A global CO2 tax is an effective means to face the climate crisis, but it was a missed opportunity at COP21, writes Wouter Last

 

Credit: Hint

Reducing CO2 emissions and limiting global warming – how would you do that?

By consuming fewer fossil fuels and by committing to more renewable energy sources – at least according to the COP21 agreement.

All very true, but this transition won’t happen by itself, as we have noticed in the last few decades. Numerous climate targets have been set by countries, but the temperature of the Earth continues to increase. In the European Union, investments in clean energy actually decreased in 2015, compared to 2010.

Where Europe formerly contributed 45 per cent of global investments, this is now only 18 per cent. That is true even for Germany, a country that has been relatively successful with its ‘Energiewende’, with a sustainable share of nearly 30 per cent in its total supply.

CO2 tax as incentive

For the time being, sustainable energy is still so expensive that it is not feasible for the industry to widely use alternatives to oil and gas. The petrochemical and process industries need the supply of oil and gas to keep producing. Low energy prices also provide little urgency to switch to alternatives. In addition, fossil fuels are still around and there are still new oil reserves found and won. That will not change quickly over the next decade.

At the moment, the biggest polluters are the manufacturing industry, transport and the real estate sector. All three induce high CO2 emissions. On the one hand, this is because energy efficiency is often not a spearhead for processes and technologies.

On the other hand, it is because they use the most polluting fuels. Developing and using sustainable technology is not economically viable. Blowing off CO2, on the other hand, is just about free.

How can we force businesses to investigate alternatives and get started with the development of sustainable production methods? Relatively speaking, governments and businesses get a lot of freedom in the way they comply with the agreements made. Thisis is basically a waste of a broad-based initiative such as COP21, which could have been used to issue concrete measures – with a tax on emissions as its ‘flagship’.

A global CO2 tax is an effective means to face the climate crisis and the idea has supporters throughout the world. Both Shell and Greenpeace are in favor of CO2 taxation, as is a coalition of the World Bank and six countries, including France and Germany.

Perhaps mobilizing support worldwide is still a step too far, but introduction of the measure in the European Union should be feasible. Such a taxation tackles the problem at its base, because it makes alternatives to oil and gas more attractive. This can unleash an energy revolution within a few years from now.

However, the countries that have drawn up plans together in Paris to reduce carbon emissions at the global level and to restrain the rise in temperature on Earth don’t consider such a tax to be a solution.

Sustainable technology

When the emission of greenhouse gases becomes too expensive, economic concerns will automatically stimulate businesses to look at other forms of energy, and thus at other technologies.

Renewable forms of energy, such as wind or solar power, are not yet profitable. Subsidies are still needed to be able to generate green energy and supply it to industries and households. This is because the technologies have not yet developed far enough to make sustainability profitable.

An example: the maintenance of wind turbines at sea is still very expensive and cumbersome. Remote monitoring and predictive maintenance with the help of ICT solutions can help. By working remotely, you will need fewer resources, work more efficiently, and be able to perform preventive maintenance. This prevents interruptions, rather than having to solve them afterwards.

In many cases, remote monitoring saves a lot of labour and money, because operators can prevent a technical problem getting out of control. But, at present, automation solutions are used insufficiently even though they are already common in the oil and gas sector.

In addition to reducing emissions, companies can also deal with any remaining emissions in a more environmentally friendly way. Here, technological innovation also offers the solution. Think of CO2 storage in old gas wells, which will also free the last bit of gas from the wells. The technology to consume in a much more economical way already offers many possibilities, too.

Heat storage in buildings and more advanced electric transport are good examples of this.

Short-term benefits

Another factor to consider in stimulating companies to deal with sustainable, innovative technologies is the lack of urgency that is felt by organizations. The new climate objectives are set for the year 2100. That is a long way off, 85 years to be exact, and it is basically beyond anyone’s imagination.

This makes the new climate agreement no less meaningful, but because of its long-term focus, it is too far beyond the horizon while, in fact, we should already be conscious that change is necessary. Why don’t we consider the short-term benefits that the environmental agreement can bring us?

All the innovations and developments that are needed to accomplish the longer-term objectives will create a lot of additional business opportunities. Plans for the next five or 10 years are a lot better to oversee than objectives that are 85 years in the future, which has the advantage of making it easier to convince entrepreneurs and citizens of the importance of sustainability.

One example of this is the new market that will emerge for measuring and analyzing emissions at factories and plants. Because we all have to comply with strict emissions requirements, a lot will need to be measured. The market involved in this will strongly develop in the coming years.

Currently, measuring methods are not optimal and we often don’t know exactly which gases are being emitted and in what quantities. Systems to analyze gases for properties such as pressure, temperature and composition make it possible to collect relevant data on emissions.

Much of the required technology already exists. The software that we need is already developed, but is currently being used for other applications. With a few small tweaks, we will make great strides in transforming the functionalities. The market for this will be gigantic, because the new standards need to be met by everyone worldwide.

“The industry needs to be stimulated financially before they’ll pick it up seriously”

So, there’s a lot of work in store for plant IT and engineering specialists. At present, though, many of these innovative methods are not economically viable. The required capital exceeds the savings, meaning the industry needs to be stimulated financially before they’ll pick it up seriously.

This can be accomplished quite easily, with a hefty tax on greenhouse gases that are released in companies’ production processes.

Wouter Last is President of Hint, a consultancy, system integrator and service provider based in The Netherlands. www.hint-global.com