Tag Archives: Canada

KTVU News: Safety concerns over trains carrying volatile crude oil to Bay Area

Repost from KTVU 2 News, Oakland, CA
[Editor: an excellent investigative report, much of which was filmed here in Benicia.  Apologies for the video’s commercial ad.  – RS]

 2 Investigates: Safety concerns over trains carrying volatile crude oil to Bay Area

By Simone Aponte, Nov 17, 2014

RICHMOND, Calif. – California used to receive all of its crude oil imports by ship and pipeline, but trains loaded with tanker cars full of oil are rolling through Bay Area neighborhoods with increasing frequency. And it’s a growing safety concern among experts who say rail imports will become much more common in the next few years, bringing millions of gallons of crude to local refineries.  Much of that crude is a more volatile type of oil that has been linked to multiple derailments, fires, and deadly accidents.

2 Investigates followed trains rolling through neighborhoods in Richmond carrying millions of gallons of crude oil, in tanker cars that have been deemed unsafe by the federal government. And the railroad is not required to tell local officials how many of those cars are carrying a more volatile oil from the Bakken shale formation, which stretches from North Dakota and Montana into Canada.

The transport of Bakken crude by rail has been at the center of federal investigations and calls for increased safety standards. It’s delivered to the Kinder Morgan rail yard in Richmond, but local officials complain that they receive no notification of which trains are carrying Bakken crude.

Increased deliveries and increased danger

“These are trains that have up to 100 tank cars and those are filled with Bakken crude,” said Kelly Huston, Deputy Director with the Governor’s Office of Emergency Services (OES). “That’s an entire train full of a much more volatile type of crude oil than we typically see on rail.”

In January, the U.S. Department of Transportation issued a warning that Bakken’s light, sweet crude oil is prone to ignite at a lower temperature than traditional crude oils. Experts say lighter crudes contain more natural gas, and the vapors given off by the oil can ignite at much lower temperatures.

But the oil industry pushed back with its own study that disputed the government warning. The North Dakota Petroleum Council, which represents more than 500 oil companies operating in North Dakota and Montana, commissioned a $400,000 study of Bakken crude. It determined the oil’s characteristics are within the safety margin for the current fleet of rail tankers.

However, the state’s Rail Safety Working Group –convened by the Governor’s Office of Emergency Services (OES) – wasn’t convinced. It released a report that warns about the dangers of increasing the shipments of Bakken crude to California refineries. The report points to at least eight major train accidents involving Bakken crude trains in 2013 and 2014 alone.

Smoke rises from railway cars carrying crude oil after derailing in downtown Lac-Mégantic, Quebec, in 2013. Credit: Paul Chiasson / The Canadian Press / AP“Incidents involving crude oil from the Bakken shale formation have been particularly devastating,” the authors warn.

Some of the most notable accidents include a derailment in Lac-Mégantic, Quebec on July 6, 2013. Sixty-three tank cars of crude oil exploded, killing 42 people. Five other people were also presumed to be dead, but were never recovered.

In 2012, about one million barrels of crude oil were delivered to California by rail. But by 2013 that number had jumped to about 6.3 million barrels.  The California Energy Commission estimates that volume could increase by up to 150 million barrels, or 25% of total crude imports, by 2016.

According to the California Public Utilities Commission (CPUC), the primary source of the crude oil coming into California was from North Dakota, in early 2013. But by the end of that year, the state was receiving a dramatic increase in imports from Canada.

Old tanker cars

For more than twenty years, the federal government has been aware of major flaws in one of the most common tanker car designs used to transport crude oil across America.

According to a 1991 safety study from the National Transportation Safety Board (NTSB), the DOT-111 tanker has a steel shell that is too thin to resist puncture during an accident, is vulnerable to tearing, and has exposed fittings and valves that can easily snap off during a rollover.

Torn DOT-111 Tanker Car And DOT-111s make up nearly 70 percent of oil tanker cars currently in use in the U.S., according to the NTSB. Critics say that shipping volatile Bakken crude in these tankers poses an “unacceptable risk” to public safety.

In his Congressional testimony in February, NTSB board member Robert L. Sumwalt cited multiple train accidents and derailments involving Bakken crude transported in DOT-111 tanker cars.

“The NTSB continues to find that accidents involving the rupture of DOT-111 tank cars carrying hazardous materials often have violent and destructive results,” Sumwalt said.

“Federal requirements simply have not kept pace with evolving demands placed on the railroad industry and evolving technology and knowledge about hazardous materials and accidents.”

This past summer, the DOT announced that it would propose stricter rules for transporting flammable materials by rail car, including Bakken crude. The plan calls for DOT-111 tanker cars to be phased out, unless they can be retrofitted to meet the new standards.

Last month, Jack Gerard, president of the American Petroleum Institute, said that his group and the Association of American Railroads would jointly ask the DOT for six to 12 months for rail tank car manufacturers to prepare to overhaul tens of thousands of cars, and another three years to retrofit older cars.

But critics say the government’s plan doesn’t act swiftly enough.
Devora Ancel, a staff attorney with the Sierra Club, said the group has multiple concerns about Bakken crude trains coming into California, in particular in regards to the age of DOT-111 fleet.

“It is extremely alarming and the public should be concerned,” said Ancel. “It’s being carried in rail cars that are unsafe. They were designed in the 1960’s. They were not meant to transport highly volatile crude.”

The Sierra Club and Earthjustice submitted a petition to the DOT seeking an emergency order to ban the transportation of Bakken crude in DOT-111 tank cars. The petition acknowledges that the DOT’s proposal for stricter rules is a step in the right direction, but stresses that two years is too long to phase out the DOT-111 cars.

“The last few years have witnessed a surge in shipments of highly flammable crude from the Bakken region, mostly in unit trains with dozens and often more than 100 tank cars carrying explosive cargo. The growth in the number and length of trains carrying crude oil is staggering,” the petition said.

Modified DOT-111 Tanker Car in RichmondTwo trainloads of Bakken crude roll into the Richmond Rail Terminal every month, according to the city’s fire department. But the fire officials tells KTVU that they’ve been reassured by Kinder-Morgan that the DOT-111 tank cars that make deliveries to Richmond have undergone additional safety modifications. Every individual tanker car carries more than 28,000 gallons of crude oil.

Tracking routes

Trains entering the Bay Area carrying crude oil from Canada and North Dakota must pass through parts of California that are considered hazardous routes, according to Huston.  In the California Public Utilities Commission’s (CPUC) annual railroad safety report, released in July, the agency said California has had 58 train derailments in the last five years, and primary cause has been a problem with the track at so-called “hazard sites.”

MAP: Rain Lines and Hazardous Areas in California

The state’s OES report on rail safety also voiced concerns about risky routes being used to transport Bakken crude.  The Rail Safety Working Group complained that crude oil rail transportation is not regulated adequately.

The report states that crude oil is “not transported with the level of protection mandated for the degree of hazard posed,” and also stressed there are “inadequacies in route planning to avoid population centers and environmentally sensitive areas, and a need for auditing rail carriers to ensure adequate response.”

One of OES’s biggest concerns is that it receives very little information about the Bakken crude trains’ schedules, and none of the data it does receive is in real time.

“Just like you would know where an Amtrak train is and whether is late to a station or not,” said Huston. “We should be able to know that about volatile substances like Bakken crude coming across our rail lines.”

Emergency response

The growing worries over the volatility of Bakken crude are particularly important for firefighters and other emergency responders who have to deal with derailments and possible fires.
According to the OES, the biggest areas of concern lie in the rural areas of Northern California, where emergency response crews are far from remote rail lines and wouldn’t be able to respond to a spill or fire quickly.

The OES report states that while there are emergency crews prepared to handle a crude tanker disaster in urban areas, “none are located near the high hazard areas in rural Northern California.” And HazMat teams that are located in more remote regions “are equipped to perform only in a support rather than lead role during a major chemical or oil incident.”

“If you get one of those trains derail and that stuff goes into the river that could affect an entire population’s water supply, which is, in some cases, worse than having a derailment in a population center,” said Huston.

Valero-Benicia refinery firefighters simulate a leak on an oil tanker car and practice using foam to quell the vapors.Last month, the Valero-Benicia refinery Fire Chief Joe Bateman led a training session with local fire departments that focused on tanker car fires. They simulated a leak on an oil tanker car and practiced using foam to quell the vapors. A small group of Richmond firefighters will attend a similar training in December, according to the Richmond Fire Marshall.

The Valero-Benicia refinery is seeking a permit to bring in crude-by-rail shipments. They would join Richmond and a planned refinery in San Luis Obispo that would also be supplied with crude carried by train through the Bay Area.

But the idea is meeting resistance from worried neighbors.
Benicia’s city council must decide whether to approve a draft environmental impact report on the proposal. The $70 million terminal would receive two 50-car trainloads, carrying a total of about 70,000 barrels of crude oil, every day. The company has said that it will use newer tanker cars instead of the aging DOT-111s that have been involved in past accidents.

Chief Bateman insists that his crews are prepared if the worst should happen with a trainload of Bakken crude traveling through the Bay Area.

“I understand that it’s a big increase. I understand the public is concerned by that,” Chief Bateman said. “If you look at some of the other rail cars that are already on the tracks today… we’ve been shipping commodities for a long time.” Bateman points out that some of those other substances are more volatile than crude oil, such as liquefied petroleum gas.

Placard 1267 Signifies Crude OilWhen first responders arrive at chaotic train accident scene, all the black tanker cars essentially look the same. The contents are distinguished by a red, diamond-shaped placard on the side of the car that displays a four-digit code. The code for crude is 1267, but there is no way for emergency crews to tell if the oil inside is the volatile Bakken variety.

In April, Canada banned the older tanker cars and ordered the controversial design be phased out within three years. Last month, another train carrying crude oil derailed in Saskatchewan, involving the same kind of rail cars. There were no casualties in that accident.

New crude oil report concludes risks of train spills are real

Repost from The Sacramento Bee
[Editor: Highly significant development – a must read!  – RS]

New crude oil report concludes risks of train spills are real

By Tony Bizjak, 10/23/2014
A train carrying fuel passes through a Bakersfield neighborhood last summer. The dramatic increase in crude oil shipments around the United States and Canada, often on 100-car trains, has led to several major derailments and fires.
A train carrying fuel passes through a Bakersfield neighborhood last summer. The dramatic increase in crude oil shipments around the United States and Canada, often on 100-car trains, has led to several major derailments and fires. Jose Luis Villegas

Mile-long oil trains that are expected to crisscross California daily in the coming years pose significant risks to residents of urban areas, including Sacramento, a new report concludes, contradicting earlier studies that found no major safety concerns.

The report, issued by San Luis Obispo County officials, is based on a plan by Phillips 66 to transport crude oil on 80-car trains, five days a week, to its Santa Maria refinery, some likely through Sacramento. The authors looked at the cumulative impact of all oil trains that could come through California on a daily basis and came to the conclusion that the risk of oil spills and fires is real, and offered suggestions on how those issues should be addressed.

“Up to seven crude oil trains a day could travel on the stretch of track between Roseville and Sacramento,” the report reads. “The cumulative risk would be significant.”

The analysis, called a draft environmental impact report, contrasts with two recent analyses of similar crude-by-rail projects in Benicia and Bakersfield. Valero Refining Co. in Benicia and Alon USA in Bakersfield are proposing to transport crude oil twice a day on trains into their facilities. The Valero trains would come through downtown Sacramento, Roseville, West Sacramento and Davis, likely on the same tracks as the Santa Maria refinery trains. Some of the Bakersfield-bound trains also may come through Sacramento.

Those reports, issued earlier this summer, concluded the risk of spills and oil fires in Sacramento and other areas is not significant and requires no additional safety steps. Those earlier analyses have been challenged. An environmental group, Earthjustice, has sued Kern County over its Bakersfield project review. Two state safety agencies and the state attorney general have sent letters to Benicia challenging the adequacy of its review of the Valero project.

San Luis Obispo County officials said they decided to go beyond what was done in Benicia and Kern County – breaking new ground in California’s evolving crude-by-rail debate – by conducting a qualitative risk assessment, to understand the ramifications of “reasonable” worst-case oil spill scenarios. The new report is an amended version of an earlier report San Luis Obispo issued last year, which also had been challenged as inadequate.

“We have been trying to keep an eye on what is going on around the state, to understand comments coming in on the Valero project and others, and to take a holistic approach,” said San Luis Obispo County project manager Murry Wilson.

That qualitative assessment takes special note of spill risks in urban areas, saying, “The risk is primarily driven by the high-threat urban areas (Los Angeles, Bay Area and Sacramento) since these are the locations where fairly long stretches of track are in close proximity to heavily populated areas.” A series of tables in the report indicate that injuries and deaths could occur up to a third of a mile from a crash site in urban areas, if there was a tank car rupture and explosive fire.

The report points out that derailments of oil trains are rare. The chances of a train spilling more than 100 gallons of oil en route from the California border in the north state to the Santa Maria refinery are anywhere from one-in-19 to one-in-31 in any given year, depending on the route, the county estimated. Similarly, railroad industry officials say their data show that 99.99 percent of freight trains arrive at their destinations safely.

But the dramatic increase in the last few years of crude oil shipments around the United States and Canada, often on 100-car trains, has led to several major derailments and fires, prompting concerns from cities along rail lines, and federal safety officials. Last year in Canada, a runaway crude oil train crashed in a small town and exploded, killing 47 people, many as they slept. Several other crude oil trains have been involved in dramatic explosions around the country in the past year, prompting evacuations of residential areas.

At the moment, two crude oil trains run to or through Sacramento. One carries highly flammable Bakken crude from North Dakota through midtown Sacramento a few times a month to a distribution facility in the East Bay. Another periodically brings oil to a transfer station at McClellan Business Park in North Highlands. The company that runs the transfer station agreed this week to halt those shipments after air-quality officials concluded they had issued the permit in error.

The daily trains to the Santa Maria refinery, if approved, are expected to travel on both southern or northern routes into the state, starting in 2016, depending on where Phillips decides to buy its U.S.-produced oil. The Northern California route is uncertain east of Roseville. West of Roseville, trains are likely to run through downtown Sacramento, West Sacramento, downtown Davis and through East Bay cities, but also could take a route through Sacramento to Stockton, then west into the Bay Area.

San Luis Obispo County officials, in their report, also went considerably further than officials in Benicia and Kern County on the question of “mitigation” or preventive measures that could be put in place to minimize risks of crashes and spills.

Federal law pre-empts cities, counties and states from imposing any safety requirements on the railroads. San Luis Obispo County officials suggest, however, in their report that the county could try using its permitting authority over the proposed Phillips 66 refinery expansion to require Phillips to sign agreements with the railroads ensuring that the railroads use safer tanker cars than those currently in use, and employ better train-control computer technology than is currently in place.

An expert on railroad law told The Sacramento Bee this week that a court likely would have to decide if such a move is legal. “The federal pre-emption of the local regulation of railroads is very strong, about as strong a pre-emption as exists,” said attorney Mike Conneran of the Hanson Bridgett law firm in San Francisco. “It makes sense. You can’t have a different rule every time a rail car pulls into another state or city.”

“I can see there being a (legal) fight on that,” he said. “It is pretty close to the line in telling the railroad what to do. On the other hand, the county is putting the obligation on the refinery, not the railroad. I think the real question may come down to whether such a mitigation measure is feasible if the refinery can’t force the railroad to comply.”

If San Luis Obispo officials determine that they cannot feasibly mitigate for the Phillips 66 project’s potential hazards, the county can still approve the project, in accordance with California law, if county leaders adopt a “statement of overriding considerations,” saying that the project’s benefits outweigh the adverse effects.

Sacramento-area representatives, who have criticized Benicia’s review of its Valero project as inadequate, say they have not yet reviewed the San Luis Obispo analysis.

“We’ll do a similar analysis to what we filed with Benicia,” said Steve Cohn, chair of the Sacramento Area Council of Governments. He said San Luis Obispo’s determination that a train could spill here and cause significant damage is logical, but he wondered what proposed safety measures follow from that conclusion. “We’ll have to take a look,” he said.

It is uncertain at this point whether all of the crude oil train transport projects being proposed in California will actually be built. And, if they are, it’s uncertain still how many of them will route their trains through Sacramento and Northern California. The shipments will come from oil producing areas in North Dakota, Texas, Colorado and other states, as well as Canada.

Benicia officials did not respond to questions from The Bee for comment about their environmental analysis of the Valero project.

Notably, both Benicia and San Luis Obispo based a portion of their reports on analysis by an Illinois professor, Christopher Barkan, who also does work for a major rail industry lobbying group. Barkan’s methods of determining the potential frequency of oil spills have been questioned by state safety officials. Barkan has declined to speak to The Bee.

Barkan estimated that a spill from a Phillips 66 train between Roseville and Santa Maria might happen once in 46 years if the trains use the Altamont Pass and once in 59 years if the trains use the tracks along the Interstate 80 corridor. Those numbers appear to be based on trains using the best available tanker cars.

History lesson: five Canadian train disasters

Repost from The Winnepeg Free Press

Trending that caught Doug’s eye: Canadian rail disasters

By: Doug Speirs, 10/11/2014
Bill Sandford / The Canadian Press filesA derailment in Mississauga caused explosions and the release of chlorine gas. More than 250,000 people fled. At the time, it was North America�s largest-ever peacetime evacuation.
A derailment in Mississauga caused explosions and the release of chlorine gas. More than 250,000 people fled. At the time, it was North America�s largest-ever peacetime evacuation. CP – Bill Sandford / The Canadian Press files

As train derailments go, it was something to see.

Last Tuesday, a 100-car CN freight train carrying dangerous goods derailed in central Saskatchewan, sending plumes of thick black smoke billowing into the sky and forcing residents of a nearby hamlet to flee.

One day later, the residents of Clair, a small community of 50 people about one kilometre from the crash, and surrounding farms were allowed to return home.

CN says 26 cars jumped the track, including six containing hazardous materials, and the spectacular fireball erupted from two cars carrying petroleum products.

The publisher of the Wadena News said she’d never seen anything like it in her 13 years in the area. “I’ve seen derailments, but this is a pretty bad one,” Alison Squires told The Canadian Press. “You could see… this huge plume of black smoke.”

What Canadians may not realize is there are hundreds of train collisions, accidents and derailments every year on the nation’s railways. Like the latest incident, most don’t result in injury or death, but they can be alarming.

Last month, the mayor of Slave Lake, Alta., called on Ottawa to do more to ensure his town’s safety after the sixth derailment in about four months. Two trains go through the town each day, pulling 56,000 cars loaded with dangerous goods annually. Sadly, our history is rife with horrific train accidents, including this five-pack of disasters:

5) The date: Nov. 10, 1979
The disaster: The Mississauga Evacuation

The details: A derailment doesn’t have to be deadly to be devastating. Just before midnight on Remembrance Day 1979, a 106-car freight train packed with explosive and poisonous chemicals pulled out of the local marshalling yards when, thanks to an overheated bearing, a set of wheels fell off, sparking a derailment near the intersection of Dundas Street and Mavis Road. According to Heritage Mississauga’s website, one of the tanker cars was filled with 90 tonnes of chlorine, while 39 more cars carried butane, propane, toluene, styrene and other highly flammable materials. A witness later recalled seeing a red-hot set of wheels from the train cartwheel 50 feet through the air and crash in her backyard. Several cars filled with propane exploded, sending up a fireball that could be seen 100 kilometres away. Every available bit of firefighting equipment was sent to the blaze. With the possibility of a deadly cloud of chlorine gas spreading throughout suburban Mississauga, more than 250,000 residents were forced to flee in what was North America’s largest peacetime evacuation until hurricane Katrina walloped Louisiana in 2005. Recalled Mayor Hazel McCallion: “If this had happened a half-mile farther down the track — either east or west — we would have seen thousands of people wiped out. It’s a miracle it happened here.” Six days later, residents were allowed to return. Amazingly, no one was reported killed.

4) The date: March 12, 1857
The disaster: The Desjardins Canal Derailment

The details: Ten years before we formally became a country, a Great Western Railway passenger train met a grisly end when a broken axle caused it to jump the tracks and crash through the deck of a timber suspension bridge over the frozen canal outside Hamilton. Here’s a gripping historical account from the archives of the Hamilton Public Library: “The chasm, 60 feet deep, over which this bridge was erected, was made by cutting an outlet for the canal through Burlington Heights. At the time of the accident, the water was covered with ice about two feet thick… The engine and tender crushed at once through the ice. The baggage car, striking the corner of the tender in the act of falling, was thrown to one side and fell some 10 yards from the engine … As far as we can yet learn, everyone in the first car was killed; those who were not crushed being drowned by the water, which nearly filled the car.” A Hamilton railway worker later recalled seeing “the steam suddenly stop, and a sort of dust arise. In a second, there was no train to be seen.” Rescuers raced to the scene, but struggled to reach the wounded because snow coated the embankments leading down to the canal. The tragedy killed 59 of the 100 passengers on board and injured at least 18.

3) The date: Sept. 1, 1947
The disaster: The Dugald Rail Crash

The details: For Manitobans, Labour Day weekend in 1947 will forever be remembered as the date of the worst rail disaster in Western Canada’s history. According to a 2006 report by Free Press writer Bill Redekop, it was around 9:45 p.m. when the engineer of the Minaki Special, travelling at about 75 miles per hour, missed a signal to pull over and slammed into a transcontinental from Winnipeg, which was parked in Dugald waiting for the oncoming train to pull over onto a siding. As Redekop reported, the crash killed 31 people and injured 85, with two victims being decapitated and many others dying in an inferno that quickly spread to a nearby elevator full of wheat. The glow from the blaze could be seen from downtown Winnipeg, 24 kilometres away. The deaths and injuries were in the Minaki train, composed mainly of old wooden, gaslit passenger cars that burst into flames after toppling from the tracks. The special was carrying cottagers, who had just closed their cabins for the summer, and children returning from camps. With few ambulances available, heroic Dugald residents used signs, billboards and doors as stretchers, and a local farmer used his tractor to pull two cars away from the train so they wouldn’t catch fire. At the time, a Free Press night reporter, driving around monitoring his scanner, beat police to the horrific scene. In 2007, a marker was unveiled to commemorate the disaster.

2) The date: July 6, 2013
The disaster: The Lac-Mégantic nightmare

The details: Given its massive media exposure, this is likely Canada’s most famous rail disaster and the one with the most widespread impact, spurring tighter regulations for the transport of dangerous goods. In the early-morning hours, a runaway Montreal, Maine and Atlantic Railway train carrying 7.7 million litres of a particularly combustible crude oil hurtled into the Quebec town, where it derailed and exploded, causing fires that killed 47 people and destroyed the town’s downtown core. The fires burned for days. The victims were mostly identified by DNA samples and dental records. The horror began when, just before midnight, the train was parked on a downward slope with one motor running to power the air brakes. When an engine fire erupted, forcing fire crews to shut down the engines, the air-brake system eventually failed. An insufficient number of hand brakes had been set by the engineer, and the train hit Lac-Mégantic travelling at 105 km/h. One Wednesday, a Quebec coroner released 47 reports — one for each person who died — with each stating: “This is a violent death. This death was preventable, or avoidable.” Three employees of the railway face 47 charges of criminal negligence causing death. The company also faces charges.

1) The date: June 29, 1864
The disaster: The St-Hilaire Horror

The details: It happened a few years before Confederation but remains Canada’s deadliest rail accident. A Grand Trunk train carrying between 354 and 475 passengers — many newly arrived German and Polish immigrants seeking a new life — was travelling from Quebec City to Montreal when, around 1:20 a.m., it approached a swing bridge over the Rivière Richelieu near modern-day Mont-St-Hilaire. The bridge had been opened to allow five barges and a steamer ship to pass, and a red light a mile ahead signalled for the train to slow down because the crossing was open. Tragically, for whatever reason, the conductor and the engineer failed to see the light. As a result, the engine and 11 coaches, with most of the passengers likely asleep, fell through the gap, one atop the other, crushing a passing barge and sinking into the river. An astonishing 99 people were believed killed and 100 injured in our worst rail disaster, including the conductor, though recently hired engineer William Burnie managed to escape with minor injuries. Online reports state he later claimed he was unfamiliar with the route and had not seen the signal.

As Canadians, we know our nation was forged with the might of giant locomotives, but we too often forget how quickly, and tragically, life can go off the rails.

Grant Cooke: Big Oil’s endgame: While fossil fuel costs keep rising, renewable costs fall

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 second of three parts.  Read part one by CLICKING HERE and part three by CLICKING HERE.  – RS]

Grant Cooke: Big Oil’s endgame: While fossil fuel costs keep rising, renewable costs fall

October 4, 2014, by Grant Cooke

Grant Cooke, Benicia, California“The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.” — Sheikh Ahmed-Zaki Yamani

THREE KEY FACTORS WILL PUT TO REST the fossil fuel industry and make the good Sheikh Yamani’s prediction come true. Two of them are discussed here.

The first is that the carbon emitters will be held accountable and made to pay for using the atmosphere as a garbage can. While still struggling to price the cost of pollution, most nations, as well as California, have come to realize that the heavy carbon emitters need to pay for the damage they have done. A cap-and-trade process is the first method to hold the emitters accountable. While imperfect and not nearly as effective as a straight carbon tax, this system is growing throughout the world. The European Union’s program, which started several years ago and was described by the fossil fuel interests as failing, is now deemed a success. It has become an established part of European culture and corporate practice. Various nations such as Australia, New Zealand, Canada, Korea and China have developed cap-and-trade programs as well.

California’s own program continues to grow, and our carbon offsets are tradable in parts of Canada as well. As it gains momentum, other states are watching California’s program and thinking about adopting their own. Impoverished state governments see cap-and-trade programs as a boon to their environment and a way to garner vital tax revenues. Since increases in personal income tax are so unpopular, cap-and-trade is seen as a way to bring new money into state treasuries without risking voter rebellions.

The pressure to make the major carbon emitters pay for their pollution is coming from the agreements made at the 2012 UN Conference on Climate Change in Doha, Qatar. At this conference world governments consolidated the gains of the last three years of international climate change negotiations and opened a gateway to greater ambition and action. Among the decisions was to concentrate on a universal climate agreement by 2015, which would come into effect in 2020. The 2015 conference will be held in Paris, and world governments are expecting much greater cooperation and agreement on carbon-reduction policies from the U.S. and other major emitters.

The world is slowly accepting the reality that the mitigation of climate change is a massive problem. A 2012 report by Climate Vulnerable Forum estimated that more than 100 million people will die and the international economy will lose out on more than 3 percent of GDP ($1.2 trillion) by 2030 if the world fails to tackle climate change. But because governments don’t want to use their funds for environmental cleanup and climate change mitigation, it will be the heavy emitters like the oil, coal and utility companies that will pay.

This cost for carbon cleanup, added to the increasing costs of extracting hard-to-get fossil fuel resources, will hit the oil industry hard. A 2013 Harvard University report showed that the cost externalities from coal were about 18 cents per kilowatt hour. Most U.S. end-users who rely on coal-generated electricity pay about 10 cents per kWh. If the external costs were added, those users would pay closer to 30 cents per kWh — which would severely impact those users’ lifestyles.

Grid parity

The second major factor hastening the end of today’s megalithic fossil fuel industries is “grid parity.” Grid parity is a technical term meaning that the cost to a consumer for electricity from a renewable source (without subsidies) is about equal to the cost from a traditional source — be it fossil fuel or nuclear. The Germans used grid parity to price their feed-in-tariff program, or FiT, that launched Energiewende.

Simply put, with PGE’s 2014 rate increase a Benicia resident or small commercial consumer pays about 20 (19.9) cents per kWh for electricity from traditional sources. If that same kWh came from a renewable source and cost the consumer an equal 20 cents, then the renewable source would be at “parity,” or equal to the cost of the traditional generation source.

However, the cost of traditional energy is rising, driven by higher extracting costs, increasing maintenance costs for natural gas pipelines and increases in operating cost at nuclear power plants. At the same time the costs for renewable energy — wind, solar photovoltaic and biowaste fuels — are declining.

The costs for wind generation have been and still are the lowest. However, the costs for solar are declining rapidly as its use spreads. Deutsche Bank reported in January 2014 that there were 19 regions around the world where unsubsidized PV solar power costs were competitive with other forms of generation. In fact, PV competes directly in price with oil, diesel and liquefied natural gas in much of Asia. This equality of costs with fossil fuel and natural gas is creating a worldwide solar boom in 2014-15.

In the U.S., almost 30 percent of last year’s added electricity capacity came from solar. In Vermont and Massachusetts, almost 100 percent added capacity came from solar. According to the U.S. Solar Energy Industries Association, more solar was installed in the U.S. in the past 18 months than in the last 30 years. Solar PV technology, which has been helped by the U.S. military, is improving so fast that it has achieved a virtuous circle.

As described by New York’s Sanford and Bernstein investment bank, we have entered an era of “global energy deflation.” This ratcheting down of energy costs may be slow to start, but as they argue, the fossil fuel-dominated energy market will experience a major decline in costs over the next decade. The market is entering a new order that will erode the viability of oil, gas and the fossil fuel continuum.

The report argues that the adoption of solar in developing markets will translate into less demand for kerosene and diesel oil. The adoption of solar in the Middle East means less oil demand, and the adoption of solar in China and developing Asia means less liquefied natural gas demand. Further, distributed solar in the U.S., Europe and Australia will likely reduce demand for natural gas.

They reason that while solar has a fractional share of the current market, within a decade solar PV and related battery storage may have such a large market share that it becomes a trigger for energy price deflation, with huge consequences for the massive fossil fuel industry that is dependent on continued growth.

Even the Saudis are betting on solar, investing more than $100 billion in 41 gigawatts of capacity, enough to cover 30 percent of their power needs by 2030. Most of the other Gulf states have similar plans.

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,” to be released in October by Elsevier.