Energy and global warming news for February 16: Trillions at stake from climate change by 2030

Trillions At Stake From Climate Change Over The Next 20 years

When the giant investment firms understand that global warming is a real problem, the rest of us should really stop thinking global warming is some sort of communist plot. The capitalists are worried about global warming too. In fact they think they can make a lot of money by dealing with the problem. They also think they can save a lot of money by dealing with the problem before it becomes too big.

It would seem that the only people who think global warming is a scam are the industries that are set to lose the most, coal, oil and gas companies.

  • Climate change could contribute as much as 10% to portfolio risk over the next 20 years
  • Investors could benefit from increased allocation to infrastructure, real estate, private equity, agriculture land, timberland and sustainable assets
  • Investment opportunities in low carbon technology could be as high as $5 trillion by 2030
  • Institutional investors have numerous options for capitalizing on opportunities and managing risks arising from climate change

See a summary video here.

Continued delay in climate change policy action and lack of international coordination could cost institutional investors trillions of dollars over the coming decades, according to research released by Mercer and a group of leading global investors representing around $2 trillion in assets under management1.

Andrew Kirton, Chief Investment Officer at Mercer, commented: “Climate change brings fundamental implications for investment patterns, risks and rewards. Institutional investors should be factoring long-term considerations, such as climate change, into their strategic planning. Mercer is pleased to have had the opportunity to kick start such strategic discussions with a group of leading global investors.”

The report Climate Change Scenarios – Implications for Strategic Asset Allocation analysis the potential financial impacts of climate change on investors’ portfolios, identified through a series of four climate change scenarios playing out to 2030. The report identifies a series of pragmatic steps for institutional investors to consider in their strategic asset allocation.

In the report, a framework is outlined that can be used by institutional investors to enhance their understanding of climate-related investment risks and opportunities across asset classes and regions. Mercer’s “TIP Framework” estimates the rate of investment into low carbon technologies (T), the impacts (I) on the physical environment and the implied cost of carbon resulting from global policy (P) developments across the four climate scenarios.

Some of the key findings show that by 2030:

  • Climate change increases uncertainty for long term institutional investors and as such, needs to be pro-actively managed.
  • Investment opportunities in low carbon technologies could reach $5 trillion.
  • The cost of impacts on the physical environment, health and food security could exceed $4 trillion.
  • Climate change related policy changes could increase the cost of carbon emissions by as much as $8 trillion.
  • Increasing allocation to “climate sensitive” assets will help to mitigate risks and capture new opportunities.
  • Engagement with policy makers is crucial for institutional investors to pro-actively manage the potential costs of delayed and poorly coordinated climate policy action.
  • Policy developments at the country level will produce new investment opportunities as well as risks that need to be constantly monitored.
  • The EU and China/East Asia are set to lead investment in low carbon technology and efficiency improvements over the coming decades.

The launch of the report and the Mercer TIP Framework represents a collaborative endeavor led by Mercer which involved 14 global institutional investors, and was supported by the International Finance Corporation, a member of the World Bank Group, and Carbon Trust. Grantham LSE/Vivid Economics were engaged to lead components of the research on the economic impacts of climate change scenarios and a research group comprised of industry practitioners and academics was consulted in the development of the model.

Barbour says oil spill was avoidable, preventable

Gov. Haley Barbour said Tuesday that the Gulf Coast oil spill occurred because the companies involved deviated from industry standards, not because of the inherent risk of drilling offshore.

“I think the biggest lesson learned from the Gulf oil spill is that it was totally preventable, totally avoidable,” Barbor told a meeting in Jackson of the Mississippi Energy Policy Institute.

Barbour, a potential 2012 Republican presidential candidate, also criticized what he called the Obama administration’s “permatorium” on drilling in new areas of the eastern Gulf and the Atlantic seaboard.

“Regrettably, right now we have an administration that is actively suppressing American energy production,” he said, adding that due to technological innovations and geological discoveries, America is now a global leader in terms of coal and natural gas potential.

“America is the Saudi Arabia of coal,” Barbour said. “We have multi-hundreds of years of supply of coal.”

The governor said he favors an “all in” energy policy that includes traditional and alternative fuels, plus energy efficiency. He singled out nuclear and hydroelectric energy for praise, calling them “absolutely emission-free” and questioning environmentalists’ opposition.

Obama budget would charge oil companies for inspections, drilling permits

The Obama administration’s proposed fiscal 2012 budget would provide $500 million to restructure the regulatory and oversight regime for offshore drilling, strengthening enforcement in the wake of the Deepwater Horizon oil disaster in the Gulf and charging oil companies user fees for inspecting their operations and processing their drilling permits.

The new fees, recommended by the National Oil Spill Commission, would net the Bureau of Ocean Energy Management, Regulation and Enforcement about $65 million, an increase of $55 million over past levels, and would apply to offshore drilling rigs for the first time. Interior Secretary Ken Salazar said an inspection of a deepwater rig would cost an operator $16,700.

“The Deepwater Horizon explosion and resulting oil spill have led to the exposure of significant weaknesses in the way this agency has historically done business,” said Michael Bromwich, who, as director of Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement, has led the administration’s post-spill reorganization of its regulations and regulatory structure.

“This bureau has not had sufficient resources to provide an appropriate level of regulatory oversight of offshore oil and gas development. These shortcomings have become more pronounced as operations have moved into deeper and deeper waters,” Bromwich said. “The president’s budget request would, if enacted, provide us with the resources — including personnel, technical expertise and equipment — needed to remedy that situation.”

Sen. David Vitter to block another nominee over drilling

Sen. David Vitter is renewing his practice of blocking votes on Obama administration nominees in order to force the Interior Department to hurry up and issue offshore drilling permits.

The Louisiana Republican Tuesday said he’ll place a hold on Dan Ashe, the nominee to head the Fish and Wildlife Service. He’s already blocking the nomination of Scott Doney to be chief scientist of the National Oceanic and Atmospheric Administration.

Vitter said he wants at least 15 deepwater exploration well permits and for the department to answer his previous string of letters on the permitting process. Interior has issued various new rules on deepwater drilling since last year’s BP oil spill, and plans to issue new permits later this year.

“The Interior Department has destroyed jobs in Louisiana, contributing to the bankruptcy of at least one major employer, and is breaching contracts with other employers and putting taxpayers on the hook for billions of dollars,” Vitter said in a statement, noting that Seahawk Drilling, a major shallow water drilling company, filed for bankruptcy last week.

The Senate Energy and Natural Resources Committee held a hearing on Ashe’s nomination Tuesday morning.

UPDATE 1-US DOE finalizes loan aid for Nevada power line

The U.S. Department of Energy finalized on Tuesday a $343 million loan guarantee for a Nevada power line expected to carry 600 megawatts of electricity including from clean sources such as solar power.

The ON Line project, jointly owned by Great Basin Transmission South LLC and NV Energy (NVE.N), is the first transmission line to receive loan aid from the DOE, the department said.

“This project will create jobs, increase the reliability of the grid, and save money through greater efficiencies in the grid,” Energy Secretary Steven Chu said.

23 Responses to Energy and global warming news for February 16: Trillions at stake from climate change by 2030

  1. Anne van der Bom says:

    America is the Saudi Arabia of coal

    Huh? Never mind the destruction, we must burn it all.

    Why? Because it’s there.

    This guy is a living fossil. Can someone beam him back to the 19th century where he belongs. Please?

  2. Prokaryotes says:

    Precisely, “It would seem that the only people who think global warming is a scam are the industries that are set to lose the most, coal, oil and gas companies.”

  3. Michael T. says:

    Increased flooding driven by climate change: study

    PARIS (AFP) – Global warming driven by human activity boosted the intensity of rain, snow and consequent flooding in the northern hemisphere over the last half of the 20th century, research released Wednesday has shown.

    Two studies, both published in Nature, are among the first to draw a straight line between climate change and its impact on potentially deadly and damaging extreme weather events.

  4. Prokaryotes says:

    Re Michael, Wow, dats breaking News, i guess … after we talked about it, seems forever …

  5. Prokaryotes says:

    Pumping Gas Underground
    Greenpeace Blasts Berlin for Secrecy on Carbon Storage

    Carbon capture and sequestration technology sounds great. But where would the CO2 be stored? Greenpeace has accused the German government of keeping potential sites secret and says the public has been misled.

    Greenpeace has accused the German government of hiding the truth over plans to store greenhouse gases deep underground. The environmental organization said Berlin had “gone behind the backs” of its citizens in pushing for the introduction of carbon capture and storage (CCS). The government, Greenpeace claims, has been classifying information about potential sites like a “state secret” and earlier this week moved to release its own map of 408 possible storage areas based on data provided through freedom of information requests.,1518,745773,00.html

  6. Prokaryotes says:

    Greenpeace argues the technology behind CCS is still in its infancy. It also points out that even experts agree it will not be viable in power plants for 15 to 20 years — too late to protect the climate.

  7. Prokaryotes says:

    Study: Even if All Emissions Were Cut Now, Warming Could Continue

    Kyle Armour says that current models are flawed in that they fail to consider how high the uncertainty is regarding the amount that aerosols contribute to climate change.

    He says that the aerosols could contribute a lot to climate change, or only a little.

    In the “best case” scenario they would only contribute a lot to net warming. If all emissions of aerosols and GHGs stopped (a cessation of fossil fuel burning, and mammalian livestock farming, in short) the aerosols would quickly exit the atmosphere. GHGs would remain for years at elevated levels, but the net result would be a slight decrease in temperatures by about half a degree Fahrenheit, given that the aerosols were the chief culprits.

    In other words, the current temperature, which is about 1.5 degrees Fahrenheit above pre-Industrial Revolution levels would dip to only 1.0 degrees Fahrenheit above that base level — but wouldn’t return entirely for many years.

    Society can obviously not just instantly cut emissions, Mr. Armour acknowledges, but he says that such a scenario would offer justification to emissions cuts.

    However, it’s also possible that aerosols offer minimal contribution and that GHGs are primarily to blame for the rising temperature. In this case, even if emissions stopped, temperatures would continue to rise and likely reach 3.5 degrees Fahrenheit above pre-Industrial Revolution levels, as the GHGs would persist in the atmosphere. Such a temperature increase would likely cause some of the more severe predicted climate change effects (though it could offer benefits as well).

  8. Prokaryotes says:

    La Niña weaker; may be gone by summer

    A significant shift is occurring in the Equatorial waters of the Eastern Pacific off the coast of South America, where the tell-tale signs of the end to the current La Niña event are beginning to show up. A borderline moderate/strong La Niña event has been underway since last summer, with sea surface temperatures (SSTs) about 1.5°C below average over a wide stretch of the Equatorial Pacific. These cool SSTs have altered the course of the jet stream and have had major impacts on the global atmosphere. The La Niña has been partially responsible for some of the extreme flooding events in recent months, such as the floods in Australia, Sri Lanka, and Colombia. La Niña is also largely to blame for the expanding drought over the southern states of the U.S. But in the last few weeks, SSTs in the Equatorial Pacific have undergone a modest warm-up, and these temperatures are now about 1.2°C below average. A region of above-average warmth has appeared immediately adjacent to the coast of South America–often a harbinger of the end to a La Niña event. An animation of SSTs since late November shows this developing warm tongue nicely. Springtime is the most common time for a La Niña event to end; since 1950, half of all La Niñas ended in March, April, or May. The weakness displayed by the current La Niña event has prompted NOAA’s Climate Predictions Center to give a 50% chance that La Niña will be gone by June. If La Niña does rapidly wane, this should help reduce the chances for a continuation of the period of high-impact floods and droughts that have the affected the world in recent months.

    Will the probable demise of La Niña this spring allow an El Niño to take its place by this fall? Well, don’t get your hopes up. Since 1950, NOAA’s Climate Prediction Center records that there have been sixteen La Niña events during February (26% of all years.) In half of those years, La Niña was still active during the August – September – October peak of Atlantic hurricane season

    Only two of the sixteen models predict El Niño conditions by hurricane season.

    A comment notes “The February run of the Japanese FRCGC model favors a La Nina that rapidly weakens into the summer but re-strengthens next winter, becoming a multi-year event.”

  9. Prokaryotes says:

    Derailed? Third GOP governor rejects Obama high-speed rail plan.
    Gov. Rick Scott of Florida declines $2 billion of federal money in deciding not to build a Orlando-to-Tampa high-speed rail line. Two other governors have made similar moves. It suggests a rocky road ahead for Obama’s $53 billion rail plan in the Republican House.

  10. Prokaryotes says:

    Proponents of high-speed rail criticized the three Republican governors’ decisions. “The governors are sadly ill-advised and probably haven’t stopped and thought about what kind of transportation system this country really needs,” says Gil Carmichael, founding chairman of the board of directors of the Intermodal Transportation Institute at the University of Denver. “The system we have now is gawdy, wasteful, polluting and dangerous.”

    “Republicans, Governor Scott included, are betting on the long-term outweighing the short-term – and that is something that is not typical in politics,” says Professor Brown. “Clearly, however, they believe that if they become known as the fiscally responsible party, they will not only win the 2012 cycle, but that voters will continue to trust them with the reins of government for many election cycles to come.”

    All what this is creating means higher cost for transportation. Just look at Peak Oil. Ofc Koch’s tea party minions follow his ill-advised retarding visions. If you factor in national security implications from sending money oversees and ultimately climate disruption, high speed trains should be mandatory.

  11. Mike Roddy says:

    You’re right about all of this, but it’s not just the oil and coal companies. Many others depend on the same gooey cash cow- investment funds, wealthy individuals, banks, and people you wouldn’t expect (like Bill Gates).

  12. Chris Winter says:
    Greenland ice sheet saw record melt, study finds
    ‘Area of the size of France melted in 2010 which was not melting in 1979,’ expert says.

  13. Prokaryotes says:

    From Michael’s link

    “2000-2009 the hottest decade on record. We are experiencing the strongest La Niña in 50 years (La Niña tends to cool the planet). In addition, we’re coming out of an unusually long period of low solar activity, which also tends to cool the Earth. The sun’s slowly increasing brightness will likely peak in 2012-2013, adding to the greenhouse-gas-induced warming we’re seeing.”

  14. Prokaryotes says:

    2011 Draft U.S. Greenhouse Gas Inventory Report
    (February 2011)

    Per a pending announcement in the Federal Register (FR), the draft 1990-2009 Greenhouse Gas Emissions Inventory is now available for public comment. To ensure your comments are considered for the final version of the document, please submit your comments by 30 days after the notice appears in the federal register.

  15. Prokaryotes says:

    Stunning Video

    Stunning solar towers light the way – videoThe world’s first commercial solar tower plant gives a breathtaking glimpse of the future of power generation. What’s stopping the technology’s widespread adoption?

    3 cent kilo watt hour, cheaper then any other form of energy … the energy revolution is about to take place.

  16. Scott says:

    Barbour is so cool he even uses the gambling term “all in” to encourage the believers. It’s tragic how they are so completely willing to leave our future to chance. Fortunately, there will be marches in the street soon to insist on realism.

  17. James Newberry says:

    Two minor corrections to Stunning Video:

    1) Energy in sunlight received by the Earth in one hour is equal to all energy used in the world in a year, rather than electricity only.
    2) The usual term is photovoltaics, rather than solarvoltaics.

    This video is one indication of the folly of the US spending trillions of dollars of subsidies over the past century for using uranium and fossil materials as “energy resources.” Physically, these substances extracted from the lithosphere are matter. One might say we have an economy based on the energy of mined explosives, rather than true energy resources.

    An energy revolution will occur only if investment in fossil carbon and uranium mining (“nuclear power” aka atomic fission) can be held at bay. The 2012 federal budget includes tens of billions of subsidies for these, like it has for decades. I guess less than five cents (per kWh) is not cheap enough for solar, yet. Efficiency improvements across the economy, which would eliminate the need for many power plants by reducing the need for supply, are even better investments.

  18. Leland Palmer says:

    That was very interesting about the solar parabolic troughs built during the 1980’s having paid off their loans, and now producing electricity at 3 cents a kilowatt hour, Prokaryotes (post # 16).

    If only we’d spent the three trillion dollars we just spent invading the Middle East on solar power towers…we’d be much better off, not only in electricity, but also because the money would have been spent inside the country, employing Americans and buying products from American companies. Chances are, we’d be in a huge boom economy right now, if we had done that.

    And in twenty years, the debt for building the solar plants would be paid off, and we would have huge amounts of electricity at three cents per kilowatt hour.

  19. Michael T. says:

    Tyson’s Cosmic Tale On Global Warming

    Neil deGrasseTyson frames our most dangerous experiment with Venus and Mars.

  20. Michael T. says:

    Neil DeGRasse Tyson’s Greatest Fear for Earth

    Astrophysicist describes “perilous thoughts” and our unknown tipping point.

  21. Barry says:

    One thing we have learned over the years: everyone underestimates the speed and chaos of actual climate changes. Nobody predicted a year like 2010 happening so soon.

    Take all those trillions of dollars in the impacts report and at least double them.

  22. Mulga Mumblebrain says:

    I’m afraid that the Barbour story concerning the fanatic determination of the denialists to burn every ounce of coal, and the Republican Governors’ rejection of high-speed rail (do they give any rational reason why?)simply reinforce my contempt for ‘capitalist democracy’. The only real democracy exists in small communities, without the interference of money power to pervert the outcomes, and, crucially, where the electorate has reached a level of intelligence, learning, compassion and fellow feeling that will see decisions made that are rational, humane and empathic. I can assure you that in Australia political fervour is excited by the exact opposite sentiments, primarily fear, xenophobia, greed and paranoia. From my own observation democracy is no longer the ‘least worst’ alternative, but one as bad as all the rest and worse than some. In my opinion, the Chinese system, that removes destructive and pointless political contention and the deliberate cultivation of negative sentiments and behaviour in the public, is greatly superior in times like these where action is critically important, and surely the proof is now irrefutable that that system is reacting to the crisis far more rationally than the ‘free market’ pathocracies.