Environmental risk mitigation coaxing a market in the battery and energy supply and storage industry

ENVIRONMENTAL RISK MITIGATIONBARBARA WEISS & MICHIYO OBI Coaxing a Market in the Battery and Energy Supply and Storage Industry... Environmental Risk Mitigation Coaxing a Market in the

ENVIRONMENTAL RISK MITIGATION

BARBARA WEISS & MICHIYO OBI

Coaxing a Market in the Battery and Energy Supply and Storage Industry

Environmental Risk

Mitigation

Coaxing a Market in the Battery and Energy

Supply and Storage Industry

ISBN 978-3-319-33956-6 ISBN 978-3-319-33957-3 (eBook)

DOI 10.1007/978-3-319-33957-3

Library of Congress Control Number: 2016954973

© Th e Editor(s) (if applicable) and Th e Author(s) 2016

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1 Introduction 1

2 Environmental Risk and Sustainability 9

3 Economic Growth, Technological Development,

and Environmental Performance 33

4 Decarbonization and Clean Energy Technology

Research and Development 47

5 Climate Change Mitigation and Clean Energy

6 Clean Energy Technology: Investment and Investment

Financing in Renewable Energy, Batteries,

Energy Supply and Storage 107

7 Battery and Energy Supply and Storage

8 Coaxing a Market:

Environmental-Societal- Financial Sustainability Interfaces 155

Fig 4.4 Research and development (R&D) distribution—2013

Fig 4.5 Business enterprise research and development (BERD)

and government- funded BERD—2013 66 Fig 6.1 Clean energy fi nancing continuum 110 Fig 7.1 Battery and energy supply and storage (B|ESST)

Frontier—Research, development and market application 141 Fig 8.1 Environmental risk mitigation—“Gearing up”

Fig 8.3 Environmental risk

mitigation-Environmental-societal-economic- capital sustainability interface 170 Fig 8.4 Environmental risk mitigation—Case|Interface 1-CET &

Fig 8.5 New technology clearing house—Mutually benefi cial

Fig 8.6 Environmental risk mitigation—Case|Interface 2-Utilities

Table 3.1 Economic size, technological development

Table 3.2 Research & development, patents, and

technological development—World rank and share 36 Table 3.3 Renewable Energy (RE) indicators—2012 42 Table 3.4 Environmental performance indicators—2010

Table 4.1 R&D location and business expenditures on R&D 

(BERD)—2013 (unless otherwise noted) 61 Table 4.2 Top 20 graphene applicants—5-country

Table 5.1 Natural resource rents and adjusted savings

(Depletion and emissions damage)—2013 79 Table 5.2 Renewable energy (RE) indicators—Policy

up with Moore’s Law of computing power doubling every two years, which has defi ned technological development for the past 40 years (Day, 5/03/14) Th e energy density of rechargeable batteries has risen only six- fold since the early lead–nickel rechargeables of the 1990s (Van Noorden, 3/05/14) Battery storage capacity currently doubles only every 10–15 years Getting it down to every fi ve years is the aim (Cleevely, 5/03/14)

Th e battery, like the light bulb, is at its heart an archaic device (Levine, 10/12/12) Rudimentary batteries were in use over 2000 years ago in Mesopotamia (Day, 5/03/14) Th e basic chemical process in batteries has not changed signifi cantly since then Today’s battery production process also uses more energy than the battery itself will stock and return during

Introduction

its use (Lewis, Park, and Paolini, 4/23/12) Th en there are the polluting by-products of the battery production process and battery recycling, as well as unwanted reactions (i.e., discharge, self-discharge, and re-charge rates) that aff ect battery effi ciency

Lithium is the lightest solid and has a power density and energy sity per unit mass equivalent to gasoline But it is also highly reactive and unstable and ineffi cient in terms of the cycling (Coulombic) effi -ciency required of rechargeable batteries Th is suggests signifi cant, per-haps, inordinate risks in launching such technology in battery and energy supply and storage chemistry Lithium-ion (Li-ion) batteries, with their

den-fl ammable liquid electrolyte, never overcame its original den-fl aws (Martin, 4/14/15) Th e incidence of Li-ion battery (LiB) “thermal runaway” causing fi res to break out in aircrafts, busses, cars, handheld electronic devices, computers, and even electric motor-assisted bicycles illustrate the very low thermal stability and riskiness of this existing metal-based battery technology Th ere are also safety risks in the battery production and disposal process, as illustrated by the case of the fi re at the Nihon Gaishi Kabushikigaisha (NGK Insulators) Sodium-Sulfur battery factory

in Tsukuba, Japan, in September 2011 Adding further uncertainty is the cost and ready and sustained supply of Lithium and some of the tran-sition metals currently used in LiBs—Cobalt, Vanadium, Nickel, and Titanium (Nitta, Wu, Lee, and Yushin, 11/24/14: 252–3) Battery and energy storage markets need to cut the cost of technology, the levelized cost of technology (LCOT), as soon as the technology is developed and scaled up for manufacture and sale Battery companies whose cost per unit storage does not drop by a factor of two in the next fi ve years will go out of business (Fallows, 4/16/14)

Today’s battery researchers are operating without a map (Levine, 10/12/12) Th e constraints of the laws of chemistry and physics on energy storage and supply means researchers have to rethink battery technology from “materials science scratch” (Day, 5/03/14) A cursory count of the number of elements in the periodic table used in battery, fuel cell, and other energy storage and supply materials research, according to Nitta,

Wu, Lee, and Yushin (11/24/14: 253) among others, is about 40 of the 103 elements or 39 percent of the periodic table Th e development of battery materials is a “punctuated evolution,” fi rst by large jumps that occur with

the discovery of a new class of material, then followed by an optimization phase to improve its basic structure and composition (Fultz, 7/08/14) Th e big jumps come from experimentation, often by serendipity or “Edison testing,” the stuff of basic research (Fultz, 7/08/14) Research and devel-opment (R&D) in this fi eld therefore goes beyond innovation into the realm of discovery Developing batteries from renewable and sustainable resources is the biggest challenge (Hardin, 8/11/11) Such a breakthrough could come from any number of avenues or not at all (Levine, 10/12/12) Investing in and then commercializing B|ESST seems to be an almost foolhardy undertaking Despite its constraints, battery R&D and pro-duction is still the rage in clean energy technology (CET) (Dikeman, 1/18/13) Never has the promise of CET been so great (IEA, 5/04/14: 4)

Th e burgeoning array of B|ESST suggests overcoming the risks associated with battery (electro) chemistry is a challenge researchers fi nd irresistible Indeed, nowhere is innovation-driven, dynamic international competi-tion more evident than in the drive for CETs (Porter and van der Linde, 1995) Th e stakes are high for CET businesses For battery manufactur-ers they are particularly high as incidences of battery and capacitor price

fi xing indicate Demand for high-performance batteries for electric and hybrid vehicles capable of matching the range and power of combus-tion engines encourages scientists to develop new battery chemistries that could deliver more power and energy than batteries with liquid Li-ion conductive electrodes, currently the best performing in the marketplace (Chen, 11/19/13) High-density energy storage technologies, scalable over a wide range of sizes, are emerging as the greatest game changer for

a new era of energy based on smart electricity distribution and the use of renewable sources (IBM Research, 8/27/09) Developing the technology

to store electrical energy so it can be available to meet demand whenever needed would be a major breakthrough in electricity distribution (DOE (US), 9/15/14) Th e Internet of Th ings (IOT), for example, is not with-out batteries and plugs (Th ibodeau, 12/22/14: 1)

Th e value that ground-breaking innovation in these areas would ate is immeasurable Environmental standards and other incentives have triggered innovation (Porter and van der Linde, 1995: 98) For some policymakers it is a matter of national security National security con-cerns about the geopolitical availability of fuels have been a major driver

cre-for a number of countries to consider renewable energy (RE) (IPCC, 5/09/11: 191) Today, governments are aware of the role of RE supply and RE technologies have to play, not only as a tool for improving energy security, but also as a way to advance national development, mitigate greenhouse gas (GHG) emissions and provide direct and indirect social benefi ts (REN21, 6/04/14) Competition from new technologies can also be disruptive to any industry (REN21, 6/04/14: 80) Namely, most mitigation scenarios could devalue fossil fuel assets and reduce revenues from coal and oil trade for major exporters (IPCC, 11/02/14: 27, 128)

In this regard and also in terms of market creation, it is important to keep

in mind that state-owned enterprises (SOEs) including national oil panies (NOCs) own more than 70 percent of global oil and gas reserves (80 percent of proven-plus- probable oil reserves and 60 percent of natu-ral gas reserves), about half of the world’s power generation capacity, and have prominent positions in the coal industry and in many pipeline net-works and transmission grids (IEA, 5/19/14: 12, 31, 53, 95) NOCs also invest 40 percent of global investment in upstream exploration, drilling, and mining in oil, coal, and gas supply chains Th e International Energy Agency (IEA) expects the reliance on oil from countries that restrict access

com-to their resources will grow from the mid-2020s onward, as output from North America plateaus peaks and then declines (IEA, 5/19/14: 12, 53)

Th e resources required to produce batteries, in addition to those not needed for their use, could cause a shift in the global power structure (Lewis, Park, and Paolini, 4/23/12) While investment in technology such as B|ESST is a key driver of future economic growth and interna-tional competitiveness in today’s interdependent world, there is still no viable market mechanism in place (Kim, 3/04/14) In other words, the development–application trajectory has not been continuous or smooth Non-market driven research that meets long-term environmental sus-tainability needs and the “innovation-driven competitiveness paradigm” (Porter and van der Linde, 1995) notwithstanding, these endeavors have

to be market viable and eventually profi table Th is is where industry vides the best barometer of what advanced technologies the marketplace

pro-is likely to need in the short- and mid-term (Littlewood, 5/07/14) Keeping in mind the open-ended nature of B|ESST and uninterruptable energy supply R&D, what is required for a viable, value creating, revenue

generating, ample margin market for new ways to store and reuse energy ?

Where is the market frontier in the battery and energy storage industries? Who undertakes the risk of seeking such game-changing technology ,

much of which has originated in the electronics industry but increasingly

in the IOT, transportation and electric utilities industries, the discovery of which is seemingly open-ended? Can it come out of nowhere as so many

of the world’s discoveries have in the past? How heavily does government subsidize and/or guarantee B|ESST investment? How long is the invest-ment time horizon of frontier R&D in an area such as this? Can it be as open-ended as is needed at the frontier of scientifi c discovery (Wineland, 11/29/13)? Does it extend into the production phase of new technology? How important is the risk- and cost-sharing, the public- private interface, especially the business-government-fi nance nexus, and the coordination needed to quickly implement the production of RE and other CET tech-nologies in what amounts to a shake-out phase of new technology as it goes into the pilot and production phases? Does a country’s energy depen-dence strengthen its resolve to succeed in this emerging industry? And, perhaps, most importantly and crucially, how does the benefi t of environ-mental sustainability fi t into product pricing and development and pro-duction cost considerations? In other words, how much does the “triple bottom line” of environmental, societal, and fi nancial sustainability, more commonly referred to as environmental social and corporate governance,

fi gure into private sector companies’ strategy to develop “green” (i.e., tainable) industries and to create and construct a “green” economy “Coaxing a market” that aff ords environmental risk mitigating ven-tures, such as those that rapidly adopt viable, new CETs, is also a con-ceptual exercise Environmental risks are integrated and systemic In competitive markets, mitigating environmental risk requires a rethink of the fundamental basis of those markets, such as the notion of value cre-ation, risk taking, and benefi t-seeking investment incentives It also relies

sus-on the acceptance of a broader notisus-on of capital that includes fi nancial, natural, and human capital Th ese concepts are developed and incorpo-rated here into a number of cases that off er some “ways forward” to coax-ing environmental risk mitigation markets

Th e focus of this research is the market for environmental risk tion Mitigation is the process of reducing the emissions and enhancing

mitiga-the sinks of GHGs, so as to limit future climate change Th e aim here is

to address questions of how low-carbon CET R&D and manufacturing production, in particular, B|ESST are being developed, deployed, and diff used, in order to strengthen existing eff orts to mitigate environmental risk In the spirit of system integration, it ties together disparate parts

of the energy market, in order to depict its organization and structure within the context of mitigating the systemic risks of climate change Some of the information included here therefore has been widely cited elsewhere

Th is discussion of the ability of technology to help to mitigate ronmental risk through energy system decarbonization off ers a nuanced understanding of environmental risk, its causes and eff ects, the utility of the CET market and CET fi nancing, and the composition of markets and the policies that underpin them and that also meet the needs of envi-ronmental risk mitigation It highlights the centrality of sustainability

envi-in its multiple, envi-interrelated forms and the role of clean energy techno- economic growth and development in reversing the anthropogenic causes

of environmental risk that increasingly delimit natural systems, which, in turn, aff ect the national security of more and more countries and the liv-able communities and human health and well-being of people around the world Th e focus of the empirical analysis is on seven countries with the largest and most technologically advanced economies—China, France, Germany, Japan, Korea, the UK, and the USA

Th e theoretical basis is the actor- or agent-driven path creation process

of socio-technical economic growth and development that begins with CET R&D (Brown and Sovacool, 8/31/11; Simmie, et al, 4/26/12) It retains the distinction between innovation and development, in order

to test the degree to which technological innovation, in this case CET, together with energy and CET policy and patent regimes, is able to coax

or spur the capital formation, price fl exibility, value creation, and risk analysis needed for the competitive market development that can deliver the sustainable economic growth needed to eff ectively mitigate environ-mental risks and increase socio-environmental resilience It focuses on the accuracy of the comparative costs or prices of energy and technology, whether or not they are derived from information symmetry and market effi ciency Where there is evidence of this, such as in micro-level and

region-specifi c B|ESST and other CET-driven markets, it allows for the introduction of the notion of path networks and path interdependence and even path “widening into avenues.” In this regard, markets are based

on an expansive defi nition of capital that includes productive, fi nancial, natural, and human capital; value assessment and creation that include what have been the intangible benefi ts of environmental and societal and community sustainability; and an expansive, indeed holistic approach to risk taking that includes a discussion of risk recognition and comprehen-sive risk analysis In terms of market governance, the emphasis is on the role of regulators to “coax” markets by “nurturing and shaping emerg-ing technology” (Karnøe and Garud, 4/26/12: 750), something market actors welcome and even call for at the early stages of market develop-ment Risk-taking market actors take it from there

Th e discussion begins at the macro- or systemic-level to identify the problem of environmental risk by depicting its sources and its threats to environmental sustainability Next is the discussion of the relationship between economic growth and environmental risk, and eff orts to subse-quently mitigate this risk In this regard, the focus is on the energy market, energy system decarbonization, and CETs in the information and com-munication technology (ICT), transportation, and electric and natural gas utilities industries Th e R&D of these new technologies is performed

in academic, government research institutes, as well as in business Th e discussion of the composition of R&D in the seven countries mentioned above confi rms the importance of business or corporate R&D. Th e next chapter describes the public policies and incentives supporting these eff orts Th e success of these policy measures is tested by describing the

fi nancial markets for RE and CETs In order to get a better look at ket design, a B|ESST frontier of originators of innovative technologies and developers of them, including funders and industrial producers (i.e., manufacturers), is constructed Also included in the discussion of the B|ESST frontier of new and alternative energy supply and storage tech-nologies is the crucially important “development  – application trajec-tory”, which explains how well-connected B|ESST frontier developers are to the industry strategists and production engineers who scale up new technology into viable manufactured products and the market eff orts that successfully introduce them to consumers and other businesses Th is

mar-is, in essence, the development phase of R&D.  Th e phrase “research, development and diff usion” is also sometimes used to describe it Th e discussion concludes with the introduction of environmental-societal-

fi nancial (E-S-F) sustainability interfaces that take include any number of

“co-located” systemic variables, in order to identify how well- established are the constituent parts of this formative market and how well they are functioning in within the so-called green economy E-S-F sustainabil-ity interfaces are the signposts, if you will, along the way of new paths that are constructing the markets that mitigate environmental risks Th ey allow us to better identify and recommend ways to lower CET policy uncertainty and increase the risk taking needed for the greater interna-tionalization of environmental risk mitigating markets

Getting the big picture, the lay of the land, if you will, is helpful to understanding a global issue such as environmental risk and the role the markets of the green economy have to play in mitigating this tremendous risk in its various forms—vulnerability, exposure, threat, peril, hazard, and so on Th e reader will please pardon what may appear to be the hubris of the authors to presume to take such an overarching view It aims

to be a useful tool with which to address complexity and identify market formation and structure It is primarily an eff ort to better understand the immensity of the issue and the multiple approaches needed to address it

Th is approach is in keeping with the notion that agents, acting as some combination of policymaker, strategist, and other employee and member

of (civil) society, have dual roles to play in reducing environmental risk

In this regard, it is an aid for the individual person to understand their own place, their own situation, and their own role in mitigating the envi-ronmental risks that aff ect daily life and productivity in some equal mea-sure Th e relationship between these roles informs risk perceptions and increases the value placed on a benefi cial environment the Earth system aff ords human existence Technical data and other information about the Earth system, energy supply and usage, low-carbon CETs and B|ESST are included and duly cited, in order to identify the market’s scale, scope, and frontier

Th e backdrop of the development of clean energy technologies (CETs), such

as renewable energy (RE) supply, alternate energy vehicles (AEVs), batteries, and other energy storage (ES) technologies is the environmental risks posed

by climate change that includes changes in global temperature, precipitation (fl ooding and drought), sea level, land and polar ice, forest cover and the incidence of forest fi res, and weather patterns According to climate scientists, climate change occurs when the Earth system responds in order to counteract the fl ux changes and radiative forcing (RF) is a measure of the net change in the energy balance of the Earth system due to an imposed (fl ux) perturbation (IPCC, 11/02/14: 664) RF, measured in watts per square meter (W m −2 ), quantifi es the perturbation (i.e., the deviation of the Earth system from its normal state caused by an outside infl uence) of energy into the Earth system caused by these drivers (IPCC, 11/01/14: SYR-9)

Th e natural and anthropogenic substances and processes that alter the Earth’s own energy budget are the physical drivers of climate change (IPCC, 11/01/14: 116) Natural RFs—changes in solar irradiance and volcanic aerosols—have had a slightly cooling eff ect since 1970 (NOAA/NASA (US), 1/10/15; IPCC, 11/02/14: 43) Indeed, the global mean total aerosol RF has counteracted a substantial portion of RF from well- mixed greenhouse gasses

(WMGHGs) ( high confi dence ) (IPCC, 11/01/14: SYR-9; IPCC, 11/02/14:

43) 1 For example, RF increased at a lower rate between 1999 and 2011, compared to 1984–1998 or 1951–2011, due to lower GHG cooling natural

RF from volcanic eruptions and the cooling phase of the solar cycle over the 2000–2009 period, as well as lower anthropogenic (human activity generated) emissions during the global economic crisis in 2007–2008 (IPCC, 11/02/14: 41) Th e benign eff ects of recent natural RF, however, will not continue if there are new volcanic eruptions and the sun emits more solar fl ares

Of the sources of systemic environmental risks, the human or pogenic drivers have become very important sources of it Th e consensus among 97 percent of climate scientists is that climate-warming trends over the past century are very likely due to human activities (Cook et al., 5/15/13  in NASA, 8/15/15) Anthropogenic GHGs emitted between

anthro-2000 and 2010 were the highest in human history (IPCC, 11/01/14: SYR-9; IPCC, 11/02/14: 45).  Th e IPCC reports unprecedented levels

of atmospheric concentrations of GHGs (levels not evident in at least 800,000 years) (IPCC, 11/01/14: SYR-9) In the Fifth Assessment Report (AR5) of the International Panel on Climate Change (IPCC) researchers estimate the warming eff ect of total anthropogenic RF (those GHG emissions originating in human activity) in the industrial era (1750–2011) to be 2.3 watts per square meter (W m −2 ) [mid-point in a likely 1.1–3.3 range] (IPCC, 11/01/14: SYR- 9) And the total anthro-pogenic RF estimate for 2011 is substantially higher (43 percent) than the estimate reported in the Fourth Assessment Report (AR4) for the year

2005 (IPCC, 11/02/14: 43)

Th e IPCC unequivocally states  that the  anthropogenic increases in WMGHGs have substantially enhanced the greenhouse eff ect, and that the resulting RF continues to rise (IPCC, 11/02/14: 661) In other words, an increase in global temperature is proportional to the build- up

of long-lasting GHGs in the atmosphere, especially carbon dioxide (CO 2 )

1 Aerosols’ infl uence over clouds and snow cover partially off set the forcing of well-mixed GHGs and dominate the uncertainty associated with the total anthropogenic driving of climate change (IPCC, 11/02/14: 661) Hence, confi dence in the representation of processes involving clouds and aerosols remains low (IPCC, 11/01/14: SYR-18) Th ey continue to contribute the largest uncer- tainty to the total RF estimate (IPCC, 11/01/14: SYR-9; IPCC, 11/02/14: 43) Eff ective RF attempts to measure more of the complex eff ects of forcing agents such as (absorptive) aerosols

(UNEP, 11/19/14: 2) Since 1880, Earth’s average surface temperature has warmed by about 1.4 °F (0.8 °C), a trend that is largely driven by the increase in CO 2 and other human emissions into the planet’s atmosphere

Th e majority of that warming has occurred in the past three decades, with the year 2014 ranking as Earth’s warmest since 1880 (NASA (US), 1/16/15) Th e average combined global land and ocean surface tempera-ture for the year, January–December, 2014 was the highest among all years in the 135-year period of record, at 0.69 °C (1.24 °F) (NOAA/NASA (US), 1/10/15)

Th e atmosphere and climate, the ultimate public goods of mankind, are simultaneously used by several parties and are fully free from rivalry in use (IPCC, 5/09/11: 964) Th e United Nations Framework Convention

on Climate Change (UNFCCC) defi nes climate change as the change of climate attributed to natural climate variability and directly or indirectly

to human activity that alters the composition of the global atmosphere observed over comparable time periods (IPCC, 5/09/11: 956) Appendix

pro-found, in terms of environmental risks to the integrated system Th ey are those risks the 274 researchers from around the world who voluntarily contributed to the three working groups in the AR5 of the Nobel Prize- winning IPCC concur with high confi dence , very high confi dence , virtual certainty , or extreme likelihood (IPCC, 5/27/14; IPCC, 11/01/14; IPCC,

11/02/14) Th e ultimate objective under the Convention is to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system by holding the increase in global average temperature below 2 °C, or 1.5 °C above pre-industrial levels (UNGA, 8/12/14: 8)

Claims of a “warm bias” and “climate change hysteria” ing, policy makers, strategic decision makers, and individual people are responding to incidences of climate volatility as a matter of imperative necessity Th e environmental risk index (ERI), illustrated below in Fig

notwithstand-2.1 places environmental risk in 12 categories and measures the able statistical data for a complete sample of countries (i.e., all reporting countries), in order to refl ect the global commons nature of the environ-ment In this regard, the overall depiction of environmental risks is also

avail-in keepavail-ing with the avail-interdependence of environmental risks Specifi cally,

the fi rst six sub-indices on the right side of the fi gure depict the causes of environmental risk—energy use and GHG emissions Th e six sub-indices

on the left side of the fi gure indicate some of the eff ects of those and other risks to environmental sustainability—air quality, land (including populations at risk of drought and fl ooding), fresh water availability and quality, ecological sustainability (biodiversity and changes in forest area), and protect conservation areas Appendix 2 lists the component variables and explains the index methodology

Figure 2.1 illustrates the degree of environmental risk posed by three Northeast Asian countries (China, Japan, and Korea), three European Union (EU) countries (France, Germany, and the UK), and the USA both on average and as a group Th ese seven countries are the focus of this study. Th e degree of risk posed by each country is assessed on the average of the country’s rank and score (i.e., the  amount of each risk created or produced on the right side of the fi gure or not conserved on the left side of the fi gure) A degree of risk is assigned to the result of

Fig 2.1 Environmental risk index ( Source : Author’s illustration)

averaging the rank and score, ranging from zero or no risk to seven the highest degree of risk

ERI Right Side: Risk Indicators

Th e biggest industrial  source of anthropogenic environmental risk is today’s energy sector—the GHGs and other pollutants emitted through thermal energy production, delivery, and consumption Th e fi rst ERI variable therefore is energy use Energy is the amount of work or heat

delivered Primary energy is the energy embodied in natural resources (i.e., coal, crude oil, natural gas, uranium, and renewable sources) (IPCC, 5/09/11: 958) Global energy usage increased by 41 percent, on average, between the 1990s and 2010s (WB, 12/18/13) Th e energy needed to power industry, transportation, and our daily lives, includes the technol-ogy much of the world has come to depend on, as indicated by dramatic increase in power demand for information and communication technol-ogy (ICT) use, including gaming computers (Mills and Mills, 6/20/15)

Th is resultant relative rates of total primary energy consumption (TPC)

to economic (i.e., GDP) growth, the energy intensity of world GDP, has been in favor of a higher, albeit modest, rate of economic growth to TPC growth since the early 1980s (EIA (US), 9/30/15)

Of the total primary energy produced in 2012 (and consumed in 2013), 31.4 percent (32.9 percent) was in the form of oil, 29.0 percent (30.1 percent) was coal, 21.3 percent (23.7 percent) was natural gas, and 4.8 percent (4.4 percent) was nuclear power (BP, 6/16/14; IEA, 9/22/14: 6)

Th is amounted to 82 percent produced by fossil fuels, 13 percent by RE, and 5 percent  by nuclear  energy according to the International Energy Administration (IEA) primary energy indictors for 2012 On the energy consumption side, the global electrifi cation rate rose to 85 percent, with

220 million more people gaining access to electricity between 2010 and

2012 (WEC, 11/10/15: 2) Of the total primary energy supplied (TPES)

to plants, the bulk was for electricity supply Fossil fuels supplied 66 cent of total fi nal energy consumption (TFC) in 2012 and RE supplied the remaining 34 percent Th e “other” TFC category, comprised of resi-dential and commercial buildings, public services, and the agriculture/

per-forestry/fi shing sector, consumed, on average, 41 percent of all primary energy sources, industry’s TFC share averaged 37 percent, and transporta-tion, 16 percent (Industry includes the industrial materials industries, such as the petrochemical, chemical, iron and steel, aluminum, cement, and plate glass industries.) Two-thirds of TFC in 2012 was for the heating and cool in buildings and industry (40 percent) and transport (27 per-cent), which primarily rely on fossil energy sources (IEA, 5/04/15a: 3, 34)

Oil continues to account for over 30 percent of the energy produced

and 40 percent of energy consumed in the world It provided almost all

of the fi nal energy consumption in the transport industry in 2012 (IEA, 5/04/15a: 40) Th e importance of oil as a primary source of energy has been declining TFC supplied by oil in 2013 was once again the lowest since 1965 (BP, 6/16/14) In its place, coal’s share of primary energy pro-duction rose to 29 percent in 2012 and over 30 percent in 2013, the high-est since 1970 (BP, 6/16/14: 5) Coal’s share of TFC was 10 percent in

2012 and accounted for 80 percent of TFC for industrial production Th e increased use of coal has even been enough to reverse the long- standing trend of gradual decarbonization of the world’s energy supply ( high con-

fi dence ) (IPCC, 11/01/14: SYR-11; IPCC, 11/02/14: 4, 47) While the

carbon intensity of world GDP, like the energy intensity of world GDP, had been somewhat tempered since the 1980s, both surged in 2010 and subsided again in 2011, the last year recorded, which suggests continued volatility in the ratio between economic growth and fossil fuel usage and carbon emissions (EIA (US), 9/30/15) Th e relative annual growth rates of infl ation-adjusted world GDP (in constant 2005 US dollar terms) and CO 2 emissions was negative (i.e., the rate of CO 2 emission growth exceeded the rate of economic growth) in 2001, the fi rst time since 1980, and continued for seven of the next ten years, until 2010 (WB, 10/09/15) Natural gas accounts for over one-fi fth of primary energy produced and 15 percent of energy consumed Of natural gas TFC, service sector industries and agri-culture/forestry/fi shing consumed 43 percent of it, followed by industrial production, 37 percent, and transport, 7 percent GHG-emitting biofuels and waste, so-called traditional RE, is the largest type primary RE pro-duced and accounted for 10 percent primary energy production in 2012 Annual capital expenditure on fossil fuels—oil, gas, and coal—more than doubled in real terms between 2000 and 2013 to over $950 billion

(IEA, 5/19/14: 51) Non-RE Primary Energy Indictors by Country indicates the seven countries in this study—China, France, Germany, Japan, Korea, the UK and the US—produced, on average, over a third of the world’s non-RE primary energy in 2013 Th e epicenter of fossil fuel investment since 2000 has been in North America (IEA, 5/19/14: 51)

Th e seven countries are also some of the world’s largest energy ers China and the USA are by far the largest energy consumer countries, accounting for 40 percent of global energy consumption and over half (52 percent) of total primary energy consumed (i.e., TFC) in 2012 (IEA, 4/03/15) Th ey all, with the exception of France, consume more energy than they produce Japan and Korea are among the world’s most energy- dependent countries Th ey are all among the world’s largest importers of fossil fuels—natural gas, coal, and oil

Th e seven countries consumed 46 percent of the oil produced in 2013

Th ey imported 57 percent of the internationally traded crude oil that year, as well Th e USA and China consumed a third of the world’s oil and imported 35 percent of the crude oil Japan, Korea, Germany, and France are also among the world’s ten largest net importers of crude oil (IEA, 9/22/14: 11) Th e USA and China were the world’s third and fourth larg-est producers, respectively, of crude oil in 2013 Th e increase of US oil production was the largest in the world in 2012 and 2013 and the larg-est annual increments in the country’s history (BBC, 6/16/14: 3) Th e USA recorded the largest increments to both global oil consumption and production in 2013, outpacing Chinese growth for the fi rst time since

1999 (BP, 6/16/14: 2, 3) Most of the oil is destined for the tion sector Only Japan and the UK rely on oil (diesel) for a signifi cant portion of their electricity production, almost 50 percent and 40 percent, respectively (IEA-RED, 9/30/14)

Coal , a “fuel of the past,” has returned to become a “fuel of today”

(IEA, 4/03/15) It not only is the dirtiest burning fuel, but also requires more water to extract and consume it than any other source of energy and therefore poses the greatest risk to the environment (Gaspar, 5/18/15: 4) Nevertheless, investments in coal have more than doubled from $30 bil-lion in 2000 to $75 billion in 2013 because it is much less expensive to mine than oil and gas (IEA, 5/19/14: 51, 53) Th e global demand for coal

is expected to reach 9 billion tons by 2019, up from the 4.7 billion tons

produced in 2013 China currently invests 40 percent of total investment

in coal and is expected to account for 60 percent of the growing demand for coal, in order to produce the electricity needed to run its industry (IEA, 5/19/14: 51; IEA, 5/04/15a: 30) Currently, these seven countries together account for 60 percent of the coal produced (over 57 percent by China and the USA alone), 63 percent of global coal imports, and over 70 percent of the coal consumed in 2013 Moreover, more coal is buried in the USA and China than anywhere else on earth (Gordon and Johnson-Reiser, 5/11/12) Coal-fi ring generates almost 80 percent of China’s elec-tricity and over 40 percent of the electricity consumption in the USA and Germany (IEA-RETD, 9/30/14: 8) Th e USA was the world’s largest pro-ducer and fourth largest net exporter of coal in 2013 (IEA, 9/22/14: 15) France, Germany, Japan, Korea, and the UK produce no or very little coal (IEA, 4/03/15) Th ey were, after China, the world’s largest net importers

of coal in 2013 (IEA, 9/22/14: 15) Germany was also the world’s eighth largest producer of coal in 2013 (IEA, 9/22/14: 15)

Th ere are extremes, in terms of the importance of coal among these seven countries On one hand, coal is not an important energy source

in France Almost all of the coal consumed there in 2012 was imported (IEA, 4/03/15) On the other hand, China is dominated by coal (IEA, 4/03/15), and therefore poses the highest coal energy risk China’s depen-dency on coal for about two-thirds of primary energy consumption peaked in 2013 (Liebreich, 4/14/15: 54, 56) It was the world’s larg-est producer of coal, accounting for 45.5 percent of the world total in

2013 Th is together with its 25 percent share of world imports brought China’s global coal consumption to almost 50 percent of the world total (IEA, 9/22/14: 15) Of China’s exports of coal during the fi rst quarter of

2015, 85 percent remained in Northeast Asia, going to Korea and Japan (HKTDC, 4/24/15) (Taiwan imported another 10 percent of China’s coal exports at the beginning of 2015.)

Natural gas is becoming the most important source of non-RE. It is

the only fossil fuel whose consumption is expected to be higher in 2035 than it is today and is expected to account for more than half of the growth

in fossil fuel demand (IEA, 5/17/14: 51, 57) Natural gas consumption

is concentrated in the few countries that have the necessary ture in place to produce, transport, and consume it (IEA, 4/03/15) Th e

infrastruc-greater importance of liquefi ed natural gas (LNG)  for truck transport and compressed natural gas  (CNG) for passenger vehicle transport in some countries increases the need for more production facilities and transportation and distribution (T&D) infrastructure (IEA, 5/19/14:

13, 45, 71, 75) Asia is projected to account 80 percent of future global demand growth (IEA, 5/19/14: 62) Among the seven countries in this study, the USA and China were the world’s fi rst and sixth largest produc-ers of natural gas, respectively, in 2013 Th e USA, China, and Japan were the fi rst, fourth, and fi fth largest consumers of natural gas that year Every one of the seven countries is among the world’s largest net importers of natural gas in 2013 (IEA, 9/22/14: 13) Steadily growing US natural gas production since 2005, which surged after 2010, suggests this fossil fuel presents an increasingly signifi cant environmental risk in the USA (Liebreich, 4/14/15: 29) Th e additional environmental risk factors asso-ciated with the natural gas industry are the production of its component GHG, methane, and the water risk (i.e., usage and contamination) asso-ciated with hydrofracking extraction methods

Electricity accounts for, on average, over 80 percent of TFES from

every source of primary energy Electricity generation increased by 66 cent, on average, between the 1990s and 2010s (WB, 12/18/13) Among the fossil fuel sources of electricity supplied to plants, coal supplies over two-thirds, natural gas, 24 percent, and oil, 7 percent Electricity produc-tion uses 40 percent of global primary energy and produces an equal share

per-of energy based CO 2 emissions (IEA, 5/12/14) Electricity is expected to become the largest fi nal energy carrier by 2050 (IEA, 5/04/15a: 3) Th e conversion of energy supplied from fossil fuels to electricity is ineffi cient Between 40 percent and 90 percent of the energy produced is lost during the thermal conversion process to produce electricity from fossil fuels and nuclear, biomass, and geothermal energy (IPCC, 5/09/11: 178) Th ese conversion ineffi ciencies raise the share of primary energy from fossil fuels and the primary energy required from fossil fuels to produce elec-tricity and mechanical energy from heat, not to mention GHG emissions (IPCC, 5/09/11: 178)

Th e non-RE energy indicators indicates the seven countries studied here account for 70 percent of the world’s coal powered electricity, 35 percent of world’s natural gas fi red electricity, and 19 percent of world’s

oil fueled electricity Th ey accounted for 55 percent of global electricity generation in 2013 (56 percent in 2012) Oil and coal were the domi-nant energy source for electricity supply in China, Japan (similarly, the Netherlands and Italy), the UK, the USA, and Germany in 2011 (CT/

EE, 9/30/14: 8) China and the USA together accounted for 41 percent

of the world total in 2012 (IE, 4/03/15) Th eir average electricity sumption per capita of (7.8 kilowatt hours [kWh]/capita) is also higher than the world average of 3 kWh/capita, especially in  the USA (12.9 kWh/capita) and Korea (10.3 kWh/capita) Japan is heavily reliant on fossil fuels, oil, in particular, to produce its electricity, 86 percent of it

con-in 2012 (IEA, 4/03/15) Imported diesel accounts for 60 percent of the country’s power generation (FS-UNEP-BNEF, 4/07/14: 57, 59) Almost half China’s electricity is coal-powered and most of it is used for indus-trial production China accounted for 41 percent of the world’s coal-fi red electricity in 2013 Th e other countries, except France, accounted for another 29 percent of the world total Th e USA is the only country in the group that relies on natural gas for a signifi cant amount of its electricity production Th e USA accounted for 25 percent of total natural gas fi red electricity in 2013 Japan and Korea together accounted for 10 percent

Nuclear energy , like natural gas, is a highly concentrated industry, in

terms of, where it is produced and consumed Almost all nuclear energy production is used for electricity generation Th e nuclear energy share

of global electricity generation has been declining since 1993 (IPCC, 11/02/14: 116) Nuclear output in 2013 accounted for 4.4 percent of global energy consumption, the smallest share since 1984 (BP, 6/16/14: 5) Th e seven countries in this study pose the most environmental risk from nuclear energy Together they account for over two-thirds of world nuclear energy production, consumption, and installed capacity

Th e USA produces and consumes a third of the world’s nuclear energy and has 27 percent of the installed capacity Among the countries listed

in Fig 2.1 , France’s 17 percent share of world nuclear energy tion, consumption, and installed capacity together with its dependence

produc-on nuclear energy for 78 percent of its domestic electricity also poses

a very high level of environmental risk from nuclear energy While France is expected to lower nuclear power generation to 50 percent

by 2025, China continues to have ambitious plans to develop nuclear

technology and continue to build nuclear capacity (IEA, 5/12/14: 7; IEA, 5/04/15a: 26) Korea’s New Energy Plan calls for the construction

of nine nuclear power plants by 2023, which will skyrocket nuclear energy risk not only in Korea, but also in the rest of Northeast Asia Japan accounts for 12 percent of net installed capacity in 2012 but just 0.6 percent of global nuclear energy consumption in 2013 Japanese output has fallen by 95 percent since 2010, by 18.6 percent in 2013 alone (BP, 6/16/14: 5) China, Japan, and Germany (and India) now produce more electricity from non-hydro renewables than from nuclear power (Lovins, 6/28/14)

Renewable energy (RE) is any continuing or repetitive form of

energy from solar, geophysical or biological sources—biomass, solar energy (including concentrating solar power [CSP]), geothermal heat, hydropower, tide and waves, ocean thermal energy, and onshore and off shore wind energy—that is, replenished by natural processes at a rate that equals or exceeds its rate of use (IPCC, 5/09/11: 178; IEA, 5/12/14: 21) While there continues to be a very high rate of coal-fi red electric-ity, geothermal, solar, and wind RE supply almost as much electricity

to plants as coal (IEA, 4/03/15) Th e RE indicators indicate the largest type of installed RE capacity is hydropower, 64 percent of total current (2012) RE capacity Th e balance, the remaining 36 percent, is other RE capacity, namely installed wind turbine, solar photovoltaic (PV), and bio-power (bioenergy) capacity Th e emerging RE technologies are CSP power towers, dish engines, and Linear Fresnel systems, large electro-chemical capacitors, solar thermal electricity, geothermal, and ocean (marine) energy

RE provided an estimated 18 percent of global power production in

2010 and 19 percent of TFC in 2012 (IRENA, 1/19/14; REN21, 6/04/14: 21; IEA, 8/28/14) Renewable electricity generation accounted for more than 22 percent of the overall generation in 2014 (IEA, 5/04/15a: 20)

In 2013, renewable power generation was on a par with natural gas, the

generation of which declined As a primary energy source, RE remained behind coal, which was almost double the size of RE (IEA, 8/28/14: 3)

Th e IEA data indicates non-GHG emitting renewable sources of mary energy, so-called modern RE, geothermal, solar, and wind supplied

pri-78 percent the amount of coal-burning electricity in 2012 RE TFC by

sector in 2012 was 57 percent to service sector industries (building and public services) and agriculture/forestry/fi shing sectors, 42 percent to industry, and just 1.3 percent to the transportation industry

China has, by far, the most installed hydropower generation capacity,

29 gigawatts, which was 26 percent of the world total in 2013 China and the other six countries in this study are also among the largest producers and consumers of electricity production from RE excluding hydro- electric Figure 2.1 indicates China, Germany, and USA, in particular are among the world’s largest producers and consumers of renewable electric-ity Here, too, China’s market is the largest, accounting for an estimated

23 percent of overall renewable electricity generation in 2014 (IEA, 5/04/15a: 20) According to the RE indicators, these three countries account for over half, 52 percent, of all net installed capacity of RE. Th e seven countries together have 65 percent of total installed wind turbine capacity and almost as much, 64 percent, of total installed PV capacity China together with the USA, Germany, and Japan account for 75 per-cent of installed capacity in the nascent solar water heating industry Th e seven countries together consumed 57 percent RE ex hydropower gener-ation in 2013, the USA - 21 percent, China - 15 percent, and Germany -

11 percent Th e average RE share of gross fi nal energy consumption in

2013 was 15 percent among the EU-28 countries, among which, it was 14.2 percent in France, 12.4 percent in Germany, 5.1 percent in the UK (EC (EU), 3/09/15) Th e seven countries accounted for 64 percent of wind power consumption, 56 percent of solar power consumption, and

47 percent of geothermal and biomass consumption Demand for wind was especially high in the USA and China and Germany is an especially large consumer of solar power Germany’s residential solar power is the most market viable in the world (IEA, 5/04/15a: 23) Th e USA followed

by Germany and China are large consumers of geothermal and biomass power

Passenger transport, about two-thirds of which is private vehicular transport, accounts for nearly 60 percent of transport energy demand And it is the least diversifi ed energy end user with oil accounting for

93 percent of fi nal energy consumption in 2012 (IEA, 5/04/15a: 40) Almost two-thirds (64 percent) of TFC from oil and products in 2012 was for transportation Passenger cars (i.e., light duty vehicles) accounted

for over half of transport fuel consumption worldwide, with heavy-duty vehicles accounting for 24 percent, aviation - 11 percent, shipping - 10 percent, and rail - 3 percent (IPCC, 5/09/11: 113) Th e prevalence of motor vehicles , as measured by motor vehicle usage per capita is among

the highest in the world in every one of the seven countries, except China Demand for mobility is growing rapidly with the number of motorized vehicles projected to triple by 2050 and with a similar growth in air travel (IPCC, 5/09/11: 113) However, the energy from today’s fossil fuel thermal conversion process is also ineffi cient, with 80 percent lost when supplying the mechanical energy needed for transport by internal com-bustion engines (IPCC, 5/09/11: 178) Th e small RE-fueled transport industry, as measured by biofuels production is most advanced in the USA, which accounts for 44 percent of biofuels and 58 percent of the world’s ethanol production Th ere are signs of RE fuel production growth

in the other countries, except Japan

2010 (of which, almost two-thirds (32 (±2.7) GtCO 2 -eq/yr) were from

CO 2 emissions) (IPCC, 11/02/14: 45) Th e six main GHGs are: 1) Carbon dioxide (CO 2 ), 2) Methane (CH 4 ), 3) Nitrous oxide (N 2 O), 4) Hydrofl uorocarbons (HFCs), 5) Perfl uorocarbons (PFCs), 6) Sulfur hexafl uoride (SF 6 ) cause anthropogenic RF (IPCC, 11/01/14: SYR-39)

Th e so-called WMGHGs—CO 2 , CH 4 , and N 2 O—are the principal anthropogenic GHGs that most aff ect Earth’s radiative balance (IPCC, 5/09/11: 955; IPCC, 11/01/14: SYR-9, 87; IPCC, 11/02/14: 661) Concentrations of CO 2 , CH 4 , and N 2 O have all shown large increases since 1750 (40 percent, 150 percent, and 20 percent, respectively) (IPCC, 11/02/14: 42)

CO 2 , a naturally occurring gas and a by-product of burning fossil fuels

or biomass, of land use changes (LUC) and of industrial processes, has been the largest single contributor to RF in the industrial era and its more rapidly disruptive trend since 1970 (IPCC, 5/09/11: 955; IPCC,

11/01/14: SYR-9) Global CO 2 emissions have increased by 16 times between 1900 and 2008 and by 1.5 times between 1990 and 2008 (EPA, 6/01/14) Despite the political will to reduce them, and despite energy effi ciency and cleaner fuel programs, global CO 2 emissions from fuel combustion continue to increase, reaching 31,700 metric tons in 2012 (WB, 12/18/13; IPCC, 11/01/14: SYR-10, 17; IPCC, 11/02/14: 4, 44), IEA, 4/03/15) Twenty advanced and emerging market economies emitted nearly 80 percent of these emissions in 2012 (Parry, 12/01/15: 10) Almost without interruption, every year records a record amount of global CO 2 emissions Th e Mauna Loa Observatory (Hawaii) has mea-sured the parts per million level of CO 2 since 1960  and has recorded

an average annual growth rate every decade since then, except in the 1990s (in 1991, 1992, and 1999) Th e fi rst weekly average CO 2 value for February 2015 was 400.21 ppm, the highest ever measured level (ESRL, 2/11/15) Global CO 2 emissions are projected to continue to rise, tri-pling by 2100 due to expanded energy use, especially in emerging mar-kets and developing countries (Parry, 12/01/15: 10)

About half of the cumulative anthropogenic CO 2 in the industrial era have occurred in the last 40 years (between 1970 and 2010) and about 78 percent of it has consistently come from fossil fuel consump-tion Industrial processes contributed about 78 percent to the total GHG emissions increase between 1970 and 2010, with a contribution of similar percentage over the shorter and more recent 2000–2010 period (Appendix 1 ) In 2012, the fossil fuel shares of CO 2 were 44 percent coal, 35 percent crude oil and oil products production, and 20 percent natural gas While the carbon intensity of GDP is expected to decline, the CO 2 emission rate is expected to be less than the constant (i.e., infl a-tion adjusted) rate of economic or GDP growth, global CO 2 emissions are expected to rise on average by 0.7 percent to 2035, and though this is slower than the 1.2 percent annual increase in energy demand, the rate of

CO 2 emissions growth is well above the rate consistent with limiting the long-term rise in average global temperature to two degrees Celsius (°C) (IEA, 5/19/14: 24)

Th e energy sector accounted for around two-thirds of global

CO 2   emissions in 2012 (IEA, 5/04/15a: 4). Cumulative CO 2 emissions have accumulated energy within the Earth’s climate system (IPCC,

11/01/14: SYR-84, 88) According to the IPCC, about 40 percent of anthropogenic CO 2 emissions since 1750 (880 (±35) GtCO 2 ) have remained in the atmosphere (IPCC, 11/02/14: 45) Th e rest, in roughly equal measures of 30 percent, was removed (i.e., sequestered) from the atmosphere by natural carbon sinks, from ocean uptake, and stored in natural carbon cycle reservoirs in vegetation with soils (IPCC, 11/02/14: 45) A large fraction of anthropogenic climate change, warming caused

by CO 2 emissions, is eff ectively irreversible on a multi-century to nial time scale, unless there is a large net removal of CO 2 from the atmo-sphere over a sustained period (IPCC, 11/01/14: SYR-24, 30; IPCC, 11/02/14: 16, 66) According to the United Nations Environmental Programme (UNEP), exceeding 1000 GtCO 2 would increase the risk of severe, pervasive, and in some cases irreversible climate change impacts (UNEP, 11/19/14)

China and the USA, followed by Russia, India, Japan, and Germany are the world’s most CO 2 emissions-intensive producers, consumers, and traders (i.e., exporters and importers) (OECD, 10/23/13: 49) Th e Energy Intensity Indicators indicate the seven countries—China, France, Germany, Japan, Korea, the UK, and the USA—emitted 55 percent of global CO 2 emissions in 2013 (markedly up from 52 percent in 2012),

42 percent by China and the USA alone None of the country’s shares declined during the year China’s share in 2013 was 27 percent and the USA’s was 17 percent for a combined world share of 44 percent, even higher than their combined share of global electricity production Th at being said, the seven-country average TPES (energy) intensity of GDP and CO 2 (carbon) intensity of GDP were below the world average, with the notable and alarming exception of China Every one of the seven countries’ CO 2 share of TPES is near, at, or below the world average However, as with their per capita consumption of electricity, the aver-age CO 2 emitted per person of these seven countries is more than twice the world average In this category, the people of the USA and Korea again emit very large amounts of CO 2 on a per capita basis

Th e combustion of fossil fuels releases CO 2 and other pollutants into the atmosphere Fuel shares of CO 2 emissions by type of fossil fuel in

2012 were coal (44 percent), oil (35 percent), and natural gas (20 cent) Coal was not only the largest contributor to GHG emissions in

per-2012, but also throughout the entire International Energy Agency (IEA) reporting period from 1971 to 2012 (IEA, 12/10/14) Th e rate of CO 2 emissions tripled in China between 1992 and 2013, increasing from 3 billion tons to 11 billion tons per annum Th e USA increased its already high annual rate of CO 2 emissions by 7 percent, from 5.4 billion tons

to 5.8 billion tons per annum European countries, in contrast, lowered their total CO 2 emissions by almost 16 percent, from 4.5 billion tons to 3.8 billion tons per annum

Emissions of the non-CO 2 gases, the so-called Kyoto gasses, tributed about 27 percent to the total emissions in 2010, of which: 16 percent was methane (CH 4 ), 6.2 percent was nitrous oxide (N 2 O), and 2.0 percent were fl uorinated gasses (IPCC, 11/01/14: SYR-39; IPCC, 11/02/14: 45) Th e emissions of hydrofl uorocarbons (HFCs), meth-ane (CH 4 ), N 2 O, perfl uorocarbons (PFCs), and sulfur hexafl uoride (SF 6 ) increased at diff erent rates during the period, with the exception

con-of PFCs, which declined After almost a decade con-of stable CH 4 centrations, atmospheric measurements have begun to increase again

con-in 2007 (IPCC, 11/02/14: 42) Natural gas production and sion to end users and coal mining are sources of methane (IPCC, 5/09/11: 192) Animal husbandry, waste/landfi lls and agriculture also generate CH 4

Th e sectors that most directly contribute to climate change and other environmental degradation are agriculture, the fi shing industry, for-estry, energy, resource-intensive manufacturing (e.g., steel, aluminum, glass, etc.), waste management, construction, and transportation (Parry, 12/01/15: 13; Poschen and Renner, 12/01/15: 14) GHG emissions by economic sector in 2010 were industry (32 percent), agriculture forestry and other land use (25 percent), commercial and residential buildings (18 percent), and transportation (14 percent) Th is includes the sector consumption of indirect CO 2 emissions from electricity and heat pro-duction (IPCC, 11/01/14: SYR-116) Th e cross-industry energy sector generates approximately two-thirds of global GHG emissions and over

80 percent of total CO 2 power (39 percent), industrial processes (26 percent), transportation (26 percent), buildings (8 percent), and agri-culture (1 percent) (UN, 9/23/14(a); IEA, 11/20/14) Final energy use for heat is responsible for around one-third of global energy-related CO

emissions (IEA, 8/28/14) Explained slightly diff erently, the industries that emit the most GHGs, 58 percent in total, are electric utilities (i.e., energy supply) (26 percent), industrial materials processing (i.e., chemi-cal, metallurgical, and mineral transformation processes) (19 percent), and transportation (i.e., road, rail, air, and marine transport) (13 percent) (EPA (US), 6/01/14) In 2008, the direct combustion of oil products for transport accounted for around 18 percent of global primary energy use and produced approximately 22 percent of energy-related GHG emis-sions and between 5 percent and 70 percent of air pollutants depending

on the particular pollutant and region (IPCC, 5/09/11: 662) Th e port industry now emits approximately one-quarter of energy-related GHG emissions and was responsible for about one-fi fth of energy use (UN, 9/23/14(a)) Th e heating and cooling of buildings and industry was responsible for 30 percent of global CO 2 emissions in 2012 (IEA, 5/04/15a: 3)

Th e GHG emissions of the seven countries indicate China and the USA emit three-times more GHGs than the other four countries com-bined By 2030, the USA together with the EU is estimated to emit

a combined 13 percent of GHG emissions, and China and India are expected to emit a 40 percent combined share (Boyd, Turner, and Ward, 10/30/15: 8–9) Over 80 percent of the GHGs emitted by the seven countries are in the form of CO 2 Th is ranges from as little as 74 percent

of France’s GHG emissions to 95 percent of Japan’s GHG emissions

CH 4 is the largest non-CO 2 GHG emitted in China, Korea, the UK, and the USA. In France and Germany it is N 2 O. Of the 5 percent of GHGs emitted in Japan besides CO 2 , CH 4 , N 2 O, and HFCs emit a roughly equal share

United Nations Framework Convention on Climate Change GHG data suggests the energy sector in the seven countries in this study emits

an average whopping 82 percent of their respective GHGs, as high as 92 percent in Japan and as low as 72 percent in France Within the energy sector, the energy industry itself is the largest emitter of GHGs in China, Germany, Japan, and the UK. About 46 percent of GHGs are emitted in the energy industry itself, especially in Germany Th e energy supplied to the manufacturing and construction and the transport industries, average about 22 percent their energy sector GHG emissions Manufacturing and

construction industry GHG emissions are higher in the three Northeast Asian countries—China, Japan, and Korea—averaging 32 percent of energy sector emissions Th e energy and manufacturing and construction industries emit about the same amount of GHGs in Korea Th e energy and transport industries emit about the same amount of GHGs in the USA. Th e transport industry is the biggest source of GHG emissions in France Among the other economic sectors of the seven countries, indus-trial processes and agriculture average between over seven percent of their total GHG emissions Agriculture is a large source of GHGs in China and France, where it is responsible for over 18 percent and 11 percent of their respective GHG emissions

Industrial processes account for, on average, 7 percent of the GHG emissions of the seven countries Th ey contribute considerably more, over

10 percent, of China and Korea’s total GHG emissions According to the latest available data for each country, the specifi c industrial processes that emit the most GHGs are those for mineral products production (40 percent) and halocarbons and sulfur hexafl uoride (SF 6 ) consumption (37 percent) Minerals production GHG emissions are especially high

in the three Northeast Asian countries, where the average is well over half of their GHG emission by industrial processes Halocarbon and SF 6 consumption is especially high in France, the UK, and the USA, where it averages over half of their respective industrial process GHG emissions

Th e industrial processes that produce the most GHGs in Germany are chemicals and metals production

Th e GHG emissions of the seven countries have  generally declined over time Th e range of change, however, is very wide from an aver-age 103 percent decline in the UK, mostly due to land use and land use change and forestry (LULUCF) changes to a 67–70 percent rise in heavily industrial China and Korea Th e sectors showing the most sig-nifi cant GHG emission reductions are LULUCF, solvents, and waste management GHG emissions have grown the most in the energy sector, transport within the energy sector, and in industrial processes, especially again in Korea and China After Korea and China, the USA is the only other country in the group of seven to increase GHG emissions over time Th e rate is a modest 2 percent Germany together with the UK and Germany reported the most reductions in GHG emissions since the

1990s Korea aims to reduce its GHG emissions by 30 percent by 2020 (IEA, 11/23/12)

ERI Left Side: Sustainability Indicators

Environmental sustainability, as measured by the fi ve sub-indices on the left side of the ERI in Fig. 2.1, indicates some of the environmental risks

to be mitigated , including evidence of the aggregate eff ect of GHG

emis-sions (UNGA, 8/12/14: 8) Th ey are, in other words, indicators of the negative externalities of environmental risk, the costs of which can be calculated and reduced to mitigate environmental risk Many of them are among the most challenging environmental problems to solve (OECD, 3/15/12: 21) Th ey include air quality, the areas of land experiencing drought or are otherwise degraded, communities where people are liv-ing at low elevations, the unavailability and low quality of fresh water, biodiversity loss due to land use change and climate change, the loss of primary (virgin) forest, and the land and marine areas within a country’s national boundaries set aside for conservation Also at risk is the degrada-tion of carbon sinks, the natural reservoirs, mainly in the ocean and in plants that absorb and store CO 2 (i.e., carbon sequestration)

Th e most visible, if you will, indicator of environmental sustainability is

air quality One measure of ambient (outdoor) air quality or ambient air

pollution (AAP) is particle pollution Particulates are linked to premature deaths due to urban air pollution (OECD, 3/15/12: 21) Th e combustion

of coal, oil, diesel, gasoline, and wood, as well as high temperature process sources such as smelters and steel mills, produce emissions that contribute

to fi ne particle formation (EPA (US), 2/18/15) Country-level particulate matter (PM10) is the ERI sub-index for air quality PM10 is particles equal to and less than 10 microns in aerodynamic diameter, the largest size that may be deposited in the lung (EPA (US), 2/18/15)

Th ere has been a 42 percent decline in particulate matter in the 1990s and 2010s (WB, 12/18/13) However, globally, 3.7 million deaths were attributable to AAP in 2012 About 88 percent of these deaths were in low- and middle-income countries, which represent 82 percent of the world population Eighty percent of these deaths were in the Western

Pacifi c and South East Asia (WHO, 3/24/14) In China, for example, the ppm concentration of particulate matter with a diameter of 2.5 microns

or less was 900 ppm in January 2013, 40 times the level the World Health Organization (WHO) deems safe ( Th e Economist , 8/10/13) It is

so unsafe in China, not to mention in India, that observed air pollution

in China is estimated to cause 17 percent of all deaths in the country (Rohde and Miller, 7/31/15: 1)

Th e contributors to land risk in the ERI are the percent of the country’s

population living in degraded areas, including at low elevations and those experiencing droughts, fl oods, and extreme temperatures, as well as the amount of forest area as a percent of total land area Th e world’s urban population will almost double to about 6.5 billion people by 2050, putting forests, agricultural lands, and water systems under tremendous pressure (Stern, 12/01/15: 8) People living in urban, rural, and coastal areas also face environmental risks, albeit diff erent ones (Appendix 1 ) Th ose people living in coastal cities face more risks from climate volatility, such as long-term sea level rise and extreme weather events Ocean thermal expansion from warming and the resultant global mean sea level rise greatly increases risks in coastal cities and seaports People living in rural areas face the pervasive long-term risks of renewable water sources, infrastructure limi-tations, and lower agricultural income due to LUC. Climate-related risks from extreme events aff ect inland and rural areas Many studies covering

a wide range of regions and crops show that negative impacts of climate change on crop yields have been more common than positive impacts ( high confi dence ) (Schlenker and Roberts, 02/08; IIPCC, 11/02/14: 6)

An additional indicator of land risk is the degree to which LULUCF does or does not lower GHG emissions GHG Emissions/Removals, a large percentage share of GHGs with LULUCF to GHGs without LULUCF and CO 2 with LULUCF to CO 2 without LULUCF, suggests LULUCF has not lowered GHG emissions; in other words, it has not removed a large share of GHG emissions Th e average GHG land risk ratio in the seven countries is relatively high, averaging 94 percent, and is especially high in Germany and the UK.  Th e very rapid, 103 percent LULUCF change-drivein decline in GHG emissions in the UK, mentioned above, suggests an especially high degree of lank risk there GHG emission-driven land risk is relatively low in France and the USA. Th e CO land risk ratio

is lower, at an average 85 percent, and is especially low in France, the USA, and the UK. It is comparatively higher in Japan and China

Water is a key environmental challenge Water risks are an important

part of the Environmental Outlook to 2050 published by the Organization

for Cooperation and Economic Development (OECD) Th e most nent threats cited are the deterioration of surface water and groundwater, river basin stress, fl ood risk, and untreated wastewater (OECD, 3/15/12: 21) Th e ERI sub-index of water sustainability indicators includes aver-age annual precipitation, freshwater withdrawals, renewable freshwater resources, and the emission of organic water pollutants Th e seven coun-tries in this study are experiencing an elevated level of water risk Th is is due, in large part, to their high energy usage For example, the largest share of the freshwater withdrawals in the USA, 45 percent in 2010, is for thermoelectric power production (Maupin, et al., 11/05/14)

Water, in the so-called energy-water nexus, is needed for energy duction—fuel extraction, transport, processing, power generation, ther-mal power plant cooling, the irrigation needed to grow biomass feedstock crops Here, China and the USA, the energy usage centers of the global economy, pose severe environmental risks Both countries also produce energy and grow agricultural products Th e USA is also the world’s larg-est producer of biofuels, accounting for 44 percent of the world market (58 percent of ethanol production) in 2013 Th is raises the water risk stake in the USA even higher In the US Southwest and Great Plains, which are regions that are home to 20 percent of the country’s population, human-induced global warming is expected to produce persistent drought during the second half of the twenty-fi rst century, worse than anything seen in times ancient or modern (Cook, Ault, and Smerdon, 2/12/15)

pro-Ecological risk , as measured by a country’s biodiversity, the number of

threatened mammal, bird, fi sh and plant species, and the change in forest area, is elevated and growing Th e biodiversity indicator in the ecological risk sub-index is the World Bank’s Global Environment Facility (GEF) benefi ts index for biodiversity, a composite index of relative biodiversity potential for each country based on the species represented in each coun-try, their threat status, and diversity of habitat types Many species have been forced to almost completely change and face extinction because they will be unable to adapt locally or move fast enough, leaving a large

fraction of them facing extinction risk during and beyond the twenty-

fi rst century, especially as climate change interacts with other stressors ( high confi dence ) (IPCC, 11/01/14: SYR-25-26; IPCC, 11/02/14: 71;

Appendix 1 )

Perhaps, not surprisingly, many of the countries endowed with the most biodiversity are those that are also facing the most ecological risk

Th e countries that pose the greatest risks to the global environment may

or may not be experiencing same amount environmental ity threats at home and vice versa While the USA, China, and Japan rank

sustainabil-among the most biodiverse places in the world, those countries home

to the most threatened species are not emitting the most GHGs (WB, 4/14/15) For example, the number of bird species threatened in four countries in South America—Brazil, Peru, Columbia, and Ecuador—is over 12 percent of the world total, while their combined CO 2 emissions

is less than 2 percent Th ese four countries also have some of the est biodiversity potential on earth Among them, Brazil has the highest biodiversity potential in the world

Conservation risk is measured in the ERI as the percent of a country’s

total land (i.e., terrestrial) area and marine territorial waters that are tected and how much this level of conservation has changed over time

pro-An aim of the Sustainable Development Goals (SDGs) 14 is, by 2020,

to conserve at least 10 percent of coastal and marine areas, consistent with national and international law and based on best available scien-tifi c information (UNGA, 8/12/14: 20) Th e 15 th SDG aims to ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular, forests, wetlands, mountains, and drylands by 2020 (UNGA, 8/12/14: 21) It also aims

to combat desertifi cation, and halt and reverse land degradation bat desertifi cation, and restore degraded land and soil, including land aff ected by desertifi cation, drought and fl oods, and strive to achieve a land-degradation neutral world, halt deforestation, restore degraded for-ests, and increase aff orestation and reforestation by x percent globally (UNGA, 8/12/14: 21) Th e term "x percent" apparently indicates the amount is yet to be determined

Ecological and conservation risks, such as land risk and water risk, are inextricably linked Global marine species redistribution and marine