Croppers pose new threat to Amazon rainforest

Croppers pose new threat to Amazon rainforest

Analysts in the US say parts of the Brazilian Amazon may face new deforestation as ranchers move from raising beef cattle to cultivating crops such as palm oil.

LONDON, 12 October, 2014 − Despite Brazil having made great strides in reducing logging in the Amazon region, a US study says the country faces a renewed threat to its forests.

The report’s authors − who focused on the Amazon states of Mato Grosso and Pará, where they interviewed ranchers and meat processors − say the cost of raising beef cattle is prompting many ranchers to consider switching to crops such as palm oil.

The study by Datu Research, a global economic research firm based in Washington DC. was commissioned by the Environmental Defense Fund.

After decades of deforestation, it says, efforts to curb the losses have been working. Between 2005 and 2013, the rate of loss fell by nearly 80% − although  the Brazilian government’s figures show that losses rose again by 29% in the year to 31 July 2013.

The beef industry, meanwhile, which had caused nearly 75% of earlier deforestation, has continued to grow rapidly.

Curb on emissions

Researchers have argued that by taxing cattle on conventional pasture and by subsidising semi-intensive cattle rearing, Brazil could curb up to 26% of the global greenhouse gas (GHG) emissions caused by the loss of forests. This in turn adds up to about one-fifth of all human-caused GHG emissions.

But the forests face problems from another quarter. The authors of the Datu Research study say pressure from Western companies requiring deforestation-free supply chains for beef from the Amazon risks being overwhelmed by big increases in demand from non-Western countries.

Russia’s recent embargo of Western beef, for example, means it has increased its demand for Brazilian beef by over 10%, creating alternative markets that do not require deforestation-free operations.

The amalgamation of the meat processors has reduced the ranchers’ bargaining power. The market share of the three largest processors − JBS, Marfrig and Minerva − grew from 24% in 2011 to 37% in 2013.

The study’s authors also say many small and medium-size processors report that, unlike their big competitors, they have restricted access to finance, which reduces their ability to monitor deforestation.

Poor regulation of cattle-raising is another problem − expensive for those ranchers who comply with the rules, yet allowing those who ignore them to escape with impunity. Licensing agencies sometimes lose entire applications, and illicit cattle operations can still enter legitimate supply chains.

Falsified documents showing the origin
and destination of cattle are easily obtained

It is not difficult, the report says, to circumvent a system that is meant to track cattle from ranch to slaughterhouse. Falsified documents showing the origin and destination of cattle are easily obtained, and cost as little as R$200 (about US$85).

A major factor in prompting ranchers to fell the forests is the harsh economic dilemma they face. The study found that the cost of going deforestation-free on 145 hectares is R$412,000 (US$167,000), nearly double the R$217,500 cost of simply clearing forest for beef production.

And while newly-deforested land can sustain cattle for at least five years at no further cost, managing pasture properly is expensive because it needs fertilizers, machinery and other investments, which cost about R$50,000 annually.

Land tenure is another problem. Several ranchers told the authors they had been waiting, sometimes for more than 20 years, to receive legal title to their land. Without a title, banks will not lend ranchers the money they need to change to a deforestation-free operation.

Foreign demand

The study found that deforestation driven by land speculation is increasing rapidly in Brazil. A further concern is the growing foreign demand for a range of crops whose cultivation requires the removal of trees. The Federation of the Industries of the State of São Paulo says production of four crops alone − soya, corn (maize), sugarcane and palm oil − will need more than 10.5 m more hectares of land by 2023.

Palm oil is fairly new in Brazil, but it is well placed to grow faster than any other commodity. The government of Pará estimates that, by 2022, palm oil plantations for biofuel will cover 700,000 ha, which would make Brazil the world’s third largest producer, behind Indonesia and Malaysia.

The study says that that only already-degraded land should be used for palm oil, so that producers do not end up illegally clearing new land.

Deforestation in the Amazon region has a considerable impact on the world’s climate as the forest is a vital carbon “sink”, soaking up greenhouse gases. If it stopped acting as a sink and became instead a source of carbon, the consequences could be profound. − Climate News Network

Share This:

Europe throws nuclear power a state aid lifeline 

Europe throws nuclear power a state aid lifeline

The controversial decision that Europe will allow state subsidies for nuclear power is likely to face a legal challenge by opponents who believe it will kill off the market for renewable energy.

LONDON, 9 October, 2014 − The European Commission has now agreed that Britain can subsidise the building of the world’s most expensive nuclear power station − despite previously believing that the deal breaks the European Union’s rules on state aid.

The £16 billion plant planned for Hinkley Point in Somerset, south-west England, was approved by just one vote at a meeting yesterday of the EC. And the decision was made even more controversial by the fact that the current members of the Commission end their term of office this month.

The new commissioners, who were not consulted over the issue, are now expected to face a series of challenges in the European Court of Justice over the legality of the deal.

The two European Pressurised reactors of 1.650 megawatts each that are planned for Hinkley Point by the French state-owned energy giant EDF are supposed to be constructed by 2023, but the track record of the nuclear industry is so poor that this is unlikely.

Over budget

A similar single reactor being built by the same company at Flamanville in France was scheduled to be completed by 2012, but is already four years late and €5 billion over budget.

The British government subsidy comes in the form of a guaranteed price for the electricity of £92.50 per megawatt hour for all the energy that the power station generates. This is double the current price of electricity, and the government has to buy it whether or not the electricity is needed.

Announcing yesterday’s decision, the EC Vice-President, Joaquin Almunia, said these subsidies had been modified so that if EDF made excess profits some money would be returned to the British taxpayer.

For the nuclear industry, the decision is a shot in the arm as it has never been possible to finance a nuclear power station without state aid. This is because private enterprise is not prepared to put up the massive capital and have it tied up in the power stations for a decade or more before there is any financial return.

The UK wants to build a whole series of new reactors on similar subsidies, and both Poland and the Czech Republic have expressed a wish to do the same because they fear that they are too reliant on Russian gas for their energy needs.

Lord Hutton of Furness, chairman of the Nuclear Industry Association, described the EC’s approval as “an important step”.

Ageing generation

He said: “This will set in train an important time for the nuclear sector in the UK as new-build projects get under way to replace the current ageing generation. It also gives certainty to other European countries looking at the UK system of contracts for difference as a mechanism to secure their own supply.”

Garry Graham, Deputy General Secretary of the Prospect trade union, said: “This is fantastic for jobs, consumers and the UK economy. Nuclear new-build is a key component in providing the UK with low-carbon energy generation.

“When operational, Hinkley Point C will provide seven per cent of our energy needs for generations to come. Its construction and operation will provide thousands of high-quality skilled jobs, while the £16bn investment will give a real boost to businesses on both a local and national level.”

However, even before the decision was announced, Austria, which strongly supports renewable energy sources, had already threatened to take the EC to the European Court of Justice to challenge the decision.

The Austrians are unlikely to be alone. A group of energy companies, scientists and associations have also been looking at a legal challenge.

Profoundly disappointed

One of those involved is Paul Dorfman, from the Nuclear Consulting Group. He said: “We are profoundly disappointed that the outgoing European Commission administration has decided to rush through this decision to approve state aid to Hinkley Point C without giving the new Commission the opportunity to review and reflect on a decision that will set a significant precedent on energy and competition policy.

“That this decision has been taken in undue haste only strengthens the grounds for, and likely success of, a legal challenge.

“The decision document refers to a significant body of new evidence from the UK and EDF, yet there is no adequate access to this information − which means that it is impossible to check the validity of this information.

“Since this evidence has persuaded the Commission to change its mind, it is important that this is properly scrutinised and validated before any final conclusion was made.

“We will be unable to make any further detailed comment until the material is released. However, we are convinced that this state aid will distort the UK and pan-EU energy market. Subsidies should not be provided to a mature technology like nuclear. We will be working with those directly and indirectly impacted by its distortive impacts over the coming weeks to put together our case.”

Andrea Carta, EU legal adviser for Greenpeace, said: “There is absolutely no legal, moral or environmental justification for turning taxes into guaranteed profits for a nuclear power company whose only legacy will be a pile of radioactive waste.” – Climate News Network

Share This:

Investor heavyweights call for clear action on climate

Investor heavyweights call for clear action on climate

As a major UN climate summit gets under way in New York today, some of the world’s leading institutional investors demand clearer policies on climate change and the phasing out of fossil fuel subsidies.

LONDON, 23 September, 2014 − Many of the biggest hitters in the global financial community, together managing an eye-watering $24 trillion of investment funds, have issued a powerful warning to political leaders about the risks of failing to establish clear policy on reducing greenhouse gas emissions.

More than 340 investment concerns − ranging from Scandinavian pensions funds to institutional investors in Asia, Australia, South Africa and the US − have put their signatures to what they describe as global investors’ most comprehensive statement yet on climate change.

In particular, the investors call on government leaders to provide a “stable, reliable and economically meaningful carbon policy”, and to develop plans to phase out subsidies on fossil fuels.

They warn: “Gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions.

Ambitious policies

“Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments.”

Attempts to establish carbon pricing systems capable of making an impact on climate change have so far ended in failure, while oil and gas companies continue to battle against stopping fossil fuel subsidies.

The investors’ move has been welcomed by the United Nations.

Achim Steiner, head of the UN Environment Programme, said: “Investors are owners of large segments of the global economy, as well as custodians of citizens’ savings around the world. Having such a critical mass of them demand a transition to the low-carbon and green economy is exactly the signal governments need in order to move to ambitious action quickly.

“What is needed is an unprecedented re-channelling of investment from today´s economy into the low-carbon economy of tomorrow.”

The investors’ statement comes amid growing concern in the finance sector about the economic consequences of a warming world.

Last week, a commission composed of leading economists and senior political figures said the transition to a low-carbon economy was vital in order to ensure continued global economic growth.

Stranded assets

Other groups say investors who continue to put their money into fossil fuels are taking considerable risks. As governments and regulators face up to the enormity of climate change and place more restrictions on fossil fuels, such investments could become what are termed “stranded assets”.

There are also signs of a surge in low-carbon technologies, particularly in the renewable energy sector. Last week, Lazard, the asset management firm, reported that a decline in cost and increased efficiency means large wind and solar installations in the US can now, without subsidies, be cost competitive with gas-fired power.

There is also increased activity on the carbon pricing front. China, the world’s biggest emitter of greenhouse gases, recently announced it would establish a countrywide emissions trading system by 2016.

If implemented, the China carbon trading system will be the world’s biggest. The country already runs seven regional carbon trading schemes. – Climate News Network

Share This:

Climate action and economies can grow together

Climate action and economies can grow together

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

Share This:

Climate and economy fan flames in Spain

Climate and economy fan flames in Spain

The combined forces of climate, economic and social change are leaving Spain increasingly exposed to the damaging and costly effects of wildfires.

LONDON, 21 August, 2014 – Climate change is gradually turning Spain into a fire zone – but it’s also the change in the economic climate that is inflaming the situation.

A research group reports in the journal Environmental Science and Policy that a mix of factors is behind the rise in both the numbers of forest fires and the areas of land scorched over the last 40 years.

Vanesa Moreno, a researcher in the geography department at the University of Alcalá in Madrid, and colleagues studied the pattern of fires in Spain from 1968 to 2010.

Natural outbreaks

Although Spain, like much of southern Europe, is expected to become more arid with global warming, and although some Mediterranean vegetation is adapted to − and even benefits from − natural fire outbreaks, the picture is not a simple one.

In the moister Atlantic north-west of the country, there are two fire seasons − at the end of winter, and in the summer. In the Mediterranean region, fires are more frequent in the long, hot summer.

Climate change, with more prolonged droughts and rising temperatures, is certainly a driving force, but another factor has been the way the land is now used.

Increasingly, agriculture has intensified and old customs have withered away. Traditional shepherding practices once relied on using fire to keep pastures clear, and, as these practices were abandoned, the risk of accidental scrub and bush and forest fire fell.

But at the same time, like everywhere else in the world, people began to abandon the rural landscape and move to the cities, which in turn means more uncontrolled vegetation growth, more tinder and dried leaves to ignite, and a greater risk of forest fire once more.

Additionally, there have been new reforestation policies, and new plantations for pulp and paper, so that there is more forest to catch fire.

Woodland now covers 37% of the 493,000 square kilometres under study, and the animal population per sq km has fallen from 45 sheep, goats or cattle to a mere 12. So social change, too is fuelling the fire hazard.

Alarming number

Across the Atlantic, from Alaska to California, wildfires are on the increase. Europe, too, has this summer been hit by an alarming number of fires. But knowledge is power, and the Spanish know what to expect.

Moreno says: “Management has evolved and become more effective through the acquisition of fire suppression resources, professional training, research, the introduction of technologies and prevention − something that has got a lot of attention in recent years.” says Moreno.

But that does not mean the fire situation is under control. “The occurrence of several fires at the same time means that resources and personnel have to be split, and extinguishing fires takes more time,” Moreno says.

“In this regard, the economic crisis has caused the workforce to be cut, which could reduce fire extinguishing ability.” – Climate News Network

Share This:

Mystery over Kazakh nuclear power plans

Mystery over Kazakh nuclear power plans

Russia intends to build the first thermal nuclear power plant in Kazakhstan, the world’s largest uranium producer. But where it will be in that vast country and who will own it remain unclear.

BERLIN, 18 August, 2014 – As the Russian President, Vladimir Putin, signed the recent deal forming the Eurasian Economic Union with his counterparts from Belarus and Kazakhstan in the Kazakh capital city of Astana, one controversial agreement went relatively unnoticed.

On the same day, May 29, the Russian state nuclear corporation, Rosatom, signed a memorandum of understanding (MoU) with the Kazakh national atomic company, Kazatomprom, on constructing the first nuclear power plant in Kazakhstan.

The MoU lays out intentions of both parties on design, construction, commissioning, operation and decommissioning of a nuclear power plant with water-water energy reactors (VVER) –  that is, water-cooled water-moderated reactors  – with an installed capacity of 300 to 1,200 MW, according to the Rosatom press release. But other vital details about where the plant will be and who will own and operate it remain a mystery.

It seems surprising that Kazakhstan has not had a thermal nuclear plant before, especially as most of Russia’s uranium comes from local mines, which last year provided 38% of the world’s supply. One explanation may be the strength of the public protests against the construction of a nuclear power station.

Experimental reactor

Russia did build an experimental fast breeder reactor near Aktau city on the Caspian Sea in 1973, but it closed in 1999. Since then, the Kazakh government has been keen to build a conventional nuclear station as a replacement.

Russia has close ties with Kazakhstan because the country has been used for Russia’s space programme and nuclear testing. Its vast, flat desert interior was seen as a perfect launch pad. Large areas of what is the world’s largest landlocked country can be isolated without inconveniencing the population of 17 million, most of whom live along the greener border areas of the country.

From the Kazakh point of view, nuclear power is a vital part of the country’s plan to improve its green credentials, launched last year by President Nursultan Nazarbayev. Currently, oil from the Caspian Sea is enriching the government, but is exacerbating climate change.

According to the green plan, Kazakhstan is to increase the share of alternative and renewable energy in electricity generation from less than 1% to 50% by 2050. Nuclear power is part of the planned energy mix. .

The construction of the nuclear power plant will involve Russian loans, but the question of its ownership remains open, Vladislav Bochkov, from the Rosatom press office, told the Climate News Network.

The signed document mentions the possibility of production of atomic fuel or its components in Kazakhstan, as well as co-operation on nuclear waste management and the personnel training. The official intergovernmental agreement is to be signed by the end of 2014, Bochkov said.

Site ambiguous

The site of the plant also remains ambiguous. In media interviews, Rosatom said the plant will be constructed in Kurchatov, a city in north-east Kazakhstan, near the former Soviet Semipalatinsk nuclear test site.

However, in an interview on the Astana TV channel, the head of Kazatomprom, Vladimir Shkolnik, said that two nuclear power plants may well be constructed − one in Kurchatov, and one near the Balkhash Lake in south-east Kazakhstan.

It is clear that Kazakhstan has been keen on building nuclear plants for some years. “The demand for cheap nuclear energy, in the foreseeable future, will only increase,” President Nazarbayev said during his annual address in January this year.

“We have to develop our own fuel industry
and build nuclear power stations”

“Kazakhstan is the world leader in uranium production. We have to develop our own fuel industry and build nuclear power stations”

Today, Kazakhstan generates more than 80% of its electricity from coal. However, as a result of the country’s outdated coal mining and production industry, its emissions have risen 40% since 2006.

In its 2010 submission to the UN Framework Convention on Climate Change, Kazakhstan pledged, on a voluntary basis, that by 2020 it would reduce its greenhouse gas emissions to 15% below its 1992 levels.

Dmitry Kalmykov, director of EcoMuseum, a Kazakh environmental NGO, said: “From the economic point of view, the interest of the Kazakh government to develop nuclear power is understandable. The country leads in uranium production, it used to have parts of the production cycles of atomic fuel, and even the personnel since Kazakhstan still runs four testing reactors.

“Yet, so far, the government has not provided any information on how economically rational it is in comparison with coal or renewable energy.”

Kalmykov said the choice of Kurchatov in the north-east as the site for the plant appears questionable. He said: “We already have, 150-160 km from Kurchatov, two gigantic Ekibastuz coal power stations, the biggest in the country, and another one nearby. Everybody knows in Kazakhstan that there is oversupply of energy in the north. The biggest need for energy is in the south.”

Kazakhstan’s electricity grid system was historically divided into three networks, with two in the north connected to the Russian system and the southern one connected to the Central Asian energy system.

Petr Svoik, an opposition politician and analyst in Kazakhstan, wrote on the Forbes.kz website that a nuclear power plant in Kurchatov makes little sense for the energy needs of Kazakhstan. “Its only advantage is convenience of energy export to Russia,” he said. “In fact, it will be a Russian nuclear power plant on the Kazakh territory.”

Expand capacity

In an interview with the Climate News Network, Svoik said the MoU on constructing a nuclear power plant gives Kazatomprom a chance to expand its capacity from uranium mining and first processing to the company dealing with the full nuclear cycle, including the atomic fuel production.

Since 1973, the Ulba metallurgical plant in the east of Kazakhstan has been producing nuclear fuel pellets from Russian-enriched uranium.

Vladimir Slivyak, from the Russian environmental group Ecodefense, said Rosatom constructs only 1200 MW reactors, whereas Kazakhstan needs less capacity.

“The only exception is a very old reactor built during the Soviet times in the 1980s,” he said. “Formally, Rosatom has smaller projects, but they never developed to the implementation stage. So it cannot just start constructing a smaller reactor, but would need five to six years for the equipment to be developed.”

Sending a signal

Slivyak said Russia might be sending a signal to the West that it has other partners, despite the economic sanctions.

He said: “In such a tight political situation, with a conflict with the Ukraine and a number of countries introducing sanctions against the country, the Russian government in response demonstrates its establishment of a new trade-economical union with some countries from the former Soviet Union. To give it weight, a range of bilateral agreements is signed, and the MoU on construction of a power plant is one of them.”

Slivyak said he was sceptical about the MoU because plans about constructing the nuclear power plant in Kazakhstan by Russia have appeared in the news over the last 10 years, but never reached the stage of the official intergovernmental agreement or a contract.

On being asked by the Climate News Network for an interview, the Kazatomprom press office said to contact Rosatom for comments, as “the memorandum was their initiative”. However, the Rosatom press office declined to provide the MoU text. – Climate News Network

  • Komila Nabiyeva is a Berlin-based freelance journalist, reporting on climate change, energy and development.

Share This:

Top 20 oil projects put investors’ billions at risk

Top 20 oil projects put investors’ billions at risk

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

Share This:

Tar oil pipeline’s hidden pollution danger

Tar oil pipeline’s hidden pollution danger

European researchers say a 2,000-mile pipeline designed to carry controversial tar sands oil from Canada to the southern US may lead to much more pollution than previously calculated.

LONDON, 14 August, 2014 − The oil industry has high hopes of the US$5.4 billion Keystone XL pipeline, which on completion is planned to carry crude oil from Canada’s tar sands in Alberta to refineries more than 2,000 miles away in Texas.

With President Barack Obama saying he will approve Keystone only if it “does not significantly exacerbate the problem of carbon pollution”, the pipeline’s future is seen by many inside and outside the US as an acid test of his resolve to tackle climate change.

But in a report that questions US State Department calculations of Keystone’s impact, researchers in Europe say it could increase carbon emissions by much more than anyone has so far calculated.

Emissions increase

The research team, from the Stockholm Environment Institute (SEI), says the pipeline could increase world greenhouse gas emissions by as much as 121 million tons of carbon dioxide a year − more than four times higher than the State Department’s estimated total of 30 million tons at most.

The official figure, the SEI says, ignores the fact that the extra oil refined once the pipeline is working will cause prices to fall by about $3 a barrel, increasing consumption and, with it, carbon emissions. The SEI report is published by the journal Nature Climate Change.

To put the possible 121 million ton figure in perspective, the total amount of CO2 emitted globally in 2013 was 36 billion tons.

The American Petroleum Institute said the study was irrelevant because the tar sands would be developed anyway and oil would be transported to the southern refineries by rail if not by pipeline.

But Ken Caldeira, an atmospheric scientist at the Carnegie Institution for Science’s Department of Global Ecology in Washington, while agreeing that the total emissions increase is small, said the concern was more about the idea of boosting emissions than the degree of change.

Tar sands arouse vehement opposition from environment groups and from many communities in Alberta.

Concerns about exploiting the sands include the impact on health and safety, water resources, air pollution and soil damage. Beyond that, some analysts are increasingly arguing that the world cannot afford to burn most of its fossil fuel reserves (including unconventional oil, such as that from tar sands) if it is to avoid catastrophic climate change.

Oil prices

The authors of the SEI study, Peter Erickson and Michael Lazarus, found that, for every barrel of increased production, global oil consumption would increase by 0.6 barrels because of the resulting fall in world oil prices.

Taking other variables into account, they calculated that the net annual impact of Keystone XL could range from virtually nothing to 121 million tons of CO2 equivalent − a spread much wider than that found by the State Department, which did not account for global oil market effects.

“The key message is that the oil market impacts of Keystone XL could be significant – and have an emissions impact four times greater than the US State Department found,” Erickson told Responding to Climate Change, a London-based news and analysis website.

“That also suggests that more of this type of analysis − analysing the possible market effects of other fossil fuel infrastructure projects − could be warranted, as they could have similar effects”. − Climate News Network

Share This:

US climate change debate heats up

US climate change debate heats up

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

Share This:

Ignoring climate risks could sink US economy

Ignoring climate risks could sink US economy

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

Share This: