Stuck in the Past: Old Models Stymie Clean Energy Transition

With the upcoming COP 24 session in Poland, I recently published a post that looks at the progress that has been made since COP 21. COP 21 is when we saw the drafting of the Paris Agreement. COP 24 is the opportunity to truly put together implementation strategies for countries to meet their greenhouse gas reduction goals. There are several market sectors that are impacted by the Paris Agreement. Here I want to take a quick look at the electric power sector and the slow transition to more clean energy power systems.

What’s the Hold Up?

One uncertainty ahead for renewable energy is how investors will take to the coming period in which project revenues have less government price support, and instead depend on private sector power purchase agreements or merchant power prices.

Why can’t this transition happen more quickly, particularly in regards to electric power generation and consumption. When countries submitted their INDCs in 2015, the energy world was a bit different than today. One of the most significant differences from then to today is the price of clean energy resources, particularly solar, wind and batteries.

With significantly lower costs for clean energy power generation since the Paris Agreement shouldn’t we be seeing a more rapid transition. A key  argument has been that the higher costs of renewable energy was a key barrier. It is very difficult to make the same argument today. As demonstrated by the most recent levelized cost of energy studies.

Economics are there for clean energy

According to the Lazard Levelized cost of energy report, in 2015 combined cycle gas plants and utility solar were pretty much event in cost per kWh. Solar was a bit cheaper at $64 and Gas combined cycle was $65. Wind was less expensive than both at $55. If we look at the most recent Lazard report for 2017, prices have continued to drop for all technologies, but solar and wind by considerably more. In 2017 wind was $15 less than gas at $45 and solar was $10 less than gas at $50. Solar made the largest gains in price reduction per square foot and closed the gap on wind. There is now only a $5 difference between wind and solar applications.

The other argument has been that renewable energy is intermittent and too much renewable energy on the grid would hurt grid reliability. This argument appears to be losing some of its validity. One would expect that with early deployment, there was not the diversity of resources, solar and wind, nor the geographic disbursement of these systems to ensure grid stability. However, as we see greater deployment of solar and wind, we see the complementary nature of these resources and how they are better able to support the overall grid when coupled together. Throw in batteries and you really solve the intermittency issue. Granted, solar and batteries is still a bit more expensive, than your base load combined cycle natural gas plants, but not by much.

Texas Not Showing the Way

A recent decision by the Texas Public Utility Commission (PUCT) on AEPs Wind Catcher facility is a good example of how developers may not be using the appropriate assumptions for their models and how the PUCT is slow to adjusting to the clean energy transition. What this means for both the developers and the regulators is that they have not been able to properly model the long-term benefits of clean energy resources and future risks of a fossil-fuel based power grid.

The AEP’s Wind Catcher would have been a 2 GW wind farm in the Oklahoma Panhandle. The largest wind farm in the United States. AEP argued that customers would receive significant benefit due to the expected fuel savings of the project. Because power would be provided to Texas, the PUCT had a say on whether the project was seen as beneficial to Texas customers. The PUCT denied the project on grounds that it placed too large a burden on rate payers.

What has changed in the market?

The clean energy market is tougher place to be than it was a year ago. Three key factors a lower federal tax rate, low natural gas prices and in Texas the fact that the renewable portfolio standard has long been met and provides no requirement for utilities to take on additional clean energy.

Because the renewable energy standard goals of Texas have been met, AEP had to demonstrate that the costs of the plant were competitive and provided cost savings to customers. Another strike against the project was when first conceived, the federal tax rate was higher. Higher tax rates provides a greater benefit to projects looking to participation in the federal production tax credit. When taxes go down, less tax burden and less benefit via this credit. AEP saw a $245 million decrease in tax benefit with reduction in federal taxes.

Old Way of Thinking Continues

Those are two valid concerns that have a material effect on the value of this project. There are two concerns expressed by the PUCT that are more difficult to accept. The first is that the PUCT does not feel there will be a carbon tax or any other climate regulation supporting clean energy investment in the near to mid-term. However, that is likely to be only as long as the current administration stays in power. Looking beyond 2020, we should anticipate a swing back toward carbon related regulations which would get the US back in line with the rest of the world.

Further, as we continue to see greater climate related extreme weather activity, it is increasingly likely that more interest will be paid in mitigating climate risk through the development of policies for more clean energy resources. This could be done through a “punctuated equilibrium” event such as an extreme long-term drought or the largest fire in California’s history, that would mobilize voters for more climate focused policies. Not only may a large event drive policy change, think Fukishima, but so would current state and local efforts. We are seeing a significant horizontal diffusion across states and communities of climate policies. As this builds, we could very well see a vertical diffusion, a snowball effect that drives action at the federal level. We see from COP 23 that a sizable portion of US cities and states are “still in.” To not take into account, the possibility of future climate regulations is short-sighted energy planning that goes against many of the indicators that would suggest otherwise.

Natural Gas Prices to Remain Flat for 30 years?

The second argument by the PUCT against the Wind Catcher project was that natural gas prices are low and will remain low for the foreseeable future.  With such low natural gas prices, wind is not believed to be competitive and would increase cost burden to customers.

The analysis by the PUCT does not take into account the ongoing decrease in wind energy prices. As mentioned earlier, according the most Lazard report, the LCOE of wind is less than natural gas combined cycle plants. A recent Rocky Mountain Institute (RMI) report finds that an “optimized clean energy portfolio” is cost competitive with natural gas at $5 MMBtu gas now and with $3 MMBtu gas in the next 15 years. The study also looks at a Texas case study.  When comparing a combined cycle plant with a clean energy portfolio which includes energy efficiency, solar, wind, demand response, etc., the clean energy portfolio has a 25% savings over the cap ex of a the combined cycle plant.

The Chairperson of the PUCT, DeAnn Walker, stated that one of the key problems with the project is that “the costs are known…the benefits are based on a lot of assumptions that are questionable.” However, looking at the decision of the PUCT, one should ask the same thing of the PUCT assumptions of low natural gas prices. Natural gas prices are historically volatile. To base the conclusions on the premise that natural gas prices are going to remain stable and flat over the next couple of decades indicates that the PUCT has not learned from history. By assuming that natural gas prices will follow a very stable, minor increase for the next thirty years does not reflect the reality of the last 30 years. This false assumption puts energy consumers at greater risk.

Here is the PUCT’s assumption – natural gas prices is the orange line.

Here is the historic reality of natural gas price volatility.

There were some other strikes against the Wind Catcher project, particularly the additional costs of transmission construction to interconnect the system. Further, AEP should have done a better job on how it presented its analysis and assumptions with the more recent changes in the natural gas market and regulatory environment.

That being said, AEP and other developers should learn from this project. One key area that has yet to be touched to the degree necessary is future climate risk and the increasing likelihood of climate regulations. Energy planning models are not properly taking into account either of these risks. By not doing so, models will not adequately value clean energy projects and limit opportunities for speeding up the energy transition. More to come on energy planning in the next post.

 

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This is the Truth About Coal

There has been a recent push to revive US coal-fired power plants in the name of electric power resilience and reliability. Why is this a bad idea? It is a bad idea for several reasons. Following is a list of the top 4 reasons why coal is a bad idea

Electricity from Coal Plants is More Expensive

Coal requires all of us to pay more on our energy bills. It’s expensive compared to most other forms of power from renewable energy to natural gas. According to Lazard’s most recent report on the unsubsidized levelized cost of energy, the lowest cost coal plant is $60/MWh this is in comparison to wind at $30/MWh, gas combined cycle at $42/MWh and utility scale solar at $43/MWh. When there is an apples to apples comparison between coal and renewable energy. This means that we are looking at plants that produce the same amount kWh per year, coal is much higher than solar and significantly higher than solar. The facts demonstrate that coal is more expensive than most other viable options. Keep in mind that this is unsubsidized costs, none of the “unfair” investment tax credits or production tax credits are included in this price. Further, this does not include the social and environmental costs that come from coal. That is covered later.

Coal Plants are a Public Health Nuisance

Speaking of social and environmental costs, coal power plants emit mercury and a variety of other greenhouse gas emissions that should be properly accounted for. The key concern here is the amount of mercury emitted by coal plants. which can result in significant health risks. According to a recent EPA analysis, over 42% of mercury emissions in the United States come from coal fired power plants. Overall 50% of mercury emissions comes from fossil fuel plants. This does not include all of the other dioxins and heavy metals that come from primarily coal plants. Below you can see the dispersion of mercury/toxic emitting power plants.

EPA – Toxic Rule Facilities

The problem with mercury is that it significantly increases a community’s health risk. High levels of mercury emitted from power plants can harm brain, heart, kidneys, lungs and immune systems of people of all ages. Further, mercury from power plants has been found to have a significant negative impact on a baby’s development, with particular impacts to a baby’s nervous system.

Coal Plants are not that Resilient

Coal power plants are not as resilient as some would like us to believe. Coal plants and the supply chain that gets coal to the power plants are highly susceptible to cyber, physical and climate risks. A recent study by the National Academies of Science titled Coal: Research and Development to Support National Energy Policy found that ““The rail net­works that transport the nation’s coal—like air traffic control and electric trans­mission networks—have an inherent fragility and instability common to complex networks. Because con­cerns about sabotage and terrorism were largely ignored until recently, existing networks were created with potential choke points [like some rail bridges over major rivers]…that cause vulnerabili­ty…[and] the potential for small-scale issues to become large-scale disruptions.”

Climate Change May Hurt Rail System

The Department of Energy further elaborates on the fragility of coal transport by finding  “Hardly a month goes by that delivery of Powder River Basin (PRB) coal somewhere in the supply chain is not interrupted by a derailment, freezing, flooding, or other natural occurrence.” Climate change is likely to increase heat that buckles rails, floods and storms that undermine tracks, and extreme weather that spikes electric demand. Meanwhile, utilities, having cut coal inventories threefold during 1980–2000 to save cost, keep trying to squeeze out more cost, exacerbating risk.” A recent example of coal not being that fuel secure was the Texas WA Parish plant. During Hurricane Harvey, the plant had to switch from coal to natural gas due to saturated coal piles. Those proponents for coal should also recall the Polar Vortex that resulted in frozen coal piles. You can’t burn frozen coal.

One other thing, coal or any other water-cooled power generation system can’t operate or at least not very efficiently when the water is too warm or there is not enough water to cool the plant. I covered this in a recent blog post on the power sector having a significant water problem.

Climate Change Induced Lack of Water Reduces Power Resilience

Coal Plants are Significant Greenhouse Gas Emitters

Can’t forget this one. Coal power plants emit significant greenhouse gas emissions. In the US, coal accounts for 67% of greenhouse gas emissions in the power sector. Of the total greenhouse gas emissions, 28% comes from electric power generation. Granted, overall GHG emissions have come down due to fuel switching since 1990, but not by much. This largely due to much of the switching is to natural gas, another greenhouse gas contributor, although not as large of one. Also, there have some increases in demand across parts of the country which has limited overall reduction.

Coal Power Plant’s Climate Change Problem

The current administration has not made the connection between greenhouse gas emissions and climate change. By not making this connection, that cannot see that sustaining or increasing emissions will result in a significant increase in storm intensity that will negatively impact the overall power system, i.e. hurt system resilience. Storm intensity, demonstrated by Superstorm Sandy, Hurricane Harvey, Irma and Maria, the Polar Vortex, to name a few, is anticipated to significantly increase under current greenhouse gas projection scenarios. If the concern of the administration is resilience of our power system due to extreme storms, there probably should be some effort to reduce the likelihood of this intensity by reducing the cause.

To Conclude

There are four really good reasons why coal fired power plants may not be the best option for a resilient and reliable grid. This was just a high-level overview. Each of these topics could be their own posts. For the long-term resilience of our electric power system, it is key that we not look to short-term fixes to the detriment of long-term health, economic and environmental well-being.

 

 

UPDATE : Climate Change has Put the Tiger in a Corner

UPDATE:

As I mentioned in my earlier post below, ExxonMobil is being much more aggressive than would be expected in its legal activity to clear its name related to climate fraud allegations. The company is fighting back with a much-increased level of intensity. In what some are saying is unprecedented, ExxonMobil is going directly after the attorney’s that are suing them.

This week it appears ExxonMobil’s attempt to play defense against multiple climate fraud lawsuits hit a significant roadblock. The case Exxon Mobil Corp et al v Schneiderman et al was filed with the US District Court and heard by Judge Valerie Camproni. This case argues that the suits filed by the New York AG Schneiderman and Massachusetts AG Healey, which claims ExxonMobil has committed fraud by not disclosing known climate risk, are politically motivated and in bad faith. Judge Camproni disagreed and dismissed the lawsuit with prejudice. This means that ExxonMobil cannot file a similar suit in the future. ExxonMobil is currently considering its next legal options

We will see what ExxonMobil’s next move is, but the findings of this case do allow the AG’s to move forward with their investigation, as well as provides optimism to others who filed similar suits.

ORIGINAL POST:

Back in May of 2017, I wrote a post on the double climate risk for the Gulf Coast region. To quickly summarize, the first risk is the physical risk that is being realized due to a rapidly changing climate. The second risk is that the region’s economy is fossil-fuel driven at a time when much of the world is trying to decarbonize. There is still significant debate as to how quickly this will happen and to what degree, but trends in technology, i.e. electric vehicles; an increasing push for more renewable energy, i.e. China and India;  would make one think a shift is happening more quickly than initially anticipated. This shift to decarbonizing is receiving growing support from the financial and insurance sector. On the financing side, we see a quickly growing green bond sector that is pouring considerable dollars into renewable energy, energy efficiency, and other green infrastructure projects. We also see growing demand from institutional investors for “green” investment opportunities. The insurance industry is also pushing for more decarbonization, as well as climate adaptation, due to the significant and growing risks of insured assets.

Kids Want Climate Justice

The lawyers are also getting involved. A variety of lawsuits have been filed in the last few years across the United States claiming harm to communities due to the burning and consumption of fossil fuels by industry. The oil and gas sector is getting a significant amount of attention from the legal sector, with ExxonMobil being one of the key targets. ExxonMobil is a focus of many due to the research the company conducted in the 1970’s that indicated the burning of fossil fuels contributed significantly to global warming and could result in significant climate change; they found an “emerging consensus that fossil fuel emissions could pose risks for society.” While they were finding these results and continuing to study how climate change would impact business operations, they were leading lobbying efforts to fight the adoption of greenhouse gas regulations. The claim that is being made is that Exxon Mobil knew about the climate risk but did not properly disclose this risk to shareholders. The legal action that appears to be getting the greatest traction is the State of New York Attorney General’s investigation into whether Exxon Mobil the statement the company made to its shareholders was consistent with its research findings on climate change. The California AG is also investigating whether ExxonMobil was implementing business strategies in line with their research findings but not disclosing this risk to shareholders. In all, there are 17 AGs investigating ExxonMobil on this issue.

 

Much of this AG activity has received expected legal pushback from ExxonMobil. The company also tried to limit any reputational damage with media campaigns on the company being a good steward and continued denial of any wrongdoing. Until this week, when it appears the company is fighting back with a much-increased level of intensity.  In what some are saying is unprecedented, ExxonMobil is going directly after the attorney’s that are suing them. ExxonMobil is looking at filing suit and getting depositions from lawyers involved in the climate suits. The company is claiming that the state AG’s and citizen groups are conspiring against ExxonMobil in a public relations and legal campaign. This campaign is believed by ExxonMobil to have started in La Jolla, CA several years ago.

So why is the 10th largest company on the planet, fighting back with such intensity? With the current occupant in the White House and the Republican domination of the legislative branch, there is no short-term regulatory risk to the company, at least in the United States. It is not likely that it is the legal suits they are most concerned about, either.

They are good prognosticators. Based on their research, they knew that climate change could be a business risk and was making business decisions based on this risk. (At least this is what the lawsuits claim.)  ExxonMobil is likely less concerned that the AG suits will prevail in courts; they have the resources to tie these up for years. What they are more likely concerned about is losing in the court of public opinion. Public opinion is driving demand for decarbonization and the market and investors are reacting accordingly. And why not, the costs of decarbonizing are at or soon to be at the same price point as business as usual. So it’s much easier for the public to get on board. Most people don’t care what their car is fueled with. They just want to have easy, inexpensive access to transportation.

The double risk is real for ExxonMobil. They have known for years that the climate change will impact their business operations and have made decisions accordingly. Now it is becoming obvious that there is more than the physical risk. There is the real risk of losing the support of the markets and public opinion. The Gulf Coast region should take heed of this growing double climate risk. ExxonMobil may be the canary in the coal mine.

 

Mitigating Climate Risk in Harris County, TX – The Problem with Being a First Mover

Harvey appears to have gotten the attention of some of our local policymakers. Harris County appears to be the first to realize that Harvey is likely not to be a once-in-a-lifetime event and significant steps should be taken to mitigate climate risk.

1200px-Fulshear_TX_Wildflowers
Fulshear, TX

There has been some question as to how our elected officials would respond to Harvey in regards to long-term rebuilding efforts and reducing the likelihood of future flooding. There had been a call by some developers, even before Hurricane Harvey was over, to keep moving down the same road with business as usual. Also, the region’s previous responses to other recent flooding events did not provide a lot of hope that much would happen in regards to land-use and development regulations.

However, on December 5th, Harris County Commissioners approved new regulations for floodplain development. The new regulations include requirements for pier and beam foundations and for homes to be built at a higher elevation in some flood-prone areas. Also, it requires that new construction is built at a 500-year standard rather than the current 100-year storm standard.  There is also a high-wind standard in place for new construction.

There are some question as to what the impact these new regulations will have. New construction in Harris County is likely to be a bit more expensive as builders build up. This could be higher development costs to build up the land in the area with fill dirt and/or to build homes to a higher elevation. All of this is cost will be passed on to the homeowners. There will be some tolerance by homeowners for this premium to have greater peace of mind, but only so much tolerance. What is also likely to happen is that some developers will choose not to build in Harris County and move on to other nearby counties. Residents will decide how far out builders can go.  Commuting time and congestion will limit the movement away.

Did Harris County Jump the Gun?

It is great to see Harris County take a leadership position and pass regulations to mitigate against flooding and wind events. However, did they get too far out ahead of the other counties and local jurisdictions? Harris County is just one part of a large region.  Will being a first mover in land-use regulations be an advantage for the County? If the surrounding counties do not take similar action, does Harris County regulatory activity push development out?  Professor Festa at the South Texas College of Law suggests that these regulations would be a disincentive to build in Harris County and would lead to urban sprawl. Should Waller, Fort Bend and Montgomery County expect a development boom?

This may be the case. Those that are typically not supportive of development regulations did not appear to push back too much. Some builders say housing costs will go up a bit to meet elevation standards and the costs will be passed on to customers. The assumption here is that customers are willing to take on some additional costs for peace of mind. However, could another reason for minimal pushback be that developers feel they can move on to these other counties with minimal risk to their business? There is a significant amount of development already happening in these surrounding counties and residents are quickly following. Fulshear is a great example. With the new expansion of  Farm-to-Market Road 1093, the infrastructure is there to move a lot of people to Fort Bend County.

Beyond the direct economic implications of losing development to surrounding counties, a second issue is that working in isolation does not solve the upstream flooding problems. If more development is pushed north and west. There will be more impermeable surfaces surrounding Harris County which may result in greater flooding risk to the county and further downstream. All of these bayous and rivers are interconnected; water flows in this region from the northwest to the southeast. Shrinking the permeable surface around Harris County is not good for Harris County. That is why there is such a push for the third reservoir and to conserve much of the remaining Katy Prairie.

I applaud Harris County for taking these steps. They have realized more quickly than the rest of the region that Harvey type flooding is not a one-off event and action must be taken.  However, they cannot be successful and our region cannot thrive if the regulatory activity takes place in isolation. Mitigating storm risk, whether it is flooding, extreme heat, hurricanes, etc, must be done at the regional scale. The interdependencies of our economic and natural systems are too great not to act together.

 

 

Book Review: Drawdown – The Most Comprehensive Climate Plan Ever Proposed to Reverse Global Warming

Title: Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming

Editor: Paul Hawken

Publisher: Penguin Books

Year Published: 2017

Price: $17.31

When this book arrived in the mail I was shocked. I was not expecting a book with coffee table dimensions. It is a wonderfully designed book. The solutions are well organized, the writing is accessible to all readers and the pictures are eye-catching.

The genesis of this book came from Hawken’s realization that there is not a comprehensive checklist of technologies and solutions for climate mitigation and climate adaptation. After several years of looking for this list and not finding one, he decided he would need to bring together and work with the top climate experts in the world to come up with a list of solutions that have the greatest potential of reducing emissions and sequestering carbon from the atmosphere. The outcome is the Drawdown organization and this book. The book is just the beginning. It is anticipated that this will be a living plan with regular analysis and updates from Drawdown and found at www.drawdown.org 

The Foreword is provided by Tom Steyer, Founder of NextGen Climate. Here he discusses the importance of identifying innovative solutions to climate change, and particularly not just technological solutions but solutions that work in tandem with natural systems. Steyer sees Drawdown as a roadmap with a moral compass that finally provides a vision that allows all of us to work together to build a cleaner and better world.

In the book over 80 solutions are identified and ranked based on the greenhouse gas reduction potential out to the year 2050. Of the top 20, reductions in the food, energy and the land-use sector are the most commonly seen. The number one solution identified is refrigeration. The problem is the proliferation of refrigeration using hydrofluorocarbons (HFC). HFCs were adopted to replace the ozone depleting chlorofluorocarbons (CFC), hydrochlorofluorocarbons (HCFC). In October 2016, in Kigali, Rwanda, the Montreal Protocol was amended to start the phase-out of HFC. However, with an anticipated 700 million air conditions being in circulation by 2030, many using HFC, this will be quite a monumental task to reign in the use of HFC.

The book provides a concise review of each of the 80 options taking into account reductions in GHG potential, net costs and the net savings of taking action. The authors do a nice job of bringing in real world examples of struggles, as well as success stories of communities and governments implementing these solutions. The solutions are broken into categories of energy, food, women and girls, buildings and cities, land-use transportation and materials. There is also a wish list presented at the end of the book of high value, but not yet fully scaled solutions such as smart highways, the hyperloop, marine permaculture and the artificial leaf.

Solutions are plentiful, both those that are already being implemented, as well as those that have some near-term potential of scaling. The book does a nice job by bringing together high impact solutions to one place for easy access and evaluation. That being said, I would not call the book a comprehensive plan. At the most a comprehensive list, but not a comprehensive plan. It is definitely a call to action. It is inspirational and provides hope and optimism that there is a way to salvage our planet through cost effective emission reducing solutions. But at the end of the book, I was still asking myself what is the plan? Maybe that is asking too much. This book takes a global approach to identify a list of solutions. We probably should not expect it to provide an actual plan to implement these measures at a national or sub-national level.

I believe the book does provide local planners and officials a better idea as to what solutions may be viable, but there still needs to be considerable work at the federal, state and local level to turn the list of solutions into a workable plan. Stakeholders must be engaged and priorities must be identified and set. Communities need to conduct cost benefit analysis to see what is economically practical. Regulations and policies must be changed that would allow for proper valuation and inclusion of these solutions and remove the barriers to their adoption. Finally, for any solution to work or plan to implemented, there needs to be funding. I was hoping this book would begin to present these funding solutions but none are identified. Fortunately, there is growing interest by institutional investors and the market in general to push more funds to climate solutions. 

To sum, it is a great list of solutions. It is well researched and well laid-out. It should be a must-read for any planner, government official or policy maker. For anything to happen in reducing greenhouse gases, it is vital that these solutions are known, quantified and ranked and the book does just that. Learn more at the image below.

Book Review: Drawdown – The Most Comprehensive Plan Ever Proposed to Reverse Global Warming

Title: Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming

Editor: Paul Hawken

Publisher: Penguin Books

Year Published: 2017

Price: $17.31

When this book arrived in the mail I was shocked. I was not expecting a book with coffee table dimensions. It is a wonderfully designed book. The solutions are well organized, the writing is accessible to all readers and the pictures are eye-catching.

The genesis of this book came from Hawken’s realization that there is not a comprehensive checklist of technologies and solutions for climate mitigation and climate adaptation. After several years of looking for this list and not finding one, he decided he would need to bring together and work with the top climate experts in the world to come up with a list of solutions that have the greatest potential of reducing emissions and sequestering carbon from the atmosphere. The outcome is the Drawdown organization and this book. The book is just the beginning. It is anticipated that this will be a living plan with regular analysis and updates from Drawdown and found at www.drawdown.org 

The Foreword is provided by Tom Steyer, Founder of NextGen Climate. Here he discusses the importance of identifying innovative solutions to climate change, and particularly not just technological solutions but solutions that work in tandem with natural systems. Steyer sees Drawdown as a roadmap with a moral compass that finally provides a vision that allows all of us to work together to build a cleaner and better world.

In the book over 80 solutions are identified and ranked based on the greenhouse gas reduction potential out to the year 2050. Of the top 20, reductions in the food, energy and the land-use sector are the most commonly seen. The number one solution identified is refrigeration. The problem is the proliferation of refrigeration using hydrofluorocarbons (HFC). HFCs were adopted to replace the ozone depleting chlorofluorocarbons (CFC), hydrochlorofluorocarbons (HCFC). In October 2016, in Kigali, Rwanda, the Montreal Protocol was amended to start the phase-out of HFC. However, with an anticipated 700 million air conditions being in circulation by 2030, many using HFC, this will be quite a monumental task to reign in the use of HFC.

The book provides a concise review of each of the 80 options taking into account reductions in GHG potential, net costs and the net savings of taking action. The authors do a nice job of bringing in real world examples of struggles, as well as success stories of communities and governments implementing these solutions. The solutions are broken into categories of energy, food, women and girls, buildings and cities, land-use transportation and materials. There is also a wish list presented at the end of the book of high value, but not yet fully scaled solutions such as smart highways, the hyperloop, marine permaculture and the artificial leaf.

Solutions are plentiful, both those that are already being implemented, as well as those that have some near-term potential of scaling. The book does a nice job by bringing together high impact solutions to one place for easy access and evaluation. That being said, I would not call the book a comprehensive plan. At the most a comprehensive list, but not a comprehensive plan. It is definitely a call to action. It is inspirational and provides hope and optimism that there is a way to salvage our planet through cost effective emission reducing solutions. But at the end of the book, I was still asking myself what is the plan? Maybe that is asking too much. This book takes a global approach to identify a list of solutions. We probably should not expect it to provide an actual plan to implement these measures at a national or sub-national level.

I believe the book does provide local planners and officials a better idea as to what solutions may be viable, but there still needs to be considerable work at the federal, state and local level to turn the list of solutions into a workable plan. Stakeholders must be engaged and priorities must be identified and set. Communities need to conduct cost benefit analysis to see what is economically practical. Regulations and policies must be changed that would allow for proper valuation and inclusion of these solutions and remove the barriers to their adoption. Finally, for any solution to work or plan to implemented, there needs to be funding. I was hoping this book would begin to present these funding solutions but none are identified. Fortunately, there is growing interest by institutional investors and the market in general to push more funds to climate solutions. 

To sum, it is a great list of solutions. It is well researched and well laid-out. It should be a must-read for any planner, government official or policy maker. For anything to happen in reducing greenhouse gases, it is vital that these solutions are known, quantified and ranked and the book does just that. Learn more at the image below.

Uncertainty in Climate Regulations Detrimental to the Environment and the Economy

A variety of climate risks are starting to have a noticeable impact on how we do business. These risks can be physical climate risk, both chronic and acute, which directly Inhofe_holding_snowballimpact operations; financial risks, such as divestment; regulatory/policy risks, such as carbon pricing or risk disclosure requirements; and reputational risks. In the next series of blog posts we are going to take a deeper look at each of these risks. The first will be with regulatory risk.

According to the Global Adaptation and Resilience Investment (GARI) Working Group 2016 survey, 78% of respondents see physical climate risk as being a very important concern and 53% ranked climate regulation risk as a very important issue that must be considered. Within the same survey, 68% of respondents are currently working on strategies to deal with anticipated changes in climate-related regulations.

Organizations must we willing to address the transitional risks associated with new policies and regulations that are likely to be adopted to mitigate climate change. New climate related regulations at the local, state and federal level have been and will continue to be considered. Some of the potential regulatory risks are related to pricing or taxing carbon emissions; change in land use zoning and subsequent loss of property value; new building and construction standards; new business continuity or insurance requirements; more requirements attached to state and federal funding for infrastructure development; and more stringent disclosure requirements. To add complexity to these regulatory changes, there is a distinct possibility that a lot of this action will be happening at the state and local level which will result in a patchwork of regulations and policy across the United States. For example, many state and local governments have vowed to move forward in battling climate change. California is one of the more vocal and active states in regard to climate policy; see the “Preserve California” legislative package.

A key area of interest for me is to what extent these companies are actually acting on these potential regulatory risks. The private sector gets very uncomfortable when there is uncertainty in the regulatory environment. In fact, although regulations are typically not highly desired, many corporations prefer regulatory certainty over a regulatory environment that is in flux. Organizations can at least plan when there is greater certainty. This is why we see some large corporations that have not traditionally been overly excited about climate regulation pushing for a carbon tax. A carbon tax is not too complex and it can be planned for and actively managed by corporations.

Unfortunately, the current Administration is creating a significant amount of uncertainty in the regulatory space. There is a definite desire by the current administration to roll back as many climate related regulations as possible. It appears the Clean Power Plan has largely been put on the back burner and there are a variety of efforts to roll back methane emissions and other Obama-era regulations. However, today July 29th, the US Court of Appeals for the DC Circuit just ruled that the EPA cannot suspend these rules.  This follows an earlier loss by the Administration when the Senate voted to reject the suspension of these rules.

This frenetic policy making process of the current administration to roll back regulations just because the word climate is associated with it is not good policy making. This is particularly a problem when the Administration does not understand the policies they are rolling back and how policy making works, particularly in regards to the dynamic we have in place with the checks and balances from the Courts and the representatives we have on the Hill. Further, for an Administration that is focused on economic growth, this yo-yoing back and forth between rules and regulations is not good for business. It leads to very uncertain business environment that reduces investment R&D, and economic growth.  To track policy uncertainty, Moody’s has published their Policy Uncertainty Index and currently it is at its highest point to date this year.

I am a fan of many of these climate regulations. I would like to see many of them stay in place. That being said, none of them are perfect and there is room for improvement. However, a wholesale rollback without any thought as to the impact on the environment, and particularly here, the impact it has on the ability to conduct business is highly problematic. There are common areas of concern and interest that both sides of the aisle can work on together. We have great examples of bipartisan work from Shaheen and Portman and Murkowski and Cantwell. So if we really want to make “America Great Again” it is important that the current Administration take a deep breath on their regulatory agenda, learn how the federal policy making process works and conduct policy making in a way that actually helps business and our communities.