Saturday, May 28, 2016

G7 Leaders Pledge to End Fossil Fuel Subsidies by 2025, but Do the Opposite

The G7 Ise-Shima Leaders’ Declaration contains some retrograde language that contradicts some positive statements picked out to claim "green" progress.  Here are some examples:

As the leaders of G7, "we commit to play a leading role in facilitating energy investments, and encourage relevant stakeholders, despite the increased uncertainty posed by the current energy price levels, to sustain their investments in energy sector, in particular in quality energy infrastructure and in upstream development, so that we can mitigate risks to future growth of global economy."

This means that the G7 will do what it takes to keep up investment in the exploration and development of (coal and) oil and gas fields in order to forestall future supply shortages.  It contradicts the language on phasing out fossil energy subsidies.  They may intend to finesse this by saying that tax breaks and other privileges are no subsidies.

"We support the enhanced efforts on energy efficiency and use of renewable energy, including hydro, as well as other domestic resources."

This is code for "we will continue to support coal, oil-sands and the like as ‘domestic resources‘".  Canada, Poland and Spain are doing exactly that, the latter two in contravention of EU state-aid rules.  Donald Trump is using that language in his promise to ensure more American coal is burned.  In essence, this says that we, the G7 leaders, will not stand in their way and may do likewise.

About subsidies, the G7 leaders say:

"We remain committed to the elimination of inefficient fossil fuel subsidies and encourage all countries to do so by 2025."

This wording leaves the option of declaring some subsidies for fossil fuel to be "efficient" and then to introduce, maintain, or increase them.  Focusing on "fuel" subsidies, leaves room for existing and new subsidies for the upstream development of fossil resource and related infrastructure.

There are other passages that express full support for:
  • (Fossil methane) gas and LNG, which can be understood as support for fracking
  • Nuclear power programmes, and call for measures to counter public skepticism

All this indicates that the G7 Summit preparation process is captured by the fossil and nuclear industries and incumbent energy utilities.  

Will the German government, with the experience of the Energiewende and its co-benefits, use its presidency of the G20 in 2017 to promote a declaration that speaks
  • unequivocally against all forms of subsidies and privileges for the fossil and nuclear energy industries,
  •  strongly in favor of energy efficiency, renewable energy, and the
  •  transformation of all energy systems to 100% renewable supply by 2050 or earlier as the
  •  urgency of global heating and ocean acidification increases, new technologies and business models emerge, costs come down, and the management of transformations is better understood?

Thursday, March 17, 2016

Co-Benefits of the Energiewende

As you are probably aware, the German Energiewende – the energy system transformation away from nuclear and fossil energy towards renewables and storage in a smart grid enabling dynamically efficient behaviour – is often misrepresented in English-language and other foreign media.  Arne Jungjohann compiled this list of typical fraudulent claims about the Energiewende. 

Apart from the important points in the Jungjohann list, there are many co-benefits of the Energiewende that are widely ignored, in part because there are no near-time monitoring data to feed the news cycle.  Here is my list; it is work in progress and I welcome suggestions what should be added.

Climate (Greenhouse Gas Emissions)
·       Carbon dioxide (CO2), strongly down (that‘s the point!)
·       Methane (CH4), strongly down from mining and gas extraction (incl. fracking), pipelines
·       Water vapour (H2O), down from reduced combustion of fossil fuels
·       Nitrous oxide (N2O) – effect unclear
·       Ozone (O3)  – down (electric mobility); lower pollution with O3 precursors
·       Chlorofluorocarbons (CFCs) – fossil industry use probably down, but unclear

Environment & Conservation
·       Air: SO2, NOX, (with benefits for biodiversity), reduced emissions of mercury, particulate matter (PM), volatile organic compounds (VOCs), O3 (as precursors are reduced), black carbon, …
·       Water: Reduced water demand for mining, extraction, fracking, thermal power plants
·       Less water pollution from mine drainage, bore-well and fracking fluids, injection, ...
·       Reduce heat loads on rivers (and in urban air-sheds), with positive effects on biodiversity
·       Waste: reduced quantities from fossil industries, processing, combustion plants (e.g. tailings, flue-gas desulphurization gypsum, slag and fly ash, …)
·       Chance to address long-term storage, management & safeguarding of nuclear waste
·       Soil: reduced acidification, heavy metals; No more drill cuttings ploughed into soils
·       Avoidance of destruction of ecosystems (mountain-top removal, open-cast mining, …)
·       Avoidance of subsidence (local earthquakes from settling of ground after mining, fracking)
·       Reduced risk of oil spills, especially in marine and Arctic environment, or gas leaks
·       Removing blots from landscape: Distributed generation reduces net grid load and allows dismantling of some power lines around former thermal power plants (nuclear, coal, lignite, …)
·       Environmental Policy Integration (EPI): Transport, Industries, Housing & Buildings

Economic & Fiscal
·       Business creation and innovation dynamics; Stimulating (domestic) investment, attracting technology leaders (foreign direct investment with additional job creation)
·       Job creation, predominantly in rural areas; across all skill levels
·       Tax revenue increase; no more excuses for perverse subsidies for fossil & nuclear
·       Stabilization of social security: more revenue, fewer toxics in environment (air)
·       Lower system cost (prices); improved competitiveness, attracting inward investment; the point most overlooked: The new energy system is cheaper to build, run and maintain than the old
·       (Indirect) Import substitution: Improves balances of trade and payment
·       Reducing vulnerability to economic shocks on world markets for fossil energies
·       Economic stabilization by the renewable energy sector (through anti-cyclical investment)
·       Improved energy system reliability or security/resilience of electricity supply
·       Additional income stream for farmers (diversification); rural development benefits
·       Option to reallocate to better use the massive and unaccounted for nuclear research
·       Dynamic efficiency gains through smart-grid enabled demand flexibility and response
·       Facilitating retail participation in investment (capital formation by “crowd funding”)
·       Increasing opportunities for creating added value at local level (municipal enterprise)

Social, Ethical, Governance
·       Benefits for rural employment, rural economy, rural development; solar, wind, bioenergy, and much environmentally friendly (small) hydropower is in agricultural and forested regions
·       Improved self-determination and de-risking through low investment cost of self-supply
·       Invigoration of cooperative movement for bottom-up economic development & capital formation
·       Strengthening democracy & local government, by closing local economic loops
·       Improves self-determination  through smart energy management
·       Facilitating participation (access to decision-making), enhancing social & political cohesion
·       Breaking the nuclear industrial-military complex with its stranglehold on too many countries
·       Reducing secrecy, improving accountability, restoring parliamentary oversight of budget spending
·       Increasing accountability and transparency reveals true costs of fossil fuels & nuclear power enforcing both accountability and transparency will strengthen the status of democracy.
·       Reducing legacy costs and risks (as burdens on future generations)
·       Reducing exposure to radiation and toxic trans-Uranium elements (health benefits)
·       Ending nuclear accident risks (with benefits for victims; as builders, owners, operators, host countries are shielded from liability though caps and waivers) > environmental justice
·       Tentative: Controlling energy system helps well-being & happiness, like own house

Foreign affairs and security policy
·       Building of soft power (for Germany, but also Denmark, Costa Rica, and others)
·       Reducing dependence on (fossil) imports (from potentially hostile or fragile) countries
·       Reducing vulnerability to disruptions along supply routes and at trading hubs
·       Domestic renewable energies cannot be denied by enemies (Steinmeier, BETD 2015)
·       Lifting the (fossil) resource curse (from people in autocratic “petro-states”)
·       Fighting the “Dutch disease” (afflicting well governed countries by crowding out talent and investment from important areas of the economy)
·       Reducing risk of nuclear proliferation; costs of sanctions, boycotts etc.
·       Reducing risk of nuclear terrorism (including with “dirty bombs”)

Indirect Benefits
·       Fossil energies are more transport intensive than renewable energies
·       Co-transformation of energy and transport systems
·       Massive reduction in weight, complexity, and moving parts in cars (resource benefits)
·       Electric mobility and smart apps enable car-sharing (fewer cars, much lower emissions, urban benefits on air quality, noise, oil spills, …)
·       Smart energy systems and zero-energy buildings reduce housing costs

Macroeconomic Cost of the Energiewende
With all those benefits – and in spite of some costs and trade-offs that are not discussed here – what is the cost of the Energiewende to the German economy or the end users of electricity?  The answer, in one word, is:  Nothing! 
Or:  Not much more compared to a world without an Energiewende, and maybe even less. 
Or:  Any added cost is too small to measure reliably (against a counterfactual) and is irrelevant.

The evidence is presented in these graphs.  One shows the percentage of GDP expended by end users for electricity as a measure of the total cost of the electricity system as a whole for 1991 to 2014.  The other shows the evolution of world-market and import prices for (fossil) energy imports for 2000 to 2014, scaled and positioned to align the years over both graphs.  The conclusion is: The small increase in total electricity costs in Germany since 2000 is most likely caused by the rising cost of fossil import.  The Energiewende is reducing those costs over time and will make Germany‘s economy more competitive.

Future of Humanity
The Energiewende enables a global energy transformation, perhaps fast enough to limit global over­heating to 1.5°C.  It is economically self-sustaining, would be self-accelerating if the German govern­ment would not legislate to slow it, and is internationally self-replicating.  The downward cost curves for renew­ables, storage, energy efficiency and smart-grid technologies contrast with flat to rising cost curves for fossil energy extraction and processing, and the rising costs of nuclear energy.  The energy trans­form­ation is a runaway success, so its co-benefits will be replicated and multiplied.  The ultimate benefit may be continued human life on Earth in a civilisation that is peaceful, prosperous, and sustainable.