Carbon Market –Sahateollisuusmiesten kokous

11.04.2019Mika Anttonen, St1

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The Global Energy Challenge

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Energy Demand (Mtoe)

New Policies Scenario

Fuel 2017e 2025 2030 2040

Coal 3 750 3 768 3 783 3 809

Oil 4 435 4 754 4 830 4 894

Gas 3 107 3 539 3 820 4 436

Nuclear 688 805 848 971

Hydro 353 415 458 531

Bioenergy 1 384 1 590 1 691 1 851

Other renewables 254 516 736 1 223

Total 13 972 15 388 16 167 17 715

IEA World Energy Outlook 2018

Source BP Energy Outlook – 2016 edition

Growth in Renewable Energy needs to be >10 times higherthan today

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©BP p.l.c. 2019

To stay within the Carbon Budget of 580 Gt the use

fossil energy needs to halved every decade

The annual growth of RE in primary energy consumption would have to be

~760 Mtoe between 2020 and 2030. In 2017 it was only 69 Mtoe.

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1) IEA WEO 20182) Calculation: The growing energy need and halving the use of fossil energy use every decade would be covered by

incremental renewable energy

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Global Energy investments (USD billion)

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IEA World Energy Investment 2018 https://webstore.iea.org/download/direct/1242?fileName=WEI2018.pdfIEA World Energy Investment 2017 https://webstore.iea.org/download/direct/225?fileName=WEI2017.pdfIEA World Energy Investment 2016 https://webstore.iea.org/download/direct/235?fileName=WEI2016.pdf

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200

400

600

800

1000

1200

Fossil Nuclear Renewables Electricity networks Energy efficiency

Energy investment 2015 - 2017 (USD billion)

2015 2016 2017 ©IEA

Fossil CO2 emission reach all time high in 2018

Balancing Global Carbon Cycle

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Image St1 Oy

White numbers are annual carbon fluxes in gigatons.

Yellow numbers indicate stored carbon in gigatons.

1 Gt = 1 billion tonsBtC = Billion tons of carbon

Note!• Probably the biggest source of

confusion and errors in climate discussions concerns “carbon” versus “carbon dioxide

• One ton of carbon equals 3.67 tons of CO2

• The central climate number is the atmospheric concentration of carbon dioxide (~ 400 parts per million, ppm)

Sources: Earth System Science Data - Global Carbon Budget 2017; Pan et al. 2011; Clais et al. 2013 *calculated from the sources1) Since ppm measuring has started in 1959, the increase of carbon in atmosphere is 185 BtC

Yearly carbon increase 4,81) (2017),

(~17,6 Gt CO2)

Atmosphere 850*

Carbon debt, reduction need 1851)

(~680 Gt CO2)

The challenge – oil refining products

Crude oil refining produces always the same oil products:

• light distillates, middle distillates, heavy distillates and residuum

• i.e. if you produce Jet fuel, the process produces the other products as well

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Liquefied petroleum gas

Jet fuel

Heavy fuel oil

Lubricants

Diesel oil and light fuel oil

Petrol

PreheatingBitumen

Crude oil

What should be done? Cut down carbon dioxide emissions at maximal speed• Completely dependend on the renewable energy investment capabilities, the progress limited by

• Engineering & Financial resources• Bottlenecks in technology• Compatibility with the old energy system• Regulation

Carbon Sequestrating from atmosphere• Increasing the amount of biological carbon sinks through photosynthesis• Afforestation and new cultivation methods• New technologies capturing CO2 from atmosphere and using solar power to produce hydrogen from water. The combination results methane or synthetic liquid fuels

and oxygen

R&D to remove the bottlenecks of energy system• Electricity and heat storage systems in industrial scale• Separation from the problematic crude distillation curve – bio crude oil and replacing solutions for the refined oil products

Scale down current Western consumer behaviour towards more sustainable way of life • Raising awareness• Regulation

To create Market-based market place for sequestered and emitted CO2

• Carbon Market, where the emitting companies will pay and carbon sequestering companies will get income to finance renewable energy investments

Measuring• All emissions and carbon sequestration activities must be under common measurement standard, which is prerequisite for a working Carbon Market

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Renewable energy developments

by controlled exploitation of CO2 cycles

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CO2

H2

N

Methane

Methanol

Dimethyl ether

Sustainable

new materials

Ammonium

Sustainable

fertilizer supplies

Synthesis

SynthesisEnergy

production

Electricity

Heat

Cool

Balancing

Water

Electrolysis

CO2

capture

O2

Air

Seawater

Industry

Electricity - Solar & Wind, Batteries, Storage

Strategic modelling of global transition of technologies, by country on an hourly level

Nitrogen

capture

System Efficiency and Grid Management

Energy

storage Fuels

Storage

Transpor-

tation

Car

Heavy trafic

Marine

Air trafic

Market place for carbon removed from the atmosphere

Third party verification

Market-basedpricing

Scientific verification of carbon removal claims

Market placefor carbon

CRC (Carbon Removal Credit) traceability ensures the authenticity and traceability of carbon credits

DEMAND(emissions)

SUPPLY(carbon sequestration)

Scientific verification

of produced emissions

Third party verification

Afforestation

Agriculture and agroforestry

Carbon capturetechnologies

Other carbonbinding projects

(e.g wetlandrestoration)

Project A

Project B

Company

A

Company

B

Company C

Producer

A

Producer

B

Producer

C

Consumers

Companies in mandatedsectors (e.g)

Other companies

Fuel

distributors

and

transportation

Electricity

producer

EUREUR

EUR

EUR

CRC

CR

C

CRC

CRC

Finland, Nordic countries and EU have a Billion euro opportunity to create and commercialise Carbon

Market and Carbon Sink concepts - includingstandardized measurement system.

That would be the responsible way for Europe to demonstrate leadership and to show example.

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Link to video: Carbon Farming

Let's make Sahara green again

Image http://clubofmozambique.com/news/southern-africa-join-great-green-wall-august-30-2016/

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The Global Energy Challenge

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1) UN News World Population Prospects: The 2017 Revision2,3) BP Energy Outlook – 2019 edition https://www.bp.com/en/global/corporate/energy-economics/energy-outlook.html ©BP p.l.c. 2019

©UN

©BP p.l.c. 2019

”Showing example” inside the EU is just not enough

Allowing CO2 abatement actions outside the EU is needed

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1)

3.9 Gt CO2-eq2)

1) Global Carbon Project, Global Carbon Budget 2017: http://www.globalcarbonproject.org/carbonbudget/17/files/GCP_CarbonBudget_2017.pdf2) European Environment Agency: https://www.eea.europa.eu/data-and-maps/indicators/greenhouse-gas-emission-trends-6/assessment-13) IEA, World Energy Outlook 2018, Current Policies Scenario

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EU Emissions 2017e Growth of global emissions w/o EU 2030vs. 2017

Gt CO2Growth of global emissions vs. EU 2017e

3)

2)

3,9 Gt CO2-eq

Growth 2025 vs. 2017

Growth 2030 vs. 2025

Carbon sinks are both imperative and cost effective

Electric Vehicles

Biofuels

~400 -6004) €/tCO2

Measure Cost per abated tCO2

EU Emission Trading (ETS)

225- 4003)

€/tCO2

~201) €/tCO2

14.11.2018 Eduskunta turvallisuuden tekijänä -keskustelu15

1) eex: https://www.eex.com/en/market-data/environmental-markets/spot-market/european-emission-allowances#!/2018/11/292) St1 own analysis for Carbon Farming project. Several sources.3) Current market price for HVO in the Nordic market, Actual offer for 225 €/tCO2 and by market intelligence estimated price span for 20304) Integrated Fuels and Vehicles Roadmap 2030+ (Roland Berger, April 27, 2016): The societal cost for long-range BEVs across different personnel vehicle segments5) European Environment Agency: https://www.eea.europa.eu/data-and-maps/indicators/greenhouse-gas-emission-trends-6/assessment-16) Natural climate solutions, PNAS: http://www.pnas.org/content/114/44/116457) Global Energy Transformation: A Roadmap to 2050, IRENA: file:///C:/Users/MIAHO/Downloads/IRENA_Report_GET_2018.pdf8) Electric Vehicle Outlook 2018, BloombergNEF: https://about.bnef.com/electric-vehicle-outlook/#toc-download

CO2 abatement potential

LULUCF 50-2002) €/tCO2CO2 abatement potential globally23,8 Gton/a CO2-eq by 20306)

CO2 reduction 2016 actual vs. 2030 cap in the EU 0,374 Gton/a CO2-eq by 20305)

CO2 abatement potential globally 2,3 Gton/a CO2-eq (720 Mtoe/a by 20507))

CO2 abatement potential globally 1.2Gton/a CO2-eq (365Mtoe/a by 20408))

Carbon Market is needed to achieve Carbon neutral EU by 2050

SetCO2 emission

reduction obligations to

companies

Allow CO2

reduction activities across

the sectorsand in the 3rd

countries (incl. carbon sinks)

Carbon Market: Create a market

place for emitted and sequestrated

CO2

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Inside the EU a minimum CO2 reduction level to be set, with the emphasis on globally scalable measures and technologies