As World Leaders Craft Climate-Change Plan, ALEC Plots Its Downfall
By Mark Richardson | December 8, 2015
SCOTTSDALE, Ariz. – At the same time world leaders gathered in Paris to find a solution for global climate change, another group has been meeting in Arizona to formulate a plan to scuttle their efforts.
Members of the American Legislative Exchange Council met behind closed doors for three days in Scottsdale, in part to develop a game plan to undermine any agreements to limit carbon pollution. According to Mary Bottari, deputy director of the Center for Media and Democracy, ALEC’s members, which include global oil and gas companies and giant utility firms, are planning a full-court press at state legislatures in 2016.
“They actually have model bills rolling back renewable energy. They have model bills rolling back wages, by pre-empting prevailing wages for construction workers, or living wages for other folks,” she said. “So, it’s a very interesting, very ‘retrograde’ agenda.”
Bottari, whose group tracks ALEC and its activities, said ALEC normally pushes its agenda by promoting model legislation to states. However, she said, the group now has moved beyond that to a direct campaign against President Obama’s proposed Clean Power Plan, which calls for a 32 percent cut in carbon emissions across the United States by 2030.
ALEC has organized the attorneys general in 24 states to sue the Environmental Protection Agency in the name of states’ rights. Bottari said they want to block the administration from implementing any plan to limit the types of pollution that most scientists say are man-made contributors to climate change. She said ALEC has some heavyweight players in its corner.
“Giants like Exxon-Mobil and Chevron, and also energy traders like Koch Industries and those kinds of folks,” she said. “These people do not want to see a global climate agreement; they want to continue burning fossil fuels ’til the end of time.”
Even if ALEC can’t stop plans to halt climate change, Bottari said, it hopes to cast doubt on the validity of the science behind them, or delay action on any treaties until after the presidential election.
Repost from the Associated Press [Editor: Significant quote: “A factor behind all these trends is that the writing is on the wall about the future of coal and thus the future of U.S. carbon dioxide emissions. The regulatory noose is tightening and companies are anticipating a future with lower and lower dependence on fossil fuels and lower and lower carbon dioxide emissions.” (Princeton University professor Michael Oppenheimer) For background data, see U.S. Energy Information Administration report on April emissions. – RS]
US carbon pollution from power plants hits 27-year low
By Seth Borenstein, Aug. 5, 2015 5:00 PM EDT
WASHINGTON (AP) — Heat-trapping pollution from U.S. power plants hit a 27-year low in April, the Department of Energy announced Wednesday.
A big factor was the long-term shift from coal to cleaner and cheaper natural gas, said Energy Department economist Allen McFarland. Outside experts also credit more renewable fuel use and energy efficiency.
Carbon dioxide — from the burning of coal, oil and gas — is the chief greenhouse gas responsible for man-made global warming.
“While good news for the environment, we certainly would not want to assume that this trend will continue and that we can simply relax,” said John Reilly, co-director of MIT’s Joint Program on the Science and Policy of Global Change.
Electric power plants spewed 141 million tons of carbon dioxide in April, the lowest for any month since April 1988, according to Energy Department figures. The power plants are responsible for about one-third of the country’s heat-trapping emissions.
April emissions peaked at 192 million tons in 2008 and dropped by 26 percent in seven years.
Carbon pollution from power plants hit their peak in August 2007 with 273 million tons; summer emissions are higher because air conditioning requires more power.
In past years, experts said the U.S. reduction in carbon dioxide pollution was more a function of a sluggish economy, but McFarland said that’s no longer the case.
“You don’t have a 27-year low because of an economic blip,” McFarland said. “There are more things happening than that.”
The price of natural gas has dropped 39 percent in the past year, he said. Federal analysts predict that this year the amount of electricity from natural gas will increase 3 percent compared to last year while the power from coal will go down 10 percent.
Those reductions were calculated before this week’s announcements of new power plant rules. The new rules aim to cut carbon pollution from electricity generators another 20 percent from current levels by 2030.
The pollution cuts in April are because efficiency has cut electricity demand and energy from non-hydropower renewable sources has more than doubled, said Princeton University professor Michael Oppenheimer.
“A factor behind all these trends is that the writing is on the wall about the future of coal and thus the future of U.S. carbon dioxide emissions,” Oppenheimer said in an email. “The regulatory noose is tightening and companies are anticipating a future with lower and lower dependence on fossil fuels and lower and lower carbon dioxide emissions.”
The number of oil trains running across Washington is unacceptable, and the Legislature will consider bills in the upcoming session that mandate advance notification of oil shipments by rail as well as more funding for railroad crossings and emergency response training, Gov. Jay Inslee said Friday.
King County Executive Dow Constantine added that oil companies are raking in profits while “the rest of us are picking up the costs.”
“Those who are profiting should shoulder the financial burden,” Constantine said.
They were speaking to the Safe Energy Leadership Alliance that met Friday at Olympia City Hall to address the surge of oil and coal trains passing through Washington.
The alliance is a coalition of local, state and tribal leaders from the Northwest who say the trains threaten the environment, economy and public safety.
As shipments of oil increase in the Puget Sound region, so does the likelihood for spills and accidents. The Department of Ecology reports that 19 fully loaded oil trains crisscross the state every week, with the number expected to reach 59 oil trains if current refinery proposals are approved. Each train hauls about 3 million gallons of crude oil in 100 tanker cars. Between 11 and 16 trains pass through rural and suburban areas of Thurston and Pierce counties every week, according to reports from BNSF Railway.
Participants in Friday’s meeting included elected officials from across the state along with Oregon and Canada.
“It is clear that we have to take significant action including being better prepared to handle an oil train explosion or large scale spill,” Inslee said.
Although the federal government is the main regulator of the railroads, Inslee said there are some actions the state can take now, such as lowering speed limits of the trains.
“We don’t want vehicles speeding through school zones, and we shouldn’t let oil trains speed through Washington cities,” said Inslee, noting that changes in state permits are at least a year away.
Friday’s meeting included a detailed report on the coal industry by Tom Sanzillo, finance director of the Institute for Energy Economic and Financial Analysis. Sanzillo encouraged states and cities to keep putting pressure on the coal industry, which has seen demand and prices decline worldwide in the past few years.
“The U.S. coal industry is shrinking,” said Sanzillo, adding that the industry needs “robust growth” to meet its potential and compete in the global market despite record demand for coal by nations like China. “Hooking your wagon to the coal industry is not a particularly promising outlook right now.”
At the local level, Olympia Mayor Stephen Buxbaum said the City Council will seek a resolution next week to add Olympia to the list of cities that oppose the increase in crude oil transport.
“We are at a crossroads,” Buxbaum said Friday. “We could see up to 60 trains a day and 4,000 supertankers in our waters.”
As for the coal issue, Buxbaum recently co-authored a guest column titled “You might be surprised by Puget Sound Energy’s coal power supply” that ran Nov. 19 in The Seattle Times. Also signing the article were Bainbridge Island Mayor Anne Blair and Mercer Island Mayor Bruce Bassett, and all three mayors’ respective city councils endorsed it.
The article urges Puget Sound Energy to take immediate action and plan for a “post-coal future.” About one-third of PSE’s power supply comes from coal that’s shipped from out of state, according to the article. The mayors also cite Gov. Inslee’s recent executive order to reduce pollution and transition away from coal power.
“The bottom line is that we don’t need coal,” the article states. “The potential is there for Washington to meet its energy needs with efficiency programs, wind, solar and other technologies. We just need to rise to the occasion.”
Repost from The Benicia Herald [Editor: Benicia’s own Grant Cooke has written a highly significant three-part series for The Benicia Herald, outlining the impending fall of the fossil fuel industry and concluding with good advice for the City of Benicia and other cities dependent on refineries for a major portion of their local revenue stream.This is the last of three parts. Read part one by CLICKING HERE and part two by CLICKING HERE. – RS]
Big Oil’s endgame: What it all means for Benicia
October 12, 2014, by Grant Cooke
IN APRIL 2014, THE HIGHLY RESPECTED Paris-based financial company Kepler Chevreux released a research report that has rippled through the fossil fuel industries. In it, Kepler Chevreux describes what is at stake for the fossil fuel industry as world governments’ push for cleaner fuels and reduced greenhouse gas emissions gathers momentum.
The firm argues that the global oil, gas and coal industries are set to lose a combined $28 trillion in revenues over the next two decades as governments take action to address climate change, clean up pollution and move to decarbonize the global energy system. The report helps to explain the enormous pressure that the industries are exerting on governments not to regulate GHGs.
Kepler Chevreux used International Energy Agency forecasts for global energy trends to 2035 as the basis for its research, and it concluded that as carbonless energy becomes more available, and as government policies make steep cuts in carbon emissions, demand for oil, natural gas and coal will fall, which will lower prices.
The report said oil industry revenues could fall by $19.3 trillion over the period 2013-35, coal industry revenues could fall by $4.9 trillion and gas revenues could be $4 trillion lower. High-production-cost extraction such as deep-water wells, oil sands and shale oil will be most affected.
Even under business-as-usual conditions, however, the oil industry will still face risks from increasing costs and more capital-intensive projects, fewer exports, political risks and the declining costs of renewable energy.
The report continues: “The oil industry’s increasingly unsustainable dynamics … mean that stranded asset risk exists even under business-as-usual conditions. High oil prices will encourage the shift away from oil towards renewables (whose costs are falling) while also incentivizing greater energy efficiency.” Eventually, fossil fuel assets will be too expensive to extract, and the oil will be left in the ground.
As far as renewables are concerned, Kepler Chevreux says tremendous cost reductions are occurring and will continue as the upward trajectory of oil costs becomes steeper.
Kepler Chevreux’s report is consistent with others released in 2014. One report from U.S.’s Citigroup, titled “Age of Renewables is Beginning — A Levelized Cost of Energy (LCOE)” and released in March 2014, argues that there will be significant price decreases in solar and wind power that will add to the renewable energy generation boom. Citigroup projects price declines based on Moore’s Law, the same dynamic that drove the boom in information technology.
In brief, Citigroup is looking for cost reductions of as much as 11 percent per year in all phases of photovoltaic development and installation. At the same time, they say the cost of producing wind energy also will significantly decline. During this period, Citigroup says, the price of natural gas will continue to go up and the cost of running coal and nuclear plants will gradually become prohibitive.
When the world’s major financial institutions start to do serious research and quantify the declining costs of renewable energy versus the rising costs of fossil fuels, it becomes easier to understand the monumental impact that the Green Industrial Revolution is having.
Zero marginal cost
Marginal cost, to an economist or businessperson, is the cost of producing one more unit of a good or service after fixed costs have been paid. For example, let’s take a shovel manufacturer. It costs the shovel company $10,000 to create the process and buy the equipment to make a shovel that sells for $15. So the company has recovered its fixed or original costs after 800 to 1,000 are sold. Thereafter, each shovel has a marginal cost of $3, consisting mostly of supplies, labor and distribution.
Companies have used technology to increase the productivity, reduce marginal costs and increase profits from the beginning. However, as Jeremy Rifkin points out in “Zero Marginal Cost Society,” we have entered an era where technology has unleashed “extreme productivity,” driving marginal costs on some items and services to near zero. File sharing technology and subsequent zero marginal cost almost ruined the record business and shook the movie business. The newspaper and magazine industries have been pushed to the wall and are being replaced by the blogosphere and YouTube. The book industry struggles with the e-book phenomenon.
An equally revolutionary change will soon overtake the higher education industry. Much to the annoyance of the universities — and for the first time in world history — knowledge is becoming free. At last count, the free Massive Open Online Courses (MOOCs) had enrolled about six million students. The courses, many of which are for credit and taught by distinguished faculty, operate at almost zero marginal cost. Why pay $10,000 at a private university for the same course that is free over the Internet? The traditional brick-and-mortar, football-driven, ivy-covered universities will soon be scrambling for a new business model.
Airbnb, a room-sharing Internet operation with close to zero marginal cost, is a threat to change the hotel industry in the same way that file sharing changed the record business, especially in the world’s expensive cities. Young out-of-town high-tech workers coming to San Francisco from Europe use Airbnb to rent a condo or an empty room in a house instead of staying at a hotel. They do this because they cannot find a room with the location they need, or because their expense reimbursement cap won’t cover one of the city’s high-end hotel rooms. Industry analysts estimate that Airbnb and similar operations took away more than a million rooms from New York City’s hotels last year.
A powerful technology revolution is evolving that will change all aspects of our lives, including how we access renewable energy. An “Energy Internet” is coming that will seamlessly tie together how we share and interact with electricity. It will greatly increase productivity and drive down the marginal cost of producing and distributing electricity, possibly to nothing beyond our fixed costs.
This is almost the case with the early adopters of solar and wind energy. As they pay off these systems and their fixed costs are covered, additional units of energy are basically free, since we don’t pay the sun to shine or the wind to sweep around our back wall. This is the concept that IKEA, the Swedish furniture manufacturer, is exploiting. IKEA is test marketing residential solar systems in Europe that cost about $11,000 with a payback of three to five years. Eventually, we’ll be able to buy a home solar system at IKEA, Costco or Home Depot, have it installed and recover our costs in less than two years.
All three elements — carbon mitigation costs, grid parity and zero marginal costs — and others like additive manufacturing and nanotechnology are part of the coming Green Industrial Revolution. It will be an era of momentous change in the way we live our lives. It will shake up many familiar and accepted processes like 20th-century capitalism and free-market economics, reductive manufacturing, higher education and health care. More to the point, it will see the passing of the carbon-intensive industries.
Like the centralized utility industry, the fossil fuel industries and the large centralized utilities have business models predicated on continued growth in consumption. Once that nexus of declining prices for renewables and rising costs of extraction and distribution is crossed — and we are already there in several regions of the world — demand will rapidly shift and propel us into “global energy deflation.”
Think about it: No more air pollution strangling our cities, no more coal ash spills in rivers that our kids swim in, no more water tables being poisoned by fracking toxics. Better yet, think of no more utility bills and electricity that is almost free. These are among the unlimited opportunities that extreme productivity can provide.
* * *
SO WHAT DOES ALL THIS MEAN FOR BENICIA? Our lovely town, along with some of our neighbors, has enjoyed a stream of tax revenue from the fossil fuel industries for several decades. This will end as these industries lose the ability to compete in price with renewable energy. After all, if my energy costs drop to near zero, I’m not going to pay $5 for a gallon for gas or 20 cents per kilowatt hour. If Kepler Chevreux, Citigroup and the prescient investment bankers are right — and they usually are — oil company profits will begin a death spiral accompanied by industry constriction and refinery closings. Losing $19.3 trillion over two decades is a staggering amount even for the richest industry in world history.
Benicia should begin a long-range plan to replace Valero’s current tax revenues. Two decades from now this town will be very different — we are headed toward a city of gray-haired pensioners and retired folks too contented with perfect weather and amenities to sell homes to wage earners who, in fact, may not be able to afford big suburban houses and garages full of cars.
Instead, the Millennials are choosing dense urban living that’s close to work, and they prefer getting around by foot or bicycle, with some public transportation and the occasional Zipcar to visit the old folks in ‘burbs. The last thing pensioners want to do is pay extra taxes for schools and services they aren’t using, so raising taxes to meet the tax revenue shortfall is probably out of the question.
A similar revenue shortfall is probably facing the thousands of fossil fuel and utility industry employees who are thinking of retiring in the East Bay. Many plan to live on their stock dividends and pass the stock along to their heirs. This will be difficult as the industry begins the attrition phase of its cycle. They should see a financial planner and diversify.
To gamble Benicia’s safety and expand GHG emissions by approving Valero’s crude-by-rail proposal is illogical given that the oil industry is winding down and fossil-fuel will soon not be competitive with renewables. It would better for the Bay Area if we start to help Valero and the other refineries begin the long slow wind-down process, and gradually close them while the companies are still profitable. If we leave the shutdown process to when the companies start to struggle financially, they will just lock the gates and walk away, leaving the huge environmental cleanup costs to the local communities much the way the military does when they close bases.
There’s no good reason why Benicia residents should be saddled with the burden of a shuttered and vacant Valero refinery. We should begin the process as soon as possible and work with the refinery to not only find a way to replace the lost tax revenue, but to identify who will pay for the hazard waste and environmental cleanup.
At the very least, Benicia City Council should understand the move to a carbonless economy, read the Citigroup and Kepler Chevreux reports and the other emerging research, and accept the fact that Big Oil has begun its endgame. Leadership is about looking forward, not back, and identifying and solving problems at the most opportune time.
Grant Cooke is a long-time Benicia resident and CEO of Sustainable Energy Associates. He is co-author, with Nobel Peace Prize winner Woodrow Clark, of “The Green Industrial Revolution: Energy, Engineering and Economics,” set to be released in October by Elsevier.