1 U n d e r s ta n d i n g C O 2 E m i s s i o n s f r o m t h e G l o b a l E n e r g y S e c to r 2014/5 85126 A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE THE BOTTOM LINE Understanding CO2 Emissions from the Global Energy Sector The energy sector contributes about 40 percent of global emissions of CO2. Three- Why is this issue important? quarters of those emissions Mitigating climate change requires knowledge of the come from six major Figure 1. CO2 emissions Figure 2. Energy-related CO2 sources of CO2 emissions economies. Although coal-fired by sector emissions by country plants account for just Identifying opportunities to cut emissions of greenhouse gases LICs 0.5% 40 percent of world energy requires a clear understanding of the main sources of those emis- Residential Other production, they were sions. Carbon dioxide (CO2) accounts for more than 80 percent of 6% sectors Other MICs total greenhouse gas emissions globally,1 primarily from the burning 10% responsible for more than 15% China 70 percent of energy-sector of fossil fuels (IFCC 2007). The energy sector—defined to include Other HICs 30% Energy 8% emissions in 2010. Despite fuels consumed for electricity and heat generation—contributed 41 Industry 41% Japan 4% 20% improvements in some percent of global CO2 emissions in 2010 (figure 1). Energy-related Russia 7% USA countries, the global CO2 CO2 emissions at the point of combustion make up the bulk of such Other India 19% transport Road 7% emission factor for energy emissions and are generated by the burning of fossil fuels, industrial 6% transport EU 16% 11% generation has hardly changed waste, and nonrenewable municipal waste to generate electricity over the last 20 years. and heat. Black carbon and methane venting and leakage emissions Notes: Energy-related CO2 emissions are CO2 emissions from the energy sector at the point are not included in the analysis presented in this note. of combustion. Other Transport includes international marine and aviation bunkers, domestic aviation and navigation, rail and pipeline transport; Other Sectors include commercial/public services, agriculture/forestry, fishing, energy industries other than electricity and heat genera- Where do emissions come from? tion, and other emissions not specified elsewhere; Energy = fuels consumed for electricity and heat generation, as defined in the opening paragraph. HIC, MIC, and LIC refer to high-, middle-, Emissions are concentrated in a handful of countries and low-income countries. Source: IEA 2012a. Vivien Foster is sector and come primarily from burning coal manager for the Sus- The geographical pattern of energy-related CO2 emissions closely tainable Energy Depart- mirrors the distribution of energy consumption (figure 2). In 2010, middle-income countries, and only 0.5 percent by all low-income ment at the World Bank almost half of all such emissions were associated with the two countries put together. (vfoster@worldbank.org). largest global energy consumers, and more than three-quarters Coal is, by far, the largest source of energy-related CO2 emissions Daron Bedrosyan were associated with the top six emitting countries. Of the remaining globally, accounting for more than 70 percent of the total (figure 3). works for London energy-related CO2 emissions, about 8 percent were contributed This reflects both the widespread use of coal to generate electrical Economics in Toronto. Previously, he was an by other high-income countries, another 15 percent by other power, as well as the exceptionally high CO2 intensity of coal-fired energy analyst with the power (figure 4). Per unit of energy produced, coal emits significantly World Bank’s Energy Practice. 1 United Nations Framework Convention on Climate Change, Greenhouse Gas Inventory more CO2 emissions than oil and more than twice as much as natural Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/3800.php gas. 2 U n d e r s ta n d i n g C O 2 E m i s s i o n s f r o m t h e G l o b a l E n e r g y S e c to r Figure 3. Energy-related CO2 Figure 4. CO2 intensity by fuel Figure 5. Evolution of the global emission factor emissions by fuel gCO2e/kWh TWh 1,000 30,000 879 gCO2e/kWh 800 25,000 Oil 713 7% 20,000 600 “The geographical pattern 391 15,000 Coal 400 of CO2 emissions closely 72% Natural gas 21% 10,000 200 mirrors the distribution of 5,000 energy consumption.” Other Coal Oil Natural gas – 1990 1995 2000 2005 2010 – 1% Global emission factor (left) Energy output (right) Notes: Energy-related CO2 emissions refer to CO2 emissions from the energy sector at the Figure 6. Emission factors for selected countries point of combustion, as defined in the opening paragraph. Other includes emissions from industrial waste and nonrenewable municipal waste. CO2 emissions from renewable energy are gCO2e/kWh insignificant and not presented here. South Africa 927 Sources: IEA 2012a and 2012c. India 912 Australia 841 Indonesia 709 Mexico 455 What have been historical trends? Egypt 450 Turkey 445 Despite improvements in some countries, the global Ukraine 322 emission factor has remained steady Venezuela 264 Coal-dependent countries Canada 187 Colombia 176 Natural gas-dependent countries Since 1990, energy demand has grown strongly, while the global Brazil 87 Hydropower-dependent countries emission factor for energy has remained relatively stable within the range of 460–500 grams of CO2 per kilowatt-hour. The emission Sources: IEA 2012a and 2012c. factor represents average CO2 emissions per unit of energy produced and reflects a weighted average of the technologies being used.2 The energy sectors in South Africa, India, Australia, and Indonesia production, leading to emissions in excess of 900 grams of CO2 per are among the most CO2-intensive worldwide, reflecting the kilowatt-hour in the cases of South Africa and India. At the other fact that coal accounts for more than 40 percent of their energy end of the spectrum, countries such as Brazil, Colombia, Canada, and Venezuela—which obtain 60–80 percent of their energy from 2 hydropower—achieve emissions of well below 300 grams of CO2 per For the purposes of this note, emission factors (CO2 emissions per kWh) were calculated following the IEA methodology used prior to March 2013. In that methodology, the numerator kilowatt-hour. Countries in which natural gas dominates the energy includes CO2 emissions from fossil fuels, industrial waste, and nonrenewable municipal waste mix—such as Mexico, Egypt, Turkey, and Ukraine—have emission consumed to generate electricity and heat. The denominator includes electricity and heat out- put from all sources. This factor should be interpreted with caution for countries with significant factors within the range of 300–500 grams of CO2 per kilowatt-hour. amount of heat output (especially colder countries with district heating) because heat gener- Five of the six top global emitters have slightly reduced their ation is usually more efficient than electricity generation, thus lowering the emission factors for those countries. In an effort to solve the limitations of this indicator, the IEA developed a grid emission factor over the period 1990–2010, while India’s has methodology for excluding the heat component from the calculation (it is especially hard to do increased over the same period. During this time span, energy pro- for CHP plants). However, for the simplicity of calculation and unavailability of enough disag- gregated data to perform such calculation for future projections, this paper applies the former duction in China and India increased at 9 percent and 6 percent per method. annum respectively, while Russia’s production decreased 1.5 percent 3 U n d e r s ta n d i n g C O 2 E m i s s i o n s f r o m t h e G l o b a l E n e r g y S e c to r Figure 7. Changes in CO2 footprint of energy generation gCO2e/kWh 1990 emission factor 2010 emission factor Emissions per capita (2010) gCO2e per capita 1,000 8,000 912 812 7448 7,000 800 758 707 6,000 577 5874 “Five of the top six emitters 600 514 5,000 of combustion from existing energy 447 456 441 459 4,000 434 415 sources as well as shifts in the energy have slightly reduced their 400 381 3493 3638 331 342 329 315 308 3,000 portfolio toward sources with lower CO2 grid emission factor over 200 2705 2356 2,000 emissions. Table 1 illustrates the extent 1,000 the period 1990–2010.” 748 843 77 to which shifts in the energy mix have – – India China USA Other HICs Other MICs Japan EU LICs Russia contributed to changes in emission fac- tors. For example, the increase in India’s Note: Energy generation refers to electricity and heat generation, as defined in the opening paragraph. emission factor reflects increasing shares Sources: IEA 2012a and 2012c. of fossil fuels and a declining share of renewable energy in the generation mix. per annum, and the rest of the top six emitters saw increases in the Conversely, in the EU, the significant drop in the emission factor range of 1–3 percent annually. Despite growth in energy production reflects lower shares of fossil fuels and a nearly two-fold increase in in China, the United States, Japan and the European Union, emission renewable energy in the generation mix. factors in all of these areas have decreased, implying a relatively Putting all of these factors together, the global CO2 footprint of slower growth rate for energy-sector emissions relative to energy the energy sector in 2010 can be portrayed as in figure 8, where production. It is also important to note that emissions per capita for the height of the bars represents the grid emission factor (or CO2 India, China, and the EU are significantly lower than for Russia and intensity) of energy generation and their width represents the volume the United States. of energy generated. The area of the chart thus represents the The observed evolution of emission factors may be attributed contribution of each country and fuel to the global CO2 footprint of to a variety of causes, among them improvements in the efficiency the energy sector. Table 1. Share of coal, gas, nuclear and renewables of energy generation (%) India China USA Other HICs Other MICs Japan EU LICs Russia Technology 1990 2010 1990 2010 1990 2010 1990 2010 1990 2010 1990 2010 1990 2010 1990 2010 1990 2010 Coal 66 68 68 78 53 45 22 24 24 22 14 27 45 27 19 9 21 19 Oil 3 3 12 1 4 1 12 11 20 10 30 9 11 3 5 9 14 4 Natural gas 3 12 1 3 12 25 10 26 31 37 20 28 10 26 16 26 57 60 Nuclear 2 3 4 2 19 19 13 11 4 3 24 26 24 23 0 0 3 6 Renewables 25 14 15 15 11 10 43 27 22 27 12 10 10 19 60 56 6 7 Other 0 0 0 0 1 0 0 0 0 0 0 0 1 2 0 0 0 4 Note: Renewables include hydropower. Source: IEA 2012c. 4 U n d e r s ta n d i n g C O 2 E m i s s i o n s f r o m t h e G l o b a l E n e r g y S e c to r Figure 8. CO2 footprint of energy generation globally, 2010 Figure 9. Required changes in emission profiles to limit warming to two degrees Celsius (2010–35) Other Other gCO2e/kWh Coal Oil Natural gas Other MtCO2 India China USA Japan EU Russia HICs MICs LICs 1,000 500 India – “Identifying opportunities 800 China (500) Other HICs to cut emissions of 600 (1,000) USA greenhouse gases requires Japan Other MICs (1,500) LICs 400 a clear understanding EU Russia (2,000) of the sources of those 200 (2,500) emissions.” (3,000) 0 Share of global electricity and heat generation (%) Coal Oil Natural gas Notes: Emission factor is broken down by fuel by prorating the associated CO2 emissions. Source: IEA 2012d. Source: IEA 2012a and 2012c. Where will action be most critical? References The greatest impact would come from cutting coal- IEA (International Energy Agency). 2012a. “CO2 emissions by product based emissions in the largest economies and flow,” IEA CO2 Emissions from Fuel Combustion Statistics (database). To limit global warming to two degrees Celsius, energy-sector CO2 IEA. 2012b. “Medium-Term Coal Market Report: Market Trends and emissions will need to decline at an annual rate of 3.8 percent (IEA Projections to 2017.” Paris. 450 Scenario), compared with a projected annual increase of 1.9 per- IEA. 2012c. “World Energy Balances,” IEA World Energy Statistics and cent (IEA Current Policies Scenario from IEA 2012d).3 Assuming a Balances (database). consistent growth rate for heat output based on trends between IEA. 2012d. World Energy Outlook 2012. Paris. 1990 and 2010, the global average CO2 intensity for the energy sector IFCC (Intergovernmental Panel on Climate Change). 2007. The will need to be reduced to 134 grams of CO2 per kilowatt-hour in Physical Science Basis: Human and Natural Drivers of Climate 2035 for the two-degree limit to hold. Change. Geneva. By comparing country emission profiles between the starting UNFCCC, Greenhouse Gas Inventory Data—Comparisons by Gas point in 2010 and a scenario compatible with no more than two (database). degrees of warming by 2035, it is possible to highlight the changes that would be needed in the generation portfolios of specific The peer reviewers for this note were Charles Feinstein (sector manager, East countries (figure 9). By far the largest reductions are needed in China, Asia Region) Christophe de Gouvello (senior energy specialist, Latin America the United States, and the European Union, particularly with respect Region), and Ashish Khanna (senior energy specialist, South Asia Region). The authors gratefully acknowledge comments from Irina Bushueva (investment to coal-fired power. Interestingly, net emissions from natural gas are analyst, IFC). projected to increase in China, India, and other high-income coun- tries even in a two degrees of warming scenario for 2035. 3 Projections for heat output as well as disaggregated carbon emissions from heat and electricity are not reported by the IEA.