Category Archives: Business

Climate action and economies can grow together

Investing in renewables such as solar energy can spur economic activity Image: Alex Snyder/Wayne National Forest via Wikimedia Commons
Working together: investing in renewables such as solar energy can spur economic activity
Image: Alex Snyder/Wayne National Forest via Wikimedia Commons

By Kieran Cooke

A new global commission report by major political and business figures refutes the claim that economic expansion and tackling climate change can’t both be achieved at the same time.

LONDON, 17 September, 2014 − We can have our cake and eat it. That’s the main message of a new study that says the idea that we have to choose between battling against climate change or promoting growth in the world’s economy is a “false dilemma”.

The report, The New Climate Economy, was produced by the Global Commission on the Economy and Climate, chaired by Felipe Calderón, the former president of Mexico, and including eminent economist Lord [Nicholas] Stern.

Calderon, addressing what he describes as a “false dilemma”, says: “The message to leaders is clear. We don’t have to choose between economic growth and a safe climate. We can have both.”

Lord Stern, author of the 2006 Stern Review, which comprehensively detailed, for the first time, the economic consequences of not taking action on climate change, says decisions being made now will determine the future of both the economy and the climate.

High-quality growth

“If we choose low-carbon investment, we can generate strong, high-quality growth – not just in the future, but now,” he says. “But if we continue down the high-carbon route, climate change will bring severe risks to long-term prosperity.”

The commission’s report, released at the United Nations in New York shortly before a major UN climate summit, says there are now big opportunities for achieving strong economic growth and, at the same time, lowering emissions across three sectors:

  • Building more compact, better connected cities will improve the quality of life of urban dwellers, improve economic performance, and lower emissions.
  • Improved land use can cut emissions resulting from deforestation. Restoring 12% of the world’s degraded land would dramatically raise farmers’ incomes.
  • More and more of the world’s energy is likely to be generated by renewables, cutting dependence on highly-polluting coal. Renewables is now a big growth industry, spurring on various economic activities.

The report says that about US$90 trillion is likely to be invested in infrastructure in the world’s cities, agriculture and energy systems over the next 15 years, and spending should be directed towards low-carbon growth that would not only benefit the climate but also business productivity.

The study calls for the phasing out of huge amounts spent worldwide on subsidies for fossil fuels – currently US$600 billion, compared with US$100bn for renewable, the report says. Competitive energy markets, consistent government policy, a strong price for carbon, and greatly expanded research in low carbon technologies are also needed.

If fully implemented, the report’s authors calculate, a reduction of up to 90% in emissions could be achieved by 2030, and dangerous climate change would be averted.

Meaningful action

Although the report’s findings have been endorsed by a wide range of leading politicians, business figures and economists, there are those who would argue against the idea that economic growth can be achieved alongside meaningful action on climate change.

For example, the New Economics Foundation (NEF), a UK thinktank, contends that indefinite global economic growth is unsustainable.

In a 2010 report, Growth Isn’t Possible, the NEF said economic growth is constrained by the finite nature of the planet’s natural resources. “Growth forever, as conventionally defined, within fixed though flexible limits, is not possible,” it said. “Sooner or later, we will hit the biosphere’s buffers.”

Others would point out that although a carbon market has been in operation for several years, the price of carbon has failed to rise. The introduction of market forces and competition in the energy sector in many countries has done little to lessen greenhouse gas emissions.

In many countries, including India, China, Australia and some states in Europe, a central role in driving economic growth is still played by coal, the most polluting of all energy sources. – Climate News Network

Top 20 oil projects put investors’ billions at risk

An oil extraction platform in the North Sea, off the coast of Norway Image: Håkon Thingstad via Wikimedia Commons
An oil extraction platform in the North Sea, off the coast of Norway
Image: Håkon Thingstad via Wikimedia Commons

By Alex Kirby

An oil industry thinktank warns that high-cost extraction projects failing to match oil demand with global emissions reduction targets could waste US$91 billion of investors’ money over the next decade. 

LONDON, 15 August 2014 – If you want a safe bet, don’t invest in some of today’s tempting oil and gas projects. That’s the message from a UK-based financial thinktank that aims to align the global energy market with climate reality.

The report, by the not-for-profit Carbon Tracker Initiative (CTI), warns that US$ 91 billion of investors’ money risks going to waste over the next decade because of the industry’s plans.

It highlights a top 20 of the world’s most expensive future oil projects being considered for development, and concludes that, to be profitable, some of them will need oil prices to be far higher than today’s levels.

The findings in the report, CTI says, demonstrate the mismatch between continuing oil demand and reducing carbon emissions to limit global warming.

Economic justification

Since an earlier CTI report in May this year, institutional investors have been asking for more details of the economic justification for projects that require high oil prices.

This latest research ranks oil majors according to their capex (capital expenditure) exposure to undeveloped, high-cost projects, and reveals the projects at highest risk.

The companies, CTI says, need to reduce exposure to exploration projects that must earn the highest prices for their oil, and that this is the principle that should determine investment decisions, rather than the simple pursuit of production volume.

“This analysis demonstrates the worsening
cost environment in the oil industry”

All the fields require at least $95 a barrel to be sanctioned, identified by CTI as the key risk level −  the market price required to go ahead with the project, assuming a $15 contingency allowance or “risk premium” on top of the break-even price.

Some projects will need prices above $150 per barrel. The global Brent oil benchmark has ranged between $99 and $114 per barrel over the past 12 months.

Using data from the independent consultants Rystad Energy, CTI finds that BP, ConocoPhillips, ExxonMobil, Chevron, Total, Eni and Royal Dutch Shell are considering investing a total of $357 billion over the next decade on new production in costly and often technically-challenging projects − ranging from Canadian oil sands to deep water finds in the Gulf of Mexico and discoveries in the Arctic.

Both BP and Total have particularly high exposure to deep water and ultra-deep water projects, while ConocoPhillips is heavily exposed to Arctic projects. High carbon-emitting oil sands projects account for 27% and 26% respectively of Shell’s and Conoco’s potential high-cost development spend.

“This analysis demonstrates the worsening cost environment in the oil industry, and the extent to which producers are chasing volume over value at the expense of returns,” said Andrew Grant, CTI analyst.

Projects shelved

Some majors have started cutting already. For example, in the Canadian oil sands sector so far this year, Total and Suncor have shelved the $11bn Joslyn mine project, and Royal Dutch Shell has put on hold its Pierre River project.

With deep-water projects, BP has delayed/cancelled its Mad Dog extension in the Gulf of Mexico, and Chevron is reviewing its $10bn Rosebank project in the North Sea.

In the Arctic, Statoil and Eni have deferred a decision on the $15.5bn Johan Castberg project.

The CTI report says projects that depend on sustained high prices for a return are at risk from a future double hit of falling oil prices and growing climate regulation in an increasingly carbon-constrained world.

Its study in May this year showed that oil prices have twice fallen as low as $40 per barrel in the last decade.

The US Energy Information Administration recently reported that the oil and gas sector has increased borrowing heavily to cover spending and dividends. − Climate News Network

US climate change debate heats up

Skiing areas such as Colorado are being hit by warmer winters Image: DebateLord at Wikimedia Commons
Skiing tourism areas such as Colorado are being hit by warmer winters
Image: DebateLord at Wikimedia Commons

By Kieran Cooke

Groups for and against US government plans for new regulations aimed at cutting greenhouse gas emissions have been slugging it out at a series of heated debates across America.

LONDON, 11 August, 2014 − Achieving progress in cutting back on greenhouse gas emissions and preventing serious global warming is never easy. But just how difficult a task that is became clear at a series of recent meetings across the US held to discuss the Obama administration’s latest plans for tackling climate change.

Those plans, announced in early June by the government’s Environmental Protection Agency, call for substantial nationwide cuts in greenhouse gas emissions.

Power companies − in particular, those operating coal-fired plants − will have to make big adjustments, reducing overall CO2 emissions by 25% on 2005 levels by 2025 and by 30% by 2030.

The EPA-sponsored public meetings, held in four US cities, were packed.

Long overdue

In Denver, in the state of Colorado, representatives of the skiing industry − a vital part of the state’s economy − said the new regulations were long overdue.

Skiing organisations said changes in climate were already happening and the industry was being badly hit, with drier and warmer winters resulting in less and less snow.

But coal mining is also central to Colorado’s economy. One resident of a coal mining community told the meeting: “The environmental extremist war on coal is really a war on prosperity. Coal means families can buy homes and put food on the table.”

The multi-billion dollar US coal industry is training its big guns on the EPA proposals.

Fred Palmer, a representative for Peabody Energy Corporation, the biggest coal producer in the US, told a meeting at the EPA’s HQ in Washington that the government should provide more funds for new technologies such as carbon capture and storage.

“Climate change is an issue we need to deal with in the right way,” Palmer said, “The only way to approach it is with technology, not with command-and-control from Washington.”

Other coal lobbyists have been wading into the fray. The American Coalition for Clean Coal Electricity said the EPA’s emissions cutting programme “threatens to dismantle our nation’s economy, fundamentally alter the American way of life, and severely hamper US energy independence and leadership”.

Groups of campaigners in favour of the EPA proposals demonstrated at the meetings, with the area round the EPA’s Washington office turned into the site of a large green carnival.

Adamantly opposed

Although the Obama administration has a considerable battle on its hands – with many politicians, corporate groups and powerful business organisations adamantly opposed to the new proposals – there are signs that the White House is determined to implement the measures.

Coinciding with the public meetings around the country, the government’s Council of Economic Advisers issued a report saying cutting emissions makes sense economically, as well as environmentally.

For each decade that action on emissions is delayed, costs of meeting reduction targets rise by more than 40%, the report says.

The public mood about the seriousness of climate change and the need to take action seems to back Washington’s stance.

A recent poll carried out by the ABC news network in the US and the Washington Post found that seven out of 10 people think global warming is a serious problem that needs to be tackled – and more than 60% of those questioned wanted action on emissions, even if it means higher energy bills. – Climate News Network

Marine economy sinks as ocean acidity rises

Crab pots and fishing nets at Dutch Harbour, Alaska Image: Michael Theberge/NOAA Photo Library via Wikimedia Commons
Crab pots and fishing nets at Dutch Harbour, Alaska
Image: Michael Theberge/NOAA Photo Library via Wikimedia Commons

By Kieran Cooke

Research has highlighted the negative effect acidification of oceans can have on marine life, but now fishing communities are waking up to the big threat it poses to their livelihoods.

LONDON, 6 August, 2014 − The waters off the US state of Alaska are some of the best fishing grounds anywhere, teeming with salmon and with shellfish such as crab.

But a new study, funded by the US National Oceanic and Atmospheric Administration (NOAA), says growing acidification of Alaska’s waters, particularly those off the southern coast, threatens the state’s whole economy − largely dependent on the fishing industry.

The study, which appears in the journal Progress in Oceanography, says that not only will the state’s commercial fishing sector be badly hit by a growth in acidification, but it will also affect subsistence fisherpeople whose diet mainly consists of the catch from local waters.

Forming acid

The oceans act as a “carbon sink”, absorbing vast amounts of carbon dioxide. Acidification occurs when amounts of carbon dioxide are dissolved into seawater, where it forms carbonic acid.

Scientists say the oceans are now 30% more acidic than they were at the beginning of the industrial revolution about 250 years ago.

Among the sea species most vulnerable to acidification are shellfish, because a build-up of acid in waters prevents species developing their calcium shells. Alaska’s salmon stocks are also at risk as one of the main ingredients of a salmon diet are pteropods, small shell creatures.

Jeremy Mathis, an NOAA oceanographer and a lead author of the study, told the Alaska Dispatch News that whereas past reports had focused on the consequences of increased acidification on ocean species, the aim of this one was designed to examine the wider economic impact.

“This is an economic-social study,” Mathis said. “It focuses on food security, employment opportunity, and the size of the economy.”

Mathis said acidification is more likely in Alaskan waters than in many other parts of the world. He explained: “It’s all about geography. The world’s ocean currents end their cycles here, depositing carbon dioxide from elsewhere. The coastal waters of Alaska sit right at the end of the ocean conveyor belt.”

Elsewhere, acidification is already having a serious impact on fishing and shellfish industries.

Oysters dying

The New York Times reports that billions of baby oysters – known as spat – are dying off the coast of Washington state in the north-western US.

In May this year, the US government’s major report on climate change, the National Climate Assessment, said that waters off the north-west of the country are among the world’s most acidic.

Jay Inslee, Governor of Washington, says an industry worth US$270 million is at risk. “You can’t overstate what this means to Washington,” he says.

Inslee and many others in Washington state are fighting plans by the coal industry to build large coal ports in the region in order to export to China and elsewhere in Asia.

Climate scientists say greenhouse gas emissions resulting from coal burning are a main cause of global warming. − Climate News Network

Ignoring climate risks could sink US economy

Flood devastation after Hurricane Katrina hit Louisiana in 2005 Image: Infrogmation via Wikimedia Commons
Harsh reminder: devastation after Hurricane Katrina hit Louisiana in 2005
Image: Infrogmation via Wikimedia Commons

By Alex Kirby

Failure to factor immediate action on climate change into American policies and business plans aimed at economic prosperity will lead to havoc, warns former US Treasury Secretary.

LONDON, 3 August, 2014 − For the second time in a month, Americans have been warned that the economic cost of not acting on climate change is likely to be calamitous.

Robert Rubin, the co-chairman of the influential, non-partisan Council on Foreign Relations, says the price of inaction could be the US economy itself.

Writing in the Washington Post, Rubin, a former US Treasury Secretary, argues: “When it comes to the economy, much of the debate about climate change − and reducing the greenhouse gas emissions that are fuelling it − is framed as a trade-off between environmental protection and economic prosperity,

“But from an economic perspective, that’s precisely the wrong way to look at it. The real question should be: ‘What is the cost of inaction?’”

Widespread disruption

He backed the Risky Business Project, a research initiative chaired by a bi-partisan panel and supported by him and several other former Treasury Secretaries. It reported in June that the American economy could face significant and widespread disruption from climate change unless US businesses and policymakers take immediate action.

In his opinion article in the Washington Post, Rubin argues that, in economic terms, taking action on climate change will prove far less expensive than inaction. He wrote: “By 2050, for example, between $48 billion and $68 billion worth of current property in Louisiana and Florida is likely to be at risk of flooding because it will be below sea level. And that’s just a baseline estimate; there are other scenarios that could be catastrophic.

“Then, of course, there is the unpredictable damage from superstorms yet to come. Hurricane Katrina and Hurricane Sandy caused a combined $193 billion in economic losses; the congressional aid packages that followed both storms cost more than $122 billion.

“And dramatically rising temperatures in much of the country will make it far too hot for people to work outside during parts of the day for several months each year − reducing employment and economic output, and causing as many as 65,200 additional heat-related deaths every year.”

Rubin believes a fundamental problem with tackling climate change is that the methods used to gauge economic realities do not take climate change into consideration. He wants climate-change risks reflected accurately, and companies required to be transparent in reporting vulnerabilities tied to climate.

“If companies were required to highlight their exposure to climate-related risks, it would change investor behaviour, which in turn would prod those companies to change their behaviour,” he argues.

Flawed picture

“Good economic decisions require good data. And to get good data, we must account for all relevant variables. But we’re not doing this when it comes to climate change − and that means we’re making decisions based on a flawed picture of future risks.

“While we can’t define future climate-change risks with precision, they should be included in economic policy, fiscal and business decisions, because of their potential magnitude.”

Rubin says the scientific community is “all but unanimous” in agreeing that climate change is a serious threat. He insists that it is a present danger, not something that can be left to future generations to tackle.

“What we already know is frightening, but what we don’t know is more frightening still,” he writes. “For example, we know that melting polar ice sheets will cause sea levels to rise, but we don’t know how negative feedback loops will accelerate the process. . . And the polar ice sheets have already started to melt.”

He concludes: “We do not face a choice between protecting our environment or protecting our economy. We face a choice between protecting our economy by protecting our environment − or allowing environmental havoc to create economic havoc.”

The White House’s Council of Economic Advisers  has estimated that the eventual cost of cutting greenhouse gas emissions will increase by about 40% for every decade of delay, because measures to restrict them will be more stringent and costlier as atmospheric concentrations grow. − Climate News Network

Boom-or-doom riddle for nuclear industry

Doubling up: solar panels at a nuclear power plant in the Czech Republic. Image: Jiří Sedláček (Frettie) 
Doubling up: solar panels at a nuclear power plant in the Czech Republic.
Image: Jiří Sedláček (Frettie) via Wikimedia Commons

By Paul Brown

The nuclear industry remains remarkably optimistic about its future, despite evidence that it is a shrinking source of power as renewables increasingly compete to fill the energy gap. 

LONDON, 26 July, 2014 − The headline figures for 2014 from the nuclear industry describe a worldwide boom in progress, with 73 reactors presently being built and another 481 new ones either planned or approved.

The World Nuclear Association (WNA) official website paints a rosy picture of an industry expected to expand dramatically by 2030. It says that over the period 1996 to 2013 the world retired 66 reactors, and 71 started operation. Between now and 2030, the industry expects another 74 reactors to close, but 272 new ones to come on line.

This represents a much larger net increase in nuclear electricity production than the basic figures suggest because most of the newer power stations have a bigger capacity than those closing down.

Pipe dream

Detractors of the industry say that these projections are a pipe dream and that nuclear power will not expand at that pace, if at all, and that solar and wind power will grow much faster to fill the energy gap.

Which projection is correct matters enormously because the world is both short of electric energy and needs to replace fossil fuels with low carbon sources of power to save the planet from dangerous climate change. Nuclear energy and renewables such as wind and solar are in competition to fill the gap.

The figures show that nuclear production is currently in decline from a peak in 2006, and is now producing less than 10% of the world’s electricity needs.

World solar capacity, on the other hand, increased by 35% in 2013, and wind power by 12.5% − although, added together, they still do not produce as much power as nuclear.

All the evidence is that wind and solar will continue to grow strongly, and particularly solar, where technological advances and quantity of production means that prices have dropped dramatically.

Costs of producing energy are hard to compare because solar is small and local and dependent on sunshine, while nuclear is large and distant and must be kept on all the time. However, research suggests that solar is already producing cheaper power per kilowatt hour than nuclear, the costs of which have not come down.

Commercial market

Both costs and time seem to be major factors in deciding which technology will gain market share. Nuclear stations are expensive and a long time passes before electricity is produced, making them almost impossible to finance in a normal commercial market. Solar panels, in contrast, can be up and running in days, and wind turbines within weeks.

Historically, nuclear power plants have always been built with government subsidy – a pattern that is continuing across the world. For example, the two countries with the largest number of reactors under construction − China, with 29, and Russia, with 10 − have populations with no democratic say in the matter.

Critics of the WNA figures say that while the claims for reactors planned and proposed might be real, the chances of most of them actually being built are remote.The US is said to have five reactors under construction, five more planned and 17 proposed – but with existing nuclear stations closing because they cannot compete with gas on price, it is unlikely that all of these will be completed by 2030.

The UK, which has a government keen to build nuclear stations, is said to have four stations planned and seven more proposed. The first of these stations was due to be opened by 2017, but work has not yet been started. The earliest completion date is now expected to be 2024, and the rest will follow that.

The delay in Britain is partly because the subsidies offered to French, Chinese and Japanese companies to build the UK reactors are under investigation by the European Commission to see if they breach competition rules.

Massive subsidies

Martin Forward is from the English Lake District, where one of the four nuclear stations is planned, and runs Cumbrians Opposed to a Radioactive Environment. He said: “I cannot see how nuclear has any future in Europe because of cost. Nuclear needs massive subsidies to be financially viable, but these are currently illegal under European law, so it is unlikely that the British ones will be built.

“Even if the government can get over that hurdle, there are many problems to overcome − for example, the designs of the stations have to be finalised. The process could take years, by which time wind, solar and other renewables will have expanded so much it will make nuclear redundant.”

The industry does not accept this, pointing to the US, where utilities hope that all five plants currently under construction will be producing power by 2019.

Siobhan O’Meara, a senior analyst at Nuclear Energy Insider, is one of the organisers of an annual “nuclear construction summit”, the sixth of which is taking place in Charlotte, North Carolina, in October.

She said: “With nuclear new build taking off once again across the globe, it’s never been more critical to finance, plan and deliver your construction programmes on time and budget.”

Time will tell who is right. – Climate News Network

Waste problems still haunt nuclear option

Closing shot: the nuclear popwer plant at San Onofre, California Image: D Ramey Logan/WPPilot via Wikimedia Commons
Closing shot: the nuclear power plant at San Onofre, California
Image: D Ramey Logan/WPPilot via Wikimedia Commons

By Paul Brown

Nuclear power is seen as one of the possible solutions to climate change, but the recent closure of five US power stations is forcing the industry to face up at last to the damaging legacy of how to deal with radioactive waste.

LONDON, 15 July, 2014 − Long-term employment is hard to find these days, but one career that can be guaranteed to last a lifetime is dealing with nuclear waste.

The problem and how to solve it is becoming critical. Dozens of nuclear power stations in the US, Russia, Japan, and across Europe and Central Asia are nearing the end of their lives.

And when these stations close, the spent fuel has to be taken out, safely stored or disposed of, and then the pressure vessels and the mountains of concrete that make up the reactors have to be dismantled. This can take between 30 and 100 years, depending on the policies adopted.

In the rush to build stations in the last century, little thought was given to how to take them apart 40 years later. It was an age of optimism that science would always find a solution when one was needed, but the reality is that little effort was put into dealing with the waste problem. It is now coming back to haunt the industry.

Profitable business

Not that everyone sees it as a problem. A lot of companies view nuclear waste as a welcome and highly profitable business opportunity.

Either way, because of the dangers of radioactivity, it is not a problem that can be ignored. The sums of money that governments will have to find to deal with keeping the old stations safe are eye-wateringly large. They will run into many billions of dollars − an assured income for companies in the nuclear waste business, stretching to the end of this century and beyond.

The US is a prime example of a country where the nuclear waste issue is becoming rapidly more urgent.

The problem has been brought to the fore in the US because five stations have closed in the last two years. The Crystal River plant in Florida and San Onofre 1 and 2 in California have closed down because they were judged too costly to bring up to modern standards. Two more − Kewaunee in Wisconsin andthe  Vermont Yankee plant − could no longer compete on cost with the current price of natural gas and increased subsidies for renewables.

Nuclear Energy Insider, which keeps a forensic watch on the industry, predicts that several other nuclear power stations in the US will also succumb to premature closure because they can no longer compete.

The dilemma for the industry is that the US government has not solved the problem of what to do with the spent fuel and the highly radioactive nuclear waste that these stations have generated over the last 40 years. They have collected a levy − kept in a separate fund that now amounts to $31 billion − to pay for solving the problem, but still have not come up with a plan.

Legal action

Since it costs an estimated $10 million dollars a year to keep spent fuel safe at closed stations, electricity utilities saddled with these losses, and without any form of income, are taking legal action against the government.

The US government has voted another $205 million to continue exploring the idea of sending the waste to the remote Yucca Mountain in Nevada − an idea fought over since 1987 and still no nearer solution. Even if this plan went through, the facility would not be built and accepting waste until 2048.

The big problem for the US, the utility companies and the consumers who will ultimately pay the bill is what to do in the meantime with the old stations, the spent fuel, and the sites. Much of the fuel will be moved from wet storage to easier-to-manage dry storage, but it will still be a costly process. What happens after that, and who will pay for it, is anyone’s guess.

The industry is having a Nuclear Decommissioning and Used Fuel Strategy Summit in October in Charlotte, North Carolina, to try to sort out some of these issues.

But America is not alone. The UK has already closed a dozen reactors. Most of the rest are due to be retired by 2024, but it is likely that the French company EDF, which owns the plants, will try to keep them open longer.

The bill for dealing with existing nuclear waste in Britain is constantly rising and currently stands at £74 billion, even without any other reactors being decommissioned.

The government is already spending £2 billion each year trying to clear up the legacy of past nuclear activities, but has as yet found no solution to dealing with the thousands of fuel rods still in permanent store at power stations.

As with the US, even if a solution is found, it would be at least 2050 before a facility to deal with this highly dangerous waste could be found. By that time, billions of pounds will have been expended just to keep the used fuel from igniting and causing a nuclear meltdown.

It is hard to know how the industry’s finances could stand such a drain on its resources without going bankrupt.

Similar problems are faced by Germany, which is already closing its industry permanently in favour of renewables, and France, with more than 50 ageing reactors.

Japan, still dealing with the aftermath of the Fukushima accident in 2011, is composed of crowded islands where few people will welcome a nuclear waste depository.

Many countries in the former Soviet bloc with ageing reactors look to Russia − which provided them − to solve their problems. But this may be a false hope, as Russia has an enormous unsolved waste problem of its own.

Dramatic rise

In all these countries, the issue of nuclear waste and what to do with it is a problem that has been put off − both by the industry and politicians − as an issue to be dealt with sometime in the future. But the problem is becoming more urgent as the costs and the volume of waste rises dramatically.

Unlike any other form of generation, even dirty coal plants, getting rid of nuclear stations is no simple matter. To cleanse a nuclear site so that it can be used for another industrial use is difficult. Radioactivity lasts for centuries, and all contamination has to be physically removed.

For many critics of the industry, the nuclear waste issue has always been a moral issue − as well as a financial one − that should not be left to future generations to solve. The industry itself has always relied on its continuous expansion, and developing science, to deal what it calls “back end costs” at some time in the distant future.

But as more stations close, and fewer new ones are planned to raise revenue, putting off the problem no longer seems an option, either for the industry or for the governments that ultimately will have to pick up the bill. – Climate News Network

Critics refute assets claim by ‘Orwellian’ Shell

 

Clouded view? A Shell oil refinery in the UK Image: S Parish/geograph.org.uk via Wikimedia Commons
Clouded view? Sunset over a flare stack at a Shell oil refinery in the UK
Image: S Parish/geograph.org.uk via Wikimedia Commons

By Alex Kirby

The world’s biggest oil company has been accused of ‘doublethink’ in claiming that its fossil fuel assets will continue to be highly profitable and in demand, while recognising the need for decisive action on climate change.

London, 9 July 2014 − Is investment in fossil fuels a prudent bet? For some time, critics have been warning major oil and gas companies that their reserves could soon be worthless if the world acts decisively on climate change.

The world’s biggest oil company, Shell, recently insisted that its reserves would remain in demand and would continue to sell at a profit, and that no global climate agreement would damage its profits.

But now two groups − the Carbon Tracker Initiative (CTI) and Energy Transition Advisors (ETA) − have today published a response to Shell’s “stranded assets” statement.

The debate itself is warming up, with one critic dismissing Shell’s statement as “Orwellian doublethink”.

The thinktanks’ reply is based on a detailed technical analysis of Shell’s argument. They say they welcome the company’s engagement with the issue, but accuse it in effect of cherrypicking the arguments to suit its case.

Weaker demand

Shell’s approach, they say, is based on dismissing potentially weaker demand for its oil as a result of tougher climate policies, technological advances and slower economic growth.

They also say the company selectively applies different timelines to fit its business strategy, highlighting conventional projects with short lead times and lower capital costs, rather than its growing unconventional and deepwater resources portfolio. This will be more capital-intensive, have longer lead times, and extended payback periods.

Shell, they say, considers only its proven oil and gas reserves, equalling 11.5 years of production at current rates. Adding existing discoveries would extend that period to 25 years, and possibly longer.

The analysis by CTI and ETA points out that while Shell recognises the need for urgent action, it argues that the world will fail to meet the internationally-agreed global warming target of no more than a 2°C rise in temperature.

“. . .as classic a case of Orwellian doublethink
as you are likely to find.”

Anthony Hobley, CEO of CTI, said: “Acknowledging the seriousness of the climate challenge whilst at the same time asserting no effective action will be taken until the end of the century is as classic a case of Orwellian doublethink as you are likely to find.”

The groups also say the company relies on carbon capture and storage (CCS) as a panacea to combat climate change, although it has yet to prove itself at a commercial scale. CTI’s 2013 research showed that CCS could provide only a limited extension (14%) of the carbon budget − the amount the world can afford to emit − to 2050.

Shell’s response, the report’s authors say, selectively focuses on producing oil fields and projects nearest to completion. They point out: “Our analysis examines a broader range of its assets. . . Over the next 10 years, we estimate that Shell could invest some $77 billion in high-risk, high-cost projects (needing a market price over US$95 per barrel).

“If Shell invests the proceeds from its producing assets into resources such as these, it will be at a progressively greater risk to changes in demand caused by measures to cut pollution.”

Unlike Shell, they say, they believe that climate regulation and related environmental policy is gathering pace, while other economic forces such as efficiency are also affecting demand.

Mothballed projects

They believe there is a real risk that global oil demand will decline within the next 10-15years − even without a global climate deal. They say that the lead times of 15-20 years required to bring many newly-discovered resources to market will only compound the possibility that scarce pension fund money and other investments will be lost in mothballed projects.

Oil companies, they recommend, should examine and disclose risks to all potential future production, rather than restricting focus to proven reserves alone.

Shell should also provide more detail on the role its internal carbon price of $40 per tonne plays in hitting demand for its oil, and its $77 billion of potential capital expenditure (2014-25) on new high-cost oil production (above a market price of $95 per barrel) ought to be a focal point for engagement with investors.

To help shareholders to assess risk, oil companies should disclose estimated break-even oil prices (BEOPs) of all new projects, CTI and ETA argue. − Climate News Network

UK doctors vote to end fossil fuels funding

Unhealthy view: fossil fuel industries will not be funded doctors Image: Peter Gordois/geograph.org.uk via Wikimedia Commons
Clean break: fossil fuel industries will no longer get funding from the UK medical profession
Image: Peter Gordois/geograph.org.uk via Wikimedia Commons

By Alex Kirby

The British medical profession’s influential national organisation has sent out a strong message about climate change by deciding to withdraw its funds from the fossil fuel industry and to support renewable energy instead.

LONDON, 1 July, 2014 − The body that represents doctors in the UK has voted to end its investments in fossil fuel companies − making it the first national medical organisation in the world to do so.

A motion passed at the annual representatives’ meeting of the British Medical Association (BMA) − in effect, its annual general meeting − marks its commitment to withdraw financial support for fossil fuels and to pursue instead a corresponding increase in its investments in renewable energy.

This is in keeping with the statement by the recent Lancet Commission that climate change “could be the biggest global health threat of the 21st century”.

The BMA motion is understood to have been passed by a majority of about two-thirds, as part of a broader motion calling for a switch to renewable energy and the creation of a new alliance of health professionals focusing on the health effects of climate change.

Growing support

Tabled by members of the BMA’s Retired Members’ Forum and several of its local committees, the motion is part of growing support for the fossil fuel divestment movement, both internationally and in the UK.

Supporters of disinvestment argue on two main grounds. They say avoiding the worst impacts of climate change demands a rapid move away from fossil fuels; and if world leaders agree to do this, they say, most oil and gas will have to be left in the ground as unburnable, becoming “stranded assets”.

There were some dissenting voices during the debate on the BMA motion, but most of those who opposed it questioned how affordable and achievable it was likely to be, rather than expressing misgivings about what it set out to do.

The clause that called for divestment passed as a “reference”, meaning that the spirit and intent are kept but the BMA’s Council is not required to adhere to the exact wording. However, BMA watchers insist that it does represent a clear commitment to divest.

During the debate, the BMA’s Chair of Council and its treasurer said the Association would seek to divest “carefully and properly”, and not “only if [they] feel like it”.

An editorial published in the British Medical Journal in March called for divestment from fossil fuels because of the “scale and immediacy of the threat to human survival, health and wellbeing” posed by unmitigated climate change.

“The decision of the BMA adds momentum to a growing
divestment movement . . . around the world”

The health charities Medact, the Climate and Health Council and Healthy Planet UK, which represent health professionals and medical students, have since called on other UK health organisations to divest from fossil fuels.

Sir Andy Haines, professor of public health and primary care at the London School of Hygiene & Tropical Medicine, told the Climate News Network: “The decision of the BMA adds momentum to a growing divestment movement, including universities, cities and theological institutions and foundations around the world.

“There is a growing body of evidence that many policies to reduce greenhouse gas emissions can improve health in the near term as well.

Principled position

“Undoubtedly, the principled position of the BMA will encourage other institutions to do the same and increase the likelihood that a strong agreement on climate change can be negotiated by the end of 2015.”

Isobel Braithwaite, a medical student who is the co-ordinator of Healthy Planet UK, told the Network: “In a sense, this vote is symbolic, because unless an organisation has billions to invest it can’t by itself make a huge difference.

“But we think that the leadership the BMA has shown will help to encourage other health organisations, in the UK and elsewhere, to follow suit.”

David McCoy, a doctor who chairs Medact, said: “In the same way that ethical investors choose not to profit from tobacco and arms sales, the health community worldwide is correctly calling for divestment from another set of harmful activities.” − Climate News Network

Tofu offers a taste of cheaper solar energy

 

Traditional tofu production points the way to cheaper solar energy Image: DryPot via Wikimedia Commons
Traditional tofu production points the way to cheaper solar energy
Image: DryPot via Wikimedia Commons

By Tim Radford

The discovery by British scientists that a chemical used in making tofu and gritting icy roads is a much cheaper, safer option in the production of solar cells could have huge financial benefits for the renewable energy market.

LONDON, 30 June, 2014 − British researchers have found a new way to cut the cost of solar cell manufacture, and at the same time make the process less hazardous. Ironically, it is also very old way – using a chemical important in turning soy milk into tofu.

Jonathan Major and colleagues at the University of Liverpool report in Nature journal that magnesium chloride − traditionally added to soy milk as a coagulant to make tofu, but also used in gritting roads in winter time, used as bath salts, and sometimes even sold as a health supplement – could replace cadmium chloride as a “doping agent” to increase the efficiency of cadmium telluride solar cells.

Dangerous to handle

Cadmium chloride is very expensive, costing $0.30 (£0.18) per gram. It is also highly toxic and very dangerous to handle, which adds to the process costs. Naturally-occurring magnesium chloride costs only $0.001 per gram, and is one of the substances that makes the ocean salty. Since the planet is two-thirds ocean, there is no danger of running out of supplies.

Photovoltaic solar cells that convert sunlight directly to electricity are now big business, and getting bigger. They can be made of thin slivers of silicon, but the silicon wafer has to be 99.999% pure, and 200 microns thick  (0.2 millimetres). So industry has also started using cadmium telluride to make sheets of photovoltaic cells that have a thickness of only two microns (0.002mm) − so thin and flexible they could even be sold by the roll.

The problem with cadmium telluride is that, to make it efficient enough to compete, it must be washed with a doping agent − an impurity added to a pure substance to produce a deliberate change− and, so far, the industry has relied on cadmium chloride. Cadmium is a dangerous metal, toxic if swallowed, fatal if inhaled, and linked by some researchers to breast cancer, cardiovascular disease, and even gout. It isn’t very good for aquatic life either.

Extra expense

Cadmium telluride is a stable salt and safe to handle, but cadmium chloride separates in solution into cadmium and into chlorine, another toxic substance. So manufacturers have the extra expense of safety during production, and then of safe disposal of waste.

Dr Major and his team at the university’s Stephenson Institute for Renewable Energy are competitors in a worldwide search for ingenious ways to exploit renewable energy and reduce fossil fuel emissions.

They started this latest research by considering what it was about the cadmium chloride that made it effective, and then whether some other salt might serve the same purpose. They found that magnesium chloride had some of the same important physical properties, and then tested it.

“If renewable energy is going to compete with fossil fuels, then the cost has to come down,” Dr Major said. “Great strides have been made, but the findings in this paper have the potential to reduce costs further.” – Climate News Network