Commitment Accounting, Committed Emissions, and Carbon Budgets

Principal Investigator

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At a Glance

Fossil fuels are so abundant that, for any plausible carbon budget target, even a weak one, attractive fossil fuel will be left in the ground. Two new schemes—commitment accounting and carbon budgets— quantify constraints on this abundance for multi-decadal planetary fossil fuel use within two- and three-degree climate change targets.

 

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Research Highlight

Recently¹, Robert Socolow and Steve Davis (University of California at Irvine) introduced “commitment accounting” as a scheme for estimating total future greenhouse gas emissions (“committed emissions”) for durable capital investments. Their paper was restricted to power plants, but commitment accounting can be extended to vehicles, roads and infrastructure, refineries, oil and gas fields and oil and gas provinces. The “carbon budget” is a related concept: introduced in the recently released Fifth Assessment Report of the Intergovernmental Panel on Climate Change, this budget is the total amount of carbon dioxide (CO₂) that can be emitted into the global atmosphere for a given climate change target. Together, commitment accounting and carbon budgets address the long residence time of CO₂ in the atmosphere.

Key Findings

At present, corporations and governments hardly ever estimate and report the total amount of CO₂ that will be emitted by newly constructed coal or natural gas power plants during their period of operation. These institutions report only CO₂ emissions year by year. Commitment accounting provides a second performance metric that highlights future emissions, once the number of years of operation is assumed. Commitment accounting updates its estimate of total remaining emissions for a plant throughout its lifetime, taking into account plans for early retirement, plant-life extension, retrofit, etc.

Figure 3.4.1 shows the committed emissions from global power plants, as of each of the years 1950 to 2012. The emissions are disaggregated by world region (panel a) and by fuel (panel b). It is assumed that power plants, irrespective of when they were built and what fuel they burn, will run for 40 years. Moreover, it is assumed that any plant operating in that year that is older than 40 years will be shut down immediately; the estimate of committed emissions increases very little when this assumption is relaxed. The two panels of Figure 3.4.1 show that total global committed CO₂ emissions have risen steadily throughout this period—not heading downward even once, year to year—and are now approximately 300 billion tons. In addition, panel (a) shows that committed emissions are now dominated by newly industrializing regions. Panel (b) emphasizes the world’s continued reliance on coal power despite the rapidly growing share of natural-gas-fired power plants (the share of committed emissions for gas plants rose to 27% in 2012, from 15% in 1980). Not shown here, coal remains dominant everywhere in the developing world except for the Middle East, where natural gas is used for new power. These results reveal that a high-carbon future is being locked in by the world’s capital investment in power plants and fossil-fuel-based infrastructure, during the same period when societal pressures are mounting to limit the world’s commitments to future global emissions.

Implications for Targets and Policy

As the world takes climate change more seriously, the long-term implications of the production and use of fossil fuels will undergo increasing scrutiny. A disciplined discussion of multi-decadal issues is emerging.

According to the most recent Intergovernmental Panel on Climate Change (IPCC) Synthesis Report², about 1700 billion tons of CO₂ have been produced through combustion of fossil fuels in the industrial age (1870-2011), and almost one degree Celsius of warming of the earth’s surface has resulted. Much discussion of climate change policy today focuses on a target of no more than two degrees Celsius of warming of the planet’s surface, relative to pre-industrial times. The Synthesis Report finds that when another 1300 billion tons of CO₂ have been emitted¹, the planet’s temperature will reach this ceiling. At today’s rate of fossil fuel CO₂ emissions, 35 billion tons of CO₂ per year, the budget for the two-degree target would be fully spent approximately in 2050. The commitment to 300 billion tons of future CO₂ emissions from existing power plants uses up about a quarter of this budget. The budget is less strict if Carbon dioxide Capture and Storage (CCS) becomes an important climate strategy: CCS reduces the committed emissions associated with investments in power plants and industrial facilities, thereby loosening the constraints imposed by carbon budgets.

The new IPCC report also provides results for a three-degree target, even though this target is rarely discussed by policy makers. The three-degree carbon budget is larger by an additional 1500 billion tons of CO₂, corresponding to another 40 years of emissions at today’s rate and a fully spent budget around 2090. To the extent that the emissions rate continues to climb (it is now 50% greater than fifteen years ago), a fossil fuel era consistent with a three-degree target would be closed off even sooner.

To what can be compared the 1300 and 2800 billion tons of CO₂ emissions that are the IPCC’s central estimates for the two-degree and three-degree targets, respectively? 1000 billion tons of CO₂ would be produced from the combustion of about 2 trillion barrels of oil, or 20,000 trillion cubic feet of gas, or 300 billion tons of coal. Using these equivalencies, estimates of the resource base by Rogner³ (including “additional” resources) can be restated in units of billions of tons of CO₂ produced via burning: oil at 8000, gas excluding clathrates at 3000, clathrates at 40,000, and coal at 20,000. Thus, Rogner’s findings reveal the carbon in the world’s buried hydrocarbons today greatly exceeds the carbon that would bring three degrees Celsius of warming. For another comparison, see Figure 3.4.2, drawn by Ian Vann⁴, which shows one view of the future of oil consumption, with one trillion barrels already produced and four trillion barrels (2000 billion tons of CO₂ emissions) of production ahead; by itself (i.e., neglecting gas and coal), these emissions will be nearly sufficient to produce three degrees of warming.

The carbon budget concept is going to lead to new conversations about inexorable choices:

• How should fossil fuel production be spread over the next decades?
• How should fossil fuel production be spread over the countries of the world?
• Should any uses be favored over others?
• Should natural gas be extracted in preference to coal, because nearly twice as much energy can be delivered from natural gas when it is burned, for the same quantity of CO₂ emissions?
• How large could be the role of CCS, including CCS in combination with Enhanced Oil Recovery (EOR)?

Future Plans

Estimation of committed emissions for infrastructure and upstream fossil fuel activity will be quantified and introduced into the emerging discussion of carbon budgets.

 

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References

1. Davis, S.J., and R.H. Socolow, 2014. Commitment accounting of CO₂ emissions. Environ. Res. Lett., 9: 084018. doi:10.1088/1748-9326/9/8/084018. One of 25 articles published in Environmental Research Letters in 2014 that has been selected by the journal’s editors for inclusion in the exclusive ‘Highlights of 2014’ collection. Papers are chosen on the basis of referee endorsement, novelty, scientific impact and breadth of appeal.
2. IPCC Climate Change 2014, Synthesis Report. The relevant table is on p. 68.
3. Rogner, H-H, 1997. An assessment of world hydrocarbon resources. Ann. Rev. Energy and Env. 22: 217-262. The table reworked here is on p. 249.
4. Vann, Ian, 2005. Talk at London Geological Society, October 12, 2005.