The identity crisis for net zero: Why you can bend politics but not truth
Regular readers will expect predominantly empirical data from Emissions Analytics, but this newsletter takes a detour into pure logic. More Karl Popper than David Hume. At the time of writing, vehicle decarbonisation targets across Europe are coming under serious strain, yet proponents are doubling down. The fear of invalidating the fundamental decarbonisation policy of electric vehicles powered by renewables is too great. But rather than argue over the latest facts and figures – are battery electric vehicle (BEVs) sales soaring or crashing – we can assess the situation in an alternative way. We can ask ourselves what the logical conditions would need to be to meet the various mandates. Is it logically possible?
To assess this, we should consider the Kaya identity, developed by Japanese energy economist, Yoichi Kaya, in 1997. It describes the relationship between several economic, energy and population metrics and total carbon dioxide (CO2) emissions. The crucial element is that is not an equation, but an identity. A mathematical equation describes the relationship between variables such that at least one permutation is true. An identity, in contrast, is always true. Simplistically, “a = 2” tells you the correct single value for “a”, whereas “a × 2 ≡ 2a” is true for all values. In other words, the identity describes something that is logically true, as the Kaya identity describes total global CO2 emissions as the product of the following factors:
CO2 ≡
Population × GDP per capita
× Energy intensity of GDP × Emission intensity of energy
To achieve global net zero, therefore, we must reduce at least one of these elements to zero. Moreover, there is no other way to achieve the goal. It’s just maths and logic. It is not that we can come up with some new, creative engineering or policy ideas to find another way. Any initiatives to reduce CO2 must lower one or more of these factors.
And so, we can look at each of these factors to assess the prospects and possibilities for reaching net zero in much the way Europe and some other countries plan. We can immediately rule out population as the lever, as killing large swathes of the human population would not be acceptable. In fact, the human population is still on a growing trend, although is likely to peak around 25% higher than today around the end of the century. In the longer term, declining global population may ease the emissions burden, but only on a timeframe way beyond current policy objectives.
Reducing energy intensity of GDP means becoming more efficient: producing more with less energy. LED light bulbs. Lower fuel consumption cars. Arc furnace steel plants. Recent decades have seen many successful initiatives in energy efficiency, not least the move with cars that used to only deliver 20 miles per gallon of fuel and how, with hybridisation, can easily achieve 50. Most of these initiatives come at the cost of upfront investment, but have the advantage that the reduced energy consumption delivers on-going financial savings to offset this investment. Therefore, naturally, people and businesses will invest in energy efficiency until their margin gain is zero. In most cases, this will be well short of zero energy consumption, and so there is likely to be a natural lower limit on how low energy intensity of GDP will go without technological breakthroughs or government incentives.
The next lever is the emissions intensity of energy. Once we have exhausted ways to produce the same economic activity with less energy, we must make that remaining energy cleaner. Solar heated hot water. Nuclear powered submarines. Flour ground by windmill. The ultimate, perhaps, will be nuclear fusion, which offers the prospect of unlimited carbon-free energy. Currently this remains prospect rather than reality. It is a further interesting feature of the Kaya identity that – if we get to scalable, commercial nuclear fusion with near-zero emissions intensity of its energy, we would be able to achieve net zero CO2 emissions while having near-infinite economic activity and catastrophically inefficient products and processes. In other words, if one variable in the identity tends to zero, zero CO2 will be achieved however bad the other factors are. Such an outcome would unlikely be the best for human society if that energy would also almost cost-free, as we would bump up against other planetary constraints such as space and physical resources in an orgy of consumption. In other words, decarbonising human activity is a policy priority but should never represent some exclusive or even abiding objective of the world.
We can put some rough numbers of how these various factors have changed over time. Symbolically, let us take the 1997 as the benchmark year, not just as it is when the Kaya identity was first published, but also as the date of the Kyoto protocol, which framed some much of subsequent decarbonisation policy. A reasonable estimate would be that, since 1997, global population has increased by 37%, energy intensity of GDP has fallen by 33%, and emissions intensity of energy has come down by just 4%. Combined, this would imply a 12% reduction in global CO2 emissions, which is in stark contrast to the approximately 50% increase in actual global emissions. How can this be?
The likely explanation for the difference is the final factor that we have yet to consider: GDP per capita. Economic activity per head of population, in other words. While not a perfect measure of financial welfare, it is the least bad global metric we have. We get richer on this measure as we become more productive, squeezing more activity out of our finite resources of land, labour, capital and enterprise. Since 1997, global GDP per head has risen strongly, by 80%, which accounts almost exactly for the gap.
Why come to GDP last in this discussion? Energy and emissions intensity are both factors that most people would agree are good things to reduce. There are challenges in doing some, and effort and investment is required, but becoming more efficient must help our CO2 goals. Population is more ambiguous as a target, with arguments on both sides as to whether a greater or smaller population is desirable. Whatever, governments’ ability to influence fecundity is almost always shown to be futile, whether you are Mussolini or Macron. GDP per capita, on the other hand, is a variable we can strongly influence by policy, and by and large we want GDP to be as high as possible, to deliver us a good standard of living. There is, therefore, a direct conflict: we want GDP to go up, but we want CO2 to go down. Governments aim to reconcile these two objectives by reducing energy and emissions intensity. Energy efficiency schemes continue, and are often worthwhile, but it is clear than infinite efficiency is impossible. That leaves the main lever of government being to reduce emissions intensity of energy to zero. That is our “net zero.
How realistic is this? Let us be practical and accept that zero emissions intensity of energy is unachievable, but that a 90% reduction would be close enough to put net zero within reach. To reach that goal, a compound annual reduction of around 7% would be needed in emissions intensity from 2020 to 2050. This might not sound too daunting, but over the last twenty years – despite all the efforts and investment – Europe has only achieved around 2% per year reduction. Globally, the rate of improvement has been even lower.
There is only one case in the history of the modern world in which such reductions in emissions intensity were achieved. This was France’s policy of nuclear expansion in the 1970s and 1980s in responsible to the oil crisis of 1973 and 1979. They build almost 60 nuclear reactors in less than a generation, and as a result achieved emission intensity reduction of electricity of 11% per year in the 15 years afterwards. Even that only translated to 3% at the whole energy system level. Then, Chernobyl happened almost 40 years ago to this day, which gave ample (although largely misplaced) ammunition to anti-nuclear groups to pressurise European and US governments to limit further nuclear investment (although. Only now, in the face of logical consequences of the Kaya identity, is that beginning to change.
Therefore, it is only reasonable to conclude that the 2050 date for reaching net zero as interpreted by the International Panel on Climate Change, following the Paris Agreement of 2015, is not going to happen, and in all likelihood we will not even get close. Where does that leave a government – such as the UK or many in Europe – that is so strongly wedded to this global emissions objective? Only one lever is left: allow GDP per person to fall, such that a combination of reduced economic activity, higher efficiency and lower emissions intensity can together get close. There is no other way.
But we must be clear what this means logically: a long and severe economic recession. Poorer citizens. Worse quality of life. There is no other way, logically, if you want to hold doggedly to the objective.
Populations in Europe are becoming increasingly restive about their financial welfare slipping progressively behind other countries and in real terms. There is a high chance that a limit will be reached that will be expressed electorally. Stagnating living standards have now persisted for twenty years. While the banking crises of 2007/8 is often blamed for this, persistent recession today may be in no small part the deflationary policy of decarbonisation endorsed by governments in the same period, as for example by the 2008 Climate Change Act in the UK.
What might this on-going, severe recession look like. Energy rationing for a start. This may sound fanciful, but we are already seeing the structure of rationing appearing. “Vehicle-to-grid” charging of BEVs may sound like a great policy for efficient allocation of electricity to transportation demand – which it is – but it is also a mechanism which governments could abuse to extract energy from car batteries and prevent recharging by certain people at certain times. The new vehicle fleet CO2 target regime is, in practice, becoming a mechanism for rationing the number of internal combustion engine vehicles that can be sold. In the UK, within a few years you will not be able to rent a house that does not achieve a certain level of energy efficiency.
At the point that voters rebel, the current orthodoxy must be replaced by an approach that does not put emissions reduction above the financial welfare of citizens. And the profound frustration is that there is a one way out of this problem, as shown above all by France, by rolling out nuclear fission at scale. This could take the centrally-directed form pursued by France, but small modular reactors offer the possibility of greater speed, flexibility and competition in an area currently overburdened by regulatory constraints.
Maybe it is not too late, logically.