The Carbon Border Adjustment Mechanism (CBAM)
11 min
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In this article we’ll explore what the CBAM is, why it’s been created, and what importers need to know ahead of its introduction.
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Ending Our Use of Fossil Fuels: Fantasy or Realistic Target?
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For almost three centuries now, fossil fuels have served as the lifeblood of industrialization, transportation, and energy production, helping to transform societies and raise living standards across the world. The accessibility, energy density, and affordability of coal, oil, and natural gas have propelled economic growth and development on an unprecedented scale. However, this advancement has come at a devastating cost to the environment and we are now faced with the pressing need to decarbonise the energy sector.
Yet, this is no simple feat - the practicality of eliminating fossil fuels from our global energy portfolio remains a contentious issue. It necessitates the development of alternative energy sources, the restructuring of energy infrastructure, and the careful consideration of socio-economic implications. In this article, we’ll explore the feasibility and consequences of a world without fossil fuels.
👉 In this article, we delve into the intricacies of moving away from fossil fuels to address climate change and promote sustainability.
Our dependence on the use of fossil fuels
Fossil fuels have been instrumental in shaping the modern world, with their usage dating back to the 18th century. The discovery of coal and its widespread adoption during the Industrial Revolution marked a transformative moment in history. Coal-powered steam engines fueled factories, railways, and ships, setting the stage for rapid industrialization in countries such as the UK, the US, and across Europe. In the early 20th century, the discovery of oil as a versatile energy source revolutionized transportation and gave rise to the automotive industry. Later, the utilization of natural gas for heating, electricity generation, and industrial processes further expanded the reach of fossil fuels.
Over the decades, the global demand for fossil fuels has surged dramatically. The appeal of these energy sources' reliability and energy density has led to exponential growth. Today, fossil fuels continue to be the dominant energy provider, accounting for approximately 80% of the world's energy demand. This reliance has powered economies, facilitated technological innovation, and elevated living standards for billions of people.
However, this remarkable advancement has come at a devastating environmental cost. The combustion of fossil fuels releases greenhouse gases, contributing significantly to global warming and climate change. This is why many nations are now in the process of trying to decarbonize their energy sectors - something that is, admittedly, easier said than done!
👉 To find out more about how the Industrial Revolution fuelled rising carbon emissions head over to our article on the topic.
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The benefits of fossil fuels
Fossil fuels get a bad rep - and rightly so given how damaging for the environment these fuel sources are - however, in order to understand why it’s so challenging to eliminate them it’s important to recognize that they also bring with them a variety of advantages. Appreciating these benefits allows us to navigate the complex transition toward sustainable energy sources more effectively.
- Energy reliability and accessibility - Fossil fuels have served as a dependable and easily accessible energy source. They have played a crucial role in providing a continuous power supply, ensuring that industries can operate around the clock.
- Energy security - Fossil fuels have offered nations a degree of energy security by reducing dependence on external sources. Countries with substantial domestic fossil fuel reserves have been able to minimize their vulnerability to energy supply disruptions.
- Technological advancements - Fossil fuels have driven technological innovation. The demand for more efficient and cleaner use of these fuels has led to the development of advanced technologies such as carbon capture and storage (CCS) and improved combustion techniques.
- Global trade and economic development - Fossil fuels have facilitated global trade and economic development by enabling efficient transportation of goods and people. For example, oil-powered ships have revolutionized international trade, allowing the movement of goods across vast distances. Air travel, which relies heavily on jet fuel derived from fossil fuels, has made the world more interconnected, facilitating tourism and business.
- Affordable energy - Fossil fuels have historically been cost-effective, making energy affordable for a broader segment of the population. This affordability has a direct impact on the quality of life by reducing energy expenses for households and businesses. Lower energy costs have also made it possible for societies to allocate resources to other critical areas such as education and healthcare.
While acknowledging these advantages, it is important to realize that the harmful impacts of fossil fuel consumption on our climate significantly eclipse these benefits.
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Just how damaging for the environment is our use of fossil fuels?
Fossil fuels, which include coal, oil, and natural gas, are the primary contributors to global greenhouse gas emissions. When burned, these fuels release vast amounts of carbon dioxide (CO₂) and other greenhouse gases. The accumulated emissions lead to an enhanced greenhouse effect, trapping more heat in the atmosphere and causing global temperatures to rise. Current data indicates that about 91% of global greenhouse gas emissions are a result of fossil fuel emissions.
Furthermore, the extraction, transportation, and burning of fossil fuels result in severe environmental degradation. This includes habitat destruction, air and water pollution, and oil spills, harming fragile ecosystems. What’s more is that air pollutants from fossil fuel combustion, such as sulfur dioxide and nitrogen oxides, lead to smog formation and respiratory illnesses in human populations.
“ Repeatedly, climate experts have underscored the imperative of reducing our dependence on detrimental fossil fuels, advocating for a move toward renewable energy. The IPCC has urgently appealed to nations to expedite their transition from burning fossil fuels. They highlight that emissions from current and proposed fossil fuel infrastructures will notably exceed the emission limits set to contain global warming to 1.5 degrees Celsius. Achieving net zero requires slashing fossil fuel demand by 80% by 2050, coupled with effective carbon removal measures. ”
Considering the detrimental effects of burning fossil fuels, the solution appears straightforward: eliminate fossil fuel usage to protect the climate. However, the complexities of energy infrastructure and global dependence on these fuels mean that the transition is not as simple as it seems.
👉 To learn more about the harmful effects of fossil fuels head over to our article.
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Why is it so difficult to decarbonise the energy sector?
Eliminating the use of fossil fuels is a complex challenge due to a combination of economic, social, and political factors. Let’s take a closer look at what these are:
- Historical dependence - Fossil fuels have not only powered our progress but have become synonymous with development and advancement. From homes to factories, our entire society has been optimized for these energy sources. Our deep-rooted reliance on fossil fuels, cultivated over two centuries, makes their elimination not just a technical challenge but a cultural one.
- Economic growth and globalization - As global markets expanded, so did the appetite for energy. Emerging economies, in their quest for development, mirrored the West's energy consumption patterns, intensifying the global reliance on fossil fuels. The market dynamics, driven by demand and supply, further entrenched fossil fuel use as central to economic growth.
- Infrastructure investment - Infrastructure, once built, determines the trajectory of development for years, if not decades. Massive investments in fossil-fuel-centric infrastructures, such as power plants and transport networks, now pose both a financial and logistical challenge to the transition towards cleaner energy.
- Economic interests and valuation - The stock-market valuations of fossil fuel companies are significant. The idea of the "carbon bubble" suggests that a rapid divestment from fossil fuels could potentially lead to a massive financial crash. This economic interdependence makes divestment a sensitive and complex issue.
- Political hurdles - Not all countries and leaders are in agreement about the urgency or the extent of the climate crisis. Some believe that the scientific consensus might be overstated or that risks can be addressed when they become more apparent. Such differing views result in a lack of global unanimity on curbing fossil fuel usage.
- Immediate priorities - Policymakers are often more focused on short-term issues such as inflation, unemployment, and re-election, rather than long-term environmental challenges.
- Transitioning challenges - Transitioning away from fossil fuels requires careful planning and foresight. While nations can strive for more sustainable practices, the process can be complex and challenging, and without meticulous planning, the desired outcomes might not always be achieved.
- Global equity - Developed nations have historically benefited most from fossil fuel use. Asking emerging economies to curb their use without offering alternatives can be seen as unfair, especially when these nations are aiming to improve their citizens' living standards.
- Workforce implications - A vast number of jobs, both directly within the fossil fuel industry and indirectly in associated sectors, depend on the continued use of fossil fuels. Transitioning away from them requires careful planning to avoid economic disruption.
- Technological limitations - Technical limitations of existing electrical grids mean that in order to integrate renewable energy we’ll also need to revamp the technology and energy infrastructure. This is further complicated by the intermittent nature of renewables like solar and wind demanding innovative energy storage solutions to ensure on-demand supply - something that still needs refining.
- Lack of alternative energy options - In the aviation industry for example, the energy density of jet fuel remains unmatched by current renewable alternatives, making long-haul flights on renewable energy a challenging proposition. Similarly, specific industrial processes like cement, steel, and glass production necessitate incredibly high temperatures. Achieving heat ranging from 1100 to 1400 degrees Celsius, essential for these processes, is currently extremely challenging without the use of fossil fuels.
Yet despite these challenges, the world doesn’t have much of a choice - the science is clear: either we drastically reduce emissions or we deal with the consequences of worsening climate change. So how can we transition from our reliance on fossil fuels?
👉 To discover why decarbonizing is a particular challenge for petrostates, why not take a look at our article on the issue.
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How can we eliminate fossil fuels?
Reimagining economic growth
Reimagining economic growth in the context of sustainability and a departure from fossil fuel dependency is a crucial transformation that requires a holistic approach. It’s about transitioning to a model where economic prosperity and environmental sustainability are interlinked and mutually reinforcing.
Policies must be crafted to promote and incentivize innovation in green technologies, encouraging industries and businesses to adopt sustainable practices. This includes pushing forward sectors like renewable energy, sustainable agriculture, and other low-carbon industries, ensuring they become the backbone of the new economy.
Another key aspect of this transition is investing in education and training programs to build a workforce proficient in green skills, ensuring job opportunities in these emerging sectors. Additionally, there must be a focus on creating inclusive growth, ensuring that the shift to a green economy does not leave certain communities behind but instead contributes to reducing social inequalities.
Transforming power production
The decarbonization of power production is pivotal in the global effort to combat climate change, considering their substantial contribution to global greenhouse gas emissions - power plants contribute around 40% of all energy-related emissions. Moving away from fossil fuels like coal, oil, and gas to cleaner, emission-free electricity generation methods necessitates significant investment and the adoption of advanced technologies.
Nuclear power is seen as a strong option, offering a reliable and substantial energy output with minimal emissions. Large-scale renewable energy initiatives, harnessing the power of wind, solar, and hydro, are also crucial despite the challenges they present in terms of storage and grid integration. The debate continues over which technological pathway is the most effective and sustainable, yet there is a consensus that with the tools and knowledge available today, achieving a substantial reduction in power plant emissions is within reach.
Navigating technological innovations for hard-to-decarbonise sectors
Some sectors present unique decarbonization challenges due to their specific technological and operational requirements. This includes aviation, long-haul transport, and industries requiring high-temperature processes. Innovative solutions such as sustainable biofuels, green hydrogen, and carbon capture are vital for addressing emissions in these areas. Collaborative efforts between governments, industries, and research institutions are necessary to drive innovation, provide funding for research and development, and establish supportive policies and incentives.
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Overhauling infrastructure and enhancing energy infrastructure
Revamping our current infrastructure is essential for achieving a sustainable and low-carbon future. A major aspect of this transformation is the shift towards renewable energy sources such as solar, wind, and hydroelectric power, moving away from fossil fuels and reducing greenhouse gas emissions.
In terms of transportation, there is a need to develop and adopt more efficient systems, which could include expanding public transit, encouraging the use of electric vehicles, and investing in infrastructure to support them.
Energy efficiency initiatives and sustainable urban planning also play a critical role in this overhaul, requiring thoughtful design that incorporates green spaces, the promotion of energy efficiency, and the reduction of waste. Improving insulation and incorporating energy-efficient appliances contribute to significant energy savings. Industrial processes are also under transformation, with innovations aiming at machinery upgrades, process optimization, and waste heat recovery. Collectively, these efforts drive down emissions, reduce energy consumption, and lay the groundwork for a comprehensive shift to a low-carbon economy.
Financial investment
Financial investment is essential in driving progress and innovation, as it allocates resources to initiatives and enterprises that have the potential to generate growth, create jobs, and contribute to economic development. In the context of addressing global challenges such as climate change, investment from both the public and private sectors plays a critical role in funding research, development, and the implementation of sustainable technologies and practices.
Developed nations, in particular, have an obligation to assist developing countries in this regard, leveraging their financial capacity and technological advancements to support the transition towards sustainability. This is not only a moral imperative, given the historical contributions of developed nations to global issues like climate change, but also a practical necessity, as the interconnectedness of today’s world means that challenges in one region can have far-reaching impacts across the globe.
Political will at a national level
National political will and regulations play a critical role in the transition away from fossil fuels. Governments have the unique authority to enact policies that can drive investment in renewable energy, implement emissions reduction targets, and phase out subsidies for fossil fuel industries, creating a regulatory environment that encourages sustainable practices.
Moreover, national leadership is essential in mobilizing resources, fostering innovation, and coordinating efforts across different sectors and regions to ensure a comprehensive approach to climate action.
By setting clear and ambitious goals, governments can provide direction and certainty for businesses, investors, and the public, facilitating the large-scale adoption of clean energy technologies.
Fostering global collaboration and regulatory changes
By building international consensus and commitment to addressing climate issues, nations can work together to set universal targets for emission reductions and sustainable practices. The development of international agreements, such as the Paris Agreement, plays a key role in this process, providing clear and achievable targets for countries to strive towards.
Furthermore, harmonizing regulatory frameworks across nations ensures a consistent approach to climate action, preventing any single country from becoming a weak link in the global effort. Encouraging the sharing of knowledge and resources, particularly with developing nations, helps to build capacity worldwide and ensures that all countries have the means to contribute to global emission reductions. By fostering global collaboration and making necessary regulatory changes, the international community can align efforts and work more effectively toward mitigating the impacts of climate change.
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A future without fossil fuels?
The future of fossil fuels stands at a critical crossroads. While these energy sources have undeniably driven human progress and prosperity for over a century, the undeniable truth is that their continued use threatens the very environment upon which our survival depends. As we grapple with the monumental task of eliminating our reliance on fossil fuels, it becomes clear that this transition is both complex and fraught with challenges. The historical dependence, economic interests, infrastructure investments, and political hurdles surrounding fossil fuels present significant obstacles to our path to sustainability.
However, the urgency of the climate crisis leaves us with no choice but to pursue this transition. The pathway to a fossil-free future lies in reimagining economic growth, transforming power production, navigating innovations in hard-to-decarbonise sectors, overhauling infrastructure, and bolstering financial investment. Moreover, it necessitates unwavering political will at the national level and global collaboration and regulatory changes on an international scale. It is only through a concerted and collective effort, driven by innovation, cooperation, and unwavering commitment, that we can end our reliance on fossil fuels and instead create a sustainable society driven by renewable energy sources.
What about Greenly?
At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. Why not request a free demo with one of our experts - no obligation or commitment required.
If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here.
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