Policy-makers across US subsidize fossil fuel production by hindering public access to renewable energy supplies

By Walter Borden

Record heat across the globe continues to make headlines. Few serious policy analysts question the urgency for immediate action to curb carbon emission driven global warming. Meanwhile Florida regulators tilt the scales in favor of fossil fuel consuming utilities by obstructing Floridians’ access to solar power from off the grid. Incumbent fossil fuel providers argue that homeowners using solar must pay fees to cover their costs of using the grid. This line of argument ignores the fact that large capital outlays and other costs are avoided by eliminating much of the need for new power plants.

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Source: Climate Reality Twitter Feed

Not to be outdone, North Carolina politicians and fossil fuel lobbying groups are weakening fracking regulations with the pretense of ending corporate welfare:

Standing by [North Carolina Governor] McCrory’s side as he signed the bill were legislative leaders who played key roles in the push for drilling, including Rep. Mike Hager, a Rutherford County Republican and former Duke Energy engineer. Besides leading the legislative drive to allow fracking in North Carolina, Hager has also led an effort — unsuccessful so far — to kill the state’s renewable energy standard, calling it a form of “corporate welfare” and an “entitlement program.”

Yet as southernstudies.org reports:

But it turns out that North Carolina’s Republican leaders are now seeking taxpayer-financed “corporate welfare” for the oil and gas industry — even though the five biggest drilling companies alone hauled in $93 billion in profits last year. As The News & Observer of Raleigh reports:

* The state Senate’s proposed budget includes nearly $1.2 million to help the energy sector with drilling, analysis and marketing.

* McCrory’s proposed budget includes $500,000 for drilling up to three test wells in Lee County, part of the state targeted for fracking.

* A separate $550,000 initiative was approved last year to help the energy industry assess fracking prospects.

Once again fossil fuel production is promoted by politicos and industry representatives as unleashing prosperity via free market forces. Yet in reality they ensure subsidies for fossil fuel marketers. As argued on this blog many times before renewable energy systems are far more deserving of subsidy due to their clear benefit to the shared prosperity of all via clean air and water. In essence, no-one really advocates that energy concerns don’t require taxpayer assistance at some level. The question is, which ones, and to what degree. Fossils have had their decades of taxpayer support and are highly profitable thanks in large part to such support. Its time to boost nascent renewable energy providers. For the sake of of today’s needs and those of future generations.

Is OPEC Calling Peak Oil? Producers Shifting to Solar as Oil Price Slump Endures and Reserves Adjusted Downward

More than ever its clear that an oil based economy is not sustainable from a variety of perspectives, both ecologically and economically. Perhaps counterintuitively, these domains are not obverse to each another, but are interlocked facets of the how the earth sustains lifecycles. They are also twin indicators of humanity’s role in the stewardship of them.

Last week we saw the somewhat mind boggling announcement by Saudi Arabia that it planned to partially wean its economy from oil sales by 2020 and do so completely by 2030.  From Reuters on April 25:

The powerful young prince overseeing Saudi Arabia’s economy unveiled ambitious plans on Monday aimed at ending the kingdom’s “addiction” to oil and transforming it into a global investment power….His “Vision 2030” envisaged raising non-oil revenue to 600 billion riyals ($160 billion) by 2020 and 1 trillion riyals ($267 billion) by 2030 from 163.5 billion riyals ($43.6 billion) last year. But the plan gave few details on how this would be implemented, something that has bedeviled previous reforms….The 31-year-old prince gave assured answers to questions on the plan, and appeared to pitch his comments to appeal across the Saudi social spectrum, and in particular to young people, who face unemployment and an economic downturn despite their country’s oil wealth.

Many were of course skeptical. And while few details were given, the Saudi markets seemed to like the news as they rose by ~2.5% that day. Presumably this is because of publicly announced plans to sell public stakes in the Saudi state run Aramco. Do the Saudi’s think we are in Peak Oil?

Their neighbors in Dubai might think so as well. They are about to bring the world’s largest solar plant online which will provide electricity at 3 US cents per Kilowatt hour.

According to industry analyst Apricum:

All three lowest bids by themselves clearly set a new world record for the unsubsidized cost of solar electricity. A recent bid of 3.6 cents/kWh by Enel Green Power in Mexico did not include the value of additional green energy certificates. Solar tariffs in the USA now regularly dip below 3 cents/kWh, but these include a 30% tax incentive and other subsidies.

Phase 1 Mohammed bin Rashid Al Maktoum Solar Park 13-MW Source: First-Solar
Phase 1 Mohammed bin Rashid Al Maktoum Solar Park 13-MW Source: First-Solar

Twist number two was in an Oilprice.com post covering a scientific analysis of the the recent Global Energy Assessment by the International Institute of Applied Systems Analysis which finds that proven reserves are 50% lower than decades old conventional wisdom would have it:

According to Professor Michael Jefferson [of the ESCP Europe Business School] who spent nearly 20 years at Shell in various senior roles from head of planning in Europe to director of oil supply and trading, “the five major Middle East oil exporters altered the basis of their definition of ‘proved’ conventional oil reserves from a 90 percent probability down to a 50 percent probability from 1984. The result has been an apparent (but not real) increase in their ‘proved’ conventional oil reserves of some 435 billion barrels.”

Global reserves have been further inflated, he wrote in his study, by adding reserve figures from Venezuelan heavy oil and Canadian tar sands – despite the fact that they are “more difficult and costly to extract” and generally of “poorer quality” than conventional oil. This has brought up global reserve estimates by a further 440 billion barrels.

Predictions about the exact nature and timing and of the phase-out process for fossil fuels are premature. Yet, as the the developments above indicate, the pace of the transition away from fossil fuels to renewable energy sources continues to accelerate.

Earth Day 2016 — Beyond Paris & Accounting for All Carbon Emissions

Economist Paul Krugman, while referencing an upcoming carbon pricing piece by David Roberts (@drvox) writes that:

Econ 101 tells us that if you want to reduce emissions of a pollutant, the most efficient way to do that is to put a price on emissions, so that all possible routes to reduction are taken, and the marginal cost is the same for all routes. It’s a real insight, and has had positive impacts on real-world policy — cap-and-trade has worked very well at reducing acid rain.

Krugman goes on to argue that pricing may not be the only solution, it may even be even sub-optimal in some cases, and that regulatory solutions may well develop sooner than robust international carbon markets. He concludes a few paragraphs later:

The point is that just because Econ 101 makes a smart, counterintuitive point doesn’t make that point of central importance….

Yet, we know ex-post from acid rain cap and trade plans that cap and trade regimes deliver results. And we also know that regulatory capture undermines many anti-pollution rules with solar being among the biggest targets. Next, there is the fact that massive amounts of Carbon Pollution remain unaccounted for. So both market making and regulation must be moved forward deliberately.

Door to Door Cover: The Magnificent, Maddening, Mysterious World of Transportation
Door to Door
Cover: The Magnificent, Maddening, Mysterious World of Transportation

Continue reading Earth Day 2016 — Beyond Paris & Accounting for All Carbon Emissions

How much will income inequality matter if the world’s oceans cannot produce food?

From the article titled “Climate-Related Death of Coral Around World Alarms Scientists” that appeared in the April 9th Edition of the New York Times:

This is a huge, looming planetary crisis, and we are sticking our heads in the sand about it,” said Justin Marshall, the director of CoralWatch at Australia’s University of Queensland.

Bleaching occurs when high heat and bright sunshine cause the metabolism of the algae — which give coral reefs their brilliant colors and energy — to speed out of control, and they start creating toxins. The polyps recoil. If temperatures drop, the corals can recover, but denuded ones remain vulnerable to disease. When heat stress continues, they starve to death.

It seems unimaginable that future generations may not be able to experience the beauty of these incubators for the majority of sea-life. The graphic provided is, to say the least, eye-opening:

Source: NOAA, GEBCO as published in The New York Times
Source: NOAA, GEBCO as published in The New York Times

Plastic Pollution On Track to Surpass Fish By 2020 while ALEC Derails Legislation to Curb the Problem

Fund Balance has covered the damage done to the world’s ocean’s by discarded plastic at great length. Based on World Economic Forum projections more pieces of plastic will contaminate the world’s ocean than there are fish within it by 2050. Only about 5% of plastic is recycled. There is no system in place takes these plastic materials back. So after their use they pollute the ocean. Freshwater systems suffer as well. Plastic pollution interferes with every aspect of the world’s water ecosystem.

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Photo Credit. The US Environmental Protection Agency.

 

All countries to one extent or another experience effects from the way plastic damages fish by filling up their stomachs causing them to starve or killing them by ensnaring them and causing serious injuries and even early death. Nations like the US and China, whose livelihood and or protein sources are highly dependent on the ocean worry.

The World Economic Forum argues that innovation will be essential for the world’s oceans. Yet we all have reason to wonder if such innovation will be choked off before its can be launched. The shadow governance group American Legislative Exchange Council (ALEC) promotes model legislation to prevent local governments from banning plastic bags. Such moves run counter to innovation and seek to create and coddle ALECs corporate backers and their monopolies, particularly the Petroleum Marketers who provide substantial funding for ALEC. Petroleum is used to make plastic. The authors the World Economic Forum study argue that plastic manufacturing should be decoupled from fossil fuels. This will require doable and currently in process innovation. Such efforts will create many new economies and industries, as opposed to protecting one from the competition such innovation would bring. Apparently ALEC is not interested in the health and well being of future generations. If it did, it could use its abundant resources to help innovation of healthy ways to manufacture plastic materials.

Source: World Economic Forum
Source: World Economic Forum

How can such groups claim to be focused on the future when they seek to continue to sell products that make the leave behind a badly damaged ocean for future generations? And what is the impact of such efforts to stifle common sense legislation to ban plastic bags on the drivers for innovation our way out of the plastic trap?

How much of climate change is our fault: Exxon and the marketing of doubt

By Walter Borden

Astrophysicist Adam Frank recently commented on NPR that climate change really is not really humanity’s fault. The crux of his argument is that while the science is settled that human activity has caused climate change, we really could not have known better. Clearly there is some real truth in this assertion. To quote from the article:

But here’s the crux of the issue: 150 years ago when we started building that fossil-fuel based civilization, we had no idea of what we were doing. We’d found this black goo seeping up from the ground and it turned out you could do awesome things with it. In the winter, you could burn it in a furnace and keep your house warm. In the summer, you could burn it in a power plant and use the electricity to keep your house cool. You could also burn it in an internal combustion engine and travel hundreds of miles in a single day. And all that electricity you were generating from the power plant? You could use that to keep the lights on at night and watch moving pictures of stuff happening on the other side of the planet.

 New Mexico's largest electric provider — the coal-fired San Juan Generating Station near Farmington — has been defending a plan to replace part of an aging coal-fired power plant with a mix of more coal, natural gas, nuclear and solar power. Susan Montoya Bryan/AP & NPR website.

New Mexico’s largest electric provider — the coal-fired San Juan Generating Station near Farmington — has been defending a plan to replace part of an aging coal-fired power plant with a mix of more coal, natural gas, nuclear and solar power.
Susan Montoya Bryan/AP & NPR website.

At the outset of large scale fossil fuel utilization and into the 20th century this point is fair. But we must consider the case of Exxon, for example has worked to undermine climate science including widespread dissemination of both its own scientific findings as well as those of other groups. According to the New York Times:

So, even as one in-house memo stated that “fossil fuels contribute most of the CO2” that was turning the earth into an overheated greenhouse, another memo showed that the company would seek to “emphasize the uncertainty in scientific conclusions.

 

Other major players in Big Oil very likely done same. And quite naturally politicians in the House Science Committee (under the chairmanship of Lamar Smith, R-TX) who take large contributions from Big Oil are using sweeping new congressional protocols modeled on the open-ended Benghazi hearings, to harass and intimidate climate researchers. Dr Frank argues that its time to go beyond narratives of greed. Maybe not quite yet. While we all strive to avoid ad hominem, it seems greed driven attacks risk damaging the basic process by which our nation funds basic research. As David Roberts points out in an very thorough post at Vox:

To be clear, Smith has not alleged any corruption, wrongdoing, or even bad science. He hasn’t alleged anything. Nor has he offered any justification for why he needs access to NOAA internal communications. The new rules mean that he no longer has to explain or justify himself to anyone. He’s just hoping to find something he can use.

So, while Dr. Frank’s point has merit, and invective isn’t likely to help much its important we understand its not other factors, and indeed putting profit before future generations apply now as well as to the late 20th century. Because as he stated:

That’s because the real truth is this: While triggering climate change might not be our fault, not doing everything we can about it now that we know it’s happening — that would be our fault. Worse, it would be our failure as a species.

Gulf of Mexico Dead Zone Much Larger than Forecast While Agriculture Industry Leaders Succeed With Sustainable Business Praxis

By Walter Borden

Evidence continues to mount. The time for a rapid transformation away from Industrial Agriculture methods towards Sustainable ones is now. The size of an hypoxic ‘dead zone’ that disrupts and destroys marine life and fishing lifeways in the Gulf far exceeds this year’s forecast, NOAA scientists report. The dead zone — areas in red to deep red that have far too dissolved oxygen to support marine life other than often toxic algal blooms— is the size of Rhode Island and Connecticut combined.

Source: Tech Times and NOAA
Source: Tech Times and NOAA

From Tech Times: ”

The Gulf of Mexico’s “dead zone,” a region depleted of oxygen to the point where fish and other marine life can die, covers 6,474 square miles this year, federal scientists say.

That is above the yearly average and much larger than had been forecast for 2015, the National Oceanic and Atmospheric Administration says.

A “dead zone,” also known as an hypoxia area, is the result of the runoff of nutrients from agriculture and other human activity carried by rivers into the ocean. There, those nutrients accelerate an overabundance of algae that then sinks to the bottom where it decomposes, consuming the oxygen needed to support marine life, the agency explains.

This year’s dead zone in the Gulf is the size of Rhode Island and Connecticut combined, scientists say, with nutrients flowing from the Mississippi River affecting coastal resources and marine habitats in the Gulf.

The good news is that companies on many fronts continue to make considerable advances in sustainability. Coca-Cola Company is years ahead of schedule in its efforts to replace the water that it uses around the world to make its beverages, it recently announced, as reported in the New York Times. Another consumer staple is the beverage market The Bacardi unit, The Rothes CoRDe, a John Dewar & Sons distillery part-owned by The Combination of Rothes Distillers is:

the latest facility under the Bacardi umbrella to produce energy through a biomass boiler fuelled by Scotch whisky distillery by-products. The Dewar’s facility produces enough energy to power entire communities of neighboring distilleries — along with about 8,000 homes….We generate 8.3 megawatts of electricity every hour of every day. We use some onsite and export the rest — enough for 20,000 people in 8,000 homes,” said Frank Burns, Managing Director at Rothes CoRDe….Converting pot ale (the residue from copper whisky stills) into organic feedstock is another technique used to divert waste from the distilleries. Local farmers use it for their animals. Each of these initiatives helps the company get a little closer to creating a “closed loop” lifecycle for their whisky products.

As oft-noted here before, sustainable business practices and principles are not a fad or fringe aspect of modern management and fiduciary practice. Rather, they are essential for planning for long term success in the 21st Century.

JEB! & the GOP Try to Triangulate Papal Encyclical on Climate

By Walter Borden

Recently the standard taking point for climate science deniers regarding manmade climate disruption has been ‘I can’t say, I am not a scientist’. This no doubt thoroughly focus-grouped response is the equivalent of saying ‘I can’t say if smoking causes cancer, because I am not a scientist’. Yet here is Pope Francis, who also happens to have scientific training and work experience in chemistry, preparing to release an encyclical saying that climate change is real, mostly manmade, will primarily hurt the world’s poor, and represents a moral obligation for Catholics to take steps to combat.

Source: New York Times and The Pew Foundation
Source: New York Times and The Pew Foundation

Jeb Bush, showing a remarkable ignorance and/or naïveté of world history and the history of science pronounced he was skeptical of the pope expressing his views:

But I think religion ought to be about making us better as people and less about things that end up getting in the political realm.

The papacy of course has been involved in politics, sometimes for better and some for worse, since the founding of the church. Certainly many Catholics reference the papal edicts regarding abortion and marriage. And many great scientific discoveries and proofs come from monks and those who considered themselves Christian, such as Gregor Mendel, Pope John XXICopernicus, Galileo, Kepler, Newton and Boyle.

So here again, Big Oil and its politicians offer expediency and “truthiness” rather than logic, and sound science. All the while talking of what’s best for future generations and smart policy. Will this tactic play with voters? Maybe not as much as some backers of the GOP think. From the May 17th digital edition of the New York Times:

About 69 percent of adults say that global warming is either a “very serious” or “somewhat serious” problem, according to a new Pew Research Center Poll, up from 63 percent in 2010. The level of concern has still not returned to that of a decade ago; in 2006, 79 percent of adults called global warming serious….One small exception on climate change is that Catholic Republicans are slightly more concerned about climate change than non-Catholic Republicans, although the gap is small: Most Catholic Republicans are also skeptical that human activity is heating the planet.

 

 

Excellent Video (2:51) On How CO2 is Acidifying & Warming Oceans

Without healthy oceans the food supply for future generations and their very existence are at risk. And we know that even if all carbon being released today from fossil fuels were to halt, the climate would continue to warm for some time. Kind of like how just because you see an iceberg it doesn’t mean that you have time to steer the ship clear.

Coal Bubblenomics: Bank of America Backs Away From Coal Financing

Yesterday Reuters reported:

Bank of America announced Wednesday it will reduce its financial exposure to coal companies, acknowledging the risk that future regulation and competition from natural gas pose on the industry.

The bank announced its new coal policy at its annual meeting, saying it would cut back its lending to coal extraction companies and coal divisions of broader mining companies.

“Our new policy reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally,” said Andrew Plepler, head of corporate social responsibility at Bank of America.

The announcement comes amid a growing fossil fuel divestment movement, in which universities, churches and large asset owners are being pressured to abandon or curb their investments in high-carbon energy.

Global bank HSBC said in a client research note in April that the recent drop in energy prices has put a spotlight on “stranded” fossil fuel assets, making them a risk to investors.

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Source: New York Times

Here we see CSR and Climate Change considerations making their way into one our nations systemically important and indispensable banks. More work is to be done, though, as BofA shareholders also rejected a resolution requiring the bank to report on its impact on climate change from financing fossil fuel projects.

And while many claim that renewables are only competitive due to subsidies. Setting aside the fact that fossils also are heavily subsidized, solar along with other renewable energy technologies, have also seen a dramatic fall in costs, in the range of more than 60 percent over the last five years. This why nations like Britain that have scoffed at renewables now feature investors and developers actively bringing it online as an energy source.

Nonetheless, despite efforts by various groups like the Alabama Wind, an anti-clean energy group with a notably Orwellian title and whose logo on its Twitter page states “Defend Your Property Rights”, the horse is out of the barn. Or as one solar installer put it in a quote in the New York Times:

The lumbering big utilities that are so used to taking three months to study this and then six months to do that — what they don’t understand is that things are moving at the speed of business. Like with digital photography — this is inevitable.

Water, Water, Everywhere….Time to Stop and Think

By Walter Borden

One can easily argue that water is the sine qua non of life. Pope Franicis stated this most eloquently and firmly yesterday in leading the Angelus Prayer. The Buenos Aires Herald reports:

A branch of Shades Creek, Mountain Brook, Alabama
A branch of Shades Creek, Mountain Brook, Alabama

Francis called water “the most essential element for life” and he urged public and private sectors to work together to ensure all people have access to clean, potable water.

“(Water) is a universal and unalienable right for all people,” the Argentine pontiff said. “Humanity’s future depends on our ability to care for it and share it,” he added.

Of course many large industrialists disagree. They seek to become rentiers, or worse, monopolists of water. Take the example of Peter Brabeck-Letmathe, Chairman of Switzerland based global food, consumer staples, and agricultural service provider Nestlé Global. In 2013 he made waves (and not just with his yacht on lake Geneva) by his quote

The one opinion, which I think is extreme, is represented by the NGOs, who bang on about declaring water a public right. That means as a human being you should have a right to water. That’s an extreme solution.

As a result of the resultant uproar Nestlé Global released a publicity video with Mr. Brabeck-Letmathe, along with a set of questions and answers from its publicity department. They contend that his point was

However, he does not believe it is fair that more than two billion people worldwide lack even a simple toilet, and more than one billion have no access to any kind of improved drinking source of water, while in other parts of the world people can use excess amounts of this precious and increasingly scarce resource for non-essential purposes, without bearing a cost for its infrastructure.

To be sure there are many firms, such as the B Corp WaterSmart that are taking on the challenge with an eye towards fair trade and profit as opposed to the mercenary view. Coverage of this firm and others will be the subject of upcoming posts.

It’s difficult to parse the last sentence quoted from the video. Who in the civilized world doesn’t pay a water and sewer bill directly and/or via taxes allocated for infrastructure? And as for the developing world, there can be no doubt that wealthier nations should chip in on a charitable, or least non-profiteering basis i.e. with capped profits, to provide these regions with clean water. Further, this new approach makes no mention of the fact that at the World Water Forum in 2000, Nestlé successfully prevented water from being declared a universal right all but declaring that local water resources are now targets for the multinational corporations to control. For Nestlé, this means billions of dollars in profits. For the rest of humanity and earth, it means paying up to 2,000 times more for drinking water because it comes from a plastic bottle. Many observers have noted how in countries around the world, Nestlé promotes bottled water as a status symbol. Yet, questions on the quality of the water persist.

Of course, keeping water clean means conservative approaches which permits fossil fuel extraction as well as processing near estuaries, rivers, aquifers, and lakes. What has happened to large portions of New Jersey with its sludge lagoons or ‘Cancer Alley’ in Louisiana where not just American owned firms, but firms from nations such as China are brazenly toxifying the environment with unchecked emissions of methanol?

And, then there are the well known dangers to our fresh water supply presented by fracking, the keystone pipeline,krugman coal blog480 coal mining, and industrial agriculture with its attendant subsidies delivered yearly in the US farm bill. None of which industries, inter alia, provide any significant amount of employment during their boom cycles, and then of course leave befouled ghost towns when they go bust. For example, there was a War on Coal, and as Paul Krugman pointed out, Big Coal won. It automated strip mining:

Basically, it’s a job that was destroyed by technology long ago, with only a relative handful of workers — 0.06 percent of the US work force — still engaged in mining.

None of the oil in the Keystone XL will enter the US energy supply and almost half of US mined coal is sold to other nations. So, most fossil fuel extraction is not about jobs, despite what the owners of Big Coal claim, nor is it about energy independence.

Senator Mitch McConnell, along with his lobbyists and big donors, is out to fight new EPA regulation aimed at transitioning US power source away from coal towards renewable energy. Even in ways outside his purview as a Senator — interestingly his own state of Kentucky, a large coal producer plans to adopt the new EPA mandates. Its clear many Kentucky residents know that the benefits of coal far outweigh the costs.

Lastly as President Obama pointed out this last weekend, the Solar Panels on the Department of energy are not just for show, they save tax dollars and help protect out drinking water from the dirty business of fossil fuel extractions.  Perhaps some polices could be put in place to use the money to upgrade water infrastructure creating long-term, sustainable jobs that preserve the balance between energy security and a clean water supply.

Renewable Energy & Climate Change Mitigation: 2014 Milestones, 2015 Challenges

By Walter Borden

The Executive Branch took the lead for the US Public in addressing Climate Change amelioration in 2014 with both EPA actions as well as international diplomacy. By any standard the US China Agreement on Climate Change is, as The Guardian wrote:

A historic milestone in the global fight against climate change

Christmas Tree of Recycled Plastic Bags made by artists Luzinterruptus.
Christmas Tree of Recycled Plastic Bags made by artists Luzinterruptus.

Solar and wind energy are now price competitive with conventional fuels and installations, especially in the Northeast and Southwest. The US military maintained its tremendous foresight as it advances with solar installations as well as developing equipment for the field.

Stock traders have been bullish (though recently skittish to bearish). Nonetheless, the Guggenheim Solar ETF (NYSEARCA:TAN) vs. the S&P 500 showed huge swings to the upside again marked by very high volatility. Observations that low oil prices will harm solar lack coherence as the main competitor to solar and wind is coal in the world’s energy marketplace. Furthermore oil accounts for less than 10% of the input costs of solar manufacturing and de minimus amounts in plants presently online.

Divestiture from fossil fuel concerns now stretches from the offices of the Rockefeller Foundation to those of the Stanford University endowment, among a great many other institutions.  In other areas of finance, firms like Generate Capital have rolled out innovative methods for providing capital for renewable energy and fresh water infrastructure.

Challenges lie ahead in 2015 to be sure. Many states such as Ohio and Florida are rolling back programs to encourage adoption of clean energy. The incoming U.S. Congress will be controlled by policymakers quite hostile to climate change mitigation, clean energy, and the EPA. Worse still, they are more committed to corporate welfare for the fossil fuel industry than ever. While jobs have been created (and destroyed) in the boom-bust cycle of shale extraction, in a handful of states the notion of the industry undertaking retraining assistance is never mentioned. Thus any hope of 21st Century Public Works project to build our climate friendly infrastructure hinge on the outcome of the Presidential election some two years out.

Many journalists in covering New York State’s ban on fracking missed a central point. For example, Andrew Revkin at Dot Earth wrote:

….even though I felt (and still am convinced) that gas extraction from shale can be done safely and cleanly if properly regulated.

In our current environment regulatory capture — the revolving door between regulators and the industries they are tasked to regulate by the electorate — continues to intensify. So expecting ‘proper regulation’ to protect our water supply and atmosphere is an inviable approach in the Citizen’s United era. (As an aside Journalists Charlie Rose and Cory Johnson, both of Bloomberg TV, have recently professed ignorance as to what regulatory capture is. Yet, its well known many key regulators are paid bonuses to leave their jobs for government all the while expecting to be hired by the same industry that they regulated. Who is going to regulate and fine firms for which they expect to work?) Quis custodiet ipsos?

Utility scale solar in particular presents legitimate concerns due its water requirements for keeping sand and dust off the panels. Though as the World Bank notes many Concentrated Solar Power plans have managed to cut water usage by 90%.

Nonetheless, fossil fuel is still the primary threat to supplies of fresh water, whether from fracking, coal mining, or aquifer depletion. Rampant plastic pollution injures our hydrosphere and climate change continues to change the ecology of the world’s oceans via acidification. Such changes are dangerous, and the one’s still under study are worrisome in the uncertain nature of their long term effects.

Meanwhile confusion and weak logic reign when it comes to the Keystone XL pipeline. Economist John Cochrane calls it “infrastructure” yet its only purpose is to ship oil from Canada for export and usage in other nations. And, the profits will largely accrue offshore. The hope is that the President will veto this boondoggle — which will create comparatively few jobs, the majority of which will be temporary.

However, it is worth ending on a positive note. Increasing numbers of people recognize the threat of climate change and are integrating ecology into economy. The picture at the beginning of this post is one of a Christmas Tree made entirely of recycled plastic bags. A realization is spreading that the natural world, the source of all life and profits, needs to be given as high a priority as national defense for it is essential to the general welfare.

A False Choice: Either Jobs or Clean Water, Air, and Healthy Forests

Robert F. Kennedy presents a strong case that King Coal is by and large criminal given the massive amounts of regulatory violations and thus damage to local water, air, and geologic resources it wrecks. To this all one must add coal mining concerns’ repeated and ongoing attempts to mislead and falsely report low to no violations of numerous federal and state laws.

As usual several commenters complain about loss of jobs caused by efforts to restrict and ultimately ban strip-mining. Oh, and subsidies for renewable energy are bad. These arguments are nothing more than a bunch of hot, soot-filled air.

Most mining has been automated over the last decade or so — by the coal mining concerns (which receive tax subsidies and other benefits themselves). So we’re talking about very few jobs — that King Coal would happily eliminate if it could. They should be required to pay for re-eduction/re-location for miners as opposed to plying the line that its a choice between jobs and clean water, air, and intact forests. Its not, at all.

As Paul Krugman wrote the war on coal mining jobs was fought by the mining firms themselves:

“There used to be a lot of coal miners, but not any more — strip mines and machinery in general have allowed us to produce more coal with very few miners. Basically, it’s a job that was destroyed by technology long ago, with only a relative handful of workers — 0.06 percent of the US work force — still engaged in mining.”

Here is the key graph in the Paul Krugman post cited above:

Arguments Against Decarbonization Crumble, Fossil Fuel Divestment Momentum Builds

By Walter Borden

Two recent reports challenge the conventional wisdom that decarbonization via carbon taxes or other methods in concert with divestment from fossil fuel marketers means diminished prosperity. Both reports were widely covered and come from authoritative international groups. Both the New Climate Economy Project  and a working paper from the International Monetary Fund (IMF) find that robust policy action reducing carbon emissions would have very limited negative effects on economic growth and shared prosperity. They also advance substantive arguments and analysis that such policies may indeed accelerate growth.

Notably and not without a soupçon of irony, economist and vocal climate change climate skeptic Richard Tol, argued in 2013:

In sum, there is no carbon bubble. If there were a carbon bubble, it would not be about to burst. If it would burst, the economic impact would be minimal.

Coal Stocks Lag S&P and its getting worse as momentum builds for divestment
Coal Stocks Lag S&P and its getting worse as momentum builds for divestment

So interestingly, there is agreement from distinct and opposite quarters that decreased use of fossil fuels poses limited economic risk. For example, as Paul Krugman wrote earlier this week in reference to the two reports from the New Climate Economy Project and the IMF:

This might sound too good to be true, but it isn’t. These are serious, careful analyses….

On one side, there has been dramatic progress in renewable energy technology, with the costs of solar power, in particular, plunging, down by half just since 2010. Renewables have their limitations — basically, the sun doesn’t always shine, and the wind doesn’t always blow — but if you think that an economy getting a lot of its power from wind farms and solar panels is a hippie fantasy, you’re the one out of touch with reality.

On the other side, it turns out that putting a price on carbon would have large “co-benefits” — positive effects over and above the reduction in climate risks — and that these benefits would come fairly quickly. The most important of these co-benefits, according to the IMF paper, would involve public health: burning coal causes many respiratory ailments, which drive up medical costs and reduce productivity.

And we may be in later stages of divestiture than some opine. For example, Fund Balance has created  an ETF  on the Motif Platform that tracks Coal Stock prices. It was initiated after Stanford University’s signal move to divest from coal stocks. This ETF is down 32% since inception in May 2014 vs. 5.9% return for the S&P 500 and down 77% over the past five years vs. a 109% return for the S&P.

Coal stocks have fallen even further since major Universities began divesting.
Coal stocks have fallen even further since major Universities began divesting.

What of the argument that China and India will continue to rapidly increase their respective carbon emissions even as US and EU emissions fall? We can see now that there are many health benefits and hence productivity gains from cleaner air and water. Factor in the inevitable pressure such efforts will put on these two nations to curb emissions as well as their budding sustainability movements (not to mention pollution so bad that major cities must be shuttered and entire rivers cleaned ever more frequently), and such arguments suddenly reveal their superficiality.

So, critical mass for decarbonization is ever closer as the World Council of Churches, Rockefeller Foundation, Google among many other large scale organizations join in with major universities in their divestment commitments. As Eric Schmidt said when asked about Google’s withdrawal from fossil fuel promoters/renewable energy policy antagonists, The American Legislative Council a.k.a. ALEC:

“The facts of climate change are not in question anymore. Everyone understands climate change is occurring, and the people who oppose it are really hurting our children and our grandchildren and making the world a much worse place,” Google Chairman Eric Schmidt told NPR’s Diane Rehm in explaining the decision. “And so we should not be aligned with such people — they’re just, they’re just literally lying.”

 

American Infrastructure Improvement: A Job for 21st Century Labor

By Walter Borden

There are many reasons to celebrate Labor in the U.S. as well as to consider what its role in the 21st Century can be. The American Society of Civil Engineers, when they graded our nation’s infrastructure, assigned a startling D+.

Firstly, our nation’s infrastructure has in most areas been allowed to decline.

Secondly, large public works projects, the W.P.A., NASA, The Internet, and the Interstate Highway system result from the type of investment and resources only the U.S. Government can bring to bear. Wal Mart and Amazon disproportionately use the highway around their distribution systems and drive great financial benefit, Google and Apple have built entire new markets with mobile app GPS driven ecosystems thanks to NASA and its innovations in satellite technology, and the WPA built up everything from Libraries to the Hoover Dam. So even while well established fossil fuel marketers continue to enjoy subsidies, lets apply some to Solar. (The same can be said for large agri-businesses  and our water treatment and delivery systems which I will address in a later post).

Screen Shot 2014-09-01 at 11.44.11 AMThirdly, all these industries need large volumes of energy from electrical power. With Solar now on parity with coal in many areas, now seems the opportune time for a nationwide solar public works initiative. Solar has much to offer, from energy independence, low carbon emissions and thus greenhouse gas/pollution reductions, and resiliency. This resilience proved itself in the Sandy storm and flooding, as the solar stations at work there stayed online even while diesel ones went down due to flooding and the frequent inability to get diesel to the necessary places. Its important to note that claims that such programs will hurt coal miners are false and misleading; the coal mining industry cut its employment numbers by more than 2/3’s over the last thirty years via the automation of strip mining.

Lastly, a large investment in solar will very likely bring about entire new class of technologies and market opportunities. This is key as start-ups, the traditional engine of the American Economy,  continue to experience more and more difficult times. For example, as Robert Litan of the Broookings Institution and Hatan Hathaway, Ennsyte Economics recently showed:

And its important to note here that its not simply a result of an aging population, as Ben Casselmen of fivethirtyeight.com shows:

 

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Microdgrids Remained Online During Sandy — The New Jersey Government Noticed

By Walter Borden

Its been well documented that solar network power generators held-up during hurricane Sandy in New York and New Jersey. This was true for PSG&E systems as well as those supplied by start-ups. As Walter Meyer of Power Rockaway Resilience pointed out:

“While gas generators sat idle without gasoline in Rockaway Beach, solar generators that David cobbled together have been producing power nonstop from the second they hit the ground. Like a renewable Hail Mary into the impact zone, these devices have already been clutch.” 

Microgrid Growth Across the US. Source: GTM Research
Microgrid Growth Across the US. Source: GTM Research

Now the state of New Jersey is taking steps to further assist the Solar and broader renewable energy industry to deploy in New Jersey. Renewable Energy reports:

“Increasing energy resilience, whether through the [ERB], the [state Board of Public Utilities (BPU)] approved resiliency improvement measures implemented by utility companies or NJ’s Clean Energy Program, will minimize the potential impacts of future widespread power outages due to major storms like Superstorm Sandy,” Dianne Solomon, president of the BPU, said in the statement.”

Noting that Sandy caused extensive damage to the state’s energy infrastructure, the BPU said that distributed energy resources, including combined heat and power, fuel cells and off-grid solar inverters with battery storage, allowed some critical facilities, including hospitals, to remain operational while the electric grid was down. Launching the ERB will allow more such facilities to remain operational during future outages.

Solar Microgrids continue to come online across the United States as well as across the world. Several factors drive their emergence: addressing carbon pollution, the need for uninterrupted power supply during severe weather and other crises, and the need for low-pollution, accesible power in remote areas. Diesel fuel after all must be shipped in.

Another popular feature in urban areas is the ability to sell spare power back to the grid. This is a feature consumers love but many utilities resist. And they are now on the march to charge distribution fees to consumers that generate power for the grid.

Nonetheless, many states are moving to scale back renewable energy support (curiously while leaving fossil fuel subsidy and policy support in place). So there is a long way to go for the U.S. to gain energy independence and ensure that our air and water supplies are safe for future generations.

 

Solar Power Usage in US and EU Builds, Policy Innovation Falters

By Walter Borden

Here at the midpoint of 2014, solar power technology continues its advance while its marketplace momentum builds. Economic policy and commercial efforts designed to induce commercial innovation must keep apace.  And there are pockets of progress in the political economics of deploying solar. Take for example this post from Clean Technica: “Solar Energy’s Quiet Invasion Into Professional Sports“. Or consider the Regional Greenhouse Gas Initiative (RGGI), a market-based regulatory program in the United States that reduces greenhouse gas emissions.

And in Germany, one of the world’s most important economies, phys.org reports, “The Fraunhofer ISE research institute has announced that Germany set a record high for solar use on June 9—on that day the country’s solar power output rose to 23.1 GW—50.6 percent of all electricity demand. The record occurred over a holiday, which meant less demand, but it still marks a major step forward for the world’s solar power leader.”

Key aspects of the report from our perspective:

  • Despite not having a generally sunny climate, Germany has been pushing solar energy, but not from the huge solar farms as seen in other countries. Other nations, like the United Kingdom, report the same.
  • The German government is on track to reduce greenhouse emissions from electric power generation from coal fired power plants while at the same time retiring its fleet of nuclear power plants (scheduled for closure by 2022).
  • The FRG aims for an energy mix of solar, wind and biomass; though solar has become the national leader according to most reports.

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Yet challenges remain, as phys.org also notes:

The move to solar has not been without its problems, of course. The government plans to lower or remove subsidies as soon as possible, and the demand for batteries to store all that home-grown electricity is outstripping supply causing a rise in prices. Also, it’s not clear what sort of role utilities will play going forward. Currently, many homeowners are reporting surplus energy production on sunny days which they sell to electric companies, which now find themselves having to store it for use during cloudy stretches.

There’s another problem though it’s not as obvious: the German government noted recently that almost seven million households in the country are living in energy poverty (defined as having to spend more than 10 percent of income on energy bills). The national energy program, Energiewende, has resulted in some transfer of wealth. Economists note that even with subsidies, it’s generally the wealthy and sometimes the middle class who can afford to put solar panels on top of their houses.  The poor continue to live off the grid paying taxes that provide the funds for the subsidies. There’s also some evidence that the country’s energy program is pushing energy costs higher overall, resulting in more electricity being produced by cheaper fossil fuels.

Energy poverty is also a problem in the US.  As states like Ohio abruptly suspend widely popular solar power policies, working poor, middle class families, and businesses see expenses rise. Manufacturers like Honda and Whirlpool joined consumers in opposing Ohio Governor Kasich’s executive order to freeze its program. Additional side-effects weigh on taxpayers.  As more coal is used public health suffers resulting in rising health care costs, and water treatment costs increase too which is also true of  fracking for natural gas. These costs are passed along disproportionately to small businesses hurting them as well as working families. Continue reading Solar Power Usage in US and EU Builds, Policy Innovation Falters

Thank You: US Military Leads in Action on Climate Change Mitigation and Low-Carbon Fuel Innovation

We honor the sacrifice and dedication of the women and men of the United States Military. The Fund Balance team takes great reassurance from their collective recognition of the realities and risks for our shared peace, security, and prosperity posed by climate change. The US Military’s determination indicates the urgency for a steady, determined transition to green and renewable energy sources. Its organizational and technological expertise as comprised of active and former service members will play a singular and essential role in planetary deployment of renewable fuels.  Leadership in delivering renewable energy and power in the 21st century on mission-critical scales will help us all avoid economic, social, and ecologic entrapment by the carbon-intense fuels of the 20th. We urge our elected representatives to continue to support the United States Military in these efforts.

After a Marine company began using solar panels while deployed abroad, they reported that their diesel fuel usage dropped by a whopping 90 percent. Source: http://solar.calfinder.com/blog/solar-contractors/solar-power-saves-lives-taxpayer-dollars-on-the-battleground
After a Marine company began using solar panels while deployed abroad, they reported that their diesel fuel usage dropped by a whopping 90 percent. Source: http://solar.calfinder.com/blog/solar-contractors/solar-power-saves-lives-taxpayer-dollars-on-the-battleground

Protecting the Hydrosphere From The Generational Theft of Pollution

Screen Shot 2014-05-14 at 12.19.47 PM

By Walter Borden

There is a canon among many policy makers and their financial backers holding that essentially all regulations diminish prosperity. Yet, evidentiary support for it is sparse. For example, a recent study Aggregate Demand and State Level Employment published by the Federal Reserve Bank of San Francisco finds:

What explains the sharp decline in U.S. employment from 2007 to 2009? Why has employment remained stubbornly low? Survey data from the National Federation of Independent Businesses show that the decline in state-level employment is strongly correlated with the increase in the percentage of businesses complaining about lack of demand. While business concerns about government regulation and taxes also rose steadily from 2008 to 2011, there is no evidence that job losses were larger in states where businesses were more worried about these factors.

Why is it important to make note of failures to link regulatory action and weakened job markets? And, why so for a sustainable economics blog? Firstly, widespread adoption of this view has been  annointed with the great advantage of conventionality: policy makers can’t be evaluated per se as acting irresponsibly in terms of managing labor market health, or so-called job creation, when they have the same extreme hands-off bias towards regulation (particularly in the environmental category) as the industries they are meant to oversee. Hence real concerns of lack of oversight. Continue reading Protecting the Hydrosphere From The Generational Theft of Pollution

LED Sector Q1 2014 Performance

By Walter Borden

Light Emitting Diode (LED) demand continued in the first Quarter of 2014. LED fab utilisation rates have improved to high levels and LED adoption is happening faster than many had expected. LED customers are also reporting increased market demand for LED backlighting products. Many leading customers are placing orders for capacity expansions. Across the industry Q1 was a significant improvement over the last quarter of 2013 with higher revenues, better margins, and falling operating costs. Our work with privately held early stage start-up firms echoes what we hear from publicly trading firms and their coverage by leading analysts.

  • We believe that higher LED consumer usage combined with new and lower cost products, cost reductions, and higher factory utilization will help increase LED usage in residential and commercial real estate.
  • Unfortunately, stock prices in the sector generally have increased much more rapidly than earnings so investors may want to wait for a dip before entering the public market for LED stocks.

A look at Phillips N.V. is instructive. The Dutch conglomerate has reported flat earnings and generally lackluster revenue growth in the Q1 of 2014 with one exception. At Lighting, while sales were flat on a comparable basis, LED-based sales climbed 37 percent, and now represent 33 percent of total Lighting sales for the Dutch conglomerate.

Notably, then,  Phillips had a flat quarter while its LED unit continued to outperform rising 37% in the first Quarter of 2014.

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Source: http://www.usa.lighting.philips.com/

Meanwhile LED and Solar Panel Manufacturer Veeco saw healthy increases in revenue, gross profit, operating and net income in Q1 2014. Continue reading LED Sector Q1 2014 Performance

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