In the Green

Geothermal electricity as baseload

Wind and PV are intermittent? Geothermal is not. Here we have a renewable source of energy which can be a good source of base load power.
Well it is still relatively expensive, but look what feed-in tariffs seem to be triggering in Germany.

Drilling is still the bottleneck for this technology (I remember hearing that last year at a Renewable Energy Association conference as well, from a representative of the UK geothermal "micro"  industry).

However, (as happened for other technologies) such bottlenecks can usually be solved with investments and market expansion (as it is happening for the silicon feedstock bottleneck in the PV sector, as an example). This is maybe what it's happening in...Germany, again!

Connecting news

Two news. The first is about surge in power sector construction cost. The other is about the lobbying efforts of an increasing number of people for the introduction of feed-in-tariffs in the UK.
This two news do not seem really connected. In my mind they are, a bit; simply considering that if the cost of conventional power sources is increasing then the relative cost of renewables might become not so high as before. So, we might need to update all those studies around (also used by governement to make decisions on energy policy) that compare  cost of different power technologies, taking into account not just the increase in fuel cost (i.e. the variable cost), but also increases in initial capital cost. I guess it would take some time, as in reality a robust estimation of generation costs is quite time consuming and subject to many uncertainty and discretion. But, who knows, in few years we might get interesting results.. and different energy policy approaches toward renewables.
well, not sure I succeeded in connnecting..but still, I think they are two interesting news/messages!

Fish in a barrel

Jeb Bush, Former Governor of Florida and brother of President G.W. Bush, this week unsurprisingly declared himself a skeptic of anthropogenic climate change. From the article:

Former Florida Gov. Jeb Bush says he is "light green" on the environment and is skeptical that humans are causing global warming. "I don't think our policies should be based on emotion; they should be based on sound science," he said.

Rather than reducing oil consumption, Bush said the United States should focus on "energy security" - reducing dependence on oil imported from hostile or politically unstable countries by encouraging alternative fuels.

While we can all agree that policies should be based on science, his comments sound like many of the other climate skeptics floating around.

His comment that policy shouldn't be based on emotion is almost comical given his track record. This is a man who relies on an imaginary friend for support:

"Chang is a mystical warrior. Chang is somebody who believes in conservative principles, believes in entrepreneurial capitalism, believes in moral values that underpin a free society."

"I rely on Chang with great regularity in my public life. He has been by my side and sometimes I let him down. But Chang, this mystical warrior, has never let me down."

This is someone who thinks leaders need not separate politics and religion:

"I don't think you can separate your personal faith from your public actions, and I don't think you need to. I think transparent, openly expressing your faith is a good thing."

"Jesus was my best political advisor."

This, of course, runs in the family: GW Bush famously revealed that God told him to invade Iraq - in spite of the faulty intelligence.

As for the science - I suggest he start by reading the well-established consensus offered by the IPCC 4AR. It's rather telling that when a skeptic scientific conference is organized (admittedly, a rather kooky one), the have a hard time finding more than a handful of actual scientists to participate, and the presentations keep descending into diatribes against Al Gore and liberals. So, which side's being emotional?

Yawn.

Auto emissions targets

France and Germany are close to resolving their dispute over EU auto emissions targets that could see a softening of the proposed regulations. "The talks are making progress," business daily Handelsblatt cited a source close to the talks as saying. "A deal should be possible by the end of April , see Document details.

The European Union wants to impose a carbon emissions limit of 120 grammes per kilometre on all new EU cars by 2012, but Handelsblatt said that this may be pushed back to 2015 and that fines on emissions over this limit may be lowered.
Please take a minute to sign the car petition through  Greenpeace. 

Is it green, or does it just feel green?

The environment is an emotion-laden topic for many - unsurprising, given that it surrounds us, gives us life, and can awe us with its beauty. This lends itself to instances of environmental extremism, such as those who call for the dismantling of our economic system to return to more "natural" ways of living. This, thankfully is only a small part of the green community - although I was once called an "eco-terrorist" on another blog so perhaps it's all relative.

However, a more prevalent emotional response towards environmental policy solutions is the tendency to lean towards things that feel green, rather than judging them on criteria of whether they are green. There are many examples of this, but it is very appropriate that the RTFO came into force yesterday in face of mounting criticism of the dubious environmental credentials and equity concerns over biofuels. Biofuels? Bad? How can they be - they're made of plants! And plants are green!

I saw another great example of this on a Channel 4 or BBC news story about a school that had gone eco. The students were showing the camera crew their low-flush toilets and desk made out of recycled mobile phones. At the end, one of the students said (to the effect of), "it's makes us feel good because we know we're saving the planet".

It's not that I have a problem with people feeling good about environmentally friendly, it's that it often distracts us from real and useful activities, in face of clear and present environmental problems such as air and water degradation and climate change. When I look around, it is obvious that we as a society are constantly making ourselves feel green for the express purpose of avoiding real environmental improvements - particularly related to carbon reduction. And with the effects of climate change likely to manifest in the future, it's easy to keep procrastinating.

In the case of the eco school, why did we not hear about how the students had gone home and installed better insulation, lowered their thermostats and decided to make better transport and consumption choices? For all we know the staff ripped out their perfectly good existing toilets and tables just so they could replace them with these eco-toilets and tables. It is of course arguable that the important thing is getting the green message to kids. But in my mind, this should be done with real examples.

The issue of distraction links back nicely to a very interesting article which inspired this post, which I found via the ever omnipotent BoingBoing.

Written by Bruce Schneier, a security expert, the article reflects on the issue of feeling safe vs. being safe when it comes to (for example) airport or home security, and makes points that can easily be applied to environmental policy:

If we make security trade-offs based on the feeling of security rather than the reality, we choose security that makes us feel more secure over security that actually makes us more secure.

The key here is whether we notice. The feeling and reality of security tend to converge when we take notice, and diverge when we don't. People notice when 1) there are enough positive and negative examples to draw a conclusion, and 2) there isn't too much emotion clouding the issue.

Designing environmental policy faces the same difficults that Schneier highlights for security: trade-offs, uncertainty, and cognitive biases. His conclusion is also relevant:

Unfortunately, there's no obvious antidote. Information is important. We can't understand security unless we understand it. But that's not enough: Few of us really understand cancer, yet we regularly make security decisions based on its risk. What we do is accept that there are experts who understand the risks of cancer, and trust them to make the security trade-offs for us.

We're never going to stop making security trade-offs based on the feeling of security, and we're never going to completely prevent those with specific agendas from trying to take care of us. But the more we know, the better trade-offs we'll make.

Resistance Is Surrender

I came across an interesting book review of Simon Critchley's Infinitely Demanding from last year, by Slovenian philosopher Slavoj Žižek. The review (and the book) deal with opinions of how the remants of left wing politics should react to global capitalism and liberal politics, given capitalism's triumph in the last century.  What form should the "struggle" take?

Third Way social democracy[?]... Acceptance of the futility[?]...Withdrawal into cultural studies where one can quietly pursue the work of criticism[?]

Žižek describes the position taken by Critchley's book:

Those who still insist on fighting state power...are accused of remaining stuck within the ‘old paradigm’: the task today, their critics say, is to resist state power by...creating new spaces outside its control.

[New] politics has to be located at a distance from it. It must be a politics of resistance to the state, of bombarding the state with impossible demands, of denouncing the limitations of state mechanisms.

The argument here is that the 'old paradigm' of resisting from 'within' will never work, because the state can only deal with real-politics, rather than ideology.

Žižek's counter is this:

[This position] simply demonstrate[s] that today’s liberal-democratic state and the dream of an ‘infinitely demanding’ anarchic politics exist in a relationship of mutual parasitism: anarchic agents do the ethical thinking, and the state does the work of running and regulating society.

The big demonstrations in London and Washington against the US attack on Iraq a few years ago offer an exemplary case of this strange symbiotic relationship between power and resistance...The protesters saved their beautiful souls...Those in power calmly accepted it, even profited from it: George Bush’s reaction [was] in effect: ‘You see, this is what we are fighting for, so that what people are doing here ... will be possible also in Iraq!’

He proposes this:

The lesson here is that the truly subversive thing is not to insist on ‘infinite’ demands we know those in power cannot fulfil. Since they know that we know it, such an ‘infinitely demanding’ attitude presents no problem for those in power: ‘So wonderful that, with your critical demands, you remind us what kind of world we would all like to live in. Unfortunately, we live in the real world, where we have to make do with what is possible.’

The thing to do is, on the contrary, to bombard those in power with strategically well-selected, precise, finite demands, which can’t be met with the same excuse.

I think that this discussion is highly relevant to the environmental movement, and its resistance to market failures  and environmental damage. What angle should our policy recommendations take? Should we make infinite demands, or work within the framework of feasible market mechanisms?

The asymptote of solar energy: solar airplane

I was reading this article about people testing the limits of solar energy at high altitude and I discover the solar airplane. My first reaction was of great scepticism, but the website of the Solar Impulse projects (which by the way is aiming to have an airplane ready by 2011 for a world tour) made me dream about it. I have to say that the Jule Verne quote on the "challenge" page did part of the job.

"All that is impossible remains to be achieved" Jule Verne

Dreaming aside, I was surprised to discover that there is already an history of Solar aviation..

Are we desperate or optimistic?

An  article about UK plans to fight climate chane (and energy security).  I really suggest reading the Readers Comments as well!
Below a couple of extract from the article. It sounds to me one of the first times I read the words underlined and put in bold in such kind of "general-UK-climate-change-policy/commitments-review" article. The reference to solar ("even"!) and concentrated solar power its rather unique in the UK,  I have to say!
are things moving? is the government really considering all possible options? not sure...(yet?)

Also, I wonder what Till would say about the stated  "not commercial viability" of Concentrated Solar Power..Till are you still there?

The goal is ambitious: to install 33 gigawatts (GW) of wind power capacity in the next ten years. [..] But this could just be the start of a huge expansion of renewable energy in the UK, though wave and tidal power and even solar energy would need to be harnessed if the government is to meet its objective of drastically cutting greenhouse gas emissions while also retiring a generation of old, polluting coal and nuclear power stations.

By 2020, the  UK should have 33 GW of wind power and 20 GW of power from nuclear power and clean coal stations. However, peak demand reaches 60 GW and there are no firm plans as of yet for balancing out the electricity system. One option could be for the UK to build electricityinterconnectors with northern European countries to send abroad extra wind energy that can be tapped when it is needed.

The UK government is also looking at the possibility of importing concentrated solar power, but this would require a considerable investment and the technology would need to be commercially viable, something that is still a long way off, according to Heap.

"Concentrated solar power is an interesting technology and there are huge solar resources in countries with hotter climates than the UK, such as, and Spain and  North Africa " Heap said.

Bubble bobble?

Quick follow-up from my PV post last month, to link to an article in Harper's (a great magazine) about asset-price bubbles. Thanks to The Big Picture (great blog) for the heads-up.

The article discusses bubbles in recent years (the internet boom, housing market) and puts them into historical perspective. However, the main reason I wanted to highlight it was this:

We have learned that the industry in any given bubble must support hundreds or thousands of separate firms financed by not billions but trillions of dollars in new securities that Wall Street will create and sell. There are a number of plausible candidates for the next bubble, but only a few meet all the criteria.

There is one industry that fits the bill: alternative energy, the development of more energy-efficient products, along with viable alternatives to oil, including wind, solar, and geothermal power, along with the use of nuclear energy to produce sustainable oil substitutes, such as liquefied hydrogen from water. Indeed, the next bubble is already being branded.

The next bubble must be large enough to recover the losses from the housing bubble collapse. How bad will it be? Some rough calculations: the gross market value of all enterprises needed to develop hydroelectric power, geothermal energy, nuclear energy, wind farms, solar power, and hydrogen-powered fuel-cell technology—and the infrastructure to support it—is somewhere between $2 trillion and $4 trillion; assuming the bubble can get started, the hyperinflated fictitious value could add another $12 trillion. In a hyperinflation, infrastructure upgrades will accelerate, with plenty of opportunity for big government contractors fleeing the declining market in Iraq.

Thus, we can expect to see the creation of another $8 trillion in fictitious value, which gives us an estimate of $20 trillion in speculative wealth, money that inevitably will be employed to increase share prices rather than to deliver “energy security.” When the bubble finally bursts, we will be left to mop up after yet another devastated industry.

Anything you can do, I can do better...

The Economist's blog, Free exchange, had this post highlighting a recent US Congressional Budget Office report which made several arguments for a preference for a carbon tax over a cap-and-trade system for US climate policy. The CBO deal with estimation of government revenue, debt, and budgets, so I'm not sure how their recommendation plays in the overall scheme for federal policy. At any rate, it was an interesting report that got some attention among the blogs.

The carbon tax vs. cap-and-trade argument brought up by the CBO (summarized here) will be familiar to anyone who has read the academic literature. For those not familiar with the concepts themselves, the best I can do is say that a carbon tax fixes the price of carbon, but doesn't specify how much reduction will be made. The opposite is true for cap-and-trade: we know the reduction, but not the price.

The CBO report made a particularly nice point here:

Analysts generally conclude that a tax would be a more efficient method of reducing CO2 emissions than an inflexible cap. The efficiency advantage of a tax stems from the contrast between the long-term cumulative nature of climate change and the short-term sensitivity of the cost of emission reductions. Climate change results from the buildup of CO2 in the atmosphere over several decades; emissions in any given year are only a small portion of that total. As a result, limiting climate change would require making substantial reductions in those emissions over many years, but ensuring that any particular limit was met in any particular year would result in little, if any, additional benefit (avoided damage). In contrast, the cost of cutting emissions by a particular amount in a given year could vary significantly depending on a host of factors, including the weather, disruptions in energy markets, the level of economic activity, and the availability of new low-carbon technologies (such as improvements in wind-power technology).Relative to a cap-and-trade program with prespecified emission limits each year, a steadily rising tax could better accommodate cost fluctuations while simultaneously achieving a long-term target for emissions.

This is a view that I certainly subscribe to, and one Greg Mankiw's Pigou Club advocates.

On the other hand, however, we have Terence Concoran's NoPigou Club - which seems to be based at Canada's right-leaning National Post (here and here). The objective of the club is to argue against the application of a Pigou tax on carbon. But rather than doing so from the point of view of how we should deal with the problem of climate change (as the Pigou Club does), he instead attempts to polarize the carbon tax debate by continuously naming it an increase in the gasoline price (highly politicized in North America) and a step towards central planning.

A carbon tax will of course lead to higher gasoline prices - but the impact on gasoline will be actually be lower than the impact on coal and gas due to the extremely high taxes that are already in place for gasoline. This means (in part) that much of our future reductions in carbon will likely take place in the electricity and industrial sectors - rather than in road transport. But of course, complaining about rising coal prices doesn't get the angry mobs out like gasoline does, so these are ignored by Concoran.

So how does Concoran suggest we design environmental policy? (Or the market failures associated with the tar sands in his back yard.) He doesn't. In which case, may I suggest he undertake a rebranding to the "DoNothing Club".

Is carbon risk displacing low-carbon technologies risk in investment decisions?

In the last couple of years I have heard many times representatives of UK energy industry, utilities and finance arena (in particular during the last Energy Review consultation process) asking for clearer and long term climate change policy commitments to help them in directing low carbon investments decisions. I often did not know how to interpret those statements:

- in some cases I had the feeling that it was just an excuse for not really acting and to maintain status-quo

- in other cases it seemed a “genuine” statement of companies seriously interested in the low-carbon technology business and/or seriously concerned with emission reductions regulations, asking for stronger government actions in order to get clearer market signals and shadow price for carbon.

Generally speaking, if climate change policies and commitments have the necessary medium-long term breathe and, most of all are credible enough, economic actors would start internalising the relative shadow prices in their decisions.

So, probably this news is a very good sign in this respect and another little step toward a sort of “institutional internalization” of the carbon price in western economic systems:

“Three of the world’s leading financial institutions today announced the formation of The Carbon Principles, climate change guidelines for advisors and lenders to power companies in the United States.[..]
The need for these Principles is driven by the risks faced by the power industry as utilities, independent producers, regulators, lenders and investors deal with the uncertainties around regional and national climate change policy […]
The consortium has developed an Enhanced Diligence framework to help lenders better understand and evaluate the potential carbon risks associated with coal plant investments.”

The fact that this is happening in the USA makes the news more encouraging? I just wonder how much the current presidential electoral campaign has got to do with this. Or it’s exactly the opposite? I wonder what Lucas would say about it..

------------------------------------------------------

Anyway, let me add this (on a slightly different note):
Shall we keep fingers crossed (as a dear friend said sending this video) and hope for a change toward more certainties in climate change policy (at least in the USA)?

A rising tide lifts all boats...

Being the non-stop consumer of media that I am, I came across this letter in Saturday's Guardian:

We try to be green and get our electricity via "npower juice", a tariff guaranteed as 100% from wind power. Npower has just written to us to say it has had to raise its prices because of increases in wholesale gas prices, and I have been told that our bills will be around £85 a year higher as a result.

I appreciate the cost of oil and gas has gone up but the wind doesn't cost any more. Why are my bills higher? And do they in fact have the right to charge us more when costs other than the supply we are paying for have risen? We appreciate there may be a tiny increase resulting from, eg the extra cost of fuel in getting boats for the people who service the marine wind farm from time to time, but this would be no more than any other company in the country might experience.

In none of the papers we have been sent or downloaded does it say that the rate for wind power will track the rate for electricity derived from coal, gas or other fuels. When I queried this with the consumer body Energywatch it simply referred me back to npower. Shouldn't it pay to be green?
Ava Greenwell, by email

This is a nice example of textbook economics. In the short run - with fixed capital - when the cost of production in one segment of the firms (i.e. gas electricity) goes up, the remaining firms take the opportunity to raise their prices to match this increased cost. This gives them a nice boost in profit.

Of course, in the long term, higher gas prices will result in changes in investment away from gas power towards coal and wind power - thereby lowering the price of electricity.

Oh King Coal!

Energy policy is based largely on predictions of what we think will happen in the future. It has to be. We need to know how factors such as prices, technologies, geopolitics and environmental damage are likely to play out. This is the world of the educated guess, the modeler, and scenarios. Almost all energy policy publications refer to some scenario-building, and one of the common features between them is the expected future role of coal.

The formula is simple. Coal is dirty and should be phased out; but there is loads of it and it is cheaper than all other energy sources. This means that it is good for the economy and for security of supply. Hence, we should not ban it, but we should clean it up and tax it a bit to account for externalities. Plugging this formula into the models delivers the result that coal becomes the default fallback option in all scenarios that limit the amount of renewables or envisage oil price rises. The educated guess is that if we can just can just get cleaner coal (preferably with CCS) we needn't worry too much about the expense of a global renewables roll-out, the dilemma of nuclear, or peak oil. After all, you can always make oil from coal.

An initial glance at the statistics seems to support this. Picking the headline data from BP it seems there are 294 years of coal left at current consumption. BP are also consistent with the price trend story, as can be seen from this graph for which I used their figures.

As a result of this data input, the IEA World Energy Outlook reference scenario says that "coal sees the biggest increase in demand in absolute terms, jumping by 73% between 2005 and 2030". Last year's UK Energy White Paper actually revised its scenarios due to the comparitive fuel price divergence. "The price of coal" it says, "is now more favourable compared with that in the July 2006 projections. This contributes to an increase in coal capacity in the new baseline of up to 8GW by 2020". The IPCC takes a similar line: "Coal is unevenly distributed, but remains abundant. It can be converted to liquids, gases, heat and power, although more intense utilization will demand viable CCS technologies...The share of liquids will probably remain constant but with a gradual transition from conventional oil, toward coal-to-liquids, unconventional oils and modern biomass".

The assertion is clear. Coal is the big reserve and although it is finite, we don't need to treat it as such yet. We have come a long way from the panic of British economist William Stanley Jevons who foresaw the peak oil debate with a treatise on peak UK coal in 1865. In The Coal Question he observed that coal was finite, that demand seemd exponential and technology was creating a rebound effect. He was right to worry about UK coal production, which peaked in 1913, but reserves in the rest of the world are now able to balance demand. Or are they?

Last year a group of academics at the Energy Watch Group reported on global coal reserves, and in the last fortnight the National Academy of Sciences reviewed US reserves. The conclusions were that the available data is of highly dubious quality but recent downgrading of reserves indicated that peak coal could be a reailty as early as 2025. For example, in 1997 Poland downgraded its reserves by 50%, and Germany by 99% in 2004! This would mean that none of the World Energy Outlook scenarios could be met without an increase in the proportion of dirtier brown coal, and that prices of all fuels would most likely rise more rapidly.

As we've discussed on the blog before, the high prices delivered by peak fossil fuel production might put renewables and energy efficiency measures at an advantage. Renewables are even more favoured when you take into account that the global centres of power (US, China etc.) do not coincide with where the oil will be coming from in future. The worrisome thing about coal is that the big reserves lie in the powerful areas of the US, China and Russia (who may become the swing producer for coal and gas). These are countries without a great record on environmentalism and a tendency to subsidise energy in favour of growth.

Drawing conclusions from all this is tricky as always. It's possible that reduced coal reserves could ease the tension between economic growth and climate goals in the rich world, but it could be a disaster for developing countries banking on cheap solid fuels. Also, a tighter coal market would surely make it politically more difficult to sustain an articificial carbon market unless renewables were very cheaply available, especially since it could easily make CCS highly uneconomic.

Whatever the reality, it is evident that scenario-builders should incorporate better information on reserves rather than just relying on coal as a cheap fallback option. Investing in renewables and nuclear may suddenly look like an even better insurance policy than it does now. Then we just need policy makers to be honest about how expensive energy is likely to get for everyone. Easy.

Don't blame me, I voted for Kodos

Before this post gets going, I really should mention yesterday's European Commission proposals on climate and energy policy (here's the draft Directive). However, something tells me we haven't heard the last of them. So staying true to my contrarian beliefs, here's a post on the US elections instead.

Grist, the chatty West Coast environmental website, has produced this handy guide to the candidates' positions on environmental issues. It's almost tempting to vote for Republican Ron Paul whose environmental position rests entirely on a strict adherence to property rights. In a properly functioning market, the polluter and victims reach a bargain and everybody's happy.

"When we know the air is polluted, we should prevent it because in the free market you don't have the right to pollute anybody's air", says Paul.

That's fine except, as Dilbert points out, such a bargain relies on all parties having adequate information. And Paul himself admits there's a lot we don't know about global warming.

"I've heard some stories from people who... have strong concerns about global warming, and they claim it doesn't even come from CO2, it comes from *chuckle* methane gas. That's how diverse these opinions are."

Chuckling aside, the interesting environmental story from the election so far is that John McCain stands a pretty good chance of securing the Republican nomination. The League of Conservation Voters gave McCain's voting record a score of 46% (Clinton scored 89, Obama 100). That's not terrific, but McCain does have a history of crusading and teaming up with Democrats on issues he cares about. As far back as 2003, he joined with Democrat Joe Lieberman to introduce the Climate Stewardship Bill to the Senate. That bill would have capped 2010 GHG emissions at the 2000 level in some sectors of the economy (unsurprisingly it didn't succeed). For 2008, his climate position appears to have softened to a more standard 'no action without China' stance.

The point is, while the Republican candidacy is still wide open there's a decent chance the nomination will go to a candidate who a) thinks climate change is real b) has a history of bipartisan action on key issues and c) might even be willing to do something about it. Assuming the Democratic candidate also has a reality-based position on climate and environment, voters won't even have the option of choosing a president who still entertains the notion that climate change is somewhere between a fictitious and an entirely natural phenomenon. Long live the two-party system! I don't know if that would be enough to push the US into a more ambitious climate policy. More research needed...

How is the world doing, doctor?

Every year the Worldwatch Institute, a globally-focused environmental research organization based in Washington, publishes “The State of the World”; this is an annual report which makes an annual assessment of urgent global environmental problems and the innovative ideas proposed and applied across the globe to address them.

This year’s report is less pessimistic than usual as the authors argue that the world economy is about to enter a new, almost revolutionary, era. Because of the threat of climate change, governments and businesses have already started changing their behaviours. In its foreword Daniel Esty, professor of Environmental Policy at Yale, says: “State of the World 2008 makes it clear that our planet and every individual on it face substantial environmental challenges. From the build-up of greenhouse gas emissions in the atmosphere to significant water shortages and a wide range of pollution and natural resource management issues, the road to a sustainable economy is full of potholes. But there are signs of hope…., the pace and scale of environmental innovation is extraordinary”. Indeed this report shows that

• In 2006, an estimated $52 billion was invested in wind power, biofuels, and other renewable energy sources, up 33 percent from 2005. Preliminary estimates indicate that the figure soared as high as $66 billion in 2007.
• In 2006 venture capital has invested 2.6 billion dollar in clean technologies, making the green business the third most funded sector, after digital and biotechnologies.
• Carbon trading is growing even more explosively, reaching an estimated $30 billion in 2006, nearly triple the amount traded in 2005.
• Innovative companies are revolutionizing industrial production while also saving money: e.g. chemical giant DuPont cut its greenhouse gas emissions 72 percent below 1991 levels by 2007, saving $3 billion in the process.

Chris Flavin, the president of the institute argues that continued human progress now depends on an economic transformation that is more profound than any seen in the last century. He is also realistic though when he says that the transition from a traditional economic paradigm to a sustainable one will require years of deep changes.

Besides the human, financial and technological capital, we now need to consider also the natural one, which means that we need new economic indices (e.g. environmental accounting). The old GDP indicator seems increasingly “unfit for purpose”.  Interestingly enough the report suggests that, contrary to what previously believed, economic growth doesn’t necessarily go hand in hand with development: between 1990 and 2000 GDP per person has increased fivefold and yet this has coincided with the biggest environmental decline in history and mass poverty.

Furthermore this study challenges another paradigm of traditional Economics, i.e. economic efficiency: markets do very little to ensure a fair allocation of goods; rich people take increasingly more while 40% (think about it….40%!!!) of the world population live in the most extreme poverty.

The bad news is that the weaknesses of a traditional economy are growing in numbers and size.  The good news is that the opportunities to create a new sustainable economy appear stronger than ever (e.g. Citigroup has recently announced its intention to invest 50 billion dollar in the climate change business for the next ten years).

Burning off the Fat

In stretching the Happy New Year greetings out to the 18th day of Christmas I sit, pondering upon what my true love would choose to send me at these Oort-cloud like extremes of the festive season. A carbon-credit offset gift voucher! - how topical that would be. However, with 25% of gift-vouchers never used, would this represent pocketed profits for the off-setters of this world or would they apply the revenue to it's intended means? A rhetorical question. The point being my personal distrust and moral rejection of the 'pay-off my impact' option.

  My back was proverbially 'upped' by a link in Nathan's post suggesting that the Toyota Prius achieved only 48mpg urban and 45mpg on the open road. This maybe true for an average enviro-tourist but I noticed upon my Father's dash that he achieves an average 55mpg since purchase. A sacrifice has been made, with music now a rare treat in the car, as the key to unlocking the true value of the Prius lies not in the purchase alone, but in a focused effort to drive more economically utilising engine braking, vehicle momentum and an appreciation of optimal speed/efficiency to coax out those precious mpg's .

This protracted intro brings me closer to my point. Energy efficient light-bulbs and increased motor-fuel efficiency can be brought over the counter some serious gains can still be made through small, directed shifts on daily behaviors. Replacing an entire household (4-bed) with 18W energy saving light-bulbs or save the equivalent kWhe as reducing the use of Tumble Dryers or Washing Machines by a third (wear those jeans for one more day!). The key being that little shifts in daily behavior can make it all the more green.

The cringe-worthy point (and upon retorspective assessment, one made by a number of other blogs about): Have you made any new years resolutions to tackle your impact for the new year? Much like the 'more gym' and 'less beer' efforts of yesteryear, can the 'more green' of 2008 last much beyond the protracted hangover of a 2007 big on enviro-stimulus. Looking back now, the year past was pretty phenomenal with regards the publicity of climate change issues in the public eye and long may it continue (a review - anyone?). It may not yet have reached the guilt-trip of a mince-pie mountain and a magnum of Merlot, but it seeps slowly into the subconscious - The trip just keeps getting bigger!

USA Energy Bill

The USA House have just approved the energy bill which now goes to Senate. The bill includes a set of policies favouring clean technologies and repealing oil and gas subsidies. Among them tax credits, Renewable Energy Portfolio Standard (RPS) and the controversial Energy Independence and Security Act which increases fuel economy standard to 35 miles per gallon by 2020. Of course the White house promises a veto and some republicans are lobbying against it.

 Here just a couple of “highlights” from this article, which also provides an encouraging review of the set of policies that the bill would entail:

- “This specific program is one of the provisions that has produced a White house veto threat.” (referring to The Energy Independence and Security Act)

- “Senator Pete Domenici (R-NM) has vowed to filibuster this bill unless the oil and gas incentives are not touched and the Renewable Energy Portfolio Standard (RPS) is dropped.”

 So the message seems to be:
Yes, let’s help clean technology industry, it’s good, it’s a growing industry, it’s becoming more and more a profitable investment*, and by the way, it’s clean. BUT don’t try to touch oil and gas industry and electricity utilities! And if you need the money to finance clean technology incentives? Not our problem, look somewhere else, maybe a cut to health or education spending? Don’t know, it was just an idea..

 Ah, and this is one of the reactions to House’s approval:

 "This bill is a failure on the most basic points: it fails to drive down prices at the gas pumps; it fails to lower home-heating bills; and, it fails to reduce our reliance on foreign crude oil." — Rep. Dave Camp, R-Midland.

* also look at chapter 2 of this Renewable Global Status report

Deus ex machina

The news is recently out that Ballard, world leader in PEM fuel cell technologies, has sold off its automotive fuel cell business to Daimler and Ford.  There have been starkingly different interpretations of this end-of-the-year surprise: one one hand, the fuel cell industry see it as a timely "handover" of the know-how developed by this high-tech company in the last decade, to the automotive giants who should be now able to run the final stretch of the race for the market, which at best will not start in another decade or so. Others, like Joseph Romm, author of "The Hype about Hydrogen", see it as a public demonstration that the dream of commercialisation of hydrogen fuel cell cars as come to an end, and basically as the beginning of the bursting of a new -and dangerous- dot-com bubble.

I hope that Ballard's and other companies investments  show results for the transport sector at some stage, and I am convinced that stationary fuel cell systems do hold much potential in the mid-term.  But we are at a stage where the "technological fix" utopia is gaining momentum again, and putting scarce public R&D resources into a far-off and extremely complex transition to a hydrogen -based transport system risks becoming a comfy option for politicians which delays action on climate change when it is needed, i.e. in the next decade, well before any significant penetration of sustainable hydrogen is possible. 

Never short of ambitious titles,  Jeremy Rifkin is still feeding the image of the hydrogen panacea in a recent report (which I admit I just scanned trhough) : "A New Energy Agenda for the European Union in the 21st Century: Leading the Way to the Hydrogen Economy and a Third Industrial Revolution-The Next Phase of European Integration".  The idea that we are facing a 30 or 40 year race against climate change is more common than one might think among the hydrogen and fuel cell stakeholders and I think it does more harm than good to the future of some very sensible fuel cell applications. I hope to look into some of these in future posts...

Serious about nuclear?

In Thursday’s Guardian an article reporting on the results of an independent consultant’s study, The World Nuclear Industry Report 2007.

The article already summarise the contents of the report. But a quick look at the “Introduction and General overview” section of the report is interesting: after a long list of commitment and general optimism among government and energy institutions on the potential growth of nuclear in the face of the increasing energy demand and pressing CO2 reduction need, the authors provide an overview of what can actually be achieved and conclude by estimating a decline in nuclear plants worldwide, rather than growth. Here an abstract from the report,

 "The authors of the present report remain convinced, on the contrary, the numbers of nuclear plants operating in the world will most likely decline over the next two decades with a rather sharper decline to be expected after 2020. Many analysts consider that the historic key problems with nuclear power have not been overcome and will continue to constitute a severe disadvantage in global market competition. New difficulties have arisen.

Ken Silverstein, Director of the US based consultancy Energy Industry Analysis states:

“As a result of deregulation of power and other market – and policy-based uncertainties, no nuclear power company can afford to take the financial risk of building new nuclear power plants. A report published by Standard & Poor’s identifies the barriers. The financial costs for construction delays, for example, could add untold sums to any future projects. […] Peter Rigby, a Standard & Poor’s analyst and author of the report says: “The industry’s legacy of cost growth, technological problems, cumbersome political and regulatory oversight, and the newer risks brought about by competition and terrorism concerns may keep credit risk too high for even (federal; legislation that provides loan guarantees) to overcome”.

and discussion then goes on..

 Acute shortage of skilled engineer, manufacturing bottleneck, technical issue and market and policy uncertainties seems to be the main causes of such relented growth.

 Let me know what do you think, but this list of causes sounds very familiar to me: quite similar to the list of barriers for renewables deployment (apart maybe – in an optimistic view- for the shortage of skilled labour and taking in consideration "technologies specificity"). How to interpret all this? Letting aside the debate on the opportunity of nuclear, shall we assume that governments do not really have a clue of how climate change issue will be addressed? That a serious commitment and willingness to act is not there yet? Or just that nuclear does not really convince markets and governments?

also, what about energy security?

Oil that glitters is not gold

In the more exciting moments of my day I like nothing more than to have a little wonder about oil and gas supplies. Often this is from the point of view of how it impacts raw materials for the chemical industry. Recently I read a few interesting things that I’ll try to put into some perspective here*.

There has been news about new discoveries. Brazil, we are told, is about to become ‘the new oil superpower’ due to its recent discovery of 5-8 billion barrels of light oil and gas, the biggest discovery since 12 billion barrels in Kazakstan in 2000. Disagreements between Cyprus and Turkey continue to surface over Turkish access to Cypriot gas discoveries. Cyprus is thought to have discovered 4-10 billion barrels of recoverable oil and gas, which it says could power the island almost indefinitely, so it is converting its power stations from oil to natural gas. It is also courting foreign firms to build an offshore LNG terminal, so much of the gas will never actually make it onshore. So, if these big new discoveries are shipped to the international market, what is the impact on our ability to meet demand?

In a couple of weeks the IEA formally unveils its World Energy Outlook 2007, but we already have the executive summary. Not much has changed since last year, and the ‘base case’ and ‘alternative policy’ scenarios are familiar. In the base case global oil demand to 2030 rises to 42 billion barrels per year from 31 in 2005, whilst with the alternative policy (new technologies, climate action) it only grows to 37. In the base case gas demand reaches 28 billion barrels compared to 17 in 2005. 

This tells us that the Brazilian, Cypriot and Kazakh finds (if mostly oil rather than gas) would support us for almost a year in 2005 but for just 42 weeks in 2030 in the most optimistic case (the upper limit is recoverable, alternative policy scenario). But, of course this is unlikely to be the case as discovered fields are rarely fully exploited. Taking a less optimistic approach (base case, lower limits) these three big finds since 2000 might not last 6 months in 2030. That is, if Brazil's deep sea reserves can actually come on line anytime soon when they are 4.5 miles below the surface and the technologies still need to be developed to extract them.

New discoveries need to replace expiration of existing reserves and also meet new demand. The huge Kazakh field meets base case demand growth over the coming 25 years. What is needed is a replacement for the >85 billion barrels currently being used each day. 

Peter Davies, ex-BP economist and still BP-payrolled, doesn’t think we need to worry. I went to a presentation in which his main points from an economist’s perspective were:

1. Peak Oil is not a problem because Hubbert’s Gaussian distribution is inaccurate if you include unconventionals and new discoveries due to new technologies;
2. Oil will peak, however, due to physical limits;
3. An economist cannot account for physical limits, but history tells us that unconventionals and new technologies will respond to price signals and overcome physical constraints.

But what if these technologies are unable to come online in time? An interesting study by Robelius that looks at the decline in production and discovery of so-called Giant Fields (>0.5 billion barrels) is sadly pessimistic. It says that during 2005, a year with the highest oil price in over 20 years, only 11.5 billion barrels were discovered in new fields and 9 billion barrels as additions to existing reserves. This was almost 10 billion barrels less than the produced volume that year. If technologies for discovery are not responding fast enough to price signals, what about unconventional reserves? On a technical basis Robelius calculates that optimistic output from the largest oil sand deposits in Alberta could physically get up to 2 billion barrels per year by 2040. Not much of a stop gap while we look for alternatives, and this discounts the possibility that investment is discouraged due to a carbon price. 

Perhaps more frighteningly, Robelius tells us that existing reserve estimates are levelling rather than being revised upwards due to new technological capabilities. Instead, last year it was revealed that Kuwait may be overestimating its reserves by stating them as 101.5 (the number used by BP) rather than 48 billion barrels. A difference of 53.5 billion barrels, potentially dwarfing all discoveries this Century. 

I haven’t really mentioned peak oil arguments here, because they have become quite confused by poor interpretation of price signals and a focus on physical natural resource limits. Whilst the physical limits are real, they are compounded by the problem of adjusting to a world in which the race for new reserves needs to be more frantic. To date this race between depletion and new technologies has not been lost for any mineral, but the IEA and Total predict some serious supply constraints by 2015 with no relief for oil prices. It is the speed of adjustment that is crucial. The speed at which discoveries are made, at which new regions are opened to exploration, and at which new technologies enable extraction in hostile environments. At the moment we seem to be losing, and yet economists continue to be optimistic based on the long-term, rather than short-term, feasibility of adjustment. 

For a comparison of arguments used by peak oil researchers and energy economists, see a paper in this month’s Energy Policy by Bentley et al. of Reading University. 

In my next post I will take a similarly quick and non-expert look at coal reserves, which I have also been reading about, and which are no rosier.

* I’ll do my best not to mention that the oil price yesterday hit $99.29 for light, sweet crude.

Paper's carbon footprint

The west management world has looked the report from Confederation of European Paper Industries (CEPI). They developed a Carbon Footprint Framework for paper and board products in response to the growing requests by paper buyers.

The starting point for the framework is the capacity of forests - the origin of paper and board raw materials – to bind CO2 while growing positively contributing to the mitigation of climate change. If forests are managed sustainably, trees are renewable and recycle carbon from the atmosphere therefore having a neutral effect in the amount of atmospheric CO2.

Several different tools exist which analyse and present the carbon contribution of various products and services including product profiles, life cycle assessments and so called carbon-footprints but there is currently no pan-European standardised approach.
As a result, CEPI has developed its framework for paper and board products based on ten key elements, the ten toes of the Carbon Footprint. Under this framework, companies and sectors will be able to address their individual needs and help the industry to contribute to the policy debate by providing a transparent and coherent information base for decision-making, across regions and countries.
The carbon footprint of a product may be seen as a balance sheet of greenhouse gas emissions and removals (transfers to and from the atmosphere) and because these balance sheets usually cover more than CO2, the units of reporting are usually CO2 equivalents. The framework looks at direct and indirect emissions, carbon sequestration in forests and in products, the value of bio-energy and the concept of avoided emissions and proposes a common approach to deal with them.
The some toes of CEPI's Carbon Footprint are as follows:
•    Carbon sequestration in forests - sustainable forest management (SFM) secures the stocks of carbon in forests to stay neutral or even improve in time
•     Carbon in forest products – a product contains biomass carbon and as long as it is in use, it will keep this biomass carbon from the atmosphere.
•     Greenhouse gas emissions from forest product manufacturing facilities –from fossil fuel combustion at manufacturing facilities that produce forest products, including primary manufacturers and final manufacturing facilities.
•    Greenhouse gas emissions associated with purchased electricity, steam, heat and hot and cold water.
•    Transport-related greenhouse gas.

So, how much do you like rainforests?

I found these two interesting links a few weeks ago, and have been meaning to post them. This first article sees Indonesia recently campaigning for help in saving their rainforests:

Rachmat Witoelar, environmental minister of Indonesia, had recently proposed that richer nations pay Indonesia $20 per hectare to preserve the rapidly shrinking forests in the country.

Recently, the deputy environmental minister of Indonesia, Masnellyarti Hilman, said: “We can’t do it alone. Developed countries need to help us because they have the money, the financing and the technology. We need their help if we are going reduce emissions and not sacrifice our future development.”

The day after, I saw this article which reported Norway paying Brazil €17 million to help save the Amazon:

Norway will contribute 60 million kroner to two projects run by the United Nations Development Programme (UNDP), and an additional 70 million kroner to a special rain forest fund.

According to Brazilian authorities, 27,429 square kilometers of Amazon rain forest were destroyed between August 2003 and July 2004.

Between August 2006 and July 2007, after the government adopted measures to protect the forest, the rate of deforestation slowed to 9,600 square kilometers.

So, are these two examples just reasonable application of the Coase Theorem, or a perverse approach to deforestation and climate change?

As we are all aware, deforestation and carbon sinks are going to be a big part of the climate negotiations. Big forestry nations like Brazil, Indonesia, Australia, and Canada are keen to get credit for protecting their trees. Once possibility is to introduce sink protection into the CDM, although this is still up in the air. Whether it pulls through, I don't know - perhaps someone can fill us in in the comments below?

As for the usefulness of sending money to protect the forests, I can't think that this is a bad thing - as long as it goes for its intended purpose. Subtract the climate change, and it's just like any other development funding. Of course, one could be cynical and say that this is blackmail... well, so be it.

Will being Carbon Neutral™ save the world?

Considering the growth of recycling rates and the increasing sales of organic food in the UK (up 22% throughout 2006), let's assume that people are genuinely more environmentally aware than ever.

It is therefore understandable that many companies want to green their image to attract this growing niche of environmentally-aware customers (conscience-customers).

One good way to convince people to buy a specific product is to advertise values of the brand that will appeal to the targeted groups.

One striking example is the recent TV commercial for Sky Group, showing a nice and funny cartoon ending with “Sky, carbon neutral since 2006”..

But what does it mean for Sky to be “carbon neutral”? If you watched the clip carefully, you might have noticed that Sky is actually “Carbon Neutral™” to be precise. As wealthy Catholics could buy indulgences from the Vatican to find a place in heaven, Sky is buying carbon offsets to find a place in the Green-Wash Market.

I am dubious that carbon offsetting helps solve any environmental problems. Surely the best CO₂ reductions are the non-CO₂ emissions. How can you encourage people to have a lower environmental impact (and therefore a more aware and sober consumption) if they can easily clear their conscience by just paying few quid to be environmentally forgiven? Can you really ask other people to repair your sins when you don’t change your habits and behaviour yourself? (check this comics to see how you can easily offset your friends’ CO₂ emissions).

In the case of Sky, I don’t know what the real benefits of Sky’s purchase of offsets are, but their clip gives an oversimplified view on how to save our planet (you just need to have a contract with The CarbonNeutral Company)?

Rather than paying to be Carbon Neutral™, let’s all become carbon responsible (without ™) by being sober in our consumption and responsible in our choices.

Protecting Forests And Climate Change

Major new research has found a direct link between land-clearing and climate change, and that land clearing triggers hotter droughts. Areas throughout southern Queensland cleared of native vegetation were found to have lost 12 percent of their summer rainfall and to have experienced an average 2C rise in temperatures. The study found that land clearing was just as significant in terms of climate change as greenhouse gas production from fossil fuels.

Should these findings hold up and are found to be generalized throughout Australia and other areas globally clearing remaining natural vegetation, it would suggest a major revision in climate change policy-making is due. It is not enough to just focus upon greenhouse gas emissions, but maintaining natural vegetation through preservation, conservation and restoration may be an equally important policy response if global heating is to stopped.

While reducing industrial emissions is critically important, we must also stop deforestation, which accounts for roughly 20 percent of all global emissions. Brazil's Amazon, for example, contains 70 billion tons of carbon, but activities such as cutting and burning make Brazil one of the largest carbon dioxide emitters in the world.

These scientific findings further bolster the unity of being and the ecological intuition that we are not just undergoing a climate change crisis; but rather a series of crises that also includes water shortages, habitat loss, ocean decline, persistent toxics and others; that are each intimately connected and reinforcing. Together these crises undermine the Earth's sustainability, threatening it and humanity with global ecological collapse.