Climate Change - Renewable Energy and Socio-Commercial Thought

The report from IPCC is unequivocal – it is indeed late, and we are facing certain irreversible changes. Both, the rate of and absolute temperature growth in last 50 years reminds me of Trigonometric function Tan θ approaching 90 degree.

The temperature rise is primarily because of the Green-house gases (GHG) emission – Methane (CH4), Carbon Dioxide (CO2), Chlorofluorocarbons (CFC) and certain nitrous gases. Clearly, carbon is the main cause of GHG emission with CO2 (76%) and CH4 (16%), together adding up to 92% of the greenhouse gases. 85% of total CO2 is emitted via fossil fuels and industrial processes, while remaining 15% is emitted during forestry and other land use. (Source, IPCC 2014)

That means, ~ 83% of total GHG are released in fossil fuel fired energy conversions and industrial processes. A little deeper dive indicates that out of this 83%, the major contributors are (a) Fossil fuel-based Power generation (~16%-22%); (b) Transportation (~19%-23%) and (c) Industrial processes and buildings (~23%-28%).

Renewable Energy attempts to solve the first pie of GHG problem (Fossil fuel-based power generation). Levelized cost of Energy (LCOE) for Solar and wind energy are cheaper than conventional fossil fuel-based energy sources. But a lower capacity utilization factor (CUF) ranging 25-40% puts a pressure on under-utilized transmission and distribution grid. Also, certainty of energy availability is a challenge. Hybrid energy setups and storage solutions are targeting to solve the round-the-clock availability problem. Hybrid can potentially increase the CUF up to 60%-70%. Storage can solve for other 30%-40% of the availability challenge, but storage solutions are expensive today. Battery technology relies largely on Lithium today. Other than the U.S. and China, countries that are rich in Lithium reserves are Chile, Argentina, Zimbabwe and then Afghanistan, being touted as the Saudi Arabia of Lithium. Lithium could be the next Oil shaping up the future geo-political equations or maybe, have already started to. Other sources of storage are more novel today – (a) Gravitational Potential (pumping water to a height using renewable energy and then converting hydro potential energy to power when needed) (b) Hydrogen synthesis can be done by methane steam reforming also, but this process generates CO2 which needs to be absorbed to catch GHG. Hydrogen, however, not only can solve the storage challenge, but it can also offer a solution to remote distribution and transmission. A more climate friendly approach to synthesize hydrogen is via electrolysis, but this technology is expensive today. H2 can be transmitted via gas grid and can be used to generate electricity closer to consumption centers such as industries, communities etc. This is very similar to the “last mile delivery and supply chain problem” that Amazon or Asian Paints (India) have solved. Nonetheless, our grids need to be more. Effective and wide range grid transmission and distribution with limited losses, is a problem that needs to be hacked, globally.

Despite transition to renewable sources (onshore, offshore, solar, geothermal, small hydro), an expected gap of 33% to the world’s energy requirement would still exist (source:https://www.ge.com/sites/default/files/ge_webcast_presentation_12172020.pdf). Hydrogen turbines, powered by the hydrogen (electrolyzed via renewable energy) could address this problem.

With regards to Transportation and mobility, let’s break down the equation further. The biggest driver of GHG in transportation is road transportation contributing to ~74% of GHG, followed by aviation ~ 11%, shipping ~ 9%, rail at just ~1.6%. Road transportation, unequivocally, is the single largest driver of the GHG emissions. Let’s break down road transportation a little further – 60% of total GHG from road transportation is contributed by Passenger Vehicles (PV) - cars, motorcycles, buses & Taxis. The contribution profile is tilted towards Cars in the US and Europe. In Asia, 2-wheelers, 3-wheelers and buses are the major drivers. Remainder 40% of the total GHG from road transportation is contributed by Commercial Vehicles (CV) - trucks & lorries (Source: IPCC, IEA)

Undoubtedly, the R&D around battery assisted mobility (EVs) in Passenger Vehicle space is addressing the answer to biggest contributor of the GHG. While US and Europe need more EV cars, Asia, with majority population outside Metros and Tier 1 cities, need to focus more on EV 2- & 3-wheelers alongside EV Cars. EV scooters today are priced much higher than the purchasing power capacity of population outside Tier 1 cities and more than the immediate price point of Internal combustion Engine (ICE) vehicles. One may argue that the life-time cost of an E-scooter (2-wheeler/3-wheeler) is significantly lesser than an ICE scooter (which needs to be fed continuously with expensive fossil fuel), but factually, immediate price point is what mostly concerns the buyers. Subsidy to customers is not going to solve the problem. Further investment is required for the development of Battery technology, regenerative braking to make EV scooters affordable. For majority consumer base, the demand for Electric vehicles is neither aspirational, nor latent or urgent. The effective way to drive consumer (user) shift from ICE vehicles to Electric vehicles, is via awareness building, policy support and also via saliency marketing (something, at which Unilever is great at).

When it comes to E-vehicles in commercial space, the first imperative is to make battery technology cheaper (lithium or fuel cell or other alternatives). While developed nations may move faster in this space; developing nations here have a long way to go, both from pricing and assisted infrastructure development standpoint, for example, charging points and road-side assistance (imagine a 1000 km stretch run)

Montreal Protocol (1987) was signed 30+ years ago to contain the CFCs, FCs and HCFCs. The use has still not ceased completely. Paris agreement was signed in 2015 followed by Kyoto Protocol (1997). Truth be told, we don't have another 30 years to get our acts together. To address climate change, we need speed and rush both !

-Rishabh Chadha (article is researched through multiple sources quoted in the article, followed by specific analysis)