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.

 

 

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Critical Action Needed to Make Electric Power Grid more Resilient to Climate Change

With three major hurricanes wreaking havoc on the United States’ power sector in 2017

2560px-Katia,_Irma,_Jose_2017-09-08_1745Z–1935Z
Katia, Irma and Jose…After Harvey and before Irma…                 Hurricane Season 2017

there has been a growing discussion on how to make the grid more resilient. Due to climate change, it is anticipated that storms are likely to become more intense and possibly more frequent, placing growing pressure on the ability of the power system to keep the lights on. We are already finding that climate-induced extreme weather events are already resulting in more frequent and longer duration outage events in the United States.

Defining Resilience 

With this growing threat, a resilient power system sounds like a good thing. Unfortunately, it appears that there is some difficulty in defining what we mean by a resilient power system. From many of my recent conversations, I find there is confusion by what we mean by resilience. For example, I see in some cases, reliability and resilience are used interchangeably. To be clear, reliability is not resilience. According to a recent National Academies of Science Report “Enhancing the Resilience of the Nation’s Electricity Grid,” reliability deals with ensuring there is an adequate amount of power supplied to meet demand, even in times of expected and “reasonably” unexpected outages. Resilience differs in that the expectation is that a resilient system can adapt and lessen the likelihood that an outage will occur and if one does occur to manage the event, lessen impacts, recover as quickly as possible and learn how to deal with future outages.

Valuing Resilience 

IceStormPowerLinesBeyond defining resilience another issue we face is that much of the decision making and cost/benefit calculations are based on economic efficiency calculations that value the benefits of a reliable grid, not a resilient grid.  The focus is on short-term cost-benefit optimization that is detrimental to resilience improvements. In other words, the calculation looks at what keeps the lights on now in our current environment, not what investment would limit the large-area, long-duration outages that may occur due to severe weather activity or other cyber or physical attacks. To overcome this issue requires that there is a better understanding of how to value resilience. To do this requires that we have a better idea as to the probability and intensity of future events that may impact the grid. These known unknowns and unknown unknowns are not easy to value which is problematic when putting together a rate case to fund this investment. Fortunately, steps are being taken to quantify metrics tied to what would be considered a resilient power system. With the development of better metrics to measure performance, it will be more likely we can make more resilient appropriate investments.

Resilient Components – Weighing the Costs

As we get better at improving our ability to define, measure and value a more resilient power system, what would be some strategies that we could pursue? There are a variety of ways to make the transmission and distribution system more robust. All of them may add significant upfront costs to the system but are likely to also provide long-term benefits as the power system is more able to withstand more severe weather events. Following is a very high-level overview of some options that could be considered.

Put the wires underground, sometimes…Undergrounding power lines is an option that I hear a lot. The problem with “undergrounding” is that it is significantly more expensive than hanging the wires on poles. So, we must weigh the cost and benefit of such an approach. In an area that is susceptible to high winds, ice storms and tornadoes, placing the wires underground may be worth the cost. The question we must ask is whether we anticipate there will be an increasing number of these events that would justify burying these cables? At this time, we know that things are going to get a bit hairier, but we are uncertain as to how hairy and when. That makes it difficult to pull the trigger.

Also, we must remember that an approach that would make a power system more resilient in one location may not be as successful in other. For example, if an area is susceptible to flooding, burying wires may be a bit more problematic. Although protections can be put in place to protect against flooding of underground lines, that adds additional cost and it may still not prevent a disruption. Further, any disruption, due to damage to an underground cable, will likely take longer to fix and be more costly than repairing above-ground wires. We must ask are we preparing for floods, high winds or both?

Elevate substations…Not only are the wires susceptible to water, substations can be, as Underwater_substation,_Cedar_Rapids,_June_12_2008well. This was demonstrated by Hurricane Harvey flooding which ruined multiple substations. This damage can be limited by elevating the platform for where these components sit. Levees and dikes can also be built to protect these systems. This is easier done for new infrastructure development, however moving or elevating legacy systems can be cost prohibitive if the proper valuation of this benefit is not properly accounted for.

Strengthen wires and poles...Additionally, for the transmission system, there are methods that can make it more robust, particularly to ice storms and strong wind events. This would include reinforcing poles and towers or constructing wind-resistant concrete and/or steel poles. There could also be more frequent deadends placed along the system. At present, the practice is to place a dead end every ten miles. Placing these deadends more closely together will reduce the likelihood of a domino effect if one of the standard designed poles are compromised.

A smarter gridFor distribution systems, improving resilience requires moving from a radial design to a more networked design. A networked design has more than one supply feed that limits outages if one of the lines go down. The network designs should be coupled with more advanced communication infrastructure that allows systems damage to be isolated and to reroute power when a component is damaged. These smarter grid systems have been deployed in a patchwork across the United States. CenterPoint, in the Houston-Galveston region, does have some smart grid components deployed which allowed for more rapid recovery during Hurricane Harvey.

Final Thoughts

The bottom line is that solutions exist. I presented a short list of options that may be considered. I didn’t even touch on the fast-approaching opportunities that come with decreasing cost of battery storage. The problem with pursuing many of these strategies is the added expense. Our decision-making frameworks for utility investment are not set-up for resilience investment, they are set up to ensure a reliable grid. Fortunately, with better climate modeling and resilience metrics, we are getting closer to properly valuing the short and long-term benefits of the resilient investment and are moving in the right direction. In the meantime, we will just keep trimming the trees.

 

 

 

More Green for Green Infrastructure – Funding to Mitigate Climate Risk

green infrastructure
Street Side Bioswale – mitigate climate risk; storm water damage

In the United States, it is estimated that $4.6 trillion will need to be spent to meet our current infrastructure needs. As of the 2017 ASCE Infrastructure Report Card funding may be available for about half of that amount; there is a funding gap of $2.1 trillion.  In the 2016 report Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future,  the ASCE does a nice job in explaining what may happen in case we do not take this funding gap seriously. According to the latest report card, taking it seriously means investing about $206 billion per year. However, it is important to keep in mind that the $206 billion per year does not take into account future damage to our infrastructure due to climate risk.

Recently, I posted a blog about the possibility of closing the funding gap using resilience bonds. As I mention in the blog, resilience bonds are an interesting idea that is waiting for the right circumstances. There is growing interest in these bonds, as a way to pay for more resilient infrastructure to reduce climate risk, but the right projects have not been identified.

Environmental Impact Bonds

To deal with climate risk what seems to have a bit more traction are environmental impact bonds (EIB).  One has been issued in Washington DC for stormwater mitigation and a second is being considered in New Orleans.

The EIB is a tax-exempt municipal bond that utilizes a pay for success approach to financing infrastructure. The bond provides upfront capital for innovative resilience-focused projects and shifts downside risk from government agencies to the private sector investors. The public sector repays investors based on the whether the agreed-upon environmental outcomes are achieved. If agreed upon performance is not achieved, the investor covers the loss.

Washington, DC – Storm Water Mitigation

The first EIB was closed in September 2016 with the DC Water and Sewer Authority. This is a 30-year, $25 million bond with a mandatory tender after five years. The interest rate is set at 3.43%. With this bond, DC Water is looking to implement green infrastructure to mitigate stormwater risk but lacked capital. Further, the utility was attempting to implement a new, more innovative approach to stormwater mitigation and was concerned about performance risk. The EIB investors took on this risk and will pay DC Water if the infrastructure under-performs. The investors in this project are Goldman Sachs and Calvert Foundation.

At the five year mark, an additional payment of $3.3 million will be made, either by DC Water or the investors. Who pays will be dependent on actual stormwater runoff reductions. Who gets paid is determined by an independent evaluator. The evaluator set the performance metrics for the project. If reductions in stormwater runoff are greater than 41.3% then DC Water will bay an outcome payment. If the runoff is reduced less than 18.6%, Goldman and Calvert will pay a one-time risk share payment to DC Water.

New Orleans – Wetland Restoration 

New Orleans just started down its own EIB path July of 2017. The focus here is on the

NASA-completes-study-of-Louisiana-Gulf-Coast-Levees-and-Wetlands
Louisiana Coastal Wetlands

restoration of coastal wetlands. The coastal wetlands act as a natural buffer from sea level rise and storm surge. The wetlands have been damaged by natural events, but this damage has been exacerbated by oil and gas exploration activity. It is anticipated that without restoration of these wetlands, approximately 1,750 square miles of wetland could be lost by 2060. This would result in significant economic and community costs.

The desire here is to restore this natural infrastructure.  EDF will be working with Louisiana’s Coastal Protection and Restoration Authority to identify the specific coastal restoration project. A portion of this restoration work is expected to be funded by RESTORE dollars. However, additional funding is needed to complete the work to mitigate this climate risk. The additional funding will be provided by NatureVest in the form of an EIB pay-for-success bond.

The United States faces significant costs to bring existing infrastructure up to standards, as well as prepare for and recover from natural disasters. Non-traditional financing mechanisms are available to help fund this infrastructure. Earlier, I discussed resilience bonds as a possibility. Reliance on traditional bond funding, and federal and state dollars are not sufficient to manage the existing gap, much less prepare for future climate risks.  It is good to see that some cities are taking innovative steps forward to build and prepare for the future.

 

Post-Hurricane Harvey, Can We Build Back Better?

According to FEMA damage estimates over 105,000 structures in the Houston-Galveston region experienced damage due to Hurricane Harvey natural disaster. The City of Houston government buildings alone realized approximately $175 million in damage.  This is $100 million over their insurance limit.  Both the private and public sector are actively working recovery efforts with a desire to rebuild as quickly as possible. Most have made their FEMA claims and those that have flood insurance, only about 15% of the population, have met with adjusters and are actively pursuing their claims.

Check out the HARC Story Map on Hurricane Harvey Impacts to learn more.

As I talk with people both in the private and public sector, the underlying concern is how harvey story mapwe are going to rebuild from this natural disaster. Based on my own conversations, many know they are not going to be made whole whether they have FEMA and/or insurance. Further, these conversations reveal that many do not want to build back to what was, they want to build to be more resilient. Unfortunately, the funding to do so appears not to be available. Many would like to stay in their neighborhood and build-up, however, $100,000 which are estimates they are hearing to raise their elevation, are not in the cards.  Some may get buyouts, but that is a fraction of the structures that were affected and remain in harm’s way.

The city government and school districts are not in a much better position.  They are largely looking to restore the existing building and get services back to normal. I have not seen anything about rebuilding more resilient public buildings, but maybe we are too soon in the process. Like those in the private sector, it is unlikely they will get any funding in the near-term, state or federal, that will allow this to happen.

Beyond the individual property recovery, there is also consideration for larger infrastructure recovery and resilience improvements to mitigage natural disasters. Items include the third reservoir in the northwest of the region, the Ike Dike, speed up the completion of the of Brays Bayou mitigation project, to name a few.  Similar to individual properties, they also do not appear to have the adequate funds available.  (Except for maybe Brays Bayou completion.)

I have written in previous posts about the funding options that are available for improving the resilience of communities.  They can be found here and here.  In both of these articles, I discuss a variety of funding mechanisms that can be used to improve community resilience including green bonds, resilience bonds, and public-private partnerships.

Solution: Resilience Bonds 

I would like to focus a bit more on resilience bonds.  Resilience bonds are bonds that allow issuers to build infrastructure to reduce loss or likelihood of loss during a natural disaster event; build new infrastructure with the expectation of reducing risk. These can be used for coastal protection, sea walls, stormwater mitigating green infrastructure, etc.

For a resilience bond, the issuer would utilize a catastrophe model to determine baseline risk to infrastructure from natural disasters. The issuer would then calculate how the implementation of a more resilient system would reduce future loss in comparison to this baseline. A resilience rebate is set based on the value of the anticipated reduced loss. The reduced risk of principal to the investor and the reduced premium expense to the sponsor is captured and provided to the sponsor as a rebate. This rebate can be used for financing resilient infrastructure or risk reduction investment.

pier and beamI am not an insurance expert, but the way I understand it is that building more resilient reduces the risk of a project to a natural disaster. This decrease in risk reduces the premium of the catastrophe bond (cat bonds) which is already being issued to cover infrastructure in the event of a major triggering event.  The rebate is coming from a lower cost of cat bonds. For example, cat bonds that cover flood damage or storm surge damage, when up for renewal, can be paired with a set of resilience-focused projects. These projects will lower risk to this infrastructure, thereby reducing premiums resulting in funds available to invest in more resilient infrastructure.

By taking steps to improve resilience utilizing resilience bonds, the public sector reduces risk to infrastructure, as well as realize economic, financial benefit from the proceeds of the resilience rebate. Resilient infrastructure funding by resilience bonds can reduce economic, social and environmental risk, as well as receive financial benefit of avoided losses. Cat bond costs also continue to go down in cost as more resilient infrastructure is added to the community. Further, more resilient infrastructure would also reduce costs of individual hazard insurance, wind, flood, etc. Not only does government see lower insurance costs, so would households and private companies.

What About Individual Property Owners? 

What has been discussed here is largely focused on public sector facilities and infrastructure development. We still are lacking the mechanism for private properties, commercial and residential. This is becoming an even more urgent issue as we see the National Flood Insurance Program is under significant financial duress and is actively working on moving properties off of this insurance into the private market. One thing to consider as this $1 billion transition occurs, is for Texas to create to flood insurance program similar to the Texas Windstorm Insurance Association (TWIA).

In May of this year, the TWIA sponsored a $400 million cat bond and currently has $4.9 billion in aggregate funding.  This amount is anticipated to cover the current hurricane season. What can make the TWIA more sustainable, would be to consider resilience bonds as it renews its cat bonds. This would include using cat models to assess wind risk to private properties. It could then assess what strategies can be done to reduce this risk to private properties. A good guide to follow would be the Fortified Standard. If properly structured, the TWIA would see a resilience bond rebate. These rebate dollars would then be set in a fund that can be provided to homeowners to reduce their wind risk to hurricanes and straight-line wind events. The outcome would be more resilient infrastructure, less costs for damage recovery and overall improved community resilience.

Keesler Air Force Base: One year after KatrinaResilience Bonds to Mitigate Flooding for Private Sector

Can a similar process be considered for the flood insurance market? There appears to be a healthy appetite for cat bonds by institutional investors. What would it take for the state to issue flood-related cat bonds? Can the state accurately assess flood risk for the private sector? There is ongoing concern about the accuracy of our flood models and floodplain maps, particularly along the Gulf Coast. If we can agree on the risks, can we identify the appropriate risk mitigation strategies for individual structures? I would not think that is an impossible task. We would then need to quantify the avoided loss with the implementation of these strategies. This would create the rebate. This resilience rebate could then be available for individual property owners to implement the mitigation measures. The result would be lower individual premiums, lower recovery costs and an overall improvement in community resilience from natural disasters.

 

 

 

 

 

“All the Above” Climate Adaptation

For long-term resilience to climate change, flooding is not the only issue we must deal with at this time. In light of the current situation, it is easy to place all of our efforts on reducing flooding risk. We have a tendency to focus on the most recent event and ignore extreme heatother threats to our well-being. It is human nature to do so. However, taking a narrow view on one particular issue could be detrimental to the Gulf Coast’s long-term well-being.

Granted with Hurricane Harvey, the Ike Dike and Coastal Spine have garnered a significant amount of attention. This is interesting due to the fact that Hurricane Harvey’s flooding would in no way be mitigated by this infrastructure. In any case, it is good to see flooding not being the only issue discussed.

As important as it is to work on our flooding and storm surge issues, three floods in three years and storm surge with Hurricane Ike, we must also keep in mind that Texas is one long-drought punctuated by torrential rainfall. It was only five years ago that the entire state experienced a significant drought that resulted in considerable damage to our road infrastructure, water distribution systems, power generation, livestock and agriculture and our St. Augustine (The last is a joke. We really should get rid of this stuff, it is a huge waste of water.) In any case, droughts are a real issue that we cannot ignore.

Drought

I have mentioned the drought experience and future risk for our power grid in previous posts. The first one looking at our current predicament and the second considering what our future grid faces.  I have not covered the variety of other drought-related issues that we have recently faced and may face in the near term. During the 2011-2012 drought our drought texashorizontal infrastructure, pipes and street, faced considerable issues, particularly our water system in Houston. At one point, during the drought over 700 pipes per day were breaking. It is estimated that 15%, 22.4 billion gallons of water, was leaked and never made it to the end-user.

The drought also caused an estimated $7.6 billion loss to the farm-sector.  The hardest hit being the livestock industry and hay production. Closer to the Gulf Coast, we see that the drought greatly damaged the rice industry and placed its future in question. As we move along the Gulf Coast, we see that the drought also had a significant impact on the Gulf ecosystem with elevated salinity levels. This damages oyster beds and fisheries that are dependent on freshwater inflows from the Colorado and Brazos River.

Extreme Heat

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Also, as many are aware, it gets hot in Houston, and it is expected to get considerably hotter. Between 1981 and 2010, the Houston region averaged 31 days over 95 degrees. If climate models are correct, it is anticipated that the number of days will triple to close to 90 days per year at or above 95 degrees. These temperatures are already having an impact on the region. For example, the City of Houston has put in place an extreme heat emergency plan and had to put it in action the Summer of 2016. This heat not only melts and warp infrastructure, it is a significant public health issue for those who work outside, as well as those vulnerable populations that do not have access to appropriate air conditioning.

The heat is anticipated to have a significant economic impact on the Gulf Coast. A recent Science article looked at the economic consequences of climate change in the United States. The study finds that there is likely to be a significant transfer shift of wealth from southern states up to northern and western states. It looks like there will be a point when it will get too hot in the kitchen and people will get out…

Public Health – Vector-Borne Diseases 

The factors mentioned above will have public health implications, whether it is contaminated flood water or extreme heat and humidity. Other public health issues we anticipate with a warming climate, is the increasing number of vector-borne diseases (VBD). This is largely the spread of disease to humans through ticks, mosquitoes, and flies. West nileWe have been dealing with West Nile virus for a few years and recently have started to see Zika get a foothold in the region, the most recent south of Houston in Hidalgo County. Ticks have been a nuisance for years, particularly the ones carrying, Lyme disease. 

It is anticipated that we should expect a greater number of disease transmission with increasing rainfall and humidity, rising temperatures and human migration. Rainfall, humidity, and temperatures provide ideal breeding grounds (except it can get too hot for mosquitoes) and migration allows for the introduction of creatures that otherwise may have a more difficult time making it to the Gulf Coast. Limiting these impacts will require that we set up robust sentinel and surveillance programs to identify the arrival and movement of these diseases around the Gulf Coast. This should be coupled with prevention methods that reduce standing water, as well as public health education programs.

All the Above Resilience 

As we move forward with improving our economic resilience, we must keep in mind two things. First, community resilience and adaptation is a regional issue. Taking action as an individual community or county and not coordinating with others in our region may likely be a waste of money and time. Second, we need to approach resilience holistically and not solely focus on one issue. It is easy to focus on just flooding at this time, but we should not forget that just a few years ago the entire region was dealing with a historic drought, is now regularly facing extreme heat days and seeing an increasing number of VBDs entering the region. So, as we move forward, we need to work together and take an all the above approach.

Lack of Action on Climate Change Threatens the “Texas Miracle”

The Texas Miracle is at risk. With Harvey recovery underway, there has been a lot of discussion on how to prevent this from happening again, or at least reduce the damage by the next big one. There are two distinct discourses happening at this time. One arguing for business as usual and another arguing for significant change from the status quo of development.

What actually happens will likely fall somewhere in the middle. Policy makers will feel some pressure to take action of some sort, however, there will be significant pressure to limit how far the pendulum swings to mitigate future storm risk. Mitigating risk and improving resilience and adaptive capacity is expensive. However, we are also seeing that recovery and restoration are becoming pretty expensive, as well.

The Price Tag for Delaying Climate Action

Check out the chart below to see number of billion dollar storms in Texas since 1980. A good bit of them have happened since 2008. The black line is the average and it is on a steady incline. Right now we are clocking in at 2.5 billion dollar plus events a year. Several of them over a $10 billion price tag. Prior to Harvey the highest cost was over $30 billion in 2008. Harvey looks to more than double this at $75 billion. How many more of these events do we need to justify moving from business as usual?

billion dollar disasters NOAA update
NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2017). https://www.ncdc.noaa.gov/billions/

What are Some Options? 

There is not an easy answer. Texas has been victim to a number of different types of natural disasters? Hurricane storm surge, flooding, drought, extreme heat, etc. Investing to mitigate in one event type won’t necessarily help to mitigate risk of other events. For example, building the Ike Dike, a storm surge barrier in front of the Houston Ship Channel, would not have limited any of the damage brought on by the Tax Day Flood, Memorial Day Flood, Harvey or the 2011-2012 drought. All of these billion dollar events happened since Hurricane Ike. Surprisingly though, (or maybe not Texas A&M has a significant amount of clout at the State House), the Ike Dike reached the top of the agenda for the State after Harvey. The Netherlands derived idea has been floundering about for years since Hurricane Ike devastated Bolivar Peninsula and Galveston, but it takes a non-related flooding event for it to get real attention. (To be fair, Ike Dike did get some traction in the State House this last legislative session but died in the spring. )

In any case, the big question is what do we prepare for next? Other than the resurgence of the Ike Dike after Harvey, which would require a special session to get it funded, the most pressing focus is on storm water management and flood mitigation. There is a significant amount of discussion about dealing with this flooding issue, but there is not any real money being made available. It is estimated that Harris County alone needs about $26 billion to upgrade its storm water infrastructure. Without significant changes in the way Harris County does business, they not have that kind of money.  Governor Abbott has refused to take any direct action or open up the rainy day fund,

need for repairs
Harris County Flood Control Map of Post-Harvey Damage

which is the largest in the country at $9.7 billion, to cover any of these costs. FEMA is over burdened and does not have the funds. Further, FEMA’s Director Long has already made it clear that the federal government is getting tired of bailing out communities.

 

This is politics as usual, particularly for Texas. The state expects the communities to fend for themselves or the Fed’s to provide the resources. It is OK for Texas to ask for disaster assistance funding, but other states better think twice.  Speaking of reaching for a handout, Florida did a 75/25 split with FEMA, Florida covering 25% of its recovery costs; Texas negotiated a 90/10 deal.  I am assuming we need the other 15% to enforce Senate Bill 4, the Sanctuary City bill.

Moving Forward

So what is going to move us ahead, away from business as usual? Right now we starve our infrastructure of funding, particularly on maintenance. There is absolutely no political will to raise taxes, even temporarily to just cover recovery costs, much less resilience. Contrary to what many politicians would have you believe, US citizens are willing to pay higher taxes to have better services and infrastructure. 90% of Americans are willing to pay their fair share of taxes if they know where the spending is going. I am not advocating that higher taxes are the best way to go, maybe there are other funding approaches such as public-private partnerships (some debate on the efficacy of these providing a public good) or resilience bonds and green bonds. So finding the appropriate funding resources is also not necessarily a problem. Further, knowing how to make our infrastructure more resilient is also not a problem. There are a growing number of voluntary resilience standards that can be used and plenty of Cities taking action.

The real problem, I would argue, is overall lack of mobilization from the private sector, primarily our oil and gas industry. The funding can be found, the resilience standards are available, the science and engineering capacity is boundless, the ability to innovate and lead is found across the region. Unfortunately, with all of this capacity and opportunity, we have allowed our City and Region to develop in a way that is not sustainable and is highly susceptible to hurricanes, flooding, drought, extreme heat, etc. Our largest economic sector, the oil and gas industry, has largely been silent, to the detriment of itself and the overall community.  The Houston region needs new industry and new talent. We will make our ability to recruit and retain high value and productive industry increasingly more difficult, if the private sector stays silent and does not push for change.  The Texas Miracle is already on life support. Is Houston up to the challenge to keep it alive?

 

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Three years, three floods

Over the last three years, the Houston region has experienced three 500 year plus rain events.  Will we see another three storms in the next three years? No one can really say. What we can say is that there will be more large flooding events and they are likely to be

1024px-Support_during_Hurricane_Harvey_(TX)_(50)
Port Arthur, TX – US National Guard

more commonly occurring and more intense. According to the National Climate Assessment, communities that are already vulnerable to weather extremes will be stressed further by even more extreme weather events.

The recent major flooding events and the likelihood of future flooding events, does not look good for Houston’s economic viability. People are watching what the City and region will do to start mitigating the impact of these flooding events.

Could Houston or any other City for that matter, have prevented flooding from 51 inches of rain or rain events with a 95% Probable Maximum Precipitation (PMP)? No, they couldn’t.

The 95% PMP was mentioned at a recent event at Baker Institute where Jeff Lindner, Harris County Meteorologist, discussed the rain total amount from Tropical Storm Harvey in Houston. Check out what 95% PMP means, it is mind blowing  to think of that amount of rain falling at one time.

It is not helpful, however, when we have project developers and construction companies, many of them who helped get us into this mess, saying that everything is fine and we don’t need to do anything different. We don’t want to ruin the Texas Miracle with California land-use regulations and other heavy handed government regulation.

Harvey dog
Hurricane Harvey Dog – DOD

Unfortunately, this line of reasoning and belief is not correct, helpful or productive. Things aren’t fine with business as usual. The Texas Miracle, in Houston is under siege, Low cost of doing business and low cost of living does not last if there is regular disruptions to business and our community. Ongoing and regular recovery has a cost and it will be felt across the entire economy, not just in higher taxes, or loss of productivity but a decreasing desire by new companies to locate their business here. Houston is already under a double climate risk. Double in that we are facing increasing intensity of storms and that we have an economic threat as more companies, cities and nations make pledges to be carbon free. We need new industry and companies moving to Houston to diversify the economy. Still 70% of the Houston economy is tied to the oil and gas sector.

I am by no means arguing for heavy handed regulations or the mandating of requirements for land development and stormwater management. These are fightin’ words in Texas and will just end up getting everyone in an uproar. What I am suggesting is that we start looking at development and deployment of voluntary resilience standards; described in a previous post.  These standards are demonstrated techniques that will improve the ability of our storm water management systems, both grey and green infrastructure, to limit the impact of major rain events. By simply building capacity in the market through education and demonstration projects these ideas can be introduced into the market, tested by the market and the ones that make the most sense will get implemented.

Former Houston Mayor Bill White set a great model of how to introduce potentially controversial ideas in the Houston market through the 2004 Green Building Resolution. This resolution mandated that all City building be built to LEED certification standards. What this mandate did to some degree was allow local engineering firms, architects and builders to have the incentive to learn how to build to LEED in a cost effective manner so they can win City projects. The outcome was a better educated building and owner community that understood LEED and how to cost effectively meet these standards. Houston is now one of the national leaders for LEED building and Energy Star. We also must keep in mind, that progress in green building was aided by several of the large oil and gas companies began demanding LEED for their buildings and continue to do so.

The point that is important to keep in mind is there are ways to introduce new standards, hurricane harvey DODmethods and tools in the market without heavy handed regulations. There are ways to incrementally move away from business as usual without significantly impacting economic growth and productivity. There is no reason to continue with business as usual. The evidence is becoming increasingly clear that storm events like Harvey are going to be more common. The world is watching, it’s in our best interest to make the right decision to decrease our flooding risk, otherwise it will be made for us.