Granular approach needed for emissions reduction

Granular approach needed for cost-effective emissions reduction

By Gavin Evans

June 24 (BusinessDesk) - Cost-effective emissions reduction will require a granular approach and a willingness to rethink traditional ways energy is used in the economy, a visiting climate and sustainability expert says.

Michael Liebreich says the interactions between energy, transport, industry and new technologies can be very complicated.

That complexity sometimes allows people to promote “a lot of stupid things” which are hard to disprove. People, and sometimes governments, also tend to look for simple answers when the best options may vary by industry and even within industries.

Liebreich, visiting New Zealand as a guest of Z Energy, says policymakers and firms need to focus on the tasks that need to be performed in the economy and how they could be delivered in a carbon-free way.

That could show that batteries can power coastal shipping, but that port-side hydrogen fuel-cells are needed to recharge occasional visits by large cruise liners. Batteries may work for milk tankers, but may not for longer-distance logging trucks.

“It has to be done at a pretty granular level,” Liebreich said in an interview in Wellington last week.

“Sometimes politicians tend to want to stay at the top level and the say - ‘the answer is hydrogen’.

“It might be hydrogen for a logging truck for some reason, but it might not be for milk,” he said.

“When you start to do that, that’s when, for instance, hydrogen taxies fall apart as a use case because you start to see we can do it this other way much easier and cheaper.”

Z Energy is the country’s biggest fuel retailer and is judiciously recycling its capital to ensure it isn’t stranded by the changes it knows are coming in transportation.

Chief executive Mike Bennetts told investors last week that electrification of the light transport fleet is coming but is probably 10 years from seriously disrupting the fossil fuels sector.

Trucks are being developed to run on hydrogen, and the government here is “quite excited” about its potential here, he said. But others question whether conversion of electricity to hydrogen to fuel cells and back to electricity can ever be economic.

“Is it a threat, is it an opportunity? And how should we, if at all, participate in that market?”

Z plans to publish a house view on hydrogen to assist that debate.

UK-based Liebreich founded New Energy Finance, and subsequently sold to Bloomberg. He is a senior advisor at Sustainable Development Capital LLP and is on the international advisory board of Norway-based Equinor.

Liebreich said that even Japan is starting to understand that hydrogen can’t compete with battery electric vehicles for sub-100 mile transport.

It may have a role in trucking and is a good thing for New Zealand to be considering for back-up thermal generation fuel and potentially even drying milk, he said.

While electrolysis to split hydrogen from water may not be commercial, he said those costs will come down as bigger units are developed, and manufacturing gets underway at scale.

The Labour-led coalition, which last year banned new offshore exploration, is funding hydrogen trials. It has also promoted the importance of hydrogen in meeting its target to have electricity generation 100 percent renewable in normal hydrological conditions by 2035.

The Interim Climate Change Committee is working to develop tools to guide emission reduction efforts in the transport and land use sectors which account for about 70 percent of the country’s gross emissions.

Its April 30 report to the government is yet to be released. But in February it said the electricity sector appeared on track to be 93 percent renewable by 2035 and that “much more significant” emission reductions were available in other sectors than pursuing the remaining 7 percent.

Liebreich said all sectors should have a 100 percent renewable target. That will test the possibilities within each sector, but should also highlight potential linkages across industries.

“Then we can be sensible and say that will prove too expensive, or we don’t do this or that,” he said.

“There’s a bit of political maturity needed about whether we do what those targets reveal. Only in that exercise will you really start to push on what the possibilities are.”

(BusinessDesk)

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