The irony is worthy of a Noel Coward play. If it weren't so frightening, it would be worth a good guffaw.
Defenders of the fossil patch have gone from accusing climate science of being incapable of producing reliable predictions, to arguing that we can "geo-engineer" our way out of this problem. So on the one hand, climate science is an immature, complicated and unreliable science. On the other, we are capable of controlling the entire global ecosystem, essentially forever, by engineering temperature-reducing solutions and controlling the outcome.
The underlying paradox hints at other motivations. Like defending business-as-usual whatever the cost, including intellectual dishonesty. Like pretending we are not in a pile of trouble. Like wanting to stick your head in the sand.
Geo-engineering means treating the global climate system like a machine, one that you can not just predict, but actually control. But it's more like trying to clamp a lid on a pot of boiling water. As the water heats up, you need to clamp the lid on tighter and tighter. Forever. This is not a a solution, this is hubris. And yet another excuse not to deal with the root causes, to do the real work that needs to be done.
Bjorn Lomborg, director of the "Copenhagen Consensus Center", has successfully put geo-engineering front and center just in time for COP15. The argument is that it's cheaper to control global temperatures - by putting reflective dust in the upper atmosphere, or increasing cloud cover over the oceans - than it is to reduce our carbon footprint.
It's true geo-engineering is cheap: it's often cheaper to suppress symptoms than to deal with underlying causes. It's also true that we'll probably need some sort of geo-engineering: we're far too late to the climate reducing game to avoid some level of temperature increase.
But geo-engineering is a dangerous distraction from the main event. Committing ourselves to a future in which we are responsible for artificially controlling the temperature of an enormously complicated system, replete with feedback mechanisms, is Faustian madness. It brings to mind a skidding car, when the driver over-compensates by trying to steer in the other direction. The result is an uncontrollable spin.
What geo-engineering might do is give us a bit more time. But it is no reason not to act on the carbon front.
We are in deep trouble. Let's not pretend geo-engineering abdicates us of our responsibility to deal with it.
Vinod Khosla
MaRS went to the AlwaysOn Summit. I, of course, went with MaRS, as their Cleantech Lead. From a Cleantech perspective, there was one clear star. The fireside chat with Vinod Khosla of Khosla Ventures.
Vinod Khosla gets it. Not just business. As the founder of Sun Microsystems, former partner at Kleiner Perkins, founder of Khosla Ventures and one of the richest Americans, that’s pretty clear. But Khosla also gets climate change. Its severity and scale, the policy tools we need to tackle it, even the moral arguments surrounding the upcoming talks in Copenhagen that will attempt to forge a post-Kyoto deal.
Clearly, Khosla is in Green with some green. And he loves high-tech. Khosla Ventureshas big bucks aimed at cleantech companies — and not just any companies. Only those that have high technology risk; companies that can potentially change the game. Khosla knows that if we are to avert the climate crisis, something drastically different needs to emerge. Smart storage that would let solar energy fly. Biofuels grown at scale on currently infertile land. He’s even game for cold fusion if he could find a good play there. If you’ve got a cleantech play that is game-changing, early stage and high-risk, you might be right for Khosla.
But Khosla is more than just high-risk, green venture.
But more importantly (and more impressive to me): Khosla pulls no punches on three issues:
What’s green wash for Khosla? A hybrid car. Why? Because, from a cost-of-carbon-reduction perspective, it’s much more effective to put that money towards painting roofs white, reducing energy used for cooling. That doesn’t mean you shouldn’t drive a hybrid (he does), his point is more subtle. If the goal is to reduce carbon, that money is better spent on painting roofs white. But the people with the money to spend on hybrid cars, rich Californians like himself (his words!), aren’t going to spend that money painting other people’s roofs white. He’s pointed out a clear failure of the free market. Money will not find the least-cost approach to reducing carbon.
He also acknowledges the scale of the problem. If we all followed every single recommendation in the Lazy Environmentalist, for example, what would it get us? Squat. Diddly-do. Nothing. The scope of our carbon problem is way past those sorts of measures and he’s candid enough to say so.
And moral arguments? “The moral argument that every person on the planet is allowed to emit the same amount of carbon is a very hard moral argument to refute,” he says (paraphrased). That’s the first time I’ve ever heard an American captain of industry acknowledge the validity of the developing worlds starting position on climate change.
Khosla is impressive. Sure he’s smart and successful and a hero to a cleantech player like me. But it’s his willingness to step outside the safe, secure optimism of American big business that sets him apart. We would do well to listen.
Here is another bit of my upcoming book:Ten Technologies to Save the World - Kicking the Fossil Fuel Habit. The chapter on Geothermal includes geo-exchange (heating and cooling buildings), regular geothermal (tapping hot aquifers for electrical production) and EGS - Enhanced Geothermal Systems. EGS is the game-changer, and if pursued with vigor, could contribute in a huge way to getting us off oil. Here I describe what it is and ask: what do you get for a trillion dollars? Answer: you could replace 75% of U.S. electrical production.
Idea: Drill EGS holes beside every coal plant. Replace the boiler with a heat-exchanger. Keep the rest of the infrastructure. Turn off the furnace. Done.
Copyright©2009 Tom Rand, Eco Ten Publishing. All rights reserved. No part of this excerpt may be used or reproduced in any manner whatsoever without written permission.
Enhanced Geothermal Systems – Mining the Hot Stuff, Anywhere.
In most of the world the ground 6 miles (10 km) underneath our feet is dry, but as hot as the hottest aquifer. That heat can be mined, brought to the surface, and used to generate electricity.
Enhanced Geothermal Systems (EGS) represent the great hope of geothermal, the holy grail of electrical production. Available around-the-clock, throughout the year, and available almost anywhere, it is suitable to be the workhorse of the world’s electrical system—with a constant baseload supply. It’s got colossal potential—the ground beneath the US could easily provide all its energy needs for the foreseeable future. EGS is the real deal.
How does it work? Drill down a long way—2.5 to 6 miles (4-10 km)—until you reach hot rock approaching 400 ˚F (200 ˚C). Drill another hole some distance away. Push water down the first hole at high pressure, creating a network of cracks between the two holes through which liquid can flow. Essentially, create a big, complex and very deep ‘geo-loop’. To mine the heat, pump liquid down one hole, let it seep through the cracks in the rock, and up the other. Grab the heat at the surface and use it to generate electricity. If you ever run out of heat, just move over a mile or two, start again, which will allow the first area to heat up again.
To get a sense of how much energy is stored in the ground, imagine a 70,000 metric ton pile of coal. Extracting enough heat to lower the temperature of a chunk of rock measuring 1/4 cubic mile in volume (1 cubic km) by just one degree, will give you as much energy as you get by burning that pile of coal. It could provide electricity to 14,000 homes for a year.[i] Ten degrees gets you 140,000 homes.
The real magic of EGS is you can drill for it pretty much anywhere. London, Adelaide, Toronto or New York, it doesn’t matter—we’re not limited to those few, thin veins of heat close to the surface.
Starting with experimental projects in the 1970s at Los Alamos National Laboratory, US, and at Cornwall, UK in the 1980’s, methods were developed to make fractures in hot, dry rock lying deep below the surface. A full-scale international collaboration is underway in Soultz, France. Small, experimental holes 2.2 miles (3.5 km) deep were drilled back in 1997, and the site has now been expanded to a full-scale pilot project using three holes 3.1 miles (5 km) deep. Water pumped into one hole emerges from the other at about 400 ˚F (200 ˚C). A power plant big enough to power 1500 homes is currently in operation.[ii]
Soultz is not the only project on the way. Drilling has started at two locations in Australia, one at Paralana, and a massive second project at Cooper Basin. There has been an operational plant in Landau, Germany since 2007 which produces enough power for more than 6000 homes. Sweden and Japan are also in on the action. The first commercial plant in the US, partly funded by the US Department of Energy, is planned for Desert Peak, Nevada.
MIT estimates that an EGS plant capable of powering 100,000 homes would take up less than a square mile (2 sq km), and use a 1.2 cubic mile (5 cubic km) underground reservoir of rock. When that plant runs out of heat—which would happen every 6 years or so—then you simply drill new holes a few miles away. The earth will gradually reheat the original area. This is truly renewable energy.
EGS is still in the early stages of commercial development, and there remain technical uncertainties—related to the geophysics of deep-earth rock fracturing, water flow and loss rates, for example—plus all sorts of engineering issues are sure to pop up. But these are ‘mere’ engineering problems, the sort of challenges engineers face all the time. Bob Potter, at 88 years of age, is one of those engineers.
Bob Potter was a co-founder of EGS while working at Los Alamos National Laboratories back in the 1950s. Not one to hang up his hat, just five years ago Mr. Potter founded Potter Drilling. Now backed with money from Google, he is working on (literally) cutting-edge technology to lower the cost of drilling those deep holes. Teamed up with his son, they’ve invented a new type of drilling technology that fractures the rock by spraying super-heated 1500 degree F (800 C) water out of a nozzle, instead of using traditional drill bits. They figure they can bring the cost of drilling down by half, and get it done faster. Drilling is a big part of the cost of EGS, and showing it can be done cheaply would go a long way to establishing commercial viability.
There is no real question about the long-term potential of EGS. That MIT report clearly established that there is more than enough accessible EGS energy to power the entire planet for thousands of years.The Trillion-Dollar Question:
What do you get for a trillion dollars? A trillion dollars worth of EGS? Around 400 GW of capacity,[iv] capable of filling three-quarters[v] of US electrical requirements.
[i] Assuming an average cost of $12,000 per household, spread across condos and homes. 83.3 million households get installed. There are approx. 105 million households in the US (Source: US Census Bureau)
[ii]. Approximately 70% of energy use is for heating/cooling (space and water). Geo-exchange lowers heating/cooling energy use by 75% (actual amount varies according to electrical source and original heating source). Total energy reduction would be 80% (portion of population) times 70% (heating/cooling portion) times 75% (energy savings) = 42% of total residential energy use
[iii] Total US household energy use is 22,000 trillion BTUs (Source: US EIA http://www.eia.doe.gov/emeu/states/sep_sum/html/pdf/sum_use_all.pdf). Annual savings would be 9240 trillion BTUs, or the equivalent of 1.6 billion barrels of oil a year (1 barrel of oil = 5.8 million BTU, Source: US EIA)
[iv] Costs of EGS are divided between exploration and drilling, construction of power plant, and present value of future re-drilling. There are two ways of generating an estimate:
First – assume cost of large-scale EGS to be similar to existing geothermal—the holes may be deeper, but EGS benefits from economies of scale, ease of site location, proximity to transmission and ongoing drilling technology improvements. Estimate: $1,057 (lowest cost – US EIA), $1,150-$3,000 (Renewable Energy Policy Project), $1,663 (MIT) per kW of capacity. Average = $1,600/kW of capacity.
Second – MIT estimates that 65% of the final cost of EGS electricity, per kWh, is due to carrying costs of initial capital investment (MIT Report, pg. 9-9), available at long-term average of around 8% (MIT Report, pg. 9-37). Breakeven price for EGS is around 6¢/kWh if deployed on a large scale (MIT Report, pg. 9-38). So capital carrying costs are ($0.65 times 6¢ = 3.9¢) per kWh. Assume 90% capacity factor: 1 kW of capacity generates 7884 kWh per year; capital carrying costs are (7884 kWh times 3.9¢) equals $307 per kW per year. Amortize this payment over 30 years and the up-front capital is $3,491 per kW.
Take the average of the two methods: approximately $2,500 per kW.
Therefore, a trillion dollars gets you 400 GW of capacity
[v] The US uses around 4 million GWh a year (US EIA)—400 GW, at 90% capacity, can produce more than 3 million GWh a year
[i] Average US household electrical use is around 11000 kWh per year (Source: http://www.eia.doe.gov/emeu/recs/recs2001/enduse2001/enduse2001.html). One metric ton of coal can provide approximately 2200 kWh (Source: US EIA; Approximately 2 billion MWh were produced from 1 billion US short tons of coal in 2007. That’s 2200 kWh per metric ton). Therefore 70,000 metric tons generates 154 million kWh or 14,000 house-hold years of electrical power
[ii] For a full, technical update on the Soultz project status at time of writing, see: http://pangea.stanford.edu/ERE/pdf/IGAstandard/SGW/2009/genter.pdf
Here is another bit of my upcoming book:Ten Technologies to Save the World - Kicking the Fossil Fuel Habit. Aside from the Ten Technologies, a number of small essays are included. Three on Climate Science (The Basics, The Complex, The Bad) outline why we need to Kick The Habit. This is the third (and quite negative) one.
Copyright©2009 Tom Rand, Eco Ten Publishing. All rights reserved. No part of this excerpt may be used or reproduced in any manner whatsoever without written permission.
Motto: Just because we can’t predict “when”, doesn’t mean we can’t predict “what”.
This is a book about hope. It is a celebration of what’s possible. We can kick the fossil fuel habit and live in a world supplied with clean renewable energy. So why this negative bit? Food shortages, geopolitical upheaval, an end to much of the world that we take for granted; why paint such a picture? Bluntly put, to motivate the effort it takes to reset our energy economy. That job is possible, but difficult, and it’s important to understand why it is worth the effort. So I depart from the upbeat tone for just a moment.
An image in New Scientist magazine (March, 2009) – had it not been reflective of current science – would seem alarmist in its vision of the earth later this century. In it, a sort of ‘super-desert’ occupies much of the planet, a desert much hotter than anything we find now. Canada looks just fine, but China, Africa, Central and South America, the United States, Australia, much of Asia – what used to be the world’s breadbasket - is now incapable of growing crops. Hospitable land is limited mainly to small, crowded bits near the poles. Much of what used to be coastal land is underwater, or headed underwater. New Orleans, Mumbai – gone. The image is a nightmare.
Our problem is this nightmare scenario is not unlikely. It’s not science fiction, but what some of the smartest people in the world are telling us. And – it’s based on a mere 4 degrees C of warming. Without a full reset of energy production, that level of warming could occur as early as 2050, and will almost certainly be here by the end of the century.
Four degrees may not seem like much. It’s less than the swing from dawn to mid-morning, or early to late spring. But a global average temperature change is not the same animal, and 4 degrees is the difference between a planet that supports what we have, and one that does not. The single biggest problem? Food. At a 4 degree rise, Mother Nature is firmly back in charge. What might it look like?
“We have just a small window of opportunity and it is closing rather rapidly. There is not a moment to lose…We are risking the ability of the human race to survive” (Dr Rajendra Pachauri, Chair of the IPCC, 2005).
Most of the world’s glaciers will be gone. While mountain-lovers may be upset at the news, the problem has nothing to do with the incredible beauty or deep sense of history glaciers provide. The problem is food. Glaciers store water during the winter, and release it during the summer, and it’s their spring run-off that irrigates much of the world’s crops. Parts of the American plains, China, India and most certainly Pakistan will suffer. Pakistan, just one example, is really a big desert with a river running through it. The Indus river system supplies water to the largest irrigated land system in the world. No Indus run-off, no crops. At present melting rates, this will happen by the early 2030’s.
The deserts will have grown, and are really hot. The increased energy of the Hadley cells that form our deserts (see Chapter 2 – Wind) causes those deserts to expand. Most of Asia, including Japan and China, have become inhospitable desert. So has much of the United States, Mexico and Africa. The Amazon is gone. None of these deserts can grow food. Average temperatures exceed the hottest days on record now. The hottest days are off the charts.
Global grain markets may no longer exist. Since deserts have taken over what used to be our bread-baskets of grain production, global output has diminished so much that little is for sale. Countries that can grow it (Russia, Canada) feed themselves or their closest friends.
The oceans won’t be able to feed us anymore. Higher temperatures and increased acidity from carbon absorption has taken out key life-supporting species (plankton, for example) throughout much of the oceans. They are no longer much of a food resource.
Storms will be really strong. Katrina was an indicator, a clue to how storms will change. With warmer waters, hurricanes gather more energy, since it’s the water that provides it.
Many of the world’s great cities will be drowning. Seas levels have risen 3-6 feet (1-2 m), and are set to keep rising for many centuries no matter what we do. Cities like Mumbai and New Orleans are already under water. The world’s ice takes a long time to melt, probably a century or more, but when it does the total rise in sea levels will be near a hundred meters.
Our population will have severely shrunk, be displaced from where we live now, or both. Only a fraction of the planet is productive – mostly Russia and Canada, as it happens – and so we all learn to live very efficiently on that land, or not.
So – how fast do we need to de-carbon? We couldn’t do it fast enough. If we want to buy some insurance against this scenario, then we should probably fully de-carbon – no fossil fuel use at all – by 2050, and hit 80% reductions by 2030.
"We are getting almost to the point of irreversible meltdown, and will pass it soon if we are not careful” (Sir John Houghton, Former Co-Chair of the IPCC, 2006).
Motto: Just because it’s complex, doesn’t mean we can’t make good predictions!
Tiny creatures and swampy plants, living hundreds of millions of years ago, breathed in vast quantities of carbon dioxide, storing the carbon in their bodies. Unmindful of their sacrifice, this early life performed a sort of global air-conditioning service for us. Their bodies stored enough carbon to change the atmosphere from being inhospitable to mammals like us, into one in which we thrive. Their dead bodies became the coal and oil that now power for our iPods, cars and air-conditioners.
As power plants and vehicles breathe back out the store of carbon, they set off a complicated chain of events. The climate system is one of the most complex ever studied. The path upon which the released carbon sets us may be complex, but the end-game is simple. Releasing all that carbon would undo what that ancient life did. That story begins in Climate Science For Dummies – III – The Bad Stuff.
Complex as it is, the role of carbon in our evolving climate is well understood. The question is not whether we understand the mechanisms – we do! – but how accurately we can predict the future. The climate system is ‘chaotic’, meaning there are ways it is stable, but also ways it can change rapidly into something quite different.
Predicting chaotic systems is like predicting hurricanes. You know one is coming and you know it’s soon, but you can’t say exactly when . Not being able to give a precise day and time doesn’t mean you don’t understand hurricanes, and it doesn’t mean you can’t give meaningful predictions. No-one in Florida doubts the prediction “more hurricanes are coming” or the advice “you should fortify your home”, even though no-one can say what day it will happen. Predictions about climate change are similar. We can predict what will happen, but can’t say exactly when.
People sometimes think that since we can’t predict weather two weeks from now, we can’t predict the climate in twenty years. That mistakes weather for climate. For example, we have no idea what the weather will be like on Dec. 10th, 2030 in New York City. But we do know the average temperature in December of that year will be lower than the average temperature in June. Climate predictions are not about particular events, they about trends and probabilities. We’re pretty good at those predictions.
What makes climate so complicated? Things are inter-linked: carbon effects temperature, temperature effects carbon and temperature effects temperature. This is called ‘feedback’. Positive feedback means a change causes more of the same – things speed up. Negative feedback means a change causes less of the same – a braking system. Positive feedback is like a pencil balanced on the tip – any tipping causes more tipping, it’s unstable. Negative feedback is like a marble in a bowl – any rolling causes it to roll back, it’s stable. Our climate is a mix of positive and negative feedbacks.
What worries scientists are positive feedbacks, which accelerate climate change. We can’t predict exactly when positive feedbacks will occur, but we can predict they will occur, and we know what will happen if they do. Two basic positive feedbacks look like this:
1. Higher carbon levels increase temperature, which increases carbon levels (which increases temperature ...).
Right now, the oceans absorb about a third of the carbon we emit. The water absorbs some, as does plankton. Oceans act as a carbon sink. When temperatures rise, they will flip into being carbon sources. Climate change will cause itself to speed up. Why? Warm air causes warmer oceans, and just like a can of pop fizzing in the sun, they will release stored carbon.
Same goes for our great rain forests. The Amazon is a giant carbon storehouse. Rising temperatures causes desertification, so the Amazon will stop absorbing carbon and will release all that it holds in a great gasp. Even our soil will flip from a sink to a source. Warmer soil means microbes get more active, releasing stored carbon. That’s already happening[i]. It is predicted that by 2040[ii], living systems will begin to release more carbon than they absorb.
There’s an elephant in the room, a bigger and badder feedback than either of these. The Arctic permafrost holds huge amounts of methane, a potent greenhouse gas. Were it released, it would effectively[iii] triple the amount of carbon in the atmosphere. It’s already happening, lakes in Russia are bubbling with the stuff.
2. Higher temperatures cause higher temperatures (which cause higher temperatures ...).
The ice at the poles reflects sunlight and heat back into space, acting as a giant mirror. As the ice disappears, the dark water that replaces it will absorb heat. As temperatures increase enough to melt the ice, the melting ice will cause temperatures to increase. This is already happening.
There are all sorts of other feedback effects, but you get the idea. Climate science tries to predict which of these changes will occur at what temperatures and what levels of carbon. It is entirely up to us when (and if) we reach those levels. The bottom line? It’s thought that the really bad stuff – all those positive feedback mechanisms – start to really kick in around 450 ppm. 500 ppm is a ‘no-go’ zone, where all bets are off and the system might be yanked out of our control. We’re at 380 ppm now ...
[i] Bellamy, Pat H., et al, Carbon Losses from All Soils Across England and Wales 1978-2003, in Nature, Vol. 437, Sept. 8, 2005.
[ii] Jones, Chris D., et al, Strong Carbon Cycle Feedbacks in a Climate Model with Interactive CO2 and Sulphate Aerosols, in Geophysical Research Letters, Vol. 30, May, 2003
[iii] Methane is about twenty times as effective as carbon dioxide at trapping the sun’s heat. When I say it will effectively triple the amount of carbon I mean that the amount of methane released will have the same heating effect itself as twice the current levels of carbon dioxide.
Anyone watching television or reading the daily paper over the past decade or so could hardly be blamed for thinking climate science a murky affair, rife with disagreement and doubtful claims. One ‘expert’ is pitted against another, the first muttering something about solar flares and the other trying to explain what ‘peer review’ means. But there hasn’t been real disagreement in reputable scientific circles on climate change for some time. Remaining arguments are about fine details. But it’s easy – and comforting - to find a marginal crackpot on television telling us not to worry. That’s irresponsible journalism, and gives an impression of doubt where none exists.
The basics of climate science have been settled in the scientific community for years: we know the earth is warming, we know it’s our carbon dioxide emissions causing it, and we know that - without big reductions in emissions - the climate will change in ways that are harmful to our way of life.
It’s often claimed this knowledge is doubtful. Because it is based on ‘theories’, it can be dismissed as conjecture. That is to mistake what is meant by ‘theory’. It is scientific theory that the earth is round, and it is a theory the sun will rise in the east tomorrow. To science all knowledge is refutable, given the right evidence. Every theory has a degree of doubt. If one day the sun rose in the west, theories about planetary movement would be changed. The real issue is – what is the degree of doubt?
It’s true that climate science is complex. But one of the largest international assemblies of scientists ever formed – the Intergovernmental Panel on Climate Change (IPCC) – agree on the basics. Even the slightest chance they are right would warrant serious action, a kind of insurance policy against calamity. But the chances of the IPCC being correct is not slim – you can bet your house on it. Here are some basics.
Carbon dioxide[i] (carbon) in the atmosphere warms the earth, acting as a insulating blanket. It lets in more energy as sunlight than it lets out as heat, trapping the heat. We’ve known this since the early 1800’s[ii]. Without greenhouse gases the earth would be inhospitable - but there can be too much of a good thing! More than 100 years ago scientists began to worry, calculating how much carbon burning coal emitted and how much it might warm the atmosphere. Emissions then were tiny, and it remained a theoretical curiosity.
Carbon concentrations are linked with temperature over long periods of time[iii]. Carbon concentrations – measured in parts per million (ppm) - were measured directly starting in the 1950s, and measurements going back hundreds of thousands of years are made possible by looking at tiny bubbles trapped in Antarctic ice. The deeper in the ice you go, the further back in time the air was trapped. Temperature is calculated by measuring the ratio of two kinds of molecules – oxygen and deuterium – set by the temperature at the time the air was trapped. We know that when carbon goes up, so does temperature[iv]. There are other ways to confirm this link, like looking at ancient tree rings or the sediment on the bottom of deep lakes. They all say the same thing.
Carbon levels are rising fast, and human activity is responsible. De-forestation and fossil fuel use are what is changing the game. The carbon concentration has risen from pre-industrial levels of 280 ppm to more than 390 ppm, higher than it’s been for hundreds of thousands of years. It’s still rising 3 ppm a year. We know we’re responsible because we know how much carbon we release, and we know how much is absorbed[v]. Roughly – the difference is us. Really dangerous levels of carbon occur around 450 ppm, so without big changes we’ll be there when today’s pre-schoolers are attending university.
We are causing the latest warming, which is happening alarmingly fast[vi]. Average world-wide temperatures have risen by 0.6 oC in the last century, the fastest rise in the last thousand years. The rise is directly co-related to the rise in carbon. Temperature cycles in the past that saw ice ages come and go were caused by subtle changes in the orbit of the earth (called Milankovich cycles), but that is not the case now. Those cycles are regular, we known when they occur – and this isn’t it.
The future looks bleak if we don’t change our behaviour[vii]. Warming is not a gradual, gentle process that lets Torontonians wear shorts in December and lengthens the golf season in New York State. It disrupts ecosystems, causes violent storms and changes weather patterns. It will render life very difficult. That story continues in Climate Science III –The Bad Stuff.
Finally – this stuff is coming at us faster than is generally acknowledged in the popular media. The IPCC is authoritative, but conservative[viii]. The latest science shows we’re already past their worst-case scenarios. Stuff that wasn’t supposed to happen for decades is happening before our eyes, like the summer melting of Arctic ice and permafrost, and the recent droughts in Australia.
[i] There are other greenhouse gases – methane, nitrous oxide and water vapour , among others – but for simplicity I shall stick to carbon dioxide as it contributes more than 60% of the greenhouse effect.
[ii] For an historical account of this discovery, see http://www.aip.org/history/climate/co2.htm
[iii] SeeSiegenthaler et al., Stable Carbon Cycle – Climate Relationship During the Late Pleistocene, in Science, Vol. 310, Nov. 25, 2005. Also: http://cdiac.ornl.gov/trends/temp/vostok/jouz_tem.htm
[iv] Sometimes the temperature goes up first, then carbon rises, which caused some people to doubt the link. What this shows, though, is the existence of ‘feedback mechanisms’ where an increase in temperature causes something to happen (like the melting of permafrost that holds stored carbon) that releases more carbon. See Climate Science III - The Complex Stuff for details on feedback.
[v] By oceans, forests, etc.
[vi]World Meteorological Organization, Extreme Weather Events Might Increase, Press Release, July 2, 2003. See also http://www.greenfacts.org/studies/climate_change/l_3/climate_change_2.htm#3
[vii] For a full account of what might happen in the climate see G. Monbiot’s Heat, and for the geopolitical sphere, see G. Dyer’s Climate Wars.
[viii] The IPCC was saddled at the outset by a need to generate an unusually high degree of consensus – near unanimity - before it publishes any results. It takes time to build that consensus, and the outcome is rendered very conservative. It also takes a great deal of time to go through the rigorous peer-review process. The end result is they use data that is, literally, years out of date. For the 2007 report, field data from the turn of the century was used.
Second generation fuels - ethanol from cellulose - sound pretty good if it doesn’t compete with our food supply.Is there really a need to go further? Sure there is. According to Dennis Bushnell, chief scientist at NASA Langley Research, “there’s just not enough fresh water and arable land to produce enough biofuels to replace the petroleum.”[i] The problem is there isn’t enough existing land or plant growth to make any real dent in our energy supply[ii] - food production issues aside.
If we were to replace all U.S. petroleum with first- or second-generation biofuels from conventional crops like soy, it would require the use of more[iii] than the entire U.S. land mass. Even palm oil, which generates 20 times the amount of biofuel per acre, would require more than a third of the arable land – and palms don’t even grow in Kansas!
When the European Union first mandated that a percentage of diesel fuel must be biodiesel, it ignited a surge in deforestation of rain forest in Indonesia to make room for plantations of palm for palm oil production. The plan backfired. Deforestation causes a massive spike[iv] in greenhouse gases. The net result was a increase in carbon emissions, not a reduction.
When Richard Branson, of Virgin Atlantic, flew one of his planes on a mix of regular fuel and the oil from 150,000 coconuts, it was touted as a sustainable fuel. The problem comes when you count the coconuts. Analysts pointed out there are not enough coconuts in the world to service just Heathrow! To be fair, Branson did show the possibility of alternate fuels, and he is now looking into ... fuel from algae.
We need to go one step further if biofuels are to contribute anything of significance. Three new sources look promising. Algae can be cultivated in tanks and farmed from seaweed in our oceans. Halophytes - plants that drink salt-water and can grow in unproductive deserts like the Sahara - won’t compete with food. Jatropha, a plant which can grow on marginal land and on top of regular crops without reducing yields, also holds promise.
Pond scum, sea-weed, green goop – the unappetizing slippery stuff is one of the most promising sources of biofuel. Squeeze out the oil for biodiesel, and break down the rest for ethanol. John Sheehan, at the U.S. National Renewable Energy Laboratory says “There is no other resource that comes even close in magnitude to the potential for making oil.”[v]
Harvested from the ocean, or grown in tanks on non-fertile land, they can be fed waste-water or even the emissions from smokestacks. These little balls of oil[vi] are harvested on a continual basis, and can produce more than forty times the fuel per acre than any other plant – up to 20,000 gallons per acre per year. In the right conditions, algae can double its volume overnight. The trick is to get the growing conditions right, and do it on a big scale.
How big? Solix is a company that’s been dabbling in algae-based fuels for years. Douglas Henston, CEO, says “If we were to replace all of the diesel that we use in the United States with an algae derivative, we could do it on an area of land that’s about one-half of 1 percent of the current farm land that we use now.” So it’s promising, but that’s one big pond – and we’re not talking about regular ponds here. These are high-tech, triangular-shaped aquariums called ‘photobioreactors’.
Algae can pack a double punch. Since algae can eat high concentrations of carbon dioxide, it can be fed straight from a conventional power plant. "Algae can take (carbon dioxide), eat it and produce algae--that's a known fact”[vii], says Isaac Berzin of GreenFuel Technologies, a super-smart startup from Cambridge, MA, with ties to MIT. It was Berzin’s work at NASA that really gives GreenFuels an edge.
GreenFuels builds a ‘bioreactor’, which is a fine-tuned, turbo-charged artificial pond. The turbo-charging is done by feeding in carbon dioxide emissions from a power plant. The algae is fine-tuned by using a cell culture unit originally developed to grow organisms for NASA’s micro-gravity space experiments. Feed in water and emissions samples, and just the right algae is grown to optimize production. The idea is to surround power plants with thousands of bioreactors. GreenFuels’ pilot plant will produce fuel for local buses.
Halophytes are plants that love salt water. So here’s an idea – irrigate vast swaths of desert with salt-water, and grow plants for biofuels. This may not yet be happening on a commercial scale, but the idea is sound and some high-powered thinkers are getting behind it. Dennis Bushnell, chief scientist at NASA's Langley Research Center says “This is a revolution for agriculture as well as for energy."[viii]
What’s the potential of halophytes? Well, according to Bushnell, the Sahara desert could by itself provide 94% of world energy consumption[ix] if it were converted to halophyte biofuel production. This may sound crazy – but these are the sorts of ideas that we need to take a really close look at. It was probably once thought absurd to go to the moon, or cross the ocean, or split the atom!
Jatropha is a plant that grows an inedible seed that is ideal for biodiesel. What makes the plant really promising is that it can be grown on crappy land that’s no good for crops, and in amongst existing crops without lowering the yield. It’s kind of like fuel for free when mixed with other crops. It’s promising enough that the Government of India has singled the plant out for a national push for biofuels.
Clearly, biofuel has a role to play. Already some European countries generate up to 20% of their energy needs from biomass, mainly from burning waste for heat and electricity.
If biofuels are to play a more significant role, it will be in replacing our liquid fuels, used mainly for transportation. To replace more than a few percent of our petroleum use, though, biofuels must stop competing with our food crops for arable land, water and fertilizer. To get really serious, we must even get past using wood and inedible farm waste and other cellulosic sources.
The problems associated with cellulosic ethanol are two-fold: limited biomass supply and the dangers associated with the required genetic engineering. There just aren’t enough wood chips and plant stalks, and even if there were - engineering those tiny little self-reproducing microbes, like bacteria, is risky. There is always a danger of introducing new bugs that upset our delicately balanced ecology.
To really replace petroleum, biofuels must come from the sorts of third generation fuels outlined above – mainly algae and halophytes. Biofuel is no magic bullet. Only if the efforts we’ve made in finding and defending our sources of oil were matched by efforts to build vast fields of bioreactors fed by our existing carbon emissions, and vast tracts of desert land irrigated by salt water, could biofuels really change the game.
What do we get for a trillion dollars? If we were to use that money to irrigate the Sahara for halotrophe farming, and build biodiesel factories to process the plants, we’d be able to irrigate enough land[x] and build enough processing capacity to replace about half of the total world oil supply.
[i] As quoted in G. Dyer, Climate Wars, pg. 126
[ii] Every source of plant growth added together, all over the world, is six times our total energy use (Source: G. Boyle, pg. 107). That’s all the crops – food and waste, all the weeds, all the forests, all the plankton in the oceans - everything. Even if we could make use of a faction of that biomass, the conversion to useful energy would be a small fraction of that. Say we could somehow make use of 5% of the total global biomass production – which seems wildly optimistic - and we get a 33% conversion rate (also optimistic), that represents less than 12% of our energy use.
[iii] Take soy production of 0.4 tonnes, or 125 gallons, per hectare. The entire U.S. landmass is 930 million hectares, giving a theoretical maximum of 119 billion gallons of biofuel. It would take 140.8 billion gallons of biofuel to replace U.S. petroleum. That’s more than the U.S. land mass. Palm oil production, which generates 20 times the amount of biofuel per hectare, would require about 7 % of the landmass. Since only 19% of the landmass is arable, that’s more than a third of the arable land mass.
[iv] See The Climate Cycle for details.
[v] Source: Pond-Powered Biofuels: Turning Algae into America's New Energy, Popular Mechanics, March 29, 2007. The National Renewable Energy Laboratory had a program looking into algae for energy, until the Bush administration shut it down.
[vi] Algae contains 30-60% oil, compared with 20% for soya.
[vii] Source: CNET New, May 20, 2005. Start-up Drills for Oil in Algae
[viii] http://www.thefreelibrary.com/Seashore+mallow+seen+as+biodiesel+source-a01610723024
[ix] From the conclusion of the paper HALOPHYTES ENERGY FEEDSTOCKS: BACK TO OUR ROOTS, by R.C. Hendricks, D.M. Bushnell, “As an example, if the Sahara desert (8.6×108 ha) were made capable to support halophyte agriculture ... and if production were increased to 100 bbl/ha-yr of bio-oil, it alone would supply 421.4 Q, or94% of the 2004 world energy consumption”.
[x] Irrigating the Desert: According to Wynne Thorne, "Agricultural Production in Irrigated Areas", in Arid Lands in Transition, Harold E. Dregne, editor, AAAS (1970) pp. 31-56: The weighted average for medium to large irrigation projects is around $98,000 per sq. km. This ranges between $56,000-$177,000 per sq. km. These are 1970 prices, so let’s triple the median to around $300,000. This is for land that doesn’t need clearing, but it’s also for land to which you need to supply fresh, not salt, water. So a trillion dollars might convert more than three million sq. km to irrigated land. Since the Sahara is about 9,000,000 sq. km, and that could provide almost all our energy needs, the 3 million figure corresponds to a third of our energy needs. But oil is only a third of that, so it could replace roughly all of our oil consumption.
Converting the Fuel: According to the U.S. Energy Information Administration (http://www.eia.doe.gov/oiaf/analysispaper/biodiesel/ ) , “A new biodiesel plant is estimated to cost $1.04 per annual gallon of capacity.” So the same trillion could build factories that could produce 23 billion barrels of bio-oil a year. That’s pretty close to what we use now.
Putting it Together: So to irrigate the land, and to process the oil, it would take 2 trillion dollars to replace all our oil. So a trillion dollars would replace half.
When I first began writing this book, I didn’t think we could break the fossil fuel habit. Not in one generation, and certainly not without a great deal of nuclear, and what is optimistically called ‘clean coal’. In exploring renewable technologies like large-scale solar, wind and geothermal, the engineer in me changed my mind. It is possible to change our energy use to 100% renewables. This book is a celebration of that idea.
But the pragmatic venture capitalist in me tempers that celebratory mood. To kick our fossil fuel habit we need to deploy resources on a scale not seen since World War II, generate a degree of international political co-operation beyond anything we’ve yet done, and at the same time develop a new set of economic rules that finally put a prohibitive price on carbon.
These are daunting challenges. Why do it?
There are lots of reasons to kick the fossil fuel habit. Energy security, the moral cost of supporting undemocratic regimes who sit on the oil we use, the military cost in blood and treasure in keeping the supply lines open, and getting a leg up on the competition in the next industrial revolution: these are each reason enough to kick the habit.
Talk to a climate scientist though, and it fast becomes clear that one reason stands above all others: severe climate change is coming and it will not be pretty. It won’t just be hotter summers, scarier storms and rising oceans – although that is all true - we will soon have trouble growing enough food to eat. The sense of restrained panic you can hear in their voices as these learned men and women speak informally reveals more than the legion of scientific papers published on the subject.
The scientific community has known about this problem for decades. Margaret Thatcher called it the ‘greatest threat to our civilization’ when she addressed the U.N. General Assembly back in 1991. We are now in the final innings, this is our last stand, the river card.
Climate change is not a political issue. It is neither left nor right, liberal nor conservative, corporate nor anti-corporate. It is a serious, practical problem affecting everyone that needs to be solved.
That we must eventually break the habit is clear because fossil fuels are a finite resource. They will run out. That we must break the habit quickly[i] is well established by the scientific community.
Can we break the habit quickly? That is what I hope to help establish in this book.
I am not alone in this way of thinking. “We have ways forward which ... will work without ... terribly time-consuming or expensive further technological developments. It’s simply a matter of giving up our current teddy bears, which we love to clutch, which is the conventional hydrocarbons, fossil carbon fuels, and [going] off into what we need to do to save ourselves.”[ii], says Dennis Bushnell, chief scientist at NASA Langley Research.
When humankind really wants to do something, our ingenuity, resources and determination are breathtaking. We put a man on the moon! We unlocked the power of the atom! We routinely build devices for our entertainment that are mind-bogglingly complex, and our industrial civilization and economic infrastructure is a system of interlocking components that rivals the brain as the most complex structure in the known universe.
We stand on the shoulders of giants who came before us. This challenge represents our generations’ turn to carry the baton forward. It will not be easy, but it is possible.
How do we do it?
The sun landing on just 1% of the area of the Sahara desert contains enough energy to power the entire world. That same desert, irrigated with salt-water, could provide enough bio-fuel to replace all of the worlds energy needs. The wind and sun in the American deserts and plains could power the entire nation. So too could the jet-streams way up above, as well as the heat in the ground beneath our feet. An intelligent Energy Internet that manages and stores energy, just like the World Wide Web does data, lies just around the corner.
There is no magic bullet. All renewables need to be developed on a massive scale. Enormous investments need to be made in transmission and storage, to deliver that energy where and when it is needed. Conservation is an equal partner. Every watt of energy you don’t use is a watt of energy you don’t need to produce.
Back when I was a software entrepreneur, my hard-nosed business partner would often exclaim in an exasperated voice “It’s all economics!” He would trot this expression out when ever I proposed something that relied on forces other than money – good-heartedness, idealism, moral goodness. He had a point.
Money makes the world go round, and it’s money that needs to be deployed. So how do we make the money flow away from fossil fuels? We cannot rely on goodwill or idealism.
One solution is to price carbon emissions. Emitting carbon can no longer be free, it cannot remain, in the words of an economist, an ‘externality’. Then, and only then, will capital will begin to flow to renewables. But this solution is long and slow. No-one is willing to shock the economy with steep, sharp increases in the price of carbon.
A second solution is to accelerate that capital flow, ensuring that lots and lots of cheap capital is made available for renewable energy production. Most renewable energy is pretty much free once you’ve built the plant – nobody pays to make the sun shine or the wind blow. What’s it cost to build the plant? Depends on how cheaply you can borrow money. A government-backed, citizens’ Green Bond[iii] – like the Victory Bonds of World War II – is one way to engage all citizens in this project, not just venture capitalists like me and the bankers on Wall Street.
When the world’s banking system failed in 2008, governments around the world mobilized something near ten trillion dollars almost overnight. The same scale of investment is required just to begin to kick the fossil fuel habit. To ignite our imaginations I ask in each chapter the trillion dollar question: what would you get if you invested a trillion dollars? How many barrels of oil could you replace? What sort of scale of infrastructure could be built?
This level of investment is not fantasy. The International Energy Agency predicts that the world needs to invest more than $45 trillion in energy systems over the next 30 years.[iv] That’s just to meet expected demand growth. The question is how do we want to invest it? Do we continue to invest in melting tar for our energy, or do we harness the sun? Do we continue to rely on a 17th century technology – coal – or do we greet the 21st century with a brand new start?
The third solution is to simply walk away from the existing energy base. We need to abandon our coal plants. Totally irrational from a free market perspective, but necessary if we are to make this transition in the time-frame required.
When the micro-chip was invented, it changed the world. We are on the cusp of a similar economic and energy revolution. That revolution, though, will not come by itself. We need to stand up and make it happen. It will not come if we do not want it badly enough, if we do not work hard enough, if we do not commit ourselves to it.
To paraphrase the world’s most famous hockey hero, the Great (Wayne) Gretzky; “Skate to where the puck is going to be, not to where the puck is.” By mid-century our civilization must have broken the fossil fuel habit. Ten Technologies to Save the World is a celebration of where we are going, and a clarion call to start heading in that direction now.
“We [have been] burning coal and oil and gas heedlessly for almost two centuries, not suspecting that, in the long run, dependence on fossil fuels is a kind of suicide pact. And here is the little miracle that shows we still have more than our share of luck: at exactly the same time when it became clear that we have to stop burning fossil fuels, a wide variety of other technologies for generating energy became available.”[v]
[i] How fast do we need to do it? By 2030, we need to bring our carbon emissions down to near zero if we are to avoid setting off some pretty scary natural processes, like the melting of the permafrost and the releasing of the massive amounts of greenhouse gases it contains. See How Bad Can it Get?
[ii] as quoted in Dyer, G., pg. 157
[iii] See Green Bonds: Citizen’s Capital at Work! for just one idea as to how to accelerate the movement of cheap capital.
[iv]Source:http://www.guardian.co.uk/environment/2008/jul/22/solarpower.windpower?gusrc=rss&feed=environment
[v] Dyer, G., Climate Wars, pg. 244
However, that's only one solar farm. If we put some serious capital toward these projects -which require no high-tech materials (it's just mirrors, some heated oil, and a turbine) - then the costs would come way down. Ford showed us how to do it, didn't he? So let's figure the costs can come down by a modest factor of 2.
Solar thermal is slightly cheaper. A actual project in Toronto, Canada that costs $134,000 is a 60 plate installation covering 178 sq m. These panels generate 134,000 kwh per year, which equals 79 barrels of oil. This translates to the equivalent of around 600 million barrels of oil every year for a trillion dollar investment (Source: private correspondence on actual solar thermal installation. Calculation: 134,000 kwh / 1582 kwh per boe = 79 boe. 1 trillion / 134,000 = 7,462,687 times 79 boe annually). With some economies of scale, and assuming slightly warmer climates (this is Toronto!), this would easily double to 1.2 million boe annually.
Copyright©2009 Tom Rand, Eco Ten Publishing. All rights reserved. No part of this excerpt may be used or reproduced in any manner whatsoever without written permission.
We’ve all seen farms of big wind turbines, some with blade lengths twice the size of jumbo jets. Wind is big power and can quite easily provide up to 20% of a grid’s power, and with different weather regions connected (called ‘grid-balancing) that ratio can rise to 70%[i]! Already well-established on land, and now in shallow seas, people – including that irascible oil magnate T. Boone Pickens - are beginning to wake up to the idea that our Prairies are the “Saudia Arabia of wind.”
But where might wind power go from here? While some companies are eyeing the deep oceans, others are looking up, waaay up. Mining the jet-stream could provide power for as little as 2c per kwh, and just 1% of the American jet-stream could provide all of the electricity needs of the U.S.[ii]
What’s the jet-stream? The jet-stream is a high-altitude wind, fast enough to lengthen or shorten our jet journeys east and west. They are highly regular, and have been measured at speeds greater than 640 kph! They are created where two zones meet in the sky[iii], about 10-15 kilometers up.
The jet-stream never stops. Based on a spinning earth and some basic atmospheric physics, you can count on it day or night, winter or summer. The problem, of course, is the height.
Mining the jet-stream could deliver absolutely enormous amounts of power, constant enough to act as baseload power. So we’re hunting big game here. Who’s on the prowl?
A company called Sky Windpower has developed functional prototypes designed to fly in the jet-stream, generate power, and send it back to earth through the cables by which it is tethered. Since these sky-high turbines are portable, they can be packed up and moved if and when the jet-stream shifts around, as it sometimes does.
The folks at Sky WindPower reckon that they could generate power at 2 cents per kilowatt-hour, if these high-flying turbines were mass deployed – that’s way less than coal! Time Magazine thinks enough of their take on things that they recently named their flying electric generator as one of the top fifty inventions of 2008.
They might be overly optimistic, and have every reason to model the price downward. But it's real, the concept is quite straight-forward and given access to the sorts of resources we're throwing at the Tar Sands should deliver on the promise.
This isn’t a pie-in-the-sky: it’s real, it’s possible, it’s large-scale and it’s on the way!
[i] Source: http://www.risoe.dk/rispubl/reports/ris-r-1608_186-195.pdf
[ii] Source: Source: American Wind Energy Association Report, World Changing, pg. 176
[iii] The ‘troposphere’ decreases in temperature with height, but above it is the ‘stratosphere’, where temperature increases with height. That temperature profile difference conspires with the Coriolis force to create the fast-moving jet-stream.
Note: Originally published www.celsias.com, Nov. 3, 2008
Cigarette smoking, the credit crunch and global warming don’t seem to have much in common. One is a habit of huddled figures on street corners and in doorways. Another is a financial mess so large it swallows banks weekly. The last is a confusing mix of rising oceans, fierce hurricanes and ice-free winters.
Scratch beneath the surface, though, and you’ll find an alarming similarity.
Each provides something good in the short-term. Nicotine brings momentary pleasure, cheap credit maximizes profit and the hydrocarbons that are generating global warming have brought unprecedented economic growth.
But in each case the short-term good trumps catastrophic long-term effects. We are rational in the short-term, but irrational over the long.
A lifetime of smoking can cause a sudden medical crisis, a tumor. Years of gorging on cheap credit have brought a financial collapse stunning in its size and severity. Continued burning of fossil fuels will result in a worsening climate crisis, the severity of which is hinted at in recent hurricanes and droughts.
Even in the face of evidence that our path will end in tears, the decision to take action is deferred, again and again. Experts are ignored. The situation is not urgent enough to forego today’s pleasure. Tomorrow will do.
Smoking, the credit crisis and global warming are all sudden death by incrementalism.
Borrowing itself is not a bad thing. Governments, companies and consumers do it all the time. But the credit fever that hit the financial system is not mere borrowing. It reflects a deeper and unsustainable commitment to short-term gain over long-term rational behaviour.
To really see how bad it has become look no further than credit swaps.
When a bank lends to another bank, it can lend out more than if it lends to a mining company. Banks are safer than other sorts of companies, so the lending bank needs fewer assets to cover the loans. If a bank lent to that mining company, they would often ‘swap’ the credit by having another bank guarantee the loan. This is what brought down AIG, who played the role of guarantor.
On the books, it looks like they lent to a bank. That meant they could make more money by lending more money, hiding the risk and reducing the amount of capital they were required to hold.
It gets worse. The guarantor would sometimes be related to the lending bank, and it was often bank stock itself that was used to back the loan. This was called double gearing, referring to how a single pool of capital is used more than once as a covering asset.
Examples abound. Harris Bank lends capital for a Chicago development project. The loan is guaranteed by BMO. But BMO owns Harris, and some of the assets required of Harris were the equivalent of BMO stock.
It was all a house of cards ready to fall.
Everyone knew it couldn’t last forever, but we all gambled that it might last just a little longer.
Then the housing bubble popped, as all bubbles do. Dropping housing values triggered a decline in the value of bank assets. Their stock prices fell, and the credit guarantees got called.
The experts saw this coming. Warren Buffet got out of the credit-swapping business years ago, calling them ‘financial weapons of mass destruction’. A new international banking agreement had been waiting in the wings since 2001, the New Basel Accord. It eliminates double gearing.
But listening to those experts was a downer. They were party-pooping intellectuals who just didn’t know how to have fun.
The climate crisis will be just the same.
It’s been twenty years since Margaret Thatcher announced to the UN General Assembly that climate change represented the greatest threat to civilization. Yet inaction defines our response to global warming. Tomorrow will do. Someone else will start first.
In climatic systems we find positive reinforcement, the equivalent of double gearing. Warming temperatures trigger events that increase temperatures even more. Ice melts in the arctic, and less heat reflects back into space. Permafrost melts and releases methane, itself a potent greenhouse gas. Oceans warm, releasing more carbon dioxide, just like a can of pop.
It is possible to flip the planet into a new equilibrium hostile to human life. If it happens, it will happen fast.
Still, the day to change behaviour never comes. We pretend the party can keep going. It cannot.
The credit crisis meant the whole world tried to de-leverage overnight. But it turns out our economy needs credit. Our panicked response led to a frozen banking system. We are experiencing a hard landing.
We can’t de-carbon our economy overnight either. A defining event will eventually come – the mother of all hurricanes, an unending drought in the Prairies – but it will be too late. Our economy is more addicted to coal and oil than it is to cheap credit. That addiction will be harder to break.
Ignoring well known but long term effects of behaviour is to ignore reality. We learned our lesson from medicine and have legislated smoking to the margins. We will surely learn something from the credit crisis.
What remains to be seen is whether we learn a larger lesson. We've done almost nothing toward serious change in energy use patterns. We flail around. We're not even close to a world price on carbon. A fast, deep and drastic transition to a low-carbon economy must start today. Not tomorrow.
Note: Advocating for a stronger role for government in accelerating the deployment of geo-exchange, or ground-source heating and cooling.
Originally published: Corporate Knights magazine, November 2008
A derelict building in downtown Toronto is being transformed into a cutting-edge green hotel, the Planet Traveler. It’s also a test-bed for me to find first-hand technologies that can cut carbon emissions by 80% from business-as-usual. I thought I’d find a mish-mash of small solutions. What I found was a magic bullet.
Geo-exchange heating and cooling (‘geo’) will reduce those emissions by 70%. In comparison the other options are akin to bailing out the Titanic with a teaspoon. Geo-exchange is the lowest-hanging fruit on the carbon-reducing tree.
I argue elsewhere (www.greenbonds.ca) that the need to cut carbon is so pressing that renewable energy sources should be pulled into the marketplace by smart government action. While the geo-exchange industry is already poised for rapid growth, it should still be the target of a comprehensive, national strategy to accelerate that growth.
Market conditions are just right for geo to reach what Malcolm Gladwell calls the “tipping point”. The economics work. All levels of government are starting to show support. The industry is maturing and becoming more professional and organized. Developers and engineering firms are getting on board. Even utilities are throwing their hat in the ring.
“It is”, says Liberal John Godfrey, “ripe for takeoff”. In ordinary times we could leave it to market forces.
But we do not live in ordinary times. The need for reductions in carbon emissions is too immediate, and the promise[1] of geo too great.
There remain obstacles in the marketplace. Building codes are outdated. There is a market gap between building developers, owners and those who pay the energy costs. Consumers are not informed. Inferior technologies have momentum. It’s capital-intensive.
These obstacles can be cleared with a comprehensive national strategy that accelerates the transformation of geo from a cottage industry to one that takes a real bite out of our emissions. It’s time to develop that strategy.
Geo-exchange is the transfer of heat with the ground by means of a heat pump and a series of buried pipes, through which liquid flows (it is not the same as ‘deep geo’, which involves tapping high temperatures way beneath the surface). Geo is not new. It’s been around for decades. It’s proven. There are a million installations in North America.
The key lies in the efficiency of the heat pump. For every unit of energy put in, five units come out. That’s 500% efficiency! It’s 5 times more efficient than baseboard heaters, and far more efficient than any other form of heating or cooling. As a renewable energy source, compared on a dollar per unit of energy basis, geo beats solar PV, solar thermal and even wind - hands down[2].
Aside from reducing energy use, a large number of point sources of carbon (furnaces, natural gas boilers) are concentrated onto the electrical grid. Carbon reduction is more focused - generating a clean grid. A difficult problem: but more feasible than making a furnace carbon-free.
Moving heat around … hmmm. Heat a community swimming pool and freeze the ice rink at the same time? Yep. How about taking the excess heat from office towers in winter (often being cooled) and heat some homes down the street? Absolutely. Community-wide coordination, known as district heating and cooling, is just the start of a strategy.
The economics make sense, but geo is capital intensive. New home installs cost $20,000 and payback is 7 or 8 years. Commercial installs pay back faster. The Planet Traveler project will pay back in 4 years, with additional capital costs of $100,000.
The keys to making geo pay are cheap capital and being in it for the long haul. New homes are a no-brainer. Put the additional cost into the mortgage and you’re cash positive from day one.
But there’s often a market gap between developer, owner and operator. Why would a condo developer put up all the extra capital when the operating costs are passed on? Heck, if it weren’t for building codes … According to Sustainable Development Technology Canada (SDTC), “Developers and builders generally have no stake in the long-term operating costs or performance of the building, and are rewarded based on their ability to control first costs and maintain construction schedules”[3].
Not all condo developers work that way. Resiance Gateway South Center is a 500-unit condo building in Calgary, and it’s going geo. The system is leased to the owners, who are insulated from rising energy costs. Resiance is a member of Build Green Alberta and “we feel we need to be as good as our word … [and create] a very efficient ‘green’ building”, says Barry Chow, VP. Resiance is an early adopter, and the project is notable by virtue of its rarity. Rarity is not what we need.
“Education”, says Jane Kearns, VP of Clean Energy Developments (CED), “is key. If consumers know about the value of geo-exchange in the buildings they buy, they will demand it.” Indeed.
Reid’s Heritage Homes is building one of Canada’s first all geo communities in the Inverlyn Lake Estates project in Kindardine, Ontario. “Customer surveys … clearly indicated that Canadians are … ready to take the steps toward energy efficiency an more sustainable communities”, says Ron Salisbury, Manager, Home Performance. Geo is, says Salisbury, the “future of homebuilding”. Reid’s Heritage is an early adopter, and is following the Great Gresky’s motto of ‘skating to where puck is going to be’.
“Geo-exchange makes existing heating and cooling technologies look like an 8 track player”, says Paul Mertes, CEO of Clean Energy Developments. It seems if people know about it, they prefer it. The challenge is to bring about a rapid, wholesale conversion to the iPod. Waiting for early adopters to spread the word is not good enough.
What we need is a high profile government-backed educational campaign so consumers know better and start demanding geo. Even better, just ban the old 8-track and legislate the iPod. Changing building codes is tortuous, but can be done with political will. Combine education and legislation with direct subsidies for developers, and ready access to the remaining capital through some sort of Green Mortgage program, and we’re getting somewhere.
All levels of governments are on board, to some extent, and so are the utilities, but we have yet to see signs of a coordinated national strategy. “Government and the utilities are dipping their toes in the water, but haven’t cannon-balled in to support the industry just yet”, says Kearns. “It’s slim pickin’s on the retrofit and commercial side of things.”
Retrofits are the big game here. If we’re serious about absolute reductions in carbon – not just slowing the increase – we need to address existing stock. There are no subsidies for the retrofit commercial project Planet Traveler, so our economic case must be made on its own. The only reason it’s happening is because I happen to be a techno-geek who knows what’s coming after the 8-track. Without my insistence, it would have been natural gas and air-conditioners – business as usual.
There are some promising moves.
Planet Traveler and the City of Toronto have formed a unique partnership. The City will let us use the laneway alongside the building to bury the underground pipes. In response to this request, City Council recommended a task force be set up to enable the use of City laneways throughout the city as conduits for geo pipes. Toronto’s move opens up retrofits in even the densest of downtown urban cores.
Utilities are starting to get on board. Geo benefits them because, paradoxically, it both increases and reduces their sales at the same time. Geo displaces competing natural gas, but lowers peak demand in summer months. More baseline supply and less variance are great for the grid.
Some jurisdictions push conservation programs to offset demand and buttress their environmental credentials. Hydro One has a pilot program whereby they offer zero interest loans for geo in existing homes. "Conservation and Demand Management is a viable alternative to new supply options”, says Giuliana Rossini, Director, Strategy and Conservation at Hydro One. “ This pilot program ... is primarily an environmental benefit." About 70 applications are in, and “customer willingness seems to be there.”
Utilities might be motivated to reduce some peak demand, and show some environmental concern - but is a utility really motivated to reduce total load? Load reduction programs need to be legislated or be given a clear profit-driven incentive. Companies do not forego profit for the environment.
These efforts need to be coordinated and accelerated. We need a national program spear-headed by the federal and provincial governments, involving all the stakeholders, to supplement the free market rate of adoption with a strong, cohesive push.
Government should take the following actions: target the retrofit market with direct incentives; increase awareness and provide education to both consumers and developers; promote bold new building code initiatives; guarantee the provision of low-cost capital through the commercial banks; motivate the utilities to accelerate their own incentive programs.
Under business as usual geo, like other renewable technologies, will slowly percolate through our energy infrastructure. Small, incremental changes will add up over the long term.
Incremental change over the long-term is not good enough. We need sharp declines in carbon emissions and we need them now. We’re in a war on carbon. Geo is one of our most effective resources in that war. It’s time to consciously and deliberately deploy that resource
[1] The promise of geo is to reduce energy use in buildings by up to 75% and carbon emissions by up to 98% (depending on the source of the electrons). Heating and cooling buildings is responsible for 20% of our total energy use, so geo can deliver a15% reduction in total carbon output.
[2] Geo-exchange energy is produced for 25% of the cost of wind, and less than 2% of the cost of solar PV.
[3] SDTC, Business Case, Commercial Buildings — Eco-Efficiency,Version 1 • November 2007
Note: Here I argue that the economy cannot grow in real terms forever, due to ecological constraints. An old idea, but one that is continually dismissed.
Originally published: www.celsias.com
When philosopher Francis Fukuyama wrote that liberal democracy heralds the ‘end of history’, neo-conservatives loved the idea, because then we could get on with business.
It was not the lofty notions of ‘liberal’ or ‘democracy’ that were seen as the intellectual victors. The real winner was the free market. Fukuyama wrote that history was now driven by the ‘satisfaction of sophisticated consumer demands’ and would end in ‘the ineluctable spread of consumerist Western culture’.
The neo-cons tell us that this is a good thing because unfettered free markets will bring wealth to all. Every soul in China, India and beyond will be lifted out of their miserable poverty and have flat-screen tv’s, air-conditioners and hybrid cars.
We have nothing to fear. Unlimited economic expansion will lift the rest of the world to our level. We will not fall to theirs.
This expansionist apple-cart is tipping over, for the simple reason that we’ve run into basic math. If you keep subtracting finite resources, eventually you’ll end up with zero.
Evidence that the economy faces hard constraints surrounds us.
The fish are almost gone. Virtually all credible science on the issue predicts the collapse of every major fishery in the next fifty years. What happened to the cod in Newfoundland is happening all over the oceans.
Food from farms isn’t disappearing, but increasingly is in short supply. Food riots over high prices are becoming common, and grain stores are at all-time lows. Once-fertile land shows the stress of the Green Revolution, a farming system that requires too many inputs from decreasing supplies of fertilizers, pesticides and oil-based energy.
Even water is running out. Farmers dig a kilometer deep around Beijing to find it as the water tables drop, and in North America the vast Midwestern aquifer is disappearing beneath our feet.
If peak oil is not upon us, it surely is just around the corner. SUV’S are going out of fashion faster than bellbottoms did in the Eighties. The era of cheap fossil fuel is at an end.
Global warming imposes a different constraint. Burning all that oil – or replacing it with coal - looks like a worse idea every day. The atmosphere feels finite. It really is thin as saran wrap on a beach ball.
These issues are related. Crops need fertilizer and water. Fertilizers need oil. Global warming brings drought to Australia’s wheat-fields. Food competes with biofuels.
These are not isolated incidents, but connected signs that something is seriously wrong with the expansionist thesis.
Even a serious thinker like John Kenneth Galbraith was ridiculed when he proposed zero-growth economics as the only sustainable model. Conservative economists dismissed his liberal views as naive. In their view, sophisticated scholars recognized that economies float free of the merely physical, finite or earthly. Human creativity will respond in ways that keep economies booming.
It’s true that we humans are creative. Techno-fixes for some problems are available. I’m a venture capitalist in renewable energy and I wouldn’t invest if I didn’t see growth in that area. Fish farms may be growth sectors, as well as agriculture with higher-yielding crops.
But these options are temporary band-aids. Fish farms need food. Higher-yielding crops need fertilizer. Renewables are coming online far too slowly to mitigate global warming.
It’s true that the market responds to scarcity, but it does so by limiting access to the resource. The advent of the hundred dollar tuna steak – or the two hundred dollar barrel of oil - will slow consumption, but then these commodities such as these will be reserved for the wealthy as they disappear.
Scarcity provides opportunity, inspires creativity and creates new industries and smart money will find these.
But that is not the neo-con promise that the economy itself will always grow. The promise of real growth means more stuff for everyone - more air conditioners, more cars and more tuna. The promise of creative solutions to resource scarcity will be viable only in the context of a new economic paradigm, based on a different cutting up of a finite resource pie.
The fact of basic constraint on growth seems obvious to most Canadians but it’s vigorously denied by the business community, ignored by most serious economists and avoided by all politicians.
Like the crowds in the fable The Emperor has No Clothes, the professional classes have agreed to the collective illusion that our economic model is fine, and continued growth won’t land us in deep trouble.
Growth is a requirement of our economic model. The moment capital cannot generate a real return it evaporates. Factories close, stocks plummet, and the economic machine breaks down.
What does zero-growth imply? From a practical perspective, it means that all goods are recycled and only sustainable amounts are taken from our forests, oceans and farms.
It means we must finally do away with the myth of the free market. Its always been a myth, conveniently trotted out when regulation gets in the way of profit. We’ve always had contract law, and regulated trade based on perceived moral goods. You can’t sell cocaine, for example, or break a promise without penalty. That is a regulated market. What zero-growth means is just further regulation of other areas of interest.
We are beginning to see the sorts of options available for this kind of regulation as it relates to carbon emissions. We can tax emissions, set up a cap-and-trade market, strictly regulate or we can settle on a mix of these options. But we cannot let the market run on unhindered.
At its most basic, our economic system is premised on the idea that capital will always grow in real terms. That will no longer be the case – some capital will increase, some will not, but the total average growth of capital will be zero. It is this most basic shift in thinking that will be most difficult to accommodate.
There are no easy solutions, but then there are no options, either. Zero economic growth is coming, and we need to start talking about it if we are to land gently.
Note: I'm not an unmitigated fan of nuclear, but here I argue that the CANDU is a necessary addition to the existing nuclear fleet, acting as a kind of recycler. Underwriting the argument is that nuclear is a necessary evil given climate change, an evil limited by the 'virtues' of the CANDU.
Originally published: The Globe and Mail, April 10, 2008
Who do you trust with a burgeoning nuclear industry – us or the Russians?
Comparing the CANDU to the Russian equivalent is like comparing a box of candles to a box of dynamite. Like it or not, the world needs nuclear energy, and the world is better off with us supplying the technology rather than our competitors. Iran currently seeks a reactor. Should we sell it to them, or leave it to the Russians?
Canada currently supplies much of the world’s uranium, so we’re already hip-deep in the nuclear game. So why should we raise our stake in such a maligned industry? The CANDU is safer, contributes much less to the weapons-producing chain, and makes better and more sustainable use of the world’s remaining uranium reserves.
The CANDU reactor is a national treasure that needs to be resurrected, re-polished and sold world-wide. Canada needs to embrace the new Advanced CANDU design, and back up that design up with a strong, international sales effort. The money the Conservatives government recently allocated to that design is a good start – but a real commitment means getting out in the world and aggressively selling it, starting in Ontario.
The CANDU has had more than it’s share of boon-doggles. There have been bribes by Canadian officials to purchasers, India purportedly ‘cooked’ the plutonium it needed for its first bomb in a CANDU design, there were massive debts incurred by Ontario Hydro largely due to the CANDU-based nuclear industry, and the American nuclear industry has determinedly and gradually improved the design of the light-water reactor, although it’s still not as safe as the CANDU.
Each one of these setbacks has eroded the competitive edge of the CANDU and collectively they have led to many calling for the federal government to stop investing in the CANDU’s future.
A nuclear power plant in Iran doesn’t have to destabilize global politics. It’s the ability to process or enrich the fuel, upgrading it from an energy-generating isotope to a weapon, that is generating global panic.
India may have cooked some plutonium in a CANDU-based reactor, but it was further fuel-processing abilities that enabled them to produce a bomb. No refining process – no bomb. The CANDU is a small, much-needed piece in a larger nuclear puzzle.
The CANDU is unique in that it does not require enriched uranium in order to operate, unlike the Russian reactors that are to be built in Iran. CANDUs were originally designed to use natural uranium that comes (almost) right out of the ground, an un-enriched product that is not weapons-ready, nor particularly dangerous to handle.
Uranium-235, which is fissile and can by itself sustain a chain reaction, is the really dangerous stuff, but the natural uranium used by CANDU is made up almost entirely of U-238, which is not fissile and requires many fewer safeguards. CANDU fuel is a kitten compared to the tiger in the Russian nuclear plants.
If you use a CANDU, you have no need for the processing facilities that can make the fuel a weapon. That’s why it’s safer.
It’s also more efficient, in a number of ways.
Using natural uranium, the CANDU is about twice as efficient as reactors using enriched uranium. The world has only got about 60 years of uranium left at current rates of use, and much less if China weans itself away from coal and grows its nuclear power base, so efficiency is vital if existing uranium reserves are to last.
Waste reduction is vital, and disposing of nuclear waste is the most significant barrier to environmentally friendly nuclear power. If we double the energy we get from the fuel, we also cut the amount of nuclear waste produced in half
The CANDU also can recycle used fuel from competing ‘light-water’ reactors – notably those made by the Areva French and the U.S. Areva recently made overtures about buying Atomic Energy Canada – the makers of the CANDU – and one strong motivation they have to do so is because of the role the CANDU can play as the ultimate nuclear recycling depot.
Pretty much every country with a nuclear energy program uses these light-water reactors, and Canada should be actively pursing these markets. The primary selling point is easy – the nuclear fuel will go twice as far if you have CANDUs to use.
The CANDU also can use a new and easier-to-handle fuel, thorium,a non-fissile material, that is less dangerous to handle than natural uranium and even more abundant.
Nuclear may scare us, but carbon-emitting fuels are becoming scarcer and scarier, and nuclear power has in important role to play in getting off the fossil carbon train.
The CANDU should be part of our participation in the nuclear game. By selling these reactors world-wide, we are adding value to our uranium production, while reducing global tensions around atomic weapons and carbon emissions as well.
Canada, with a renewed commitment to the CANDU reactor, could do much more than just feed the nuclear machine. We could, with a focused effort, ensure that machine is run safely and efficiently. The new Advanced CANDU design can put Canada back in the nuclear game, contributing to making that game safer and more sustainable.
Who do you have more trust in to build the world’s nuclear plants – us or the Russians?
Note: Second of a two-part series. Green Bonds is a public policy proposal produced in conjunction with Action Canada Fellows.
Originally published in Corporate Knights Magazine, June 2008
On June 2nd the Green Bonds proposal – first discussed in CK last issue - was unveiled publicly for the first time. After nine months of consultation and detailed policy development, we – the Green Bonds Team – gathered stake-holders into a conference room at the Royal York to initiate what we hoped would be an on-going public debate about the merits of our proposal. Green Bonds – a Victory Bond for the environment – was an exciting proposal (of this we had no doubt), but would it withstand the scrutiny of Bay Street? Of my fellow Clean-tech entrepreneurs? Of think-tanks and academics? Would anyone even show up?
We packed the place to standing-room only. Over 120 people, from finance to energy producer, from banker to policy-wonk, attended to hear our presentation of Green Bonds, listen to a panel of experts kick the tires, and engage in a lively Q & A session. Not only did the policy withstand scrutiny and debate, but the room was charged with excitement. It’s time for Green Bonds to enter the national debate on the economy and the environment, and on June 2nd we kick-started that process.
What’s all the excitement about? In a nutshell, here’s how it works: Canadians buy a government-backed bond (like a Canada Savings Bond), to raise funds to accelerate renewable energy production by providing low-cost debt to renewable energy producers. At the core, it’s that simple.
There are details, of course. Public-engagement is one thing – Green Bonds will spark excitement by providing an answer to those Canadians asking “What can I do for the environment?” – but the financial details are another. Our analysis suggests that Green Bonds are more efficient and more flexible than other policy options on the table. Bottom Line? The Green Bond proposal is one of the cheapest and most effective ways for the government to reduce carbon emissions.
The nuts-and-bolts? The government backs the bond, and provides a mandate to the private sector to run the fund. The fund manager lends the money at low rates to renewable energy producers. The mandate is technology-neutral, has a clear measure of success (e.g. cost to government per tonne of carbon reduction), and financial incentives to maximize that success. Since renewables are typically high capital cost and low operating cost, the low-cost debt reduces the cost of renewable energy production, making it competitive in the short-term with fossil production.
It’s not the company that’s doing R&D on a better wind-turbine blade - or bio-gas technology - that get the money, it’s the company that want to build the next wind-farm, or the next bio-gas plant.
Some questions come to mind ....
Why private sector management? The government shoulders the risk, so why separate risk from management? First off – no-one like the idea of the government picking winners. More importantly, we want to leverage the creativity and efficiency of the private sector, by offering the right financial incentives, to deliver a really efficient policy.
If success of the policy is measured in $ per tonne of carbon emissions reduced, and the mandate is technology-neutral (no picking winners!) then the private sector responds with sound technology choices, strong due diligence and aggressive asset recovery in the case of loan defaults - to minimize cost to the government. Technologies are chosen according to existing market conditions, and would typically be those proven technologies with minimal technology risk. Borrowers would be single-source large impact players – so no mom-and-pop operations. Liens would accompany loans – on equipment, on Power Purchase Agreements, on potential carbon credits, on whatever the fund manager and borrowers negotiate.
What’s the cost to government? We’ve done some math. The main cost is loan defaults (which the fund manager is motivated to minimize) with other variables such as asset recovery rates, management fees and whether the borrower has to put up matching funds. In the three scenarios we ran, costs ranged from $1 to $13 per tonne of carbon removed. The lower end of that range corresponds to a quite realistic scenario, and the upper end to the worst-case-the-sky-is-falling analysis required by the folks at the Ministry of Finance.
That’s s cheap as it gets. Carbon trades at $40 per tonne in Europe and both current and previous federal governments have proposed buying carbon for $15 per tonne. Why is our proposal so cheap? It effectively limits the government’s exposure to paying only for those loans that are defaulted, and the loan agreements and risk-mitigation efforts sit squarely in the hands of the private sector. Each dollar cost to the government is multiplied many times into actual capital deployed to produce renewable energy.
It’s flexible. Technology choices, lending rates – all the details of implementation – can change according to market conditions. It targets a much broader range of companies than either tax credits (to benefit from these you need to be profitable) or fixed subsidies, and costs less per tonne of CO2 reduction.
It’s temporary – this subsidy will quite naturally drop away as costs of carbon emission compliance increase (slowly, over time) or as commercial banks indicate their willingness to lend at similar rates for renewables.
Green Bonds is no magic bullet – it is one tool of many the government must bring to bear to solve the most complicated and massive problem this generation has faced. Green Bonds certainly a darn good tool to put into the policy toolkit.
The possibilities don’t end here. Andrew Heintzman – co-founder and president of Investeco – reminded the audience on June 2nd that the national railroad was built because of innovative public-private financing mechanisms. The sky’s the limit as far as nation-building projects Green Bonds could: high-efficiency DC lines up to Hudson’s Bay, opening it up to wind developers, for example.
Build the Bond, and the buyers will come.
Contact us, and get full policy details at www.greenbonds.ca
Note: First of a two-part series. Green Bonds is a public policy proposal produced in conjunction with Action Canada Fellows.
Originally published in Corporate Knights Magazine, May 2008
With my arms gesticulating wildly at a B&B in Canmore, Alberta, I told my Action Canada colleagues about the sort of geeky vision that haunts the dreams of a Cleantech engineer and financier like myself. Eyes wide open, they heard how windmills circling Hudson’s Bay might power the North American grid, how the Bay of Fundy holds more power than a fist-full of nuclear reactors, and how geothermal could transform the way we heat and cool our buildings. Canada is uniquely positioned – our geography speaks not just to our being an energy superpower but a renewable energy superpower! Forget the tar sands, let’s mine Hudson’s Bay! How do we get there, I asked - and, more importantly, how do we engage Canadians in this vision? “Green Bonds!”, shouted my colleague Andrew Sniderman. A public policy project was born.
This way of seeing things may be a bit ‘enthusiastic’, but the Government of Canada has committed itself to deep, long-term greenhouse gas and air pollutant reductions. Outlined in the Turning the Corner regulatory framework, we’re committed to a 60-70% reduction below current levels by 2050. We ain’t gonna get there with compact florescents and hybrid cars – we need massive renewable energy infrastructure and we need to start building it now.
The only long-term solution to the carbon crisis is a strong, market-wide pricing signal – preferably a global pricing signal (see Cleantech Issue ’07, Vol 6.2) – but that pricing signal will come only slowly and incrementally. No-one wants to shock the economy. The National Roundtable on the Environment and the Economy (NRTEE) has concluded it will take a price on carbon of around $270 a tonne to get to that commitment. That price level won’t be reached for years and years. In the meantime, energy producers are investing in energy infrastructure that will last a lifetime. How to change their behaviour today, before that pricing signal really hits?
Here’s where Green Bonds comes in – a government backed financial instrument designed to engage the public by raising capital to accelerate renewable energy production. Raise money from the public, guarantee it by the government, nad lend it at low rates to energy producers who choose renewable methods of production.
The Europeans – ahead of us as always on the climate change issue – have issued their Climate Awareness Bond in June, 2007. The idea has been tested, and it works
If I want to build a coal plant today, I can borrow from the bank at a super-low rate. Why? Because commercial banks are comfortable with coal, it’s been around a long, long time. It’s safe. If I want to build a commercial-size bio-gas plant, or an industrial-scale tidal plant, the rate at which I have to borrow is high - really high. That means renewables face a significant disadvantage – and we propose to address that market gap by supplying cheap debt to qualified companies for qualified technologies.
What we call a “threshold technology” is one that has been proven from an engineering perspective (it’s won’t rust on the bottom of the ocean, or stop turning in the wind) and would become price-competitive given cheap capital. Most renewables are high-capital costs, low operating costs – perfect for a low-cost debt solution. There are proven pilot projects funded by Sustainable Development Technology Canada that cry out for commercial-size funding.
We can’t wait for the commercial banks, they’re just too stodgy. Let’s face it - that’s why we like them, they’re safe. But that cozy, safe feeling comes at a price – they cannot play an enabling role for large-scale, massive rollouts of renewable energy production.
Why a bond? Why not just have the Feds issue a Treasury Bill? Don’t underestimate the importance of engaging the public in a positive way on the climate change issue. Canadians are biting at the bit to do something other than change a light-bulb. We conducted a poll through SES Research: 81.8% of Canadians support this initiative and 62.2% say they would purchase Green Bonds.
Green Bonds is not a magic bullet, nor a permanent solution. It’s designed to fill a temporary market gap until a carbon pricing signal can take over - Green Bonds will accelerate the rate at which we build our renewable infrastructure.
On June 2nd, at the Action Canada conference in Toronto, we will release all the nitty-gritty details of our proposal. Glen Hodgson, Chief Economist of the Conference Board of Canada will be there to keep us honest.
Next issue I’ll give you the real goods. What are the bond mechanics? How are the funds disbursed? How is the risk of defaulted loans mitigated? Most importantly – why is this policy more efficient at accelerating the adoption of low-carbon technology than tax credits, or other direct subsidies? Stay tuned for those details.
