move to areas with high renewable energy concentrations.

The amount of energy consumed by blockchains largely depends on their consensus mechanism. Consensus mechanisms or protocols are procedures by which all of the peers (database nodes, application servers, and so on) of the blockchain network come to a common understanding about the current state of the distributed ledger; such mechanisms are aimed at reaching a common understanding that is beneficial to the entire network. Additionally, consensus mechanisms in crypto-economic systems assist to prevent certain types of economic attacks such as 51% attacks.

High energy consumption is not inherent to every blockchain design. The main consensus mechanism that requires the most energy is the Proof of Work (PoW) mechanism, which is the network that enables bitcoin creation. The system is fiercely competitive with new specialised hardware devices called ASICs that generate greater processing power and energy. PoW miners compete for these mining rewards which are in the form of freshly mined bitcoins. The higher a miner's computational power and the more technologically sophisticated the ASICs, the larger the bitcoin rewards payouts.

Proof of Stake (PoS) is an alternative to Proof of Work (PoW). In contrast to PoW, validators are needed to stake the native digital assets, rather than ASIC miners. PoS networks do not need a lot of processing power, they consume 99% less energy than PoW networks. Ethereum, the second-largest digital currency, is transitioning from PoW to PoS; the graph below indicates the difference in energy use.


Energy Consumption Not Equivalent to Carbon Emission

To accurately estimate the quantity of carbon emitted by bitcoin mining, it is necessary to first establish the industry's worldwide energy mix. PoW miners are located in several countries and use a range of energy sources. There will be less carbon in one unit of solar-generated power compared to a coal plant. An accurate estimate of the total energy required by bitcoin mining may be derived by estimating the hash rate and calculating the total energy consumption of ASIC miners used in the mining process.

Calculating the quantity of carbon released by these miners throughout the globe, however, is challenging. The mining process consumes the bulk of bitcoin's energy, bitcoins need very little energy after they've been mined. Let us consider a creative approach to make bitcoin mining more sustainable.

Renewables for Mining


Levelized Cost of Energy (LCOE) refers to the average net present value of electricity production during the lifetime of generating technologies. It is useful for investment planning and consistent comparison of various generating technologies.

The LCOE for solar has decreased by 90% over the last decade, according to recent statistics from the US Energy Information Administration (EIA), the unsubsidized cost is 3-4 cents/kWh. The LCOE of some projects is even lower. Compared to fossil fuels, the average LCOE of coal is about 5-7 cents/kWh, implying that solar is already cheaper than coal and at par with geothermal and hydro.

The price of solar has fallen to the point where it is cheaper to build new solar generating capacity than to operate existing coal plants in some parts of the world. The case for solar is comparable to other renewables such as wind, hydro, and geothermal in various regions of the world.

Due to grid flexibility, overgeneration, and interruptible load difficulties, PoW miners may become one-of-a-kind buyers of solar-generated electricity. There is a mismatch between peak demand and peak production, production is normally at its greatest in the middle of the day, while demand is at its peak in the early evening.

Bitcoin mining provides a solution to this conundrum by providing Demand Response (DR) with smart batteries that may be switched on and off in an instant. The grid may pay bitcoin miners to shut down when demand increases. Bitcoin mining also offers granularity in Demand-Response, if the energy supply to a mining farm must be reduced by 50%, the farm can shut down precisely 50% of its supply. Miners can shut down in batches, giving the grid the exact power it requires during peak demand.

RThe Green Agenda


Organisations such as the Climate Chain Coalition, Climate Ledger Initiative, Blockchain for Climate Foundation, and Yale Open labs Open Climate, among others, are leading the way in leveraging blockchain technology to contribute to the climate agenda. The Chinese government's prohibition on all blockchain mining has been beneficial to the sector, driving some of the world's largest coal-powered mining farms to regions with vast renewable energy resources, like North America and Iceland.

To recap, the energy usage of blockchains varies due to varied design mechanisms. PoS blockchains have significantly decreased energy consumption. Throughout North America, various commercial services power PoW mining farms with renewable energy.

PoW miners have the potential to become the purchasers of last resort for all renewable energy sources. Bitcoin mining has the potential to accelerate the global energy transition to renewables by acting as a complementary dynamic load option, enabling power grids to deploy more energy when demand is high and transferring energy back to mining farms in times of overgeneration.

References

[1.]( Cambridge Bitcoin Electricity Consumption Index (CBECI) [Internet]. Ccaf.io. 2021 [cited 5 November 2021]. )

[2.] ([Internet]. Jbs.cam.ac.uk. 2021 [cited 5 November 2021]. )

[3.] ( Schinckus C, Nguyen C, Ling F. Crypto-currencies Trading and Energy Consumption [Internet]. Econjournals.com. 2021 [cited 5 November 2021].)

[4.] (Schletz M. Blockchain energy consumption: Debunking the misperceptions of Bitcoin’s and blockchain’s climate impact | Data-Driven EnviroLab [Internet]. Datadrivenlab.org. 2021 [cited 5 November 2021].)

[5.] (How Much Energy Does Bitcoin Actually Consume? [Internet]. Harvard Business Review. 2021 [cited 6 November 2021].)

[6.]Li J, Li N, Peng J, Cui H, Wu Z. Energy consumption of cryptocurrency mining: A study of electricity consumption in mining cryptocurrencies. Energy. 2019;168:160-168.

[7.] ([Internet]. Cfpub.epa.gov. 2021 [cited 6 November 2021]. )

[8.](,a href="https://hbr.org/2018/11/making-cryptocurrency-more-environmentally-sustainable?ab=at_art_art_1x1 ">Making Cryptocurrency More Environmentally Sustainable [Internet]. Harvard Business Review. 2021 [cited 7 November 2021]. )

[9.] (Solar + Battery + Bitcoin Mining [Internet]. Medium. 2021 [cited 3 December 2021].)

[10.] ( “Virtual batteries” could lead to cheaper, cleaner power [Internet]. MIT News | Massachusetts Institute of Technology. 2021 [cited 6 December 2021].)

[11.] (How Many Solar Panels To Mine Bitcoin? Solar Bitcoin Mining – Solar Website [Internet]. Diysolarshack.com. 2021 [cited 8 December 2021].)

[12.] ( → V. Top ten list of lowest solar power prices in the world - updated April 16, 2021 [Internet]. Commercial Solar Guy. 2021 [cited 10 November 2021].)


“Decarbonization of Energy Systems With Alternative Energy Storage Technologies”

The potential for blockchain technology to profoundly disrupt the world is enormous. The financial system is often seen as the most vulnerable industry primed for disruption. This technology has the potential to disrupt a variety of industries, including aerospace and defence, supply chain and logistics, and energy management, most notably decentralised micro-grid systems.

In the modern era, in which we live, the energy crisis is becoming one of the major challenges we face in our daily lives. There are many sources of energy, including more sustainable and greener ones such as renewable energy (e.g. wind and solar energy). However, the main source of energy remains soon to be depleted fossil fuels. According to the full report of BP Statistical Review of World Energy 2019, the total consumption of energy was equivalent to 13864.9 million tonnes of oil in 2018. However, only 561.3 million tonnes of oil equivalent, (4 percent of overall energy consumption), was consumed in the form of renewable energy [1].

The burning of fossil fuels leads to carbon emission worsening climate change, which is another challenge we face besides the energy crisis. So, why do people still choose fossil fuels as the main source of energy but not renewables, even though renewable energy is cleaner, greener and more sustainable? One of the reasons is that renewable energy is mostly not as cost-effective as fossil fuels despite the huge green taxes implemented by governments. Another reason why renewable energy is not widely used is its limitations connected to time and location.

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Figure 1. The Consumption of Energy in 2019 [1]

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Figure 2. The Duck Curve [2]

Limitations Of Solar Energy - “The Duck Curve”


Let’s explore the limitations of solar energy (one of the main renewable energy sources), in terms of time and location. There is a huge difference between the solar energy produced in London, United Kingdom, where the weather is mostly cloudy, and the solar energy produced in Los Angeles, California, United States, where the weather is mostly sunny. However, despite this difference, in both cities, the energy consumption is similar since they are both big cities with large populations. It can be predicted that there will be a need for additional energy sources in London since its cloudy weather would reduce solar energy production. Solar energy production differs by time as well. While the solar energy production is greater in the mornings/afternoons and in summer/spring, it will be relatively less at night/in evenings and in winter/autumn. Considering the daily routines of people nowadays, the energy consumption is relatively greater at night than in the morning, in which more solar energy is produced. When the solar energy supply is less than the consumption demands, mostly during evening and night, the additional energy supply is produced thanks to conventional ways (coal, gas, oil, etc.). On the other hand, in the mornings/afternoons, solar energy production exceeds the demand for energy. Hence, the inverse relationship between the consumption and production of solar energy depending on the time of the day actually creates a phenomenon called “the Duck Curve.”

The Role Of Energy Storage In Decarbonising Energy Systems


In accordance with the increasing global demand for energy, the supply of energy should increase. This will lead to new emissions of greenhouse gases if it’s in the form of burning fossil fuels. Even though renewable energy is becoming cheaper, it is not enough to replace it with fossil fuels due to the limitations mentioned above, supported with the Duck Curve. Hence, alternative energy storage solutions should be applied in order to decarbonize local energy systems.

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Figure 3. Emissions reduction (%) with storage [3]

Figure 3 from the Nature article titled “The role of energy storage in deep decarbonization of electricity production” represents how emissions are reduced with storage in California. This study shows that, despite the curtailment, which is “the reduction of output of a renewable resource below what it could have otherwise produced” [4], of one-third of the renewable energy, increasing renewables in California by 60GW will reduce carbon emissions by 72%. However, in comparison to the zero-energy storage case, when energy storage solutions have been employed, the reduction in carbon emissions increases to 90%, and only 9% of renewable energy is lost. In Texas, where energy production is based less on renewable energy than in California, energy storage leads to a 57% reduction in emissions, and only 0.3% of renewable energy is lost. This illustrates that energy storage reduces greenhouse gas emissions more effectively when the energy stored is produced by renewable energy sources rather than fossil fuels [3]. The study clearly illustrates that, in order to reduce carbon emissions, employing energy storage with renewables is more effective than only utilising renewable energy. It also highlights how storing renewable energy rather than energy obtained from fossil fuels is reducing more emissions.

Compared to other decarbonizing measures, employing energy storage solutions would be more cost-effective and easier to apply. According to Massachusetts Energy Storage Initiative Study’s report titled State of Charge, over ten years, the application of large-scale energy storage would reduce more than 1 million metric tonnes of greenhouse gas emissions, equivalent to eliminating more than 200,000 cars from traffic, in Massachusetts [5]. Hence, implementing large-scale energy storage is easier and more cost-efficient than implementing other carbon emission-reducing measures such as reducing traffic. This shows another reason why energy storage has a significant role in decarbonizing energy systems.


Drawbacks Of Energy Storage & Alternative Energy Storage Solutions


Even though energy storage is known as a green technology, it can lead to an increase in greenhouse gas emissions if not deployed strategically. In the case in which fossil fuels are more cost-effective than renewables, energy storage might enable more fossil-fueled energy, thus, higher emissions. However, the most significant problem faced with energy storage is the energy loss during storing the existing energy. Even though the demand for energy does not change, more energy should be supplied and stored to meet the demand due to the loss of energy [6].

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Figure 4.The map of storage CO2 emissions in United States [7]

Even when the energy loss is minimised, many energy storage technologies have short durations which is a serious limitation. Fortunately, some novel energy technologies could solve this problem with their higher duration [8]:

Liquid Air: The generated energy is employed to liquefy air by cooling. When energy is needed, with exposure to waste heat, the stored liquid air is transformed into gas, which turns turbines to generate electricity [9].

Pumped Hydro: The basic principle of gravity is used to store the energy by pumping water from a low to a high reservoir in a dam. When water is released from the high reservoir to lower, its potential energy turns into kinetic energy, and energy is generated. Despite its low cost, one of the challenges it faces is the lack of sites to construct new pumped-hydro storage facilities since it takes a lot of space [8].

Flow Batteries: Through redox reaction, circulating liquid electrolytes in flow batteries are charged and discharged to store energy [8].

Underground compressed air: Generated electricity is used to pump compressed air into underground, which works as a storage tank. When energy is needed, the pumped and pressurised air is released and the plant re-generates the stored energy [8].


Conclusion

Replacing fossil fuels with renewables is one of the ways to reduce greenhouse gas emissions. However, due to the limitations related to time and place, renewables might not be the only energy source when not stored strategically. Storing over-generated renewable energy will reduce the reliance on fossil fueled energy; therefore, will reduce the greenhouse gas emissions from burning fossil fuels. Consequently, it will benefit the decarbonization of energy systems by replacing energy from fossil fuels with stored renewable energy. The limitations of energy storage, such as the loss of energy can be minimised thanks to alternative energy storage solutions. Hence, while advocating the use of renewables, the governments should also support the technological developments in long-duration energy storage which will reduce emissions.

References

[1.]( BP Statistical Review of World Energy [Internet]. BP; 2019)

[2.] (Confronting the Duck Curve: How to Address Over-Generation of Solar Energy [Internet]. Energy.gov. [cited 2022Jan3]. )

[3.] Arbabzadeh M, Sioshansi R, Johnson JX, Keoleian GA. The role of energy storage in deep decarbonization of electricity production. Nature Communications. 2019;10(1).

[4.] (Impacts of renewable energy on grid operations [Internet]. CAISO. California ISO; 2017)

[5.] ( STATE OF CHARGE [Internet]. Massachusetts Government. Massachusetts Energy Storage Initiative; [cited 2022Jan3].)

[6.] (Roberts D. Batteries have a dirty secret [Internet]. Vox. Vox; 2018 [cited 2022Jan3])

[7.] Hittinger E, Azevedo IML. Estimating the Quantity of Wind and Solar Required To Displace Storage-Induced Emissions. Environmental Science & Technology. 2017;51(21):12988–97.

[8.](a href="https://www.greentechmedia.com/articles/read/most-promising-long-duration-storage-technologies-left-standing ">Spector J. The 5 Most Promising Long-Duration Storage Technologies Left Standing [Internet]. Greentech Media. Greentech Media; 2020 [cited 2022Jan3]. )

[9.] (Liquid Air Energy Storage (LAES) [Internet]. Energy Storage Association. 2021 [cited 2022Jan3].)


Biomethane & Agriculture: what we can learn from Western Europe's errors.

Within the debate around climate change, renewable energy sources (RES) hold a place of choice, and some of them come easily into our minds while others take more time to do so. Next to solar & wind, biomethane is shy, often classified as “other renewable power”. However, it is promised a bright future as solar and wind have shown their limits in fall 2021, being partially responsible for the increase of gas prices in Europe [1]. More than ever, our growing dependence on intermittent energy sources make it crucial to diversify the energy mix. It should be noted that even though Europe is moving towards a system that deeply relies on electricity as an energy carrier, many industries such as iron or cement making are not yet ready to be powered by electricity, hence relying heavily on fossil fuels. In opposition to other RES, biomethane shares almost all its characteristics with natural gas, making it interchangeable with it and suitable for industry applications, while using the existing gas transmission network. The number of biomethane plants in Europe increased by 51% between 2018 and 2021 [2], which means that despite its timidity, biogas is actually making its way. As a matter of fact, Total Energies bought the French leader in methanation Fonroche Biogaz [3] and is building its first methanation unit [4] in the United States for a dairy farm (with a production capacity reaching 40 GWh per year - to be operational by 2022).

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Figure 1 : Methanation process. IEA, 2021.


How does it work ?

Biogas is obtained from the anaerobic digestion (microorganism breakdown of organic matter in a closed space without oxygen) of waste. Farm waste is usually poultry, pigs, cattle and sheeps as well as crops, and household’s food waste. To another extent, biogas can also be obtained from the waste water of certain industries (ie. beverage, food and paper) and from burning municipal waste [5]. This biogas is then upgraded to biomethane, which is almost chemically identical to natural gas, and therefore suitable for gas distribution network injection and electric power generation. After methanation of agricultural waste, the solid substance we are left with is called “digestate” and can be used as a fertiliser after being mixed with water. The methanation process accelerates the decomposition of the organic matter, creating a carbon-stabilised fertiliser that is rich in nitrogen, one of the key elements in soil regeneration. [Figure 1]

A windfall for farmers

Methanation represents several opportunities for farmers. It allows them to produce energy for themselves but also to sell it to the grid, as prosumers. It also allows them to value their waste, making them important actors of the circular economy, another important challenge and system to embrace in order to reach the UN’s Sustainable Development Goals. On another note, the digestate obtained from the methanation process represents a local alternative to artificial fertilisers, participating in creating a sustainable agriculture.

Two different approaches, with different consequences

Biomethane can be obtained from different types of waste, and most importantly, at different scales. It can range from (1) an anaerobic digester in a local farm using its own waste and the ones from neighbouring farms in order to provide around 0.06GWh/year or less to power its activities and/or local communities, to (2) a much bigger biogas plant that receives waste from numerous farms as well as industrial waste. The latter provides a much bigger amount of energy to be sold directly to the national grid. In France, in the first quarter of 2021, a methanation plant with a power generation capacity as big as 663 GWh/year was installed [6].

These two approaches are different :

1. In the first one, we value waste in a circular framework, reducing it as much as possible and turning it into a useful green energy, hence participating in decarbonizing our energy mix.

2. In the second one, although participating in decarbonizing our energy mix at a larger scale, waste is now considered as a commercial commodity and gains a strategic value.

If an independent methanation plant bases its business model on generating profit depending on the amount of energy sold to the grid System Operator (SO) or the utility, it will naturally try to get as much input (waste) as possible to generate economies of scale and reduce its operating costs. This can lead to unsustainable practises such as having waste be transported by oil-fueled trucks for several hundreds of kilometres, or relying on input provided by big industries that are negligent in terms of waste management. As a matter of fact, some plastic and heavy metals, most likely coming from the methanation of industry waste, have been found in some digestate spread on a field in Normandy, France [7]. This raises an important issue : since the digestate’s composition highly depends on the inputs, the ones obtained from abusive practises can have tremendously negative consequences, namely, land pollution.

Energy crops, incidents & leaks

Crops planted solely for energy-producing purposes rather than alimentary are called energy crops. Pushing for large-scale agriculture waste methanation using them can have unexpected social consequences, something that was observed in Germany. Germany is the world’s biggest biogas producer and home to more than 10 000 anaerobic digestion plants. Within the last decade, thanks to policy incentives, it managed to considerably increase its biogas production obtained from biomass, mostly relying on energy crops. However, the dynamics in the agricultural sector started to change drastically, leading to an increase in agricultural land rental prices [8]: growing energy maize became more profitable than growing food maize.

In 2017, one third of the maize cultivated in Germany was destined to biogas production, which forced the country to introduce a limit of 50% of maize as digester input. The limit was lowered every year to reach 44% in 2021 [9].

Besides the energy crop issue, the share of incidents out of the total number of methanation units in France has been increasing steadily in the last few years. Since a methane leakage rate of only 11% means no GHG saving compared to using natural gas [10], a lack of attention or control can lead to the whole process becoming worthless in the net-zero pathway. According to Claudia Rouaux, a French deputy of Ile-et-Vilaine, in Brittany, in 2020, only 3 controls were performed by the French Ministry of Energy Transition for a total of 39 methanation units in the department - an alarming number.

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Figure 2: A methanation unit (credit : Pixabay).

Rectifying the trajectory

As part of the quest for diversifying its energy mix and increasing its energy independence, the European Union is encouraging the development of methanation. Germany was the first country to get on board, and France is now joining its neighbour in this path.

However, the urgent need for decarbonization framed by the Paris Agreement seems to push all stakeholders into acting too quickly, leaving space for abusive practises and for things to get out of hand, at the detriment of sustainable agriculture practises.

If methanation is to become as big as what France’s expectations predict (30 TWh power capacity by 2030) [11], the control and inattention gap that was observed in the last few years needs to be filled immediately, in order to avoid an exponential growing number of accidents that could have terrible consequences on the land (which in the end, is used by the very same farmers who are asked to become prosumers), and paradoxically, on the atmosphere.

The cost of renewables have declined drastically over the last decade (see fig. 1). The levelized cost of electricity for solar PV and wind have decreased by 81% and 62% respectively between 2010-17 [8]. Alongside the lowering of costs, investments in renewable power generation increased to USD $300 billion by 2017 [8]. Of this investment sum, developing countries accounted for 63%, mainly in China, India and Brazil [8]. On a smaller scale, renewable energy has been useful for equipping households, health clinics and schools with basic solutions. These include solar panels for a few hours of water pumping, lighting or other low electrical demand processes. Over the last decade, the offerings have expanded to include village level mini-grid systems often spearheaded by private companies. On a national level, the prioritisation of renewable energy generation has proven to be sustainable for developing countries. For example, since 2009, Morocco pursued an ambitious renewable energy program based on solar PV that allowed it to increase renewable energy to a 42% share of its national energy network, staying ahead of the global average of 30% [9].

For now, biogas issued from anaerobic digestion should not be accounted as a key fuel to power the macro-electricity grid. As long as the security of the soil and the neighbouring communities cannot be assured, its role should be limited to being a powering fuel for off-grid or micro-grid communities, paving the way for more decentralised, local and sustainable communities.

References

[1.]( Jesper Starn & Rachel Morison (2021), U.K. Power Prices Soar Above £2,000 on Low Winds)

[2.] (European Biogas Association, EBA - GiE Biomethan map (2020))

[3.] ( Total Press (2021), Total Acquires Fonroche Biogaz and Becomes the French Leader in Renewable Gas )

[4.] (Total Press (2021), United States: TotalEnergies and Clean Energy Launch the Construction of their First Biogas Unit )

[5.] (European Biogas Association, EBA (2021), The role of biogas production from industrial wastewaters in reaching climate neutrality by 2050)

[6.] (Ministère de la transition Écologique de la France (2021), biométhane injecté dans les réseaux de gaz Q1 2021 )

[7.] (Thomas Baïetto, France Info (2019), #AlertePollution : les méthaniseurs, qui fabriquent du biogaz avec des déchets, sont-ils vraiment écologiques ? )

[8.] (Franziska Appel, Arlette Ostermeyer-Wiethaup, AlfonsBalmann (2015), Effects of the German Renewable Energy Act on structural change in agriculture – The case of biogas. Leibniz Institute of Agricultural Development in Transition Economies (IAMO), Theodor-Lieser-Str. 2, 06120 Halle (Saale), Germany)

[9.] (Daniela Thrän, Kay Schaubach, Stefan Majer & Thomas Horschig (2020), Governance of sustainability in the German biogas sector—adaptive management of the Renewable Energy Act between agriculture and the energy sector, Energy, Sustainability and Society)

[10.] (The International council on Clean Transportation (2021), Biomethane potential and sustainability in Europe, 2030 and 2050. )

[11.] (https://www.grdf.fr/acteurs-biomethane/aventure-biomethane-pleine-croissance)