Lord Stern: global warming may create billions of climate refugees

Lord Nicholas Stern, one of the world’s most influential voices on climate economics, does not mince his words when it comes to criticising those who take a narrow view of prosperity and highlighting the devastating consequences of global warming.

Nicholas Stern

"You have to be a complete idiot to think that GDP sums up prosperity," says Stern, who believes we need to develop broader measures of success and combine this with a return to core values if we are to convince people to act to prevent runaway climate change.

Stern, who wrote the landmark 2006 Stern review of the economics of climate change, says if we fail to take heed of the danger signals, we risk temperatures rising this century to levels we haven’t seen for tens of millions of years.

"Hundreds of millions of people, perhaps billions of people would have to move," he warns. "If we’ve learned anything from history that means severe and extended conflict.

"We couldn’t just turn it off. You can’t make a peace treaty with the planet, you can’t negotiate with the laws of physics. You’re in there, you’re stuck. Those are the stakes we’re playing for and that’s why we have to make this second transformation, the climate transformation and move to low carbon economy."

Stern has co-authored the recently published New Climate Economy report, which argues that the world can head off the worst effects of climate change, and enjoy the fruits of continued economic expansion, if it moves quickly to invest in a low-carbon economy.

He says he hopes the study will influence key decision makers because it was written with the support of a coalition of respected politicians, economists, think tanks and institutions, including the World Bank, the International Monetary Fund, the OECD, the International Energy Agency and the UN.

He dismisses the arguments of more radical economists who believe that we need to stop our fixation with growth, arguing that the economy needs to keep expanding if we are to have a hope of eradicating poverty.

"To those who want to knock out growth from objectives, I find they’re close to reprehensible because for me the two defining challenges of this century are overcoming poverty and managing climate change.

"We fail on one, we fail on the other. So I think to say that we should just switch off growth is to miss big aspects of what matters about poverty. And so it worries me. It’s also politically very naive. If you turn it into a pissing contest between growth on the one hand and climate and environment on the other and say you’ve got to choose, you’re setting yourself up for failure."

Stern says investments in renewable energy must be combined with a rethinking of our understanding of prosperity, which he believes will lead to what he terms better growth.

"It means thinking differently about health, about the way we live in our cities and about the strengths of our communities," he says. "It’s not that GDP is idiotic but it’s mostly about the use of labour resources and what it produces. But there are very important parts of this story about prosperity that get missed out."

How does Stern, who is president of the British Academy, believe we can start to measure prosperity that goes beyond GDP?

He says it is vital to start from the perspective of people understanding what they mean by wellbeing and what they value, whether it is family, community, arts or sport.

"You can be reasonably empirical about what moves people and then you go and try to collect data on that," he says. "Once you understand what it is it you’re trying to capture and create indicators, you can then start to talk about policy."

The 68-year-old peer says it’s vital we go back to recognising the importance of Aristotle’s belief in the need to understand what it means to be a virtuous person and to whom we owe a duty of care.

"I’ve been an academic all my life and I look at the evidence of what works and what doesn’t work," he says. "But if you ask yourself what you’re trying to do, that’s spurred by values, by what’s important to you."

For Stern, the heart of his values lies in the importance of family. Speaking immediately after introducing his two-week old granddaughter Rosa on stage at a TEDx talk in New York, he said: "I’m 68 and I am thinking what will Rosa be like when she’s 68? We’re talking about towards the end of this century and what we do now will determine whether the next 100 years is the best of centuries or the worst of centuries."

"Are we going to look our grandchildren in the eye and tell them that we understood the issues, that we recognised the dangers and the opportunities, and still we failed to act?"

Stern believes that it is time for religious leaders, politicians and the media to act more responsibly, pointing in particular to the importance of the Pope’s statement earlier this year that if we destroy creation, creation will destroy us.

Also key to changing hearts and minds is the field of arts, with Stern pointing to Barbara Kingsolver’s book Flight Behaviour, which he says is not only wonderful in describing the human condition but also in questioning our relationship with the environment.

"It’s not just the policy wonks like me we need to try to assemble the evidence and set it out," he says. "You have to do that because emotional argument without rational evidence on cause and effect doesn’t get you all that far. But rational argument about cause and effect alone doesn’t get you there either." More

 

© 2014

Putting Climate Polluters in the Dock

Can Caribbean governments take legal action against other countries that they believe are warming the planet with devastating consequences?

A former regional diplomat argues the answer is yes. Ronald Sanders, who is also a senior research fellow at London University, says such legal action would require all Small Island Developing States (SIDS) acting together.

He believes the Hague-based International Court of Justice (ICJ) would be amenable to hearing their arguments, although the court’s requirement that all parties to a dispute agree to its jurisdiction would be a major stumbling block.

“It is most unlikely that the countries that are warming the planet, which incidentally now include India and China, not just the United States, Canada and the European Union…[that] they would agree to jurisdiction,” Sanders told IPS.

“The alternative, if countries wanted to press the issue of compensation for the destruction caused by climate change, is that they would have to go to the United Nations General Assembly.”

Sanders said that the Caribbean Community (CARICOM) countries could “as a group put forward a resolution stating the case that they do believe, and there is evidence to support it, that climate change and global warming is having a material effect… on the integrity of their countries.

“We’re seeing coastal areas vanishing and we know that if sea level rise continues large parts of existing islands will disappear and some of them may even be submerged, so the evidence is there.”

Sanders pointed to the damaging effects of flooding and landslides in St. Vincent and the Grenadines, St. Lucia, and Dominica as 2013 came to an end.

The prime minister of St. Vincent and the Grenadines, Dr. Ralph Gonsalves, described the flooding and landslides as “unprecedented” and gave a preliminary estimate of damage in his country alone to be in excess of 60 million dollars.

“People who live in the Caribbean know from their own experience that climate change is real,” Sanders said.

“They know it from days and nights that are hotter than in the past, from more frequent and more intense hurricanes or freak years like the last one when there were none, from long periods of dry weather followed by unseasonal heavy rainfall and flooding, and from the recognisable erosion of coastal areas and reefs.”

At the U.N. climate talks in Warsaw last November, developing countries fought hard for the creation of a third pillar of a new climate treaty to be finalised in 2015. After two weeks and 36 straight hours of negotiations, they finally won the International Mechanism for Loss and Damage (IMLD), to go with the mitigation (emissions reduction) and adaptation pillars.

The details of that mechanism will be hammered out at climate talks in Bonn this June, and finally in Paris the following year. As chair of the Alliance of Small Island States (AOSIS), Nauru will be present at a meeting in New Delhi next week of the BASIC group (Brazil, South Africa, India and China) to try and build a common platform for the international talks.

“It isn’t just the Caribbean, of course,” Sanders said. “A number of other countries in the world – the Pacific countries – are facing an even more pressing danger than we are at the moment. There are countries in Africa that are facing this problem, and countries in Asia,” he told IPS.

“Now if they all join together, there is a moral case to be raised at the United Nations and maybe that is the place at which we would more effectively press it if we acted together. It would require great leadership, great courage and great unity,” he added.

Pointing to the OECD countries, Sir Ronald said they act together, consult with each other and come up with a programme which they then say is what the international standard must be and the developing countries must accept it.

“Why do the developing countries not understand that we could reverse that process? We can stand up together and say look, this is what we are demanding and the developed countries would then have to listen to what the developing countries are saying,” Sir Ronald said.

Following their recent 25th inter-sessional meeting in St. Vincent, Jamaican Prime Minister Portia Simpson Miller praised the increased focus that CARICOM leaders have placed on the issue of climate change, especially in light of the freak storm last year that devastated St. Lucia, Dominica and St. Vincent and the Grenadines.

At that meeting, heads of government agreed on the establishment of a task force on climate change and SIDS to provide guidance to Caribbean climate change negotiators, their ministers and political leaders in order to ensure the strategic positioning of the region in the negotiations.

In Antigua, where drought has persisted for months, water catchments are quickly drying up. The water manager at the state-owned Antigua Public utilities Authority (APUA), Ivan Rodrigues, blames climate change.

“We know that the climate is changing and what we need to do is to cater for it and deal with it,” he told IPS.

But he is not sold on the idea of international legal action against the large industrialised countries.

“I think what will cause [a reversal of their practices] is consumer activism,” he said. “The argument may not be strong enough for a court of law to actually penalise a government.”

But Sanders firmly believes an opinion from the International Court of Justice would make a huge difference.

“We could get an opinion. If the United Nations General Assembly were to accept a resolution that, say, we want an opinion from the International Court of Jurists on this matter, I think we could get an opinion that would be favourable to a case for the Caribbean and other countries that are affected by climate change,” he told IPS.

“If there was a case where countries, governments and large companies knew that if they continue these harmful practices, action would be taken against them, of course they would change their position because at the end of the day they want to be profitable and successful. They don’t want to be having to fight court cases and losing them and then having to pay compensation,” he added. More

 

© 2014

The energy transition tipping point is here

In late February, Bloomberg finally addressed the most problematic issue in shale gas and tight oil wells: their incredible decline rates and diminishing prospects for drilling in the most-profitable "sweet spots" of the shale plays. I have documented that issue at length (for example, "Oil and gas price forecast for 2014," "Energy independence, or impending oil shocks?," "The murky future of U.S. shale gas," and my Financial Times critique of Leonardo Maugeri's widely heralded 2012 report).

The sources for the Bloomberg article are shockingly candid about the difficulties facing the shale sector, considering that their firms have been at the forefront of shale hype.

The vice president of integration at oil services giant Schlumberger notes that four out of every 10 frack clusters are duds. Geologist Pete Stark, a vice president of industry relations at IHS—yes, that IHS, where famous peak oil pooh-pooher Daniel Yergin is the spokesman for its CERA unit—actually said what we in the peak oil camp have been saying for years: "The decline rate is a potential show stopper after a while…You just can’t keep up with it."

The CEO of Superior Energy Services was particularly pithy: "We've drilled all the good stuff…These are very poor quality formations that I don't believe God intended for us to produce from the source rock." Source rocks, as I wrote last month, are an oil and gas "retirement party," not a revolution.

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.

And what's to come for the utilities isn't good. Earlier this month, Reuters reported that Germany’s three largest utilities, E.ON, RWE, and EnBW are struggling with what the CEO of RWE called “the worst structural crisis in the history of energy supply.” Falling consumption and growing renewable power have cut the wholesale price of electricity by 60 percent since 2008, making it unprofitable to continue operating coal, gas and oil-fired plants. E.ON and RWE have announced intentions to close or mothball 15 GW of gas and coal-fired plants. Additionally, the three major utilities still have a combined 12 GW of nuclear plants scheduled to retire by 2020 under Germany’s nuclear phase-out program.

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 estimated31,500 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.

Federal regulators issued emergency rules on Feb. 25 requiring Bakken crude to undergo testing to see if it is too flammable to be moved safely by rail, but I am not confident this measure will eliminate the risk. Light, tight oil from U.S. shales tends to contain more light molecules such as natural gas liquids than conventional U.S. crude grades, and is more volatile.

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. More

 

© 2014