1. The Low Carbon Society Challenges and OpportunitiesAndrew SentanceProfessor of Sustainable BusinessWarwick Business School Making Science Work ConferenceExeter, 3rd December 2009

2. Outline The challenge of the Low Carbon Society Implications for economy and key sectors Policy instruments and measures Key steps and business opportunities 3. Carbon emissions per headCO2 per capita, 2005 values 25 20 15 10 2050 target52-2.5 T0 il y SKna a liana acea az anpa adre disiUUra hian usIn BrKo mJa an st CFrRerAu CGSource: OECD 4. Sustainable global emissions scenariosAnnual greenhouse gas emissions (GtCO2e)70605040302016:4% 2010Increased early grow th 0 20002010 20202030 2040 2050Year2016:4 trajectory with global emissions peaking in 2016 with subsequent reduction in total emissions of 4% subsequentSource: Climate Change Commission 5. World GDP growth and CO2 emissions from energy Average annual growth rates, percentGDP5Carbon DioxideEmissions4 3 2 1 0 70s80s90s 2000-08Note: Carbon dioxide is measured in millions of tonnesSource: World Bank and BP Statistical Review 6. Greenhouse gas emissions, by sourceGlobal GHG emissions in 2000 = 42GT CO2 equivalent5% 3%25%Power 14% Industry Transport Buildings Land use* Agriculture* Waste*18% 14% Other 8% 13%Source: Stern Review (2006) * Non-energy emissions 7. Key steps Decarbonisation of power sector andtransport Big shift in energy efficiency of industry,buildings & appliances Cutting non-energy emissions fromagriculture, changes in land use & waste 8. Decarbonisation of power sector Hydro, wind, wave/tide & solar Bio-fuels and bio-mass Carbon capture and storage Energy storage schemes Nuclear power 9. CO2 emissions from global transportTotal CO2 emissions in 2000 = 5.6 GT 2% 12% Cars and vans 10% Freight trucks 2-3 wheelers 45% Buses 6%Water Aviation2% Rail23%Source: Stern Review (2006) 10. Transport carbon emissionsExcluding international aviation and shippingCO2 emissionsCO2 per capita Transport as % of total(million tonnes) (tonnes/head) CO2 emissionsUnited States1813 6.131%Canada160 5.029%Australia 803.921%France135 2.235%United Kingdom129 2.224%Italy 119 2.026%Japan 268 2.021%Germany 159 1.919%Russia206 1.413%Brazil138 0.741%China 332 0.37%India 960.18%Source: OECD 11. Transport cutting emissions Reduce travel How we travel time shift, mode shiftand behavioural change Carbon efficiency of individual modes 12. UK carbon taxes/T of CO2, 2009 values300250200150100 500Domestic Climate EU ETSStern carbon Air Motor fuels-50 gaschange levy permits pricepassenger duty 13. CO2 emissions by UK transport modeGrams per passenger kmCurrent 2050 potential 180 160 140 120 100 80 60 40 200 CarRail - Rail -Bus Air - Air - Air - electricdiesellonghaulshorthaul domesticSources: Committee on Climate Change, 2008; CfIT (2007); and authors estimates.Note that 2050 figures are illustrative based on 90% decarbonised electricity 14. Contribution of energy efficiency Potentially massive increase in requirement for verylow carbon energy Significant shift in energy efficiency will reduce theload on the future low-carbon energy system Key areas: energy distribution; transport; buildings;appliances & industry Potential rebound effect Regulatory and pricing interventions needed todrive investment and behaviour change 15. Building the low carbon societyEconomic Instruments Behavioural Low CarbonTechnology & Structural Society Change Political Frameworks 16. It is not from the benevolence ofthe butcher, the brewer, or thebaker, that we expect our dinner,but from their regard to their owninterest.Adam Smith, Wealth of Nations, 1776 17. Technology potential drivers Consumer demand Strategic vision Carbon pricing Regulation and standards Government policy and financial support 18. Technology barriers Consumer confusion Conflicting business strategies Inadequate long-term price signals Uncertain regulation Unclear or inconsistent policyapproaches 19. Economic instruments Emissions trading Carbon taxes Energy taxes Incentives for developing andembodying low carbon technologies Energy efficiency incentives 20. Potential size of carbon markets 20000 18000Million tonnes CO2 emissions, 2002Total emissions from fossil fuels 16000Emissions from power and industrial sectors (estimated) 14000 12000 10000 8000 6000 4000 20000 European Union United States of China, India,G7EU25, Jap, Aus, OECD Top 20 Global(25)AmericaMexico, Brazil,Can, USA emittersSouth Africa(+5) Extending EU ETS to power and industrial sectors in Top 20 countries would create a market of US$90-350 bn 21. Emissions trading key conditions Comprehensive geographically Wide sectoral coverage Long-term framework of caps/targets todrive investment Robust monitoring and reporting Strong institutions to underpin credibilityand protect against political interference 22. Emissions trading in practice EU ETS is best established scheme, but targetsand framework relatively short-term Sector coverage limited transport, agricultureand domestic energy use largely excluded Prices have been volatile and emissionsreductions have been modest Political pressures and influences on allocationprocess Copenhagen a major opportunity to moveahead with global emissions trading? 23. Key steps to Low Carbon Society Twin track approach: major shift in energy efficiency, whiledecarbonising energy & transport Massive expansion of low/zero carbon electricity supply,using a wide range of technologies Electrification of road transport, alongside increasing useof bio-fuels Heavy investment in low carbon technologies will berequired especially in energy sector and transport Wide range of economic & regulatory instruments to bedeveloped, providing consistent & long-term price signals 24. Business opportunitiesStrategic driver: There is No Alternative (TINA) to the LCS1) Key energy and transport sector challenges technology, infrastructure, systems and support2) Helping households and firms identify and deliver energy efficiency improvements3) Developing market infrastructure for carbon trading, pricing and decision-making4) Supporting policy-makers in developing and delivering new and innovative tools and frameworks5) Educating, informing and advising the public and the business community on LCS change agenda