Lecture 6 - Demand side: industry and transport

Question 1

What do we mean by industry?

Answer 1

• Diligence in an employment or pursuit, steady or habitual effot
• Systematic labour, especially for some useful purpose or the creation of value
• A department or branch of art, business or manufacture
• A distinct group of profit making enterprises
• Manufacturing activity as a whole

Question 2

How much global energy does industry consume?

Answer 2

• 35%

- Of that, 70% supplied by fossil fuels

Question 3

What industries emit the most?

Answer 3

• Cement (26%)

- Iron and steel (30%)

Question 4

What does higher GDP tend to mean?

Answer 4

• More service sector
• Less industry
• Less agriculture?

Question 5

How is energy used in industrial processes?

Answer 5

Energy in: coal, oil, gas, electricity, bio/waste

• > Process route: e.g. oxygen furnace for iron production, chemical pulping, cement kiln
• > Unit operation: mixing, chemical reactor, separation, filtration
• > Energy services: heating, cooling, pumping, motors, compression

Question 6

Why is it challenging to decarbonise industry?

Answer 6

• Very heterogenous, i.e. wide range of sectors and processes. Processes can vary from site to site depending on, e.g. quality/availability of raw materials
• Very high temp processes - rely on direct burning of fossil fuels to reach these temperatures
• Process emissions - arise from chemical processes such as limestone calcination - electrification won’t eliminate these emissions.
• Competitiveness - products such as steel and cement are traded on the international markets and need to be price competitive thus making it difficult to pass on the costs to the consumer.
• Carbon leakage - companies move production abroad to countries with less ambitious climate measures - can lead to a rise on global GHGs

Question 7

What the the equation for the decomposition of emissions from energy?

Answer 7

GHG from the industrial sector
= Emissions intensity (GHG / energy consumption)
x Energy intensity (energy consumption / materials produced)
x Materials intensity (materials produced / stock pf products created)
x Product service intensity (stock of products created / services delivered)
x Product service delivered (service delivered)

G = G/E x E/M X M/P x P/S x S

Question 8

How can emissions intensity (G/E) be improved?

Answer 8

• Switch from coal to gas where possible
• Switch to biomass and wastes
• Requires improved agricultural and waste management practices.
• Electrification of industry, e.g. heat pumps
• CCS - 4.57GtCO2/year needs to be captured from industrial sites by 2050 (2DS). Advantages: potential for clustering, some high purity CO2 sources can be an easy win. Disadvantages: wide range of CO2 sources, different pressure, temp and CO2 concs, impurities in flue gas, heat integration more complex, adds costs and an energy penalty

Question 9

How can energy intensity (E/M) be improved?

Answer 9

• Reduce the required input of energy whilst still producing the same product
• Process-specific options: highly dependent on manufacturing process, can result in step change improvement in energy efficiency, often involves a large capital outlay, e.g. improved process design, heat recovery
• Cross-cutting options: independent of manufacturing process, requires a system based approach, typically incremental improvements, smaller capital investment, e.g. improvement in ancillary equipment such as compressed air, stream systems, motor driven systems
• Abatement of industrial emissions requires continual technology advancement: implementation of and improvements in current Best Practice and Best Available Technology (BAT)
• Should be possible to increase efficiency whilst increasing production by 2035 across all major industries (pulp & paper, cement, chemicals, iron & steel
• Energy costs are a significant driver of energy efficiency improvements.

Question 10

How can materials intensity (M/P) be improved?

Answer 10

• Reduce yield losses, e.g. around 1/3 of all food is wasted. Required significant behavioural changes
• Reuse old material
• Improve product design, e.g. light-weighting of cars without loss of performance

Question 11

How can product service intensity (P/S) be improved?

Answer 11

• Reduce the amount of wasted product, e.g. around 1/3 of all food is wasted. Required significant behavioural changes
• Deliver the same ‘product service’ with fewer products, e.g. increase the lifetime of products through repair and maintenance, cars estimated to spend around 95% of their lifetime parked - increase sharing through rentals, new business models

Question 12

How can product service delivered (S) be improved?

Answer 12

• Reduce the overall demand for product services .g. reduce the amount of products we consume. The relationship between happiness and consumption (increased GDP = increased life satisfaction).

Question 13

Which elements of the equation for GHG from the industrial sector is for demand?

Answer 13

M/P x P/S x S

Question 14

What can be done to decarbonise steel?

Answer 14

• Hydrogen based production
• Electrolysis
• CCS integrated process

Question 15

What can be done to decarbonise chemicals?

Answer 15

• Bio-based plastics?

- Hydrogen fuel and feedstocks?

Question 16

What can be done to decarbonise cement?

Answer 16

• 100% waste fired kilns?
• Advanced CCs options such as Ca-looping?
• Electric kilns

Question 17

What are the main challenges for innovation in industry and how can they be addressed?

Answer 17

• Large capital outlay therefore high risk: assistance with investment, e.g. government support, long-term policy signals.
• Must be demonstrated at scale for learning with no opportunities for modularisation as with renewables: international collaborations and technology transfer allows for a shared global learning curve
• Competitiveness - costs can’t always be passed on to the consumer in order to remain competitive: sector-wide agreements, creating demand for low-carbon products down the value chain

Question 18

What are the main limitations of MACC curves?

Answer 18

• Very dependent on underlying assumptions which are often not transparent
• Interactions and path dependency
• Costs exclude indirect costs/benefits
• Assume regional agents with perfect information
• Discount rate used
• Inter-temporal issues - MACC is a snapshot in time
• No representation of uncertainty

Question 19

What are the main barriers to reducing emissions from industry?

Answer 19

• Monitoring and metering - cost of energy is the main driver, CO2 monitoring is based on estimations, full metering is very expensive.
• Technical - risk of interruptions to production, mist obvious high gain options have already been implemented, future reductions will require breakthrough technologies
• Costs - not familiar with MACC curves, high certification cost to trade carbon, threat of rising energy prices considered to be main driver
• Competitiveness - cannot pass on to consumers
• Policy - environmental compliance increases energy intensity, hurdles with new equipment, target setting - no consistent method to handle variation of energy intensity with tonnage.

Question 20

What are the key elements of the UK policy landscape that impacts on industry?

Answer 20

Direct impacts on energy intensive industry:

• Climate Change Agreement
• EU ETS
• Renewable Heat Incentive

Indirect impacts on energy intensive industry:

• EU ETS in power sector
• Carbon price floor

Direct impacts on light industry:

• Climate Change Levies
• Carbon Reduction Commitments

Question 21

How can we enable action within industry?

Answer 21

• Develop international standards for energy and emission monitoring - essential for accurate benchmarking
• Design policies with the aim of overcoming the barrier to the adoption of cost effective energy efficient technologies
• Drive the update of more expensive abatement options through subsidies, carbon pricing etc
• Facilitate technology transfer in order to encourage global spread of BAT
• Provide the necessary regulatory frameworks for new technologies

Question 22

Provide a breakdown of emissions from the transport sector

Answer 22

Road = 72%
Shipping = 9.26%
Aviation = 6.52% (international) 4.10% (domestic)
Also rail, pipeline, HFC, waterborne

Question 23

Provide the equation for the decomposition of emissions from the transport sector

Answer 23

G 
= Sum 
(( Sum of fuel emissions intensity) 
x energy efficiency 
x modal share )
x transport demand

G = Sum (( Sum of Gi,j / Ei,j) x Ej/Mj X Mj/T) x T

Gi,j = GHG from fuel, i, consumed on mode, j
Ei,j = Energy consumption of fuel i, consumed in mode, j
Ej = Energy consumption of mode j
Mj = Transport demand of mode j
T = Total demand for transport

Question 24

How can we improve on fuel emissions intensity (Gi,j/Ei,j)?

Answer 24

1. Fuel switching to lower carbon fuels:
   - Natural gas: renewed interest, may provide a bridge to biome thane systems for biogas. Compressed natural gas (CNG) for road vehicles which has energy efficiency similar to petrol/diesel would lead to a 25% reduction in gCO2/km
   - Biofuels: ethanol and biodiesel can be blended at low levels (10-15%) with petroleum and used in unmodified internal combustion engine (ICE). At low cost Ice can be modified to accommodate blends up to 85%. Already demonstrated in aviation. GHG emissions 30-90% lower per km than petroleum based fuels.
   - Aviation sector: emissions are expected to grow by 5% pa by 2050. In medium term radical new aircraft design could improve fuel efficiency by 25%, potential for biofuels - technically feasible to blend up to 50%, hydrogen planes also a possibility - first flight of 4 seater plane in 2016, but would require large storage volume, starting point could be to fuel on the ground during taxi and EasyJet is exploring this currently.

Question 25

How can we improve energy efficiency (Ej/Mj)?

Answer 25

• Enhanced vehicle and engine performance
• Lightweight materials
• Redesign light duty vehicles (LDVs) to bring in line with best in class
• Improved aerodynamics, auxiliary components, rolling resistance, weight reduction
• Potential for 50% improvement in fuel economy of LDVs by 2030 relative to 2005
• Electric vehicles (EVs) - plug in hybrids (ICE plus battery charged on grid, decreases fuel by 45%), Battery EVs (2 times more efficient than ICE, could reach cost parity with petrol/diesel by 2020, rapidly extending range >400km, driven by rapid drop in Li-ion battery costs)
• Hydrogen fuel cell vehicles - 1.5x more efficient than ICE, limited by hydrogen infrastructure and refuelling, most likely for heavy trucks.

Question 26

How can we improve modal share (Mj/T)?

Answer 26

• Switch to lower carbon modes of transport
• Heavily dependent on behavioural changes and infrastructure
• Deliberate and considerate urban planning can have a significant impact, e.g. public bike sharing, cycle lanes
• Around 15% current journey <5km could be replaced by walking or cycling
• High speed rail as a substitute for driving or flying
• Freight - current trend awaits from rail and towards air and road. 70% growth in truck travel expected between 2010-2050. European Commission has set targets of all freight journeys >300km ti be by rail or ship by 2030. Requires doubling or rail capacity.
• London 2012 - 28% incr in tube journeys, road traffic down 7%, cycling up 20%. On an average weekday 1/3 people changed their travel in some way. 77% of Londoners made some change to their travel during the Olympic games.

Question 27

How can we improve total demand for transport (T)?

Answer 27

• Densify urban landscapes
• Source local products
• Optimise logistics
• ICT conferencing
• Travel time budget - average amount of time per day a person spends commuting - seems to be independent of wealth, race, geography. Averages 1.1-1.3 hours of travel per day. Speed of travel dictates range.
• Cost - relative cost of fuels and taxes
• Social and cutural factors - vehicle ownership is a sign of wealth/status, you’re generations in OECD countries favour cycling, walking, public transport over LDVs
• Strong relationship between GDP and car ownership

Question 28

What are the co benefits of emission mitigation in the transport sector?

Answer 28

• Health - decreased pollution and increased activity
• Reduced noise
• Reduced death rate (road higher risk than other forms of transport)
• Reduced congestion
• Improved public transport

Question 29

What are the main behavioural aspects that impact on mitigation within the transport sector?

Answer 29

• Purchase behaviour - consumers rarely consider total cost due to imperfect info, info overload. Policies: fuel economy standards, sliding scale vehicle tax systems
• New technologies/fuels - consumers unwilling to purchase due to risk aversion, uncertainty, perceived quality.
• On road fuel economy - can be 30% better but not done due to driving conditions, driver behaviour, vehicle age. Policies: traffic management, intelligent transport systems, vehicle and road maintenance.
• Eco-driving - 5-10% improvement in fuel economy, Policies: driver education and training
• Rebound effects - Lower costs of travel an result in more travel. Policies: fuel tax, road pricing to offset lower travel costs from efficiency improvements.