Big Oil must grudgingly make way for Big Solar

Saving the world isn’t going to be cheap. If you sell oil, coal or old-fashioned cars, that threatens disaster. For makers of stuff like solar panels, high-tech home insulation, and efficient lighting, it’s a potential miracle.

That’s the bottom line from this weekend’s climate deal in Paris, which commits 195 countries to reducing pollution in order to head off dangerous climate change.

Global governments and companies are counting the costs and benefits from the agreement, which calls for wholesale transformations of energy, transportation, and dozens of other lines of business. Fossil-fuel producers and countries that depend on them face massive, costly disruption. Players in up-and-coming industries like renewable power and energy efficiency are looking at an unprecedented opportunity.

The Paris pact, which also calls for a review of ever-tightening pledges every five years, is the most significant global climate agreement ever, outstripping the 1997 Kyoto Accord in its scope and ambition…The deal will likely accelerate investments in technologies like renewable energy and electric vehicles — especially if more countries join the European Union and parts of North America in imposing a price or tax on carbon. The United Nations estimates upward of $1 trillion a year in spending is required to de-carbonize the global economy and prevent temperature rises scientists say could flood coastal cities, disrupt agriculture, and destroy ecosystems.

That means companies with business models threatened by a low-carbon world need to re-focus, and fast, said Lyndon Rive, CEO of SolarCity Corp., a U.S. provider of home-solar systems…Rive said on the sidelines of the Paris summit, “you’re going to defend that job because that’s your livelihood. But your livelihood is going to be destroyed.”

Executives from more traditional companies have a similar, if less stark, view. Peter Terium, CEO of German utility RWE AG, said companies like his would have to learn from the successive transformations of International Business Machines to stay relevant in a new energy system. RWE on Friday approved a plan to split into two companies, one focused on renewables and grids and the other managing declining conventional assets.

That doesn’t mean Big Oil will be closing up shop anytime soon. According to a relatively optimistic forecast of emissions cuts by the International Energy Agency, fossil fuels will still account for about 75 percent of energy demand in 2030, with coal hitting a plateau, oil growing slightly and natural gas surging…

Energy investment, though, will increasingly shift toward green power. Under another IEA scenario, renewables will attract about 59 percent of capital in the power sector over the next decade, rising to about two-thirds from 2026 to 2040. France’s Total, for example, is building out its solar business, shifting investment to gas, and expanding energy-efficiency services to cope.

Executives at companies that have moved early to get themselves ready for a lower-carbon world argue there’s nothing new about the energy transition except perhaps its scale; after all, changing technologies have been obliterating business models since at least the invention of the wheel.

“Really high-carbon industries have had their day,” said Steve Howard, Chief Sustainability Officer at furniture retailer Ikea. “If they can adapt and reinvent themselves, fantastic! If they can’t, maybe some will just return cash to shareholders and slowly close up shop.”

One of the advantages of a globalized economy is that progressive tech – if a firm is capable of moving into global competition, planetwide distribution and sales – becomes widely accepted, faster and easier. Backwards portions of any industry will no doubt continue to drag their feet. Even more backwards politicians – the Republican Party and other wholly-owned subsidiaries of the Koch Bros. – will do their damndest to hold back time, deny any progress offered by science and technology. But, a global market offers the opportunity of scale sooner to bona fide enterprise. A global market doesn’t grow itself over time on the path of selling for cheap and dirty.

It would be great if our political infrastructure still believed sufficiently in American talent for innovation and invention to help out. Poisonally, I think too many of our politicians are owned by the two most reactionary wings of capitalism: the types who consume Earth’s resources regardless of the result and those who unblushingly are out to make a quick buck, especially with runaway shops. The first will rely on political flunkies to defend their diminishing global role. The second are already running hard to be importers instead of efficient, competitive manufacturers.

Coal is getting to be worth less than dirt

Coal is having a hard time lately. U.S. power plants are switching to natural gas, environmental restrictions are kicking in, and the industry is being derided as the world’s No. 1 climate criminal. Prices have crashed, sure, but for a real sense of coal’s diminishing prospects, check out what’s happening in the bond market.

Bonds are where coal companies turn to raise money for such things as new mines and environmental cleanups. But investors are increasingly reluctant to lend to them. Coal bond prices tumbled 17 percent in the second quarter, according to an analysis by Bloomberg Intelligence. It’s the fourth consecutive quarter of price declines and the worst performance of any industry group by a long shot.

Bonds fluctuate less than stocks, because the payoff is fixed and pretty much guaranteed as long as the borrower remains solvent. A 17 percent decline is huge, and it happened at a time when other energy bonds—oil and gas—were rising. Three of America’s biggest coal producers had the worst-performing bonds for the quarter:

Alpha Natural Resources: -70 percent
Peabody: -40 percent
Arch: -30 percent


The map shows coal plants in 2010 that may be headed for retirement. Blue circles represent plants that will be shuttered by 2020, while yellow will convert to gas, and red have undetermined futures.

About 17 percent of U.S. coal-fired power generation will disappear over the next few years, according to an analysis by Bloomberg New Energy Finance (BNEF). Obstacles include age, the abundance of cheap natural gas, and new EPA rules to cut pollution…

Even China, the world’s biggest consumer of coal, wants to be rid of it…While China’s electricity demand will soar in the coming decades, its coal use will remain relatively flat, peaking by 2030 and then declining, according to BNEF. The pollution is too thick and the alternatives too cheap for coal to flourish…

But even setting aside the environmental and health issues, renewables are on a trajectory to outcompete fossil fuels, starting with coal. Between now and 2040, two-thirds of the money spent on adding new electricity capacity worldwide will be spent on renewables, according to BNEF…

Pigs like the Koch Bros and their bed-buddies ExxonMobil et al are putting their last hopes into the Republican Party. Unlike their peers in archaic monarchies like Saudi Arabia, they have to confront minimal papier mache democracies like the United States. Conservatives like Republicans or Blue Dog Democrats needn’t involve themselves with science to decide policy. Their only decision is whether they require a new wheelbarrow to carry away the dollar$ on offer from the barons of fossil fuel – or the old one is adequate.

It only remains for the crowd in charge of the Democrat Party to decide if they will listen to reason, evidence-based science and concern for future generations of our species. For some that’s still a difficult questions.

Overpumping groundwater creating a crisis in California

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A simple instrument with a weight and a pulley confirmed what hydrologist Michelle Sneed had suspected after seeing more and more dirt vanish from the base of her equipment each time she returned to her research site last summer. The tawny San Joaquin Valley earth was sinking a half-inch each month.

The reason was no mystery. “There are wells up and down this road,” Sneed said, nodding toward a two-lane byway that cut across the flat agricultural landscape.

Parts of the San Joaquin Valley are deflating like a tire with a slow leak as growers pull more and more water from the ground. The land subsidence is cracking irrigation canals, buckling roads and permanently depleting storage space in the vast aquifer that underlies California’s heartland.

The overpumping has escalated during the past drought-plagued decade, driving groundwater levels to historic lows in some places. But in a large swath of the valley, growers have been sucking more water from its sands and clays than nature or man puts back for going on a century.

They are eroding their buffer against future droughts and hastening the day, experts warn, when they will be forced to let more than a million acres of cropland turn to dust because they have exhausted their supplies of readily available groundwater…

The Central Valley aquifer extends for about 400 miles under the Sacramento and San Joaquin valleys. The subterranean water, some of which seeped into the ground 10,000 to 20,000 years ago, is California’s biggest reservoir. Yet it has been largely unregulated and unmonitored. Most of the more than 100,000 wells that pierce the valley floor are unmetered and landowners have taken what they wanted.

Scientists estimate that since the first wells were drilled by settlers more than a century ago, pumping has depleted Central Valley groundwater reserves by 125 million acre-feet. That is about 4 1/2 times the capacity of Lake Mead, the biggest surface reservoir in the country. About 20 million acre-feet of that loss occurred in the last decade.

Until last year, California didn’t have a statewide groundwater law, making it an outlier in the West. The legislation, intended to end unsustainable groundwater use, won’t do that any time soon. Agricultural interests opposed the regulations, which call for the creation of local groundwater agencies that have more than two decades to fully comply.

In the meantime, it’s easier for growers to keep pumping than rein in their use. “Telling people they have to stop irrigating is a huge economic thing,” said Charles Burt, chairman of the Irrigation Training and Research Center at Cal Poly San Luis Obispo. “Guys are going to get their guns out…

Read the article for measured, sensible solutions – which, of course, don’t mean a damned thing in American politics. And it will be politics that resolves whatever is implemented in California. Short-term politics, short-term economics, short-term profits – which have always been the bane of Agriculture, whether it’s in the American West growing alfalfa or palm-nuts in Indonesia.

You don’t have to be a cynic to expect that verifiable science means nothing to producers who worry most of all about commodity prices and hedge funds.