Tag Archives: International Energy Agency

Fossil fuel divestment

Exxon Blasts Movement to Divest From Fossil Fuels

Repost from The National Journal

Exxon Blasts Movement to Divest From Fossil Fuels

The oil giant seeks to counter the campaign that urges investors to dump stock in petroleum and coal companies.
By Ben Geman, October 13, 2014

Exxon Mobil is wielding its public relations might against the fossil-fuel divestment movement, signaling that climate-change activists have struck a nerve at the world’s biggest publicly traded oil and gas company.

Exxon Mobil’s blog, titled “Perspectives,” posted a lengthy attack Friday about the divestment movement, which urges universities, churches, pension funds, and other big institutional investors to dump their shares of oil and coal companies as part of the fight against global warming.

But the blog post calls the movement “out of step with reality,” saying it’s at odds with the need for poor nations to gain better access to energy, as well as the need for fossil fuels to meet global energy demand for decades to come.

So far, the climate advocates’ progress at getting a growing number of institutions to shed holdings in fossil fuel companies remains pretty small compared with the scale of the industry they’re battling.

Consider that the roughly 1,700 oil-and-gas and coal companies listed on stock exchanges are worth nearly $5 trillion, notes the research company Bloomberg New Energy Finance.

But the divestment movement has been growing– just last week the University of Glasgow became the first European university to announce divestment plans. And the movement also has a number of high-profile adherents, including Archbishop Desmond Tutu, the South African Nobel Prize-winning anti-apartheid leader. (The fossil fuel divestment movement takes its cues from the 1970s and 1980s movement urging divestment from apartheid South Africa.)

Another supporter is Christiana Figueres, the United Nations official shepherding international negotiations aimed at reaching a new global climate pact in late 2015.

But Exxon calls divestment a misplaced solution to climate change.

“Divestment represents a diversion from the real search for technological solutions to managing climate risks that energy companies like ours are pursuing,” writes Ken Cohen, Exxon’s VP for public and government affairs.

Cohen’s post argues that the movement ignores the scale of global energy demand for power, transportation, and other needs, as well as “the inability of current renewable technologies to meet it.”

“Almost every place on the planet where there is grinding poverty, there is also energy poverty. Wherever there is subsistence living, it is usually because there is little or no access to modern, reliable forms of energy,” Cohen writes.

Divestment advocates will find plenty of material to argue about in Exxon’s post. In one case, Exxon cites estimates that renewable energy’s share of the total global mix will be about 15 percent in 2040.

But the activists pushing for divestment, such as Bill McKibben’s 350.org, advocate for more aggressive policies that promote low-carbon energy, and analysts say that would change the global mix a lot more and a lot faster.

While the International Energy Agency has forecast that without policy changes, renewables will meet about 15 percent of total energy needs in 2035, IEA and other agencies have also modeled various other scenarios in which low-carbon energy takes a far larger share.

For instance, in late September, IEA released a “roadmap” of policies explaining how solar power alone could become the world’s biggest source of electricity by 2050 or even earlier.

Divestment advocates have already criticized Exxon’s post.

“This is the oil industry saying ‘please don’t be mean to me’ after bullying vulnerable communities around the globe for decades,” said Anastasia Schemkes, a campaign representative with the Sierra Student Coalition.

Reverend Fletcher Harper, executive director of the pro-divestment group GreenFaith, took issue with Exxon’s assertions that the divestment movement is out of touch. “Divestment advocates have been clear from the start that the divestment campaign is about calling into question the industry’s ‘social license’ to operate. In this regard, divestment is a highly appropriate debate, and highly reality-based,” he said in an email.

Harper also said that advocates agree with the imperative of bringing energy to nations where access is now lacking. “I believe that these energy needs must be met, to the greatest degree possible, with clean, renewable energy. The [Exxon] blog post does not reckon with the fact that coal, oil, and gas combustion are responsible for a large number of deaths annually worldwide,” Harper said.

It’s not the first time Exxon has tussled with divestment advocates.

In response to shareholder activists, Exxon released a report in late March that rebuts advocates’ claims that its fossil fuel reserves are at risk of becoming “stranded assets” in a carbon-constrained world.

 

 

Big Oil, Climate Change, Coal industry, Fossil fuels, Green Industrial Revolution, Oil Industry

Grant Cooke: Big Oil’s endgame: What it all means for Benicia

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

P1010301IN 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.

Air Quality, Climate Change

UN summit: Businesses and investors pressing for green policy

Repost from The Associated Press

Businesses and investors pressing for green policy

By Johathan Fahey, AP Energy Writer, September 22, 2014
AP Photo
In this Saturday, Jan. 10, 2009, file photo, a flock of geese fly past a smokestack at the Jeffery Energy Center coal power plant near Emmitt, Kan. Hundreds of corporations, insurance companies and pension funds are calling on world leaders gathering for a U.N. summit on climate change this week to attack the problem by making it more costly for businesses to pollute. (AP Photo/Charlie Riedel, File)

NEW YORK (AP) — Hundreds of corporations, insurance companies and pension funds are calling on world leaders gathering for a U.N. summit on climate change this week to attack the problem by making it more costly for businesses and ordinary people to pollute.

The idea, long advocated by policymakers, economists and environmental activists, is that the world can’t hope to slow the heating of the planet until its cost is incorporated into the everyday activities that contribute to it, such as using gas- or coal-generated electricity, driving a car, shipping a package or flying around the globe.

Business leaders representing trillions of dollars in revenue and retirement savings say they worry that global warming threatens the long-term value of their investments, and they want world leaders to adopt policies that would provide a financial incentive to people to clean up their act.

That could include a tax on carbon emissions, a cap or some other mechanism.

“There’s a market failure that needs to be fixed,” said Anne Simpson, senior portfolio manager and director of global governance at the $300 billion California Public Employees’ Retirement System, the largest public pension fund in the U.S.

Despite a broad consensus that something needs to be done, it has been impossible so far for global leaders to agree on how to implement what amounts to a price on pollution, because energy is so important for economic growth.

“It may be easier to get large businesses to agree that something should be done than to get them to coalesce around specific policy measures,” said Michael Levi, senior fellow for energy and the environment at the Council on Foreign Relations.

At Tuesday’s U.N. summit, 120 world leaders will try to summon some of the considerable political will required if a new climate treaty is to be reached at international negotiations next year in Paris. The one-day summit is part of U.N. Secretary-General Ban Ki-moon’s push to help world leaders to reach a goal they set in 2009: prevent Earth’s temperature from rising more than 2 degrees Fahrenheit (1.1 degrees Celsius) from where it is now.

On Sunday, scientists announced that the world set another record last year for the amount of carbon pollution spewed into the atmosphere.

Ahead of the summit, business leaders such as Apple’s Tim Cook renewed or expanded pledges to help the planet by running their businesses more efficiently, investing in renewable energy or pulling their investments from fossil fuel companies.

Last week, CalPERS and other big asset-holders such as the insurance and financial firms Allianz, BlackRock and AXA Group called for a “meaningful” price on carbon emissions. The World Bank said Monday that 73 countries and more than 1,000 companies have expressed their support for a price on carbon.

Also on Monday, a parade of business and political leaders tried to rally support in a series of speeches in New York.

“It doesn’t cost more to deal with climate change; it costs more to ignore it,” said Secretary of State John Kerry.

Cook said customers care about the planet and will “vote with their dollars” for sustainably produced products. He outlined the steps Apple is taking to reduce the carbon emissions of its products and its supply chain, and called for broader action.

“The long-term consequences of not addressing climate change are huge,” he said. “I don’t think anyone can overstate that.”

While many insist a transition to a cleaner economy can boost economic growth or at least not harm it, many worry it would slow the global economy and make it more difficult for people in developing nations to get access to even basic electricity and transportation. Even those who agree that the transition must take place can’t agree on how to do it.

The International Energy Agency estimates that $1 trillion per year must be invested through 2050 in clean energy in order to keep global temperatures from rising past a level that scientists consider especially dangerous.

Charging a price for carbon emissions could prod polluters to change their ways by making it in their financial self-interest to do so. It would make fossil fuel investments less profitable and therefore less attractive. And it would make clean energy more lucrative.

A host of new investment vehicles are already making it easier for investors and others to sink their money into renewable projects. The market for so-called green bonds – tax-free bonds that fund clean energy, energy efficiency or other sustainable projects – is expected to at least double to $20 billion this year, for example.

Last week the $188 billion California Teachers’ Retirement System announced its intention to boost its investment in clean energy and technology to $3.7 billion from $1.4 billion over the next five years and said that could rise to $9.5 billion with changes in policy. Warren Buffet has said he is looking to double his $15 billion in investments in wind and solar projects.

On another front, a group of activists is calling on foundations and endowments to reduce or eliminate investments in fossil fuel-related companies and direct that money toward clean energy. The group, the Divest-Invest Coalition, said Monday that foundations representing $50 billion in assets have signed on, though the fossil-fuel investments in those portfolios are a very small percentage of the total.

Despite these signs, annual global investment in clean energy is only a quarter of what the IEA estimates is required.

“We’re moving tens or even hundreds of billions, but we’re looking at a $1 trillion every year, and if we’re looking at $1 trillion, we need policy,” said David Pitt-Watson, chairman of the U.N. Environment Program’s Finance Initiative.

Crude By Rail, Hazmat notification, Oil prices

Farm Bureau posts Wenatchee Washington opinion: No Oil Trains Here

Repost from The Farm Bureau’s FBACT Insider (The Unified National Voice of Agriculture)
[Editor: I was heartened to learn that the Farm Bureau has a progressive agenda on energy.  See http://www.fbactinsider.org/issues/energy.  – RS]

OPINION: Move along, no oil trains here

June 27, 2014 – The Wenatchee World

June 26–Peak oil? Not yet. Like it or not, the United States now is among the world’s leading oil producers, pumping around 9 million barrels a day and rising. That’s not far behind Saudi Arabia, and makes a lot of sheikdoms look puny. And like it or not, this compressed energy will be burned to turn the economic wheels of the world. To get from producer to customer, however, it has to go somewhere.

Just not here.

The information reluctantly released Tuesday shows that in the absence of pipelines the railways of the northern tier have become, not exactly pipelines on wheels, but getting closer. Information on oil shipments by rail was provided to states and emergency responders by order of the Department of Transportation earlier this month, with the expectation that it be kept confidential for security reasons. Then DOT ruled there really weren’t any security reasons, and so the train data hit the wires on Tuesday.

The report from BNSF detailed one week of shipments late in May of light crude from the Bakken field of North Dakota. It showed not what rail lines were used, but where trains traveled by county. These are loaded trains of at least 1 million gallons of crude, but often around 3 million gallons. Around 18 such trains a week enter Washington, mostly through Spokane, and apparently traveling south through the Tri-Cities and down the Columbia Gorge. Some then make their way north.

Spokane County saw 16 trains for the week; Lincoln, 17; Adams, Benton, Franklin, Skamania and Clark, 18; Pierce, 15; King, 11; Snohomish, 10; Skagit, 9; Whatcom, 5. Kittitas, Grant, Douglas and Chelan — 0.

So as expected, no heavy oil trains make the heights of Stevens Pass, although we have seen empties headed east.

The mounting news makes it look likely that we will see more and more tank cars passing through. Just this week is was announced that the Commerce Department had agreed to allow two Texas companies to export small amounts of lightly refined oil, possibly creating a tiny fracture in the 40-year-old ban on U.S. oil exports. The Obama administration and experts were quick to downplay this, saying it didn’t constitute an end to the embargo, which would require congressional approval. But it was a big enough crack in the door to raise Texas crude prices and drop oil stocks.

No one still alive can recall exactly why the United States forbid its oil to be exported, except that the people in government are always excessively paranoid about gasoline prices rising for reasons other than increased taxation. Also, at its peak the United States imported 60 percent of its oil needs. Now that’s down near 40 percent. The experts say a full-fledged end to the export embargo would raise crude prices at home, and make world markets less volatile. All that just increases the incentive to hunt, drill, frack and pump.

Exports are, almost always, good for a nation’s economy, and so oil transport will have a future on the West Coast. We will see. Remember that rail shipments of oil in Washington were zero as recently as 2011. The state estimates they hit 17 million barrels in 2013, and some say that could triple.

Remember, it will be burned. Some 25 years ago, the International Energy Agency estimated that fossil fuels provided 82 percent of the world’s energy consumption. After decades and billions invested in renewable energy, the IEA announced in February, that of all the world’s energy consumption, fossil fuels provide … 82 percent.