Get Ready for Ugly as Markets Begin to Deal With Climate Crisis

Carl Pope  ::  EcoWatch  ::  28 July 2015 

Advocates of “market-based” climate solutions paint pastel pictures reflecting smoothly adjusting macro-economic models. Competitive markets gradually nudged by carbon pricing glide into a low carbon future in a modestly disruptive fashion, much as sulfur pollution from power plants was scaled back in the 1990’s.

But commodity markets for oil and gas don’t work that way. These real markets are poised to savagely strand assets, upset expectations, overturn long established livelihoods and leave a trail of wreckage behind them—unless climate advocates start owning the fruits of their own success and preparing for the transition. Schumpeter’s destructive engine of capitalism is about to show its ugly side.

Markets are abandoning carbon companies—even if society continues to burn far too much of it. Photo credit: Shutterstock

Two powerful forces are currently driving energy markets and climate outcomes.

Fossil fuel prices are indeed opening the door to climate solutions, but not through the gradual carbon pricing mechanisms so favored by economists (and recently, reluctantly beginning to be explored by conservative thinkers). Instead, the divergence between clean energy price curves, which fall rapidly with market share and fossil fuel prices, which rise with consumption, are about to collide explosively.

Second, Investors are indeed, moving away from fossil fuel stocks and bonds, but not out of ethical concern over climate risk, or even an expectation of global regulation of carbon combustion. They are racing to the exit as bloated coal and oil stock values collapse on the other side of the “Commodity Super-Cycle” which until early 2014 was the dominant paradigm.

Two weeks ago I wrote two pieces in Bloomberg Views suggesting that the fossil divestment movement was arguably behind market trends in arguing that coal and oil were bad investments. The following week witnessed a cascade of commentary making my pieces look milquetoast and timid. Markets are abandoning carbon companies—even if society continues to burn far too much of it.

Look at the numbers:

U.S. coal consumption has fallen, in the face of competition from performance (efficiency), alternatives (natural gas) and disrupters (solar and wind.) Five years ago we burned a billion tons of coal; now we burn 850 million tons. Solid progress. But still 850 million tons.

What happened to coal company share values? In the last five years, a coal company has gone bankrupt on the average every month. The second largest U.S. coal company, Alpha, after one bankruptcy and reorganization, was just dumped from the NY Stock Exchange because its price fell below $1.00. Even a coal producer (Walter) whose output, metallurgical coal, still enjoys a strong market had to file for bankruptcy. The biggest U.S. coal company, Peabody, which traded in 2011 at $73, is now selling at $1.29. The bond markets have abandoned coal. All coal company debt is now graded “junk.” In the last quarter the three worst performing major U.S. bonds were all coal:

Alpha Natural Resources: -70 percent
Peabody: -40 percent
Arch: -30 percent

Coal, as an investment class, is effectively finished—coal companies will go through a series of reorganizations. After each one only those with the best balance sheets and cheapest mines will remain. The reclamation bonds which the U.S. government and the State of Wyoming allowed these companies to self-insure against their balance sheets are about to go south, creating sequential calls on capital that will push even more companies first into Chapter 11 and then into Chapter 7. Outside the U.S., 1/6th of Australia’s coal mines now operate at a loss. Companies in the sector are in liquidation, even though the world will use a lot of coal for quite a while to come. Eventually slumping demand will be overtaken by declining production and more mines will become cash flow positive, but existing stakeholders will be liquidated first. That’s the dynamic of shrinking commodity markets—investors, communities and workers lose fast even as markets shrink slowly.

Many investors thought they could be the last to make a profit on conventional telephone land-lines. Someone was that last lucky bottom-feeder. But most of those who entertained that illusion were wiped out. Coal investors can join the line.

But what about oil and gas? The public—and politicians—still view oil as the necessary evil and oil companies as the essential usurers of our dependence. But the markets are not so sure. Since 2011 a “five-point gap has emerged between market valuations for energy companies and the S&P 500, as returns on capital have fallen in the sector.” Federal banking regulators have begun warning lenders that many of the loans made to drillers at the height of the shale rush must be treated as “substandard.”

BP recently earned the dubious distinction of being the first of IOC’s integrated majors to have its bonds de-rated because of potential environmental liabilities from the Deepwater Horizon Spill. Shell was able to finance one of its recent pipeline projects at 23 times its earnings, but its own shares fetch only 9X. From 2006 to 2013 the percentage of Exxon Mobil’s proven reserves made up of tar sands and heavy oil increased from 15 percent to 32 percent. Relying on a larger share of more expensive oil reduced Exxon Mobil’s margins and returns. Its stock value trailed the S&P 500 by 40 percent during those seven years—even as the company used the vast majority of its profits to buy back shares to sustain their value.

Chatham House in a recent analysis commented, “Even before the 2014 oil price collapse, equity investors were concerned that, with few exceptions, many companies in the oil sector were heavily committed to high-cost projects for which they had a poor record of execution.”

Now, with oil less than half its price a year ago, companies are desperately canceling projects; a few months ago $118 billion in oil exploration and development projects had been shelved; this month Wood Mackenzie said the total had risen to $200 billion, a cut of almost 50 percent in investments to replace reserves. The biggest victims: not just U.S. shale producers, but Canadian tar sands, declining North Sea fields and Brazilian deep ocean drilling. Big investors have been hit hard: Carl Icahn and John Paulson have lost hundreds of millions of dollars on their oil bets.

Investor owned oil companies are particularly vulnerable in an oil commodity-cycle price crunch because while their existing reserves include large volumes of relatively cheap to pump legacy reserves, their ability to replace those reserves is highly constrained to the world’s most expensive ultra-deep, super-heavy and wildly remote reserves. “Even before the 2014 oil price collapse, equity investors were concerned that, with few exceptions, many companies in the oil sector were heavily committed to high-cost projects for which they had a poor record of execution.” The remaining untapped cheap or moderately costly oil fields are mostly off-limits to IOC’s, reserved by Russia, Venezuela and Persian Gulf monarchies for their nationally owned oil companies, whose long term business plan is to squeeze the Western IOC’s out of business.

In 1915, as the American economy boomed, the huge supply chain that supported horse-drawn transport—harnesses and horseshoes, wagons and buggies makers (13,000 of them), farriers and blacksmiths, hay balers and feedmills—looked like a robust and vital segment for deploying capital. 1920 was the year of “Peak Horse” in the U.S.. By 1940 it was gone. This was not “low-cost”, incremental progress. It was an economic disruption so fierce that the phrase “buggy-whip maker” became a business simile for loser.

From both the standpoint of barometric pressure and stock market volatility we have sown the winds of fossil fuel capitalism for a decade too long—but bemoaning that fact changes nothing. As Christina Figueres says “Better late than later.” We still have time to prepare for the whirlwind. It will come whether we prepare or not.

Oil Prices Drop As Global Warming Rises

Dr. David Suzuki  ::  EcoWatch  ::  20 January 2015 

With oil prices plunging from more than $100 a barrel last summer to below $50 now, the consequences of a petro-fuelled economy are hitting home—especially in Alberta, where experts forecast a recession. The province’s projected budget surplus has turned into a $500-million deficit on top of a $12-billion debt, with predicted revenue losses of $11 billion or more over the next three or four years if prices stay low or continue to drop as expected. Alberta’s government is talking about service reductions, public-sector wage and job cuts and even increased or new taxes on individuals. TD Bank says Canada as a whole can expect deficits over the next few years unless Ottawa takes money from its contingency fund.

As world leaders prepare for the UN climate summit later this year, we must look at the recent market meltdown as an opportunity to shift away from fossil fuels. Photo credit: Shutterstock

It’s absurd that a lower price on a single commodity could have such a profound economic impact, but that’s what happens when you put all your eggs in one basket and fail to plan for such contingencies. With a population and oil-and-gas production profile similar to Alberta, Europe’s largest petroleum producer, Norway, is also feeling the impacts. But much higher taxes on industry, majority state ownership of the country’s largest oil-and-gas company and an approximately $900-billion sovereign wealth fund built from oil revenues are cushioning the fall.

Some see low fuel prices as good news, but there are many downsides. With driving becoming less costly, more cars and trucks could be on the road, which is good for the auto industry but bad in terms of pollution, climate change and traffic accidents. And because the price of oil is now lower than the cost to extract oilsands bitumen, the industry is starting to put the brakes on rapid expansion plans—bad news for workers and businesses in Fort McMurray and those heavily invested in the industry but good news for the planet.

Recent research shows most of Canada’s oilsands bitumen—as well as all Arctic oil and gas, most of Canada’s coal and some conventional oil and gas—must be left in the ground if the world is to avoid a global temperature increase of more than 2 C above pre-industrial levels, the internationally agreed-upon threshold for limiting catastrophic impacts of global warming. The report, by researchers at University College London’s Institute for Sustainable Resources and published in the journal Nature, concludes a third of the world’s oil reserves, half of gas reserves and more than 80 percent of coal reserves must not be burned before 2050.

The study also found that carbon capture and storage, touted as one way to continue exploiting and burning fossil fuels, is too new, expensive and limited to make enough of a difference by 2050.

Study co-author Paul Ekins told National Geographic that putting hundreds of billions of dollars into fossil fuel exploration and development is “deeply irrational” economic behaviour. “What would be ideal,” he said, would be to “use the opportunity of this fall in the oil price to start instituting a global carbon tax, which would take some of the volatility out of the prices.”Removing fossil fuel subsidies would also help.

John Stone, a Canadian scientist and lead author on the most recent Intergovernmental Panel on Climate Change report, told CBC the UCL study “is another wake-up call to snap us out of our denial of climate change.

With 2014 confirmed as the hottest year on record, and 13 of the hottest 15 years having occurred since 2000, we can’t afford to ignore the consequences. According to researchers, the odds that natural variability is causing today’s climate change are less than one in 27 million! It’s astounding that, in the face of such overwhelming evidence from scientists worldwide, people continue to deny the problem exists or that humans are responsible and can or should do anything about it.

It’s especially irresponsible when energy conservation and cleaner fuel alternatives offer so many economic benefits, including job creation, greater stability and reduced health-care costs. As world leaders prepare for the UN climate summit later this year, we must look at the recent market meltdown as an opportunity to shift away from fossil fuels. It’ll be much easier and less costly to get on with it now than to wait until we’re left with few choices.

UN Climate Chief: Carbon Bubble Is Now a Reality

Anastasia Pantsios  ::  Eco Watch  ::  20 January 2015 

The so-called “carbon bubble” is no longer a concept, it’s a reality, according to UN climate chief Christiana Figueres, who will oversee the crucial UN climate conference in Paris in December.

Investments in fossil fuels are becoming a losing bet as the so-called “carbon bubble” bursts.Photo credit: Shutterstock

Investors who sunk their money into the fossil fuel sector are going to come up losers, she suggested, as plummeting oil prices have made new extraction projects too costly to continue to pursue and concerns about global warming have made them too risky.

“A lot of the stranded asset conversations we’ve been having for a long time are now coming true,” she told RTCC, speaking from the World Future Energy Summit in Abu Dhabi. “Those expensive oil projects—deep sea, Arctic, tar sands—those are actually beginning to be taken off the table because of the low oil prices.”

That’s good news for the environmental groups that have long warned about “stranded assets”—coal, oil and gas that would have to be left in the ground to slow climate change—and how that was leading to an overvaluation of these reserves.

RTCC cited a number of expensive exploration and extraction projects that have already been cancelled. Chevron has delayed plans to drill in the Canadian Arctic. Norway’s Statoil has returned three licenses to explore for oil off the Greenland coast. And Shell and Qatar Petroleum announced last week they were scrapping a planned $6.5 billion petrochemical project in Qatar, saying it was “commercially unfeasible, particularly in the current economic climate prevailing in the energy industry.” Qatar’s state-controlled petrochemical company Industries Qatar abandoned plans for another $6 billion plant last September. Many of these projects were planned when oil was $100 a barrel. It’s now under $50.

In the U.S., Texas is feeling the brunt of the oil bust, as extraction companies lay off workers.The New York Times reported yesterday, “With oil prices plummeting by more than 50 percent since June, the gleeful mood of recent years has turned glum here in West Texas as the frenzy of shale oil drilling has come to a screeching halt. Every day, oil companies are decommissioning rigs and announcing layoffs. Small companies that lease equipment have fallen behind in their payments.” And the once seemingly unstoppable growing of fracking in North Dakota’s Bakken shale region has also come to a screeching halt.

Carbon Tracker Initiative, a independent nonprofit think tank that analyzes energy from both an environmental and financial standpoint, coined the term “carbon bubble” and has continuously warned investors about the risks of sinking money into fossil fuel-related businesses, due to the 2c target of limiting global warming to 2 degrees to stave off the worst impacts of climate change.

“If the 2C target is rigorously applied, then up to 80 percent of declared reserves owned by the world’s largest listed coal, oil and gas companies and their investors would be subject to impairment as these assets become stranded,” the group said in its report Unburnable Carbon.

Figueres told RTCC she believed investors and investment firms would be taking notice, opening up the possibility that investment assets might begin to shift more decisively to renewables.

“When you begin to see very specific examples of a concept that was previously only a concept, I do think it’s going to be taken much more seriously on the part of investors,” she said. “That volatility in prices is one that incrementally and gradually makes investment in oil and gas more risky than investment in renewables, where it is very predictable what the upfront cost of infrastructure is, and then the price of fuel from then on is very predictable and certain.”

Pope Francis: Acting on Climate Change Is Essential to Faith

Cole Mellino   ::   EcoWatch   ::   15 January 2015 

Pope Francis will be touring the Philippines today, including a visit with survivors of Super Typhoon Haiyan in Tacloban, which was devastated by the typhoon that killed 6,300 people in 2013. Catholic organizations around the world are taking this opportunity to call on the pope and Catholics worldwide to take meaningful action on climate change.

Photo credit: Georgia Catholics Against the Death Penalty.

A new initiative, the Global Catholic Climate Movement, has formed in response to man-made climate change. The organization is made up of “laity, religious and clergy, theologians, scientists and activists from all over the world” who have “come together to care for God’s creation, for the poor (who are the most vulnerable to extreme weather events), and for our children (who will face the worst impacts).” The group has written a statement that will be given to Pope Francis by Cardinal Tagle, the Archbishop of Manila.

Another climate group, 350.org, is urging the Pope to take action on climate and divest from fossil fuels. “As Pope Francis prepares to visit the impacted communities from Super Typhoon Haiyan, we need him to stand in defense of humankind and the environment and take the lead in actions that will help prevent further climate catastrophes. One such urgent action is full divestment from the fossil fuel industry. We urge the Vatican and the Roman Catholic Church to lead the way,” said Lidy Nacpil, 350.org board member.

Fossil fuel divestment has become increasingly popular among faith communities. According to 350.org, “Just in the last few months we’ve seen, the World Council of Churches decide to phase out its holdings in fossil fuels and encouraged its members to do the same.” Anglican churches in Australia, New Zealand and Polynesia, the Quakers in the UK, the United Church of Christ in the USA and many more regional and local churches have also joined the divestment movement.

In 2014, the Pope became an outspoken advocate about the urgent need to address climate change. He wrote a letter to Tony Abbott, who headed the G20 summit in November about the “constant assaults on the natural environment,” which he said was the “result of unbridled consumerism.” He called learning how to respect creation “one of the greatest challenges of our time” and told university students that the “destruction of South America’s rain forests” is a “sin.” The pope also convened a five-day summit with scientists and experts on the environment. And he has come out against fracking.

The pope is not making any plans to quiet down in 2015—just the opposite. He is expected to publish an encyclical—the highest form of papal writing, which is sent out to the world’s 1.2 billion Catholics—in the next couple months that will be on the “ecology of mankind.”According to Dan Misleh, director of the Catholic Climate Convent, he will likely advocate action on climate change based on economics and science rather than morality, and he will warn his followers that “acting on climate change is ‘essential to the faith.'”

The pontificate is hoping his encyclical will guide world leaders, who will convene at the end of the year at the U.N. Climate Summit in Paris, to finally take the necessary actions on climate change to avoid the most catastrophic outcomes. And his followers are hoping his divine intervention will work, too. “We look to Pope Francis to break the political impasse preventing real action on climate change. Twenty years of climate negotiations have left the world at the mercy of political and economic circles looking to protect their vested interests at the expense of mankind and the planet,” said Yeb Saño, Philippine Climate Change Commissioner. The pope is also scheduled to speak at the U.N. General Assembly in September when world leaders convene to announce new anti-poverty and environmental goals.

The Global Catholic Climate Movement’s message is sure to resonate with the pope as he tours the typhoon-ravaged Philippines. In the organization’s statement to Pope Francis, it reads: “The impacts of extreme weather on the vulnerable and marginalized become clear as we join the Holy Father in praying for all the families that were impacted by super Typhoon Haiyan—for the many thousands dead or missing and the countless more who remain homeless.”

Can Shoes Generate Renewable Energy with Every Step We Take?

Anastasia Pantsios  ::  EcoWatch  ::  8 January 2015

Maybe he hasn’t figured out all the details to make them technically feasible for mass production yet. But a concept for shoes that generate electricity has earned 22-year-old Vancouver university student Taylor Ward, who describes himself in his resume as “an aspiring experience designer looking to learn, grow and take the world by storm,” a slot as one of the five finalists in the Interaction Design Association (IXDA) 2015 Student Design Challenge. He and the other finalists will go to the Interaction15 conference in San Francisco next month to present his idea to a panel of judges. The winner will receive access to research and design tools to help them further develop their idea.

This year’s theme was “Envisioning the Wearable City.” And while other contestants came up with ideas for clothing that helped guide visitors to places of interest, connect people or enhance women’s safety, Ward was thinking green. His idea involves creating clean, renewable energy through something most people do every day: walk.

Inspired by Vancouver’s goal to become the greenest city in the world by 2020, Ward proposed a shoe he calls Step. It features insoles that produce energy as the wearer walks through a system of piezoelectric nano-generators and capacitors that capture and store the energy. As the shoes collect energy—over 100w with each step, Ward says—the wearer would go to a transfer station where they would discharge it into wireless charging pads. That energy could then be used to power homes, schools and businesses. Ward proposes placing them in high-traffic areas like transit stations, parks, schools, busy street corners and hockey arenas (this is Canada, after all!) 

The Vancouver walkers could be producing renewable 

energy with each step. Photo credit: Shutterstock

“Simply walking up to a station and standing in the transfer area would tap out your current raised energy and send it back into our city,” he wrote in his proposal. “We could also incentive giving power. Transferring enough power to the right station could land commuters a free coffee, movie tickets, or even a discount to the game.”

He said that the shoes wouldn’t cost more than a pair of high-end athletic shoes, although the charging stations would require a major funding source.

“Normally piezoeletric sensors are quite inexpensive,” he told City Lab. “The difficult part comes down to the capacity that a small capacitor (or series of capacitors) could hold and the cost for those parts. In the end, I would assume that the wearable itself would still be moderately priced, but the real cost would come from transfer stations. Similar charging stations using inductive charging do exist, but to impact a full city with these stations would be the larger investment from city council and urban planners.” 

The Step would capture energy and store it for 

discharge at a transfer station. 

Image credit: Tyler Ward

The Simon Fraser University student described how Vancouver’s density and walkability make it the idea location for his concept.

“Vancouver is one of the only North American cities that does not have a major highway cutting through its center,” he said. “This has caused our city to develop a high density of urban living and nomadic culture. Within our core, there are 13,000 residents per square mile, the highest in Canada. Additionally, for the millions that are just outside the city, there are 48 skytrain stops that all lead downtown. So what if we could use our crowded streets of commuting passengers to our advantage?”

“We take approximately 150 million steps in our lifetime,” said Ward. “Let’s capture that power.”

Before you fly, think about this . . . . 

If commercial aviation were a country, it would rank seventh in global greenhouse gas emissions according to a recent report by the International Council on Clean Transportation. Photo credit: Giorgio Montersino via Wikimedia Commons

How long will we be able to continue our way of life without ending our way of life?

Nukes Fade As Wind and Solar Soar

Paul Brown  ::  Climate News Network  ::  30 December 2014

With nuclear power falling ever further behind renewables as a global energy source, and as the price of oil and gas falls, the future of the industry in 2015 and beyond looks bleak. 

Investors are increasingly skeptical about putting their money into nuclear—whereas renewables
promise an increasingly rapid return on investment, and may get a further boost if the governments of the world finally take climate change seriously.

Renewables now supply 22 percent of global electricity and nuclear only 11 percent—a share that is gradually falling as old plants close and fewer new ones are commissioned.

New large-scale installations of wind and solar power arrays continue to surge across the world. Countries without full grids and power outages, such as India, increasingly find that wind and solar are quick and easy ways to bring electricity to people who have previously had no supply.

Developed countries, meanwhile, faced with reducing carbon dioxide emissions, find that the cost of both these renewable technologies is coming down substantially. Subsidies for wind and solar are being reduced and, in some cases, will disappear altogether in the next 10 years.

Speed of installation

The other advantage that renewables have is speed of installation. Solar panels, once manufactured, can be installed on a rooftop and be in operation in a single day. Wind turbines can be put up in a week.

Nuclear power, on the other hand, continues to get more expensive. In China and Russia, costs are not transparent, and even in democracies they hard to pin down. But it is clear that they are rising dramatically.

Building of the proposed twin European Pressurised Water reactors, called Hinkley Point C, in Britain’s West Country is due to start in 2015, but the price has risen several times already. Estimated construction costs have now jumped from £16 billion to £24 billion—before the first concrete has even been poured.

The other problem with nuclear is the time frame. Originally, Hinkley Point C was due to be completed by 2018. This has now slipped to 2024, but even this is optimistic judging by the performance of the two prototypes in Finland and France, both of which are late and over budget.

The Finnish plant was due to open in 2009, but is still at least three years from commissioning. The French plant is five years overdue.

In many countries, there are plans on paper for new nuclear stations, and China, South Korea and India are among those that are continuing to build them. Other countries, particularly where private capital is needed to finance them, are putting their plans on hold.

A solar power project developed on a 750-metre stretch of canal by Gujarat State
Electricity Corporation in India. Photo credit: Hitesh vip via Wikimedia Commons

Extend life

The U.S., which still has the largest number of reactors of any country in the world, is opting instead to extend the life of its plants. Many operators are considering applying for such extensions from 60 to 80 years. Provided they are up to modern safety standards, there seems no barrier to this.

Many other countries, including the UK, are extending the lives of their plants as long as possible, so the industry won’t be disappearing any time soon.

But one of the key problems for the nuclear sector is that reactors have been designed to be at full power all of the time. With renewables taking an increasing share of the market, a combination of nuclear, wind and solar can produce more electricity than required—leaving a problem of what to turn off.

A way round this problem being developed in Britain is large, strategically-based batteries. A five-megawatt battery, the largest in Europe, has just been commissioned in Leighton Buzzard, Bedfordshire, in the middle of England.

This is charged up when there is too much power in the grid, and releases its energy when there is a surge in demand. 

If, during a two-year trial, this works to smooth the peaks and troughs of demand, and cuts the costs of switching on expensive gas turbines, then a network of batteries will be installed across the country to harvest the intermittent supplies of renewables.

The only bright spot for nuclear at the moment is the development of small nuclear reactors. These are from 30 megawatts upwards and are designed to be built in a factory and assembled on site—a bit like wind turbines are.

These can be installed singly or in a series, depending on the demand. Their two greatest selling points are that they would be good in remote locations far from other power sources, and are said to be much safer than their larger cousins.

Price tag

However, a drawback is the price tag of around $3 billion dollars. Both the U.S. and UK are supporting private firms in research and development, but commercial operation is a long way off.

Whether a small nuclear power station would be any more welcomed than a wind or solar farm to provide power in a neighbourhood is a question still to be tested.

Nuclear enthusiasts—and there are still many in the political and scientific world—continue to work on fast breeder reactors, fusion and thorium reactors, heavily supported by governments who still believe that one day the technology will be the source of cheap and unlimited power. But, so far, that remains a distant dream.

In the meantime, investors are increasingly sceptical about putting their money into nuclear—whereas renewables promise an increasingly rapid return on investment, and may get a further boost if the governments of the world finally take climate change seriously.

Extreme Weather Will Be ‘New Climate Normal’ Without Immediate Action, Warns World Bank

Anastasia Pantsios  ::  EcoWatch  ::  24 November 2014

World Bank President Jim Yong Kim said this weekend that the organization’s investment focus will be on clean energy and that it will back coal-fired and other fossil fuel projects only when there is “extreme need.” Flying in the face of a popular climate denier narrative that says phasing out fossil fuels and addressing extreme poverty can’t be done at the same time, Kim said climate change threatened efforts to tackle poverty.

Image credit: World Bank Group

His remarks followed the release of the World Bank’s new report, Turn Down the Heat: Confronting the New Climate Normal. It said among other things that the extreme weather impacts of climate change may now be unavoidable and that they are impacting people’s food and water security as well as threatening their safety. But it also said, “More and more voices are arguing that is possible to grow greener without necessarily growing slower. Today, we know that action is urgently needed on climate change, but it does not have to come at the expense of economic growth.”

“There is growing evidence that warming close to 1.5 Centigrade above pre-industrial levels is locked in to the Earth’s atmospheric system due to past and predicted emissions of greenhouse gases, and climate change impacts such as extreme heat events may now be unavoidable,” the report asserted. “As the planet warms, climatic conditions, heat and other weather extremes which occur once in hundreds of years, if ever, and considered highly unusual or unprecedented today would become the ‘new climate normal’ as we approach 4°C—a frightening world of increased risks and global instability.”

“Today’s report confirms what scientists have been saying—past emissions have set an unavoidable course to warming over the next two decades, which will affect the world’s poorest and most vulnerable people the most,” said Kim. “We’re already seeing record-breaking temperatures occurring more frequently, rainfall increasing in intensity in some places and drought-prone regions like the Mediterranean becoming drier. “These changes make it more difficult to reduce poverty and put in jeopardy the livelihoods of millions of people. They also have serious consequences for development budgets, and for institutions like the World Bank Group, where our investments, support and advice must now also build resilience and help affected populations adapt.”

The 200-plus page report enumerated the impacts of heat waves, prolonged droughts, disappearing glaciers, rising sea levels, heavy rainfall and vanishing forests on different parts of the world from Mexico City to Benghazi to Central Asia and spotlighted what it called “The Case for Immediate Action.”

Immediate action, the report said, meant acting quickly to disinvest in what it called “the carbon intensive, fossil-fuel-based infrastructure” which releases climate change-causing greenhouse gases into the atmosphere. It said that in some cases, there might be no alternative to funding fossil fuel projects to supply electricity to impoverished areas, but overall, the World Bank’s priority would be backing clean, renewable energy projects.

“At the World Bank Group we will use our financial capacity to help tackle climate change,” said the report. “We will innovate and bring forward new financial instruments. We will use our knowledge and our convening power. We will use our evidence and data to advocate and persuade. In short, we will do everything we can to help countries and communities build resilience and adapt to the climate impacts already being felt today and ensure that finance flows to where it is most needed.”

“The good news is that we can take action that reduces the rate of climate change and promotes economic growth, ultimately stopping our journey down this dangerous path,” said Kim. “World leaders and policy makers should embrace affordable solutions like carbon pricing and policy choices that shift investment to clean public transport, cleaner energy and more energy efficient factories, buildings and appliances.”

Energy East pipeline: Don’t lock in to fossil fuels for next 50 years

CATHERINE ABREU  ::  Halifax Herald  ::  14 November 2014

                           
TransCanada executives announce the company is moving forward with the
1.1-million barrel-per-day Energy East pipeline project at a news conference
in Calgary in 2013. (JEFF McINTOSH / CP)

Reading Frank McKenna’s speech to the Atlantic Canada Energy Summit, reprinted in the Opinions section on Nov. 4, I felt unexpected relief.

Finally, a regional perspective on the key factor we need to keep in mind when making decisions about our energy sector and electricity systems.

McKenna thinks there is a revolution happening for energy in Atlantic Canada. “The secret to this revolution is infrastructure,” he said, “and each new investment in infrastructure opens a whole new world of opportunities.”

Hallelujah!

But my relief was followed quickly by dismay. At some point, McKenna loses track of his own logic and begins to argue that the nature of energy infrastructure justifies fracking and Trans-Canada’s proposed Energy East pipeline. In fact, given the long life of infrastructure, the opposite is true.

Energy and electricity infrastructure is big and it’s expensive and it lasts a long time. Infrastructure that gets built now defines the world we live in 40 and 50 years from now, and limits the choices we’ll be able to make in that world.

The former New Brunswick premier illustrates this with some useful examples, describing the cumulative effects of growing natural gas infrastructure in the Maritimes that began with Sable Island.

Here’s another example of the long-term ripple effect of infrastructure investment: Without the coal mines of mid-century Nova Scotia, there would be no coal-burning electricity generators in the province. Without those facilities, Nova Scotia would not be the multi-million-dollar import market for Columbian and American coal that it is today, with some of the highest electricity prices in Canada.

An energy revolution is indeed underway in Atlantic Canada. That revolution looks like energy efficiency saving enough power to run 63,000 homes in Nova Scotia in 2013 and creating 1,200 jobs in four years.

It looks like world-class research into smart grids in New Brunswick. It looks like Prince Edward Island producing up to 30 per cent of its electricity with wind energy and Newfoundland and Labrador becoming better integrated with the North American grid.

It is a revolution of clean energy, of innovation, and of responsible resource management. It is a revolution that sees Atlantic Canadians learning new skills to become employed in emerging sectors that keep money in communities, rather than sending it to international shareholders and fossil-fuel markets. It is a revolution that is redefining our ideas of prosperity and the ways energy can support and jeopardize that prosperity.

Companies looking to develop hard-to-reach hydrocarbons and transport them long distances are building infrastructure of the past. Our success, and the well-being of our children and grandchildren, depends on us building infrastructure of the future.

We must ensure that 50 years from now, we are telling the story of how our regional electric vehicle network was made possible by investments in renewable energy generation that made our electricity systems 100 per cent fossil-free by 2035, the development of innovative storage and smart-grid technologies that helped us manage the intermittency of the wind, sun, and tides through the 2020s, and the ongoing construction of grid infrastructure that allowed the Atlantic provinces to share power over long distances while also allowing communities to become more self-sufficient with local energy production.

It is true that we will continue using fossil fuels for a while longer. It is also clear that fossil fuels are becoming more difficult and costly to extract. Plus, there’s that whole business of our addiction to fossil fuels propelling changes in the climate that will obliterate our coastlines and dramatically shorten the lake hockey season.

The era of fossil fuels is drawing to a close. It must end if we are to safeguard the health of future generations, and it can end because present generations have developed the alternatives.

Transition takes time and those alternatives won’t entirely replace our fossil fuel-based systems in the next decade. They will, however, dominate the global energy and electricity landscapes of 2050.

At this point, it is an either/or choice: either we invest in clean energy infrastructure or we continue down the road of fossil fuels. The future can not afford for us to have it all.

And that’s what the “mob” that McKenna warns his political comrades against has been trying to say. Surprising as it may be to some, we are not a scared, childish rabble in need of a strong hand.

We’re of course concerned about the immediate threats to our communities and to our water that fracking and pipelines pose, but there’s more to it than that. We know that decisions we’re making today about infrastructure have huge implications for a future we care about.

Once built, all an oil pipeline can do is move oil. Once established, an onshore natural gas industry based on fracking creates an entire economic sphere that relies on continuous fossil-fuel extraction. Jobs are created and revenue is generated, but those benefits are shackled to resources that are on their way out. Forty years from now, we have a pipeline pumping oil the world can’t afford to burn and a sector we’re trying to keep afloat as the resource disappears.

We’re saying we can do better than that.

The jobs and revenue created by investing in the sustainable energy sector and building sustainable electricity infrastructure are not as familiar to us as the kind of prosperity we associate with fossil fuels, but they are real.

Seeing them means shifting our perspective, and growing them means making long-term plans with short-term goals. It’s not going to happen all at once, but the transition is already underway. It is a revolution for Atlantic Canada, by Atlantic Canadians, and it is the future we are building together.

Catherine Abreu is energy co-ordinator at the Ecology Action Centre in Halifax