Key Skills Session 4

Key Skills for Corporate Transition

• Session 4, presented by Sophie Chlela on 20/11/2024
• Provided by Mines Paris, PSL, and Skema Business School

Part 1

• Energy Systems and Climate Change
  • What is an energy system?
  • Climate change mitigation.
  • Studying the long-term transition.

Key Definitions and Concepts

• Energy system: supplying energy services to end-users
• Components: production, conversion, delivery, and use of energy
• Scope: local to global, physical infrastructure, and societal elements
• Efficiently delivers services, maintaining a balance between supply and demand
• Net zero energy systems
  • Electrification
  • Reduced fossil fuel use
  • Integration of carbon removal technologies

Energy and Electricity

• Global Energy production and consumption in EJ
  • Primary supply: 585 EJ
  • Final consumption: 448 EJ
  • Includes various energy sources (oil, coal, natural gas, hydro, nuclear, wind, solar, geothermal, biomass) and transformations (refineries, power plants)
  • Also includes breakdowns for different consumption sectors (industry, residential, commercial, transport)
• Source: IPCC Technical Summary of AR6, WG3

Achieving Net Zero Emissions

• PA article 4.1: balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.
• Basis of equity, sustainable development, and eradicating poverty
• Source: Riahi et al, 2021, Nature Climate Change

Climate Complexity

• Carbon flows between the atmosphere, biosphere, and ocean.
• Land biosphere emissions: ~550 Pg CO2/yr.
• Land biosphere removals: ~560 Pg CO2/yr.
• Largest emissions from fossil fuel combustion.
• Sources: AR6 WGI, IPCC, 2021; NASA ARSET based on NOAA, 2021

Anthropogenic Activities

• Human activities from different sectors causing climate change and air pollution.
• Greenhouse gases present varying Global Warming Potential (GWP)
• Includes global emissions of the six Kyoto Protocol GHGs, including international shipping and aviation.
• Source: IPCC, 2022

International Cooperation

• 30+ years of climate change negotiations
• Global awareness of the importance of taking charge of and integrating climate issues
• Evolution of political and geo-strategic environment
• Transitions to low carbon and sustainable energy
• GHG mitigation strategies like decarbonization
• Technological and regional impacts of climate policies
• Dependent on economic, political, and geostrategic interests

The Major Issues in Negotiations

• Responsibility (Common but differentiated)
• Transparency (Monitoring, Reporting, Verification (MRV))
• Finance
• Skills building/capacity-building
• Loss & damage
• Adaptation
• Technology transfer

What is Needed?

• Energy sector transformation needed due to being a top emitter.
• Mix of technologies, policies, and behavior changes required.
• Explore solutions like renewable energy, energy efficiency, and carbon removal.
• Analyze current policies to understand their effects.
• Consider sustainable development for further insights.

The Main Actions and Solutions

• Technologies like hydropower, solar PV, fuel economy, public transport, soil carbon capture, energy efficiency, solar thermal, and wind farms are available to solve climate change
• Mitigation options and their potential contributions to net emission reductions (2030)

Electrification's Place

• The ongoing transition to renewable energy sources acts as a major catalyst for electrification in the energy system.
• This transition promotes energy independence and creates green jobs to boost the economy.
• CO2 emission reduction per year and per action for the Stated Policies Scenario of the IEA.
• Source: IEA

How Fast Will Clean Energy Transitions Unfold?

• 560 gigawatts (GW) of new renewables added in 2023
• Challenges remain, including heatwaves, efficiency policies, and the rise of artificial intelligence (AI) affecting electricity demand.
• Source: World Energy Outlook, IEA (2024)

Technologies for Electricity Production

• Summary of technologies for electricity production based on location, geography, and characteristics like universality, intermittency, and peaking
• Source: Lazard, LCOE+, 2023

The Economics of Electricity

• Levelized Costs of Electricity (LCOE) is an indicator of cost-effectiveness.
• Formula provided for calculation (sum of (cost in period t + running costs in period t) / total electricity in period t * (present value of 1 in the period t))

Decreasing Costs of Wind and Solar

• Unsubsidized costs of onshore wind and solar PV, and their decrease over time.
• Data provided on percentage decrease/compound annual growth rate (CAGR)
• Source: Lazard, LCOE+, 2023

Best Research-Cell Efficiencies

• Chart showing trends in solar cell efficiency
• Source provided as Public Domain

Utilities Industry and Regulation

• Showing the breakdown of an energy system across the value chain (upstream, midstream, and downstream), with different components, regulations, and complexities in each part

Current Situation and Future Pathways

• Different scenarios of sustainable transitions (SSP1-5)
• Socio-economic implications of these pathways (income, consumer behavior, institutions, environmental factors, and energy consumption)

Example of Energy Mixes

• Energy supply by source in France, United States, China, Brazil, and Costa Rica.

Energy Efficiency

• Improving energy efficiency is critical to sustainable energy management.
• Efficiency expressed as energy output / total energy input.

Measurement of Energy Efficiency

• Smart meter deployment decisions in Europe to improve energy efficiency.
• Global energy intensity improvement by sector (transport, industry, residential buildings) in the Net Zero Scenario

Transition and Innovation

• Summary of different energy storage technologies by discharge time

Electric Vehicles

• Global electric car stock from 2013 to 2023

Critical Minerals Demand

• Minerals' demand per capacity of various energy systems

Carbon Dioxide Removal Approaches

• Methods of removing carbon dioxide from the atmosphere
• Information regarding the capture and storage of carbon dioxide

Biomass Feedstocks

• Types of biomass feedstocks, their relation to total renewable energy in the EU (2019), and stabilization of carbon in forests and soils

Bioenergy Carbon Capture and Storage

• The impact of various factors on the supply of biomass
• Summary of estimated levelized cost of electricity with different power plant types

Defining Natural Climate Solutions (NCS)

• Land-based solutions involving forests, ecosystems, agriculture, and energy sectors to avoid emissions, protect, manage, and restore natural ecosystems to enhance the carbon dioxide sinks, and achieve global mitigation potential

Energy Modeling With TIMES

• Development of TIMES model and its use in representing an energy system
• Provides an economic representation of local, national, multi-regional, or global energy systems to simulate supply-demand equilibrium

Scenario Assessments With Integrated Assessment Models (IAMs)

• Types of models used for assessing scenarios of climate change, especially focusing on global warming across categories C1-C8
• Source provided

Global Energy Use in 2070 Under IMP-NEG Pathway

• Global energy use in 2070 under a pathway with global emissions reductions

The Challenges

• High reliance on fossil fuels.
• Intermittency of renewable energy sources.
• Energy grid effects in California.
• Land use issues.
• Existing infrastructure issues.
• Research and development needs for industry

Emissions and Sustainable Development Pathways

• Shift development pathways towards sustainability (distributional, equity, fairness, technology, innovation) and historical global per capita emissions
• Source provided

Green Jobs and Technological Innovations

• Summary of green job creation in various sectors
• Case studies including Xcel Power in Colorado and solar projects in UAE.

Review

• Sustainable development goals from United Nations.

Energy for Sustainable Development

• Multiple objectives and interdependencies (including energy poverty, energy security, biodiversity and food, climate change, water, and air pollution)
• Summary of solutions addressing these issues, highlighting efficiency and sustainable solutions' benefits

Circular Economy and Air Pollution

• Principles of circular economy (reducing, reusing, refurbishing, repairing and recycling)
• Implications of these principles related to carbon sequestration and emission reductions

Partnerships and Climate Change

• Cooperation and partnerships on mitigation strategies, policies, technology transfer, and global climate partnerships

Part 2 of the Corporate Transition Discussion

• What mechanisms are for implementing net-zero strategies for companies?
• Examples of net-zero strategies

Carbon Compliance Markets

• The carbon compliance market is a mandatory market
• Carbon pricing leverages market mechanisms to incentivize emission reduction through efficient processes and cleaner fuels
• Participants benefit from reducing emissions if the cost is lower than the quota's market price

About Quotas and Credits

• Quota exchange methods (trading platforms, directly or via an intermediary, over-the-counter)
• Distinction between carbon quota and carbon credit definitions

Carbon Markets

• Emissions Trading Scheme (ETS) operations and the EU ETS
  • Caps and allowance trading within facilities.

Evolution of the EU ETS

• 2013 ceiling of European allowances (EUAs)
• Allowance reduction and scope extension to maritime transport
• Graph showing the evolution of carbon prices in the EU ETS from 2008 to 2023

Carbon Offsets

• Summary of methods to counterbalance CO2 emissions (avoidance/reduction and removal/sequestration)

Direct and Indirect Emissions

• Overview of Scope 1 (direct), Scope 2 (indirect energy use), and Scope 3 (indirect) emissions in a company's value chain

Voluntary Carbon Markets (VCM)

• Characteristics of VCMs (decentralized governance and carbon credits).
• Notable decrease in 2023 carbon credit supply
• Summary of methods for buying and selling carbon credits
• Involvement of standards and certification bodies

Examples of NCS Projects in the VCM

• Summaries of different natural climate solution projects across various regions

Carbon Taxes

• Putting a price on carbon emissions
• Historical context of international agreements on carbon taxes

Strategies to Achieve Carbon Neutrality

• Illustrative example from TotalEnergies: carbon neutrality by 2050, multi-energy strategy, increasing electricity production capacity, lifecycle carbon emission intensity as an indicator, and offsetting remaining emissions

Key Takeaways

• Net-zero pathways require energy sector decarbonization, including electrification and renewable energy.
• Transition implies sustainable development strategies and focus on economic viability.
• Importance of developing competencies in green areas through training and culture shift

Test your knowledge on the factors contributing to project cost variability in the utilities industry. This quiz covers socio-economic implications, consumer behavior influences, and environmental awareness related to energy consumption. Explore the complexities of cost factors across different markets.