What it is like living with Net Zero and how we got here…
Welcome to net zero in 2050! To understand what net zero looks like and what it means for our every day life, it is all about electricity. Now, electricity fuels our home, our cars, our industry and just about anything that can be moved, heated or cooled. Some petroleum products are still used in a small number of industrial processes (i.e. concrete and petrochemicals) but even they are being transitioned to alternative products or alternative fuels. The process of the clean energy revolution is almost complete.
Surprisingly, little has changed for most people and the cost of living has not increased as predicted by the vested interest politicians who fronted the fossil fuel industry back in the 20’s. Although the climate has continued to warm, communities and industry have learned to be more resilient to the impacts. Assisting the developing world to meet net zero is now the most active area of international assistance to complete the job.
So, what did we need to change here in Australia and elsewhere to meet the net zero carbon target and how were these changes implemented over the past 30 years?
The Politics
The clean energy revolution that was the accumulated reaction to climate change was, by necessity, Government driven. Without any market mechanisms to cost the emission of greenhouse gases into the atmosphere, governments around the world finally came to the table in the early 20’s to chart a course for real action – compared with what had been fudged for the previous 15 years despite the Kyoto II protocols. No one wanted to take significant and costly action alone, especially the conservative politicians in Australia where the demise of six prime ministers over a 15-year period was their reward for either trying to do too little or too much with climate policies.
The breakthrough came in late 2021 in Glasgow when all of the OECD countries plus 110 developing nations committed to net zero 2050. These commitments meant setting interim targets for 2035 which were significantly in excess of each country’s former targets and included specific policies around reducing emissions from coal and petroleum in the energy and transport sectors. Aid packages for developing nations were also put in place in recognition that most countries in the world could not afford the capital for the transition technologies required to meaningfully reduce their carbon emissions.
Australia stopped being the international climate laggard and became one of its climate leaders as a result of it adopting the net zero by 2050 commitment. This was a big step for Australia at the time because it was the largest exporter in the world for both coal and LNG as well as exporting 70% of its agricultural production which also had a heavy carbon footprint.
While governments were held responsible for setting the policy frameworks and financing many of the changes required around the implementation of technological change, the largest shift came from the average person on the street. Governments realised that people’s concerns around climate change could no longer be ignored and globally, a huge political shift came about when the vested interests in the fossil fuel industries took a back seat to the general public’s needs on the issue. People wanted action even if it meant some extra cost and loss of some jobs. Afterall, their children’s long-term welfare was at stake.
The Average Householder
For the average Australian and for most people in the developed world, net zero really has not impacted their day to day lives in any meaningful way. While many technologies were employed to achieve the necessary emissions targets, these were largely in the background or ignored overtime by younger generations as just the way things are.
For those living in the temperate zones who used to heat their house and their hot water with natural gas, it is now all done with electricity. Natural gas was last piped to residential properties in 2035. The heat pumps that replaced gas are reciprocating air conditioners that are 30% more efficient than the reverse cycle units available in the 2020’s. Hot water is heated through heat exchangers on the roof and boosted by the heat pump before being piped into the house. For those living in the tropics, air conditioning to cool houses was always the norm and is used even more now that humidity has increased with global warming. Overall, it is understandable that electricity consumption has increased significantly.
Residential electricity demand is generally met by each individual household’s solar system. The Victorian and NSW governments introduced mandatory 8 kW systems to be installed in all new homes and renovations in 2025. Electricity is encouraged to be used when the solar panels are generating at their peak, so hot water systems, dishwashing and clothes washing are usually done with timers in the middle of the day. As weather extremes have become more frequent, the greater use of electricity for air conditioning coupled with the charging of each household’s electric cars, the average electricity consumption across the country has increased by 40% from around 25 kWh per day in 2020 to 35 kWh per day now. The solar panels that provide this power as well as for storage are a combination of silicon and perovskite which now have conversion efficiencies of 35% on average compared to around 20% in 2021.
At night, power is supplied by battery back ups that include people’s own cars that operate in reverse and supply electricity into the house, small curb side battery farms for localised distribution and grid scale electricity storage systems. Blackouts are a thing of the past given that much less reliance is placed on transmission and distribution systems to transmit electricity over long distances to get to the home.
So apart from the battery electric vehicle (BEV) parked in the garage, very little has changed for the average householder and virtually no change to their quality of life or cost of living. While certain products such as concrete and steel alternatives are more expensive, other costs such as electricity bills have reduced now that residential electricity prices have gone from 22 cents per kWh in 2021 to 12 cents per kWh in 2050. Together with the lower cost of purchasing electric cars and their significantly lower operating costs, the average householder is now $3-5,000 per annum better off.
Small inconveniences such as lighting up the BBQ or wok cooking is still provided by LPG which is the only fossil fuel now allowed in residential areas. Some people still talk in nostalgic terms about the virtues of gas cook tops but most have been converted to the benefits of induction cooking. Of course, the younger generation know as much about cooking with gas as they do about a car that needed to be driven to a dirty service station to put an evil smelling fluid in it that then proceeded to belch cancer causing smoke every time they started it up.
The New Electricity Infrastructure
In 2021, around 60% of the world’s electricity was supplied by fossil fuelled generators and most of this was coal fired. Power generation accounted for 48% of greenhouse emissions in Australia in 2020 so retiring the remaining coal fired power stations was an obvious focus for emissions reductions. In 2050, a few coal fired power stations still operate in developing countries but the last coal fired power station in Australia was decommissioned in 2042 and the last in the developed world ceased operation in China in 2048. 85% of the developed world’s electricity is now generated by renewables with the remaining being provided by nuclear.
The key to employing high levels of renewables was the development of electricity storage systems both on a grid scale and a distribution scale. Several large storage system types have been employed using molten metal, molten salt and liquid air. These grid scale systems have lower energy intensity than chemical batteries which installed in the early 20’s by companies such as Tesla. However, given their locations, the new storage systems do not have to be constrained by their aerial footprint. Several coal fired power stations were also converted to storage systems where the boilers were replaced by graphite contained aluminium which is heated up during the day to then produce steam to drive the old turbines during the night (the last coal fired power station in Australia to be retired was Kogan Creek in Queensland and this was also converted to a storage generation site). The re-use of old power stations had the advantage of utilising the existing transmission systems that had been set up under the old coal fired centralised systems of last century.
Other grid scale systems are located on other parts of the high voltage transmission system such as near solar and wind farms as well as within the existing substations dotted around the metropolitan areas. These substation storage systems have taken up space once occupied by extensive switch yards that have a smaller function given the localised distribution storage systems that now handle the bulk of the distributed electricity. The low cost of these storage systems have helped keep electricity prices down to their lowest levels in 75 years. The most expensive part of the storage system is the so-called Snowy 2.0 which proved to be an expensive lesson in how adopting old technologies to solve 21st century problems can be an expensive exercise.
At the residential level, battery storage predominates with the local distribution companies installing small batteries inside some people’s garages as well as curb side battery units to supply the remaining load such as apartment complexes. The distribution companies alone operate the complex of batteries on their systems to ensure the system is balanced and supply is ensured to all points of the distribution system. In the 20’s, some people installed their own batteries despite these never being economic but now people see the benefits of the much lower cost of a centralised distributed battery system.
Commercial buildings have for a long time generated their own solar based electricity given their large roof top spaces. The introduction of perovskite layers into the windows of office towers and apartment buildings has significantly added to the daytime generation of electricity in large and multi-story buildings. Large battery storage has now been incorporated into the basements of all new buildings for night time usage. Overall however, the commercial office sector is a relatively small user of electricity given that more than half of the office worker population works from home and online shopping represents more than 80% of all sales.
Most industry has always been predominantly electric driven so the transition to even more electricity based processes was a smooth evolution. The main areas of difficulty were in concrete production, raw steel and petrochemicals. Green forms of concrete have been in development for many years now and cross laminated wood as an alternative construction material is used for most multi story buildings below 30 stories. Green steel and recycled steel now predominates although its general level of usage is much lower than in the past as substitutes such as aluminium and engineered wooden products have taken a large part of its previous market share. But it is in the petrochemical area which produce ammonia-based products where the transition has proved the most difficult. These processes have instead bought carbon offsets to continue operating and the offset revenue is used in further research into the development of green alternatives.
The Transport Sector
Australia reached 100% electric cars in 2036 across not only passenger vehicles but also heavy freight given the ongoing progress made with battery technology. The further development of Lithium Iron Phosphate (LFP) and later, Lithium Sulfur (LS) battery chemistry made the combination of lower cost cars and driving range an irresistible combination when compared to the polluting ICE cars. The tipping point had its roots in 2021 when LFP batteries were produced for below the theoretical breakeven point ($US 100/kWh) when it came to comparing the cost of producing an ICE car and a BEV. Once production output was ramped up to meet demand, a wholesale move to electric cars started in 2025. The Australian government did not mandate the phasing out of ICE cars, the market did it for them.
The heavy vehicle market, which is purely operationally cost driven, quickly shed the option of hydrogen fuel cells when it was clear that hydrogen would never get close to the running costs of pure battery vehicles. Hydrogen however, did find niche markets such as heavy duty machinery that needed to be operated continuously over long periods of time in operations that could afford the dedicated fuelling systems required to keep the hydrogen supply available on a continuous basis.
The largest automotive manufacturers today are Chinese who supply 50% of the annual 70 million new car sales across the world. These are generally electric car companies who never made internal combustion engines and therefore had no management baggage when it came to totally focussing their business model on the electric car age. It is also no surprise that the largest auto producer in the world today wasn’t even in business in 2021.
In the aviation industry which accounted for 5% of the old world’s use of oil, electric driven propeller planes for short commutes under 500 km are now the norm. Jet aeroplanes still use the equivalent of kerosene which is now supplied by bio fuels. Plant production for these fuels is strictly controlled to ensure that there is no competition with regular agriculture or degradation of rainforest as was the case with palm oil when it was grown on an industrial scale.
The maritime shipping industry has always been the bottom feeder when it comes to utilising fuels to drive its ships. The industry was always driven by the lowest cost form of energy staring with coal, then low grade fuel oil and then diesel. Major international shipping lines are still able to use natural gas (i.e. LNG) when in international waters but must shift to electric drives once they reach port. Shipping is one of the areas where costs have increased significantly which has had some impact on trade, but this has also encouraged more local manufacturers to set up. Major Chinese companies have established manufacturing bases in Australia, especially in the area of battery production which is largely mechanised.
The Winners and the Losers
- The Losers
Through any economic revolution there will always be winners and losers. Losers are usually the ones whose business models have been disrupted and it is not surprising that the biggest losers were the fossil fuel companies. Firstly, the coal miners who in Australia were the largest exporters in the world in 2021 have stopped all thermal coal mine operations in Australia. Those coal fired power stations that are still operating in the export counties are now getting their coal from local suppliers. There are still two coking coal mines still operating in Australia but as the transition to green steel is almost complete, these mines are already scheduled for closure sometime during this decade.
The oil industry is now operating at 20% of its 2020 capacity with only 19 million barrels being produced on a daily basis. The loss of the freight and passenger vehicle transport sector which made up 45% of the oil barrel left the oil industry reeling. The industry analysts who had convinced their managements that global growth would offset the losses from electric vehicles, had grossly underestimated how quickly the change to BEV’s would occur. In 2021, the Chinese battery producers brought battery costs down to $93/kWh which meant that BEV’s were then cheaper to produce than ICE’s. It took another 4 years for production capacity to meet demand and suddenly the tipping point for the move to BEV’s started in earnest. By 2030, the value of an ICE car had diminished so much that most owners were offloading their now obsolete vehicle for scrap value only. GM, Ford and Toyota all had to be bailed out by their respective governments because they had not moved fast enough to make the change to BEV’s and could not recover fast enough to avoid the trap of a catastrophic cost/revenue imbalance. These iconic brands were eventually merged into the new electric start-ups by private equity. Who would have thought that these once famous car companies would go the way of Nokia and Kodak?
The large oil countries that produced lighter oils that were once preferred to make gasoline and diesel have generally hit hard times. Saudi Arabia was the first to fall as oil prices collapsed in the lead up to 2030 and their once welfare-based economy quickly collapsed leading to the royal family to be overthrown in 2038. Russia which also relied heavily on oil as its primary source of foreign currency is also doing it hard but is gradually transitioning to a broader based economy on the back of its diverse resource base.
Alternative energy sources such as hydrogen was an early casualty. Despite billions being poured into projects to produce so-called blue and green hydrogen as an alternative fuel, it soon became apparent that the proponents of hydrogen never had a business case that would make hydrogen compete either economically or environmentally with battery technologies. 100 million tonnes of hydrogen is still produced to supply the petrochemical industry which has no alternative. The hydrogen is produced partly by electrolysis fuelled by renewables but the vast majority is still from the steam reforming of natural gas. The carbon emissions from this process are offset from carbon credits purchased on the international market set up in 2025.
While it is easy to have little sympathy for certain businesses and corrupt political regimes that did not survive the clean energy revolution, it is harder to dismiss the human tragedy of people who could not make the transition, either by their own intransigence or because they were ill equipped with other skills to find employment elsewhere. It is generally accepted that a full 3% of the workforce permanently lost their jobs in businesses directly or indirectly associated with the fossil fuel business. However, it is also estimated that there were 5% more jobs created through the many new jobs involved in such a fundamental move away from a carbon-based economy to a clean and technologically based economy. Nevertheless, the loss of carbon-based jobs is still being felt in 2050.
- The Winners
The obvious winners from the full adoption of the clean energy revolution and the successful meeting of the 2050 target are the people. The air is cleaner, people are healthier and food is more nutritious given that it is now more locally sourced.
New businesses are also big winners. Horticultural food production near capital cities is often coupled with solar power production and water purification. IT services ubiquitously service every aspect of our lives from our home office to the management of the electrical system to the network of autonomous vehicles that are the main form of transport around metropolitan areas.
As one of the largest lithium producers in the world, Australia was an initial winner given that lithium remains the most commonly based chemical battery component through the many development iterations that this class of electrical storage went through over the past 30 years. However, 80% of lithium is now sourced through recycling and the remaining lithium producers are the low cost producers in Chile and Russia. Only two lithium operations are currently operating in Australia. However, aluminium and copper are the two most used metals in the new electricity-based economy and Australia has become one of the world’s largest producers of these commodities. Not just because Australia is a major producer of both bauxite and copper ore, but because it has become a solar powerhouse which has some of the cheapest power prices in the world in Western Australia. Aluminium and magnesium are more or less forms of frozen electricity and the combination of mineral resources and solar energy has kept Australia in a significant position of competitive advantage in this area.
Overall however, the biggest winner has been China. The Chinese industrial complex was an early adopter of battery development and electric machinery in general to meet the future needs of the clean energy society. It is now the largest economy in the world and dominates both world manufacturing and research and development. China had its own problems meeting its 2050 commitments but probably because of its more centrally administered government structure, it more easily coped with the policy decisions that were needed to be made in a timely manner, no matter the cost. This unfortunately played further into the hands of the communist party which has maintained its control over the populace because it has continued to deliver outcomes for the people that they value. Of course, this was achieved at the cost of individual freedom which seems to elude every generation of young Chinese who may seek something different.
Conclusion
The jury is still out and whether the world can avert the worst aspects of climate change. The earth continues to warm and it is predicted that we will not stop that warming from tipping over 2 degrees Celsius above pre industrial levels by the end of this century. While the CO2 concentration has started to level off, the long-term impacts of our emissions over the years will continue to have an impact for decades to come given the residence time that CO2 has in the atmosphere. While we have largely eliminated methane emissions from our industrial processes, natural seepage from the Siberian tundra and shallow ocean hydrates continues to be a threat to our greenhouse reduction efforts.
Whatever the long-term outcome, we can be proud of the international response to climate change and the continued efforts to assist the developing world to make this a global achievement. We got a late start to the challenge because of our entrenched embrace of the fossil fuel industry and what it had done for us in the past, but we continue to hope that it is not too late. After all, the ultimate mark of our humanity is our positive spirit to survive.
Author: Gregory Craven
October 2021
Clean Energy Oz 