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About Will Dubitsky

Will Dubitsky worked for the Government of Canada on sustainable development policies, legislation, programs and clean tech innovation projects/consortia. He lives in Quebec. View all posts by Will Dubitsky →

Why coal can’t make America great again

September 11, 2017Coal, Energy and ResourcesfeaturedWill Dubitsky

Donald Trump gets fired up about coal in West Virginia

Among the ways Donald Trump vows to “make America great again” is reviving the US coal industry. That’s a stretch considering the plight coal faces today in the US.

The combined value of the top four US coal companies fell from $33 billion in 2011 to $150 million in 2015. Coal’s declining role in the US power supply saw it go from 50% in 2006 to 42% in 2011, to 30% in 2016. US coal production dropped 19% in 2016 alone. In 2015, between 11 gigawatts (GW) and 14 GW of US coal capacity went off line.

The US coal industry took some comfort in the fact that 2017 first quarter data marked a sharp improvement over the disastrous year of 2016, with a 14.5% increase in weekly production and a 58% increase in exports. But this is just a blip in the industry’s decline since 2006. All the long-term US and global indicators suggest US coal will continue its decline.

Renewables eat into coal’s energy market share

A solar ev charging station in San Francisco

Forty-nine percent of the US coal market slump is attributable to natural gas and 18% to the growth of the renewables market. Moreover, the renewables market now represents the largest share of new US electrical capacity installations, with 68% of new power capacity added in 2015 attributable to renewable energy sources. This latter trend can only increase, with renewables having reached a point where they are among the least expensive sources of supply.

Another 26% coal’s decline is related to lower than expected electricity demand and another 3- 5% to environmental regulations. Yet in Trump’s view, regulations have been a key killer of the coal industry. Trump has got it all wrong.

As if that’s not bad enough, the least expensive, least costly and easiest to mine US coal sources have been fully exploited, making a return to the good old cheap coal days unlikely.

For many US utilities, investments in coal-fired plants no longer make economic sense. The same is true for railroad companies hauling coal. The US railroad firm CSX announced it will no longer be buying new locomotives to haul coal.

Opening public lands to coal

Nevertheless, Trump thinks he has come up with the rabbit out of the hat solution for the coal industry. Specifically, he wants to make federal lands available to the fossil fuel sector. This is a major policy thrust since 28% of the land mass in the US, 643 million acres, is federally owned and 40% of coal mined in the US is extracted from federal lands.

Within these public lands is the Powder River Basin, in southeast Montana and northeast Wyoming, one of the most productive coal mining regions in the US.

Conscious of environmental implications, the Obama administration had imposed a moratorium on new coal leases on public lands and adopted a ruling to eventually raise the royalties for existing coal mines on these lands. In the interim, a three-year study on the industry’s environmental impacts was initiated.

But given the decline in domestic demand for coal, the Obama administration ban on coal on federal lands seemed, for some, to be a restriction on coal exports.

US coal industry depends on exports

With respect to foreign markets, the US coal industry is dependent on exports to China and India. This spells more bad news for the US coal industry, considering China’s war on coal, solar coming in cheaper than coal in India and India’s targets for renewables. To make matters worse, there is a lot of competition from other global suppliers of coal to Asian markets.

China’s war on coal

China's emissions drop, global cleantech boom are grounds for optimism on climate change — Chinese solar company Suntech at the Bird’s Nest stadium

In effect, half of the US coal industry’s revenue decline in the last 5 years is associated with the reduction of US coal exports to China.

China, the world’s largest energy consumer, represents half of the world’s coal demand and nearly half of global coal production. With nearly 100% of its new electrical generation capacity associated with renewables, China saw its coal consumption slump for a third year in a row in 2016 with a 7.9% decline in 2016, a 3.7% decline in 2015 and 2.9% in 2014. This slump will continue given China’s commitment to invest a whopping $361 billion in renewables between 2016 and 2020.

The order of magnitude of China’s war on coal entails a 10% decline in the percentage of the nation’s electricity sourced from coal in just 4 years, from accounting for 80% of 2011 total electricity consumed to 70% in 2015. By 2025, coal is expected to represent just 55% of China’s electricity mix.

Concurrently, China is cancelling coal power plants, both planned and already under construction. In January 2017, China announced it had suspended plants totalling 120 Gigawatts of production. This is part of a continuing trend. China announced the suspension of 30 coal plants in 2016, representing 17 GW.

China is also cutting its domestic supply of coal with a commitment to close 1000 coal mines in 2016 and not open any new ones in the subsequent three years.

Beijing is equally impressive in its war on coal, having planned to cut 30% of its coal consumption in 2017 and having already pledged to completely ban all coal use by 2020. The city had previously announced it would close its four major coal-fired plants in 2016.

US coal exports to India wane

As for India, a combination of cost declines for renewables and new government policies is shifting the electrical power landscape of the world’s other large coal consumer.

At an auction in May 2017, the state-run Solar Energy Corporation of India obtained a record low tariff of 2.44 Rupees (Rs) per kilowatt-hour (kWh) for Rajasthan’s Bhadla solar park, a 10,000-hectare facility on the edge of the Thar desert. This places solar energy at a considerably lower price than coal-fired plants. India’s largest power company, NTCP, sells electricity from its coal facilities at Rs3.20 per kWh.

At the policy level, India has targets for 100 GW of solar and 75 GW of wind installed capacities by 2022. But these goals may be too modest. In June 2017, Prime Minister Narendra Modi announced that its 40% renewables target for 2030 may be surpassed by 2027. This could mean no new coal plants being built in India until after 2022.

Recent data indicates that India is on track to meet its policy objectives. Between March 2014 and March 2017, India increased its solar capacity from 2.6 GW to 10 GW.

The impact on the country’s coal sector is already being felt. In June 2017, Coal India, the world’s largest coal producer – representing 82% of the country’s coal – announced the closure of 37 mines. Around the same period, the Indian states of Gujarat, Odisha and Uttar Pradesh cancelled thermal energy plants.

This is quite the energy transition as 60% of the country’s current electrical production stems from coal sources.

In parallel, the India experienced a 21.7% decline in coal imports in January 2017.

The decline of the global coal sector

Collectively, the impact of the decline of coal consumption in the US and China is a projected stagnation of global coal demand for the next 5 years.

Globally, a record breaking 64 GW of coal plant retirements occurred over 2015 and 2016. Global coal production fell the equivalent of 231 million tons of oil in 2016 alone.

US coal industry job numbers confirm domestic and export market trends. The industry went from 800,000 jobs in in the 1920s, to 130,000 in 2011 to a little over 70,000 today.

Yet, Richard Reavey, chief lobbyist for Cloud Peak Energy, a US coal enterprise with major investments in the Powder River Basin, described the Obama ban on new coal mining on public lands as a policy to restrict access to satisfying market demand.

Fittingly, the Trump administration repealed the moratorium on new coal leases on federal lands and froze the raising of royalties on these lands.

The 2017 spike in industry numbers may give the Trump administration the illusion (among many) that he is succeeding in reviving the US coal industry. But the long-term trends will continue to paint a different picture.

As Big Oil tanks, why is Canada so slow to adapt?

July 27, 2017Canada, Energy and Resources, Oil&Gas, Politics, RenewablesfeaturedWill Dubitsky

Alberta Premier Rachel Notley and Canadian PM Justin Trudeau (Photo: Premier of Alberta/Flickr)

The business model of Big Oil has already started to collapse. The model is premised on strong growth to fuel high prices and render economically viable the exploitation of expensive-to-develop, non-conventional fossil fuels, including the tar sands and shale oil and gas.

Persistent low oil prices are having a devastating impact on global investments in oil discoveries, which have dropped to an all-time low of 2.4 billion barrels in 2016 , a substantive decline from the 9 billion barrel annual average of the last 15 years.

Sanctioned oil reserves – those identified for new development – dropped to 4.7 billion barrels in 2016, a 30% drop from 2015. But that doesn’t tell the whole story because the numbers of “new development” projects receiving a final investment decision fell to their lowest level since the 1940’s. Total oil output was 85 million barrels/day (MB/d) with 69 MB/d coming from conventional sources, 6.6 MB/d from shale wells and the rest from tar sands and heavy oil.

Added to this portrait, there is currently a market glut due, in part, to US shale oil supplies, combined with existing tar sands production.

Under these circumstances, BP anticipates stranded assets.

Stranded in Alberta

tarsands industry-kris krüg — Twilight in Fort McMurray (Photo: Kris Krüg)

Naturally, the first projects to be stranded are those extracting expensive resources – the Alberta tar sands being high on that list. The cost of extracting oil from the tar sands is worse than for any other resource. It takes one unit of natural gas to produce less than three units of oil. Capital investment in the oil sands fell about 30% in both 2015 and 2016. The decline is estimated to be another 11% for 2017.

In Fall 2016, Exxon made its biggest reserve revision in its history, cutting 19% from its reported reserves, most of the cut – 3.6 billion barrels – from its Kearl, Alberta oil sands project. This is in addition to a re-assessment of 1 billion barrels of other North American reserves. In keeping with the collapse of the high growth/high price business model, other oil companies, Chevron and Shell included, have lowered their valuations of reserves by more than $50 billion since 2014.

Shell, ConocoPhillips and Marathon Oil Corporation have also pulled back on their tar sands investments. For Statoil, it has been a total withdrawal from the sands at a loss of $500-$550 million.

Especially significant, Koch Industries, formerly the third largest leaseholder in the tar sands and a strong champion of Keystone XL to bring tar sands bitumen to Koch refineries in Texas, has indicated it’s pulling out of its $800 million Muskwa region lease in Alberta. This, after a 50 years of Koch Industries involvement in the tar sands.

BP and Chevron are considering getting out of the tar sands business as well.

So far, 17 tar sands projects have been suspended or terminated and no major new projects are planned.

Equally important, Canada’s bitumen is a lower quality oil, which only the US Gulf Coast refineries are capable of handling. Then, like compounded interest, the high viscosity of tar sands oil renders the cost of transportation higher than conventional oil. This is because condensates must be added to improve the viscosity. The result is Canada’s bitumen acquires a lower price in European and Asian markets.

Finally, economics aside, there aren’t any environmentally friendly options for exploiting the tar sands region, an area of 140,000 square kilometres, equivalent to the size of Florida. The process to get a barrel of oil out of the ground is both energy-intensive and harmful to the environment. One either has to bake the oil to the top or use open pit mining techniques. Due to these procedures, there are 170 square kilometres metres of toxic lakes in Alberta.

Higher on the totem pole of environmental considerations, the tar sands are the greatest single source of current and potential emissions in Canada. These factors mean Canada cannot meet its 2030 GHG reduction targets with a tar sands “business as usual” formula. Presently, the petroleum sector represents 25% of Canada’s GHGs.

Trudeau stalls progress

Despite all this, the Trudeau government continues to adhere to the industry’s objectives to double tar sands production to 4.3 MB/d by 2030.

But scientists are warning us that to limit the warming of the planet to 2° Centigrade, the carbon budget that the planet will have left is 800 gigatonnes (Gt). However, the existing and likely-to-be-exploited reserves of fossil fuels represent 15,000 Gt. This means that Canada has a large role to play by in keeping tar sands reserves in the ground.

Clean Transportation – beginning of end for Big Oil

The transportation sector represents 55% of the global demand for oil. Consequently, even a modest penetration of the vehicle market would have a major impact on the supply-demand portrait of the petroleum industry.

Volvo’s first fully-electric car is due to arrive in 2019

According to Bloomberg New Energy Finance, about 120 electric vehicle models will be on the market by 2020. Case in point, beginning 2019, all Volvo models will be either hybrids or fully electric vehicles. Five new Volvo all-electric models will be introduced between 2019 and 2021. Other European and Asian vehicle manufactures are not far behind.

Then there is China, which is destined to be the leader in the clean transportation revolution, thereby keeping the pressure on the rest of the world – the Trump administration included – to maintain or accelerate the shift to zero and low-emission vehicles.

Not only has China legislated a 5 L/100km overall fleet corporate average fuel economy (CAFE) target for 2020 – the average fuel economy of each automaker based on its sales for the year in question – but it also has the world’s most aggressive legislation on electric vehicle sales. China mandates that 12% of automakers’ sales in 2020 must be electric, with interim regulations set at 8% for 2018 and 10% for 2019. These regulations apply to foreign and domestic manufacturers alike.

By comparison, the US CAFE standard for 2025, and the Canadian clone target, is 4.3L/100km for cars and 5.9L/100km for light duty trucks, as per the decision of the former Obama administration. The term “light duty trucks” includes the highly popular SUVs, which represent approximately 60% of automakers’ new vehicle sales in Canada.

Of course, the unpredictable Trump administration may weaken the 2022-2025 CAFE legislation, or give them the total axe. But the good news is that 14 US states are prepared to take the matter to the courts should President Trump decide to do so.

Moreover, California and 9 other US states, plus Quebec, have legislation requiring that 15.4% of each manufacturer’s sales be zero and low-emission vehicles by 2025. This would apply to electric vehicles and plug-in hybrids.

The global picture also includes the fact that European Union emission standards are considerably more stringent than those of the US.

This leaves little wiggle room for the North American automakers to breath a Trump-related sigh of relief on the pace of the shift to clean transportation. This assumes that North American manufacturers want to be competitive in the global economy. Governments shouldn’t have to bail them out a second time.

Methane & Pipelines: Canada forgets Paris

Trudeau’s pipeline dreams cannot be achieved with Big Oil pulling out of the more expensive-to-exploit projects and the inevitable shift to clean transportation beginning around 2020, when electric vehicles will become competitively priced.

More important, Trudeau’s pipeline dreams are incompatible with the Paris Accord and Trudeau’s own modest targets for a 30% GHG reduction relative to 2005, by 2030.

Trudeau also sidesteps the challenges associated with the global carbon budget by having postponed the required reductions of methane emissions to 2023. Trudeau approved the Pacific Northwest LNG facility, whose proponent recently pulled the plug due to low global LNG prices. But with his government’s continued support for LNG development, we cannot expect to reduce methane emissions by 40% to 45% by 2025, relative to 2012 levels. In other words, Trudeau had taken advantage of Trump pulling out of the Canada-US methane agreement that would have the two countries begin reducing methane emissions in 2020.

Trudeau may have been too quick on the methane trigger though, since a US Court of Appeals in Washington DC has ruled that the Trump administration has overstepped its authority in suspending the rules on methane emission reductions.

Overall, between 2005 and 2015, Canada reduced its emissions by just 2.2%, which indicates it will be impossible to achieve a 17% GHG reduction by 2020, something that is necessary in order to meet Trudeau’s 2030 target.

Consequently, it is high time that the Government of Canada and the provinces start thinking of economic development and the green economy as synonymous…as opposed to the token gestures of the 2016-17 Budget of the Government of Canada.

No wonder Shell and Norway’s Statoil are already becoming diversified energy companies, with a new emphasis on clean technologies. If only Trudeau would apply that thinking to Canada.

Note to Justin: Pipelines don’t help transition to green economy

February 13, 2017Canada, Energy and Resources, Oil&Gas, Pipelines and Supertankers, Politics, RenewablesfeaturedWill Dubitsky

When Justin Trudeau talks of oil pipeline projects as part of an energy transition, what exactly is he talking about?

That we will be on the path to reducing our dependency on fossil fuels by increasing our oil dependency in the short term? And that by immaculate conception we will reduce these very same dependencies over the long term? Supposedly, we will switch to a green economy sometime between now and when we are all dead, with the help of Adam Smith’s “invisible hand”.

Green is the future for jobs

When the Trudeau government repeatedly indicates we can grow the economy while protecting the environment, it knows full well that it is reinforcing the myth that the resource economy is about economic development and protecting the environment represents a cost. Journalists and most of the general public, who know nothing about green economics, can identify with this myth. This, despite the fact that the green economy offers better economic development models than the traditional resource economy model in terms of job creation.

If Trudeau was serious about working on a transition now, he could pursue his stated inclinations on the international scene to re-direct Canadian subsidies for the fossil fuel industry. For example, he could encourage, among other things, the diversification of the Alberta economy, and the Western Canadian economy in general, to join the global migration to the high-job creation, high-growth, green economy.

Corporate welfare for fossil fuel sector

The International Monetary Fund has estimated that the direct and indirect subsidies for Canadian fossil fuels work out to $46 Billion/year in US 2015 dollars. Reallocating these subsidies to help Western Canada catch up in the migration to the green economy would offer a more sound path to the country’s future prosperity

The pipeline capacity numbers speak for themselves – namely that we are headed in the wrong direction. The Kinder Morgan Trans Mountain project would increase the capacity of that pipeline from 300,000 barrels/day to 890,000; Enbridge Line # 3 would be doubled to 760,000 barrels/day and Keystone XL is set for Canadian and US approvals to carry 830,000 barrels/day. Energy East has not as of yet been approved, but Trudeau has claimed that opposition to the 1.1 million barrel/day Energy East pipeline is not based on science.

Stars aligned for green economy

Science is telling us that to avoid catastrophic climate change, 80% of known fossil fuel reserves must remain in the ground. The 100 megatonne ceiling that Trudeau likes to brag about as an example of putting limits on tar sands development will increase tar sands emissions by 40%.

The time is ripe for beginning the transition because solar and wind have come down so far in cost that they are often cheaper than fossil fuels. China, the world’s largest energy consumer, has figured this out and continues to set the pace for the rest of the planet with a $361 Billion commitment to renewables in its 5 year plan for 2016 to 2020.

Shells leads way diversifying into clean tech

Somehow, it is the oil giants themselves who have come to the realization that they will have to diversify if they are to avoid being left with large volumes of “stranded assets.” Fitch Ratings have gone so far as to forewarn that the oil companies will have difficulty gaining access to capital if they do not diversify into renewables.

Shell gets it! Shell has successfully won a bid for the 630 Megawatt Borssele 3&4 zone offshore wind project off the coast of the Netherlands. Shell’s chief energy advisor claimed “the penny has now dropped that this is the new business space.” Thus Shell will be more active in offshore wind in 2017, currently eying offshore tenders in Germany and the UK. Shell is also planning to divest from the tar sands. Norway’s Statoil has already done it.

France’s Total has ambitions to be a top-three solar player within 20 years after taking over battery maker Saft and having bought out a majority share in SunPower.

Dong of Denmark is divesting from petroleum and has become the world leading investor in offshore wind with 4.4 GW of offshore wind projects presently under construction off Europe’s coasts.

Cleaner cars en route

This brings us to the matter of the transition in the transportation sector. At this point, the US automakers, such as the CEO of Ford, Mark Fields, are gearing up to tell Donald Trump that the current US automobile fuel economy standards – which incrementally become more stringent through to 2025 – will cost US jobs and raise the average cost of vehicles. But the rest of the developed world will continue to require that the industry dramatically reduce its emissions.

A Morgan Stanley report projects that electric car sales will represent 10% to 15% of vehicle sales by 2025. This is less than Volkswagen’s projection of 20% to 25% of sales for the 2020 to 2025 period but nevertheless reinforces the growing consensus that the tipping point favouring electric vehicles will come in the 2020-25 period.

In effect, Fields is conveying half of the truth. That is, the vehicle manufacturers are investing in getting more efficiency out of the internal combustion engine, something which adds to the manufacturer’s costs. But the other half of the truth is that they will reach a point where investing in electric vehicles will be the more cost effective way to reduce vehicle emissions. This is what can be appropriately called a transition, as opposed to the Trudeau version of the word, which calls for more petroleum production.

No business case for new pipelines

Stanford University’s Tony Seba predicts that the falling costs of electric vehicle technologies will contribute to oil becoming redundant by 2030. That translates into a too-short life span for tar sands pipelines to be an acceptable economic proposition.

Further on the Fields argument on the cost of change, innovation should be regarded as a normal cost of doing business because the alternative is that of no improvements and being outclassed by one’s competitors.

Improved fuel economy a good investment

The US Alliance of Automobile Manufacturers laments about the cost of improved fuel economy. It lies.

The increasing cost of new vehicles has little to do with fuel efficiency improvements and more to do with consumers buying more fully-equipped vehicles for both comfort and entertainment; the shift away from cars to the high-profit margin light duty trucks and SUVs in particular; and automakers’ increasing pursuit of the higher end luxury market.

The reality is that Canada can support a more aggressive transition to zero and low-emission vehicles with standards more stringent than those of the US federal government. In doing so, the Government of Canada could join US states and the Government of Quebec, all of which have taken a different path than that of the US federal government.

Enough of Trudeau’s greenwashing

We could agree with Trudeau’s greenwashing line that we need to engage in a transition and that we can develop the economy while protecting the environment. But the transition needs to begin now to guarantee the economy of tomorrow. To do this we need a green economic development model.

Despite Trump & Trudeau’s pipeline fetish, green economy will keep booming

January 7, 2017Energy and Resources, Oil&Gas, Pipelines and Supertankers, RenewablesfeaturedWill Dubitsky

US President-Elect Trump (Flickr/Gage Skidmore) and Canadian PM Trudeau (Flickr/Canada 2020) are both big on pipelines

Forces at play suggest there will continue to be significant advancements in the global migration to a green economy. Trudeau and Trump are rowing against the current.

Despite Trudeau’s continued focus on tar sands extraction and limiting provincial action on climate change; despite Trump’s obsession with fossil fuels – coal in particular – the US and Canada will be swept up in these global green economy currents.

Moreover, these global forces strengthen the case that the proposed tar sands pipelines – Kinder Morgan, Energy East and Keystone XL in particular – are redundant, superfluous or pipelines to nowhere.

Trudeau stuck on resource economy

One can be understandably be pessimistic with Trump’s appointment of climate change deniers to his Cabinet. In Canada, there are also grounds for pessimism given Trudeau’s recent track record, including:

Approving or backing the Kinder Morgan, Line 3 and Keystone XL pipelines, plus two BC LNG plants – Petronas and Woodfibre – and BC’s Site C dam

His favourable view on the Energy East pipeline, to the effect that he said that opposition to this pipeline is not based on science

A razor-thin climate plan, stemming from the agreement with most of the provinces

Backing Alberta’s 100 megatonne/year lid on tar sands emissions, which would leave wiggle room to raise annual tar sands-related emissions by 40%

This means it would be very difficult to meet even the Conservative GHG reduction target, one now adopted by the Liberals and calling for a measly 30% yearly GHG reduction in 2030 relative to 2005 levels

His heavy reliance on carbon pricing, despite the fact that, as a stand-alone measure, this is not likely to be very effective – especially with low oil prices and the low carbon price proposed

Confirming in his 2016-17 Budget the National Energy Board’s (NEB) role for environmental impact assessments for pipelines

His plan to modernize the NEB subsequent to a 3 year-long process entailing advice from a panel of 5 people, 3 of whom are close to the oil and gas industry

On the issue of over-relying on carbon pricing, two provinces come to mind. First, BC has a $30/tonne carbon tax, but the government is quite comfortable with the Petronas-backed Pacific Northwest LNG facility and the $6 Billion Pacific Trails gas pipeline to connect to BC’s northeast shale gas to the LNG facility. This project alone would raise BC’s emissions by 6.5 to 8.7 megatonnes/year or an 8.5% increase in GHGs/year.

A second case in point is Quebec. Despite its cap and trade system, it went ahead with new legislation to facilitate the exploitation of fossil fuels in the province and $450 million in public subsidies for a cement facility in Port-Daniel, which would become one of the greatest sources of emissions in the province at 1.7 million tonnes of CO2 equivalent/year.

The current Quebec government is also favourable on Energy East.

And yet…renewables are now cheaper than coal

Obama-gets-tough-on-coal-plant-emissions-with-30-percent-reduction — Outgoing President Obama visiting Copper Mountain solar plant in 2012 (Photo: Sempra U.S. Gas & Power)

Let’s take a look at the emerging energy landscape in the US.

Trump’s rhetoric aside, the falling cost of renewables will make it hard for Trump to give full priority to fossil fuels in the electricity sector. Since 2009 in the US, the cost of solar has been cut by nearly half and wind has fallen by two thirds. Solar and wind installations are now cheaper than coal in many parts of the US. This trend is exemplified by the fact that 99% of new US generation capacity in the first quarter of 2016 was represented by renewables, 64% from solar. For the year 2016, renewables will likely account for two thirds of new capacity.

As a result, there is now 20 gigawatts (GW) of wind capacity under construction in the US, or in an advanced development stage, which will ultimately raise the US total wind capacity beyond its current 75 GW. What Trump will not be able to ignore are the 88,000 jobs in the US wind sector, especially the 21,000 jobs in US wind tech manufacturing.

As for solar, it is poised to shake up global markets as unsubsidized solar is beginning to outcompete coal and is coming in below the cost of wind projects.

This reality undermines Trump’s ambitions for revitalizing the industry with “clean coal.” Not only has the popularity of renewables and natural gas resulted in the producers of 45% of the country’s coal output having filed for bankruptcy, but also the least expensive, least costly and easiest to mine US coal sources have been fully exploited, making a return to the good old, cheap coal days unlikely. Against this backdrop, 11 GW to 14 GW of US coal capacity went offline in 2015.

Further on Trump’s promise to bring back coal jobs, these new economics had the US solar sector adding more jobs in 2015 than the US oil, gas and pipeline sectors combined.

And despite Trump’s rhetoric, he will not be able to counteract the global implications of China, the world’s largest energy consumer, which continues to shake up global energy economics with its massive investments in renewables and its war on coal. Not only has coal dropped from 80% of China’s electrical generation sources in 2011 to 70% in 2015, but the projections are that by 2025 coal will represent just 55% of China’s electricity mix.

With the 2 principal consumers of coal, China and the US, at the precipice of massive declines in demand for coal, the International Energy Agency is projecting global coal demand to stagnate over the next 5 years.

Also on the global scale, emerging economies are giving priority to solar energy. Auctions in Chile and India have had solar coming in at half the price of coal power. Accordingly, the amount of solar PV added globally is likely to exceed wind capacity additions with as much as 70 GW installed in 2016, compared to 59 GW of wind.

With US coal exports largely dependent on China and India, this all spells more bad news for the US coal industry.

Within the next decade, global clean energy installations will represent more new capacity added than coal and natural gas combined. This green revolution is advancing more quickly in emerging markets, where renewable energy investments were greater in 2015, at $154.1 Billion, than in OECD countries, at $153.7 Billion.

Automotive sector shifting fast to electric

But the most significant cause for optimism lies ahead, with the shift towards low and zero-emission vehicles being imminent. This has major implications for future oil demand, since the transportation sector represents 55% of global petroleum demand.

Here, China continues to lead the way. Up from 331,000 electric vehicles sold in the country in 2015, the projection for 2016 is for 400,000 vehicles – giving us every reason to believe China will meet its target to manufacture 2 million eco-vehicles/year by 2020.

European nations are joining the bandwagon. The German federal upper house, the Bundesrat, adopted a motion to ban internal combustion engine vehicles from the new vehicle market after 2030. Meanwhile, Norway has passed legislation to do the same by 2025, and the Netherlands may well join them.

In effect, Norway is leading the pack, as this country is well on its way to achieving its targets, with nearly half of its 2016 new vehicle sales being plug-in hybrids and electric vehicles, up from 28% in 2015.

With respect to the vehicle manufacturers, it is not just that Volkswagen has announced an investment of $11 Billion in a battery manufacturing facility or its projection that 20% to 25% of its sales will be electric during the 2020 to 2025 period. Many vehicle manufacturers are actively preparing for the introduction of low and zero emission vehicles. Ford, Hyundai-Kia, Volkswagen, Mercedes, BMW, Toyota and Volvo, all have ambitious plans for a wide range of electric and plug-in hybrid models by 2020.

Concurrently, the entry of electric trucks into the marketplace will also make a difference.

China’s electric vehicle-leading enterprise, BYD, will soon triple the 400 employees at its e-bus manufacturing facility in California to make trucks, as well as more buses. Canada’s Lion Bus, manufacturer of electric school buses, will be adding class 5, 6, 7 and 8 trucks to its lineup. Mack Trucks is working in collaboration with Wrightspeed to produce an electric garbage truck and Tesla has added trucks to its Master Plan.

In keeping with these considerations, by 2020, the UK will have more charging stations than gasoline stations. In effect, it appears that Shell’s UK arm also sees the writing on the wall in that the company is thinking of introducing charging stations at its service stations. This my happen as early as 2017.

European automakers are also getting into the act. In November, 2016, Daimler, BMW, Ford and the Volkswagen group (the latter includes Audi and Porsche) signed a Memorandum of Understanding to set up a fast Combined Charging System to cover common long distance travel routes in Europe – 400 station locations in all. The development of the network would begin in 2017 and the goal will be to have thousands of fast charging points on the continent by 2020. Other partners/manufacturers would be welcome to join the network. These fast charging stations will offer up to 350 kW of power, compared with Tesla’s fast chargers, which deliver 120-135 kW.

The Combined Charging System will be complemented by Hubject, a cross-provider, cross-border e-Roaming platform that connects 40,000 charge points worldwide. Charging point locations, availability and payments will be possible with the one application. The application is backed by a European consortium that includes Volkswagen, Daimler, BMW and Siemens.

Going one step further, the EU recently approved regulations that all new and renovated homes and apartments must have charging stations in place beginning 2019.

California will be adopting similar requirements to the effect that all new buildings and parking lots must have the wiring and control panels in place to receive charging stations.

Speaking of the US, Chargepoint, a private supplier of charging stations, installed its 30,000th station in August 2016.

On the downside, Trump may weaken or eliminate regulations for the vehicle manufacturers to improve their respective corporate average fuel economies. That said, the global government policy momentum and global private sector competition among the world’s vehicle manufacturers will ensure a progression to low and zero emission vehicles regardless.

Canada and the US will have to change

Currently, the global supply of petroleum on the market exceeds global demand. This is the result of a flattening of demand, combined with an abundance of new supply sources, due in part to the production of US shale oil, together with existing tar sands exploitation.

An internal memo to the federal Deputy Minister of Finance, released to the public in mid-July, 2016, indicated that existing pipeline capacity is sufficient to accommodate tar sands industry needs until 2025.

Not surprisingly, Dinara Millington, Vice-President of the Canadian Energy Research Institute, echoes the end of the era of exponential oil demand growth by pointing out that the decline oil prices is a reflection of the collapse of the traditional supply-demand model. The demand has not materialized to accommodate increased supply in international markets.

To this effect, Exxon is reassessing 3.6 Billion barrels of oil sands reserves and several other oil firms, Chevron and Shell included, have lowered their valuations of reserves by more than $50 Billion since 2014. More recently, Norway’s Statoil announced its withdrawal from tar sands investments at a loss of $500-550 million.

Also a liability for Canada’s tar sands, Canada’s bitumen is a lower quality oil which only US Gulf Coast refineries are capable of handling. The result is Canada’s bitumen will acquire a lower price in European and Asian markets than conventional supplies.

Trudeau on wrong track

Justin Trudeau and Christy Clark (Province of BC/Flickr CC) — Justin Trudeau has backed BC Premier Christy Clark’s LNG vision (Province of BC/Flickr CC)

The pending decline in the appetite of the transportation sector for petroleum combined with the unstoppable momentum of the global green economy, indicate that Canada, with its big push on pipelines, is on the wrong track.

The Trudeau’s continued focus on pipelines and resource economy means it is unlikely that Canada will achieve even the poor Conservative GHG reduction target it has adopted. This is sad since there are 6 to 8 times more jobs per government investment unit created by investments in green jobs than from funds sunk into the traditional resource sectors.

Case in point: Quebec’s electric vehicle sector is not on the federal radar screen. (This sector includes 2 battery manufacturers; work underway on the development of a super battery; 2 charging station manufacturers; a developer of an electric motor wheel; an electric school bus manufacturer which plans on branching out into truck classes 5 to 8; a manufacturer of an urban transit electric bus soon to be included in a pilot project in Montreal; and several research facilities)

Whether they like it or not, the above facts mean that Trudeau and Trump will soon be forced to adjust their respective mindsets to address the emerging global green economy.

Electric Vehicles are set to take off…so why is Trudeau still pushing pipelines?

August 31, 2016Energy and Resources, Oil&Gas, Pipelines and Supertankers, Renewables, Urban & TransportfeaturedWill Dubitsky

Tesla Model 3 at March 2016 unveiling (Steve Jurvetson/Flickr)

In my previous March 2016 article “Pipelines to Nowhere“, I made the point that the proposed Canadian pipelines are about increasing the international supply of petroleum when all the signs are that demand fossil fuels are levelling off over the longer term.

For example, recent data showed renewables represented 99% of new US electrical generation capacity added in Q1 of 2016, up from the 68% in 2015 referred to in my March story, leaving one to believe that further progress has been made since year 2015, when 90% of global new capacity added was associated with renewables.

That said, it is the incredible, emerging trends in the transportation sector – currently nearly 100% dependent on petroleum – that are on the verge of severing the world from its heavy addiction to oil. On that note, the majority of car companies have plans for bringing in a wide array of plug-in hybrid and electric vehicles by 2020 and by that time an electric vehicle would be competitively priced versus a conventional internal combustion engine vehicle.

Big car makers get serious about EVs

Notwithstanding this progress, the transportation times appear to be changing faster than indicated since my March article was published. A couple of significant examples confirm this trend, including:

1) Volkswagen recently announced it will invest $11B in a battery manufacturing facility and expects 20% to 25% of its sales – 2 to 3 million vehicles/year – to be electric vehicles by 2025

2) Tesla has $1000 deposits for 370,000 Model 3 vehicles that won’t be delivered until 2017

3) A projection coming out of the UK suggests that by 2020 there will be more charging stations in the UK than gasoline stations

4) Porsche is hiring 1400 people for the development and deployment of its new electric sports car

5) Mack, Tesla and China’s BYD have made it known they will be bringing electric trucks into the marketplace, with the BYD truck to be assembled in Lancaster, California – the same place BYD manufactures electric buses – and the two types of vehicles will share many components.

Outpacing the aforementioned examples, Norway has increased its sales of plug-in hybrids and electric vehicles from 25% of the total new vehicles sold in 2015 to 28% in the first half of 2016.

Germany, Netherlands could ban gas cars

Against this backdrop, the Netherlands and Germany are now mulling over banning gasoline cars from new vehicle offerings, beginning in 2025. Then there is the news from Australia that it is placing fast-charging stations around the country to sell electricity at the same price as that from one’s home plug outlet.

And as I indicated in “Pipelines to Nowhere“, China and California have myriad policies to make zero emission vehicles (ZEVs) the shape of the future, with China having a target to manufacture 2 million eco-vehicles/year by 2020 and California targeting 1.5 million ZEVs on its roads by 2025.

Resistance is futile

So why are electric vehicles only 1% of total vehicle sales now and how can so much happen by the end of the decade to drive such transformative change?

First, there are the dealers. According to a survey conducted on behalf of the US Sierra Club, dealerships are doing everything imaginable to discourage potential clients from purchasing electric vehicles by not keeping them in-stock, keeping them not charged for a test drive and salespeople ill-informed on what one needs to know about electric vehicles. The salespeople much prefer to push the high-volume, high-profit margin SUVs. Funny coincidence, I experienced a similar scenario when I tried to purchase a hybrid in the 2008 model year.

Then there is the matter or the US Corporate Average Fuel Economy (CAFE) standards cloned in Canada, which set sales-weighted average fuel consumption targets for each vehicle size category, as well as sales-weighted targets for the overall vehicle sales of each manufacturer. The perverse side of this concept is such that if a manufacturer has sales heavily weighted in favour of large, high-energy-consuming vehicles, its overall sales fuel economy target becomes more lenient, otherwise known as “compliance flexibility.” The manufacturers are now exploiting this loophole to the limit, even to a point of making some models bigger to be subject to less stringent fuel economy standards.

In theory, the automakers have to make up for failing to meet overall sales-weighted fuel consumption targets in later years, leading up to 2025. But the automakers are already gearing up for sob stories to request more leniency on the part of the US government, with the excuse that they have to accommodate unanticipated client demand for the vehicles with the high profit margins, the SUVs.

Here in Canada, the Government of Quebec has introduced Bill 104 to duplicate the stipulations of California and 9 other states, on the percentage of zero emission vehicles (ZEVs) and hybrids manufacturers must sell from 2018 to 2025 – that percentage incrementally increasing each model year from 3% in 2018 to 15.5% in 2025. The Quebec dealers and the manufacturers are putting up a fight that essentially says that: a) the policy won’t work because the public must be free to choose and the demand is not there for ZEVs and hybrids; and b) what is good enough for California and 9 other US states is not good enough for Quebec.

Meanwhile survey after survey has shown that electric vehicles are favoured by the public, and 2020 is the tipping point when ZEVs become competitive.

The City of Montreal has acknowledged this public receptivity in that it will shortly adopt legislation requiring car sharing services to incrementally offer greater percentages of electric vehicles, beginning in 2018 and reaching 100% electric by 2020!

Trudeau Govt failing Canada on climate change

Meanwhile, the federal Liberal Budget for 2016-17 only allots $56 million over two years for cleaner transportation, with a large portion of these funds to be invested in developing standards and regulations – I thought the latter expenses were part of government operating costs! And the Trudeau government has already reneged on its promise to invest in charging stations and have a government vehicle procurement plan favouring ZEVs.

The current government has its mind set on pipelines for which there will not be a corresponding increase in consumption to justify increasing the supply. Plus, Canada can’t meet the Conservative GHG reduction targets should these pipelines be built.

Justin Trudeau speaks at the Paris climate talks - flanked by Canadian premiers (Province of BC/Flickr) — Justin Trudeau speaks at the Paris climate talks – flanked by Canadian premiers (Province of BC/Flickr)

But wait, you say. The Liberals have said they are going to overhaul the environmental review process. The context is a reaction to a Federal Court decision to annul the National Energy Board’s recommendation for approval of the Northern Gateway pipeline and a desperate attempt to avoid a repeat overturning of the NEB approval of the Kinder Morgan TransMountain Pipeline to triple its capacity from 300,000 to 890,000 barrels/day. Trudeau’s support for the latter pipeline dates back to the 2015 election campaign.

Taking a closer look at this Trudeau concern about the implications of the aforementioned Federal Court decision for the Kinder Morgan project, Trudeau appointed a three-person panel to advise the government on the NEB approval of the TransMountain project. One of the three panelists is former Tsawwassen First Nation Chief Kim Baird, who participated in an executive exchange program with Kinder Morgan. Ms. Baird is now a registered lobbyist for liquefied natural gas projects in BC. Hardly the profile of a credible panelist to advise the Trudeau government. The President of the Union of BC Indian Chiefs, Stewart Philip, has referred to this panel appointment as a conflict of interest.

More conflicts of interest

Now, Trudeau has an even bigger NEB conflict of interest on his plate. Within the last few days after the August 29, 2016 stillborn start to the Montreal segment of the NEB hearings on Energy East, the hearings were suspended indefinitely in response to two formal requests that two of the three NEB commissioners on Energy East be removed because of a conflict of interest. These two commissioners, Jacques Gauthier and Lyne Mercier, along with the NEB President, Peter Watson, met with former Quebec Premier Jean Charest in January, 2015, while Charest was acting as a consultant for TransCanada.

All Jim Carr, the Minister of Natural Resources Canada, could say in reaction to the latest NEB fiasco is that the NEB needs to be modernized to avoid these conflict of interest situations. This is in keeping with Budget 2016-17, which confirms the NEB’s role evaluating the environmental impacts of pipeline projects.

What should be at the heart of the question of the environmental review process is the Harper government’s decision to put the National Energy Board in charge. Tinkering with the oil-tainted NEB engine is about changing an image and not the substance. Substance would suggest the re-habilitation of the Canadian Environmental Assessment Agency, or some equivalent, to get the job done – properly!

Canada needs solid, clear legislation

Canada is still operating under the traditional resource economy model while its competitors are moving into fast-forward on the green economy. This is the context for Budget 2016-17 offering less for clean technologies than the budgets of previous Liberal governments.

There is a moral or common thread to this piece. First, when the government objectives are clear and well-laid out in policy and legislation, industry will comply. Second, where things are fuzzy, or in the all of the above category, industry will procrastinate though whatever loopholes are made available to them.

Canada needs solid and clear policies and legislation, not meaningless clichés or platforms for “all of the above.”

Trudeau abandons green election promises, lacks real climate plan

May 24, 2016Energy and Resources, Oil&Gas, RenewablesfeaturedWill Dubitsky

Justin Trudeau talking a good game at the Global Progress summit (Canada 2020/Flickr)

“Not everything that can be counted counts, and not everything that counts can be counted.” -Albert Einstein

With the recent National Energy Board approval of the Kinder Morgan pipeline and Justin Trudeau’s enthusiastic post-election remarks to the effect that Canada can build pipelines and address climate change concurrently, it is time to take stock of just where the current government is heading us.

Put bluntly, it remains questionable whether Canada can meet the very modest Conservative 2020 GHG reduction target should the Energy East and Kinder Morgan pipelines get the green light. Worse still, the Trudeau Liberals do not have a serious plan on climate change.

Western Canadian regulators band together to reduce pipeline delays — Under Trudeau, several major pipelines are closer to being built

True, Justin’s Liberal government came to power as a champion for addressing climate change – promising to establish a credible environmental assessment process for proposed pipelines, invest in clean tech, and reduce subsidies for fossil fuels. Yet, barely half a year later, it is in full backtrack mode, as the government’s recent budget demonstrates.

Most disheartening, while the green economy is advancing at an incredibly rapid rate in China, Europe and the US, the actions of the Liberal government on increasing the supply of petroleum to international markets and its 2016-17 budget initiatives on climate change will only increase the green economy jobs and growth gap between Canada and its competitors.

Market for fossil fuels disappearing

Consider for a moment that two of the largest markets for fossil fuels are electrical power generation and transportation – the latter nearly 100% dependent on petroleum. The transition to a green economy is well-advanced in the electrical sector, as I discussed in my recent CSC article, “Pipelines to Nowhere“, while the transportation sector is showing signs that a transition is imminent.

Signs of the times

Like a dog hanging on to its bone, the Liberals seem to be oblivious to the clear signs of the beginning of the end of the fossil fuel era. This despite the staggering warning signs. Here are just a few of the biggest ones:

1) 90% of all new global electrical generation capacity in 2015 came from renewables

2) Global emissions have remained flat since 2013

3) China’s coal consumption declined in both 2014 and 2015

4) US coal producers representing 45% of US coal output have gone into bankruptcy

5) 21 countries have experienced economic growth while diminishing their respective emissions since 2000

6) The tipping point when an electric vehicle becomes comparably priced to a conventional one is predicted to occur as early as 2020 – with the overall cost to the consumer being cheaper due to lower fuelling and maintenance costs.

7) The arrival of zero and low-emission vehicles, even under modest market penetration scenarios, will have devastating impacts on demand for petroleum.

8) China is a world-leader, with 331,000 electric vehicles sold in 2015. By 2020, it is expected to manufacture 2 million eco-vehicles/year and have 5 million on the road

9) Ford, Hyundai-Kia, Volkswagen and Volvo all have ambitious plans for a wide range of electric and hybrid models by 2020. Meanwhile, a full 10% of BMW’s North American sales in April 2016 were electric vehicles and 25% of all 2015 new vehicle sales in Norway were electric

10) The Chief Financial Officer of Suncor, Alister Cowan in April 2015 has candidly said that “The years of large, multi-billion projects are probably gone”

11) The Canadian oil and gas sector will see just $17 Billion in revenues for 2016 vs. $30 Billion in project spending (which is already a 62% decline from the previous year)

Despite all of this, the Trudeau government continues to do everything possible to promote Energy East and the recently NEB-recommended Kinder Morgan pipeline, for which the signs suggest that these pipelines may be economically redundant. So many new developments have occurred on this file since my “Pipelines to Nowhere” article was first published in The Common Sense Canadian in March that I’ve done an update to this piece on my blog.

Time to shift fossil fuel subsidies to clean tech

While the Liberal election campaign included a reduction of fossil fuel subsidies, Budget 2016-17 failed to deliver.

An offshore wind installation in Denmark (United Nations Photo/Flickr) — Offshore wind installation (United Nations Photo/Flickr)

With the $46 Billion/year Canadians already spend to subsidize the fossil fuel sector, coupled with the glut of supply on the global market, both the industry and country urgently need to diversify the Western Canadian economy and catch up to the high-growth, high-job-creation clean tech sector. The moment is ripe for the Canadian fossil fuel sector to be a leader in a common, pan-Canadian effort to join the global green economy.

Such diversification of the sector is possible. Just look at Norway’s Statoil, which recently made the former head of its renewable energy division its new CEO and defined clean techs as one of the prime pillars of its overall corporate goals. The company has become a major global investor in clean tech innovation, including a floating offshore wind platform and recently-created venture capital entity to invest in clean tech start-ups.

Trudeau fails to regulate the regulator

Perhaps most disconcerting is the Liberals’ broken election promise to create bonafide environment impact analyses for pipelines.

First, the “interim plan”, for National Energy Board (NEB) hearings on Energy East is “rubber stamped” in Budget 2016-17 by way of involving a mere 3 month prolongation of the hearings and an expanded NEB mandate to take into account emissions. This constitutes insufficient time to put into place research contracts for scientific studies on GHG impacts.

More disturbing is that Budget 2016-17 cements the industry-friendly NEB as the permanent authority for environmental impact analyses concerning pipelines. Unfortunately, the much-dismantled and formerly internationally-respected Canadian Environmental Assessment Agency is relegated to that of an advisory body on environmental impact analyses.

Bonafide environmental impact assessments would entail starting the Energy East and Kinder Morgan review processes over, with the right parameters from the outset, and overseen by a competent team – at least comparable to that of the former Canadian Environmental Assessment Agency.

This is precisely the perspective that should have been adopted with respect to Kinder Morgan. Ditto for the upcoming federal and Government of Quebec hearings on Energy East.

Paying polluters

A tar sands operation in Fort McMurray, Alberta (photo: Chris Krüg) — Tar sands operation in Fort McMurray, Alberta (Chris Krüg)

The 2016-17 Budget’s three-sentence description of the Low Carbon Economy Fund bears a resemblance to the $1B Climate Fund announced by Stéphane Dion just prior to the defeat of the previous Liberal government by the Conservatives. Under the still-born Climate Fund, the greater an entity’s emissions, the more money one could get from the government to reduce one’s emissions. Put another way, that means that the largest emitters, such as oil and gas companies, would be the largest beneficiaries of a “pay the biggest polluters the most dollars fund” – a sharp and perverse contrast with “the biggest polluters pay more model”. While this may make the fossil fuel companies appear to be righteous, it is an inefficient and costly way to reduce emissions.

Clean Tech funds cut

The amounts of funding for clean technologies in 2016-17 are lower when compared with the funding that was available during past Liberal governments – a period when emissions went up.

One example is that of Sustainable Development Technology Canada (SDTC), which had an average allocation of $40 million/year during past Liberal governments, while Budget 2016-17 only provides for $50 million over 5 years.

Another former Liberal government sustainable development program was Technology Early Action Measures, a program complementary to that of SDTC, which had an allocation of $56 million for the period 1999-2001.

Moreover, past Liberal governments offered substantial funding for clean transportation innovation but Budget 2016-17 only calls for $56.9 million over two years, which is to be divided up to cover the development of regulations and standards, including international emission standards for the air, rail and marine sectors. Thus, this money will only cover a handful of clean transportation projects.

This has all the appearances of a shell game.

With Canada’s share of global clean tech markets at just 1.3% while the green economy is advancing at a extraordinary pace, it is clear that Trudeau and his Liberals have a poor sense of priorities aligned with traditional centres of power and money.

Where are the green infrastructure funds?

The “all of the above”, positives-and-negatives modus operandi that is the Liberal trademark, is very prominent in the Liberal plan for infrastructure. While Budget 2016-17 funding to support public transit is a strong positive, Trudeau has let it be known that the provinces and municipalities will define the projects for federal support. In other words, urban sprawl-related highways and bridges will also be eligible for this Santa Claus re-election fund, thereby undermining gains made on reducing GHGs attributable to public transit projects.

Low credibility, contradictions and manipulation

Further to the above weak links in the Trudeau climate plan, consider the following:

1) Trudeau has said that opposition to Keystone XL and Energy East is not based on science

2) Trudeau had praised Alison Redford for her boasting of Canada’s environmental record as a means to warm up the Obama administration to approve Keystone XL

3) The Investor State Dispute Settlement provision of the Trans Pacific Partnership would allow corporations to sue a national government like ours in the event domestic environmental laws impede the maximization of profits. Despite this, cross-country Liberal consultations on the TPP have been primarily with highly restricted audiences, little advance notice and no answering of tough questions.

As progressive Canadians, we must rise above the hype of the Trudeau government on climate, recognize that the Leap Manifesto is out-of-date and needlessly inflammatory, and focus on the urgent requirement for Canada to catch up with its competitors on green economics – the better economic development model, yielding 6 to 8 times more jobs per government investment unit than does the traditional economy.

A combination of solutions

There is no magic solution for achieving climate goals, rather it is like addressing poverty: One needs a combination of measures that collectively contribute to goals pursued. With so many countries ahead of Canada, there is a wealth of examples from other countries to draw upon, such as:

1) A legislative agenda with meaningful penalties for non-compliance

2) Shifting some of the $46B/year in Canadian fossil fuel subsidies to investments in clean tech, training fossil fuel workers for green jobs, and creating a more-diversified and less-vulnerable Western Canadian economy

3) Engaging the Business Development Bank of Canada and other financing arms of the federal government to establish clean technology programs, coupled with a meaningful green bond programs

4) Building networks of research centres for clean technologies that cultivate public-private partnerships, plus a national clean technology integration centre that links clean energy, low carbon buildings and clean transportation – the US National Renewable Energy Laboratory is one great model for this

5) Supporting clean technology product development and manufacturing, including Quebec’s electric vehicle sector

6) Initiatives comparable to those of China and California for encouraging a rapid migration to low and zero emission vehicles

The above is simply brief illustration that a meaningful strategy on climate change and a migration to a green economy is possible if there is a will to do so.

For a more detailed analysis of the myths and realities of the Trudeau government’s energy policies, check out this report.

Pipelines to Nowhere: Energy East, Kinder Morgan make no sense amid global green energy boom, tanking oil market

March 7, 2016Economics, Energy and Resources, Oil&Gas, Pipelines and Supertankers, RenewablesfeaturedWill Dubitsky

Pipelines to Nowhere- Energy East, Kinder Morgan make no sense amid global green energy boom, tanking oil market — Images: Lindsay G/Flickr (left), Minoru Karamatsu/Flickr (right)

Most financial analysts, economists and energy experts would have us believe that the fossil fuel sectors, and the petroleum sector in particular, are in a slump, that this is cyclical, and things will eventually normalize. This is because their “training” is based on the assumption that the future will follow the patterns of the past.

But what if it is the economic paradigm that is changing?

Two of the largest markets for fossil fuels are electrical power generation and transportation – the latter nearly 100% dependent on petroleum. With the former, the transition to a green economy is well-advanced, while in the case of the latter market, the signs are that a transition is imminent.

Renewables surpass fossil fuels with new installations

Since 2013, more than half of the newly added global electrical generation capacity has been associated with the installation of renewables. And in 2015, for the first time ever, more of investments in renewables took place in developing countries than in developed countries – $167 Billion vs. $162 Billion.

As a consequence of this trend, according to the International Energy Agency (IEA), in 2015, an astounding 90% of all global electrical power capacity added was attributable to renewables.

In the US, in 2015, renewables represented 68% of new electrical generation capacity installed.

But no country is changing the energy/economic paradigm more than China, the world’s largest energy consumer. In 2015, nearly 100% of newly installed electrical capacity in China was represented by renewables – attributable to a record of $110.5 Billion in investments for that year.

This has produced an amazing decline in energy-related CO2 in both China and the US and global emissions remaining flat since 2013! What’s more, for the first time in history emissions have declined during a period of economic growth.

China to close 1,000 coal mines as wind, solar soar

China’s total installed capacity for wind farms stood at 145 GW in 2015 and for solar farms at 28 GW in 2014. An incredible total of 30.5 GW on new wind power capacity had been added in 2015. The solar PV sector saw 16.5 GW added in 2015, a world record! For 2020, the projected installed capacities for wind and solar farms stand at up to 200 GW each!

The result is China’s coal use declined for the second year in a row, approximately 3.7%, in 2015, on the heels of a 2.9% decline in 2014. Hence, China has made the spectacular announcement that it will be closing down 1000 coal mines in 2016 and not opening any new coal mines for the next three years (2016-2019).

All this translates into China’s coal generated electricity declining 10 percentage points related to China’s total electricity supply sources since 2011, in just 4 years, from accounting for 80% of total electricity consumed to 70% in 2015.

Clean Transportation: At the edge of transition

With respect to transportation, the indications are that we are at the edge of the transition to clean transportation.

During the first 9 months of 2015, 136,700 electric vehicles were sold in China. As of 2016, 30% of all Government of China purchases of vehicles are to be electric. In parallel, government bodies in Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Pearl River Delta have committed to vehicle procurement targets of 30% electric and hybrid vehicles, as of 2016. In 2015, Beijing restricted new vehicle registrations to electric vehicles and plug-in hybrids; and Shenzhen aimed to have more than 3,000 electric taxis, 5,000 hybrids and 1,000 electric urban transit buses on the road in 2015.

China’s overall clean transportation targets for 2020 are to have 5 million eco-vehicles on the road and a capacity to manufacture 2 million eco-vehicles/year.

Norway, California race ahead with electric vehicles

Meanwhile, in 2015 in Norway, thanks to multiple incentives, 25% of January to August new car sales were electric vehicles.

Not to be outdone, California has a target to have 1.5M zero emission vehicles (ZEVs) on its roads by 2025. It has also established stipulations for automakers that 15.4% of all vehicles sold in the state be ZEVs by 2025. Moreover, it is supporting ZEV innovation and manufacturing and has set goals for 10% of total state government light duty vehicle purchases in 2015 to be ZEVs and 25% by 2025. Finally, it is requiring that all new buildings and parking lots have the electric panel and wiring in place to accommodate electric vehicles.

And while other bus manufacturers are developing electric buses, China’s BYD is selling them, including via its manufacturing plant in Lancaster, California. That plant recently signed a contract with the State of Washington to deliver up to 800 electric buses to that state.

E-buses can cover over 1,100 km in 24 hours

Also on e-buses, there are the Proterra electric buses, manufactured in California and South Carolina. These e-buses can travel over 1,100 kilometres in a 24-hour period with the support quick charging points along a route, at less than 10 minutes/charge. Another option is that of a range extender, allowing for 90 minute charges in a bus depot and, hence, fewer requirements for charges en route. Tests conducted by the National Renewable Energy Laboratory have found these buses to be very efficient and reliable, that is, they live up to the range claims of the manufacturer.

Why fossil fuels won’t be making a comeback

This all brings us back to the following question:

[quote]Is the flattening of demand in fossil fuel markets, and oil in particular, a cyclical thing, or an omen that the energy/economic model is changing? That is, are we in a transition to a green economics?[/quote]

Well, even BP Chief Economist Spencer Dale, UBS – the world’s largest bank – and Governor of the Bank of England Mark Carney have concluded that, with the increasingly aggressive actions on climate by governments all around the globe, the fossil fuel glory era is nearing its end. This means that much of the world’s proven reserves will become stranded assets, or LIABILITIES.

Canada: Still stuck in the Old Economy

Where is Canada in all this? We are already way behind our competitors, rating 56 among 61 nations on a 2016 Global Climate Change Performance Index. Put another way, Canada’s share of global clean tech markets is 1.3% and falling.

To make matters worse, the ultra-conservative International Monetary Fund has estimated that fossil fuel subsidies in Canada in 2015, including indirect subsidies for health and climate change, stood at $46B USD/year.

BC Premier Christy Clark touring Petronas' operations in Malaysia (BC Govt / Flickr CC licence) — BC Premier Christy Clark touring LNG operations in Malaysia (BC Govt / Flickr CC licence)

So we have to ask ourselves, why on earth is Canada and the current federal government so committed to increasing the supply of oil on international markets via Energy East and Kinder Morgan, when all the signs are suggesting that the business model for Big Oil is collapsing? That business model is based on strong growth in demand, which, in turn, engenders high prices and the economic viability for non-conventional energy resources, such as tar sands and shale oil and gas.

Shale oil and gas are included in the discussion here because: 1) shale wells lose around 85% of their productivity in the first three years, thus requiring constant heavy investments in new wells 2) in January, 2015, the US shale sector was running up $200B in debt and 3) current indicators are such that up to half of the US shale companies may soon be facing bankruptcy.

Yet, according to a March 15, 2016 article in Le Devoir by Alexandre Shields, 30% of the Energy East capacity will be used to transport North Dakota shale oil via Canada for export to the US East Coast. This reinforces the premise that Energy East is not economically viable.

Canada missing out on Green Jobs

It is estimated that there are 6 to 8 times more jobs per government unit of investment in green sectors, when compared with government investments in the traditional economy.

In 2014, there were 371,000 jobs and 1.2 million jobs in the German and EU renewables sectors respectively and 3.5 million in EU green sectors at-large.

China, the world’s most aggressive country on the green economy, had 1.9 million jobs in their solar electricity and solar heating/cooling sectors in 2014 and 356,000 in their wind sector.

Seizing the opportunities

But wait a second – federal and provincial governments are not even providing adequate support even when a clean tech sector emerges!

A case in point is that Quebec has a significant critical mass regarding the electric vehicle sector, with two battery manufacturers, two charging station manufacturers, a developer of an electric motor wheel developed in Quebec but manufactured under license in China, and an electric bus under development.

And yet, we learn from Fiat Chrysler Automobile’s CEO, Sergio Marchionne, that he worries about the arrival of electric vehicles because the last bastion that the automakers fully control, from design and manufacturing to final assembly, pertains to the internal combustion engine (ICE) and its powertrain. A shift to electric vehicles would mean this last bastion would become new entry points for outsourcing or outside suppliers.

Reallocating fossil fuel subsidies to green energy

Then there is the matter I alluded to earlier – namely that all Canadians are subsidizing the fossil fuel sectors to the tune of $46B/year in 2015 US dollars.

What we should be asking of the federal and provincial governments concerned, is this: How can fossil subsidies be reallocated to foster diversification of the fossil fuel industries so that clean tech investment, as a percentage of total corporate-specific investments, becomes significant and increasingly so over time?

On this point, Norway’s Statoil is showing the way. Its new CEO is from its renewable energy division; the company recently approved low carbon/renewable technologies as one of its 3 principal thrusts, while Statoil has assigned more ambitious goals for its renewables division. Subsequently, a short while ago, Statoil set up Statoil Energy Ventures to invest in clean tech start-ups.

Dong energy aims for 85% renewables

Another model is this vein is Denmark’s Dong Energy, 60% owned by the Danish Pension Fund, which plans to shift from around 85% of its investments in fossil fuels and 15% in clean energy to the reverse of this ratio by 2040. Dong is the world’s largest investor in offshore wind.

Finally, diversified energy companies headquartered in the West can do more than just develop local infrastructure in their respective regions. Rather, they can become key players in the global market by bringing together clean tech expertise from across Canada. This would include economic diversification, the participation of stakeholders previously not involved in the clean tech, high job creation/growth areas. And often, it means the blending of different fields of expertise that brings about world leadership.

More generally, it is clear that Canada, to be competitive, should be focusing on clean tech at large and not just on clean energy.

Canada at a crossroads

More fundamentally, it time to face the music and recognize that Energy East and Kinder Morgan are white (or, more appropriately, “black”) elephants. This means focusing on how Canada can engage in a fast-forward catch-up with its competitors on the transformation to a different economic model: Green economics.

Roadmap for Canadian transition to green economy

It is in this context that I have assembled a detailed paper on the subject – a roadmap for getting Canada up to speed on the transition to a green economy (read full paper here). This discussion document is based on models from around the globe, adapted and improved upon for “Made in Canada” applications; plus my own Government of Canada employee experience on sustainable development-related experiences in policies, legislation, programs, projects and other initiatives.

What makes this document distinct is this:

While other organizations are emphasizing why we should change and what goals we should pursue, the aforementioned discussion document specifically maps out of HOW TO MAKE THE TRANSITION TO A CANADIAN GREEN ECONOMY. It does so by presenting broad palettes of policy/strategy options, amenable to cherry picking by stakeholders, as per their respective preferences.

No need to reinvent the wheel

Canada need not reinvent the wheel on the green transition because there is so much to learn from the successes and failures of countries far ahead of us and from our own Government of Canada empirical evidence stemming from past climate change action plans.

We don’t need to be stuck with white/black pipeline elephants. Accordingly, I invite anyone interested to have a look at the Roadmap so that we can finally get the dialogue going on how Canada can move forward and fully participate in the high-growth, high-job creation, global green economy.

Canada should put the brakes on misleading, ineffective fuel economy standards

August 30, 2015Urban & TransportfeaturedWill Dubitsky

Photo: Flickr/Scott Molineaux CC licence

For the last several decades, the fuel consumption requirements imposed on vehicle manufacturers in Canada were the same as those applied in the US. The premise of the Conservatives and Liberals alike has always been that Canada has no choice but to emulate the US, because Canada is part of an integrated North American market.

That line of thinking is half right. Canada is part of an integrated North American market but to date, vehicle manufacturers have gotten off easier in Canada than in the US and Canada does have option of more stringent stipulations within the North American framework.

Understanding CAFE

To put the above considerations in context, thus far, what has been the same in Canada as in the US are the obligations that each vehicle manufacturer must comply with corporate average fuel economy (CAFE) standards – standards which each year incrementally decrease the required average fuel consumption of vehicles sold.

These CAFE standards are sales-weighted, which is to say, that a CAFE year-specific goal represents the mandatory minimum average fuel consumption for all vehicles sold by a given manufacturer, in a given country, in a given year. Thus, the greater the proportion of sales associated with high-energy-consuming models, the worse will be a manufacturer’s CAFE and the more difficult it will be for the manufacturer in question to comply with the CAFE standard for that year.

At least, this is the way things stand prior to 2016.

Loopholes open up for car makers

The new US CAFE legislation, which comes into effect for the 2016 to 2025 period, is written in a way that allows a corporate compliance target to be a moving target. That is, should the manufacturer sell a “higher than expected” number of larger (higher fuel consumption) vehicles, that manufacturer would be have the “privilege” of having a higher than desired average fuel consumption compliance target.

Unfortunately, Canada has adopted the above-described new US CAFE formula, while continuing to leave more wiggle room for manufacturers under the Canadian CAFE rules than under its US counterpart. As a result, the Canadian approach risks encouraging the dumping/marketing of the larger vehicles on the Canadian market.

By contrast, there are options for Canada to have more stringent requirements than the US, without any of the constraints associated with the integrated North American market, and remaining consistent with the actions of 8 US states.

Canadian fuel efficiency hugely exaggerated

The fuel consumption figures used to determine a manufacturer’s compliance or non-compliance with CAFE targets are not the same in the US and Canada. The Canadian numbers highly exaggerate what one can expect on the road, while the US numbers are not far off from what the consumer can expect under SUMMER driving conditions.

In the US, the formula for churning out the numbers is based on a combination of test results that are subject to mathematical calibrations to reflect the on the road experiences of consumers.

Furthermore, in the US, though the manufacturers are responsible for doing the testing, to keep them honest, the US Environmental Protection Agency randomly tests about 15% of the models. This aspect of the US system seems to work quite well.

However, in Canada, the manufacturers do their own testing and their data is not verified by the Government of Canada. This is how we end up with vehicles rated as having exceptionally better fuel economy in Canada than the very same models in the US.

The implications are: 1) the calculation of a manufacturer’s year-specific Canadian CAFE is not reliable; 2) it is easier for a manufacturer to comply with a Canadian CAFE target for the year in question than it is to comply with the identical US CAFE target for the same year; and 3) Canadian consumers are mislead as to the fuel consumption to be expected for the models on our market.

With regard to the latter point, knowing that the fuel consumption ratings claimed by the manufacturers via their advertising are not credible, Canadian consumers are discouraged from taking into account fuel consumption ratings when making a selection for a vehicle.

New US CAFE rules too complicated, weak

US President Barack Obama is talking tough on climate change these days. — US President Barack Obama is letting automakers off easy

The US CAFE stipulations that apply to the 2016 to 2025 period, as negotiated by the Obama administration with automakers in 2010, are represented by a 1500-page agreement and new legislation that is 300 pages long.

As indicated earlier, Canada has followed down the same path as the US. This is a pity because the US path for 2016 to 2025 is a departure from the greenhouse gas reduction principles of previous CAFE legislative models, leaving the automakers with more flexibility than ever before – which undermines the spirit of GHG reduction goals.

It has been surmised that the reason why President Obama was so accommodating to the industry was because in 2010, US-based vehicle manufacturers had just survived a near-death experience and needed breathing room for their respective recoveries.

In theory, nevertheless, the US had adopted laudable targets, with the 2016 CAFEs set at 6.2 litres/100km for cars, and 8.2 litres/100km for trucks – and the 2025 CAFE target for cars at 4.3 litres/100km. Pretty impressive, one might say. But the devil is in the details of the 1500 page agreement and 300 page legislation.

Fast and loose

Under the new 2016 to 2025 US CAFE formula, distinct fuel economy targets are established for each category of vehicle. These categories are defined in terms of footprints, as measured by multiplying the distance between the front and rear wheels (the wheelbase) by the distance between the right and left wheels (the track).

Where the new US CAFE rules depart from the spirit of the original CAFE goals is the fact that the mandatory CAFE for a given manufacturer becomes more lenient should a manufacturer sell a greater proportion of vehicles in the larger footprint, or the high energy consumption footprint categories.

Put another way, the US government “…will establish a distinct target for every automaker that is based on its footprint categories and sales.”

This means that these are not hard, defined targets at all, rather “… projections because, unlike today, when every manufacturer’s car and truck fleet must meet the same mandated corporate-wide sales-weighted fuel consumption average, the future requirements will be instead based on the size of each vehicle in a manufacturer’s fleet… calculated by averaging the footprint-based CAFE targets of each and every vehicle it sells in a given model year,” and adjusting “the miles-per-gallon targets to match the industry’s real-world production tallies and market conditions at the end of the year.”

The result is that the CAFE goal becomes a moving target to suit the whims of auto manufacturers. Moreover, for legislation to be effective, it must be clear, reasonably succinct and minimize caveats.

As if all these “willful loopholes” are not enough to be dismayed with Obama agreement, even the US “virtual manufacturer-wide CAFE targets” are not that ambitious when compared with those of the European Union. In the EU, the average emissions/vehicle is set at 95 grams for 2020 while the US target for 2025 works out to be 93 grams.

Time for a shift

Canada has the option adopt more stringent CAFE targets than those of the US. Manufacturers would simply need to adjust the distribution of models made available on the Canadian market.

Since manufacturers have always had differences between the selection of models offered on the US and Canadian markets, a more stringent Canadian CAFE would merely accentuate the differences, without imposing any technological constraints on the auto industry. As such, a more demanding Canadian CAFE would not create any undue challenges pertaining to the North American integrated market.

Moreover, Canada could join California and 7 other US states in requiring that a certain percentage of sales be zero emission vehicles and low carbon (hybrid) models, beginning in 2018. The required percentage would incrementally rise through to 2025.

The seven other states are Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island, and Vermont.

A Made-in-Canada model

Taken together, the above information suggests it is time for a Made-in-Canada solution – which could include the following components

Back to Simpler CAFE, without Loopholes

First, and perhaps most important, a Made-in-Canada solution need not be as complicated as the US departure from the original company-wide CAFE concept – one which allows the auto industry to stray from overall manufacturer-wide CAFE targets whereby the targets are adjusted to fit with vehicles sales, rather than the other way around. This allowance for a higher aggregate fuel consumption is, in reality, a license for manufacturers to promote higher profit models with the help of advertising images of SUVs climbing over rocks and speeding along narrow winding roads at the edge of cliffs.

A far superior model would be that of straightforward Canadian CAFE targets pertaining to the average fuel consumption for all vehicles sold by each manufacturer, for each year – without there being any footprint categories.

By taking this path, the Government of Canada would have the necessary assurance that its goals would be met.

Providing reliable information to consumers

Second, to address the built-in leniency of the current CAFE approach, new fuel economy testing methods and calculations could be introduced to be similar to the US Environmental Protection Agency’s methodology – with a number of significant differences. To this effect, it would make sense that a Canadian testing procedure include WINTER DRIVING conditions with snow tires on and that the test results be properly calibrated to reflect on-the-road experiences.

Also borrowing a page from the US, the Government of Canada would be wise to randomly test around 15% of the models put on the Canadian market. In addition, the selection of vehicles for government testing could include models for which there have been a significant number of complaints or which have been identified as problematic for other reasons.

By taking this approach, Canada would have reliable data for calculating the CAFE of each manufacturer and consumers would have reliable information for comparing vehicles on the market, thus encouraging them to take fuel consumption ratings more seriously when purchasing a vehicle.

Joining leading US states on zero and low-emission vehicle goals

Finally, by adopting legislation similar to that of California and 7 other states – regarding the percentages of sales that must be zero emission vehicles and low carbon vehicles beginning in 2018 and increasing through to 2025 – Canada could surpass typical US CAFE standards without running into market integration problems

For those who might suggest that Canada cannot do this because it is part of the integrated North American market, one could remind them that California has roughly the same population as that of Canada and all 8 US states taking part in “enhanced low/zero emissions targets” are part of the North American market. Indeed, should Canada participate in the “enhanced approach”, it would be helping automakers improve their economies of scale for meeting the requirements of the jurisdictions in question.

To sum up, Canada not only has considerable scope for having more stringent vehicle fuel consumption legislation and targets than those of the US, it can pursue such a strategy without creating havoc to the North American market. There is nothing stopping Canada from shifting to a better system.

Exxon disses paltry clean tech subsidies while oil industry takes Trillions from taxpayers

June 24, 2015Energy and Resources, Oil&Gas, RenewablesfeaturedWill Dubitsky

Digital composite by AZRainman (Flickr CC licence)

A recent article quoting executives from Exxon is an incredible example of the misinformation, half-truths and contempt for solutions to climate change that we continue to see from the oil and gas industry.

In response to a question about subsidies for renewables, Theodore Pirog and Robert Gardner, two top dogs at Exxon’s Corporate Strategic Planning department, had this to say:

[quote]…the government, through tax incentives, is pushing wind and solar, which cannot compete with other energy sources on a level playing field. Over the long term, government subsidies for energy production and policies that pick winners and losers in the competitive energy space are counterproductive to broadly meeting society’s needs.[/quote]

Five reasons while Exxon is full of crap

Exxon complains about the subsidies for renewables, making for an unlevel playing field where government intervenes to pick winners and losers. Furthermore, according to EXXON market prices should drive solutions. Fascinating!

1) No sector of the economy receives more subsidies than the fossil fuel sector. The IMF projected the 2015 global subsidies for fossil fuels at $5.3 Trillion/year

2) The IMF has calculated global subsidies for renewables at $120 Billion/year

3) Thanks to the Republicans and their Big Oil lobbyists, the US wind power subsidy the Production Tax Credit of 2.3 cents/kWh has expired and the Investment Tax Credit of 30% that applies to solar energy installations will expire at the end of 2016.

4) In sharp contrast with the unstable US subsidies for renewables, which undermine long term investments, US direct subsidies for the oil and gas industry amount to about $7 Billion/year. These generous allowances for the oil and gas sectors: a) go as far back as the 1890s; b) include a 1926 enacted Percentage Depletion Tax Credit that increases when the price of fuel goes up; and c) allow the industry to write off most drilling costs. Not to be outdone on archaic subsidies, based on US incentives dating back to the late 1700s, the US coal industry gets tax benefits now worth $5 Billion/year.

5) The European Wind Energy Association says that wind power can compete without subsidies if fossil fuel subsidies were to be abolished.

Big Oil business model collapsing

Exxon claims that the oil industry will have to increase production significantly, in particular from unconventional sources (eg tar sands, shale oil, offshore oil), to meet increases in global demands.

This model is based on: 1) demand for fossil fuels continuing to climb; 2) oil prices remaining high enough to justify continued investments in expensive-to-extract unconventional sources such as the tar sands, offshore and shale sources; 3) high oil prices justifying the pumping out of greater volumes of conventional oil to further increase profits; and 4) the growing concern about climate change failing to affect the bottom line.

Until recently, this business model worked like a charm, with Exxon earning $32.6B in 2013, more than any company other than Apple. Well, as it turns out, all of the above elements of the business model have hit a wall.

LNG & Fracking: Risky Business for BC — Lights out for fracking operations? (Two Island Films)

According to the US Energy Information Administration, 2015 global oil demand had originally been projected to be 103.2 million barrels/day, but this number has been adjusted to 93.1 million barrels/day, thereby undermining the viability of unconventional investments. Low prices cannot sustain the development of tar sands, shale and offshore oil.

This is translating into dangerously high debt loads, with assets being written off in the billions, thus generating a cascade of announcements of abandoned projects around the globe, putting tar sands projects on hold and pushing shale gas companies into bankruptcy. The US shale gas and oil sector now has accumulated a debt of $200 Billion!

Exxon blind to clean tech boom

Exxon sees the growth of renewables as limited because they are intermittent source of power. Here’s what’s wrong with that thinking:

1) There is massive investment all over the world in energy storage technologies and the linking of clean electricity sources to electric transportation that includes, among other things, bi-directional charging stations that can network the batteries of parked electric vehicles for additional energy storage, as required.

2) In 2011, the Chinese Development Bank committed $45B to smart grid technologies, including energy storage technologies.

The Economist: China's going green...but is it fast enough? — China is investing big in renewable energy

3) China doesn’t seem to know about the supposed limits of renewables. As I noted in an earlier article this year, “…in just 2014 China’s new installations of wind and solar capacity amounted to 34 gigawatts (GW = a billion watts) of new electrical generating capacity, bringing the total installed capacity of wind and solar energy in that country to 114.8 GW and 28 GW respectively. In other words, China’s new clean energy installations added in 2014 represent nearly 3 times BC Hydro’s entire installed capacity of 12 GW and more than 70% of the total electricity capacity of Hydro-Quebec, 46.3 GW – but China installed all of this new capacity in one year!”

4) China’s mind-boggling increasing commitments to clean energy along with its goals for clean transportation – electric vehicles in particular – is galvanizing the development of its energy storage sector, expected to quadruple by 2025 to an $8.7 Billion/year market. Transportation/electric vehicle applications are projected to represent 85% of the revenues of this market, or $7.4 Billion in 2025. Clearly China is a global leader in linking clean energy to clean transportation, with integration technologies such as energy storage being a critical component of their green economy game plan. China’s clean transportation commitments are hard to beat regarding: a) $16B for the installation of electric vehicle charging stations; b) 30% of national government vehicle purchases to be electric beginning 2016; and c) a target to manufacture 2 million eco-vehicles per year by 2020.

5) Non-hydro renewables represented 47% of new electrical generation power installed in the US in 2014 and 75% of new US installations in the first quarter of 2015.

Despite all that, here’s what Exxon’s leaders have to say on the subject:

[quote]While we believe governments will take action to address the risk of climate change, we believe a policy scenario that completely transforms the global energy system at the unprecedented rate, pace and cost needed to stabilize greenhouse gas levels as contemplated in the 2°C scenario is highly unlikely.[/quote]

Turning the corner on GHGs

Global emissions reached a plateau in 2014, largely thanks to China’s massive investments in clean energy and reduction of GHG and coal use.

We don’t have any choice but to stay within the 2 degree limit, as not doing so will lead to catastrophic climate change. The prevailing wisdom is that 80% of the world’s fossil fuel reserves must stay in the ground to prevent the catastrophic scenario. Even Mark Carney, the Governor of the Bank of England acknowledges that this reality will lead to exceptional growth of stranded assets:

[quote]A growing number of senior figures in the financial community—some of them controlling many millions of dollars worth of investment funds—have been pressing fossil fuel companies to disclose how investments would be affected if energy reserves became frozen or stranded by regulatory moves associated with tackling climate change.[/quote]

Unconventional energy is debt and risk-heavy

Exxon says that technology has found a way to increase the resource base.

This is true except the costs of unconventional sources are prohibitive. The shale oil sector’s debt is staggering and all over the globe, fossil fuel companies are abandoning their reserves, also known as stranded assets.

Using poverty to promote fossil fuels

Micro Grids - Another alternative to investment in old energy — Community micro-grids are an effective way to bring energy to poor, rural communities

Exxon feigns concern for “the approximate 1.3 billion without electricity and the approximate 2.6 billion globally who use wood or dung stoves for cooking, which can lead to fatal indoor air pollution. What if we could supply all these too with affordable energy?”

The truth is that local clean energy micro-grids are the fastest and cheapest way to bring electrical power to those who don’t have any access or insufficient access. Just as many developing countries skipped the centralized landline telephone stage to go directly to mobile phones, the developing world can skip the centralized, expensive distribution infrastructure for delivering energy to isolated communities by setting up easy-to-install community clean energy micro-grids with minimal infrastructure.

Exxon: Oil fundamentalists

The views expressed by Exxon show a total contempt for climate solutions and a fundamentalist blind faith in a need to increase oil production, even to a point of implying that this is the solution to poverty. They disregard the reasons for the decline of the Big Oil business model and the staggering debt levels associated with unconventional fossil fuels. They’re allowing greed to confuse dictate their professional outlook. Apparently that’s the Exxon way.

How Alberta NDP can get r done with green energy…seriously

May 28, 2015Energy and Resources, RenewablesfeaturedWill Dubitsky

Alberta Prermier Rachel Notley (Alberta NDP/facebook)

In her speech on election night, Rachel Notley spoke of her ambition to diversify the economy of Alberta – including the energy sector – and partner with the energy industry and federal government for a national strategy on the environment.

Is all this possible? The answer is a resounding yes!

Alberta could actually reduce emissions

First, the theoretical wind power production potential of Alberta is equivalent to all the electrical production needs of every province West of Québec.

Second, the potential for wind power to reduce Alberta’s emissions is especially significant in that fossil fuels represent the lion’s share of energy sources consumed for electricity production in the province.

Coal represents 6,258 megawatts (MW), 42% of the electrical power generation sources in the province – and 40% of total electricity use if one takes into account 1,200 MW of imported electricity – out of a total of 15,798 MW produced to meet Alberta’s needs.

Natural gas accounts for 5,812 MW or 40% of the electricity produced in the province and 37% of the total provincial consumption of electricity.

US coal consumption waning

In the larger context of global trends, while global wind energy capacity is growing at 20%/year and solar energy at 50%/year over the past 10 to 15 years, US coal consumption has declined 21% between 2007 and 2014. In the last 5 years more than one third of the US coal-fired generating plants have either closed down or have been the object of announcements of closures to come. This trend will accelerate for the purposes of complying with US Environmental Protection Agency requirements to reduce CO2 emissions from the electrical power plant sector by 30% by 2030 over 2005 levels.

China leads the way

And then there is the astounding example of the world’s largest energy and coal consumer, China, which uses more coal than the rest of the world combined. China, which is now by far the world’s largest investor in clean energy technologies – with 1.58 million jobs in its solar energy sector and 356,000 working in its wind sector – saw it’s coal consumption decline in 2014!

Surely, if the world’s largest consumers of coal are reducing their use of this energy source, it may be time for Alberta to get in-step with the world leaders and acquire a more positive international energy profile.

Working with the oil and gas industry

To make the shift to clean electricity happen, the petroleum sector could play an important role.

Specifically, in the event that the new Notley government and energy sector engage in a joint review of fiscal and policy options, a strategy could be developed to facilitate energy diversification among the fossil fuel sectors to become bigger players in the clean energy fields. Indeed, there are already models for doing so.

The new CEO of Norway’s Statoil, Eldar Sætre, a man with a Statoil renewables background, recently announced that the company will be putting a new emphasis on renewables and low carbon activities. To this end, Statoil has set up a new division, New Energy Solutions. To quote the new CEO, “We will strengthen our efforts in the transition to a low carbon society,” making this new thrust one of the three pillars of the company’s strategy.

Also worth noting, Dong Energy, which is 60% owned by the Danish Pension Fund and is the world’s largest investor in offshore wind farms, has a target to shift from 85% fossil investments and 15% in renewable energy, to reversing this ratio by 2040.

Growing green jobs

Equally important, Notley can go beyond home grown clean energy production to include job creation and economic diversification in the province’s energy manufacturing sector.

This could be achieved with the right policy environment for clean energy projects – such as local manufacturing content stipulations in exchange for wind farm contracts and/or financing, as per the Québec and Brazilian models – and possibly including additional incentives for some oil technology firms to become part of a local clean tech supply chain. In short, there may be opportunities for Alberta to manufacture and export clean technologies, as well as produce clean energy for local use.

Brazil becomes green power player

This is not that far outside of the box. A case in point is that of Brazil’s WEG, a new entry into the wind turbine manufacturing sector, thanks to Brazil’s incrementally increasing local content rules for wind power projects, which will reach 60% by January 2016.

These Brazilian domestic content requirements – applied under an auction process that is managed and favourably financed to about 60% to 65% of projects’ value by the country’s business development bank – have given rise to WEG diversifying into the business of developing its own wind turbines. Now, what makes this interesting is WEG is a Brazilian home-grown domestic technology supplier that has traditionally served the oil, gas, industrial and power sectors.

WEG has already started making a first turbine prototype and plans to launch its 3.3 MW model in 2017. Working with local suppliers and testing their components, WEG expects to achieve 80% local content and include technologies specifically designed for Brazil’s tropical and sub-tropical temperatures. WEG relies on its local R & D capacity to turn out designs more in-tune with local environments. The company also plans to export its technologies to Latin America and Africa.

Applying the WEG model to Alberta, suppliers there would design components suited to a colder climate and export their products to northern regions.

A “win-wind” model for Alberta

All of the aforementioned considerations could be among the starting points for Alberta participation in a national strategy on the environment, and a provincial policy on economic and energy diversification, as per Notley’s goals. In the words of the late Jack Layton, “Don’t let them tell you it can’t be done!”