One of the reasons I’m writing this article is that Asia Pacific is increasingly recognising the role of renewable and alternative fuels, especially biofuels. And one of the ‘measures’ of sustainability of these fuels, which may be low or zero carbon in emissions, is the carbon intensity (Scope 3). However, it often gets confused with the fuel emissions (Scope 1), and so I thought it was worth explaining clearly.
Fuel decarbonisation is so critical that it covers part of decarbonising electricity generation. Relying on a mix of intermittent renewable generation with short-duration storage in the power system is very challenging. Gas peakers are going to be integral in a system that has a significant share of wind and solar power. Yet there are concerns about carbon emissions associated with gas.
Decarbonising natural gas use and other liquid fuel-use remains a critical lever to achieve net zero by 2050. Renewable fuels, especially biofuels, enable a drop-in solution that bridges our immediate decarbonisation needs with future alternative fuel, or complete electric solutions. There are concerns however, with the sustainability of biofuels, and one of the ‘measures’ of sustainability of these fuels, is the carbon intensity of it.
The carbon intensity of the fuel refers to the lifecycle carbon emitted in the production of the fuel, usually expressed in gCO2e/MJ (reads: grammes of carbon dioxide equivalent per mega-joules). For fuel that is zero emissions, or non-reckonable carbon emissions, there are still carbon emissions associated with its production, processing and transportation before its energy is used. And so if it’s being transported from such a location, or that too much logistics were involved in its feedstock collection, those emissions gets accounted for in this carbon intensity metric. EU use thresholds for carbon intensity to determine if the fuel is ‘sustainable’ or not – on the basis that if the fuel does not achieve a level of emissions reduction, then it cannot be considered renewable.
As should be clear by now, carbon intensity is different from the concept of fuel emissions. The carbon intensity value is not reflective of the emissions of the fuel itself but more of its lifecycle, making it a Scope 3 emission as opposed to Scope 1. Take, for example, a regime where there is a carbon tax associated with fuel emissions, the carbon intensity of the fuel would not actually be considered within the calculation of the carbon tax at all – especially if the tax is designed only to apply to Scope 1 (direct emissions).
However, such a regime where a carbon tax is applied to Scope 1, should be mindful that they do not end up incentivising the use of “low-carbon fuel” that have overly high carbon intensities. Because this would defeat the purpose of trying to price the carbon emission as the direct emissions become displaced by emissions in some other parts of the fuel supply chain.
Carbon intensity is also why the International Maritime Organisation have been pushing for the Net Zero Framework that considers the ‘well-to-wake’ emissions (lifecycle emissions) instead of the ‘tank-to-wake’ (direct Scope 1) emissions. If we are focused only on the ‘tank-to-wake’ emissions, then technically, grey hydrogen or grey ammonia would have zero carbon emissions. We don’t want a case where the emissions are not reduced at the system level but just shifted from one part of the value chain to another – that’s why we care about the carbon intensity of a fuel, not just its direct emissions.
It’s probably worth pointing out I first wrote this article on linkedin and you can find it here.