In HK, even a car that is not running is a bad car!

A particular feature of the transport system is its extreme complexity. It has multiple objectives, externalities, sectors (housing, residential, business, construction) levels (city, region, country, international) and players.  This complexity creates problems when it comes to implementing public policies in the sector.  All the externalities are interrelated, so that it is impossible to only target one of them.

However there is an effect that is completely forgotten in the economic approach, which concerns Volatile Organic Compounds (VOCs emissions when the car is not running. It has been proven (Yamada, 2013, EPA 2014 or De Gennaro et al., 2016) that VOCs emissions from cars that are parked account for a significant part of VOCs emissions. This is especially relevant for countries like Hong Kong where the diurnal temperature is rather high on average.

In Hong Kong, VOCs emissions generated by road transport accounted for 20% of total VOCs emissions in 2014. Evaporative VOCs from cars come from different source (see Table 1). According to the EPA that conducted a study on representative vehicle fleets (EPA 2014b), the diurnal source (or cold soak) is estimated to correspond to about 25-35g of emissions per day per car. They represent at least half of the total VOCs emissions from cars. The latter correspond to 34kg per year per car or are equivalent to 50 liters of liquid gasoline per year per car. De Gennaro et al. (2016) conducted a study in some Italian cities (Firenze and Modena) and found an evaporative VOCs density equal to 4 to 8 kg/km²/day.

Since the year 2000 (following the Council Directive 98/69/EC), gasoline vehicles for the European market have been equipped with an activated carbon canister placed on the vent of the tank. Its purpose is to trap the fuel vapours instead of having them released into the air. The carbon canister has a limited capacity. For the canister to be purged, and the hydrocarbons to go back to the tank, it needs the vehicle to be running. However, it is once the carbon canister gets saturated due to long time parking, or insufficient purging that evaporative VOCs become significant. This likely to be the case in Hong Kong where cars do not run at a sufficient speed to trigger the purge! The size of the carbon canister, the Gasoline Working Capacity of the activated carbon and the purging strategy are key parameters affecting the efficiency of the evaporative emission control system (See Martini et al, 2014).

Accounting for these evaporative VOCs would significantly alter public policies. For instance having cars parked for a longer time in city centers to avoid congestion was not supposed to have any cost in terms of pollution: this would no longer be the case. In addition, the level of evaporative VOCs depends on the age of the cars (what matters is the existing legislation at the car’s building time) and on the size of the tank but in a way that differs from the relationship existing between polluting emissions and tank size or car newness when the car is running. To summarize, it was so far considered that a good car is car that is not running; we now argue that even a car that is not running is a bad car!

Table 1: sources of evaporative VOCs from cars

Source: Yang (2016)

 

References:

De Gennaro M., Paffumi E., and Martini G., (2016), “Data-driven analysis of the effectiveness of evaporative emissions control systems of passenger cars in real world use condition: Time and spatial mapping”, Atmospheric Environment  129, 277–293.

EPA, (2014a), http://www.epa.gov/oswer/riskassessment/glossary.htm (accessed in October 2016).

EPA, (2014b) “Evaporative Emissions from On-road Vehicles in MOVES2014”, EPA-420-R-14-014, September 2014.

Martini G., Paffumi E., De Gennaro M. and Mellios G., (2014),  “European type-approval test procedure for evaporative emissions from passenger cars against real-world mobility data from two Italian provinces” Science of the Total Environment 487, 506–520.

Yamada H., (2013), “ Contribution of evaporative emissions from gasoline vehicles toward total VOC emissions in Japan ”. Science of the Total Environment 449, 143–9.Yang W. (2016) «Evaluation of evaporative VOCS in passengers Vehicles for regional air quality management » Master Dissertation Thesis, City University of Hong Kong. 

 

Brexit: a barrier to clean energies and climate change agreements

Introduction:

To a large extent, Brexit has been a surprise. This implies that part of its consequences have not been studied ex ante in a serious way, as UK leaving the EU was not considered as a plausible outcome. EU is now dealing with a hangover coming from a mix of uncertainties, unexplored possibilities, and unexpected circumstances. For instance, some people are not even convinced that Brexit will really come into effect. UK is a big player in the EU in particular for what concerns clean energies and EU is a big player on the international scene for what concerns climate change agreements. One may therefore wonder what is going to happen on the one hand for wind, solar and interconnected grid in the EU and on the other hand, for the extension of international climate change agreements or even simply the enforcement of the existing ones. Very little attention has been paid by economists to these issues so far first because Brexit is recent and was not a realistic situation ex ante. Second, no changes are expected to happen in the short run. Indeed, the EU rules “acquis communautaires” remain in place and there will be very little impact on the energy business: the price of energy sources is not set by the institutions in Brussels but on international markets. However, one can expect important consequences for the longer run, some of them due to the increase in uncertainties generated by Brexit

Part 1 : Consequences for the development of clean energies in the EU

Let’s start by analysing the consequences of Brexit for the development of clean energies in EU. The energy business is a lot about huge irreversible investments in infrastructures. Whether we consider electricity generation using solar panel or wind power, the development of such energy sources requires to invest important amounts of money into the solar panels the wind mills and the land to install them. These investments are not easy to sell back as there is no real secondary market. As a result, they are irreversible, meaning that once they have been done, we have to keep them for a long time. It is not a problem if future is perfectly known. In such a case, future operating costs and benefits are certain and not having the opportunity to undo the investments in solar panels or windmills does not matter. Of course, future is never perfectly known. But what is happening with Brexit is that the future for energy markets in the EU is getting a lot more uncertain. Ambiguity about the new U.K.-EU relationship will for sure raise uncertainty about changes in energy and climate policies. It is well-known in economic analysis, and in fact quite intuitive, that under reinforced uncertainty, investors become more reluctant to realise investment projects and wait before implementing them. Therefore, one can expect that UK clean energies expansion will significantly slowdown and as the UK is a big player for wind and solar energies, this slowdown will affect the whole EU clean energy development as well.

Also note that clean energies are intermittent and one choice made by the EU to tackle solar and wind intermittency is to set up a single European energy market with a large interconnected grid to balance excesses and shortages at different European locations. Again, such a grid requires irreversible investments and the UK was playing an important role in this grid. No doubt that the interconnected grid project is now going to be delayed, further impeding on European clean energies development.

An example is already provided by the Hinkley Point nuclear project in the UK involving French EDF and Chinese state-owned nuclear companies CGN and CNNC.¹ Even if EDF Chief Executive Officer Jean-Bernard Lévy committed to build Hinkley Point C whatever UK decision, there is a concern that the cost of construction could rise following the depreciation of the pound and that the project’s profits could be reduced if electricity consumption in the UK declines as a consequence of an economic downturn. Such a fear is not necessarily founded as not only the pound depreciation enters the picture, but it is sufficient to lower investors’ confidence and reduce investments.

¹ China General Nuclear will take a 33.5% stake in EDF Energy's £18 billion ($28 billion) project to construct the plant.

Part 2 : Consequences for international environmental agreements to fight climate change

Another important long term consequence of Brexit concerns international environmental agreements to fight climate change. Addressing climate change is very complicated in particular because of its global dimension. It is global Green House Gases (GHG) emissions that increase average temperatures which in turn generate cost to the economies. These costs are unevenly spread among countries (some may even actually gain from a warmer climate) with no correlation with the GHG emissions of each country. Therefore it requires a global environmental policy. It would make no sense for Hong Kong (or Switzerland) to engage into a very stringent policy to reduce their own GHG if no other country in the world is doing the same. And if the environmental policy is decided globally, it means that it results from close international cooperation, for instance to set emissions targets. Such a cooperation is very difficult to set up and in particular it requires leaders both from a diplomatic point of view and a GHG emissions point of view. US has not really played this role so far. It seems that China, by exploiting co-benefits between air pollution and climate change reductions, is becoming a first mover in the climate change mitigation international game. But so far, a very important player has been the EU. The EU has long been a respected international leader in international environmental negotiations. It comes from the close cooperation between the European institutions, and the member states… including the UK. As they have spoken with one voice, the EU’s collective impact has been a lot stronger than a collection of national positions taken by member states.

With the UK now out of the team, the EU becomes a smaller player in international negotiations, making it more difficult for the EU to play the leading role. Moreover, the UK has been a pro-active player inside the EU team with a lot of concerns for environmental issues. It may be that international cooperation inside the EU itself becomes more complicated without the UK to lead it. More difficult environmental negotiations in and out the EU will also delay international agreements. This can be observed for agreements that have already been made: what becomes the outcome of COP21 without the UK in the EU? The plan EU countries submitted in Paris as a 28-member bloc needs to be recalibrated since the UK is now out, but as the U.K. was part of the EU at the time of the negotiations, any change will require fine tuning. All this will take time and in the case the UK and the EU would delay ratification, one may wonder whether the agreement will later… or never enter force.

As a conclusion, Brexit generates a lot of uncertainties that will delay the development of clean energies and it will slowdown international environmental agreements as well. But things may become even worse: other countries may follow the UK example and it may be more difficult to address any global problem in the future as it could be viewed as questioning national sovereignty.

Smog around climate change III : Dimming is back!

Does China really care about climate change and not only on air pollution? According to LI Yijing[i] there is no doubt. After her presentation[ii] on March 11^th, 2016 at PolyU HK, she just replied “yes of course!” to my question, without any other attempt to justify her very confident answer. It is probably true that China (i) would like to be the leader in something like reducing global warming and (ii) already suffers from the adverse consequences of climate change, but it is even more convincing to observe that China faces an air pollution catastrophe and should urgently deal with it. And this is my concern.

Fighting air pollution implies reducing SO2, one of the 6 air pollutants entering the Air Quality Index as computed by China's Ministry of Environmental Protection (MEP), others being ozone, lead, carbon monoxide, nitrogen oxides and PM. It is one of the 6 major air pollutants as listed by the EPA as well. SO2 is a gas produced from burning coal, mainly in thermal power plants. There is scientific evidence proving that short-term exposure to SO2 (from 5mn to 24h) causes adverse respiratory effects.  SO2 is affecting radiative forcing as well but in a surprising way: due to a dimming effect it is actually cooling the climate!

A recent paper published in Nature[iii] argue that if SO2 emissions were to go back to their 1980 level China contribution to radiative forcing of the climate would be 13%+/- 4% instead of the current 10+/-4%. In fact, in China, the cooling effect of SO2 (-0.11 Wm^-2radiative forcing) currently nearly compensates for the warming effect of CH4 (0.13 Wm^-2radiative forcing). This illustrates the “masking” effect of cooling aerosols such as sulphated ones. And China is effectively reducing these emissions. During the 10^th Five-Year Plan period (2001-2005) the MEP set a goal to reduce SO2 emissions by 10% by 2005 compared to 2000. It was not achieved, but there is a significant decline starting after 2005 (around 10% between 2006 and 2008, according to Lu et al. 2010)[iv], In the same paper, authors stress that whether an air quality improvement in China occurring through SO2 emissions reduction would imply a rise of China’s contribution to the global radiative forcing depends on the reduction of other pollutants such as ozone precursors and black carbon that may be co-emitted and have a warming effect. But what I noticed[v] is that Particulate Organic Matters are cooling the climate as well…

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[i] China Executive Leadership Academy Pudong, Shanghai, 201204; liyijing@celap.org.cn

[ii] https://esscaeu-public.sharepoint.com/Research%20%20Activities%20%20Publications/Workshops%20on%20EU-Asia%20Relations%20in%20Global%20Politics/Papers%20-%205th%20Workshop%20on%20EU-Asian%20Energy%20&%20Climate%20Policy/3.2.LI-Yijing-China%E2%80%99s%20Policies%20and%20Actions%20for%20Addressing%20Climate%20Change.pdf

 

[iii] “The contribution of China’s emissions to global climate forcing” , by Bengang Li, Thomas Gasser, Philippe Ciais, Shilong Piao, Shu Tao, Yves Balkanski, Didier Hauglustaine, Juan-Pablo Boisier,  Zhuo Chen, Mengtian Huang, Laurent Zhaoxin Li, Yue Li, Hongyan Liu, Junfeng Liu, Shushi Peng, Zehao Shen, Zhenzhong Sun, Rong Wang, Tao Wang, Guodong Yin, Yi Yin, Hui Zeng, Zhenzhong Zeng & Feng Zhou, Nature 531, p357-362  January 2016. http://www2.centre-cired.fr/Actualites/article/The-contribution-of-China-s-emissions-to-global-climate-forcing-2197?lang=fr

 

[iv] Lu Z, Streets D.G., Zhang Q., Wang S., Carmichael G.R., Cheng Y.F., Wei C., Chin M., Diehl T., and Tan Q. (2010), “Sulfur dioxide emissions in China and sulfur trends in East Asia since 2000”Atmospheric Chemistry and Physics, 6311-6331.

[v] See figure 1 p358.

COP21 in Paris: Are promises better than nothing?

Prudence Dato, prudence.dato@univ-savoie.fr, IREGE/University of Savoie (France)

  

Before submitting to the assembly for final agreement, the President of COP21, Laurent Fabius declared with emotion that the compromise text is “fair, sustainable, dynamic, balanced and legally binding”. However, it seems to be very difficult to find how it is legally binding by reading the final agreement.[1] But there are nice promises. The agreement that was unanimously voted confirms the goal of maintaining the increase in average temperature to 2°C below the pre-industrial average (the 1850-1900 reference period) and intends to pursue efforts to limit this increase to 1.5°C. This limit of 1.5 °C would require negative emissions that suppose a quick transition to renewable energy and energy efficiency; and the adoption of biofuels combined with carbon capture and storage (CCS) technologies according to the Intergovernmental Panel on Climate Change (IPCC) mitigation pathways. While the group of developing countries, which include most vulnerable countries and also both less and more polluting countries like China and India supports this target, its requirements are less favorable to them. For instance, biofuels are competitive with food production[2] and may reduce their possibilities to reduce poverty[3], while developing countries are most affected by both climate change and poverty.  Also, up to now the CCS technologies are too costly[4] and renewable energy is not affordable in developing countries[5]. This would not be possible unless there is a transfer of technologies and financial aids.

 These issues of transfer of technologies and financial aids were also important parts of the COP21 agreement. Fund of $100 billion a year was promised by developed countries to support climate policies in developing countries such as conservation and sustainable management of forests and promotion of renewable energy through new aids or greening existing ones[6]. Additionally, there were side commitments from some countries like France and US.  For instance, France has decided to cut subsidies for overseas coal-fired power stations without a CCS and has promised €2 billion by 2020 to African countries. Also by the year 2020, the United States has promised to double its funding from $430 million in 2014, for poor countries to help them adapt to the effects of climate change. But all this is only promises…In addition, developing countries may be careful of the euphoria of green that may redirect aids to green projects which may not socially efficient instead of investing in development projects such as infrastructures, education, health, etc. Overall, nothing will happen if developed countries do not fulfill their promises…and why would they? Even worse: even if developing countries really receive the $100 billion, will they have any incentive to reduce their GHG emissions? No sign of that in China or Hong Kong.

 

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[1] http://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf

[2] For more details, see Condon, Nicole, Heather Klemick, and Ann Wolverton. "Impacts of ethanol policy on corn prices: A review and meta-analysis of recent evidence." Food Policy 51 (2015): 63-73.

[3] https://www.foreignaffairs.org/articles/2007-05-01/how-biofuels-could-starve-poor

[4]http://www.iea.org/publications/freepublications/publication/technologyroadmapcarboncaptureandstorage.pdf

[5] Martinot, Eric, Akanksha Chaurey, Debra Lew, José Roberto Moreira, and Njeri Wamukonya. "Renewable energy markets in developing countries*."Annual Review of Energy and the Environment 27, no. 1 (2002): 309-348.

[6] http://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf

COP21, peak oil and climate policy implementation

COP21, peak oil and climate policy implementation

Surprisingly, there are still engineers who seem to be concerned about the peak oil. Jean-Pierre Jancovici - well-known in French media- made a speech last month at¹ BaptistU in Hong Kong that was mainly on peak oil but with some slides on the textbook IPAT identity² at the end of his presentation in order to reach a climax in the drama: this is the end of growth because we are depleting of oil and on the top of that, he argued, populations are going to be decimated as it is the only way to satisfy the IPAT identity.

Usually I ask such pessimistic speakers how many kids they have to check the consistency of their thinking³... Instead, I made him address the following question: “Which constraint on fossil fuels do you think is the most stringent: the one on climate change or the one exhaustibility?” Indeed the two issues are in some sort mutually exclusive: being short of oil makes it easier to cope with climate change, as less GES will be created. At least, the two problems are not reinforcing each other. He did acknowledge that it was climate change even if he seems convinced that running out of oil is already in the countries’ growth figures (or will be soon…that was not entirely clear to me).

Having engineers now convinced that climate change is the issue number one, should we be optimistic about climate policies that will be implemented in the near future? Nowadays, economists know quite well which environmental policies could allow reaching the first best (or nearly). However, they are hardly implemented. There has been a lot of talking, a lot of debates and a lot of events around COP21. It will now start soon (some will say it is already finished since to avoid a “Copenhagen scenario” a lot of things have been decided in advance) and one may wonder what to expect.

Many people do not expect that much. First note that COP21 implies that 20 COPs already happened! Second, each negotiator’s first objective is to secure the lowest targets possible for his/her country while the second one is to congratulate all participants at the end of the event for such time, energy and money devoted to trying and solve the climate change issue. This is mainly communication. However, climate change is a global issue and there is no way to avoid international negotiation. As a reaction to the expected statu quo, some economists have therefore called for a uniform carbon price in view of COP21. The rationale was to propose a very simple instrument that would then be easier to implement. However it seems quite far form a first best situation. Also note that in Hong Kong, there is nearly no environmental policy (except some environmental education). At the 4th Nobel Laureates Symposium on Global Sustainability, 22-25th April 2015, Christine Loh (under Secretary for the Environment in Hong Kong) publicly said "We now know what we should do but we cannot do it. Anybody who has any ideas should help us". It seems that the main problem is implementation, or political acceptability. Why not design an environmental economics that explicitly accounts for political constraints? For the time, let’s hope COP21 will turn out more ambitious than we thought!

1 The event was co-organized by CEFC. http://www.cefc.com.hk/fr/event/how-does-the-energy-crisis-influence-the-world-economy-and-the-geopolitical-ecosystem/

2 For a refresher: http://www.ipcc.ch/ipccreports/sres/emission/index.php?idp=50

3 Having written a book entitled “Climate change explained to my daughter”, we can infer he has at least one.

The inconvenient truth about China and air pollution in Hong Kong

On june16th, the Environmental Protection Department (EPD) of Hong Kong published the 2013 Emission Inventory for Hong Kong (one would have expected the 2014 one…). According to this report, Hong Kong's total emissions in 2013 were 31 280 tonnes of SO₂, 113 220 tonnes of NO_x, 29 420 tonnes of VOC and some tonnes of other dirty gazes (details can be found there). It is advocated that compared to 2012, the levels of the six major pollutants in 2013 were between 1 and 11 per cent lower, mainly due to a reduction in emissions from vessels and motor vehicles.

But are HK emissions important for HK air pollution? Depending on who you speak with (people who own a car, people from the government, MTR users etc…) the answer does vary. In fact the usual suspect for HK air pollution is mainland China. And the usual answer when you do not have conflict of interest nor any particular information is 50% is coming from HK emissions and 50% is coming from mainland China.

At the School of Energy and Environment, Dr. Nicky Lam and Glory Kwok Lee Kan who is a PhD student have carefully addressed the subject, and are developing a new statistical model to predict the air quality in Hong Kong as well as the source of this pollution. Interestingly, the PM10 mainly come from mainland China (80% in January!). But it is not always true: from May to September included, more than 50% of PM10 are generated by Hong Kong. These are not the most heavily polluted months but it is also true for February and March. Last but not least, HK has to be taken responsible for most NO₂ and SO₂ generation.

And now guess what Hong Kong is doing? Quietly waiting for mainland China to do the job in emission reduction. But with this information about air pollution sources, HK SAR authorities have now to seriously consider doing something too. Which means ultimately understand that pollution is an externality generated by economic activity and is an issue that, by definition, cannot be spontaneously addressed by the market.