Commitment accounting of CO₂ emissions

Of 95 529 fossil-fuel generators included in the Platts database [20], the online year is available for 79 595, or 83%, of the generators. For an additional 12 275 generators, we assign an online year equal to the mean online year of all other generators for which an online year is provided in the Platts database (i) that operate in the same country, (ii) that burn the same fuel, and (iii) whose generating capacity is within 75 MW of its capacity. Thereby, our analysis creates an online year for 91 870 fossil-fuel generators, or 96% of those included in the Platts database. The remaining 4% are 'planned' or 'under construction' generators that were not yet in operation when the Platts data were published.

The most important assumption of commitment accounting is the expected lifetime of new generators. The decision to retire a generator or power plant is seldom prompted by physical failure of the equipment; rather, the decision is driven by economic considerations of operating costs, replacement costs, and revenues [14, 22–24]. The Platts database lists 13 026 fossil-fuel generators as 'retired,' about 14% of the total. Of these, the retirement year is available for only half of them (the retirement year is known for 6447 and not known for 6514). Moreover, of the 6447 generators with known retirement year, another 606 do not state the year they came on line. Rather than use the methodology to estimate online date described above, we simply exclude these retired generators as well. The data for the remaining 5841 generators with known online and retirement dates are our primary data source for choosing a reference lifetime.

Figure 2 shows these distributions of retirement age for generators fired by natural gas, oil and coal. Their median ages at retirement are remarkably similar: 37, 35, and 32 years, respectively. We explored these retirement data in detail and found no persuasive evidence of systematic differences or trends in relationships among fuel type, region, online year, generating capacity, and retirement year (figures S1 and S2), with the exception of the secondary detail of fuel type, where natural gas- and oil-fired generators were substantially more likely to be retired before operating 20 years than coal-fired generators (figure 2). We thus chose to simplify our demonstration of commitment accounting by using a single reference lifetime of 40 years for all generators regardless of differences in fuel type, region, online year, or generating capacity and performing a sensitivity analysis using lifetimes of 20, 30, 40, 50 and 60 years. Unless otherwise noted, the results reported here reflect a 40 year generator lifetime with a range of uncertainty corresponding to generator lifetimes of 30 and 50 years.

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When we assume a reference lifetime for a retired plant whose retirement date is not in the Platts database, and this results in a retirement year later than 2012 (i.e. an obviously incorrect estimate given that the generator in question is known to be retired), we estimate the retirement date using the same methodology as in section 2.1 (same country, same fuel, similar capacity) and add the constraint of similar vintage (defined as an online year ±5 years). For an assumed generator lifetime of 40 years, roughly two thirds of the generators for which no retirement year is stated (4256 out of the 6514 generators) came on line after 1972 and hence required this adjustment.

The CARMA database [21] contains data on electricity generated and CO₂ emitted by each of 68 931 power plants for the years 2004 and 2009. We allocate the plant-level data of electricity generation and emissions data to individual generators in proportion to their nameplate generating capacity. We use 2009 emissions data unless only 2004 data exist (e.g., where a plant retired between 2004 and 2009).

Although annual emissions usually deteriorate over a generator's lifetime because it is run less often as its operating efficiency and economic competitiveness decline [22], we make the simplifying assumption that the CO₂ emissions produced by each generator in 2009 (or 2004 if there are no 2009 data) is a good estimate throughout its period of operation, and thus we underestimate early emissions from any older generators that operated only occasionally in 2009. To the extent that annual emissions of older generators are underestimated, their contributions to committed emissions will also be underestimated. As a check of our method, we compare a time series of annual global emissions from our model to a time series of emissions from power plants provided by the International Energy Agency (IEA) for the years 1971–2011 [25] (figures S3). Our estimates are within 42% of the IEA data over the period prior to 1975, within 29% of IEA data from 1975–1985, and within 9% of IEA data from 1985–2011.

If no emissions data are available from CARMA (e.g., because a plant retired before 2004), we estimate emissions and electricity generation according to the nameplate capacity of the generator (from the Platts database) and the mean capacity factor (MWh electricity generated per MW capacity) and emissions factor (kg CO₂ per MWh) of all other generators (i) in the same country, (ii) burning the same fuel, and (iii) with similar generating capacity (defined as a nameplate capacity ±75 MW). In 32 cases (0.03%), our method yields carbon intensities that are too low to be credible for the fossil fuel being burned; we use lower limits of 800 kg CO₂/MWh for coal, 700 kg CO₂/MWh for oil, and 490 kg CO₂/MWh for gas. In these cases, we assume the reported electricity production is correct and estimate CO₂ emissions using the global average carbon intensity for generators burning that type of fuel. Figures S4 and S5 show that there are no obvious relationships between emissions intensity (kg CO₂/MWh) and online year and nameplate capacity, respectively.

According to the CARMA database, coal plants built worldwide 2000–2012 on average emit 1090 kg CO₂ per MWh and have a capacity factor of 44%, weighted by generating capacity. Assuming a 40 year lifetime, the average committed emissions are 167 Mt CO₂ per GW of coal-fired generating capacity. The corresponding values for natural gas are 659 kg CO₂ per MWh and 35% capacity factor, leading to 83 Mt CO₂ of committed emissions per GW of gas-fired generating capacity. In other words, roughly, every 6 GW of new coal-fired capacity has been committing the world to 1 Gt CO₂ of emissions, and so has every 12 GW of gas-fired capacity.

Figure 3(a) shows commitment accounting (see figure 1) for the global power sector, which was the source of 40% of global fossil-fuel emissions in 2011 [25, 26]. The point of view is from 2012, a 40 year lifetime is assumed for all generators, and all fossil fuel-fired electricity-generating units ('generators') that were built globally between 1950 and 2012 are included. Global committed emissions from these generators total 629 (508–761) Gt CO₂ (light green area; only the central estimate reflecting a 40 year lifetime is shown), of which 322 Gt CO₂ were realized emissions by 2012 (black area), and 307 (192–439) Gt CO₂ were remaining commitments as of 2012 (dark green area).

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The error estimates in parentheses here are for assumed lifetimes of 30 and 50 years, presented in table 1 (along with the results of assuming lifetimes of 20 and 60 years). Thus, the range of estimated remaining commitments in 2012 (192–439 Gt CO₂) assigns an uncertainty of 40% to our central estimate of 307 Gt CO₂. This estimate and its uncertainty are generally consistent with the remaining commitment from the power sector reported in Davis et al for 2009 (a central estimate of 224 Gt CO₂ and an uncertainty range from 127–336 GtCO₂). Davis et al used somewhat shorter reference lifetimes of 39, 36, and 34 years for coal, gas, and oil plants, respectively. Its error estimates, like those in this paper, were based on lifetime corrections of ±10 years in each case.

Embedded in the calculations of remaining commitments in figure 3(a) is the assumption that all generators older than 40 years in 2012 will be shut down immediately. Table S2 shows the consequences of instead allowing all plants to run an additional five to ten years (to 2017 or 2022, respectively), for all five assumed lifetimes. For example, assuming a 40 year lifetime, each five years that overage generators are allowed to continue running causes the remaining global commitment to increase by 7 Gt CO₂ (table S2).

The black dashed line in figure 3(a) indicates the magnitude of adjustments that were made to accommodate generators that retired either before operating 40 years or after operating more than 40 years (see figures S1 and S2 for further analysis of retirements). This line can barely be distinguished from the top of the light green area because, even in aggregate, these adjustments are small: a 7 Gt CO₂ reduction for early retirements and a 13 Gt CO₂ addition for life extension. However, larger adjustments are necessary when assumed reference lifetimes are substantially different from 40 years (see 'adjustments' in tables 1 and S2).

As seen in figure 3(a), annual contributions to the total of 629 Gt CO₂ of committed emissions accumulated as of 2012 rose from approximately 4 Gt CO₂ yr^–1 in 1960 to ∼9 Gt CO₂ yr^–1 between 1970 and 2000, before ramping steeply to more than 14 Gt CO₂ yr^–1 since 2000. In comparison, the International Energy Agency (IEA) estimates for annual emissions from the global power sector are consistently less than these annual commitments; the IEA estimates rise nearly linearly from 3.7 Gt CO₂ yr^–1 in 1971 to 13.1 Gt CO₂ yr^–1 in 2011 [25] (figure 3(a), blue curve) [25].

Figure 3(b) decomposes the global totals from figure 3(a) into world regions, and figure 3(c) does the same for fuels. Among the stories figure 3(b) tells are the expansion of power infrastructure in the US and the EU during the 1960s and 1970s, the 'race to gas' in the US between 2000 and 2005, and the rapid construction of generators in China beginning in the mid-1990s [27, 28]. China's infrastructure represents 129 (89–171) Gt CO₂, or 42% (46%–39%) of the total remaining commitments in 2012 (figure 3(b)). Less anticipated, India's remaining commitments from power-plant emissions in 2012 are approximately equal to those of the EU and the US: all three are between 23 and 34 Gt CO₂ (or between 15–18 and 32–57 Gt CO₂ assuming generator lifetimes of 30 and 50 years, respectively). Figure 3(b) also reminds us that a focus on the foursome of China, India, the EU and the US can be overdone: remaining committed emissions from the rest of the world (ROW) are 31% (29%–31%) of the global total in 2012. Ten countries represent 56% of remaining committed emissions from the ROW region in 2012: Japan, South Korea, Russia, Saudi Arabia, Indonesia, Australia, Taiwan, Iran, Mexico and Turkey (figure S6). Not shown, the central estimates (40 year lifetime) of ROW commitments represent 17% and 53% of all remaining committed emissions in 2012 from coal generators and oil and gas generators worldwide, respectively (see table S1).

Of the 307 (192–439) Gt CO₂ of remaining committed emissions as of 2012, figure 3(c) shows that coal-fired generators represent 206 (128–296) Gt CO₂, or 67% of the total. Not shown, China's remaining commitments are 98% from coal (see table S1). Over half of the world's remaining committed emissions from oil- and gas-fired generators are in the ROW region (59 of 100 Gt CO₂, 40 year lifetime, see table S1).

Figure 4 extends figure 3(a) into the future, showing when the remaining committed emissions in 2012 are expected to occur, for various generator lifetimes.

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Thus far, we have restricted the analysis to a single year (the most recent year with available data, 2012)—effectively updating the analysis Davis et al presented for 2009 [16]. Much can be learned, however, from producing the corresponding analysis for earlier years and examining trends, a line of argument not investigated in Davis et al. In figure 5, we show the results of repeating the committed emissions analysis for each year from 1950 through 2012 and assuming a 40-year generator lifetime. Figure 5 has six panels: we present the remaining committed emissions by year, the change each year, and the dimensionless ratio which is the change each year divided by the actual emissions that year; we show a decomposition for all three cases both by region of the world and by fuel.

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The first pair of panels, figures 5(a) and (b), plot total remaining commitments for each year 1950–2012. The 2012 endpoint of these plots is the same value, 307 Gt CO₂, as the total remaining emissions for 2012 shown in figure 3. But whereas figure 3 decomposes the committed emissions by the year in which the generators which contribute to these commitments came on line, figure 5 suppresses the year in which any particular generator came on line, and instead the time axis shows the year for which the total remaining committed emissions are calculated.

There has been a monotonic increase in global remaining commitments over time, from near zero in 1950 to 107 Gt CO₂ in 1980 and 307 Gt CO₂ in 2012 (data on generators built prior to 1950 are incomplete). Regional disaggregation (figure 5(a)) reveals that prior to about 1985, most remaining commitments were associated with generators operating in the US and Europe. But in the years since, remaining commitments increasingly reflect new generators in China, India and the rest of the world, with the US and EU28 accounting for less than 20% of total remaining commitments in 2012. Disaggregation by fuel (figure 5(b)) shows that remaining commitments have always been dominated by coal-fired generators, but the contribution of natural gas-fired generators increased nearly five-fold between 1980 and 2012: from 17 Gt CO₂ in 1980 to 82 Gt CO₂ (27% of all remaining commitments) in 2012.

Figures 5(c) and (d) show annual changes in remaining commitments (i.e. the derivative with respect to time of the curves in figures 5(a) and (b)) by region and fuel, respectively. The rate of increase of global remaining commitments was approximately 6 Gt CO₂ per year throughout the 1970s and 1980s, driven by coal-fired generators (figure 5(d)) being installed in the US and Europe (figure 5(c)). Construction in the US and Europe slowed in the late 1980s, and the rate of increase of global remaining commitments reached a minimum of 2.0 Gt CO₂ per year in 1992 (figure 5(c)). Between 1990 and 2012, in spite of a rate of change in remaining commitments that averaged −0.8 Gt CO₂ per year in the US and 0.1 Gt CO₂ per year in Europe, the rate of increase of remaining global commitments averaged 6.5 Gt CO₂ per year. The message of the most recent data is that China is 'passing the torch' to other industrializing countries: averaged over the most recent three years of our data (2010–2012), the global rate of increase in committed emissions was 7.7 Gt CO₂ yr^–1. After peaking at an average of 13.7 Gt CO₂ yr^–1 in 2005–2006, the rate of increasing commitments in China has fallen to 5.3 Gt CO₂ yr^–1 and the combined value for India and the rest of the world has risen to 3.0 Gt CO₂ yr^–1, influenced especially by the rapid expansion of generators in places like Indonesia, Russia, Saudi Arabia and Iran (see figure S6 and table S3 for a comprehensive list of remaining CO₂ commitments from oil, gas, and coal generators in 233 individual countries). Note that the boom of natural gas in the US [29] is visible as a roughly five-year surge in both US commitments (figure 5(c)) and gas commitments (figure 5(d)) beginning about 1998. Except for this brief spike, remaining commitments in the US have declined from the late 1980s through 2012 (figure 5(c)). In comparison, new commitments in Europe have been less variable, and remaining committed emissions have seldom decreased over the entire period 1950–2012 (figure 5(a) and (c)).

The year-on-year increases in remaining commitments can be compared systematically with actual annual emissions by examining their ratio, R, where,

$$\begin{eqnarray}&&R=\;\frac{\left( {{C}_{{\rm new}}}+{{C}_{{\rm late}}} \right)\;-\;\left( {{C}_{{\rm real}}}+{{C}_{{\rm early}}} \right)}{\left( {{C}_{{\rm real}}} \right)}\;.\end{eqnarray} \tag{ 1 }$$

Here C_new are new commitments in a given year, C_late are additional commitments in that year related to generators that continue to operate after their expected retirement age, C_real are realized commitments in that year (i.e. annual emissions), and C_early are commitments in that year related to generators that are shut down before their expected retirement age. The numerator of equation (1) is graphed already in figures 5(c) and (d). Dividing by new commitments in that year creates a useful dimensionless 'commitment ratio,' R, which is plotted in figures 5(e) and (f). Trends in R say much about evolution of the stock of power plants. If no new emitting infrastructure is built and all generators retire at the assumed reference year (the case considered by Davis et al [16]), R is sustained at −1, as total remaining commitments decrease in step with previously committed emissions being realized. An R of 0 is obtained for a 'steady state' where increases in remaining commitments are exactly offset by realized emissions. An energy system that is phasing-out fossil-fuel infrastructure and transitioning to carbon-emissions-free energy technologies, will maintain an R less than 0 over decades, just as an energy system with an expanding fossil-fuel infrastructure will maintain an R greater than 0.

Figures 5(e) and (f) plot the commitment ratio, R, using a five-year running average for both numerator and denominator. The global value of R was positive during the entire period 1971–2011 (because total remaining commitments have never decreased). R followed a V-shaped path in those years, decreasing from 1.7 in 1971 to a minimum of 0.4 in 1994 and then back up to 0.8 in 2011 (black curve in figure 5(e)). The 2011 value of 0.8 can be calculated, from equation (1), as the consequence of five-year-average annual values for C_new and C_real of 21 Gt CO₂ and 12 Gt CO₂, respectively. (Global values of C_new and C_real are graphed as 'committed' and 'annual emissions' in figure 3(a); values of C_early and C_late are negligible).

Analysis of the regional data in figure 5(e) reveals that the 20-year average values of the commitment ratio, 1991–2011, are −0.3 for the US, 0.1 for the EU28, 1.2 for India and 3.1 for China (figure 5(e)). Across fuels (figure 5(f)), year-to-year changes in R in most years are driven by commitments of coal-fired infrastructure, but between 2000 and 2005 the R of coal generators leveled off at ∼0.5 and the R of gas generators spiked upward to more than 2. By 2011, the R of coal was 0.7 and the R of gas was 0.9. Between 2000 and 2011, committed emissions from oil-fired generators fell (few were built), producing negative values in figures 5(d) and (f).