Editor’s note: Second of three parts to run on consecutive Sundays. Read part one by CLICKING HERE.
“The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.” — Sheikh Ahmed-Zaki Yamani
THREE KEY FACTORS WILL PUT TO REST the fossil fuel industry and make the good Sheikh Yamani’s prediction come true. Two of them are discussed here.
The first is that the carbon emitters will be held accountable and made to pay for using the atmosphere as a garbage can. While still struggling to price the cost of pollution, most nations, as well as California, have come to realize that the heavy carbon emitters need to pay for the damage they have done. A cap-and-trade process is the first method to hold the emitters accountable. While imperfect and not nearly as effective as a straight carbon tax, this system is growing throughout the world. The European Union’s program, which started several years ago and was described by the fossil fuel interests as failing, is now deemed a success. It has become an established part of European culture and corporate practice. Various nations such as Australia, New Zealand, Canada, Korea and China have developed cap-and-trade programs as well.
California’s own program continues to grow, and our carbon offsets are tradable in parts of Canada as well. As it gains momentum, other states are watching California’s program and thinking about adopting their own. Impoverished state governments see cap-and-trade programs as a boon to their environment and a way to garner vital tax revenues. Since increases in personal income tax are so unpopular, cap-and-trade is seen as a way to bring new money into state treasuries without risking voter rebellions.
The pressure to make the major carbon emitters pay for their pollution is coming from the agreements made at the 2012 UN Conference on Climate Change in Doha, Qatar. At this conference world governments consolidated the gains of the last three years of international climate change negotiations and opened a gateway to greater ambition and action. Among the decisions was to concentrate on a universal climate agreement by 2015, which would come into effect in 2020. The 2015 conference will be held in Paris, and world governments are expecting much greater cooperation and agreement on carbon-reduction policies from the U.S. and other major emitters.
The world is slowly accepting the reality that the mitigation of climate change is a massive problem. A 2012 report by Climate Vulnerable Forum estimated that more than 100 million people will die and the international economy will lose out on more than 3 percent of GDP ($1.2 trillion) by 2030 if the world fails to tackle climate change. But because governments don’t want to use their funds for environmental cleanup and climate change mitigation, it will be the heavy emitters like the oil, coal and utility companies that will pay.
This cost for carbon cleanup, added to the increasing costs of extracting hard-to-get fossil fuel resources, will hit the oil industry hard. A 2013 Harvard University report showed that the cost externalities from coal were about 18 cents per kilowatt hour. Most U.S. end-users who rely on coal-generated electricity pay about 10 cents per kWh. If the external costs were added, those users would pay closer to 30 cents per kWh — which would severely impact those users’ lifestyles.
Grid parity
The second major factor hastening the end of today’s megalithic fossil fuel industries is “grid parity.” Grid parity is a technical term meaning that the cost to a consumer for electricity from a renewable source (without subsidies) is about equal to the cost from a traditional source — be it fossil fuel or nuclear. The Germans used grid parity to price their feed-in-tariff program, or FiT, that launched Energiewende.
Simply put, with PGE’s 2014 rate increase a Benicia resident or small commercial consumer pays about 20 (19.9) cents per kWh for electricity from traditional sources. If that same kWh came from a renewable source and cost the consumer an equal 20 cents, then the renewable source would be at “parity,” or equal to the cost of the traditional generation source.
However, the cost of traditional energy is rising, driven by higher extracting costs, increasing maintenance costs for natural gas pipelines and increases in operating cost at nuclear power plants. At the same time the costs for renewable energy — wind, solar photovoltaic and biowaste fuels — are declining.
The costs for wind generation have been and still are the lowest. However, the costs for solar are declining rapidly as its use spreads. Deutsche Bank reported in January 2014 that there were 19 regions around the world where unsubsidized PV solar power costs were competitive with other forms of generation. In fact, PV competes directly in price with oil, diesel and liquefied natural gas in much of Asia. This equality of costs with fossil fuel and natural gas is creating a worldwide solar boom in 2014-15.
In the U.S., almost 30 percent of last year’s added electricity capacity came from solar. In Vermont and Massachusetts, almost 100 percent added capacity came from solar. According to the U.S. Solar Energy Industries Association, more solar was installed in the U.S. in the past 18 months than in the last 30 years. Solar PV technology, which has been helped by the U.S. military, is improving so fast that it has achieved a virtuous circle.
As described by New York’s Sanford and Bernstein investment bank, we have entered an era of “global energy deflation.” This ratcheting down of energy costs may be slow to start, but as they argue, the fossil fuel-dominated energy market will experience a major decline in costs over the next decade. The market is entering a new order that will erode the viability of oil, gas and the fossil fuel continuum.
The report argues that the adoption of solar in developing markets will translate into less demand for kerosene and diesel oil. The adoption of solar in the Middle East means less oil demand, and the adoption of solar in China and developing Asia means less liquefied natural gas demand. Further, distributed solar in the U.S., Europe and Australia will likely reduce demand for natural gas.
They reason that while solar has a fractional share of the current market, within a decade solar PV and related battery storage may have such a large market share that it becomes a trigger for energy price deflation, with huge consequences for the massive fossil fuel industry that is dependent on continued growth.
Even the Saudis are betting on solar, investing more than $100 billion in 41 gigawatts of capacity, enough to cover 30 percent of their power needs by 2030. Most of the other Gulf states have similar plans.
Grant Cooke is a long-time Benicia resident and CEO of Sustainable Energy Associates. He is co-author, with Nobel Peace Prize winner Woodrow Clark, of “The Green Industrial Revolution: Energy, Engineering and Economics,” set to be released in October by Elsevier.
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Keep up the good work, Grant. No one likes moneyed, polluting stupidity.
Peter Bray, Benicia, CA
More crude-by-rail news the community can use….
From the above commenter:
“No one likes moneyed, polluting stupidity.” Well stated, Mr.Bray.
From the above article:
“This cost for carbon cleanup, added to the increasing costs of extracting hard-to-get fossil fuel resources, will hit the oil industry hard.”
From the article below: more information ( “moneyed, polluting stupidity”.) for Mr. Cook and our appointed and elected leaders to seriously consider…
Fiery Derailment Puts Spotlight on Hazardous Train Shipments
“We know trains will continue to derail and we know we still stand unprotected from these types of dangerous accidents,” scientist warns
“The freight rail lines actually go right through the center of almost every major urban center in the entire country, including small towns, communities across the country, so the risk of accidents is significant,” said Adam Scott of Environment Defence. Scott said that in Canada, rail companies, like CN Rail, are not required to publicly disclose the types of hazardous materials being transported on trains.
“It’s unacceptable,” Scott continued. “The municipalities themselves, the communities have no power, no control, and in this case no information even over what’s being run through the rail lines.”
http://www.commondreams.org/news/2014/10/08/fiery-derailment-puts-spotlight-hazardous-train-shipments
More on externalities:
Many socio-ecological problems result from negative externalities. Thus, in order to reduce those problems, external costs have to be internalized, i.e. the company has to pay for them. Internalization can be accomplished either via governmental action or via the market. However, today the responsibility should be on the companies’ side. The market do not seem to solve negative externalities in a satisfying manner, sustainable business models have to take care of it. If the company voluntarily decides to internalize external costs, sustainable business will be possible.
Trouble is that solar and win are not dependable resource and have to be backed up by dependable generation such as gas fired
Combined cycle plants. So solar and wind are far more costly than they might appear when dependable capacity requirement for keeping the lights on are considered
As far as solar and wind not adversely affecting the environment that is a huge fallacy. They both clutter thousands of pristine acres in California and the West. Both are huge bird killers. Rurns out concentrated solar Frits bird like endangered eagles in flight
As included frequently here when the issue of bird kill comes up, here are
other causes of annual bird decline in the U.S.:
• Cats: 2.4 billion bird deaths
• Building windows: 599 million
• Autos: 200 million
As to, “they both clutter thousands of pristine acres in California and the West.” That is purely subjective.
• Power lines: 30.6 million
• Communication towers: 6.6 million
• Agricultural chemicals: 2.7 million
• Wind turbines: 234,000
These figures have been posted in this forum numerous times in response to those that point to wind farms as having great impacts on bird populations. And, while any activity that has an impact on the decline of wildlife population should be reviewed, we can see that wind farms are just a drop in the bucket in comparison to the other drivers. Thus, anyone that argues against wind farms due to their impact on bird populations, should also levels their sights on cats, buildings, cars, power lines, com towers, and ag chemicals. BTW – The list one typically sees also includes oil spills as a driver.
Only the fast-turning, small wind-turbines kill birds. The sail-arms of the slow giants are easily visible to birds.
Not true. Wind farms in Palm Desert and Altamont Pass are known as “poultry plants” by the Audobon Society. Large blades do kill birds, primarly eagles.
Hydrocarbon based energy is short term. It is speculated that solar electric cells will become highly efficient within the next hundred years. Hydrogen based energy generators will also, likely, become an economic reality in 100 years. Oil and gas will then become extinct as an economically efficient energy source.
So what are we debating here? 100 years of hydrocarbon existence and how will that affect the Earth’s atmosphere. Can the Earth withstand the pollutants for 100 years? I believe the answer is yes! My speculation … Hydrocarbon based energy is becoming more efficient and cleaner with every year. The Earth’s atmosphere is dynamic and stable … It has the ability to filter and clean over time.
I say we continue to utilize our most economically available resources until the point where they become economically unfeasible. The market will cure all this. In the meantime, it is humane and better for society, especially the poor and impoverished to have access to low cost, efficient energy.
Market mysticism gives rise to much market mythology. Few markets are fully free, nor should they be.
I’ll take free markets over government control any day. Socialism does not work. And that is an empirical fact. Thank you for annunciatiing your economic philosophy … I feel very vindicated with my post.
I’m wondering where the empirical evidence that socialism doesn’t work comes from – Canada, Norway, Sweden, Finland, Denmark? Or semi-socialist countries like Germany, Holland? Just wondering what the evidence is…
None of the countries you mention are Socialist based economies. They are all practice free market economics at different levels of regulation. Canada specifically, as well as Norway, are considered more openly capitalistic then the USA.
How well is Cuba doing? The economy of the Soviet Union? The past Iron Curtain economies? China only started expanding when they introduced market based economics.
Socialism is the practice of economic control by the state. The previous blogger stated no faith in market based economics.
Over-general conclusion, Matter. By Socialism you really mean “command economy.” These tend to be clunky and need constant adjustment from top managers who can scarcely keep up with developments. Good financial and monetary policy lets a so-called “free market’ economy run by itself. Without sound regulation and honest regulators, the “engine” goes haywire and breaks down or explodes from over-heating.
I refer to this as the definition. I continue to hold my point, free markets work, and over regulated state owned economies fail. I will take a free market, with all it’s perceived risks, over a regulated economy any day.
socialism
[soh-shuh-liz-uh m] Spell Syllables
Examples Word Origin
noun
1.
a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.
2.
procedure or practice in accordance with this theory.
3.
(in Marxist theory) the stage following capitalism in the transition of a society to communism, characterized by the imperfect implementation of collectivist principles.
Great work, Mr. Cooke. Never mind the little gadflies who can’t spell “ideologue” correctly. Never mind the desperate nit-pickers and purveyors of irrelevance.
The comments about socialism vs. free-market opens an interesting topic. My new book “The Green Industrial Revolution: Energy, Engineering and Economics” has a whole chapter on the need for a new economic structure. We argue that “Modern Economic” theory, or free-market capitalism failed to predict the 2008 real estate crash because it had come to the end of its usefulness. We suggest also that it is incapable of addressing such macro issues as climate change and world environmental degradation. A new economic structure must be developed to address the needs of a new social, political and carbonless world order. We are tentatively describing this new structure as “social capitalism”–it is far more plan based and environmentally responsible than previous economic structures–feudal, autocratic, oligarch, capitalism, socialism, etc. While this idea is just starting to emerge in academic and scholarly economic circles, particularly in Europe, it is gaining traction and may lead to greater adoption and policy acceptance.
When you use the EU as an example I do know you are a littler academia confused.
Grant I cannot believe you just said that.
Grant stated: “We argue that “Modern Economic” theory, or free-market capitalism failed to predict the 2008 real estate crash”
With all due respect Grant, people were predicting the collapse. The problem was not that ample warnings were not being given, as to the dangerous path we were on, but the fact that those in charge were not listening to the warnings.
Look back at what Barney Frank has said regarding the subject as but one of many examples.
Read also the minority report that investigated the collapse for additional information on this.
Actually much of the 2008 real estate crash was precisely due to government involvement! Fannie Mae and Freddie Mac allowed banks to sell high risk loans to the govern,ent for no risk. Further, the government via Congress intervened in the market by pressuring and regulating banks to lend to low income, high risk people in the hopes of increasing home ownership rates. If the government had stayed out of the market, home ownership rates would have been lower … But the risks would not have been involved. The crash, caused by the regulation bubble, would not have happened.
Free market Capitalism has faults, but it does correct. Regulated economies fail at a higher rate, they cause more suffering, especially to those in poverty, and always underperform. Governments simply cannot recognize or foresee every scenario.
Fascinating how history is distorted. The Great Recession, or Crash of 2008, was caused by extraordinary leverage within a frail and uncontrolled financial system. No one was watching what was going on in the derivative market and “credit swaps” were being insured without pricing. This collapse of the world’s financial system was created by unregulated human greed, and uncontrolled leverage. Government’s failed in their fiduciary duties to oversee banks and financial institutions that had become “too big” to fail. It was a shameful and unconscionable example of what happens when regulators are absent from our complex markets. The simple fact that the recession has been prevented from becoming a Great Depression by the unlimited and unprecedented distribution of capital by federal banks clearly argues that the failure on a “free-market”. Basically, the worlds economic structure is far to complex and fragile to continue ‘without government intervention and oversight. Hence, the need for long-term planning and consensus agreement on macro issue. This approach is the basis for the world’s climate conference in Paris in 2015.
Tey have all failed and this one will also. Do you think China, India and Russia are on board. If you do then it will be in their best interests that come out of it and not the rest of the world. America must set the example and we are. We use proper regulations along with high tech to get where we need to be. Clean, safe and healthy. We have a company right in Benicia that I did introduce yu to Grant. Do you remember. He is way out front. You new nothing about what was happening in Kern County until I told you. Do you rem3ember that Grant? I do believe Grant you must broaden your viewes.
Sorry Shelby for the typos. Even you make them.
Yes History is distorted including by those who seek to absolve themselves of responsibility.
These quotes and excerpts tell part of the story of how government actions an private lawsuits forced the banks to make the bad loans they did:
Dec. 9 2011 Atlantic: Friday Interview: Barney Frank on Congress, the Crash, Why Huntsman Is Like Dorothy in Oz
FRANK: It was irresponsible lending, primarily by the private sector and primarily by non-banks. You know, the banks have a right to complain.
Aug. 2010 Atlantic: In an interview on Larry Kudlow’s show in August 2010, (Frank) said “I hope by next year we’ll have abolished Fannie and Freddie … it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.”
“The Community Reinvestment Act was set up to say to the bank regulators: Look, you guys go in and look at these banks and tell them, you got to take some of your money and invest it in inner cities and neighborhoods, and with people who otherwise would not get it so they have a chance to build homes, to build businesses, to create jobs, to build neighborhoods.
In the 20-year history of the Community Investment Act, 85 percent-plus the money loaned out under it to poor inner city neighborhoods has been loaned in the five years since I’ve been President. “
President Bill Clinton
January 21, 1998
New York Post: 2008:
“A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money.
Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department. “
To claim that the banking industry and the mortgage industry is an unregulated free market is simply ridiculous. Your political agenda is distorting your views. To claim that Fannie Mae and Freddie Mac had no impact on the crash of 2008 is absurd. Congressional regulation intervened in the market forcing down regulations to under qualified borrowers and giving safeguard to the lenders. To deny this is pure folly.
A bubble was created and the regulators led the way in creating it.
You are 100% right Matter.
The minority report I referred to above contains a lot of information that confirms what you are saying including:
a) Fannie and Freddie loaned out more money than the banks did.
b) F&F had a higher number of high risk loans.
c) F&F had a much higher percentage rate of loan failures.
Let’s summarize what happened :
1) Pass a law that encourages loans to high risk individuals.
2) Strengthen the law when the banks don’t bite.
3) Gin up a phony report (see the NY Post piece) that says the banks are racist.
4) Sue the banks forcing them to make high risk loans.
5) Then F&F turn around and buy the high risk loans from the banks.
6) When the scheme collapses blme the banks as “Greedy evil bankers” for selling the loans to the government.
Yes, that is a cliff notes summary of events that contributed to the collapse. Yet the ostriches refuse to lift their heads out of the sand to see how this contributed.
Meanwhile, Barney was sleeping with a high ranking manager at the government backed loan institutions.
At least he finally admitted he was wrong I do not understand why others refuse to do the same.
The only thing the writer got right was solar. That will be the main source of renewable energy in the future. The writer fails to understand that renewable energy will be driven by a very few large corporations. The three major providers of electric energy to consumers in California are already into it. There will also be many off the grid facilities that the writer does mention. Those also will be done by all the major companies. The big fossil fuel companies are far from being run out of business. In fact they will continue to provide most of the fuel and a be a grat part of the electricity provide far a very long time. As off the grid electricy becomes less erxpensive you will see all the major providers setting up programs to set up off the grid operations. Major land owners will now get most of their income not in deverloping their property but from the revenus provide by off the grid business/industrial park deverlopements. So as you can see the folks that will benefit could vertr well be big oil which will now produce for themselves and at the same time sell the energy that they produce. As will big land owners. So what does that do? It reduces the cost of operations to produce better, cleaner and safer products. These anti fossil fuel folks played right into the hands of big oil and did not even know it. Someday agenda driven idealogy will learn. Maybe. Keep your eye on business/industrial park development. Wake up Benicia Mayor/Council it is staring yo right in the eye.
Sorry for some misspelled words. But you got the picture. I am correct again. Follow me you will learn a lot.
OH my: forgot to bow whenever I hear the always-right, omnipotent Prof. Livesay announce his royal comands. Hold forth, old master, hold forth…..
Robert
i already have AND you missed it.
Rob would consider yourself a CLLLSP Try to figure that one out.
Not worth bothering.
Our local Mr. Livesay, a prophet in his own imagining, has more than bad spelling to recommend not attending his desperate bids for attention. Future energy sources will indeed include carbon burning for longer than is good for the world, but only as a gradually diminishing part of an increasingly multiple input system including wind, tide, river current flow, geo-thermal, hydrogen and conventional hydro-electric dams, along with improving solar.
Robert you are so out of touch. Just where have you been. All of that has ans is happening. Sorry Robert you just do not get it.
Sorry Shelby just another typo. At least my comments are typos yours are your Socialist ideals. You know Robert the “Tri-Colored Rag” comment.
You are unable to discern my positions on politics and economic without reductive distortion. That means oversimplification and misidentification.
Yeah, I left the s off of economics. Enjoy my imperfection.
Dennis (DDL 10/7 at 8:24 am) has it right on describing the etiology of the nation’s financial wreck in 2008. [Not everyone here may recall what Cliff Notes are.] Our trouble is another “baby in bath-water” situation. Reading “Matter” & “Livesay” one might suppose they confuse theory with reality. An economy is not a theory. Any wrongly-regulated market is headed for trouble. That cannot mean markets must be unregulated but that they must be correctly regulated. Total market freedom seems invariably vulnerable to boom & bust. The wealthiest people and companies seldom really lose in a bust, because they have staying power. Real property & infrastructure seldom disappear like bank accounts or credit. Small investors are the likely losers. In this light, the big markets are shearing machines.
It is quite irrational to detest things called “capitalism” or “socialism.” In reality, these are abstract descriptors of two complementary aspects of any working economy. People have argued often and long about what business enterprises serve or should serve: Owner’s profit, Enterprise vitality or Consumer benefit and Socio-ecological value. What applies to private ownership also applies to government ownership and workforce ownership, save that profit cannot supersede or outrun benefit and value, as happens too often with private owners.
Robert stated:Dennis (DDL 10/7 at 8:24 am) has it right on describing the etiology …
Does anyone have any smelling salts?