Monthly Archives: March 2014

Climate change and health: IPCC reports emerging risks, emerging consensus

31 March 2014, 6.47am AEST

AUTHORS

Anthony McMichael / Emeritus Professor, National Centre for Epidemiology & Population Health at Australian National University

Colin Butler / Professor at University of Canberra

Helen Louise Berry / Professor and Associate Dean Research at University of Canberra

DISCLOSURE STATEMENT

Anthony McMichael receives funding from The National Health and Medical Research Council. He is affiliated with The Climate Institute.

Colin Butler receives funding from the Australian Research Council. He is co-director of the NGO Benevolent Organisation for Development, Health and Insight.

Helen Louise Berry receives funding from the National Health and Medical Research Council and the Australian Research Council. She is a member of the Australian Labor Party.

Reproduced from : http://theconversation.com/climate-change-and-health-ipcc-reports-emerging-risks-emerging-consensus

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The largest impacts will occur in poorer and vulnerable populations. ‘Collecting water’ by UNAMID,CC BY-NC-ND

The Intergovernmental Panel on Climate Change’s (IPCC) Impacts volume of the Fifth Assessment Report will be released today. Here, three contributors to the health chapter explain the ideas and evidence behind the report.


The consequences of human-driven global climate change as this century progresses will be wide-ranging. Yet public discussion has focused narrowly on a largely spurious debate about the basic science and on the risks to property, iconic species and ecosystems, jobs, the GDP and the economics of taking action versus taking our chances.

Missing from the discussion is the threat climate change poses to Earth’s life-support system – from declines in regional food yields, freshwater shortage, damage to settlements from extreme weather events and loss of habitable, especially coastal, land. The list goes on: changes in infectious disease patterns and the mental health consequences of trauma, loss, displacement and resource conflict.

In short, human-driven climate change poses a great threat, unprecedented in type and scale, to well-being, health and perhaps even to human survival.

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Extreme weather events have contributed to a rise in global food prices. ‘Palm Trees, Wind and Ocean’ by Brooke/Flickr, CC BY-NC-SA

The human health chapter in the second (“Impacts”) volume of the IPCC’s Fifth Assessment Reportconcludes that the scientific evidence of many current and future risks to health has strengthened in recent years. The chapter, as in all IPCC reports, reviews all existing scientific evidence and is subject to external peer-review.

During at least the next few decades, the chapter states, climate change will mainly affect human health, disease and death by exacerbating pre-existing health problems. The largest impacts will occur in poorer and vulnerable populations and communities where climate-sensitive illnesses such as under-nutrition and diarrhoeal disease are already high – thus widening further the world’s health disparities.

Currently, the worldwide burden of ill-health clearly attributable to climate change is relatively small compared with other major blights on health such as from poverty, poor sanitation and exposure to tobacco.

Even so, in this early stage of human-driven climate change researchers in many countries have reported that rising temperatures and changing rainfall patterns have, variously, increased heat-related illnesses and deaths, altered the distribution of some water-borne infectious diseases and the insect transmitters (vectors) of some diseases (such as malaria), and have reduced food yields in some already food-insecure populations.

Less certainly, extreme weather events, influenced in part by climate change, are likely to have contributed to the recent rise in global food prices.

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Climate change may render some regions uninhabitable. Shutterstock

The chapter discusses three impact categories in particular:

· under-nutrition and impaired child development due to reduced food yields

· injuries, hospitalisations and deaths due to intense heat waves, fires and other weather disasters and

· shifts in the seasonal duration and spatial range of infectious diseases.

There is also mounting evidence of the adverse health consequences of workplace exposure to heat extremes, including reduced work capacity and productivity.

Looking ahead to 2100, for which some modelled scenarios now project an average global warming of 4 degrees Celsius, the report foresees that in such conditions people won’t be able to cope, let alone work productively, in the hottest parts of the year. And that’s assuming social and economic institutions and processes are still intact. Some regions may become uninhabitable.

Impacts on mental health could be similarly extreme, further limiting our collective capacity to cope, recover and adapt.

Overall, while limited health gains from climate change may occur in some regions, the health chapter concludes from the evidence that harmful impacts will greatly outweigh benefits. The impacts of climate change will also undermine hard-won gains achieved through social development programs, impeding progress in the world’s poorest countries.

The world community has dithered for two decades over climate change since it rose to prominence during the 1992 Earth Summit. As valuable time to reduce the risks (mitigation) has been squandered, the need to also focus on managing risk (adaptation) has increased. But excessive reliance on adaptation carries its own risks – including fooling ourselves that we don’t need immediate and aggressive mitigation.

The health chapter concludes that the most immediate effective way to manage health risks is through programs that introduce or improve basic public health measures. It also notes the need to boost human rights-based access to family planning.

As climate change proceeds, additional climate-specific measures (such as enhanced surveillance, early warning systems and climate-proofed building design) will be needed to protect population health, even in high-income settings. Recent extreme events such as the severe heat waves and fires in Australia in 2009-2014 and in Russia in 2010 underscore this need.

The chapter offers some cheer in stressing that the near-term and relatively localised health “co-benefits” from reducing greenhouse emissions (mitigation) could be very large. Reducing emissions of methane and black carbon, for example, may avoid more than two million deaths per year.

Other mitigation actions likely to improve physical health, social connectedness and mental health include:

· encouraging communities to be more active via improved public transport and reduced car reliance

· reducing exposures to temperature extremes with well-insulated energy-efficient housing and

· promoting healthier diets through the transformation of food production and processing systems.

In economic terms, the IPCC chapter judges that the health co-benefits from reducing emissions would be extremely cost-beneficial. They would, for example, be one thousand times greater than the economic co-benefits to agricultural yields from reduced exposures to short-lived, crop-damaging, airborne climate pollutants.

Overall, the up-front costs of reducing emissions could be substantially offset by early and extremely large health (and other) benefits.

Of course, none of this matters if human well-being, health and survival mean little to us. In that case we can emit all we like, then suffer, dwindle or even die out as a species and leave this planet to recover and thrive without us. One way or another we will then emit less.

We have a closing window of time in which to do something about global climate change.

We can’t just geoengineer our way out of climate change …….

 
 

 

Reproduced from David Suzuki Foundation -[subscribers@davidsuzuki.org]

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Photo Credit: Paul Bica

Because nature doesn’t always behave the same in a lab, test tube or computer program as it does in the real world, scientists and engineers have come up with ideas that didn’t turn out as expected.

DDT was considered a panacea for a range of insect pest issues, from controlling disease to helping farmers. But we didn’t understand bioaccumulation back then – toxins concentrating up the food chain, risking the health and survival of animals from birds to humans.

Chlorofluorocarbons, or CFCs, seemed so terrific we put them in everything from aerosol cans to refrigerators. Then we learned they damage the ozone layer, which protects us from harmful solar radiation.

These unintended consequences come partly from our tendency to view things in isolation, without understanding how all nature is interconnected. We’re now facing the most serious unintended consequence ever: climate change from burning fossil fuels. Some proposed solutions may also result in unforeseen outcomes.

Oil, gas and coal are miraculous substances – energy absorbed from the sun by plants and animals hundreds of millions of years ago, retained after they died and concentrated as the decaying life became buried deeper into the earth. Burning them to harness and release this energy opened up possibilities unimaginable to our ancestors. We could create machines and technologies to reduce our toil, heat and light our homes, build modern cities for growing populations and provide accessible transport for greater mobility and freedom. And because the stuff seemed so plentiful and easy to obtain, we could build vehicles and roads for everyone – big cars that used lots of gas – so that enormous profits would fuel prosperous, consumer-driven societies.

We knew fairly early that pollution affected human health, but that didn’t seem insurmountable. We just needed to improve fuel efficiency and create better pollution-control standards. That reduced rather than eliminated the problem and only partly addressed an issue that appears to have caught us off-guard: the limited availability of these fuels. But the trade-offs seemed worthwhile.

Then, for the past few decades, a catastrophic consequence of our profligate use of fossil fuels has loomed. Burning them has released excessive amounts of carbon dioxide into the atmosphere, creating a thick, heat-trapping blanket. Along with our destruction of natural carbon-storing environments, such as forests and wetlands, this has steadily increased global average temperatures, causing climate change.

We’re now faced with ever-increasing extreme weather-related events and phenomena such as ocean acidification, which affects myriad marine life, from shellfish to corals to plankton. The latter produce oxygen and are at the very foundation of the food chain.

Had we addressed the problem from the outset, we could have solutions in place. We could have found ways to burn less fossil fuel without massively disrupting our economies and ways of life. But we’ve become addicted to the lavish benefits that fossil fuels have offered, and the wealth and power they’ve provided to industrialists and governments. And so there’s been a concerted effort to stall or avoid corrective action, with industry paying front groups, “experts” and governments to deny or downplay the problem.

Now that climate change has become undeniable, with consequences getting worse daily, many experts are eyeing solutions. Some are touting massive technological fixes, such as dumping large amounts of iron filings into the seas to facilitate carbon absorption, pumping nutrient-rich cold waters from the ocean depths to the surface, building giant reflectors to bounce sunlight back into space and irrigating vast deserts.

But we’re still running up against those pesky unintended consequences. Scientists at the Helmholtz Centre for Ocean Research in Kiel, Germany, studied five geoengineering schemes and concluded they’re “either relatively ineffective with limited warming reductions, or they have potentially severe side effects and cannot be stopped without causing rapid climate change.” That’s partly because we don’t fully understand climate and weather systems and their interactions.

That doesn’t mean we should rule out geoengineering.  Climate change is so serious that we’ll need to marshal everything we have to confront it, and some methods appear to be more benign than others. But geoengineering isn’t the solution. And it’s no excuse to go on wastefully burning fossil fuels. We must conserve energy and find ways to quickly shift to cleaner sources.

By David Suzuki with contributions from Ian Hanington, Senior Editor

 
 

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The trouble with offsets – delusional at best.

Reproduced in full with the gracious permission of Background Briefing: http://www.abc.net.au/radionational/programs/backgroundbriefing/2014-03-16/5320906#transcript

Sunday 16 March 2014 8:05AM

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IMAGE: IN JANUARY 2014 OVER 100 PEOPLE SHUT DOWN CONSTRUCTION AT THE MAULES CREEK MINE. THE PROTESTERS USED TRIPOD STRUCTURES TO BLOCK ENTRY TO THE MINE. (FLICKR/LEARD STATE FOREST ALLIANCE)

Environmental offsets are supposed to compensate for ecosystems and biodiversity that are bulldozed to make way for development. But there’s mounting evidence the policy is being subverted, as governments approve controversial offsets across Australia. Di Martin investigates.

A Senate inquiry has just been launched into claims a key environmental policy, offsetting, is falling over.

Under offsetting, developers have to compensate for what they’re bulldozing. They need to protect other properties that contain the same sort of vegetation and habitat as what’s being cleared.

To me it is akin to some guy going into that art gallery and pointing at the Mona Lisa on the wall and ‘saying sorry mate we need that bit … so the Mona Lisa has to go. But we will paint you another one’.

PROFESSOR RICHARD HOBBS, ECOLOGIST

The promise of offsetting is that development can happen and biodiversity will be no worse off.

However offsets have always been controversial and an increasing number of scientists, ecologists and conservationists say there are many loopholes and the policy is being manipulated by governments who won’t say no to developers.

Federal Greens Senator Larissa Waters pushed for the Senate inquiry, listing five developments for investigation.

They include the Abbot Point Coal Terminal and Waratah Coal’s Galilee Coal Project in Queensland, the Jandakot Airport in Perth, and the Maules Creek coal mine in northern NSW.

Clearing has already begun on the Maules Creek mine site, destroying critically endangered white box gum grassy woodland which is down to 0.1 per cent of its original range.

The mining company, Whitehaven Coal, says it’s protecting large areas of critically endangered box gum woodland on its offset properties.

This article represents part of a larger Background Briefing investigation. Listen to Di Martin’s full report on Sunday at 8.05 am or use the podcast links above after broadcast.

But local ecologist Phil Spark says Whitehaven’s claims are wrong. He took Background Briefing to the two largest offset properties in an area marked as white box grassy woodland.

‘We are looking around us and we see the dominance of stringy bark, probably 80 per cent stringybark. And it’s not white box at all,’ Mr Spark said.

There are now four local ecologists who’ve looked at Whitehaven Coal’s offsets and found serious problems.

Dr John Hunter is a botanist who specialises in critically endangered communities and has helped develop offset plans for other mines. He has prepared a preliminary report on 1600 hectares of Whitehaven’s offsets, and says that 95 per cent of their mapping is wrong.

‘I think there’s at maximum, five per cent of what they are saying is box gum woodland there,’ he said. ‘All of the dominance that we found there, are actually trees that they haven’t listed as occurring.’

Instead, the dominant trees that Hunter found were stringybark, New England blackbutt, orange gum and Bendemeer white gum, which weren’t represented in the mapping.

‘The maps are patently wrong. They are just completely wrong,’ he said.

Another local ecologist, Wendy Hawes, sat on an expert panel that wrote the condition criteria used to identify box gum grassy woodlands. She has looked at four areas mapped as box gum grassy woodland, and found hardly any at all.

‘It is not the community they claim it is,’ she said. ‘There are within their offset areas … small patches that could potentially meet the [criteria], but they are very small areas, so they are a couple of hectares. Nothing like the hectarage they are claiming.’

‘So the majority of the stuff that they are protecting its stringy bark communities. Not white box,’ Hawes said.

Neither the state nor the federal government did on the ground surveys of the offset sites before approving the Maules Creek mine.

Whitehaven Coal’s CEO Paul Flynn was not available for interview, but the company said in a statement that it is committed to meeting its offset obligations. It also claimed that reports critical of its offsets are incomplete and deliberately distorted, and the company is protecting an area far larger than what is being cleared on the mine site.

The dissenting ecologists agree that Whitehaven’s offset area is larger, but maintain the vegetation it contains is not the same as what is being bulldozed.

When the Maules Creek mine was approved, Whitehaven Coal was required to complete an independent review of the offset sites. That report has been handed to the Federal government, but has not been released.

Environment Minister Greg Hunt declined to be interviewed, but issued a statement saying he’s aware of the issue, and his department is now considering the independent review.

The department recently told a Senate estimates hearing that it’s investigating what it calls a criminal matter regarding the Maules Creek offsets. It is a crime to be reckless or negligent in providing false or misleading information about offsets.

The Environment Department said it could be some months before its investigation is complete.

The ANU’s Phil Gibbons, who helped develop offset policy for the federal and NSW governments, says the theory behind offsetting is very attractive.

‘A fair-minded person would agree that if a developer destroys some of Australia’s natural capital in making a buck, then they should really offset that impact elsewhere,’ he said.

‘But the devil is in the detail.’

Gibbons said he sees an increasing number of examples where governments are cutting corners. Some offsets are not like for like and others are not being properly managed or restored. Some sites have been approved that weren’t in danger of being cleared or lost in the future.

‘Anything that you do in terms of an offset must be a genuine gain, must be something that would not have happened anyway as under business as usual,’ Gibbons said.

‘I think what people are doing is getting very creative in finding biodiversity gains when really they are things that would have happened anyway.’

With less and less good quality bush to be found, developers are putting up old cattle paddocks and mine sites as offsets, land which they say will be restored to its original state.

However, according to restoration ecologist Professor Richard Hobbs, those sites can take decades to develop, and there’s no guarantee they will be the same as what was cleared.

He scoffed at the idea that Australia’s biodiversity will be no worse off under offsetting, and called the practice ‘a Faustian pact’.

‘I’ll say it’s a furphy. To me it is akin to some guy going into that art gallery and pointing at the Mona Lisa on the wall and saying sorry mate we need that bit … so the Mona Lisa has to go. But we will paint you another one.’

‘We run the risk of trading something irreplaceable for the short term development gains with the mirage of having a good conservation outcome in the future through the activities of the offset.’

Pay 31% Less for electricity – The Bellarine and beyond ……..

Guess Why People in This Tiny German Town Pay 31% Less for Electricity?

me

BY CLIMATE COUNCIL     08.03.2014

CC photo by SuluSolar from Flickr

Hint: they’ve done something totally amazing to power their town.

Cross-posted from Greenbiz

Regardless of debate about the success of Germany’s renewables revolution, there is no denying that a small town in the corner of rural eastern Germany, 40 miles south of Berlin, may be one of the best examples of decentralized self-sufficiency. Feldheim (pop. 150), in the cash-strapped state of Brandenburg, was a communist collective farm back when Germany was still divided into East and West. Now it is a model renewable energy village putting into practice Germany’s vision of a renewably powered future.

In 1995, a local entrepreneur paid for Feldheim’s first wind turbine. As farmers started to worry when prices for their milk, potatoes, and beets began to fall and energy prices started to rise, they learned they could earn cash by renting their land to energy companies wanting to install a wind turbine. A local renewable energy company, Energiequelle GmbH, saw the potential as well, and decided to install a wind farm in Feldheim. Forty-three wind turbines with an installed capacity of 74.1 MW soon dotted the Feldheim landscape, providing income to farmers who leased their land to the energy company.

Renewable fervor was catching on, and in 2008 Energiequelle bought a 111-acre former Soviet military site about five miles from Feldheim, cleaned up the toxic military waste and hidden ammunition, and constructed a 284-panel solar farm that produces over 2,700 MWh per year. Its power is fed into the grid at the feed-in-tariff rate.

That same year, the town of Feldheim and Energiequelle established a joint venture, called Feldheim Energie GmbH & Co. The new company built a biogas factory that converts pig manure and unused corn into heat, taking advantage of the community’s 700 pigs and 1,700 acres of arable farmland. The biogas plant is fed from the town’s agricultural cooperative and produces 4 million kWh of electricity a year. A 400-kW wood-chip furnace fueled by the byproduct of forest thinning helps to firm the power from wind and biogas.

By 2009 Feldheim was producing all its own energy with renewable sources. Residents then wanted to take things a step further and free themselves from the large utility company, E.on, which was supplying the grid.

E.on refused to either sell or lease the part of its energy grid that ran through Feldheim. So the people took the matter into their own hands, and decided to build their own. Each of the 150 residents contributed 3,000 Euros (~$4,000 at today’s exchange rates) so that they could build their own smart grid. With help from Energiequelle, and financing from the European Union and government subsidies, the smart grid was completed in 2010, making Feldheim then the only town in Germany with its own mini-grid. This allows the locally produced heat and electricity to be fed straight to consumers and gives them control over their electrical prices, which are set at community meetings.

They now pay 31 percent less for electricity and 10 percent less for heating than before. The town consumes less than one percent of the electricity produced annually by its wind turbines and solar panels, selling the rest back to the market. This lowers their electricity bills to around half the national average. The biogas plant not only sells electricity back to the market, but also supplies the entire community with heating, saving over 160,000 liters of heating oil each year. As an added benefit, the plant produces over three million gallons of high-quality fertilizer annually that the agricultural cooperative uses.

Feldheim has also installed a plug-and-pay EV charging station in the town center, and next plans to install a 10-MW battery later this year. The storage will help balance the community microgrid’s generation and load.

The Bellarine & beyond ………


Wind turbines in Feldheim (Credit: Energiequelle)

There are now more wind turbines than houses in the town. While residents don’t mind the noise or aesthetics of the wind turbines, there has been some opposition from neighboring towns, which didn’t—until recently—directly benefit from the wind farm. “In order to make neighbors feel more at ease with the wind farm, we are offering power at a special rate,” Energiequelle spokesman Werner Frohwitter told RMI. “Our aim is to let as many people as possible directly benefit from our turbines, thus encouraging social acceptance for renewable energies.”

All the renewable projects also created jobs. While other villages in the economically depressed state of Brandenburg have roughly a 30 percent unemployment rate, Feldheim virtually erased its unemployment. Most residents work in the biogas plant or maintain the wind and solar farms. And the town, which has not a single museum or restaurant, has seen an influx of visitors. Three thousand people visit the small town of 150 each year. This has prompted the foundation of a new organization, Förderverein des Neuen Energieforums Feldheim (Friends of the New Energies Forum Feldheim), which is converting an old inn into a renewable energy information and training center. The hope is that when the center opens in the fall of 2014 it will bring even more visitors to Feldheim, generating more jobs and income for the villagers.

Feldheim has proven that a high-renewables energy future is possible today. “There have been and are still occurring remarkable changes (in Feldheim),” says Frohwitter. The small town is thriving thanks to its confidence in renewable energy technologies.

by Laurie Guevara-Stone
Cross-posted from Greenbiz

THE ENERGY TRANSITION TIPPING POINT IS HERE

 
 

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By Chris Nelder

For the complete article refer – http://www.smartplanet.com/blog/the-take/the-energy-transition-tipping-point-is-here/

 

The economic foundations supporting fossil fuels investments are collapsing quickly, as the business case for renewables such as solar and wind finds a new center of balance.

I have waited a long time—decades, really—for a tipping point in the energy transition from fossil fuels to renewables beyond which there can be no turning back. Fresh evidence pertaining to many themes I have explored in this column over the past three years suggests that tipping point is finally here.

Oil and gas

Underlying the abundance hype over tight oil, tar sands and other “unconventional” sources of liquid fuel has been a dirty little secret: They’re expensive.

The soaring cost of producing oil has far outpaced the rise in oil prices as the world has relied on these marginal sources to keep production growing since conventional oil production peaked in 2005. Those who ignored the hype and paid attention to the data have known this for years. I have detailed this evidence repeatedly (for example, in “The cost of new oil supply,” “Oil majors are whistling past the graveyard,” and “Trouble in fracking paradise”), but now the facts are earning mainstream recognition.

The Wall Street Journal recently pointed out that oil and gas production by Chevron, ExxonMobil and Royal Dutch Shell has declined during the past five years even as the companies spent more than a half-trillion dollars on new projects. Chevron’s costs alone have jumped 56 percent since 2010.

A marvelous new presentation by Steven Kopits, Managing Director of the Douglas-Westwood consultancy, details oil supply, demand, cost and price trends with merciless precision. If you can take an hour to watch Kopits’ presentation I highly recommend it, as it’s the most comprehensive perspective you’ll find on the global dynamics of oil.

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The graphic above shows how capital spending (capex) by the world’s publicly listed oil majors has increased by more than a factor of five since 2000, while their production of oil has fallen back to the 2000 level after a few years of very modest increases. In Kopits’ earthy metaphor, the companies kept watering the plant but it just wouldn’t grow anymore—precisely as the peak oil model predicted.

The toxic combination of rising production costs, the rapid decline rates of the wells, diminishing prospects for drilling new wells, and a drilling program so out of control that it caused a glut and destroyed profitability, have finally taken their toll.

Numerous operators are taking major write-downs against reserves. WPX Energy, an operator in the Marcellus shale gas play, and Pioneer Natural Resources, an operator in the Barnett shale gas play, each have announced balance sheet “impairments” of more than $1 billion due to low gas prices. Chesapeake Energy, Encana, Apache, Anadarko Petroleum, BP, and BHP Billiton have disclosed similar substantial reserves reductions. Occidental Petroleum, which has made the most significant attempts to frack California’s Monterey Shale, announced that it will spin off that unit to focus on its core operations—something it would not do if the Monterey prospects were good. EOG Resources, one of the top tight oil operators in the United States, recently said that it no longer expects U.S. production to rise by 1 million barrels per day (mb/d) each year, in accordance with my 2014 oil and gas price forecast.

Coal and nuclear

When I wrote “Why baseload power is doomed” and “Regulation and the decline of coal power” in 2012, the suggestion that renewables might displace baseload power sources like coal and nuclear plants was generally received with ridicule. How could “intermittent” power sources with just a few percentage points of market share possibly hurt the deeply entrenched, reliable, fully amortized infrastructure of power generation?

But look where we are today. Coal plants are being retired much faster than most observers expected. The latest projection from the U.S. Energy Information Administration (EIA) is for 60 gigawatts (GW) of coal-fired power capacity to be taken offline by 2016, more than double the retirements the agency predicted in 2012. The vast majority of the coal plants that were planned for the United States in 2007 have since been cancelled, abandoned, or put on hold, according to SourceWatch.

Nuclear power plants were also given the kibosh at an unprecedented rate last year. More nuclear plant retirements appear to be on the way. Earlier this month, utility giant Exelon, the nation’s largest owner of nuclear plants, warned that it will shut down nuclear plants if the prospects for their profitable operation don’t improve this year.

Japan has just announced a draft plan that would restart its nuclear reactors, but the plan is “vague” and, to my expert nose, stinks of political machinations. What we do know is that the country has abandoned its plans to build a next-generation “fast breeder” reactor due to mounting technical challenges and skyrocketing costs.

Grid competition

Nuclear and coal plant retirements are being driven primarily by competition from lower-cost wind, solar, and natural gas generators, and by rising operational and maintenance costs. As more renewable power is added to the grid, the economics continue to worsen for utilities clinging to old fossil-fuel generating assets (a topic I have covered at length; for example, “Designing the grid for renewables,” “The next big utility transformation,” “Can the utility industry survive the energy transition?” “Adapt or die – private utilities and the distributed energy juggernaut” and “The unstoppable renewable grid“).

Nowhere is this more evident than in Germany, which now obtains about 25 percent of its grid power from renewables and which has the most solar power per capita in the world. I have long viewed Germany’s transition to renewables (see “Myth-busting Germany’s energy transition“) as a harbinger of what is to come for the rest of the developed world as we progress down the path of energy transition.

RWE said it will write down nearly $4 billion on those assets, but the pain doesn’t end there. Returns on invested capital at the three utilities are expected to fall from an average of 7.7 percent in 2013 to 6.5 percent in 2015, which will only increase the likelihood that pension funds and other fixed-income investors will look to exchange traditional utility company holdings for “green bonds” invested in renewable energy. The green bond sector is growing rapidly, and there’s no reason to think it will slow down. Bond issuance jumped from $2 billion in 2012 to $11 billion in 2013, and the now-$15 billion market is expected to nearly double again this year.

A new report from the Rocky Mountain Institute and CohnReznick about consumers “defecting” from the grid using solar and storage systems concludes that the combination is a “real, near and present” threat to utilities. By 2025, according to the authors, millions of residential users could find it economically advantageous to give up the grid. In his excellent article on the report, Stephen Lacey notes that lithium-ion battery costs have fallen by half since 2008. With technology wunderkind Elon Musk’s new announcement that his car company Tesla will raise up to $5 billion to build the world’s biggest “Gigafactory” for the batteries, their costs fall even farther. At the same time, the average price of an installed solar system has fallen by 61 percent since the first quarter of 2010.

At least some people in the utility sector agree that the threat is real. Speaking in late February at the ARPA-E Energy Summit, CEO David Crane of NRG Energy suggested that the grid will be obsolete and used only for backup within a generation, calling the current system “shockingly stupid.”

Non-hydro renewables are outpacing nuclear and fossil fuel capacity additions in much of the world, wreaking havoc with the incumbent utilities’ business models. The value of Europe’s top 20 utilities has been halved since 2008, and their credit ratings have been downgraded. According to The Economist, utilities have been the worst-performing sector in the Morgan Stanley index of global share prices. Only utilities nimble enough to adopt new revenue models providing a range of services and service levels, including efficiency and self-generation, will survive.

In addition to distributed solar systems, utility-scale renewable power plants are popping up around the world like spring daisies. Ivanpah, the world’s largest solar “power tower” at 392 megawatts (MW),  just went online in Nevada. Aura Solar I, the largest solar farm in Latin America at 30 MW, is under construction in Mexico and will replace an old oil-fired power plant. India just opened its largest solar power plant to date, the 130 MW Welspun Solar MP project. Solar is increasingly seen as the best way to provide electricity to power-impoverished parts of the world, and growth is expected to be stunning in Latin America, India and Africa.

Renewable energy now supplies 23 percent of global electricity generation, according to the National Renewable Energy Laboratory, with capacity having doubled from 2000 to 2012. If that growth rate continues, it could become the dominant source of electricity by the next decade.

Environmental disasters

Faltering productivity, falling profits, poor economics and increasing competition from power plants running on free fuel aren’t the only problems facing the fossil-fuels complex. It has also been the locus of increasingly frequent environmental disasters.

On Feb. 22, a barge hauling oil collided with a towboat and spilled an estimated 31,500 gallons of light crude into the Mississippi River, closing 65 miles of the waterway for two days.

More waterborne spills are to be expected along with more exploding trains as crude oil from sources like the Bakken shale seeks alternative routes to market while the Keystone XL pipeline continues to fight an uphill political battle. According to the Association of American Railroads, the number of tank cars shipping oil jumped from about 10,000 in 2009 to more than 230,000 in 2012, and more oil spilled from trains in 2013 than in the previous four decades combined.

Feb. 11 will go down in history as a marquee bad day for fossil fuels, on which 100,000 gallons of coal slurry spilled into a creek in West Virginia; a natural gas well in Dilliner, Pa., exploded (and burned for two weeks before it was put out); and a natural gas pipeline ruptured and exploded in Tioga, ND. Two days later, another natural gas line exploded in the town of Knifely, Ky., igniting multiple fires and destroying several homes, barns, and cars. The same day, another train carrying crude oil derailed near Pittsburgh, spilling between 3,000 and 7,500 gallons of crude oil.

And don’t forget the spill of 10,000 gallons of toxic chemicals used in coal processing from a leaking tank in West Virginia in early January, which sickened residents of Charleston and rendered its water supply unusable.

No return

At this point you may think, “Well, this is all very interesting, Chris, but why should we believe we’ve reached some sort of tipping point in energy transition?”

To which I would say, ask yourself: Is any of this reversible?

Is there any reason to think the world will turn its back on plummeting costs for solar systems, batteries, and wind turbines, and revert back to nuclear and coal?

Is there any reason to think we won’t see more ruptures and spills from oil and gas pipelines?

What about the more than 1,300 coal-ash waste sites scattered across the United States, of which about half are no longer used and some are lacking adequate liners? How confident are we that authorities will suddenly find the will, after decades of neglect, to ensure that they’ll not cause further contamination after damaging drinking water supplies in at least 67 instances so far, such that we feel confident about continuing to rely on coal power?

Like the disastrous natural gas pipeline that exploded in 2010 and turned an entire neighborhood in San Bruno, Calif., into a raging inferno, coal-ash waste sites are but one part of a deep and growing problem shot through the entire fabric of America: aging infrastructure and deferred maintenance. President Obama just outlined his vision for a $302 billion, four-year program of investment in transportation, but that’s just a drop in the bucket, and it’s only for transportation.

Is there any reason to think citizens will brush off the death, destruction, environmental contamination of these disasters—many of them happening in the backyards of rural, red-state voters—and not take a second look at clean power?

Is there any reason to believe utilities will swallow several trillion dollars worth of stranded assets and embrace new business models en masse? Or is it more likely that those that can will simply adopt solar, storage systems, and other measures that ultimately give them cheaper and more reliable power, particularly in the face of increasingly frequent climate-related disasters that take out their grid power for days or weeks?

Is there any reason to think the billions of people in the world who still lack reliable electric power will continue to rely on filthy diesel generators and kerosene lanterns as the price of oil continues to rise? Or are they more likely to adopt alternatives like the SolarAid solar lanterns, of which half a million have been sold across Africa in the past six months alone? (Here’s a hint: Nobody who has one wants to go back to their kerosene lantern.) Founder Jeremy Leggett of SunnyMoney, who created the SolarAid lanterns, intends to sell 50 million of them across Africa by 2020.

Is there any reason to believe solar and wind will not continue to be the preferred way to bring power to the developing world, when their fuel is free and conventional alternatives are getting scarcer and more expensive?

Is there any reason a homeowner might not think about putting a solar system on his or her roof, without taking a single dollar out of his or her pocket, and using it to charge up an electric vehicle instead of buying gasoline?

Is there any reason to think that drilling for shale gas and tight oil in the United States will suddenly resume its former rapid growth rates, when new well locations are getting harder to find, investment by the oil and gas companies is being slashed, share prices are falling, reserves are getting taken off balance sheets and investors are getting nervous?

I don’t think so. All of these trends have been developing for decades, and new data surfacing daily only reinforces them.

The energy transition tipping point is here, and there’s no going back.

Photo: Vladimir Cetinski, iStock Photo

 

Feb 28, 2014

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Chris Nelder

Columnist (Energy)

Chris Nelder is an energy analyst and consultant who has written about energy and investing for more than a decade. He is the author of two books on energy and investing, Profit from the Peak and Investing in Renewable Energy, and has appeared on BBC TV, Fox Business, CNN national radio, Australian Broadcasting Corp., CBS radio and France 24. He is based in California. Follow him on Twitter. Disclosure

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