Understanding Kaya Identity for Carbon Emissions Analysis

Faster Energy Efficiency Gains are Critical to Curb Emissions Faster improvements in energy efficiency will be essential if global emissions of carbon dioxide (CO2) and other greenhouses gas are to be reduced while the world’s population and economic output continue to rise. Recognising the critical role played by energy efficiency, policymakers called for the global average annual rate of improvements to double by 2030 at their climate conference held in Dubai in December 2023. The International Energy Agency (IEA) has described energy efficiency as the “first fuel” in the transition away from fossil fuels and towards net zero emissions by 2050. Doubling the rate of improvements would deliver more than one-third of the emissions reductions called for by 2030 under the IEA’s net-zero scenario. By 2022, efficiency improvements had already avoided almost 7 billion tonnes of annual CO2 emissions, offsetting most of the impact of economic growth since 2010. Energy-related emissions totalled 35 billion tonnes compared with 42 billion tonnes if there had been no efficiency improvements, according to the IEA. Efficiency improvements also account for most of the IEA’s projected cuts in oil and gas consumption by mid-century. But efficiency improvements have slowed rather than accelerated over the last two years – postponing any peak in emissions and delaying any turning point in oil and gas consumption. KAYA IDENTITY In the 1990s, Japanese energy engineer Yoichi Kaya developed an approach to thinking about CO2 emissions as driven by four fundamental factors. The eponymous Kaya identity shows total emissions are the product of (i) population; (ii) economic output per person; (iii) energy consumed per unit of economic output; and (iv) emissions per unit of energy consumed. Global population and gross domestic product (GDP) per capita are both expected to continue increasing through the middle of the century, driven by population increases in Asia and Africa and rising incomes. So the future emissions trajectory will depend on energy consumption per unit of GDP (usually called energy intensity or energy efficiency) and emissions per unit of energy (emissions intensity or carbon intensity). Global energy efficiency improved by an average of 1.4% per year between 1990 and 2020, about 34% in total, according to data published by the IEA. Efficiency improvements accelerated to an average of 1.8% per year between 2010 to 2020, up from 1.0% per year between 2000 and 2010. Eighteen of the G20 countries increased their efficiency between 2010 and 2020 (the exceptions were Argentina and Brazil). Policymakers called for the rate of annual improvements to accelerate further to almost 4% between 2020 and 2030. Instead improvements slowed to just 1% in both 2023 and 2024, sending forecasts for peak emissions off course. Full analysis: https://lnkd.in/eVCSSNaJ

Why are we finding it so difficult to meet our climate targets? As regular readers know, we are big fans of the 𝗞𝗮𝘆𝗮 𝗜𝗱𝗲𝗻𝘁𝗶𝘁𝘆, which breaks down CO2 emissions into a series of demographic, economic and tech factors: 𝗖𝗢𝟮 = 𝗣𝗼𝗽𝘂𝗹𝗮𝘁𝗶𝗼𝗻 x 𝗚𝗗𝗣/𝗣𝗼𝗽𝘂𝗹𝗮𝘁𝗶𝗼𝗻 x 𝗘𝗻𝗲𝗿𝗴𝘆/𝗚𝗗𝗣 x 𝗖𝗢𝟮/𝗘𝗻𝗲𝗿𝗴𝘆 Annual CO2 emissions are the product of 𝗽𝗼𝗽𝘂𝗹𝗮𝘁𝗶𝗼𝗻, 𝗶𝗻𝗰𝗼𝗺𝗲𝘀, 𝗲𝗻𝗲𝗿𝗴𝘆 𝗶𝗻𝘁𝗲𝗻𝘀𝗶𝘁𝘆 (energy use per unit GDP) and 𝗰𝗮𝗿𝗯𝗼𝗻 𝗶𝗻𝘁𝗲𝗻𝘀𝗶𝘁𝘆 (CO2 emissions per unit energy used). Annual CO2 emissions have increased 325% since 1960 (chart). Rising populations and rising income explain all of the increase, with improvements in energy efficiency and the shift to clean energy helping to dampen the impact. Three observations: 1️⃣ While technology is helping, it is not doing anywhere near enough to offset the impact of emissions from rising populations and incomes. The tech would need to deliver 2.6x what it is currently delivering just to meet government climate (NDC) targets. 2️⃣ Given the importance of population and incomes in driving emissions, fast growing economies like India and Indonesia are at a big disadvantage when compared to slow growth economies like Europe or Japan. This needs to be accounted for when comparing achievements in bringing down CO2. 3️⃣ Recently released models have revised up the projected 2050 population by ≈200 million (to around 9.6 billion). This will mean the technology needs to do 𝘦𝘷𝘦𝘯 𝘮𝘰𝘳𝘦 heavy lifting in order to offset higher populations. The Kaya Identity is a fantastic resource to help understand climate change in a macro context. For more on our Kaya database feel free to get in touch https://lnkd.in/eGyU69DQ

Kaya Identity: Developed by Yoichi Kaya in the 1990s, this framework helps understand CO₂ emissions, but has limitations. Kaya Identity breaks down CO₂ emissions into four components: carbon intensity, energy intensity, GDP per capita, and population. It helps identify different levers to influence emissions. The image below compares two countries, showing how differences in these factors can balance out to produce the same emissions. Country A vs. Country B: Despite differing in carbon intensity, energy intensity, GDP per capita, and population, Country A and B end up with equal total CO₂ emissions. This shows there are multiple pathways to the same emissions outcome. While Kaya Identity helps decompose emissions, it doesn't prescribe changes or consider non-linear interactions. It simply presents the math behind emissions. For effective climate action, we need to consider the broader context: technological feasibility, socio-economic resilience, and policy effectiveness. Despite its limitations, Kaya Identity is a useful starting point for understanding emission drivers. This discussion is especially relevant given the current focus at COP29 on establishing a new climate finance framework. The New Collective Quantified Goal (NCQG) aims to replace the previous $100 billion annual commitment with a more ambitious target. Developing countries are advocating for up to $1.3 trillion annually to address climate change challenges, while developed countries are considering expanding the contributor base to include nations like China and Saudi Arabia. In this context, the Kaya Identity (a more nuanced version) can help understand how different factors influence emissions and inform how financial support might be allocated to achieve climate goals. #Sustainability #COP29