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How Effective are U.S. and G7 Energy Security and Carbon Emissions Policies?

Following the announcement to withdraw the U.S. from the ‘Paris Climate Agreement’, major European and Asian countries have been very critical of President Trump’s decision. While such a U.S. action is clearly legal and allowed under the Paris accord, it appears possibly inconsistent with other G7 Countries’ agreements such as the ‘Rome G7 Energy Initiative for Energy Security’. Rather than just assume this decision to exit the Paris Agreement compromises the U.S.’s world leadership role, it’s important to review recent and likely future U.S., G7 and other countries’ past and projected future performances related to both ‘Energy Security’ and ‘Carbon Emissions’.

G7 Energy Security Policy – The ‘Group of 7’ (G7) Countries includes Canada, France, Germany, Italy, Japan, United Kingdom (UK) and United States (U.S.).  These seven Countries have the largest economies of all Developed Countries in the world today and produce almost half of the world’s current total Gross Domestic Products (GDP).  G7 Countries also consume about one third of total world fossil fuels and currently generate about one quarter of total world carbon emissions (CO2).

The 2014 ‘Rome G7 Energy Initiative for Energy Security’ included addressing a broad range of security and business-environmental principles.  These include fully supporting free energy markets, increased domestic energy production and reduced demand (i.e. reduced imports), upgraded energy infrastructures and emergency reserves, and, encourage displacement of fossil fuels with lower carbon, alternative energy supplies.

The largest historic even that severely impacted most Countries’ energy securities was the 1973 the Arab OPEC oil embargo.   This OPEC embargo disrupted significant fractions of U.S., UK, Canada and Japan’s available imported oil supplies, and quadrupled world market oil prices.  This event created numerous energy crises, which led to major economic recessions.  As a result, a number of policy-actions were taken by G7 and other Countries that included creating ‘strategic petroleum (oil) reserves’ (SPR), reducing future oil demand (via increased efficiencies, alternative/biofuels, and nuclear power), and increased domestic energy supplies.  These energy independence/security policies varied among G7 Countries due to a broad range of factors, including limited available domestic oil & gas reserves and varying governments’ priorities.  For example, following the Arab OPEC embargo, the U.S. and France began rapidly growing their nuclear power generation-capacities to reduce the need for Power sectors’ petroleum fuels.  Today, France generates almost 80% of its power from nuclear; reducing its Power sector’s carbon emissions to small fractions of all other Nations.

The greatest potential risks to most Countries’ energy security today is still largely based on the level of required ‘net’ oil & gas imports needed to meet total domestic demands.  Refer to Table 1.

Table 1 – G7 and Major Developing Countries’ Oil & Gas Supplies, Demands and Net Imports

Data Sources – 2016 projection based on available IEA & EIA data 2014-16.  KBD = thousands of barrels per day, Total Oil (Domestic) Production and ‘Net imports = demand – production. 

Based on G-7 current needs for oil & gas imports, Canada clearly has the highest level of ‘energy security’ due to their large ‘net exports’.  The U.S. has the next highest level of energy security since it has relatively small net oil and gas imports, and, most of these imports come from Canada.  U.S. oil supplies security is further supported by its large SPR inventory.  The UK has the third highest level energy security due to relatively lower net oil & gas imports compared to the balance of G7 Countries, and most of its current oil & gas imports fortunately come from Norway.  The UK, however, relies on the overall EU for SPR supplies in the event of another major oil embargo; which could become problematic with the recent Brexit developments.

Japan, France, Germany and Italy directionally all have the lowest levels of energy security due to very large oil & gas imports.  These Countries have very little domestic production and must rely overwhelmingly on net oil & gas imports supplies to meet demands.  Unfortunately, most of these imports come from OPEC and Russia.  Fortunately, Japan, France and Germany have fairly large domestic SPR’s.

The largest Developing Countries, China and India, energy security’s data are included in Table 1 since their economies and oil & gas demands are similar to the levels of most G7 Countries.  Similarly, they require net imports far greater than Canada and the U.S., and therefore have relative low energy security levels.

Future Energy Security Risks and Challenges to Reducing Fossil Fuels Consumptions – As illustrated in Table 1, most of G7 Countries continue to be at substantial risk to current and future energy securities from potential loss of required oil & gas imports.  Unfortunately, despite over two decades of energy security and related carbon emissions policies and actions to reduce the need for fossil fuels, most G7 and Developed Countries still rely on at least 80% of their total energy supplies from oil, gas and coal.

A major energy security risk is likely the ongoing instabilities in the Middle East, such as Iran’s past threats to shutdown the Strait of Hormuz.  This action risks disrupting up to 20% of total world oil supplies and about 35% of total world marine oil shipments.  And, puts Japan and other Asian Countries, and the U.S. West Coast at the greatest risks.

Russia supplies almost 40% of EU natural gas.  If the current NATO-Russia relationship continues to decline, this could put much of the EU at considerable natural gas supplies disruption risks.  Unfortunately, Russia has a history of shutting off EU natural gas supplies.  Fortunately, the U.S. is expanding its exports of liquified natural gas (LNG).

Since most of current G7 and World oil & gas supplies are consumed primarily as motor and heating fuels, it’s unlikely that G7 or other Countries will be able to substantially reduce their demand for these fossil fuels in the near future.  Yes, continuous progress will likely be made in replacing Power sectors’ fossil fuels with renewables and possibly nuclear.  However, all technologies are costly, have limited application feasibilities, and will take many decades to displace the majority of existing fossil fuels needed for Power generation and other Sectors’ heating and transportation fuels.  Other than reducing the need for heating fuels by increased efficiency upgrades and replacing limited Residential & Commercial buildings’ heating systems with electric heat pumps and/or geothermal technologies, replacing the need for fossil heating fuels in the Industrial Sector is very challenging, with limited alternatives; such as for producing steel, cement, petrochemicals, synthetic materials, etc.

There is a major limitation of how quickly more efficient and cleaner energy technologies can reasonably become a dominate reality, such as for the Transportation sector’s average on-road vehicles.  The most feasible-effective alternative to ‘internal combustion engine’ (ICE) vehicles’ will likely be eventual displacement with ‘electric vehicles’ (EV’s).  However, it will probably take many decades before this strategy effectively replaces the majority of existing ICE fleets.  Today there are about 1.3 billion on-road ICE vehicles in service in the world and only about 1.3 million are on-road EV’s.  Yes, the number of annual EV sales is increasing fairly rapidly and costs are coming down, but it will still take many decades before EV’s reasonably become the most dominate mode of on-road transportation, as needed to substantially reduce the need-demand for current petroleum motor fuels.

G7 and other Countries’ Recent Fossil Fuels Consumptions and associated Carbon Emissions – Climate Change and the need to reduce carbon emissions has been a growing World priority since the creation of Kyoto Protocol.  Since the late 1990’s Developing and Developed Countries populations, economies, fossil fuels consumptions and associated carbon emissions have grown to historic highs.  Refer to Table 2.

Table 2 – G7 and other Countries’ Demographics, Fossil Fuels Consumptions and Associated Carbon Emissions – 2016

Data Sources – Global Carbon Atlas, IEA and EIA data.  $T/yr. = $Trillion per year, MBbl/day = million barrels per day, TCF/yr. = trillion cubic feet per year, Quad Btu/yr. = quadrillion Btu per year, and MMT/yr. = million metric tons per year.  CO2 emissions data based on fossil fuels consumptions only and excludes other greenhouse gases.

Table 2 shows that in 2016, G7 Countries’ total populations represent 10% of the total world, produced 48% of total GDP’s, consumed 34%/37%/17% of total world oil/gas/coal fossil fuels, and produced 27% of total carbon (CO2) emissions.  This compares to China with 19% of total world population, 15% of total GDP, consuming 12%/5%/52% of oil/gas/coal, and also producing 27% of total world carbon emissions.  China’s relatively high carbon emissions are due largely to consuming over half of total world coal production.

India and all other Developing and Developed Countries account for the balance of the world population (71%), GDP (37%), fossil fuels consumption (54%/58%/31%, oil/gas/coal), and the 46% balance of carbon emissions.  These non-G7 Countries (excluding China) consumed almost 30% more coal than G7 Countries.

Possible Carbon Emissions Impacts of the Recent Paris Climate Agreement – During 2015-2016, all G7 and Develop Countries, and nearly all Developing Countries ratified the Paris Agreement.  The Paris Agreement updated previous G7 commitments made in the original Kyoto Protocol and subsequent agreements, and, included Canadian and U.S. support.  Based on the recent Paris Agreement development, a summary Table 3, was created to illustrate past and projected/pledged Countries’ carbon emissions.

Table 3 – G7 and Other Countries’ Baseline and Projected/Pledged Carbon Emission

Data Sources – Global Carbon Atlas, IEA and UNFCCC data.  Note: A negative ‘reduction’ is equivalent to an ‘increase’.  U.S. original projected 2030 emissions are based on a 28% reduction 2005-2025 and an 80% reduction 2005-2050.

Total G7 carbon emissions increased by +1,138 MMT/yr. (12%) 1990-2005, and are projected to decrease by 3,640 MMT/yr. (36%) 2005-2030; prior to the U.S. withdrawal from the Paris agreement.  Unfortunately, all of G7 carbon reductions have been and will continue to be offset by growing China, India and other Countries’ carbon emissions.  A major gap in the Paris Agreement is that China’s emissions are not based on reducing any past baseline year, and, will only be capped at some (unspecified) level in 2030.  India has only agreed to reduce its Power sector’s carbon intensity by 2030 and many other Countries have vaguely agreed to similar directional reductions in recent/current carbon emissions & intensities.  Many Developing Countries appear to have tied their future carbon levels/intensities to receiving part of $100 Billion/yr. in subsidies established in the Paris Agreement; funded by Developed Countries.

All of the G7 EU Countries agreed to reduce their 1990 level carbon emissions by 40% in 2030.  President Obama originally agreed to reduce U.S. 2005 level carbon emissions by 26%-28% in 2025.  Canada has agreed to possibly reduce its 2005 baseline emissions by 17% in 2020 and 30% in 2030.  And, Japan has agreed to possibly reduce their 2005 baseline emissions by 26% in 2030.

Based on the original 2015 Paris Agreement commitments, the U.S. was projected to account for 2,235 MMT/yr. reductions 2005-2030, or about 60% of total G7 reduced carbon emissions during this period.  Trump’s decision to withdraw the U.S. from the Paris accord means that G7 and World carbon emissions will possibly increase.  Note: China’s + India’s carbon emissions are projected to increase by 3-times U.S. original Paris Agreement reductions 2005-2030; assuming full compliance with the Paris accord pledges by these countries.

U.S. and Other Countries’ Projected Carbon Emissions – The U.S.’s recent actions to cancel the ‘Clean Power Plan’ (CPP) and withdraw from the Paris accord will effectively eliminate all U.S. projected carbon emission reductions 2015-2030.  Refer to Figure A.

Figure A – Projected U.S. and Other Countries’ Carbon Emissions – 1990-2030

Data Sources – Tables 1-3

Figure A graph shows that with the U.S. cancelling the CPP and exiting the Paris accord, U.S. carbon emissions are projected to possibly increase by only 80-90 MMT/yr. 2015-2030.  While this 2015-2030 U.S. carbon emissions projected increase is somewhat disappointing, it’s relatively small compared to major Developing Countries.  China and India’s carbon emissions in full compliance with the existing Paris accord are projected to possibly increase by 2,300 MMT/yr. during 2015-2030.  By 2030, China will continue to be the largest source of world carbon emissions, generating nearly twice the level of CO2 emissions as the U.S. even following its exit from the Paris accord.  All other World Countries’ (excluding China, G7 and India) are projected to increase by 4,000 MMT/yr. 2015-2030 despite full Countries’ Paris accord compliance.  Note, that India’s carbon emissions are projected to almost equal the level of G7 Countries (excluding U.S.) following the U.S. exit.

In Conclusion – The U.S., Canada and UK have clearly made the greatest progress in improving their energy securities over the years.  Since 2000, France, Italy and the UK have made the greatest progress in reducing their carbon emissions ‘percentages’ (17%, 21% & 27%, respectively).  However, on a world ‘unit mass’ emissions basis, Germany, the UK and the U.S. have made the greatest annual fossil fuels carbon reductions (69, 149 & 425 MMT/yr., 2000-2016).  These carbon emission reductions were due primarily to reductions in coal and petroleum consumptions, and ‘fuels switching’ to natural gas and renewables.  The U.S. by far has made the greatest progress in reducing its actual-unit carbon emissions during this century.

European G7 Countries are clearly disappointed in the U.S. withdrawing from the Paris agreement, since President Obama’s pledge to substantially reduce U.S. future carbon emissions would have represented up to 60% of total G7 pledged carbon reductions 2005-2030.  Unfortunately, President Obama failed to seek and obtain U.S. Senate approval of the Paris Agreement, and only made an executive pledge.  This past President pledge did not make the Paris Agreement equivalent to a legally bidding ‘treaty’, which fully enabled the current President to withdraw from all of President Obama’s previous commitments; carbon reductions & funding Developing Countries’ subsidies.

Without renegotiating the Paris Agreement into some form of a legally bidding ‘International Treaty’, the Paris accord will essentially continue to be just a list of semiformal political pledges.  Other than negative news critics and political fallout, the current Paris Agreement does not hold signatories legally liable for failure to comply with their current accord pledges.  If President Obama had actually convinced the Democratically controlled (Harry Reid’s) Senate to pass some form of the American Clean Energy and Security Act (H.R. 2454) prior to 2015 (when the Democrats lost control of the Senate), President Trump’s recent executive order to exit the Paris Agreement could have been prevented.

One factor that made the past Senate approval of any legally bidding law or treaty very problematic is that compliance with significantly large future carbon emission reductions is expensive.  Rarely mentioned in the news media today is the fact that most G7 Countries’ motor & heating fuels and electric power market costs are at least ‘double’ that of the U.S. and Canada.  In the case of Germany, which has established the largest percentage of (non-nuclear) renewable power generation in the world today, Germany also has domestic Consumer power costs triple the U.S.  This factor is possibly one of the major reasons why past Democratic and current Republican Senates’ have not passed any significant carbon reduction legislation during Obama’s Presidency.  Substantially increased energy costs was also likely a major factor motivating President Trump’s recent decision to pull the U.S. out of the current Paris Agreement.  By mitigating a substantial increase of U.S. motor & heating fuels and power costs to levels similar to those found in Europe, has potentially prevented inhibiting future U.S. domestic economic growth.

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