The American Commitment

COP26 ended with a unanimous decision on how to accelerate the global effort to mitigate climate change. This included plans to assist developing countries in their adaptation efforts and to monitor progress in these areas on an annual basis.

It’s now time to start to monitor the progress. In one of my classes, each student selected a country and has been charged to do just that. I focused on the US and how local efforts translate to global ones. This blog starts my coverage of mitigation efforts, while next week’s blog will be focused on the US and the current administration’s April 20th re-commitment to the original Paris agreement:


The nationally determined contribution of the United States of America is: To achieve an economy-wide target of reducing its net greenhouse gas emissions by 50-52 percent below 2005 levels in 2030.

It took several months for the practical steps that the US was taking to fulfill this commitment to come to light. These efforts were incorporated into two resolutions drafted in collaboration with Congress and represent a summary of the present administration’s efforts to redefine the role of government in the American economy.

One resolution, the Infrastructure Investment and Jobs Act was signed into law on Monday, November 15, 2021. Figure 1, from corporate services company EY, outlines the spending in that resolution. While it includes a full list of categories and their allotted budgets, it does not explicitly label climate change anywhere. However, the legislation itself features a relatively minor category addressing energy & climate, which identifies mitigation-related “key words” such as clean energy and grid—two essential concepts relating to changing our energy sources. A more in-depth examination reveals that if the executive branch of the government strongly believes in the necessity of taking a leadership position in fulfilling our COP26 commitment, most of the other categories can serve as legitimate vehicles to achieve it.

Figure 1 Budgets for each category in the Infrastructure and Investment Jobs Act

EY—the company that created Figure 1 using data from the White House record—wrote a description of the resolution:

Infrastructure in the Unites States is deteriorating. The Infrastructure Investment and Jobs Act (IIJA or the Infrastructure Bill) would provide for $1.2 trillion in spending, $550 billion of which would be new federal spending to be allocated over the next five years. The historic investments included in the IIJA, from clean energy to broadband, would significantly reframe the future of infrastructure in the US.

In other words, the $550B marks the new money that has not yet been allocated through the normal budget allocation process.

Meanwhile, looking at other categories, one does not need a vivid imagination to connect improvements in public transportation with a decrease in use of private cars. As long as the majority of private cars continue to run on fossil fuels, any decrease in their use will reduce carbon emissions. This is also true for electric vehicles, unless the electricity used to charge their batteries is sourced from something other than fossil fuels.

I have explored the connections between water infrastructure and climate change multiple times (for the latest entry, see the October 26, 2021 post that deals with the Water-Energy nexus). Additionally, albeit indirectly, the category of infrastructure resilience deals with climate change: specifically, the enhanced intensity and probability of major, climate-related disasters.

As this discussion has hopefully made clear, direct calculation of how much of the infrastructure budget is allocated to addressing climate change will depend strongly on the administration that oversees that spending. By any account, even this resolution will not be enough to fulfill Mr. Biden’s pledge to halve US emissions from 2005 levels by 2030.

The largest part of President Biden’s effort to fight climate change is included in his $1.85 trillion social policy and climate change package. Below are some highlights of this package:

Climate has emerged as the single largest category in President Biden’s new framework for a huge spending bill, placing global warming at the center of his party’s domestic agenda in a way that was hard to imagine just a few years ago.

As the bill was pared down from $3.5 trillion to $1.85 trillion, paid family leave, free community college, lower prescription drugs for seniors and other Democratic priorities were dropped — casualties of negotiations between progressives and moderates in the party. But $555 billion in climate programs remained.

It was unclear on Thursday if all Democrats will support the package, which will be necessary if it is to pass without Republican support in a closely divided Congress. Progressive Democrats in the House and two pivotal moderates in the Senate, Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, did not explicitly endorse the president’s framework. But Mr. Biden expressed confidence that a deal was in sight.

The centerpiece of the climate spending is $300 billion in tax incentives for producers and purchasers of wind, solar and nuclear power, inducements intended to speed up a transition away from oil, gas and coal. Buyers of electric vehicles would also benefit, receiving up to $12,500 in tax credits — depending on what portion of the vehicle parts were made in America.

The rest would be distributed among a mix of programs, including money to construct charging stations for electric vehicles and update the electric grid to make it more conducive to transmitting wind and solar power, and money to promote climate-friendly farming and forestry programs.

This package recently passed the House but its fortune in the US Senate is still unknown. The big question remains, who is going to pay for it. Below is the latest background on this issue:

WASHINGTON — President Biden’s pledge to fully pay for his $1.85 trillion social policy and climate spending package depends in large part on having a beefed-up Internal Revenue Service crack down on tax evaders, which the White House says will raise hundreds of billions of dollars in revenue.

But the director of the nonpartisan Congressional Budget Office said on Monday that the I.R.S. proposal would yield far less than what the White House was counting on to help pay for its bill — about $120 billion over a decade versus the $400 billion that the administration is counting on.

It is obvious that the Congressional Budget Office, which evaluated the bill, didn’t factor in the physical or fiscal damages that will result from a failure to mitigate and adapt to uncontrolled climate change (see blogs dated November 21, 2017, September 15, 2020, January 21, 2020).

Stay tuned. Next week, I will explore the calculations that the US administration made public that led to the April 20, 2021 commitments.

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Conclusions From COP26

This semester, I am teaching two courses directly related to climate change. I start both with an exploration of the basic science involved. It’s a multidisciplinary topic that requires using first principles to address the overlap of the physical, natural, and social sciences. For the second half of the semester, I turn to helping my students understand—from both observer and participant perspectives— how global current events relate to climate change. This semester provided us with a rich selection of such events, culminating in COP26 in Glasgow, Scotland.

The observation part of both courses was to compile an individual e-journal of the global developments, ending with a summary of the global climate picture, as they saw it developing. In terms of participation, for the first course, each student had to select a country whose developments in the global climate challenge they would track and summarize. They were asked to give short class presentations following any important developments. Students chose countries based on personal connections, including birth, affiliation of relatives, and special affinity. I personally covered both the United States and the global trends.

The participant part of the second course was targeted at our “campus as a lab” effort to decarbonize campus (type Brooklyn College into the search box to follow my efforts on this line) through students’ bottom-up efforts. This is part of a multiyear project, which includes several similar courses. We have summarized the results of this effort on a webpage that is being sent to decision makers; we hope that some of the proposals will be implemented.

COP26 was concluded on Saturday, November 13th. As is the usual practice of such meetings, it ended with a successful unanimous decision by the 197 official participation countries.

To their credit, Wikipedia contributors were able to post an objective summary of the most important accomplishments of the meeting only a few days after the conclusion of the meeting:

The number of countries pledged to reach net-zero emissions passed 140. This target includes 90% of current global greenhouse gas emissions.[6]

More than 100 countries, including Brazil, pledged to reverse deforestation by 2030.

More than 40 countries pledged to move away from coal.

India promised to draw half of its energy requirement from renewable sources by 2030.[7]

The governments of 24 developed countries and a group of major car manufacturers including GM, Ford, Volvo, BYD Auto, Jaguar Land Rover and Mercedes-Benz committed to “work towards all sales of new cars and vans being zero emission globally by 2040, and by no later than 2035 in leading markets”.[8][9] Major car manufacturing nations like the US, Germany, China, Japan and South Korea, as well as Volkswagen, Toyota, Peugeot, Honda, Nissan and Hyundai, did not pledge.[10]

Most of the sources I saw (including press, TV, and social media) criticized the results, saying either that the decision didn’t go far enough or that it went too far.

To keep some balance, I’m including what I find to be the most significant entries in each category of the latest draft of the final resolution that was available to me. The final resolution (COP26 cover decision) is not long (around 7 pages) and I strongly recommended that you read it in its entirety so you can form your own opinion:

Glasgow Climate Pact

Acknowledging the devastating impacts of the coronavirus disease 2019 pandemic and the importance of ensuring a sustainable, resilient and inclusive global recovery, showing solidarity particularly with developing country Parties,

  1. Science and urgency
  2. Expresses alarm and utmost concern that human activities have caused around 1.1 °C of global warming to date and that impacts are already being felt in every region;
  3. Adaptation
  4. Emphasizes the urgency of scaling up action and support, including finance, capacitybuilding and technology transfer, to enhance adaptive capacity, strengthen resilience and reduce vulnerability to climate change in line with the best available science, taking into account the priorities and needs of developing country Parties;

III. Adaptation finance

  1. Urges developed country Parties to urgently and significantly scale up their provision of climate finance, technology transfer and capacity-building for adaptation so as to respond to the needs of developing country Parties as part of a global effort, including for the formulation and implementation of national adaptation plans;
  2. Mitigation
  3. Calls upon Parties to accelerate the development, deployment and dissemination of technologies, and the adoption of policies, to transition towards low-emission energy systems, including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognizing the need for support towards a just transition;
  4. Finance, technology transfer and capacity-building for mitigation and adaptation
  5. Urges developed country Parties to provide enhanced support, including through financial resources, technology transfer and capacity-building, to assist developing country Parties with respect to both mitigation and adaptation, in continuation of their existing obligations under the Convention, and encourages other Parties to provide or continue to provide such support voluntarily;
  6. Urges developed country Parties to fully deliver on the USD 100 billion goal urgently and through to 2025, and emphasizes the importance of transparency in the implementation of their pledges; 28. Urges the operating entities of the Financial Mechanism, multilateral development banks and other financial institutions to further scale up investments in climate action, and calls for a continued increase in the scale and effectiveness of climate finance from all sources globally, including grants and other highly concessional forms of finance;
  7. Loss and damage
  8. Resolves to strengthen partnerships between developing and developed countries, funds, technical agencies, civil society and communities to enhance understanding of how approaches to averting, minimizing and addressing loss and damage can be improved;

VII. Implementation

  1. Strongly urges all Parties that have not yet done so to meet any outstanding pledges under the Convention as soon as possible;

VIII. Collaboration

53. Recognizes the importance of international collaboration on innovative climate action, including technological advancement, across all actors of society, sectors and regions, in contributing to progress towards the objective of the Convention and the goals of the Paris Agreement

As you can tell from the Wikipedia summary, the final resolution is not the only outcome of the conference. Figure 1 shows a snapshot of the 31 separate outcomes that passed without unanimous decisions.

Figure 1 – Screenshot of the main page of COP26 outcomes

I chose to highlight two of these outcomes. One—the ARA—the first in Figure 1, includes not only several member states but also signatories from of cities, companies, and other large entities. This coalition strengthens the belief that strong bottom-up commitments to fight climate change are the best way forward. The second one, not visible in Figure 1, calls for instituting an annual global checkpoint process by 2022:

These statements and declarations are the high-level outcomes from the World Leaders Summit and presidency theme days of the two-week programme of COP26.

We the undersigned, representing over 100 organisations across 35 economies, have gathered here at the 2021 United Nations Climate Change conference (COP26), in Glasgow, United Kingdom, to launch the Adaptation Research Alliance (ARA).

A bold new coalition of global adaptation actors, the ARA will catalyse and scale investment in action-oriented research and innovation for adaptation that strengthens resilience in communities most vulnerable to climate change.

Breakthrough agenda – launching an annual global checkpoint process in 2022

The breakthrough agenda launched at the world leaders summit commits countries to work together to make clean technologies and sustainable solutions the most affordable, accessible and attractive option in each emitting sector globally before 2030.

Wikipedia rightly lists this annual checkpoint process as the biggest accomplishment of the meeting. I fully agree. Hopefully, it will guarantee that the large groups interested in global climate change mitigation will shift from future commitments to ongoing accomplishments in the wake of the COP26 meeting.

I will end this blog by stating my belief that the outcome of COP26 probably would have felt much more discouraging if not for the unexpected announcement of an agreement between the US and China to work together to slow the impact of global warming and to ensure a successful conclusion of COP26.

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Managing the Energy Transition: Specifics

Rex Tillerson, the former CEO of ExxonMobil, may have asked, “what good is it to save the planet if humanity suffers?” (September 21, 2021) but this week, in the context of COP26, the current CEO of Exxon expressed a different opinion:

Darren W. Woods, the chief executive of Exxon Mobil, made the case for his company to play a role in helping the global economy transition to clean energy at the DealBook Online Summit on Wednesday.

“There are a lot of sectors of the economy which are critical to supporting modern life that aren’t easy to decarbonize, where we don’t have a good solution,” Mr. Woods said in an interview with DealBook’s Andrew Ross Sorkin. “Frankly, that’s where I think a company like Exxon Mobil can bring value,” he said, by finding ways to “bridge that gap between what’s needed today and what we want for tomorrow.”

Not surprisingly, oil companies had a large representation at COP26; the final conclusions of the meeting might reflect it.

By the time that this blog is posted, the COP26 meeting will be over (officially, the meeting closed on Friday; however, attempts to reach a unanimous decision often overflow into the day after the official closing). Given that I write my blogs ahead of time, I will wait until next week to give my take on the meeting’s closing.

This blog is a continuation of last week’s post, with an emphasis on some specifics in the efforts to transition the global energy supply away from carbon sources. I will start with an industry-friendly description about managing the balance between the need to decarbonize our energy source and our ability to generate a sufficient amount of energy from alternative sources:

The world wants to “transition” away from fossil fuels toward green energy, but the difficult reality is this: Dirty fuels are not going away — or even declining — anytime soon.

The total amount of renewable energy that’s available is growing. That’s good news for a world threatened by potentially devastating climate change.

But the increase in renewable energy is still lower than the increase in global energy demand overall. A “transition” from fossil fuels may come someday, but for now, renewable energy isn’t even keeping pace with rising energy demand — so fossil fuel demand is still growing.

“The global power market is experiencing rapid power demand growth as markets recover from the pandemic. Despite all the capacity additions in renewables generation, the amount of power currently generated by renewables is still not enough to meet this increased demand,” Matthew Boyle, manager of global coal and Asia power analytics at S&P Global Platts, told CNBC.

The global supply of renewables will grow by 35 gigawatts from 2021 to 2022, but global power demand growth will go up by 100 gigawatts over the same period, according to Boyle. Countries will have to tap traditional fuel sources to meet the rest of the demand. A gigawatt is 1 billion watts.

Now that we are (hopefully) at the tail-end of the COVID-19 pandemic, the global economy is starting to rebuild. Of course, this means an accelerated demand for energy that must be synchronized with available supply (see last week’s post on how natural gas ties in here).

Coal was a major topic at the COP26—specifically, how to secure commitments to stop using it as an energy source. That’s easier said than done, though:

Coal was supposed to be headed to the dust bin of history as the world increasingly embraces renewable energy.

After all, many countries were shutting down these sooty, air-choking power plants. Mines closed, coal companies went bankrupt, and utilities started to replace coal-fired electricity generation with natural gas or wind and solar energy.

But it turns out that weaning the world off fossil fuels, particularly the dirtiest fuel of them all, isn’t going to be easy or quick, as coal’s price and demand have been revived this year. Transitions take time.

“From our point of view, the energy transition was always a multi-decade story,” said Biff Ourso, senior managing director, Nuveen Real Assets. “And there’s invariably going to be periods of spikes in demand, or supply/demand imbalances that was going to cause a resurgence in carbon-based generation sources.”

Coal is likely to stick around as countries rely on it to ensure the lights stay on and the economy hums along. Coal’s resurgence also shines a light on the need for improved battery storage for renewables if the world is going to decarbonize.

One of the apparent low-lying fruits, which some hope will emerge out of this meeting, is for all participating governments to agree to stop subsidizing fossil fuels:

The head of the United Nations Development Programme told CNBC that $423 billion of taxpayers’ money is being spent on subsidizing fossil fuel use each year, and is preventing a transition toward cleaner energy.

Speaking around the launch of its new campaign, “Don’t Choose Extinction,” UNDP Administrator Achim Steiner said he was “very worried” that we are in a “historical moment in time” with all the means to tackle climate change, but not taking the decisions necessary to make it happen.

The new UNDP campaign against fossil fuel subsidies sees a dinosaur, voiced by global stars in various languages including Jack Black, Eiza Gonzalez, Nikolaj Coster-Waldau and Aïssa Maïga, addressing the United Nations in New York, urging the world not to make choices that could lead them to follow dinosaurs into extinction.

The global approach could be helpful if all of the countries signed on, however, this is so far not the case. Among the rich countries, Australia, at least under its present government, wants to find its own way forward. It is one of the largest exporters of coal and it would like to continue to enjoy the advantages that this lucrative business brings:

“Australia’s energy and natural resources sectors have evolved and reduced emissions much faster than we expected a decade ago,” Mr Taylor said when asked what the energy landscape would look like in 2030.

He said he believed hydrogen – made from either renewable energy or from natural gas combined with a process to trap and bury the carbon dioxide released – would be more competitive by then and help cut emissions in parts of the economy that could not be easily electrified.

“The extraordinary uptake of renewables, particularly household solar, towards the end of the 2010s, has been matched by huge growth in the 2020s of a range of new low-emissions energy technologies,” Mr Taylor said.

While many experts agree government policy is needed to help phase out planet-heating fossil fuels, the Morrison government has adopted an approach of “technology not taxes” to drive commercial uptake of lower-carbon energy. It has resisted setting industry emission targets, a carbon price or moves to reduce fossil fuels’ role in the grid in coming years.

The difficulties of the transition are not confined to finding enough supply of decarbonized energy sources. The global objective of the transition is to emit less carbon dioxide overall but some industries need carbon dioxide for their industrial production—it is an essential part of their supply chain. Below is an example from England:

Britain’s pig farmers are the latest casualty of the worsening energy crisis which threatens to trigger a shortage of carbon dioxide used across the food and drinks industry. Nick Allen, chief executive of the British Meat Processors Association, said: “We urgently need the secretary of state for business to convene the big CO2 manufacturers to demand that they coordinate to minimise disruption, and provide information to Britain’s businesses so contingency plans can be made.”

Rocketing gas prices have caused a Europe-wide slowdown for some chemical factories that produce fertiliser, a byproduct of which is carbon dioxide, used in fizzy drinks and beer as well as in the meat industry to stun animals before slaughter.

Meat industry representatives have warned that farmers may imminently be required to begin “humane” pig culls because of a looming shortage of carbon dioxide to slaughter the backlog of animals destined for abattoirs that are already understaffed amid labour shortages.

Probably the most difficult and important issue that the COP26 meeting tackled was how to mitigate the impacts of the immense, destructive powers of climate change while also seeing to the financial and energy needs of developing countries. In next week’s blog, I will try to share my views on the strengths, weaknesses, and overall outcome of COP26.

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Managing the Energy Transition on a Global Scale

Figure 1

Figure 2

I have been (starting on September 21st) focusing on energy companies’ transitions away from fossil fuels; many are finally realizing that such global shifts are necessary if we cannot implement an acceptable way to capture the immense amounts of carbon we emit. While the energy companies are the sector with the most potential for change, the related climate catastrophes affect us all.

In September of this year, Rex Tillerson, the former CEO of ExxonMobil, questioned, “what good is it to save the planet if humanity suffers?” (September 21, 2021). In a certain sense, he is right—that is, if humanity suffers in the transition to save the planet, chances are that people will not be willing to go along with the necessary changes. A “return to the cave”—or less technological—scenario is not an option. Of course, in order to avoid inflicting mass misery, such a global transition will necessarily be both complex and time-consuming. It must replace fossil fuels with sustainable energy—or at least, energy alternatives that don’t end up changing the chemistry of the atmosphere in a detrimental way. (This will likely include nuclear energy and carbon capture). At the same time, the transition must ensure a constant supply of sufficient energy to drive the global economy while also supporting a growing human population. Since a polluted atmosphere is global, the energy transition must be global as well to include both mitigation and adaptation to the new climate. Arguments such as “Make America Great Again” (MAGA), which focus on a specific country or region, must be replaced by new slogans such as “Keep Our Planet Livable.” Otherwise, rising social unrest will stop the transition cold, putting our collective existence in question.

Figures 1 and 2 show the two faces of such transitions. Figure 1, taken from a CleanTechnica piece about the Global Association for Transition Engineering (GATE) shows schematics for how an engineer sees such a transition, while Figure 2, taken from the NYT article I cited above, shows how we present the transition in layman’s terms: as a one-parameter event that extrapolates the future climate based on how much carbon we emit.

Almost immediately after the opening of COP26, President Biden was caught in what seemed to be a duplicitous statement:

President Biden told a global climate summit on Monday that “we only have a brief window before us” to reduce the emissions from burning oil, gas and coal that pose an “existential threat” to humanity. But only days earlier, he was urging the world’s largest oil producers to pump more of the fossil fuels that are warming the planet.

The incongruity was on center stage both at the global climate summit currently taking place in Scotland, and in Rome this past weekend during a gathering of leaders from the 20 largest economies. The president’s comments highlighted the political and economic realities facing politicians as they grapple with climate change. And they underscored the complexity of moving away from the fossil fuels that have underpinned global economic activity since the Industrial Age.

“On the surface, it seems like an irony,” Mr. Biden said at a news conference Sunday. “But the truth of the matter is — you’ve all known; everyone knows — that the idea we’re going to be able to move to renewable energy overnight,” he said, was “just not rational.”

This does not mean that President Biden is a duplicitous man; he understands the nature of the energy transition that we are trying to enact. However, he also realizes that we are also trying to recover from the economic damage that COVID-19 has inflicted on the world—and the current global energy shortage has major impacts on that recovery:

Much of the world is suddenly worried about running short of natural gas, and the impact is being felt in surging utility bills, shuttered factories and a rising desperation as winter approaches.

Across Asia, Europe and Latin America, consumers still reeling from the pandemic are finding energy costs soaring, driven higher by natural gas prices that have increased fourfold in some regions in recent months, hitting record highs this week. Makers of chemicals, steel, ceramics and other goods that require large amounts of energy are seeing their bottom lines squeezed and, in some cases, suspending operations.

In South Korea, electric rates just increased for the first time since 2013, and small businesses that struggled under months of strict pandemic rules are now fearing future price jumps. “It’s already hard for small businesses to survive,” said the Korea Federation of Micro Enterprise.

In Brazil, the worst drought in 90 years has depleted hydroelectric output, forcing power generators to import expensive natural gas. The government raised electricity prices by nearly 7 percent in September, after a nearly 8 percent increase in July.

Europeans are also feeling the pinch. In Spain, the government recently said it would take profits away from energy companies to help rate payers. In Italy, residents were recently hit with a 14 percent increase in their gas bills, accompanied by a nearly 30 percent jump in electricity rates.

“We’ll have to do the dishes or laundry at nighttime to save money,” said Carla Forni, a teacher and mother of two in Bologna.

In China, already the world largest importer of natural gas, demand is up 13 percent as Xi Jinping, the country’s leader, presses forward with plans to clean up the environment by turning away from coal.

As a major gas exporter, the United States has been benefiting from the strong global demand. Of late, prices that have risen to their highest levels in years have prompted calls to rein in the shipments abroad. American prices, though, are just a fraction of those seen recently in Europe and Asia.

All these shortages coincide with the opening of the COP26 meeting, one of whose main agendas is to establish a timeline to stop the use of coal:

Coal was supposed to be headed to the dust bin of history as the world increasingly embraces renewable energy.

After all, many countries were shutting down these sooty, air-choking power plants. Mines closed, coal companies went bankrupt, and utilities started to replace coal-fired electricity generation with natural gas or wind and solar energy.

But it turns out that weaning the world off fossil fuels, particularly the dirtiest fuel of them all, isn’t going to be easy or quick, as coal’s price and demand have been revived this year. Transitions take time.

“From our point of view, the energy transition was always a multi-decade story,” said Biff Ourso, senior managing director, Nuveen Real Assets. “And there’s invariably going to be periods of spikes in demand, or supply/demand imbalances that was going to cause a resurgence in carbon-based generation sources.”

Coal is likely to stick around as countries rely on it to ensure the lights stay on and the economy hums along. Coal’s resurgence also shines a light on the need for improved battery storage for renewables if the world is going to decarbonize.

In spite of these energy shortages, 40 countries—among them several major coal users—signed an agreement that laid out a timeline for ending their use of coal:

In a surprise announcement from the COP26 climate summit in Scotland, an international agreement has been reached to accelerate the end of coal, the fossil fuel that is the single biggest source of the emissions that cause climate change.

According to a release from the U.K. Government’s Department for Business, Energy and Industrial Strategy (BEIS), 18 additional countries will commit to ending their use of coal in the 2030s and the 2040s. These include the highly coal-dependent nations of Poland, Vietnam, Egypt, Chile and Morocco.

Importantly, the agreement does not include the coal-heavy powers China or Russia, the first and fifth most polluting nations respectively, whose leaders are not attending the summit in Glasgow. However, in the run up to the COP, China reaffirmed its commitment to achieve net-zero carbon emissions by 2060 and to reach peak emissions by 2030.

China,  as well as Japan and Korea, announced within the last year that they would no longer fund new coal-power projects overseas.

The announcement also does not cover India, though on Monday the nation’s Prime Minister Narendra Modi announced a series of new carbon-cutting goals, with pledges to reach net-zero carbon emissions by 2070, and to slash emissions by 1 billion tons by 2030.

Of course, as the article mentions, not all of the major coal producers or users are among the signatories. Next week, we’ll be nearing the end of COP26 meeting, and should have a clearer picture of the various commitments.

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Universal Hydrogen Economy: Part 2

This week, we’re back to our discussion about the hydrogen economy. The Economist published a great summary of the related challenges we’re facing right now:

Today’s hydrogen business is, in global terms, reasonably small, very dirty and completely vital. Some 90m tonnes of the stuff are produced each year, providing revenues of over $150bn—approaching those of ExxonMobil, an oil and gas company. This is done almost entirely by burning fossil fuels with air and steam—a process which uses up 6% of the world’s natural gas and 2% of its coal and emits more than 800m tonnes of carbon dioxide, putting the industry’s emissions on the same level as those of Germany.

Tomorrow’s hydrogen business, according to green-policy planners around the world, will be vital in a different way: as a means of decarbonising the parts of the economy that other industrial transformations cannot reach, and thus allowing countries to achieve their stated goal of stabilising the climate. But for that vital goal to be met everything else about the industry has to change. It can no longer stay small. Morgan Stanley, an investment bank, reckons that, if governments take their green commitments seriously, today’s market could increase more than five-fold to over 500m tonnes by 2050 as these new applications grow (see chart 1). And it has to become clean, cutting its carbon-dioxide emissions to zero.

As the European Union’s hydrogen strategy puts it, “From 2030 onwards and towards 2050, renewable hydrogen technologies should reach maturity and be deployed at large scale to reach all hard-to-decarbonise sectors.” Forcing the industry to the level of maturity which will allow that deployment is set to soak up $100bn-150bn in public money around the world in the decade to 2030. Some $11bn of that will be spent this year, according to Bloombergnef, a data company.

Reuters adds some details about the funds necessary to reach that goal:

Governments need to step up investment in hydrogen production and storage chains to help cut net emissions to zero, the International Energy Agency (IEA) said on Monday.

States and private investors had so far only come up with about a quarter of the $1,200 billion needed by 2030 to develop and deploy hydrogen and make it part of global net zero strategies, the Paris-based organization said.

Efforts should be directed on getting hydrogen into more sectors and developing technologies to make it cheaper to produce with renewables, its report added.

Meanwhile, the CEO of Siemens Energy has a rather more pessimistic (some will say more realistic) view:

The CEO of Siemens Energy has spoken of the challenges facing the green hydrogen sector, telling CNBC that there was “no commercial case” for it at this moment in time.

In comments made during a discussion at CNBC’s Sustainable Future Forum on Tuesday, Christian Bruch outlined several areas that would need attention in order for green hydrogen to gain momentum.

“We need to define boundary conditions which make this technology and these cases commercially viable,” Bruch, who was speaking to CNBC’s Steve Sedgwick, said.

“And we need an environment, obviously, of cheap electricity and in this regard, abundant renewable energy available to do this.” This was not there yet, he argued.

Hydrogen can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.

If the electricity used in this process comes from a renewable source such as wind or solar then some call it green or renewable hydrogen.

It’s cyclical: you cannot have commercially viable green hydrogen without having commercially viable green electricity to break apart our most abundant hydrogen resource, water. Meanwhile, we will continue to harvest the most efficient renewable energy via the fusion of hydrogen from the center of our solar system.

In addition to direct, straightforward solar energy, we can also get the hydrogen from the sun both indirectly and with byproducts that might help to pay for the technology:

We will make zero-CO2 hydrogen from natural gas so cheaply we could give it away for free’

US start-up H Quest says its emissions-free microwave plasma pyrolysis technology will turn methane into H2 and high-value solid carbon or petrochemicals — with these “co-products” alone making projects profitable, writes Leigh Collins

This is because the technology will also produce high-value carbon-based products and chemicals at the same time as the hydrogen — and the income from selling those would be enough to render any project profitable.

The microwave plasma pyrolysis technology developed by Pittsburgh-based H Quest uses electricity to generate microwaves that moves methane (CH4) into a plasma state, stripping off hydrogen atoms and initiating a chain reaction that creates solid carbon or petrochemical compounds such as acetylene (C2H2) and ethylene (C2H4).

Facilities to produce hydrogen are now popping up everywhere but the origin for this hydrogen is not always clear. By convention, they separate electricity into coal-, natural gas-, or “green”- (from sustainable energy sources) powered but rarely disclose specific sources for the latter. Here are descriptions of the efforts to produce hydrogen in India and Japan.

My next blog will discuss the timing of these transitions.

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Universal Hydrogen Economy

My last 5 blogs have looked at global energy companies’ apparent green shift, questioning their objectives: where are they shifting? Last week, I promised that I’d address both this and the timing needed for the transition. To address the first part, I must tackle the larger issue: globally, where do we ultimately need to go to shift our energy use so that we have enough energy at a price that all of us can afford? We need to power a flourishing global economy without destroying the planet in the process.

Obviously, I am not the only one that is trying to address the issue. The COP26 UN meeting in Glasgow, Scotland is quickly approaching (scheduled to last two weeks from its start on October 31st); I am focusing here on two of the biggest subjects leading up to it: energy generation from the fusion of hydrogen nuclei and the hydrogen economy. I’ve addressed both topics extensively throughout Climate Change Fork’s more than 500 posts. You can search for either in the search box to find examples. Both concepts, as their names imply, are based on hydrogen and its isotopes. The two are tightly connected.

Earlier this month, I looked at the transition in the automotive industry (October 12, 2021). I included the example of what is happening at Daimler, the world’s largest maker of heavy trucks. The batteries that have been successful in powering vehicles for shorter distances are not practical for long-haul trucks. Daimler and its competitors are instead looking into internal combustion engines with green hydrogen fuel (produced from water with non-carbon energy sources).

Obviously, not everybody is giving up on the electrical grid. Not surprisingly, the solution that is attracting more and more attention (and money) is nuclear fusion (emphasis is mine):

ABINGDON, England — Harnessing fusion energy into something commercially viable — and maybe, ultimately, a clean source of power that replaces fossil fuels for centuries to come — has long been considered by some as the ultimate moonshot.

But investor interest in fusion energy continues to slowly rise, and the number of start-ups in the field is multiplying, with an estimated 1,100 people in several countries making their living at these firms. An industry is taking shape, with a growing network of companies that supply highly specialized equipment, like the components of the powerful magnets that fusion devices require.

The British government even recently saw the need to issue regulations for fusion energy — a kind of milestone for a burgeoning industry.

No one knows when fusion energy will become commercially viable, but driving the private investments is a rising alarm about global warming.

“Nobody has a better plan to deal with the climate crisis,” said David Kingham, one of the three co-founders of Tokamak Energy, a company that has raised about $200 million, mostly from private sources.

This is not the only publication to describe this trend.

If all our energy were to come from fusing hydrogen, as present trends indicate might be possible, our electricity use would technically make Earth a star, making us a binary star with the sun. Stars are defined in terms of their hydrogen fusion energy-producing cores. To fuse hydrogen in its core, gravity needs to produce a core with a temperature of millions of degrees C. We need a large mass to accomplish it. The lowest surface temperature of stars is 3000oK (2730oC) (oK, or Kelvin, is equal to the Celsius scale with the addition of 273). Understandably, that means there is no life possible (that we know of) on the surface of any star.

Earlier this year, I discussed the prospect of producing electricity using hydrogen fusion (June 8, 2021). We have plenty of hydrogen on this planet in the form of water; its molecular structure consists of two hydrogen atoms connected to an oxygen atom. However, water is the stable, low-energy product of the combustion of hydrogen. We would need to use energy to separate its hydrogen atoms before we could use those for energy production.

The nature of the water cycle on Earth is such that, even though it is constantly changing form, it’s a closed system and the total value of the planet’s water is constant (see the September 3, 2013, blog). Energy use, on the other hand, is not cyclical. The second law of thermodynamics means that the output is always less than the input. We get high-quality energy (high temperature), mostly from the sun, use it for whatever the planet needs, and emit it back into space in the form of lower temperature heat.

However, what makes this planet habitable is the large availability of accessible liquid water. Every form of life that we know needs liquid water to survive. Humans can only directly use fresh water, which consists of around 0.5% of all naturally available water.

Figure 1 shows the schematics of the “water-energy nexus,” the connection between our energy use and our water availability. If you Google the term, you’ll run into a slew of diverse activities emerging around this connection.

Figure 1Water-Energy nexus

A recent World Meteorological Society (WMS) report (2021 State of Climate Services (WMO-No. 1278) | E-Library) summarizes the connection. From the abstract:

Water is a top adaptation priority. In 2018, 2.3 billion people were living in countries under water stress1,2 and 3.6 billion people faced inadequate access to water at least one month per year. By 2050, the latter is expected to be more than five billion.3 Assuming a constant population, an additional 8% of the world’s population in the 2000s will be exposed to new or aggravated water scarcity4 associated with a 2°C of global warming.5 Concurrent population growth would further increase this number. Human- and naturally-induced stressors are increasingly adding pressure on water resources, a key prerequisite for human development. In the past 20 years, terrestrial water storage – the summation of all water on the land surface and in the subsurface, including soil moisture, snow and ice – has been lost at a rate of 1cm per year. The situation is worsening by the fact that only 0.5% of water on Earth is useable and available freshwater. Integrated Water Resources Management (IWRM) is vital to achieving long-term social, economic and environmental well-being. But, although most countries have advanced their level of IWRM implementation, 107 countries remain off track to hit the goal of sustainably managing their water resources by 2030,6 as set out in the UN Sustainable Development Goal No. 6 (SDG 6). In 2020, 3.6 billion people lacked safely managed sanitation services, and 2.3 billion lacked basic hygiene services. The current rates of progress need to quadruple in order to reach the global target of universal access by 2030.7,8 Meanwhile, water-related hazards have increased in frequency for the past 20 years. Since 2000, flood-related disasters have increased by 134%, compared with the two previous decades.9 Most of the flood-related deaths and economic losses were recorded in Asia, where end-to-end warning systems for riverine floods require strengthening in many countries. The number and duration of droughts also increased by 29%. Most drought-related deaths occurred in Africa, indicating a need to continue strengthening end-to-end warning systems for drought.

The WMS report mostly focuses on climate change’s destructive power: worsening water-related hazards and diminishing fresh water availability. Meanwhile, when we look at water’s impact on energy production, we often focus on hydroelectric power generation, which now makes up 65% of global renewable energy production. However, it is important to remember that water is also directly involved in the cooling of almost all power plants, regardless of their energy sources.

This blog is old enough to be able to track updates in the hydrogen economy. My last blog that dealt with the issue (April 2, 2019) focused on Japan. Today, almost every country or region is experimenting with the concept. I will try to expand the term of hydrogen economy to include energy production from hydrogen fusion in next week’s blog. In this universal hydrogen economy, not all energy production needs to be human-made on Earth; a significant fraction of our energy comes from the sun (including solar and wind)—after all, we are part of the solar system.

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Learning from COVID-19 to mitigate the energy transition

Two years ago, I wrote a blog, “Cherry-Picking Data in an Energy Transition: Renewables & Polar Bears” (September 17, 2019) that took stock of where we stood in the ongoing energy transition. I am repeating the photos from that blog here, with two questions: What is the mama-bear trying to teach her cubs now? and what does the ice-water phase transition represent today?

For me and those of you with enough imagination, Figure 3—with its loaded ships full of imported containers stuck in the LA port, ties in with Figure 2. One is a literal freeze and the other a supply-chain freeze. It is difficult to teach your cubs in these kinds of transitions how to move forward.

I posted the 2019 blog only a few months before the COVID-19 pandemic struck the world. Climate change impacts were in a slightly earlier stage. With God’s help, and a great deal of work by vaccine innovators, many of us have been able to get vaccinated; surges and variations aside, predictions say that the COVID-19 pandemic is winding down. Meanwhile, the impacts of climate change are clearly getting worse. As I have often discussed, we are living through two immense phase transitions. One is existential and mostly irreversible, marked on a generational time scale. The other has claimed more than 5 million lives within a matter of months but is hopefully more temporary. Can we learn from one how to mitigate the other?

Phase transitions (like water to ice in Figure 2) are among the most complex physical systems that science encounters; the components of the two phases coexist and interact with each other in unique ways. We have made great progress in understanding these systems on a laboratory scale. We have a long way to go in understanding them on a global, human scale.

polar bears, renewables, Arctic, sea ice, climate change Figure 1 – Mama-bear trying to teach her cubs what to do

Arctic, sea ice, climate change, melt

Figure 2 – A freezing lake

freeze, supply chain, economy, port, energy

Figure 3The supply-chain freeze in import arrivals at the Los Angeles port

The last few blogs focused on large fossil fuel companies that are finding themselves in the middle of a stuttering energy transition. Forced by external factors, many are starting to announce that they will go green by 2050, whether or not they want to.

Many of them have grudgingly promised to lower their own emissions while carefully avoiding any further commitments that might undercut profits:

Earlier this year, Chevron faced a reckoning when 61 percent of the company’s shareholders backed a nonbinding resolution asking it to cut its emissions. The oil and gas giant had previously announced goals to make its operations less carbon-intensive, but at its annual general meeting in May, shareholders effectively crossed their arms and shook their heads, demanding that the company cut emissions from the use of its products, too.

But even after the majority shareholder vote, Chevron is barely budging.

On Monday, Chevron announced a new “aspiration” to reduce emissions from its upstream operations to net-zero by 2050, along with a separate target of reducing the carbon intensity of its products by 5 percent by 2028. That mouthful of words means the company plans to keep producing just as much oil as it always has, if not more, but emit less carbon per barrel.

Activist shareholders were not impressed with the update.

Nor is Chevron the only company with this attitude: “US oil majors have largely favored plans that target the emissions produced by their own operations, covering just a tiny proportion of their wider impact on the climate.”

Even when cornered, these companies are trying to deny responsibility. Right now, we’re in a climate change-triggered phase transition: either we can keep using conventional fossil fuels, allowing energy companies to continue business as usual, or we can replace the fossil fuels with sustainable energy sources and other fuels such as nuclear energy that don’t leave the same level of destructive residues in the physical environment. However, in order to sustain the global economy, we still need access to current energy levels. Fortunately, we are making progress; renewable energy is poised to overtake fossil fuels in some places:

Australia’s clean energy transition is tipped to accelerate to the point that most homes will have solar panels paired with batteries by 2030 and the nation could have the highest penetration of renewable energy per-capita of anywhere in the world.

As pressure mounts ahead of the Glasgow climate summit for Australia and other developed nations to quit coal-fired electricity by 2030, a new report compiling the views of 30 energy industry and government leaders, including Federal Energy Minister Angus Taylor, details the commonly held expectation that the shift to clean power rolling through the sector is only going to get faster.

While that’s great news, we immediately see negative effects on a global scale if the requirement to replace conventional fossil fuel with non-carbon-emitting energy sources is not synchronized with energy production needs. Below are two examples from China and Europe:

China is dealing with rising energy demands as the pandemic begins to slow; the country’s response is not eco-friendly:

BEIJING — A bread company can’t get all the power it needs for its bakeries. A chemicals supplier for some of the world’s biggest paint producers announced production cuts. A port city changed electricity rationing rules for manufacturers four times in a single day.

China’s electricity shortage is rippling across factories and industries, testing the nation’s status as the world’s capital for reliable manufacturing. The shortage prompted the authorities to announce on Wednesday a national rush to mine and burn more coal, despite their previous pledges to curb emissions that cause climate change.

Mines that were closed without authorization have been ordered to reopen. Coal mines and coal-fired power plants that were shut for repairs are also to be reopened. Tax incentives are being drafted for coal-fired power plants. Regulators have ordered Chinese banks to provide plenty of loans to the coal sector. Local governments have been warned to be more cautious about limits on energy use that had been imposed partly in response to climate change concerns.

“We will make every effort to increase coal production and supply,” said Zhao Chenxin, the secretary general of the National Development and Reform Commission, China’s top economic planning agency, at a news briefing on Wednesday in Beijing.


Soaring natural gas prices have roiled Britain and the rest of Europe, leading to price spikes in the cost of electricity that are raising utility bills for consumers, putting pressure on energy suppliers and disrupting industries.

The consequences of the turmoil are unfolding every day, as factories shut down, ministers huddle with business leaders to find solutions and idled coal-burning plants are pressed into service to provide more power.

On Wednesday, the crisis became geopolitical as the U.S. energy secretary, Jennifer M. Granholm, appeared to take aim at Russia, the largest supplier of gas to Europe. The United States and its allies, she said, “have to be prepared to continue to stand up when there are players who may be manipulating supply in order to benefit themselves.”

There are suspicions that Moscow is using the gas markets to pressure Europe to sign off on a giant new pipeline to Germany called Nord Stream 2. For years, Nord Stream 2 has been a lightning rod in U.S.-Russian relations …

Globally, the transition is much worse in developing countries that don’t have the resources required for a successful energy transition. Since the impact of this transition is global, selective mitigation is not doing much good. In the same way that they need to ensure worldwide vaccine availability in order to effectively end the pandemic, rich countries must contribute to facilitating the energy transition in the developing world. Larry Fink, the chairman and CEO of the investment company Blackrock, described this situation forcefully:

As the leaders of the World Bank and the International Monetary Fund meet this week, they have a chance to reimagine how the world can use finance to reduce the risks from climate change.

For the economies working toward the goal of achieving by 2050 a net-zero world — one where we have removed as much of our carbon emissions as we produce — a huge obstacle will be mobilizing enough private investment to help developing countries do their part. In the coming decades, emissions from fast-growing emerging markets such as Brazil, India, Indonesia, and South Africa are expected to increase at faster rates than those from rich countries like the United States, the members of the European Union and Japan. If this comes to pass, the entire world will be overwhelmed by the effects of climate change.

Achieving the net-zero transition will require unprecedented levels of investment in technology and infrastructure. Investments in low-carbon projects in poor countries will need to total more than $1 trillion a year — more than six times the current rate of investment of $150 billion.

The next two blogs will try to address two key issues in this complicated transition: where should we aim our changes? and how long do we really have to transition before the planet becomes irreversibly unlivable? November is coming up soon; when the COP26 international meeting takes place in Glasgow, Scotland, the world will announce its collective commitments to the transition. I’ll be watching.

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The End of Oil?

The UN COP26 is almost here:

The latest round of global climate talks will take place from 31 October to 12 November 2021 in Glasgow, United Kingdom. Thousands of government delegates and people from civil society, business and the media will gather to advance climate action. The world will be watching and demanding that national leaders rise to the moment, given the mounting climate crisis.

Lately, I have focused on energy companies and the pressure that they are facing to finally acknowledge their responsibility to act on mitigating climate change. They are being pushed to stop denying and wishing away climate change threats and instead use their enormous resources to do something. The important question has always been what they should do. As I have tried to make clear, we can only mitigate climate change effectively if we can, as a society, go carbon-free within the next generation (roughly by mid-century)—a timetable that lines up with the stated objective of the Paris agreement and COP26. Obviously, at the same time, we must also ensure an alternative energy supply to sustain the global economy. We are not yet clear about exactly how to successfully complete this transition within the available timeline.

Last week, I took a more critical look at oil companies and the pitfalls so far in the transition. Am I suggesting the end of oil usage and with it, the end of oil companies? My answer for the moment is no, but it is within the purview of these companies to demonstrate how they are going to join the effort to lessen their carbon output.

Table 1 shows how oil, gas, and automotive companies rank within a recent list of the world’s 50 largest companies, based on their 2020 revenues. Out of the 50, 10 belong in this subset. I have included automotive companies because their vehicles run on the gasoline that the oil companies provide. Their strategy for ditching carbon-based fuels within the next generation seems to focus on electric cars and hydrogen. I will demonstrate this with a look at the changes taking place at Mercedes-Benz. Indeed, electric cars can be beneficial to this fight—but only if their power source itself is renewable/carbon-free.

Table 1 – Oil, gas, and automotive companies, as ranked among the world’s 50 largest companies by 2020 revenue. (List is taken from Wikipedia, based on Fortune’s Global 500 list. *superscripts indicate that the government owns more than 50% of the company. The original tally was published in August 2021.

The collection of developed countries called the OECD writes this about the transition to a carbon-free economy:

Ambitious action on climate that keeps the warming of the planet as far below 2 degrees as possible is an imperative if we are to ensure a future for humanity. There can be no doubt that a zero-carbon world is possible, but we have choices about how we manage the transition. A just transition ensures environmental sustainability as well as decent work, social inclusion, and poverty eradication. Indeed, this is what the Paris Agreement requires: National plans on climate change that include just transition measures with a centrality of decent work and quality jobs. The sectoral and economic transformation we face is on a scale and within a time frame faster than any in human history. There is a real potential for stranded workers and stranded communities. Transparent planning that includes just transition measures will prevent fear, opposition and inter-community and generational conflict. People need to see a future that allows them to understand that, notwithstanding the threats, there is both security and opportunity. There are reasons for optimism. In the EU, renewable energy is on track to be 50% of energy supply by 2030. Globally, the renewable energy sector employed 8.1 million workers in 2015, with an additional 1.3 million workers employed in large hydropower. Heavy industry typically has had few good technological solutions for cutting emissions. Now, Dalmia, an Indian cement company, is producing a new blended cement with 50% less emissions than the global industry average. Nonetheless, the just transition will not happen by itself. It requires plans and policies. Workers and communities dependent on fossil fuels will not find an alternative sources of income and revenue overnight. This is why transformation is not only about phasing out polluting sectors, it is also about new jobs, new industries, new skills, new investment and the opportunity to create a more equal and resilient economy.

Meanwhile, here is what is taking place at the world’s largest long-haul truck maker:

Carmakers have been promising to scrap the internal combustion engine, and now it’s the truckmakers’ turn. But the makers of giant 18-wheelers are taking a different route.

Daimler, the world’s largest maker of heavy trucks, whose Freightliners are a familiar sight on American interstates, said last week that it would convert to zero-emission vehicles within 15 years at the latest, providing another example of how the shift to electric power is reshaping vehicle manufacturing with significant implications for the climate, economic growth and jobs.

The journey away from fossil fuels will play out differently and take longer in the trucking industry than it will for passenger cars. For one thing, zero emission long-haul trucks are not yet available in large numbers.

And different technology may be needed to power the electric motors. Batteries work well for delivery vehicles and other short-haul trucks, which are already on the roads in significant numbers. But Daimler argues that battery power is not ideal for long-haul 18-wheelers, at least with current technology. The weight of the batteries alone subtracts too much from payload, an important consideration for cost-conscious trucking companies.

Instead, Daimler and some rivals are betting on fuel cells that generate electricity from hydrogen. Fuel cells produce no tailpipe emissions, and hydrogen fuel tanks can be refilled as fast as diesel tanks — a distinct advantage compared with batteries, which typically take at least twice as long to recharge.

As I will try to make clear in the next few blogs, the ultimate energy shift will amount to joining the hydrogen-based energy budget of the universe (see my April 2, 2019 blog post for background):

Over 90% of atoms in the universe belong to a single element. It’s the element responsible for the Solar System’s largest ocean — a vast and vaporous sea somewhere beneath Jupiter’s turbulent cloud cover. And yet this Jovian ocean is made not of water, but is instead a deep chasm of liquid metallic hydrogen. The conditions needed to create liquid metallic hydrogen are too extreme for us to simulate in our laboratories here on Earth, though we do have access to hydrogen in its less extreme gas and liquid form. Already we use around 70 million metric tons of it each year in industries pertaining to chemical and fertilizer production, food processing, oil refineries, and more.

But hydrogen is poised to go far beyond these sectors, revolutionizing everything from the power in our homes to our environmental impact on the planet. In a survey conducted with automotive executives in 2017, over 75% of them believed the true breakthrough in electric vehicles would come not from battery electric vehicles such as Teslas, but from hydrogen fuel cell cars. By 2030 it is possible that hydrogen power will have become a $140 billion industry with over 700,000 jobs. What exactly makes it such a promising element in the future of our energy?

There are different opinions as to the feasibility of a hydrogen economy:

A so-called ‘hydrogen economy’ assumes we can produce renewable electricity inexhaustibly and continue to lead our resource-depleting lifestyles. Pat Baskett argues that this isn’t the future we want. 

Our energy needs involve complex decisions with profound implications. One, already on the horizon, concerns hydrogen. The cycle of its production and use is deceptively attractive because it can be emissions-free, beginning and ending with water. Alongside that fact lies a hornets’ nest of negative features and a host of questions about how we plan our future.

The story of hydrogen is, literally, colourful. It is described as green, blue or brown, according to how it is produced. The brown version is made from coal or natural gas (methane) by separating hydrogen atoms from carbon atoms in a process called “steam reforming” and which releases CO2. This emissions-rich “brown” kind accounts for 95 percent of what is used around the world today.

If it’s blue, that same process using fossil fuels is said to incorporate the means of capturing and storing the carbon emissions. But this technology, known as carbon capture and storage (CCS), is expensive and undergoing further research.

Green hydrogen fits the initial picture of carbon neutrality if it meets two criteria: it must be made from water and the process of electrolysis used to produce it must be powered by renewable electricity.

Hydrogen of whatever colour is either compressed or liquified for storage and is used in fuel cells – where it is electrochemically combined with air to create electricity, which drives an electric motor. Water vapour is the only gas emitted.

The current energy companies will likely continue to lead the effort to supply the global economy with sufficient carbon-free energy. From there, they may slowly be replaced by new, perhaps more efficient companies. The automotive companies are a good example of such evolutionary changes. All of the four automotive companies in Table 1 are long-established manufacturers. However, Table 2 lists the four automotive companies with the highest net worth, based on their stock prices, and half of them are newer (Tesla and BYD were both founded in 2003). Only two of the companies show up on both tables.

Table 2The four largest automotive companies, by net worth

If you are like me and had never heard of BYD, this link might help.

Next week, I will go into more detail on the concept of joining the cosmological hydrogen economy mentioned in the piece I cited above.

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The Price of the Green Shift

I started this series of blogs about energy companies and their shift toward greener power sources with a citation from an earlier blog (July 17, 2013), quoting then-CEO of ExxonMobil, Rex Tillerson, who opined, “What good is it to save the planet if humanity suffers?” His statement equated a more limited use of fossil fuels with inherent suffering.

While I didn’t state it explicitly, I have hinted strongly that the destruction of the planet would lead to infinitely more suffering than would the impact of limiting our use of fossil fuels. My last two blogs have provided some evidence that—directly or indirectly, mostly due to external pressure—many energy companies are starting to realize the validity of this argument. However, there is no escaping the conclusion that if limiting the supply of fossil fuels does limit the availability of energy overall, humanity will suffer.

Energy is probably the most important ingredient in the supply chain for almost everything that society does. Recently, we have encountered some of the symptoms of limited energy supply on a global scale:

UK electricity prices have hit record highs to become the most expensive in Europe, with “day-ahead” power prices (the price of spot electricity) hitting £540 per megawatt hour (MWh) on Monday. UK prices are at their highest since 2008, says Cornwall Insight, an energy-market analyst.

Gas prices quoted in therms (a unit of heat) are trading at £1.89, doubling in as little as two months, and five times higher than September last year. In a taste of what is to come if energy prices keep rising, two fertiliser plants in the north of England have been shuttered because they have become too expensive to run. The operator, CF Industries Holdings, did not say when production would resume. And the rise in energy prices has stoked fears that we may be in for a very cold and expensive winter. So why are prices rocketing and what might it mean for investors?

Wholesale European electricity prices have shot up, too, and natural gas futures in the Netherlands have raced past €60/megawatt hour to hit a record high this week. Dutch gas prices have risen by around 450% over the year, and French and German wholesale electricity prices are also trading at record highs. To add to the problem, gas stockpiles are at their lowest in ten years.

These shortages are not limited to England or Europe; they are worldwide. China, too, is now suffering from an acute lack of supply and its energy prices are shooting up. Unsurprisingly the instabilities in the energy markets are causing smaller companies to default:

At least four of the smaller UK energy companies are expected to go bust next week amid soaring wholesale gas prices. Industry sources have told the BBC that four firms have asked larger players to bid to take over the supply to one million customers.

The price rise has left some companies unable to provide their customers with the energy they have paid for.

Industry rules mean supplies will continue for affected customers, and they will not lose money owed to them. The new company is also responsible for taking on any credit balances the customer may have. But paying that credit out to customers is a further disincentive for companies to take on new business.

The US state of Wyoming provides an especially powerful example of the strain of maintaining energy supply while shifting to greener power sources. Wyoming legislators are so terrified of the prospect of losing both fossil fuel jobs and energy supply that they are requiring the companies offloading such plants to offer them up for sale rather than let them go fallow:

Wyoming has been the US’s top coal producer since 1986. But while the state stubbornly clings to the fossil fuel, its largest utility is dumping coal in favor of renewables.

PacifiCorp is ditching coal in Wyoming

Rocky Mountain Power is Wyoming’s largest electric utility, and its parent company, PacifiCorp, announced on Friday, according to KPVI, that its biennial Integrated Resource Plan is expected to “include substantial investment in renewables — and no new investment in coal or natural gas. The 2021 plan will be finalized next week.”

In response, Wyoming legislators tried to stop utilities from shutting coal plants by passing a bill that went into effect last month. Oil City News explained in March 2020:

Wyoming Governor Mark Gordon [R-WY] signed Senate File 21 into law on Tuesday, March 10. That bill will require electric public utilities to “first make a good faith effort” to sell coal-fired electric generation facilities before retiring such facilities.

The rules will go into effect July 1, 2021, and will allow non-utilities to purchase otherwise retiring coal fired power plants and sell energy to industrial customers.

Forbes, one of the most conservative publications in the US, does a great job at summarizing the energy industry’s predicament:

This week has produced a spectacular batch of news stories highlighting the many contradictions facing us as we embark on the greatest technological transition in our history: abandoning fossil fuels.

Shell, one of the world’s largest oil companies, has been forced by a Dutch court to cut its emissions much faster than originally planned: 45% by 2030, with the court arguing that the company’s decarbonization targets were incompatible with the Paris Agreement.

The news, which could (and should) trigger a wave of similar cases around the world, coincides with increased pressure on the boards of two other of the world’s largest oil companies, America’s Exxon and Chevron, some of whose shareholders are demanding faster responses to the climate emergency, rather than merely greenwashing.

The oil industry will find it increasingly difficult to ignore social pressure to reduce its emissions. We are facing a fundamental change, the end of the oil era, which could lead to a financial meltdown among the companies dedicated to exploiting a resource that is still far from being exhausted, but which is becoming increasingly uneconomical to exploit. Over the course of the next thirty years, 80% of the oil industry is set to disappear.

The combination of technologies that involved the exploitation of fossil fuels and the internal combustion engine brought enormous economic progress to mankind over many decades, but we now know at what cost. Abandoning the use of fossil fuels, and leaving behind an industry that we have long subsidized and financed to prevent the economy from grinding to a halt, is absolutely essential, however impossible it may seem today, because the real cost of these fossil fuels is actually much, much higher.

It is possible, and also essential, to make this transition: the world should be powered exclusively by renewable energies by 2030. They have long been the cheapest option, despite the self-serving myths spread by the oil industry and its lobby, and they could well be enough to cover all our needs.

It is time to put an end to the contradictions.

Does all of this mean the end of oil? My next blog will argue that the truth may be more complicated and may require all of us to get involved.

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Energy Companies Shifting Greener

What does it mean for oil companies to shift toward being “greener”? How can we measure that change? More than 8 years ago, I talked about how we can use the amount of unextracted fuels as a marker for this shift (July 17, 2013 blog):

The Security and Exchange Commission (SEC) made an administrative decision to categorize untapped oil reserves as part of the capital value of a company, for accounting purposes; this decision can be reversed through an administrative order. In reality, these reserves are no more capital than would be the “good ideas” of the company’s staff scientists. They contribute to the capitalization process through good name, track records, etc., but do not add to the explicit pricing or marketability of the good idea. If the accounting rules were changed, so as to remove those reserves from the capitalization appraisal, the company would still retain the ownership and exploration rights of the real-estate in which the reserves are buried, but the reserves would only factor into the capitalization when they were ready to be marketed. The assessment of the value of this real estate would, instead, follow the same objective procedures that other commercial real estate properties enjoy.  Once we put a “cap” on extraction, if the market were to exceed this “cap,” the price of the real estate would rise, thus benefiting the company, and rendering moot the need to use its resources to oppose the “cap.” This is an example of a situation where a change in the status quo could potentially benefit almost all parties.

Essentially, oil companies claim the value of oil on their land, even if it hasn’t been extracted. If you limited how much they could extract in the future, it would have major effects on their valuing system.

I haven’t heard anything further about that particular strategy since that time but an alternative approach might be to check their expansion capability by limiting exploration for new reserves.

As it stands, it does not seem like either has been acted upon. Figure 1 shows that oil companies have only cut back on their exploration efforts when the price of oil has fallen, making the ventures less economically feasible. In other words, it’s not because they’ve had a major change in philosophy.

crude oil price vs exploration expenditureFigure 1 Price of oil vs. new exploration and development

An alternative way to shift toward sustainability is to do what a German utility did at the end of 2014 (see my December 9, 2014 blog). Below is a citation from an article in The Economist that I used in that blog:

For many Germans, E.ON, the country’s biggest utility, is a symbol of stability. But on November 30th it surprised by announcing it would split itself up. In 2016 it will float a new company which will include its power generation from nuclear and fossil fuels, as well as fossil-fuel exploration and production. The rump—which will keep the E.ON brand—will make money from renewable energy, distribution and ‘customer solutions’, a grab-bag of offerings such as advice, smart-metering and the like. The firm’s boss, Johannes Teyssen, said that as a sprawling integrated utility E.ON could only be ‘mediocre’. Two focused ones would do a much better job.

That kind of change in business model is a bet that staying in the energy field but moving to sustainable energy sources will be so financially rewarding in the long-term that it is worth rebranding their current company now.

More recently, Royal Dutch Shell sold off its holdings in the Permian Basin in Texas and New Mexico:

Houston — Royal Dutch Shell sold its oil and gas production in the Permian Basin, the biggest American oil field, to ConocoPhillips for $9.5 billion in cash on Monday.

The deal marks a turning point for Shell, which had put considerable effort into developing the 225,000-acre field since buying it from Chesapeake Energy nine years ago, expanding its production to about 200,000 barrels a day.

The sale is the latest sign that Shell, like other European oil companies, is under pressure to sell off oil and gas production and move toward producing cleaner energy in response to growing concerns about climate change among investors and the general public.

I don’t know yet who the buyers are and we can only speculate about what Royal Dutch Shell will do with the $9.5 billion they got from the sale but they seem to be acting based on the external motivators I discussed last week.

Perhaps, the only really productive scenario would be if oil companies developed the technology to not only efficiently capture the carbon dioxide produced by burning fossil fuels but also repurpose that carbon dioxide for something useful. This would allow them to extract and sell fossil fuels to supply societal energy needs but create a much smaller carbon footprint. Several companies are now working hard to convince the government to finance such a system:

Over the last year, energy companies, electrical utilities and other industrial sectors have been quietly pushing through a suite of policies to support a technology that stands to yield tens of billions of dollars for corporate polluters, but may do little to reduce greenhouse gas emissions.

Some environmentalists say that is exactly what is happening. They argue that the money being appropriated by Congress is likely to allow polluting power plants and petrochemical facilities to continue operating longer into the future, while doing little to reduce the nation’s emissions. They also say that, even if the technology is able to cut carbon pollution from petrochemical plants or refineries, it won’t address other toxic chemicals those operations send into communities that are home to many people of color. Electrifying industry and reducing the use of plastics and petrochemicals, these advocates argue, would be far cheaper and safer.

The most powerful forces pushing for carbon capture have been fossil fuel companies, which have promoted CCS for decades but have increased their lobbying and marketing for the technology in recent years as they have fallen under increased pressure to address climate change.

Carbon Capture and Storage (CCS) has operated on this planet for more than three billion years, in various forms of the photosynthetic process. Without our recent anthropogenic contributions, emissions, as reflected in the carbon cycle (see my March 25, 2014 blog) would balance with absorption, to reach an equilibrium. This worked until the beginning of the last century. We are now shifting the balance, and with it, triggering climate change. If oil companies could actually accomplish more efficient/effective CCS, it would be great but, as the article above points out, it would not be the whole solution.

As I have discussed in earlier blogs, perhaps the most popular (and easiest) method of enhancing carbon capture is planting more trees; it has become a common part of many commitments to shift to zero-carbon technology. It’s also a very important task. As much as (live) trees are known for their remarkable carbon capture, recently, some have argued that dying trees contribute more carbon dioxide than the burning of fossil fuels.

An alternative (or supplementary) activity is to chemically synthesize new fossil fuels by reacting the already emitted carbon dioxide with “green” hydrogen. For example, a team of researchers is attempting to synthesize methane (the main component of natural gas) from CO2 and renewable hydrogen.

Meanwhile, Iceland is taking big steps in direct air capture of its carbon.

In the next blog, I will try to explore some of the ways society may respond to the consequences if energy companies keeping their commitments and move toward renewables on the way to a carbon-zero society.

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