Worlds of Differences

I’ve always known that Americans hold a pretty different view about the state of the energy sector than elsewhere in the world, but never really knew how to characterize those variances.

Today, I write in gratitude, thanking the efforts of Sonal Patel, senior writer at Power magazine.  Patel developed this helpful visual framework summarizing the recent issuance of the World Energy Issues Monitor, a a global survey undertaken annually by the World Energy Council posing the question “what keeps energy leaders awake at night?”

For each of three regions — North America, Europe and Asia — Patel has drawn circles for each major issue area of potential concern to the energy sector and placed them on a two-dimensional chart, where higher indicates more impact and right represents more certainty.   The size of the circles is proportional to the urgency of an issue.

Perusing Patel’s graphic is an illuminating exercise.  Of note:

Only in North America is the topic of “unconventionals” — meaning producing oil and gas from unconventional sources such as shale and oil sands — viewed as a particularly big deal.  In Europe, unconventionals are somewhat lower on the radar screen, and in Asia barely on the screen at all.

Conversely, energy prices are a critical topic in Europe and Asia, but deemed only of modest importance in North America.

Similarly, energy efficiency is high on the agenda in Europe and Asia, not so much in North America.  Even more starkly, renewables are seen as only a low-impact issue in North America, and a more significant issue elsewhere.

Perhaps because of the high penetration of renewables there, energy storage is of most interest in Europe, but of less interest in North America, and of hardly any interest in Asia.

Nuclear energy is viewed as a high-impact issue in North America, moderate impact in Europe, and (perhaps surprisingly) low-impact in Asia.  So, for that matter, are electric vehicles.

The so-called “hydrogen economy” — involving the use of fuel cells for power generation and transportation — retains a bit of interest in North America (though with low urgency), but has fallen off the map elsewhere.  Carbon capture and storage (CCS) follows somewhat of the same pattern, although Europe does hold it in higher esteem than hydrogen.

True, there are some commonalities to acknowledge:  the smart grid and policies to deal with climate change and energy subsidies are seen in approximately the same light globally.

However,  more than anything else, Patel’s framework shows that leaders in the energy industry live in very different worlds, depending upon which part of the world they live and work in.

Reporting from Omaha

Over the weekend, I attended the annual shareholder’s meeting of Berkshire Hathaway (NYSE:  BRK.A, BRK.B) in Omaha to hear the wit and wisdom of CEO Warren Buffett and Vice Chairman Charlie Munger.  For five hours on Saturday, Buffett and Munger fielded questions from panelists and investors on a wide range of topics.  A good synopsis of the often amusing banter was provided by an ongoing blog operated by the New York Times.

During the marathon Q&A session — quite impressive for a pair of octogenarians to endure — Buffett and Munger thrice touched upon topics of relevance to the cleantech sector.

First, Buffett commented on the excellent performance of Berkshire’s railroad, BNSF, which experienced a very strong first quarter of 2013, with much higher growth in volumes than other U.S. railroads.  Buffett noted that it was very fortunate for Berkshire to have “lots of oil discovered next to BNSF’s tracks”:  BNSF is able to take advantage of the oil boom in western North Dakota associated with the Bakken shale, due to its extensive route network in the area.   A side implication is that BNSF is well-positioned to ship oil imported from Canada, whether or not the Keystone XL pipeline gets built.

Of course, BNSF also has a large exposure to coal hauling.  However, it’s important to recognize that BNSF’s coal business is mainly centered on production from the Powder River Basin, which is both incredibly cheap and low-sulfur.  As such, it remains competitive with low-cost natural gas, and is not being displaced as much from the power generation sector as is coal from Appalachia, so BNSF is unlikely to be as hard-hit by the shale bonanza as other railroads.

Second, an investor asked about the potential effects of the increasing competitiveness of solar energy on the future financial performance of Berkshire’s utility business unit, MidAmerican Energy.  The question was likely prompted by a recent report issued by the Edison Electric Institute raising the concern that solar and other forms of distributed generation may lead to reduced revenues and profitability of grid-based electric utilities as customers source a greater share of their electricity needs from on-site sources.

Buffett and Munger noted that Berkshire was aware of the declining cost of solar energy and correspondingly saw good investment opportunities in the sector, as evidenced by three very large projects acquired by MidAmerican with over $5 billion in capital requirement.  However, they noted that these plants were central-station generation, as opposed to on-site distributed generation.  Moreover, they are located in the deserts of the southwestern U.S., not in MidAmerican’s utility territories.

Extrapolating from Berkshire’s entry into solar — central powerplants in deserts — Munger was particularly skeptical that rooftop solar would pose much of a cannibalization threat anytime soon in MidAmerican’s not-so-sunny locales in the Pacific Northwest, Iowa and the United Kingdom.

Buffett asked MidAmerican’s CEO Bill Fehrman to stand in the audience and comment further.  Fehrman opined that MidAmerican’s relationships with their regulators were sufficiently positive that tariffs would be restructured if/as rooftop solar penetrates their customer base and leads to reduced revenues/profitability associated with the grid services that MidAmerican provides to its regions.

Personally, I agree with these assessments — insofar as MidAmerican’s current portfolio of territories is concerned.  For electric utilities in far sunnier locales, and with regulatory regimes that are generally more populist in their leanings, rooftop solar may sooner pose more of a downside.

Third, another investor asked about the potential impacts of climate change and of climate change policy on Berkshire’s businesses.

Buffett began his response sarcastically by noting the unseasonably warm weather that Omaha was enjoying (which it most definitely wasn’t, as attendees had to prevail against a cold windy rain to enter the auditorium).  After this Fox-worthy cheap-shot, Buffett cautiously offered that — though he certainly wasn’t an expert — he believed that there was a real chance that man-made climate change was occurring, because most of those who really understood the issue and were worried were quite compelling in their logic.

However, he was less concerned that climate change would represent a major negative force against Berkshire — especially their insurance businesses.  At several points during the day, Buffett extolled the excellence of the pricing discipline and risk assessment of Berkshire’s insurance businesses, and Buffett indicated that he didn’t think that the risk profiles of the insurance businesses had changed materially due to climate change, at least so far.

Munger then chipped in with some commentary on climate policy.  He was pessimistic that any global policy on carbon would be effective, due to the massive coordination problems between all of the various countries that would need to be signatories.  However, Munger was supportive of higher taxes on carbon fuels, which “Europe stumbled into” for reasons other than climate change.  This suggestion prompted some applause from the audience, which surprised Munger.  Buffett then noted to Munger that far from everyone applauded, which drew laughter and a much louder burst of applause from the crowd — indicating that the Berkshire shareholder base on average is probably not as concerned with this issue as is your intrepid reporter.

Open Letter, Closed Minds

Last week, 129 signatories sent an open letter to the Secretary General of the United Nations, Ban Ki-Moon, that said in part:

“Current scientific knowledge does not substantiate your assertions” recently made that climate change is causing more extreme weather events (such as last month’s disastrous Hurricane Sandy), and that the cost of continued inaction on climate change will be very high.

The open letter continues:  “The hypothesis that our emissions of CO2 have caused, or will cause, dangerous warming is not supported by the evidence.  The incidence and severity of extreme weather has not increased. There is little evidence that dangerous weather-related events will occur more often in the future. ”

Moreover, “Policy actions by the U.N., or by the signatory nations to the UNFCCC (United Nationals Framework Convention on Climate Change), that aim to reduce CO2 emissions are unlikely to exercise any significant influence on future climate.”

I will leave it to others to opine whether or not the signatories to the open letter making these statements are credibly “qualified in climate-related matters”, as they claim for themselves.

For the record, a much larger body of people doubtlessly “qualified in climate-related matters” would surely strongly disagree with this letter.  Thousands of experts are quite confident that climate change is in fact a serious future threat to the planet (all species, not just humans), that its economic and social (and biological) costs will be high, and that effective actions can be taken to reduce the impacts.

Conclusions of this ilk come from the Intergovernmental Panel on Climate Change (IPCC), a massive peer-reviewed process of researchers around the world facilitated by the UN and the World Meteorological Organization (WMO) that — while imperfect — is nevertheless quite robust.

Here’s the rub:  it doesn’t matter that ten or twenty times as many experts of at least comparable quality can be amassed on the other side of the issue to outweigh the signatories of this open letter.

Notwithstanding the vast body of evidence concerning climate change, there are in fact certain elements of climate science that are admittedly unknown or not well understood.  Even the IPCC experts would agree.  And, because of that, it is in fact somewhat inappropriate to say cavalierly, as Ban Ki-Moon and others such as Al Gore have said, that “the science is settled.”

Even though assembling a vast quantity of data and analyses make for a damn persuasive case to most reasonable people, the science is not, fully, settled.  In fact, given the daunting complexity of the global climate system,  that will surely always be the case.

Those with closed minds — who for whatever reason choose to ignore the preponderance of evidence and focus instead on the exceptions — will not concede the likelihood of climate change.  To them, the outliers and unknowns mean that there could theoretically be a possibility that human-driven climate change isn’t really happening, ergo let’s not get worried about it until it can be proven (which, for them, will generally be never).

As a result, stalemate exists.  This is just fine for climate deniers and those who have a vested interest in maintaining the status quo — the former often being funded by the latter.

Extreme flip statements like “the science is settled” only harden the opposition.  It’s not the first time, and certainly won’t be the last, that too-strident environmentalists have harmed rather than helped the causes about which they care.

The open letter to Ban Ki-Moon does, however, have one notable redeeming feature.  It is found in the last sentence:  “Climate policies therefore need to focus on preparation for, and adaptation to, all dangerous climatic events however caused.”

This inarguable position in favor of improving our adaptation capabilities is an increasing focus of the climate debates.

The stalemate on climate change policy means that chances are growing that our time is shrinking to do anything meaningful to prevent significant future climate change.  Accordingly, the best we may be able to do is to agree to limit the impacts that more severe weather would create.

We can argue about whether weather severity is on the rise.  However, if we waste our time arguing about that (which we are), we will have less time to spend on actually preparing more prudently for the future — whether it’s as worrisome as many climate scientists think it will be, or it’s a “don’t worry, be happy” world just like today’s.

The Deeper Meaning of Sandy

Watching the video feeds from the New York and New Jersey areas in the wake of Sandy reminded me of the images seven years ago from New Orleans being decimated by Katrina.

Other than perhaps providing a warning not to call a particular geographic area “New” anything, what do these storms tell us?

Like Katrina did, Sandy reminds us most poignantly how little most Americans think about the reliability and importance of energy – until it’s not there.  And then, they think about it – a lot.

The sight of people lining up for gasoline, and fighting about who gets to the pump first, is evidence of the dependence of our society on commodities over which individuals ultimately have minimal control.

The sight of people screaming at civic leaders about the slow pace of power restoration says volumes about the resentment about our subservience to technology – and the necessary prerequisites that enable technology to actually work.

The sight of people desperately tapping into scattered energized cell phone charging sites, so that they can maintain connectivity to others that they depend on or that depend on them, confirms the observation that our species is no longer able to be truly self-sufficient, much as some may like to think otherwise.

Sandy thus reminds us that our vehicles and our buildings and our communications need constant access to energy, whether electricity, gasoline, diesel or natural gas.  Without energy, these artifacts of modernity quickly become irrelevant.  Without energy, 21st Century humans can barely survive at all.

In turn, the supply line of energy provision is an immense enterprise that can nevertheless be easily disrupted.  The short-term consequences can be acutely tragic, with damaging economic effects that can linger for a long, long time.

One consequence of Sandy is that, like Katrina, it has elevated the topic of climate change in the national discourse.

Many advocates had been complaining about “climate silence” during the 2012 Presidential campaign, but New York Mayor Michael Bloomberg threw the issue into the spotlight in the wake of Sandy by endorsing Obama over Romney.  The endorsement came in large part because Bloomberg believed that Sandy was amplified by climate change, and that candidate Obama was more committed to taking action to combat climate change, thereby reducing the risks to low-lying places such as New York in the future.

The hand-wringing conversations occurring now are similar to those immediately post-Katrina, and I expect that the U.S. will similarly act on climate change now as it has consistently since then – with no action.

Alas, that’s because the political climate in Washington is probably in worse shape than the atmospheric climate covering the planet.

Although we can’t say for sure that Sandy (or Katrina, or any of the other mega-storms of recent years) were caused or even worsened by anthropogenic climate change, most experts agree that the frequency and magnitude of extreme weather events is likely to increase as the energetic content of the atmosphere and oceans has risen with decades of carbon dioxide emissions – from consuming the energy upon which we so utterly rely.

Moreover, experts also agree that the emissions of the past decades have still yet to exert their full impact on the climate, so some additional worsening is likely baked in, even if the world (especially the U.S.) finally decides to do something to control emissions on a going-forward basis.

So:  Expect more Sandies and Katrinas.  Expect more heat waves.  Expect more droughts.

In fact, expect more blizzards too.  The average temperature of the planet may be increasing, but the probability distribution of temperatures is widening, which means cold events will still happen on occasion.  And, when they do, they may well be accompanied by more moisture – hence, blizzards.

All of this illuminates a central thrust of how the cleantech sector can best help mankind in the decades to come, in the face of what is likely to be increasing climate chaos:  adaptation.

Adaptation has many forms.  For instance, adaptation should force a re-think about the wisdom of civil construction right along ocean shorelines.  Adaption might involve people relocating to live within reasonable walking distance of their workplace, not reliant on vehicles or public transportation.

Adaptation also suggests that, given an increasing exposure to storms like Sandy (and other threats such as terror attacks), the energy system should be designed and built with greater redundancy and dispersion of assets, to be more robust in the face of overwhelming events – of which Sandy is just the latest.

Sandy should provide an impetus for increased installation of uninterruptible power systems and backup/standby generators – especially at gasoline stations, many of which in the Northeast were put out of commission due to lack of electricity – as well as an awareness NOT to situate these devices in places where they will be flooded and hence unusable exactly when they’re most needed.

More broadly, becoming more resilient in a more turbulent world implies a move away from a centralized energy topology based on large-scale refineries and powerplants, and the huge corporations that own and operate them.

Making that transition would not only be expensive, as it implies a massive change-out in the nation’s energy infrastructure, but it would be highly uncomfortable.

Although they like to think that the nation has been built largely from the bottom-up via individual initiative, Americans are stuck in an outdated “top-down” mentality when it comes to the energy sector.

Americans are complacent about their reliance on the power grid and on petroleum-fueled vehicles.  They want continuous access to any form of energy at virtually no cost.  While they prefer minimal environmental impact and detest the strategic reliance on the Middle East for oil, they heartily trade off higher emissions or ongoing geopolitical subjugation for a just few cents cheaper.

Americans may not much like Big Oil, or utility monopolies, or the dirtiness of the coal sector, but they don’t want to sully themselves by doing much to disrupt them from their current dominance.  They certainly have limited appetite for taking energy matters into their own hands by supporting novel smaller-scale distributed energy approaches being pursued by cleantech innovators that may entail a little more cost (at least currently).

In many ways, the American willingness to go along with the energy status quo mirrors the American dependence on large institutions – governments and corporations alike – that are nevertheless widely-hated and even antithetical to the idealized notion of American self-reliance.

Sandy thus has highlighted the deeply-seated fear and loathing of the United States, circa 2012, in a way that would do Hunter S. Thompson proud.  The physical damage wrought by Sandy upon New York and New Jersey is a metaphor for the salt that Sandy has thrown in the open wounds of the collective American psyche.

There is a joke that asks “How many psychiatrists does it take to change a lightbulb?”  The answer is “Just one, but the light bulb really has to want to change.”

Whether Americans in the wake of Sandy will want to undertake the effort to change, in order to not only heal themselves but inoculate themselves against challenges posed by future storms like Sandy, is a major question.  The evidence, post-Katrina, indicates a high willingness to moan and groan, but a limited appetite for making the necessary commitments and sacrifices to effect meaningful long-term improvement.

Meanwhile, the cleantech community continues to press forward, under the forecast that opportunities for positive impact will only increase in the years to come.

Hot Enough For You?

So far, the summer of 2012 has been a scorcher for most of the U.S., following hot on the heels of a much warmer than usual winter. 

Last week, as reported by the Washington Post, the National Climatic Data Center released its State of the Climate report for June, in which NCDC noted that not only were the last 12 months of U.S. temperatures the hottest in recorded history, the last 13 months in a row were all well above average.  The NCDC then calculated the chances of this series of above-average temperature outcomes happening randomly to be on the order of 1 out of 1.6 million.  (Subsequent analysis suggests that the true odds may be somewhat lower, but still extraordinarily slim.)

It’s thus very tempting to claim that the recent heat must be due to anthropogenic climate change, what some people term “man-made global warming”…and it may be so.  This article hints that the recent heat wave “is what climate change looks like.”

Of course, responsible journalists know that any small sample of weather results, even a whole year’s worth of data over an entire continent, can not possibly be conclusive.  This recent oped in the Los Angeles Times makes all the right caveats. 

The one data trend that’s most troubling to me is the ratio of record high temperatures to record low temperatures.  Logic dictates that this ratio, in a stable climate, should be approximately 1:1.  However, as reported here (by Fox News, no less!), the website Climate Central has been tracking the ratio at approximately 2:1 for the past several years, with about 7:1 for 2012 to date.

In the most extreme example I know, as reported here, the record high temperature for International Falls MN on March 19 was eclipsed this spring by that day’s low temperature.  (The prior day’s high temperature obliterated the previous record high by a ridiculous 22 degrees F.)

What are ya gonna do?  Well, adapt. 

It’s not a new thought:  I recall Bill Nitze making this case to me about eight years ago, recognizing that whatever response humans might make to reduce greenhouse gas emissions was going to be insufficient to completely prevent significant climate changes from occurring.  Thus, we’d better prepare.

Nitze’s credentials as a thought-leader for the cleantech sector are unimpeachable, but the concept of focusing on adaptation rather than prevention was (and remains) to me somewhat of a surrenderist perspective. 

Now, as reported here by the Associated Press, we’re hearing some of the same things from Rex Tillerson, CEO of ExxonMobil (NYSE: XOM)

Basically, Tillerson’s message is:  climate change is happening, human activity is probably causing it, but it’s not that big of a deal, fear-mongers are overblowing the issue, and humans can adapt sufficiently.  “It’s an engineering problem and there will be an engineering solution.”

Gee, thanks, that’s reassuring:  coming from the same company that brought you the Exxon Valdez, the accident that couldn’t happen.

As an aside, adaptation-enabling or -related technologies will be difficult for the investor community to finance, simply because it’s unclear who the customers would be, and what pricing mechanisms would support them.

So, are we going to have to wait until climate change becomes unmanageable before we start managing it?  Because, if we do wait that long, we’ll be behind the curve by several decades. 

Tillerson’s comments became somewhat of a news item because ExxonMobil has historically tended to deny climate change as an issue, and the fingerprints (i.e., funding) of ExxonMobil have been found on many of the works by climate change skeptics.

In response to ExxonMobil’s kinda-sorta admission of climate change, the Financial Times ran its own oped:  adaptation is necessary, but it shouldn’t be sufficient, as the response to the situation we collectively face. 

Echoing the sort of calculus that was first and most famously pursued in the Stern report of 2006, FT argues that “the warmer the world gets, the more likely it is that [the costs of climate change] will outweigh the price tag for curbing emissions…The sooner the world gets to grips with it, the lower the eventual costs will be.”

In other words, FT (and the Stern report) suggest that simply relying on adaptation ex post will be more expensive than taking some ameliorating actions in advance.

Alas, there simply is not the political will to do anything in the near-term.  I recall a candid off-the-record conversation about a year ago with a recently-retired C-level executive from a major oil company who previewed Tillerson’s comments from last month, but with a harsher reality.  I don’t remember his exact words, but they were something like:  “Anthropogenic climate change is almost certainly happening, but there are too many vested interests at stake that want society NOT to do anything about it.  So, we’ll have to adapt.”

Maybe at some point there will be enough decision-makers and thought-leaders who will eventually feel that there’s enough evidence to do something proactive to mitigate man-made climate change.  However, aided by the fact that the playbook of climate deniers is ingenious at obfuscating public and political opinion, there is likely to always be a significant enough body of power for whom climate science is not sufficiently “settled”.  For these people, there will never be definitive proof of human-induced climate change, and thus never adequate justification for action.  They are likely to be blockers for a long time to come.

Without political action to limit greenhouse gas emissions, and without a situation conducive to investment in adaptation, our society will likely be faced with increasing climatic pummeling by a world going madder. 

If it’s not hot enough for you now, just wait till next decade.

Absent an at-scale program with the potential for meaningful impact, my best idea for individual adaptation:  a cold beer in the shade, anyone?

Climate Change Mitigation: Refocus Needed

In most of the discussions about anthropogenic (i.e., human-influenced) climate change, the concept of greenhouse gas (GHG) emissions is usually short-handed to carbon dioxide (CO2) emissions.  In fact, humans are responsible for emissions of many other pollutants that contribute to climate change, and while these emissions are sometimes converted into “CO2-equivalents” to make discussions simpler, it’s pretty clear that — when it comes to climate change — some emissions are much more important than others.

While CO2 represents the bulk of GHG emissions (in terms of quantities), methane (CH4) is about 20-25 times as potent on a per-unit basis.  And, when it falls to the ground, soot (technically referred to as “black carbon”) increases the rate of snow/ice melt, and is possibly at the root of accelerating melt in the polar ecosystems.

Accordingly, in a recent issue of the journal Science, a new study by a long list of collaborators posits that the fastest way to a significantly better (i.e., less dramatically increasing) trajectory in future average planetary temperatures is for society to focus on reducing methane and soot emissions, rather than CO2 emissions.  Based on the study’s projections, it appears that concerted efforts to reduce methane and soot emissions will achieve a large share of the reduced rate of temperature increase that an all-out effort to curb CO2 emissions would achieve.

Since methane and soot have short residence times in the atmosphere (unlike CO2), an immediate reduction on these emissions will translate to immediate improvements in GHG levels.  Also, reducing methane and soot emissions will have significant benefits in alleviating local air quality issues and thereby improving human health, by mitigating ground-level ozone formation and reducing airborne particulates.

Of course, the big kahuna in anthropogenic climate change remains CO2, which is emitted into the atmosphere when anything is burned — and much of what gets burned is fossil fuels.  Alas, fossil fuels represent a very lucrative enterprise for many of the world’s largest corporations in the energy business, and a critical enabler of the commercial output and social lifestyles that define 21st Century human existence.  Consequently, there’s immense political and public resistance to imposing any limitations on fossil fuel consumption in order to reduce CO2 emissions. 

So, perhaps a shifting of focus by the cleantech world away from CO2 reductions toward methane/soot reductions would be much more politically acceptable for the foreseeable future and thus would actually gain some real traction. 

It would certainly be more helpful to the planet than another series of endless climate negotiations in far-flung exotic cities that themselves produce a lot of emissions (figuratively and literally) and little substantive progress. 

Some of the most strident opponents of cap-and-trade on CO2 emissions will have a hard time objecting to measures that reduce methane and soot emissions.  Indeed, the more that methane can be captured rather than released to the air, the more it can be used to supply our energy needs.  Thus, cleantech innovators and investors should put soot and methane emissions higher on the list of areas to tackle with their incremental efforts — as they are more likely to be rewarded than a continued frontal-assault on CO2 emissions.


A World of Hurt

Seemingly generating nary a ripple here in the U.S., the International Energy Agency (IEA) just issued its 2011 World Energy Outlook — its annual synopsis on the future of the global energy sector. 

If ignorance is bliss, then we’re certainly blessed by generally not bothering to confront the pretty-alarming conclusions of the report. 

A pastiche of the highlighted snippets in the Executive Summary, when stitched together, provide a glimpse of the world we’re now choosing to invent for ourselves and future generations:

“There are few signs that the urgently needed change in direction in global energy trends is underway.”

“Global investment in energy supply infrastructure of $38 trillion (in year-2010 dollars) is required over the period 2011 to 2035.”

“The age of fossil fuels is far from over, but their dominance declines.”

“The cost of bringing oil to market rises as oil companies are forced to turn to more difficult and costly sources to replace lost capacity and meet rising demand.”

“Factors both on the supply and demand sides point to a bright future, even a golden age, for natural gas.”

“Coal has met almost half of the increase in global energy demand over the last decade.  Whether this trend alters and how quickly is among the most important questions for the future of the global energy economy.”

“The dynamics of energy markets are increasingly determined by countries outside the OECD.”

“All of the net increase in oil demand comes from the transport sector in emerging economies, as economic growth pushes up demand for personal mobility and freight.”

“China’s consumption of coal is almost half of global demand and its Five-Year Plan for 2011 to 2015, which aims to reduce the energy and carbon intensity of the economy, will be a determining factor for world coal markets.”

“Russia’s large energy resources underpin its continuing role as a cornerstone of the global energy economy of the coming decades.  Russia aims to create a more efficient economy, less dependent on oil and gas, but needs to pick up the pace of change.”

“International concern about the issue of energy access is growing.  Around $9 billion was invested globally to provide first access to modern energy, but more than five-times this amount, $48 billion, needs to be invested each year if universal access is to be achieved by 2030.”

“We cannot afford to delay further action to combat climate change.”

“New energy efficiency measures make a difference, but much more is required.”

“Widespread deployment of more efficient coal-fired power plants and carbon capture and storage (CCS) technology could boost the long-term prospects for coal, but there are still considerable hurdles.”

“Events at Fukushima Daiichi have raised questions about the future of nuclear power.”

“The wide difference in outcomes between [the scenarios analyzed in this report] underlies the critical role of governments to define the objectives and implement the policies necessary to shape our future.”

When observing the dysfunctional nature of the current political ecosystems in the U.S., in Europe, and in world affairs (e.g., the United Nations), and the increasing imperative for economic austerity to resolve the shortfalls in public coffers, it is hard to believe that governments (other than autocratic places like China and Russia) will be able to take any meaningful action to nudge the energy sector from its trajectory of “muddle-along.”  The chaos that IEA describes in the world energy scene will thus likely only intensify.

Lots of challenges in this world.  But, then again, lots of opportunities too.

Keystone Cops

As mentioned in a prior posting, I recently traveled to Canada as part of a delegation convened by the Chicago Council on Global Affairs to consider energy trade issues of importance to Canada and the U.S. – especially in the Midwest.

The second stop on our journey, after a day and a half in Manitoba to gain a deeper appreciation of Manitoba Hydro, was northern Alberta, which has become the epicenter of one of the largest energy opportunities and simultaneously one of the most controversial environmental issues facing those of us in the cleantech sector.

Of course, I’m writing about the Athabasca oil sands, one of the largest reserves of commercially-recoverable oil (using currently-available practices) on the planet. 

The main attraction of the Alberta leg of our trip was a visit to the operations of Suncor Energy (TSX: SU), one of the largest producers operating in the Athabasca, about 20 miles north of the boom-town of Fort McMurray.

Several indisputable facts are important to lay out concerning the oil sands in Alberta before addressing the issues at hand.

  • The Athabasca oil sands resource is massive:  an estimated 1.7 trillion barrels theoretical maximum, or about 170 billion barrels assuming a 10% recovery rate.  The only larger set of proven oil reserves in the world is in Saudi Arabia.  Significant portions of these reserves are economically-recoverable at oil prices of $75/bbl or even lower.
  • Current production levels from the Alberta oil sands are about 1.5 million barrels per day, mainly using surface mining techniques.  Surface mining imposes significant environmental scars upon the landscape for many years.  Most future production growth will be from parts of the resource that are deeper underground and thus not amenable to surface mining approaches, and will be accessed by in-situ recovery methods such as steam-assisted gravity drainage (SAGD) that impose far less environmental impact.
  • Because the resource is inferior in innate quality to so-called “sweet crudes” of West Texas that have become the oil industry benchmark, significant energetic inputs are required to “upgrade” recovered oil sands into a grade of oil that can flow easily through pipelines and be processed by refineries into transportation fuels.  As a result of all the extra pre-refining efforts, the carbon footprint of using fuels from oil sands is higher than from other sources around the world.  According to a report by IHS CERA, producing a gallon of gasoline or diesel from oil sands unleashes about 40-70% more greenhouse gases than for the average fuel burned in the U.S.
  • The U.S. consumes over twenty percent of annual world oil production, yet has only a couple percent of the world’s proven reserves.  Consequently, the U.S. needs to import about 40 percent of its day-to-day oil requirements.  Canada is the largest source of U.S. oil imports, mainly oil sands production from Alberta.  Without the Alberta oil sands, the U.S. would surely need to import much more oil from Saudi Arabia and other Middle Eastern countries.
  • World oil demand is on the order of 85 million barrels per day, and lacking an widely-scaled substitute for oil to supply ever-increasing transportation demands, almost every observer of the energy markets expects that number to only increase.  This is due to the rise of the developing world into 20th and 21st Century standards of living. 
  • Nowhere is this more true than China.  Given rapid economic expansion on its huge population and industrial base, China is the largest driver of future growth in global oil demand.  Sometime in the next 20 years, China will likely overtake the U.S. in world oil consumption.  Yet, like the U.S., China has only a tiny share of the world’s oil endowment.  As a result, China is mobilizing around the world to acquire rights to oil resources – and is especially active in investing in Alberta oil sands projects.
  • Between potential Chinese and American demands, private investment in the oil sands is exploding.  About $10 billion per year is pouring into the Athabasca oil sands, with an aim to boost production to 3.5 million barrels per year by 2020. 
  • Two major pipeline construction projects are proposed to correspond to the increased planned production in Alberta:  to refineries in the U.S. via an expansion of the Keystone Pipeline System called Keystone XL being proposed by TransCanada (TSX: TRP), and to the British Columbia coast via the Northern Gateway Pipeline under development by Enbridge (NYSE: ENB),  for shipment by tankers plying the Pacific Ocean to refineries in Asia and America.

And herein lies the rub:  the Keystone XL project has quickly become one of the most contentious environmental battlegrounds in recent memory.  The issue has become a national cause.  Over the past few weeks, protesters have camped out in front of the White House demanding that the U.S. to deny construction of Keystone XL.  The New York Times has come out squarely against Keystone XL.

Environmental advocates hope to stop Keystone XL for three primary reasons:

  1. Climate change.  James Hansen of NASA, one of the pre-eminent voices leading the charge for addressing the threat of climate change, has said that it’s “game over for our planet” if the Keystone XL pipeline is developed.  A good part of this claim arises from the fatter carbon footprint associated with oil sands relative to other sources of oil:  that using oil sands for our transportation fuels will imperil the climate more rapidly.  Directionally, this is correct.  However, while oil sands may have a 40-70% larger carbon footprint on a “wells-to-pump” basis, on the more relevant “wells-to-wheels” basis, oil sands is “only” 5-15% worse.  Far and away, most of the greenhouse gases associated with petroleum use are associated with actually burning the fuel in our vehicles, not in producing and refining it.  In other words, improving auto efficiencies by 20% is more important to climate change than the choice of oil sands vs. other crudes.
  2. Environmental degradation.  No question, mining oil sands is ugly and damaging, as documented by such observers at Andrew Nikiforuk.  But, the boreal forests of northern Alberta, while beautiful, are massive in their extent and mining operations operations are taking only an infinitesimal fraction of it.  Reclamation techniques being developed by Canmet (Canada’s national energy R&D institute) and employed by operators like Suncor are cause for cautious optimism that the land can be remediated back to a healthy ecosystem, albeit with a several-decade time horizon.  And, in-situ SAGD operations will likely comprise a significant share of the incremental production from the Athabasca, imposing much less negative impact on the local environment.  Finally, we should note that there are lots of no-less-ugly and no-less-damaging operations in strip mining for coal in the Powder River Basin and mountaintop removal in Appalachia — both of which are happening right here in the U.S. of A., and both of which entail a fuel that is higher-carbon than oil and can more easily be displaced by many other more-environmentally friendly substitutes.  
  3. Risk of oil spills.  Between the Exxon Valdez spill in Alaska, the BP Deepwater Horizon fiasco in the Gulf of Mexico, and this year’s Yellowstone River leak, oil companies don’t have anywhere near a perfect record at ensuring oil doesn’t end up in pristine places where it shouldn’t be.  Governor Dave Heinemen of Nebraska, a Republican whose party is more than occasionally associated with the “drill, baby, drill” mantra, has come out in opposition to Keystone XL for fear that any leaks will taint the Ogallala Aquifer.  However, it should be noted that oil pipelines already cross the aquifer — and these older lines are probably more subject to failure than any newer ones that might be built.

While I am sympathetic to these concerns at a conceptual level, I frankly think they’re a bit overblown.  Accordingly, I don’t think that stopping or even delaying Keystone XL will yield much environmental benefit. 

As noted above, the Alberta oil sands are vast and economic to produce — and continued robust demand in the world oil markets, especially from China, will drive these resources to be developed promptly.  If the resources are developed promptly, then all of the climate change and environmental degradation that protesters hope to avoid by blocking Keystone XL will happen anyway. 

OK, granted, if Keystone XL isn’t built, there wouldn’t be any additional oil spills in the Midwestern Great Plains of the U.S. (beyond what already might occur from the existing oil pipeline network).  However, the size of Northern Gateway would probably be expanded to scoop up the volumes that would have gone south to the U.S. via Keystone XL — and there would be at least an equivalent if not greater risk of spills along the Northern Gateway pipeline route across the Canadian Rockies or in the Pacific Ocean or along the pristine B.C. coastline.

In other words, if the opposition succeeds and the U.S. doesn’t allow Keystone XL to happen, it probably won’t end up helping the environment anyway.

Instead, all it would do is piss off our friendly neighbor:  note that Alberta has enacted the only binding carbon emission reduction program in North America, and standing in Canadian shoes for a moment, it would be more than a little annoying to be scolded by Americans for climate malfeasance when the U.S. hasn’t done jack-squat on the issue.

In addition, denying Keystone XL would only cause the U.S. to import more oil from other less-friendly and farther-flung places — perhaps at higher net out-of-pocket costs to American consumers to boot.  Although I suspect the estimated impacts are overblown, there would also be the foregone economic development benefits to the U.S. associated with constructing and operating the Keystone XL pipeline if it’s installed.

So, notwithstanding the good intentions of those who are against Keystone XL, I respectfully can’t agree with their position.  As I recently wrote to my good friend Stefanie Spear, publisher of EcoWatch Ohio, even if I don’t like the facts, I can’t dismiss them.

I can’t see any way around concluding this:  since it’s probably about a wash from an environmental standpoint, the U.S. should allow Keystone XL, so that we can at least obtain the economic and geopolitical benefits that trading with our preferred partner Canada (instead of, say, Venezuela or Saudi Arabia or Nigeria) affords.

Based on recent statements by Secretary of Energy Chu and insider rumors about the leanings of the State Department (which is the lead agency in reviewing the Keystone XL proposal), I suspect the Obama Administration will grant approvals for Keystone XL, because they sense the calculus of these tradeoffs.  A final decision is due by the end of 2011.

The problem is not Keystone XL.  Our problem is actually quite simple, although completely different:  we — especially the profligate U.S., but the whole world as well — need to stop using anywhere as much oil as we do. 

Only when we reduce the consumption of oil in a meaningful way will we meaningfully reduce emissions from oil burning, environmental degradation associated with oil recovery, and risk of oil spills in transportation.  

Arresting the development of a new oil pipeline is merely re-arranging the deck chairs on the Titanic.

We need to kick our “addiction to oil”, as acknowledged by President Bush way back in January 2006, not worry about where the oil is coming from.  Only when we start weaning ourselves off oil will projects like these not happen — because they won’t provide good financial returns as demand for the stuff falls. 

Getting off oil in a big way very quickly would only happen if there were  large/rapid shifts in non-petroleum (electric, natural gas or biofuel) vehicle penetration, massive expansion of public transportation, and/or major reconfiguration of 21st Century  live/work/shop/play patterns.

I would rather the protesters turn their energy towards rerouting the pipeline around the Ogallala — perhaps the most well-grounded concern.  

Otherwise, I would like to see more outrage directed towards the more useful aim of actions to reduce oil demand for transportation — higher fuel taxes, carbon emission reduction requirements, public transportation, smart growth zoning, R&D programs for biofuels and batteries.  And, towards reducing coal demand for power generation too.

Without major declines in world oil demand, stopping Keystone XL really won’t matter much from an environmental standpoint, no matter how much James Hansen and others wail.  The protesters can win at best a symbolic victory.


What If…?

…someone invents an economically-competitive energy storage technology that could be deployed at any electricity substation at megawatt-hour scale?

…the power grid were brought up to 21st Century standards to match the true power quality needs of our increasingly digital society?

…high-speed rail was not the exclusive province of Europe and Asia?

…customers had real choice about electricity supplies, via ubiquitously cost-effective on-site generation options?

…cities and industries pursued viable cogeneration options with real vigor, and companies like Echogen revolutionize the capture of waste heat?

…the use of fracking was reliably paired with other technologies and solid oversight to assure that local water quality is not harmed when shale gas is produced?

…recovering coal and tar sands was undertaken only via mining approaches that don’t leave huge gouges in the earth’s crust?

…all companies involved in the mining and burning of coal would honestly acknowledge and deal responsibly with the environmental challenges associated with coal?

carbon sequestration technologies are more than just a pipe dream and can be widely applied with confidence that no leakage will occur?

…environmentally-responsible technologies were commercialized to produce oil from shale in the Piceance Basin, making the U.S. self-sufficient for years to come?

Joule is really onto something and can produce liquid fuels for transportation directly from the sun?

…fuel cells expand beyond niche markets via continuing improvements in technology and economics to penetrate mass-market applications?

nuclear fusion could ever become viable as a technology for generating electricity?

…new technologies for the production and use of energy in a more environmentally-sustainable matter were responsible for a major share of new jobs and economic growth in the U.S.?

…we stopped sending hundreds of billions of dollars overseas every year to fight both sides of the war on terrorism?

…we stopped subsidizing mature and profitable forms of energy?

…we determined that climate change was simply too big of a risk to keep ignoring and decided to tackle the issue out of concern for the future?

…Americans were willing to pay at least a little bit more for energy to help defray the costs of pursuing much — and achieving at least some — of the above?

…we later found out that we didn’t spend that much more money and also found ourselves living on a healthier planet and in a more fiscally-solvent country with a viable industrial future?

…certain fossil fuel and other corporate interests would cease misinforming the public on many economic and environmental issues related to energy consumption?

…Democrats and Republicans could come together and do what’s best for the country rather than what’s best to strengthen or preserve their party’s political power?

…more Americans cared about the above than who wins American Idol, Survivor or Dancing With the Stars?

Interview with Dr. Frank Ling on Climate Change Mitigation and Adaptation

Our longtime portal manager, and editor of the weekly newsletter is a researcher at one of the top climate change research institutes in the world, where among other projects he is editing a book on climate change. He was recently inteviewed by Green Japan on the subject of climate change mitigation and adaptation.

Dr. Frank Ling on Climate Change

Frank Hiroshi Ling is a climate policy researcher. In this part of interview, he talks about what brought him to this area and analyzes the results and solutions of climate change. With the help of policy and technology, what can we and the government do to help solve climate change issue and other issues?

Frank’s bio, for those of you who haven’t met him.

Frank Hiroshi Ling is a climate policy researcher and entrepreneur. He has extensive experience in scientific research, environmental and energy policy, and media. Currently based in Japan, he is a researcher in climate adaptation at Institute for Global Change Adaptation Science (ICAS) at Ibaraki University. He also works with IGES as an editor of the forthcoming book “Transition to Low Carbon, Climate Resilient Asia: Opportunities and Challenges.”

Dr. Ling is also the host and co-creator of the Groks Science Show, a highly humorous and popular radio and podcast program, with Dr. Charles Lee. In addition, Frank oversees Cleantech.Org, a web portal for catalyzing investments in new technologies that promote environmental sustainability.

Dr. Ling received his Ph.D. from the Department of Chemistry at the University of California at Berkeley and was a post-doctoral fellow at the Renewable and Appropriate Energy Laboratory and at Lawrence Berkeley National Laboratory (LBNL). Frank received his Bachelors of Science in Chemical Engineering from Caltech and his MS degree from the University of California at Santa Barbara. He has received numerous awards for his research and contributions to science education. In 2006, he received the Mass Media Fellowship Award from the American Association for the Advancement of Science. He has also been a Mirzayan Science & Technology Policy Graduate Fellow at the National Academy of Sciences in Washington, D.C.

The Thorny Nexus: Science and Religion and Politics and Climate Change

by Richard T. Stuebi

A fascinating article in Slate noted that 55% of scientists in the U.S. are Democrats, as opposed to 6% Republicans (with the remainder being independents or “don’t know”).  Since most Democrats favor action on climate change, so do most scientists. 

The implication, as the Slate article says:  “the results of climate science, delivered by scientists who are overwhelmingly Democratic, are used over a period of decades to advance a political agenda that happens to align precisely with the ideological preferences of Democrats.  Coincidence — or causation?”

The flip-side of this equation is religion.  Gallup has found that Republicans tend to be more religious than Democrats.  And, Republicans are generally more skeptical about the climate change phenomenon — (1) whether it’s happening at all, (2) even if so, whether human activity is causing it, and (3) even if so, whether it’s worth spending anything more than zero to do anything about it.

It also follows, then, that there is a negative correlation between religious belief and concern about climate change.  Put more simply, the more a person has religious faith, the less a person tends to worry about climate change.

If religious fervor can be quantitatively assessed, then it’s safe to say that evangelicals would get a high score, and it seems to be the case that evangelicals are especially adverse to the climate change issue.

As reported in the New York Times article “An Evangelical Backlash Against Environmentalism”, a non-profit evangelical organization called the Cornwall Alliance calls the environmental movement a “false religion”, and has issued an educational program titled “Resisting the Green Dragon” to warn Christians that the forces of radical environmentalism are seeking tyrannical control over all other beloved institutions such as God and country. 

To make matters more confusing, a court in England ruled in 2009 that a belief in climate change can be considered a religion in itself.

With respect to climate change, the “Evangelical Declaration on Global Warming” is well worth reading in its entirety to get a flavor of the position of the Cornwall Alliance.  It’s a far cry from the “creation-care” movement that other less-strident Christians have embraced, using theology as a foundation for planetary stewardship. 

It would appear that the ages-old schism between religion and science has therefore appropriated climate change as the newest issue over which to tangle.  Since the two U.S. political parties tend to cleave pretty neatly also alongside the science/religion divide, it makes the climate change debate particularly thorny and hard to untangle in either our churches or our legislatures, since strongly-held beliefs are always more emotionally powerful than facts.

7 Book Reviews in Cleantech and Energy

Sandor Schoichet s a longtime Cleantech Blog reader, and Director of Meridian Management Consultants.  Sandor has EE and SM degrees in Electrical Engineering & Computer Science from MIT, where he studied artificial intelligence, office automation, and business process reengineering, and completed a joint program in Management of Innovation at the Sloan and Harvard business schools. He holds undergraduate degrees in Information Sciences and Philosophy from UC Santa Cruz.  He published these book reviews on our sister site, and following our Cleantech Bookshelf,  we liked them so much we’re republishing them here as a Reader’s Choice Bookshelf.

Natural Capitalism: Creating the Next Industrial Revolution
by Paul Hawken, Amory Lovins, L. Hunter Lovins

If there was one key to turning around the damaging business and environmental practices of modern culture, what would it be?  ‘Natural Capitalism,’ the seminal 1999 call for a broader focus on sustainability, presents an overwhelming case that the key is resource efficiency and effectiveness.  Just as conventional capitalism is all about using financial capital effectively, so ‘natural capitalism’ is about expanding that bottom line focus to include the  natural resources and ecosystem services underlying the ability of business and society to function in the first place.  The authors argue that with appropriate shifts in business perspective and government policy, our economy could be something like 90% more efficient in its use of irreplaceable natural resources, thereby mitigating ecosystem impacts, enabling global development, and staving off climate change.

Throughout history, until very recently, man has been a small actor in an overwhelmingly large world.  Most of the book explores how this has given rise to our ingrained cultural patterns of wasteful resource utilization, limited focus on capital efficiency, and drive for production volumes, while assuming unbounded access to subsidized natural resources and ‘free’ ecosystem services.  Shifting perspective to include natural capital on the business balance sheet, and to expand lean manufacturing principles beyond the factory walls is what’s required to address the ecology/climate change nexus.  This change in perspective is embodied in a range of sustainable business concepts, including the ‘triple bottom line’ (profits, people, and planet), and the ‘cradle-to-cradle’ model for recycling products and integrating industries to eliminate ‘waste’.

The basic principles of natural capitalism put forward can be summarized as: (1) focus on natural resource efficiency (2) using closed loop, biomemetic, nontoxic processes (3) to deliver more appropriate end-user services (4) while investing in restoring, sustaining, and expanding natural capital.  Following these principles leads not to constraints on business or lowered expectations, but an enormous range of new business opportunities to profit from improved efficiencies and environmentally beneficial activities.  One of the best expressions of this perspective comes in the discussion on climate change, providing a refreshing contrast to the recent spate of bad news on this front: “Together, the [available business] opportunities can turn climate change into an unnecessary artifact of [our] uneconomically wasteful use of resources.”

While the authors deliver an awesome, deeply researched articulation of their vision, showing with many examples why it’s important and how it can work within our current capitalistic economies, the book has two key flaws.  First, it falls prey to the syndrome first articulated by Paul Saffo, founder of the Institute for the Future, of confusing a clear vision of the future with a short path.  This combines with an  excessive reliance on sheer volume of examples to make their points, too many of them poorly explained, bristling with non-comparable numbers, and substituting hand-waving for real outcomes.  Deeper exploration of fewer examples might have illustrated the principles better, and have been much easier to read.  Also, 11 years after the original publication, many of the examples are seen to be hastily chosen and and used to support glib and overreaching conclusions that make the authors seem naive.  Examples include the advent hydrogen powered cars (“hypercars”), the potential for shutting down Ruhr Valley coal production in favor of direct social payments to coal workers, or the imminent triumph of the Kyoto Protocols for international carbon trading.  And, while much attention is paid to articulating the perverse incentives, misguided taxes and subsidies, and split responsibilities that impede more efficient system approaches, there’s short shrift given to new technology adoption rates, the scale of existing infrastructure investments, or the political complexities of changing incentives and subsidies.

However, if you are interested in understanding the genesis and foundations of the modern sustainability movement, this is a fundamental text.  Despite its flaws, after 11 years the fundamental argument and principles hold up well and are still inspiring.

Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future
by Robert Bryce

Bryce bills himself as a purveyor of “industrial strength journalism,” and ‘Power Hungry’ doesn’t disappoint. Starting with a clear statement of his own energy policy – “I’m in favor of air conditioning and cold beer.” – Bryce provides a muscular, data-driven analysis of our modern industrial civilization and the changing mix of energy sources that power it. This is an eye-opening discussion that does an unusually good job of conveying the scale of our existing energy infrastructure, and the challenge of providing adequate energy supplies for the future, not just for the US and Europe, but for the developing world and the third world as well, under the constraints of economics and decarbonization. Bryce articulate four energy imperatives – power density, energy density, cost, and scale – and uses them as a consistent framework for looking at what he calls the “Myths of Green Energy.” His “myths” run the gamut from the idea that wind power can really reduce overall CO2 emissions, to the idea that the US lags other countries in energy efficiency, to the idea that carbon capture and sequestration could work at scale, and intriguingly, even the idea that oil is a dirty fuel compared to the alternatives. While the debunking of green alternatives has flaws, especially in the lack of attention to advanced biofuels, smart grid technologies, and green building materials, it is refreshingly apolitical – focused on facts, practical alternatives, and the requirements of scale. In some ways Bryce ends up with conclusions similar to those of Bill McKibben in his recent book ‘Eaarth': we will not be able to turn the tide on atmospheric CO2 quickly enough, the scale is too large, the transition times are too long, the pressure for global development is too great. We will have no choice but to mitigate some problems and adapt to the rest. However, instead of advocating acceptance of a “graceful decline” as McKibben does, Bryce lays out an energetic path forward, a “no regrets” policy he dubs N2N: shifting electrical generation aggressively towards natural gas in the near term, while investing in advanced nuclear technologies for the long run. The strongest element of the book is how he effectively links the future economic health of the US with rising prospects for the rest of the world … and that will take massive quantities of carbon-free power, not only for economic development, but for mitigating unavoidable climate change impacts as well. ‘Power Hungry’ is a challenging and valuable read for everyone interested in green energy and an effective response to the climate crisis.

Whole Earth Discipline: An Ecopragmatist Manifesto
by Stewart Brand

Brand, as ever, is a clear and forceful writer, fearlessly putting himself on the line with specific recommendations and a call to action. This is the Plan missing from Al Gore’s otherwise excellent textbook, ‘Our Choice: A Plan to Solve to Climate Crisis’ –harder-edged, more urgent, more tech-savvy, willing to name names, kick butt, and provoke a reaction. This is the place to start if you’re ready to move beyond the conventional green perspective and really get a grip on what responding to the climate challenge entails. Frightening and exhilarating at the same time!

Eaarth: Making a Life on a Tough New Planet
by Bill McKibben

I’m conflicted about this book, and McKibben’s style in general. First, this is a valuable contribution to the debate about how to think about climate change and appropriate goals for our planetary future. McKibben actually presents many good ideas (in the second half of the book), rooted in a realistic and compelling vision of how our world is changing and how we need to adapt. However, his writing style, especially when presenting bad news (the first half of the book) is just “one damn thing after another,” an endless listing of specifics without adequate context or meaningful analysis … he apparently does not understand that anecdotes are not evidence. While he makes his argument most energetically, and has lots of suggestive detail that appears to support it, in the cases with which I am directly familiar he is guilty of taking things out of context, then making gross simplifications and overreaching generalizations. And this is too bad, because, overall, I think he’s basically right, and that his suggestions for change are excellent. Probably the most important aspect of this book is simply his tough, clear-eyed situation assessment of the damage that’s already been done, the building momentum of environmental change, and the need to get on with a meaningful response. I worry, though, that by beating us over the head with a stream of bad news, and then framing his suggestions for a response in terms of achieving a “graceful decline”, too many people will be turned off and won’t hear the good ideas towards the end of the book. The grand project of changing our culture so that we can live in a durable and robust symbiosis with our environment on a global scale … that’s not a graceful decline, but a call to help create a new age as exciting as any that went before.

Turning Oil Into Salt: Energy Independence Through Fuel Choice
by Anne Korin, Gal Luft

This slim volume is the clearest and most direct analysis I’ve yet seen of oil’s position as a strategic commodity, and the potential for open fuel standards to enable a market-based pathway to transportation fuel choice. Especially notable for its independent perspective … we hear so much about the need for ‘drop in’ petroleum equivalents and the ‘ethanol blend wall’, but not nearly enough about other approaches that might emulate the open interface model that has driven the phenomenal growth of the internet. Absolutely required reading for anyone interested in clean energy, the potential contribution of biofuels to achieving energy security, and the practical steps that we need to take to move down the path.

Science as a Contact Sport: Inside the Battle to Save Earth’s Climate
by Stephen H. Schneider, Tim Flannery

If you care about the big picture of climate change that’s driving the urgency behind global environmental agreements and the commercialization of greentech, then Schneider’s ‘Science as a Contact Sport’ is must reading. The book achieves two objectives in an engaging and forceful manner. First it is a great introduction to the science of climate change, presented through Schneider’s personal experience as a key participant in its development. And second, it provides much-needed insight into how the issue has played out in the US legislature and the global media, again from an up-close and personal point of view. Democracy and government are both messy systems, but still are forums where the environmental and greentech communities must ultimately triumph, and Schneider’s personal experience should be of value to everyone engaged in the battle. Some elements of Schneider’s message echo Al Gore’s discussion in ‘The Assault on Reason,’ but are presented in a clearer, more direct, and better operationalized manner. Highly recommended!

Why We Hate the Oil Companies: Straight Talk from an Energy Insider
by John Hofmeister

Hofmeister writes with refreshing directness and lack of pretense about two key ideas: the disconnect between “political time” and “energy time” that drives legislative dysfunction in energy and environmental planning; and his own proposal for an independent Federal Energy Resources Board to fix it. Most of the book is a walkthrough of the current US energy business and infrastructure … the “straight talk from an energy insider” part. He convincingly lays out an array of problems with the approaches advocated by just about everyone, from left-wing environmentalists, to right-wing “infotainers”, to the energy and utility power industry itself … with special scorn for the disastrous and long-running failure of our elected officials of all stripes to address our energy needs in a serious manner. The book provides a prescient and unnerving in-depth background to current newspaper reporting on the BP spill disaster in the Gulf (it went to press just before the explosion and blowout). Hofmeister is on less firm footing, however, when he switches to his proposal for an independent energy regulatory agency modeled on the Federal Reserve. While he surely gets an ‘A’ for boldness and for thinking outside the box, how this is supposed to work and how we are supposed to get there in advance of a national energy disaster akin to the Great Depression, are both left up to “grassroots pressure.” All I can say is that I hope his non-profit, Citizens for Affordable, is successful at pushing his ideas onto the national stage, and helping to build a consensus focus on practical solutions. Highly recommended … wherever you stand on these complex issues, Hofmeister will push your buttons and make you think about what a real solution might look like.

Bonn Voyage – Time to set sail to a new Climate Archipelago

In my last set of observations (see Kill Bill V2 and the Cancun COP), I tried to make the case that the 20 year old UN system that manages intergovernmental climate affairs is increasingly archaic.  Rather than just complain and wander off muttering under my breath, these next blog blasts represent a few ideas might  enable the UNFCCC to enhance its  relevance, while not asking it to undertake tasks it is ill equipped and underpowered for.  And I think it’s clear that we need to shake some things up – somehow or another.

As they say in real estate, location is everything.  The German government offered Bonn as the home for the UNFCCC Secretariat back in 1995 at the first Conference of Parties in Berlin.  Which, as an aside, was attended by all of 1000 people – fewer than 3% of those who attended Copenhagen last year.   Bonn was, of course, the capital of West Germany during the Cold War, but the reunified government had quickly committed to repatriating to its historic home of Berlin.  In a blink of an eye, Bonn moved from being the capital of the strongest economy in Europe to a city that probably doesn’t  even crack top ten in its own country.  Just for comparison sake, my list would be Berlin, Frankfurt, Munich, Cologne, Stuttgart, Hamburg, Dusseldorf for certain – and Bremen, Dortmund, Essen, Hanover, Leipzig, Heidelberg, Aachen, Karlsruhe and the like jousting with Bonn for the last three slots.

If the world community wants to send signal how important climate change is, housing this crucial function in Bonn is like sending a Lada with a broken exhaust to pick up the CEO at the airport after a 12 hour flight.  People get fired for doing things like that.  Staying with Bonn at this point just because it is there is a firable offense in my mind.  It shows we are not serious.

This goes beyond just the perception – there are functional problems in the fact that Bonn’s is little more than an innocuous northern European city.   Talented people choose not to apply for UNFCCC jobs simply because they involve Bonn postings.  Every time a meeting in Bonn crops up, one invariably finds multiple Facebook posts groaning about having to go to Bonn.  For most hard core climate negotiation participants, the idea of yet another stay at the Maritim hotel brings on thoughts of ritual seppuku.  OK, that’s a bit strong, but suffice to say few people get a perk in their step when receiving notice of yet another need to come to Bonn

The results are exceedingly problematic.  In the most interconnected issue the world has ever faced, our lead agency on the issue is inherently isolated and insular – largely due to the tyranny of geography and a choice made at a very different time.  Profound developments are occurring in low carbon technology, finance, business models and policy.  Yet the globetrotting class that is moving heaven and earth to develop these tools has utterly no reason to ever just schedule a side meeting and have a cup of coffee with the Secretariat to mutually learn.  One must always justify  a dedicated trip see the UNFCCC secretariat in its home environs  – a fundamentally irrational situation.  Because in the climate and cleantech space, there is utterly no other reason to ever go  to Bonn.  The result is a dysfunctional entente, in which the outside world and the UNFCCC have substantial mutual incomprehension of eachothers capabilities and roles.

While Bonn is undoubtedly the wrong place, that certain does not mean that there is a single right place.  The scope of the climate issue and mission has grown enormously over the past fifteen years and ideas are flowing from all corners of the globe.  Perhaps we need to rethink the UNFCCC Secretariat as a global archipelago of issue focused units.  One can imagine a half dozen plus of regional bases, bristling with high end video conferencing and other telecommunications.  Grab the the conceptual framework  of Richard Branson’s Carbon War Room (think about the situation room in 24) and ask Apple, Cisco, Google, IBM and SAP outfit the archipelago with every bit of relevant technology and database IP to make them an example of a truly global best working practice.

Current meetings that Bonn hosts could become partially virtual (with small groups of participants convening at the local regional hub).  We’d even probably save some greenhouse gases, though we might have the problem of Lufthansa demanding compensation for lost revenue.

What might this archipelago look like?  We’d probably want to look for cities that are already in the midst of key green transformations and have certain green reputation.  Purely off the top of the head, one might think Masdar City (sustainable cities), the San Francisco Presidio (R&D) Rio de Janeiro (biofuels)  San Jose, Costa Rica (development issues), Melbourne (clean coal), Shanghai (transportation)  and probably still Bonn (coordination and governance).   The real fight would, of course,  be for the finance seat.

Of course there will be overlap and turf battles – that happens in any dynamic work area.  But frankly, the UNFCCC could use a bit of dynamism and I’d rather have units stepping a bit on eachother’s toes for ideas and people, rather than abetting the idea that fighting climate is about setting up the right comprehensive bureaucracy.    Make it an exciting place to be – not another UN agency backwater.

To the good people and civic leaders of Bonn, I ask your forgiveness for my blunt words and I truly mean no disrespect.  Like many of my colleagues, I have walked your pleasant streets many times and had my fair share of your delicious fresh beer and streetside currywurst.  You are a good place and I believe you should continue to be a spoke in the climate world.  But it’s time to step up, be big and let the rest of the world share the burden – and the opportunity – that managing global climate change represents.  From Bonn, we must sail forward.

OPIC To Mobilize $1 Billion To Assist Developing Nations in Combating Climate Change

Agency to open a call for proposals from private equity fund managers; announcement made at UN Climate Change Conference in Cancun

CANCUN, Mexico – Elizabeth Littlefield, President and CEO of the U.S. Overseas Private Investment Corporation (OPIC), announced today that OPIC will provide at least $300 million in financing for new private equity investment funds that could ultimately invest more than $1 billion in renewable resources projects in emerging markets. The announcement was made at the United Nations Climate Change Conference.

OPIC’s mobilization of these funds represents one of the largest initiatives by the U.S. Government to support the international effort to mitigate climate change.

“When President Obama and global leaders negotiated the Copenhagen Accord in December 2009, they included a financial commitment to help developing countries reduce their greenhouse gas emissions and adapt to the effects of climate change. OPIC-supported investment funds represent an important and innovative step toward the realization of that goal,” Ms. Littlefield said.

OPIC will issue a “Global Renewable Resources Call for Proposals” for private fund managers investing in a wide variety of businesses promoting renewable energy and the sustainable utilization of natural resources such as energy, water, and land.

Specifically, the funds will accelerate investment in renewable energy, including solar, wind, hydro, tidal, geothermal power as well as waste and biomass. Investments in agriculture, land, and water may include efficient irrigation, cold storage, transportation, water treatment, sustainable forestry, natural resource preservation, and forest rehabilitation. OPIC will also place particular emphasis on the efficient utilization of natural resources via investments in energy efficiency products, systems and equipment, emissions control, and waste management.

The call for proposals will open for submissions on December 15, and remain open until mid-February. Information about the call may be obtained on the OPIC website,, on December 15.

Kill Bill Volume 2 and the Cancun COP

Quentin Tarantino’s Kill Bill, Volume 2 is one of my favorite movies.   It penultimate scene – a final confrontation of vengeance  from the wronged Beatrice Kiddo (aka, The Bride, aka, Black Mamba, aka Uma Thurman) and the evil, yet oddly amiable and ambiguous, title character (aka, the great David Carradine) is perhaps the finest in the film.  For those of you unfamiliar, shame on you.  In a nutshell, at the outset of a fight that will certainly require a major furniture allowance, the Bride suddenly executes the most exquisite sequence of strikes on the all of Kung Fu – the Five Point Palm Exploding Heart maneuver.  Bill – to his utmost surprise – finds his greatest disciple has surpassed him (their thousand year old kung fu master played by Hong Kong action master, Gordon Liu, had not deigned to pass this knowledge to him) and bows to her grace and superiority.

Why am I, sitting here on the beaches of Cancun, reminiscing about Tarantino’s oevre?  Well, it’s because of the way the Five Point Palm actually operates, explained via foreshadow earlier one by Bill himself.  It is not instant death – far from it.  The victim feels perfectly normal – except in his fifth step after the strike, his heart explodes and he drops dead.  It creates – literally – a perfect example of the walking dead.  Which is what brings us to the Cancun COP – climate’s first full gathering after the Copenhagen Five Point Palm Exploding Heart debacle.

Cancun is Bill getting up from the couch and taking that first proud step to his inevitable demise.  Everything here looks normal, feels normal – the mass ant colony of climate has done is annual migration to another odd corner of the world and set up shop. It’s lower energy than Copenhagen, Bali, the Hague or Kyoto, but that’s to be expected – off year COPs always go through these cycles

But make no mistake, COP/MOP process in its original form is most certainly the walking dead.  The fundamental political dynamics around past and future carbon responsibility in a world transitioning to new global multipolar balance (a dizzy prospect in its own right) have not been remotely resolved.  The chasm we saw in Copenhagen is not close to being bridged and there appears no way it ever will be bridged in this particular UN process.

To quickly review the dynamics of this particular Mexican standoff, developing countries continue to insist on an extension of Kyoto emission caps on industrial countries as the fundamental policy to engage mitigation.  Simultaneously, more and more industrial countries refuse to continue down that path.  While there are many other issues – macro and micro – this alone is a pretty binary choice and neither side is ever remotely likely to move.  Since the UN process is intrinsically based on 100% consensus, well – it ain’t gonna happen folks.  This  is my ninth COP/MOP total, my fifth in a row and these tensions are not getting better, they are getting worse.

Therefore – for all intents and purposes – the CMP process dead in its current configuration and the question is how many steps we will take before we too collapse in a heap.  For the record, cinema buffs debate  whether Bill died on his fifth or sixth step off the couch.  If each COP were a step, Tarantino’s model means we have another five years to go before we final collapse. Somewhat sickeningly, that feels about right.  Unlike David Carradine – who had total awareness of his fate – my guess is that substantial parts of the COP ant colony continue to delude themselves that this process represents the only relevant forum for climate management.

The COP process has become is own raison de etre and its existence seems increasingly  isolated  from the real innovation that countries, companies and other aggregations are attempting to address small fragments of the problem.  Basically, what goes on for two weeks inside these halls of official dialogue is a shadow game with little relevance to actual decision making around carbon policy, innovation and investment in the world that 6.5 billion people inhabit.  And vice versa.  And when when institutions exist simply for the reason that they exist under their own life force, a serious rethink is in order.

If we solely focus another half decade to supporting this particular paradigm, we may indeed be accused by our grandchildren of fiddling while Rome (and many other places) burned.  The efforts that thousands of negotiators and tens of thousands of other participants undertake to address the climate challenge through the COP process are undoubtedly real and important.  They are, however, driving toward an inevitable dead end.

The UN process as a intermediary of economic and environmental value between countries no longer holders up to scrutiny.  Being honest, we must recognize that the UN and CMP texts of the last decade do represent some agreement to abrogate  sovereignty – and for countries who are finding their way in a new global political  dynamic, this is likely a bridge too far.   Given the other forces at work, that simply is not a realistic assumption to make during such a fundamental power transition such as we find ourselves

This is not to say the UN does not have a role going forward – far from it.  My very good friend Christiana Figueres is now the ringmaster of the circus and if there is a human being on the planet who can recast the intergovernmental role positively for  our species and our fellow  earthlings, she’s the one I’d put my money on.  In my next installment in the next couple days, I’ll lay out some ideas for reinvigorating this UN processes relevance, making it so real climate mitigation work and UN support can walk hand in hand, as opposed to in parallel paths around the climate policy maze.

California’s Cleantech War – Prop 23

According to pick your favorite cleantech and carbon media outlet, California is at war. 

AB 32 is California’s carbon cap and trade law.   The law is most the way ready to implement, with the rulemaking in process now.  It’s aimed squarely at two goals, one, reduce California’s greenhouse gas emissions, and two, since such a reduction is largely symbolic without the rest of the world participating as well (CO2 is the only environmental pollutant that really doesn’t care where in the world it goes in or comes out, so is a truly global pollutant requiring a global response) continue California’s trend of environmental policy leadership, and be the beacon on the hill.

As it currently stands, AB 32 rules (as with most of these things the devil’s in the details, and the 2008 law takes a long time to work out the details) are supposed to be ready to go at the end of this year, and implemented in 2012.

Proposition 23 is an initiative on the ballot designed to indefinitely delay implementation of AB 32.  And for the record, if you don’t click that link at least read the Legislative Analyst’s analysis, I suggest you skip the vote.

The actual impact according to the California voter information guide would be to suspend part of the measures in the Scoping Plan (California’s overall GHG Plan), targeting about half of the emissions in the Scoping Plan:

“Various Climate Change Regulatory Activities Would Be Suspended. This proposition would result in the suspension of a number of measures in the Scoping Plan for which regulations either have been adopted or are proposed for adoption. Specifically, this proposition would likely suspend:

  • The proposed cap–and–trade regulation discussed above.
  • The “low carbon fuel standard” regulation that requires providers of transportation fuel in California (such as refiners and importers) to change the mix of fuels to lower GHG emissions.
  • The proposed ARB regulation that is intended to require privately and publicly owned utilities and others who sell electricity to obtain at least 33 percent of their supply from “renewable” sources, such as solar or wind power, by 2020. (The current requirement that 20 percent of the electricity obtained by privately owned utilities come from renewable sources by 2010 would not be suspended by this proposition.)
  • The fee to recover state agency costs of administering AB 32.

Much Regulation in the Scoping Plan Would Likely Continue. Many current activities related to addressing climate change and reducing GHG emissions would probably not be suspended by this proposition. That is because certain Scoping Plan regulations implement laws other than AB 32. The regulations that would likely move forward, for example, include:

  • New vehicle emission standards for cars and smaller trucks.
  • A program to encourage homeowners to install solar panels on their roofs.
  • Land–use policies to promote less reliance on vehicle use.
  • Building and appliance energy efficiency requirements.”

Because it is expected to scrap CARB’s proposed expansion of the California RPS to 33% of power from renewable sources up from the current goals of 20% (we’re not there yet), and the removal of the planned Low Carbon Fuel Standard, the entire cleantech sector is up in arms. 

Contrary to popular opinion, a Yes on Prop 23 probably won’t gut the cleantech sector – since cleantech is global and California’s cleantech companies are driven by programs well beyond its borders, since all the major programs Prop 23 affects haven’t actually been enacted yet and several key programs would be untouched (as well that the LCFS probably gets served by things other than cleantech biofuels anyway at least in the first years).  But it would cut into the future growth of renewables in the state a few years down the road, esp wind and large scale solar.

What it would definitely do is kill the nascent push in the US towards real cap and trade just a month ahead of the next round of international climate change negotiations in Cancun.  Quite frankly if California can’t deliver on its own cap and trade law, who else can?

And it would send a signal to the world that California voters are not quite as ready to be the beacon on the hill for environmental issues as they once were.

Will it hurt the economy and kill jobs if we don’t pass it and AB 32 continues?  Unfortunately it depends, with the pain more certain and likely nearer term, and the huge economic benefits more uncertain and likely longer term – though quite substantial in possibilities.  Yes, in the short term and medium term LCFS and 33% RPS and cap and trade will push up power prices and fuel prices in California, hurting consumers, and pushing some production out of the state (if other states and countries don’t continue to match the increased regulation).  That’s why it’s called alternative energy – it’s still more expensive.  But yes, it will probably simultaneously catalyze more venture capital investment (VC services is a big export for us), carbon markets investment (I know about two dozen companies that moved into California specifically because of AB 32 and its first mover advantage in US cap and trade and I helped bring 2 of them in myself), and certainly add some manufacturing and construction jobs in the cleantech sector. 

Net net, higher energy and manufacturing costs in California and an effective renewable and carbon quota mean economic losses in comparative advantage and to consumers in California.  But how much depends on exactly how good a job it does of catalyzing jobs in California for export or replacing business that we currently import to offset that.  And it is very, very hard to underestimate how good California’s environmental leadership has been at catalyzing US and global change.  Meaning the that comparative advantage loss may be short-lived (higher power prices from more low carbon renewables don’t cost California many jobs if its competitors adopt effective carbon prices as well), and if a new export industry and venture capital emerges to be a world leader (which basically pulls dollars from all around the world into Silicon Valley) it means more new California jobs gained than those lost from the comparative advantage shift, then all is good.

Unfortunately, some of that depends on how well CARB actually designs the final rules, and my big fear for California on AB 32 stems from how badly the state screwed up its last major energy deal – power deregulation.  Keep in mind Texas got that one right, and California’s was a fiasco (then as now blamed on the Texans – but I can buy 100% wind power for 11.4 cents a Kwh flat rate in Texas).

So, vote yes, and kill AB 32, and carbon leadership, and ding the rest of the cleantech sector, and you’ll probably never feel the impact in you pocket book (or realize it if you do).  But if you vote yes, you lose all moral right to claim cleantech and environmental leadership for the state.

Or vote no, and keep the state headed in the direction its going – leadership in renewables and carbon, and signal to the world that you care.  More than that, you tell yourself you believe that policy enabled innovation can change your fortune for the better, and outweigh the investment.  That’s technology and venture capital, and that’s what California does best. 

But please, vote for what *you* believe – not because the cleantech sector is screaming that you’re taking away their subsidy or because a couple of independent Texas oil companies are funding the no vote (they are, but to be fair, they provide a lot jobs and taxes to the state, California has not exactly gone out of its way play fair for them in the implementation of AB 32).  And don’t vote one way or the other just because you think it create or kill jobs – because which way the net outcome sways lies on our shoulders, too, from policy makers and CARB staff to the energy industry to the California consumer and business who will pay the final price and reap the final reward either way. 

Neal Dikeman is a founding partner at cleantech merchant bank Jane Capital, has help found or has interests in businesses in carbon (as founding CEO of Carbonflow), solar, superconductors, and green products, and personally stands to lose a lot of money if Proposition 23 passes and AB 32 goes down.

Jeremy Grantham on Climate Change

Richard T. Stuebi

Jeremy Grantham is one of the world’s most successful investors, over a very long period of time. He founded Grantham Mayo Van Otterloo in 1977, which now manages $100 billion of capital for sophisticated investors from around the globe. He tends to take positions for his clients that anticipate the formation of bubbles and defend against their collapse. His quarterly newsletters are extremely well-written: thoughtful and deeply researched. In short, he’s someone who’s thoughts matter, and the thoughts of his readers also matter.

So it’s with extreme interest to me that Grantham devotes pages 7 and 8 of his most recent quarterly newsletter to the issue of climate change. It’s well worth reading. He breaks down the topic in a way reflecting the mind of a long-term strategist who is smart enough to understand risk-reward tradeoffs in a world of imperfect information. And, of someone who is deeply concerned about the environment — as reflected by his founding of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.

His closing paragraph is both stunning in its sweep and unsettling to those of us in the cleantech capital markets: “Global warming will be the most important investment issue for the foreseeable future. But how to make money around this issue in the next few years is not yet clear to me. In a fast-moving field rife with treacherous politics, there will be many failures. Marketing a ‘climate’ fund would be much easier than outperforming with it.”

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Nuclear Energy: Threat or Opportunity?

by Richard T. Stuebi

Several months ago, I was asked by the Chagrin Foundation for Arts & Culture, in my lovely home town of Chagrin Falls OH, to speak on the topic of nuclear energy at their Chautauqua-at-Chagrin lecture series this summer.

I agreed, and proposed the title of my talk “Nuclear Energy: Threat or Opportunity?” I thought that it would be kinda catchy, and that I could figure out something interesting to say under that heading.

Well, the talk is tomorrow (Tuesday July 20 at 6 pm ET), so this past weekend, I forced myself to organize my thoughts on what to say. It was more challenging than I had anticipated.

This is because the title of my talk actually turned out to be truly apt: nuclear energy is both a threat and opportunity. There are huge advantages and substantial risks associated with nuclear energy. It’s easy to see one side of the coin or the other, but it’s hard to see and accept both sides of the coin at the same time.

Among the points I intend to make in my lecture:

There is no easy, cheap, one-size-fits-all answer for powering our economy in a way that provides the standards of living we’re accustomed to, at the costs we’re accustomed to paying, in avoiding the bad future to which continued status quo will drive us. Nuclear energy can be a major part of the total solution, but only if we’re willing to accept the costs and risks.

Many people tend to think that nuclear powerplants are inherently dangerous, thinking of Chernobyl. Chernobyl was truly an aberration – all safety systems were intentionally disabled and the plant was pushed to limits as an experiment. (Hey, that’s a really good idea!) Three Mile Island was a more plausible worst-case scenario — and its environmental impact of was/is small relative to the long-term impact of coal mining or burning, or petroleum extraction or refining. The BP Gulf oil spill is far worse of an ecological catastrophe than Three Mile Island, but no-one’s talking about banning oil. Instead of environmental risks, the real risks of nuclear energy are about fuel security and fuel disposal.

The U.S. taxpayer has long heavily subsidized, and continues to subsidize, nuclear energy. With maybe a hundred billion dollars of cumulative R&D funding over the decades, plus substantial tax credits and loan guarantees, the U.S. government has been and remains the biggest benefactor of the nuclear industry. Private industry sure isn’t: there hasn’t been an order for a new nuclear reactor in over 30 years. When opponents discredit renewable energy due to subsidies (which they admittedly do receive), it’s pretty hypocritical: nuclear (and fossil) energy has gotten and still gets far more subsidy dollars than renewable energy has and does.

If we shut down all the nuclear powerplants in operation today, the risk associated with spent fuels would still exist, and emissions would likely go up – at least unless/until enormous amounts of new wind/solar installation were to backfill nuclear retirements. For the time being, the economics of new wind and solar energy (indeed, any new powerplants) are considerably higher than the costs of running existing nuclear plants, so electricity prices would go up if nuclear were to go away. So, shutting down operating nuclear plants doesn’t seem like a promising strategy from either an economic or environmental perspective.

The costs of new nuclear are completely unknown. There hasn’t been a new nuke completed in the U.S. since the 1980’s, and no new orders since the late 1970’s. New designs are on the drawing board, but none have been implemented. Including earning a fair return on investment in new plants, costs could be as low as 8 cents/kwh or as high as 15 cents/kwh. The range is so wide because it could take 5 years or 15 years to complete a new plant – based upon uncertainties about licensing, approval and permitting processes. The cost of new nuclear is generally more than new wind, and while less than new solar today, the costs of new solar should become competitive with technological advancements in the coming years. So, it would seem that this argues for massive wind and solar installation, rather than new nuclear (or new fossil powerplants).

But, it’s not so easy. Wind and solar are not “round-the-clock” – at least unless/until there’s cost-effective energy storage for the power grid (don’t hold your breath). And other options aren’t so appealing either.

New gas-fired powerplants have fairly low emissions and can be approved/built quickly, but price/supply of natural gas is uncertain and highly volatile. New coal powerplants would be an even riskier bet.

Using conventional technology and ignoring greenhouse gas emissions, the cost of energy from new coal powerplants is probably on the order of 6-8 cents/kwh. However, if the U.S. ever becomes serious about dealing with climate change via a carbon policy, then the economics of coal power will deteriorate significantly — either to capture carbon (largely untested and expensive technology) or to pay for the costs of emissions. In a carbon-constrained world, it’s easy to project the costs of new coal power at > 10 cents/kwh. So, if we don’t care about climate change, coal is likely to be the dominant answer, and few new nukes will be built in the U.S.

On the other hand, if climate change matters, then there’s a potential role for new nuclear in the U.S. This role is amplified if we want to deal seriously with the other energy imperative we face: eliminating our reliance on petroleum for transportation. Clearly, we won’t see nuclear powered vehicles. But, with improvements in battery technologies, we can (and likely will) see more electrification of transportation – through plug-in hybrids and even pure-electric vehicles. If/as that happens, we’ll need much more power generation capability — especially if a lot of old coal plants are retired in response to climate legislation. But, where will that new power come from? If we want it to be from zero-carbon sources, and if we’ve already installed as much wind/solar as we plausibly can (assuming no effective grid storage technology), nuclear will be a very interesting option.

Summarizing, the more we try to deal with climate change and oil dependence, the more appealing nuclear becomes. Environmentalists are torn: many oppose nuclear on philosophical grounds based on their perceived risks, while other thought-leaders (e.g., James Lovelock) are nuclear proponents based on the practical realities. Which risks are more pressing: climate change and energy insecurity, or radioactive wastes and weapons materials for terrorists? Those are the tradeoffs upon which tilts the balance for nuclear energy. Americans don’t seem to like that answer: they want no risk and low cost, and whine when they don’t/can’t get it.

On balance, I think the risks associated with climate and oil outweigh the nuclear waste and weapons risks. Accordingly, I tend to think that nuclear needs to be a bigger part of the energy toolkit of the future – at least until ocean-based power generation and/or grid-scale energy storage become economically viable. If nuclear is not to be part of the energy solution of the future, then there will be other costs/risks to bear — some of which could be very dramatic.

If we get it badly wrong, either way, the future of life on this planet may be seriously jeopardized.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

What’s the state of climate change policy these days?

To those you who missed it, below is the link to a web panel on the state of climate change policies and developments that I participated in for Brightalk today.

The panelists:

– Emilie Mazzacurati, Manager, Carbon Market Research North America, Point Carbon
– Chris Busch, Policy Director, Center for Resource Solutions
– Nicholas Bianco, Senior Associate, World Resources Institute
– Neal Dikeman, Jane Capital Partners

Enjoy and post any thoughts in the comments section back on this blog for the rest of us to read.

An Open Letter to Ban Ki Moon on Climate Change

An open letter to Ban Ki Moon in support of an extraordinary friend

Dear Mr. Secretary General,

I am sure that in your position, the volume of unsolicited outreach you receive must be truly breathtaking. I will not add to your never ending inbox, but rather will simply post this note on a friendly blog, with the hope that some of the messages within find their way to you via the osmosis of modern communication.

The climate crisis is no longer confined to the geophysical state of our planet – it has now metastasized into an even more virulent form of crisis involving our collective political and sociological ability to manage this complex issue. The UN has done tremendous work in defining the climate issue for more than 20 years and the accomplishments it has achieved are inspiring. However, there is little doubt that the Copenhagen conference broadly underperformed against the needs we face today.

Copenhagen’s underperformance is having an insidious effect on perceptions of UN effectiveness among even many supporters. It is increasingly considered conventional wisdom that the UNFCCC’s day has passed – that the climate issue must now center on a series of bilateral or regional negotiations and perhaps be centered in more focused organizations like the WTO.

I, for one, do not believe those arguments. I began my accidental career in climate finance in 1993. I was fortunate enough to bear witness to the euphoria of Kyoto, the despair of the Hague and the last second save of Bali. And, of course, Copenhagen – where the sheer enormity and heterogeneity of the issue finally truly stared one and all in the face. Yes, humanity collectively blinked and deferred.

But throughout, the UN process that has tried to manage and coordinate the world’s response has been honorable, dedicated,. You specifically should be commended for making climate the pre-eminent issue of your tenure as the Secretary General. And, it must be recognized that what the UN has been able to accomplish is strictly reflective of the mandates it has been handed by the community of nations. Those mandates have often been halting or ambiguous. However, let us also recognize it’s a two way street – the strength of those mandates is also partially reflective of and the confidence that nations have in the UN, its processes, its leaders and its managers in being a key player at the table in the climate issue.
In this light, you have a major decision to make – one that will set the tone for the crucial coming decade of the climate crisis. You have to hire somebody. As you know, Yvo de Boer announced his resignation from the UNFCCC Secretariat earlier this year. And, as might be expected, there is an emerging horse race among several candidates and I am sure all would serve the post honorably and with energy and enthusiasm.
But to be very frank, at this moment in time, we don’t need adequate, we need extraordinary. We need charisma, we need inspirational leadership. We need somebody who can think outside of the box, – but also somebody with a deep experience of the inner workings of the climate negotiating and regulatory process . And there is only one candidate, in my estimation, who remotely meets that elevated criteria – my good friend, Christiana Figueres of Costa Rica.
Yes, indeed, she is my friend – we have known each other for more than ten years as I built a business around emissions mitigation and she built a formidable reputation as a thinker, advisor, negotiator and regulator across the climate space. Even on paper, I cannot see how any other candidate can match her personal experience in all aspects of the climate conundrum – government, civil society, regulator, private sector, negotiator.
But it is off the sheet of paper where Christiana truly shines – she inspires all who meet her through her intelligence, her humanity, her strength. Most of all, she has a great senses of humor and perspective – which one could argue might be the most important job description components of all, in this hour of need.
To achieve transition to a global, low carbon trajectory, people and governments will need to go the extra mile. With all due respect to the accomplished and dedicated individuals who have run the UNFCCC since its inception, vision, inspiration and leadership rarely seemed part of their portfolio. If it’s really a war on climate, more than anything we need a general who will inspire the troops to do the extraordinary. Those of us who have been in the trenches on this issue for a decade or more are tired and dispirited – in our minds, we have moved mountains, but we step back and it looks more like molehills. I have never seen the climate community as downtrodden as in these few months since Copenhagen. And – again to be honest – you need us fired up and moving mountains.
To the contrary stands the promise of Christiana Figueres – a rallying general from a country without an army (and a country that aspires to full carbon neutrality by 2020). All you need to do is go the the Facebook group that supporters of hers created and that has grown up very quickly over the last few days and scroll through the wealth of testimonials that Christiana has inspired throughout a huge cross section of the climate and development community. Thousands of people from all walks of the climate world know in their hearts that she is the one who can make a difference at this crucial moment. And their voices are raising to be heard by you.
There is only one choice that can deliver that promise. Please make the right one and appoint Christiana Figueres as the next Executive Secretary of the UNFCCC
Marc Stuart was the founder of EcoSecurities, where he worked for 13 years prior to its integration into JP Morgan in early 2010. He is currently engaged in early stage private equity in the carbon and alternative energy space.