Posts tagged “climate change”
I spent the past week in the heart of the Athabasca oil sands in Fort McMurray, Alberta. I was there as a guest of the Canadian government, which hosts annual tours for small groups of journalists and energy analysts. During my trip I was told that the only person who ever asked as many questions as I did was when David Biello from Scientific American was a guest. (You can read one of David’s articles from his trip here).
I felt like I learned enough to write a book on the oil sands, so I have a great deal of information I want to share with readers in a series of articles. In these articles I will provide an overview of the oil sands, compare and contrast the different ways of processing them, discuss the environmental issues, and then discuss the particular companies that I visited on this trip — Cenovus Energy and Canadian Natural Resources Limited.
I want to start this series with a 2-part discussion on the environmental issues. Generally when people think of oil sands, the environmental issues are foremost on their mind. That has always been the case with me, so most of the questions I asked during my trip related to the impact of oil sands development on the environment. This is a very contentious issue, and one in which the battle lines have been drawn. CONTINUE»
In their Wall St. Journal op-ed this week, Al Gore and one of his business partners characterize the current market for investments in oil, gas and coal as an asset bubble. They also offer investors some advice for quantifying and managing the risks associated with such a bubble. Their article is timely, because I have been seeing references to this concept with increasing frequency, including a recent article in the Financial Times, as well as in the growing literature around sustainability investing.
Although bubbles are best seen in retrospect, investors should always be alert to the potential, particularly after our experience just a few years ago. In this case, however, I see good reasons to believe that the case for a “carbon asset bubble” has been overstated and applied too broadly. The following five myths represent particular vulnerabilities for this notion:
1. The Quantity of Carbon That Can Be Burned Is Known Precisely
Mr. Gore is careful to differentiate uncertainties from risks, which he distinguishes for their amenability to quantification. For quantifying the climate risk to carbon-heavy assets, he refers to the widely cited 2°C threshold for irreversible damage from climate change, and to the resulting “carbon budget” determined by the International Energy Agency. As Mr. Gore interprets it, “at least two-thirds of fossil fuel reserves will not be monetized if we are to stay below 2° of warming.” That would have serious consequences for investors in oil, gas and coal.
A Kindred Spirit
I have a very busy travel schedule this week, so this one is a little bit late and a bit rushed.
Last week I had the pleasure of meeting Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS). It was a funny sort of meeting, because I didn’t know he was coming, as he had come to visit someone else. When I was introduced to him we both said to each other “Hey, don’t I know you?”
We figured out that the reason we knew of each other is that we have both been advocates of using methanol as fuel. In fact, I referenced Dr. Luft and his frequent co-author Anne Korin in my book Power Plays. During his visit, he left a copy of their most recent book Petropoly: The Collapse of America’s Energy Security Paradigm. CONTINUE»
This is the 6th and final installment in a series that examines data from the 2013 BP Statistical Review of World Energy.
The previous posts were:
- Renewable Energy Status Update 2013
- Hydropower and Geothermal Status Update 2013
- The State of Oil According to BP
- The US is the Gassiest Country
- King Coal Gets Fatter, While The US Goes on a Diet
Today’s post looks at carbon dioxide emissions, and if you are concerned about climate change the results aren’t good.
The “highlights” are:
- Global carbon dioxide emissions increased by 1.9% to reach a new record high in 2012
- China led all countries in the categories of most carbon dioxide emitted and the greatest increase in emissions
- The US had the greatest decline of any country, with carbon dioxide emissions falling by 217 million metric tons from 2011 levels
- However the US is responsible for 25% of the carbon emitted to the atmosphere over the past 50 years
- Of the countries tracked, 25 saw decreased carbon dioxide emissions from 2011 levels and 39 countries experienced increased emissions
Emissions Keep Climbing
Global carbon dioxide emissions increased to 34.4 billion metric tons (BMT) in 2012. This was a new global record, 1.9% above the previous record set a year earlier. Over the past decade carbon dioxide emissions have increased by 32%. And since 2004 the increase in global emissions has been 5.9 BMT, which is an increase greater than total US emissions.
Later this week I intend to start a series covering the recently released BP Statistical Review of World Energy 2013. However, first I want to follow up on last week’s post The Increasing Irrelevance of the Keystone XL Debate. With few exceptions, the post was well-received by people on both sides of the debate. There was some reasonable debate on the post on my Twitter feed, and much less rancor. I think only one person accused me of being an “enemy combatant” while most recognized that I am sincerely trying to shine a light on a problem that I see as orders of magnitude worse than Keystone XL.
The primary objection to my argument over the irrelevancy of Keystone XL is the same one that has been voiced in the past. It is that the Keystone XL project itself may be relatively insignificant, but add up many Keystone XL projects and you get a big effect. The only problem is that this really isn’t even true.
In last week’s article I referenced a 2012 paper by Neil C. Swart and Andrew J. Weaver from the School of Earth and Ocean Sciences, University of Victoria published in Nature Climate Change. That paper contained a graphic that I shared on Twitter, and it got quite a bit of commentary. The graphic shows the relative potential warming contributions of various fossil fuel resources:
Keystone XL’s Insignificant Contribution to Climate
Last week President Obama unveiled a new plan to combat climate change in a speech at Georgetown University. While there is generally broad consensus that his comments further threaten the already battered US coal industry, his comments on TransCanada’s (TSX: TRP, NYSE: TRP) Keystone XL pipeline project had pundits guessing at his meaning. Here is what the President said in his speech about Keystone XL:
Now, I know there’s been, for example, a lot of controversy surrounding the proposal to build a pipeline, the Keystone pipeline, that would carry oil from Canadian tar sands down to refineries in the Gulf. And the State Department is going through the final stages of evaluating the proposal. That’s how it’s always been done. But I do want to be clear: Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.
The reason that there have been widely differing views on the President’s intentions boils down to his use of the phrase “only if this project does not significantly exacerbate the problem of carbon pollution.” The State Department’s Draft Supplementary Environmental Impact Statement (SEIS) for the Keystone XL Pipeline project already concluded that approval of the project would have little impact on global carbon dioxide emissions or on the development of the oil sands because of their view that the oil will get to market one way or another. More on that below. CONTINUE»
An article I wrote was published yesterday, Why a Global Shale Gas Boom is Key to Combating Climate Change. Because I had actually written the article a week ago, I didn’t know that it would come out at the same time as the release of the President’s big speech on climate change. As I demonstrated in the post, the U.S. has been the most successful country over the last decade in reducing its emissions; most of that is due to fuel switching from coal to natural gas. Natural gas generates more than 50% less greenhouse gas emissions than coal, not even including the many harmful particulate pollutants coal emits. To achieve similar benefits around the world, we need to replicate America’s shale gas revolution around the world.
While most of the news about the speech will be about how Obama is planning to accelerate renewable energy, I believe the biggest area of near-term action on reducing emissions will come from some underreported sections that will encourage the replacement of coal with natural gas for energy generation, both in the U.S. and globally.
Reduction in Energy-Related CO2 Emissions
The United States has seen a remarkable run in reducing its greenhouse gas emissions over the last five years, reducing energy-related CO2 emissions from 2007 to 2012 by 12%, from six billion tons to 5.29 billion tons. While part of this reduction in emissions is attributable to a reduction in energy demand due to the economic downturn, another reason for this huge reduction is an increase in the use of natural gas for electricity.
In a story that is now familiar to most readers, the shale gas revolution in the United States has dramatically reduced the cost of natural gas. From a peak of $10.54 per million btu (mbtu) in July 2008, the spot price of gas at the well-head had fallen to less than $2/mbtu by April 2012.
Because utilities respond to price incentives, this caused fuel-switching of baseload electricity production from coal to natural gas, leading to a time in April 2012 when natural gas equaled coal as an energy source for the first time. This switch has partially been undone, with coal now producing 40% of electricity and natural gas 26% as gas prices have bounced back to $3.85/mbtu. Because burning natural gas for electricity produces half as much carbon emissions as coal, fuel switching is one of the main causes in the U.S. reduction in emissions.
Bringing together climate policy and innovation to form a cohesive carbon tax proposal reframes U.S. climate advocates’ near-myopic focus on carbon pricing, mandates, and subsidies and expands the discussion on how we can use those tools to spur innovation, writes Matthew Stepp.
Joint Statement on ‘Dangers’ of Climate Change
A few weeks ago, Secretary of State John Kerry went to Beijing to meet with the leadership of the Chinese government. This meeting was mostly noted in the press as an effort to defuse tensions in the ongoing crisis over North Korea – and clearly that was important; there has been a notable ratcheting down of tensions since then.
However, over the long term, there was an agreement that came out of the meeting that could be much more important to the world’s future stability and security – a joint U.S. – China Statement on Climate Change. It was so overlooked in the press, that I missed it for the last two weeks. The statement indicated that the U.S. and China recognize the “dangers presented by climate change” and that a “more focused and urgent initiative” is needed.
This statement is invariably true – and these two countries are in a position to have an impact. Together, China and the United States are the largest emitters of greenhouse gases in the world, with 29% and 16% of global emissions, respectively. Like Willie Sutton and the Banks, if you want to affect greenhouse gas emissions, start where the emissions actually are.
Mutual Concern About Present Day Impacts
Importantly, the statement notes that the reasons for each country’s mutual concerns about climate change come from the impacts that are already being seen. The statement lists ocean acidification, Arctic sea ice loss, and the “striking incidence of extreme weather events” as reasons for concern about climate. Climate change has moved from being a hypothetical worry in world politics (this will harm us) to an actual threat (this is harming us).
This agreement is important because it will catalyze action by each country at the national level, it will open up areas of cooperation between the two, and it could act as a signal to international negotiations, leading to an ambitious UN agreement.
Formally, the agreement will create a new Climate Change Working Group in the annual U.S. – China Strategic and Economic Dialogue (S&ED). The S&ED was the brainchild of then-Secretary of the Treasury Hank Paulson, with the first one taking place in September, 2006. Over the last six years, the S&EDs have successfully brought together the highest levels of both governments to meet and discuss important areas of the bilateral relationship. Mostly, however, the discussions have focused on economic and trade issues.
Creating a Climate Change Working Group will ensure that the highest levels of government are forced to deal with the problems of climate change.
Forcing Entrenched Bureaucracies to Collaborate
One of the key reasons why this agreement is important is not even the potential areas of cooperation between the countries – it is the action it will generate within each country’s government. In the United States government (I can’t speak with any familiarity about the Chinese government), it will force entrenched bureaucracies to deal with one another on climate and environmental issues. There is often a tendency in government for issues to become ‘stovepiped’ – and on climate, which is pegged as an environmental issue, but is actually a cross-cutting issue of energy, trade, economics, national security, and more, the stovepipes have not worked.