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CO2 Emissions from Fuel Combustion; Highlights
October 2011 (International Energy Agency)

A Snapshot

While the emissions of developing countries (non-Annex I2) continued to grow in 2009 (+3.3%), led by Asia and the Middle East, the emissions of developed countries (Annex I3) fell sharply (-6.5%), putting them at 6.4% below their 1990 collective level. It should be noted that 2009 emission levels for the group of countries participating in the Kyoto protocol were 14.7% below their 1990 level.

Global CO2 emissions actually decreased by 0.5 Gt CO2 between 2008 and 2009, which represented a decline of 1.5%. However, trends varied greatly: as already noted above, the emissions of Annex I countries decreased, whereas the emissions of non-Annex I countries increased. Due to these diverging trends, the share of total emissions for developing countries increased to 54% (excluding bunkers), after becoming larger than Annex I’s share for the first time since 2008.

The changes were not equal across fuels, regions and sectors. The increase in emissions for developing countries was primarily due to an increase in coal demand (with oil and gas increasing more modestly).

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On the contrary, the reduction in emissions for developed countries was more spread out over fuels: 53% of the decrease came from coal, while 30% from oil and 18% from natural gas (Figure 1).

Early indications suggest that CO2 emissions trends in developing countries in 2010 will continue to increase, through growing consumption of fossil fuels in some of the larger countries. The trend of emissions in developed countries will rebound in 2010 and CO2 emissions will likely be at a similar level to 2008, before the recent financial crisis and the slowdown in economic activity.

In the medium term, Annex I CO2 emissions are expected to rebound when economic conditions pick up. In its New Policies Scenario, the World Energy Outlook (WEO 2010)4 projects that world CO2 emissions from fuel combustion will continue to grow unabated, albeit at a lower rate, reaching 35.4 Gt CO2 by 2035. This is an improvement over the Current Policies Scenario of the WEO and is in line with the worst case scenario presented by the Intergovernmental Panel on Climate Change (IPCC)5 in the Fourth Assessment Report (2007), which projects a world average temperature increase of between 2.4°C and 6.4°C by 2100.

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CO2 emissions by fuel

In 2009, 43% of CO2 emissions from fuel combustion were produced from coal, 37% from oil and 20% from gas. Growth of these fuels in 2009 was quite different, reflecting varying trends that are expected to continue in the future.

Between 2008 and 2009, CO2 emissions from the combustion of coal decreased by nearly 1% and represented 12.5 Gt CO2. Currently, coal is filling much of the growing energy demand of those developing countries, such as China and India, where energy-intensive industrial production is growing rapidly and large coal reserves exist with limited reserves of other energy sources (Figure 2). Without additional measures, the WEO 2010 projects that emissions from coal will grow to 14.4 Gt CO2 in 2035. Energy Technology Perspectives (ETP 2010) shows that intensified use of coal would substantially increase CO2 emissions unless there was a very widespread deployment of carbon capture and storage (CCS).

CO2 emissions from oil fell in 2008, decreasing 2.2% throughout the year. The decreasing share of oil in total primary energy supply (TPES), as a result of the growth of coal and the penetration of gas, put downward pressure on CO2 emissions from oil, which produced 10.6 Gt CO2 in 2009. However, the WEO 2010 projects that emissions from oil will grow to 12.6 Gt CO2 in 2035. Emissions of CO2 from gas in 2009 represented 5.8 Gt CO2, 2.2% higher than in the previous year. Again, the WEO 2010 projects emissions from gas will continue to grow, rising to 8.4 Gt CO2 in 2035.

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CO2 emissions by region

Between 2008 and 2009, CO2 emission trends varied markedly by region. As mentioned earlier, CO2 emissions from non-Annex I countries grew by 3.3%, while those of Annex I countries decreased by 6.5%, causing the aggregate emissions of the developing countries to increase their small lead over those of the developed countries. At the regional level (Figure 3), CO2 emissions increased significantly in Asia (5.5%), China (5%) and the Middle East (3.6%).

On the other hand, between 2008 and 2009, CO2 emissions decreased in all other regions, ranging from1.5% in Africa to 7.4% in the Annex II European countries.

However, regional differences in contributions to global emissions conceal even larger differences among individual countries (Figure 4).

Two-thirds of global emissions for 2009 originated from just ten countries, with the shares of China and the United States far surpassing those of all others. Combined, these two countries alone produced 12.0 Gt CO2, 41% of world CO2 emissions.

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CO2 emissions by sector

Two sectors, electricity and heat generation and transport, produced nearly two-thirds of global CO2 emissions in 2009 (Figure 5).

Generation of electricity and heat was by far the largest producer of CO2 emissions and was responsible for 41% of the world CO2 emissions in 2009. Worldwide, this sector relies heavily on coal, the most carbon-intensive of fossil fuels, amplifying its share in global emissions. Countries such as Australia, China, India, Poland and South Africa produce between 68% and 94% of their electricity and heat through the combustion of coal.

Between 2008 and 2009, total CO2 emissions from the generation of electricity and heat decreased by 1.7% (Figure 6), while the fuel mix stayed similar. CO2 emissions from oil decreased the most, by 2.8%, while coal and gas decreased by 1.9% and 0.7% respectively. The future development of the emissions intensity of this sector depends strongly on the fuels used to generate the electricity and on the share of non-emitting sources, such as renewables and nuclear.

By 2035, the WEO 2010 projects that demand for electricity will be approximately three-quarters higher than current demand. This demand will be driven by rapid growth in population and income in developing countries, by the continuing increase in the number of electrical devices used in homes and commercial buildings, and by the growth in electrically driven industrial processes. Meanwhile, renewables-based electricity generation is expected to continue growing over the next 25 years, benefiting from government support, declining investment costs and rising fossil-fuel prices. The share of renewables in total electricity generation rises from 19% in 2008 to 23%, 32% and 45% in the Current Policies, New Policies and 450 scenarios, respectively.

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Transport, the second-largest sector, represented 23% of global CO2 emissions in 2009. CO2 emissions in this sector decreased between 2008 and 2009 by 1.7% (Figure 7).

The United States has the highest level of passenger travel per capita in the world (more than 25 000 km per person per year). Until recently, lower fuel prices in the United States contributed to the use of larger vehicles, while in Europe higher fuel prices encouraged improved fuel economy (along with the EU voluntary agreement with manufacturers). As a result, there is more than a 50% variation in the average fuel consumption of new light-duty vehicles across OECD member countries (ETP 2010, p. 262).

Global demand for transport appears unlikely to decrease in the foreseeable future; the WEO 2010 projects that transport fuel demand will grow by about 40% by 2035. To limit emissions from this sector, policy makers should first and foremost consider measures to encourage or require improved vehicle efficiency, as the United States has recently done and the European Union is currently doing as a follow-up to the voluntary agreements. Policies that encourage a shift from cars to public transportation and to lower emission modes of transportation can also help.

Finally, policies can encourage a shift to new, preferably low-carbon fuels. These include electricity (e.g. electric and plug-in hybrid vehicles), hydrogen (e.g. through the introduction of fuel cell vehicles) and greater use of biofuels (e.g. as a blend in gasoline and diesel fuel). To avoid a rebound in transport fuel demand, these moves must also be backed up by emissions pricing or fuel excise policies. These policies would both reduce the environmental impact of transport and help to secure domestic fuel supplies, which are sometimes unsettled by the threat of supply disruptions, whether from natural disasters, accidents or the geopolitics of oil trade. As these policies will ease demand growth, they are also likely to help reduce oil prices below what the prices might otherwise be.

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Coupling emissions with socio-economic indicators6

Indicators such as those briefly discussed in this section strongly reflect energy constraints and choices made to supply the economic activities of each country. They also reflect sectors that predominate in different countries’ economies.

In 2009, the largest five emitters (China, the United States, India, the Russian Federation and Japan) comprised 45% of the total population and together produced 56% of the global CO2 emissions and 51% of the world gross domestic product (GDP).7 However, the relative shares of these five countries for all three variables were very diverse. In the United States, the large share of global emissions is associated with a commensurate share of economic output (as measured by GDP), the largest in the world. Japan, with a GDP more than double that of the Russian Federation, emits 29% less than the Russian Federation.

Although climate and other variables also affect energy use, relatively high values of emissions per GDP indicate a potential for decoupling CO2 emissions from economic growth. Possible improvements can derive from fuel switching away from carbon-intensive sources or from energy efficiency at all stages of the energy supply chain (from fuel extraction to energy end-use).8 Among the five largest emitters of CO2 in 2009, China, the Russian Federation and the United States have significantly reduced their CO2 emissions per unit of GDP between 1990 and 2009 (Figure 8). The other two countries, India and Japan, already had much lower emissions per GDP.

Worldwide, the highest levels of emissions per GDP are observed for the oil and gas exporting region of the Middle East and for the relatively energy-intensive Economies in transition EITs9 (Figure 9). China emissions per GDP have fallen close to the level of the United States.

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As compared to emissions per unit of GDP, the range of per capita emission levels across the world is even larger, highlighting wide divergences in the way different countries and regions use energy.

In 2009, the United States alone generated 18% of world CO2 emissions, despite a population of less than 5% of the global total. Conversely, China contributed a comparable share of world emissions (24%) while accounting for 20% of the world population. India, with 17% of world population, contributed more than 5% of the CO2 emissions. Among the five largest emitters, the levels of per capita emissions were very diverse, ranging from 1 t of CO2 per capita for India and 5 t for China to 17 t for the United States.

Industrialised countries emit far larger amounts of CO2 per capita than the world average (Figure 10). However, some rapidly expanding economies are significantly increasing their emissions per capita. For example, between 1990 and 2009, among the top 5 emitting countries, China increased its per capita emissions by over two and a half times and India doubled them. Clearly, these two countries contributed much to the 8% increase of global per capita emissions over the period. Conversely, both the Russian Federation and the United States decreased their per capita emissions significantly, by 27% and 13% respectively, over the same period.

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Developing a Low Carbon World

Until recently, industrialised countries have emitted the large majority of anthropogenic greenhouse gases. However shares of developing countries are rising very rapidly and are projected to continue to do so. To shift towards a low-carbon world, mitigation measures now taking shape within industrialised countries will need to be accelerated, and complemented by comprehensive efforts worldwide.

Complementing various national policies and measures, the Kyoto Protocol of the UNFCCC is so far the most comprehensive binding multinational agreement to mitigate climate change. Having entered into force in February 2005, the Protocol commits industrialised countries (as a group) to curb domestic emissions by about 5% relative to 1990 by the 2008-12 first commitment period. The Protocol also creates “flexible mechanisms” by which industrialised countries can transfer emission allowances among themselves and earn emission credits from emissions reduction projects in participating developing countries and EIT countries.

Despite its extensive coverage (192 countries), the Protocol is limited in its potential to address global emissions since not all major emitters are included in reduction commitments. The United States remains outside of its jurisdiction and though most developing countries (i.e. non-Annex I countries) have signed the Protocol, they do not face emissions targets. The Kyoto Protocol implies action on less than one-third of global CO2 emissions, as measured in 2008 (Table 1). The Protocol has made carbon a tradable commodity, and has been a key driver for the development of emissions trading schemes as detailed below.

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Emissions trading schemes

Emissions trading schemes (ETS) are developing or being proposed in several regions and countries around the world. Some are operational (EU ETS, New Zealand, Norway, Tokyo, Switzerland, the Regional Greenhouse Gas Initiative in the United States, Alberta, Canada and New South Wales, Australia) while others are under active development (California, Australia, Korea, China).

Given the significant uncertainties surrounding future international climate commitments, policy makers have allowed flexibility in changing design options over the longer term. Indeed, lessons from the first years of existing schemes are helping the elaboration of others (Hood, 2010).

In the European Union, the largest scheme in operation is the EU ETS, which covers emitters in the energy and industrial sectors (aviation will be added from 2012), representing about 45% of the energy related CO2 emissions of the region. Norway’s ETS is fully linked to the EU system. The lessons from its first two phases have helped to shape the scheme’s post-2012 design (Ellerman et al., 2010).

In December 2008, the European Council and the European Parliament endorsed an agreement on the climate change and energy package which implements a political commitment by the European Union to reduce its greenhouse-gas emissions by 20% by 2020 compared to 1990 levels.10 The package also includes a target for renewables in the EU set at 20% of final energy demand by 2020.

The EU ETS will play a key role in achieving this target, as the 2020 emissions cap for ETS installations is 21% below the actual level of 2005 emissions,11 or 34% below if the overall target moves to a 30% reduction. There will be a significant increase in the proportion of allowances auctioned rather than allocated for free, including full auctioning (in general) for the power generation sector. Continued use of credits from the Kyoto Protocol flexible mechanisms Clean Development Mechanism (CDM) and Joint Implementation (JI) will be allowed, with both quantitative and qualitative restrictions.

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In New Zealand, a comprehensive economy-wide emission trading scheme (NZ ETS) is being progressively introduced, starting with the forestry sector in January 2008. The energy, transport and industrial sectors are included from July 2010, and waste and agricultural emissions enter by 2015. There is a transition phase from 2010 to 2012 with a capped price and partial obligations. The scheme is fully linked to the international Kyoto market, and allows unlimited use of Kyoto Protocol project and forestry credits. No emissions cap is specified: linking to the international market is intended rather to ensure that an appropriate carbon price is set in the New Zealand economy.

Several other ETS schemes are operating, including in countries that are not Parties to the Kyoto Protocol. In the United States, the first regional scheme (the Regional Greenhouse Gas Initiative covering the electricity sector in the northeastern states) began on 1 January 2009. Small schemes are also in place in New South Wales (covering the power sector), Tokyo (covering commercial sites) and Alberta (covering large emitters). Switzerland’s ETS allows companies to manage their emissions through trading instead of facing the country’s carbon tax.

A number of other domestic trading schemes are also under development, in both Annex I and non-Annex I countries. The Korean government has submitted legislation to establish an emissions trading scheme from 2015, to assist in delivering Korea’s target of a 30% improvement on business-as-usual (BAU) emissions by 2020. The Australian government also has legislation progressing to implement emissions trading, with a fixed-price transitional period starting in 2012, moving to full trading in 2015. As part of its 12th five year plan (2011 to 2015), the Chinese government is investigating options for ETS pilots in two provinces and four cities. These pilots are to be developed by 2013, to inform the potential implementation of a nation-wide policy after 2015. California also intends to begin trading in its domestic market in 2013, and other US states and Canadian provinces may link to the California scheme thereafter under the umbrella of the Western Climate Initiative.

An important development in 2011 was the launch of the World Bank’s Partnership for Market Readiness, which provides funding and technical assistance to developing countries for capacity building toward the development and piloting of market-based instruments for greenhouse gas reduction. Chile, China, Columbia, Costa Rica, Indonesia, Mexico, Thailand and Turkey received grants in the first round of funding.

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Steps for future action

Held in late 2005, the first Meeting of the Parties to the Kyoto Protocol (COP/MOP1) witnessed the official opening of talks on post-2012 climate change policy. The Bali Road Map adopted at COP/MOP3 in Bali in 2007 established a two-track process, i.e. both for the Convention and Kyoto Protocol strands, aiming at the identification of a post-2012 global climate regime to be adopted by COP15 and COP/MOP5 in Copenhagen in 2009. In Bali, Parties organised two official fora: the Ad Hoc Working Group on the Kyoto Protocol (AWG-KP) and the Ad Hoc Working Group on Long term Co-operative Action (AWG-LCA).

The AWG-KP focuses on the design of post-2012 commitments for Annex I Parties under the Protocol. Ideally, it would also provide some certainty to carbon-constrained investments in infrastructure and to the carbon market itself. However, the AWG has no mandate to encourage participation from non-Annex I Parties or from non-participating Annex I Parties.

By contrast, the broader AWG-LCA was designed to enable full and sustained implementation of the UN Framework Convention on Climate Change by all Parties, up to and beyond 2012, through long-term cooperative action. While the Bali Action Plan, adopted under the Convention track, did not introduce binding commitments to reduce greenhouse-gas emissions, it included the request for developing countries to contribute to the mitigation of global warming in the context of sustainable development. In addition, the plan envisaged enhanced actions on adaptation, technology development and on the provision of financial resources, as well as measures against deforestation. The Bali Action Plan introduced a focus on mitigation actions by all Parties and the provision of financial resources by developed countries that are “measurable, reportable and verifiable”, now central to the establishment of a post-2012 framework for climate action.

After the unprecedented move at COP15 and COP/MOP5 in Copenhagen, where heads of states and high-level representatives negotiated the Copenhagen Accord, COP16 and COP/MOP6 in Cancún were widely seen as having put the international negotiating process back on track. In Cancún the key elements of the Copenhagen Accord were formally adopted into the UN process, including the goal of limiting global temperature increase to less than 2°C above pre-industrial levels, commitments for the provision of financial resources, and sketching a framework for monitoring and reviewing mitigation actions and commitments. Annex I Parties submitted quantified economy-wide greenhouse-gas targets to 2020 as part of the accord, and several non-Annex I countries also listed mitigation actions, or sectoral or economywide greenhouse-gas targets. The Cancún meeting also set an ambitious forward work programme for issues to be considered in Durban at the end of 2011, including a peak year for global emissions, 2050 emissions targets, and options for new market-based mechanisms for emissions reduction.

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The challenge of post-2012 discussions is the need to engage developing countries with approaches, possibly including the carbon market, which suit their capacity and their legitimate aspiration for economic and social development. The Asia Pacific Partnership for Clean Development and Climate (APP or AP7), the G8 2005 Gleneagles Plan of Action, and the Major Economies Forum on Energy and Climate (MEF) and Clean Energy Ministerial processes seek to involve developed and developing nations in common measures to address climate change. Other international for a gathering both developed and developing countries have emerged to further mitigation efforts in specific areas, such as the Clean Energy Ministerial (CEM), the International Renewable Energy Agency (IRENA), and the International Partnership for Energy Efficiency Co-operation (IPEEC).

The AP7, which groups Australia, Canada, China, India, Japan, Korea and the United States, focuses on the emissions of specific sectors (iron and steel, cement, aluminium, mining, buildings and appliances) and the methods of clean fossil energy use, renewable energy generation and more efficient power generation and transmission.

Canada, France, Germany, Italy, Japan, the Russian Federation, the United Kingdom and United States launched the July 2005 G8 Gleneagles Plan of Action to, in part, promote clean energy and sustainable development while mitigating climate change. The IEA was tasked under the Plan of Action to develop concrete recommendations to help the G8 achieve its clean energy objectives. Additionally, the G8 sought to engage South Africa, India, Brazil, China and Mexico in an official dialogue to address climate change, clean energy, and sustainable development worldwide. This commitment by the G8 was reiterated at all subsequent summits.

The G20 summits have also served as a forum to advance climate change and clean energy discussions, including a commitment to rationalising and phasing out inefficient fossil fuel subsidies over the medium term. In 2011, the G20 formed a new Clean Energy and Energy Efficiency (C3E) Working Group to further its work in this area. It remains to be seen how this group, whose membership has a high degree of overlap with the CEM and IPEEC will coordinate its work with those bodies.

In all these efforts, timely and accurate CO2 and other greenhouse-gas statistics will prove central to ascertain compliance to international agreements and to inform policy makers and carbon market participants. The ability of countries to monitor and review emissions from their sources is essential in their engagement towards national and global greenhouse-gas mitigation.