Fiddling While Rome Burns
Hugh Mercer Curtler
Originally published in the January 2013 issue of Empirical
There is considerable talk these days about climate change and whether or not global warming is a fact or merely an opinion. Well, it is assuredly a fact in the sense that any verifiable empirical claim is a fact. The only thing that can still be debated at all is whether or not humans are part of the problem and that consideration is gradually shifting from opinion to cold, hard fact as well. But, as Diane Keaton recently said, “Climate change, like gravity, doesn’t give a damn whether you ‘believe’ in it or not. It’s happening regardless.
While we sit around and debate its existence, it’s taking full advantage of the situation and using the time we’re giving it to make life miserable.” The problem is that in talking about it we may get the impression we are actually doing something about it when in fact we are not. As Keaton says, it just keeps happening.
The problem was made very real to me recently as I returned from Minneapolis to my home 150 miles west and south of that city with my two little granddaughters in the car. We passed dried-up drainage ditches and creeks; rivers where the water was barely visible and slowed to a crawl; we saw dust hovering in the air as far as the eye could see; we noted the burned-out lawns and the scattered crop residue in the parched fields now that the farmers have finished their harvest, such as it was. We also noted the small lakes and ponds that have shrunk below the grasses and reeds on the shore leaving several feet of dry shoreline exposed to the relentless winds. The words I have read and written myself about global warming began to be replaced by stark images as the message they convey moved from the head to the heart causing considerable distress and mild anxiety.
I worried about the future of these two little girls.
This is no longer an intellectual problem: at the risk of sounding dramatic, if something isn’t done to alter present conditions we will soon face a struggle for survival. In this part of the upper Midwest the farmers have had a relatively decent year. It has been dry, but there were scattered but timely rains earlier in the summer and the farmers in this area will do fairly well–unlike others in the Midwest who have been hit hard by the prolonged dry spell that promises to drag on. However, the signs point to the severe drought spreading into this part of the country as well. And that’s the problem: the drought isn’t just part of the normal “cycle” of weather, as many of the farmers I talk with contend; it is something we are going to have to learn to live with–resulting in higher prices in the grocery stores and even the real possibility of rationing as food becomes scarce.
And we could eventually be dealing with increasing levels of violence as well from growing numbers of hungry people who cannot find food to eat. In a word, the problem is here and talking about it won’t solve it. Unfortunately, as we all know, the issue of climate change has become a political football in this country. Politicians are lined up facing one another and neither side wants to give an inch. Or so it would appear. As it happens, there may be more agreement in Washington on this issue than we might think. Michael Brune, Executive Director of the Sierra Club, has spoken with politicians on both sides of the aisle and is convinced that there is near unanimity in Washington that something simply must be done about climate change.
As he says, both Republicans (who speak to him “off the record”) and Democrats agree that Congress must address the issue, and soon. One prominent Republican said to him, “Mike, we may not agree on much, but on climate change, there’s not really that much separating us.” As Brune notes in the Sierra magazine, the Union of Concerned Scientists has already adopted “a national renewable-electricity standard that ensures that utilities obtain at least 25 percent of their power from wind, solar, and bioenergy by 2025,” pointing out that this would “create 297,000 new jobs, $13.5 billion in income to rural landowners, and $15.3 billion in new local tax revenues.”
And yet politicians remain encamped with their party opposite one another on the issue of climate change and merely exchange mindless barbs. Publicly, only 26% of Congressional Republicans will admit there is a problem that is accepted by 97% of the scientific community as of this writing. This fact was recently reported on PBS Newshour where it was also noted that Professor Richard Muller of Cal-Berkeley had published an Op-Ed piece in late July in which he had radically altered his view of the problem of climate change. He had been one of the most outspoken skeptics of global warming but he and his daughter, a trained mathematician, had studied the available data and concluded he had been wrong. He said in his Op Ed piece that the data show that global warming is occurring and it is worse than others have portrayed. He added that “Humans are almost entirely the cause.”
The empirical evidence continues to mount even as the oceans rise. The Carteret Islands are slowly being consumed by the sea. Many of the islanders have gone to bigger islands close by in hopes of becoming permanent residents there. These are people who are less well-educated than the average American, yet they are seeing first-hand what is happening to their island and the crops they try to raise. They all speak openly of global warming and it is ironic that these people know more about the phenomenon than 74% of Congressional Republicans as well as the recent GOP candidate for the Presidency who openly mocked President Obama for trying to do something about the rising ocean levels.
A large part of the problem is that massive amounts of money in political donations by the oil/gas industry make it imprudent for those on the political right (especially) to speak out about a problem many politicians may acknowledge in private.
And this despite the fact that the Department of Defense, which the political right wing typically regards as beyond reproach, considers global warming to be one of the greatest threats it faces. Further, the US Coast Guard has requested a $1 billion ice-breaker to patrol the Northwest Passage in the expectation that it will be considerably busier in the years to come. Also as I write this the Navy is taking measures around San Diego to invest in alternative energy. And finally, the insurance industry has begun to take steps to deal with future claims rising from global catastrophes. As Bloomberg Businessweek reports in its Sept. 5 issue, “the industry has absorbed many lessons from Sept. 11 about anticipating risk. One is that the recent spate of weather extremes is likely to continue–and the insurance market must reflect that.”
As if to underscore this prediction the recent Frankenstorm by the name of “Superstorm Sandy” demands our attention. A recent article in the New Yorker by Elizabeth Kolbert points out, “As with any particular ‘weather-related loss event,’ it’s impossible to attribute Sandy to climate change. However, it is possible to say that the storm fits the general pattern in North America, and indeed around the world, toward more extreme weather, a pattern that, increasingly, can be attributed to climate change.” In fact Munich Re, the world’s largest reinsurance company, has noted that “Nowhere in the world is the rising number of catastrophes more evident than in North America.”
And they, too, are taking steps to factor climate change into their computer models. While we may be hesitant to blame climate change for the freakish confluence of three storms coming together over the Northeast of this continent, the evidence is compelling. And, as the Weather Channel reports, we can expect more freakish weather in the years to come, quite possibly including storms like Sandy.
The evidence keeps mounting. The National Oceanic and Atmospheric Administration completed another study earlier in 2012 and said global warming is occurring, it is man-influenced, and it is worse than projected. They even pointed to Governor Rick Perry’s Texas and noted that the droughts in Texas are definitely influenced by man. Perry as you recall is a naysayer and also wants to do away with the E.P.A. Yet, Galveston is slowly being encroached upon by the Gulf of Mexico. There is more than a little irony here.
To put the problem in terms that most people can understand, let’s take a quick glance at what the financial costs will be if we continue to look the other way and ignore climate change. Last year, Mercer, one of the largest investment consultants to corporate and public trusteed assets for pension plans (401(k) and non-US capital accumulation) partnered with 14 global institutional investors (Calpers, Ontario Municipal Employees Retirement System, Norwegian Ministry of Finance, Government of Singapore Investment corporation, to name a few) to conduct a study on the investment portfolio risk of climate change. Some of the key findings of the study show that by 2030:
- Climate change increases uncertainty for long-term institutional investors and as such, needs to be proactively managed.
- Investment opportunities in low carbon technologies could reach $5 trillion.
- The cost of impacts on the physical environment, health and food security could exceed $4 trillion.
- Climate change related policy changes could increase the cost of carbon emissions by as much as $8 trillion.
- Increasing allocation to “climate sensitive” assets will help to mitigate risks and capture new opportunities.
- Engagement with policy makers is crucial for institutional investors to proactively manage the potential costs of delayed and poorly coordinated climate policy action.
- The European Union and China/East Asia are set to lead investment in low carbon technology and efficiency improvements over the coming decades.
Since that study we have had extreme floods, droughts, and wildfires in other parts of the world, including the US. China and Germany are way ahead of us on eco-energy planning. Brazil is entirely bio-fueled with a mixture of sugar cane ethanol and gas. Denmark has an eco-energy plan that has survived at least one election. When your land is beneath sea level, global warming takes on great importance–as we are about to find out.
The current path we are on will leave us even worse off than we are at present.
Natural gas is seen as a viable alternative despite the fact that it is obtained by a process known as “fracking,” which is an environmental powder-keg and drains vast amounts of water from our diminishing supply. A major debate is occurring right now between the frackers, government, and farmers in Kansas over water usage during the drought. Fracking takes 4 to 6 million gallons of water per fracking well. So, there needs to be more rational debate with all of the facts and all of the constituents involved before we buy into the “fracking” solution. Further, off-shore drilling for oil is terribly risky as the British Petroleum/ Deepwater Horizon disaster proves–the Gulf of Mexico is seeing continued impact from that spill; the Keystone Pipeline invites a number of environmental disasters; “clean” coal is by no means clean, as we are learning to our chagrin; and nuclear power plants present a permanent hazard with toxic waste that we cannot hide and the ever-present threat of meltdowns.
But above all else our attitudes need to change. We need to get our heads out of the sand and confront the situation honestly and intelligently. The urge to hide from the truth was nowhere more in evidence than in North Carolina recently where the legislature refused to accept a peer-reviewed and revalidated scientific paper which notes the sea will rise 39 inches by 2100. So, with pressure applied from the tourism and real estate industries, they passed a law making it illegal to mention the fact in the public media.
This would appear to be the bottom line: the alternatives to clean energy are not rationally acceptable. The cost of failing to plan for an uncertain global future is staggering and will impact investments in a huge way not to mention the impact it will have on our lives. I have noticed in passing that post-apocalyptic games our kids play always speak of a nuclear disaster. The more likely candidate for causing a disaster will be climate change as our planet heats up and impacts our food and water supply; the toxic chemicals in the land, air, and water brew some more; and the sea consumes key port cities such as Norfolk, Galveston, etc. Scientists like to compare the rising sea level to elevating a basketball court: storms coming ashore will find it easier to dunk a basketball. There is much work to be done.
The news is not all bad, however. Small steps are being taken by thoughtful investors and a number of state legislatures in the direction of changing our thinking about how we treat the planet and they provide reason to hope that more will be done. While Congress largely ignores the problem, people like Warren Buffett and T. Boone Pickens have invested heavily in clean energy systems and General Electric is increasing the manufacture of wind turbines. There are more small steps as well. Solar panels are improving in efficiency and becoming less expensive and more readily available. The proposed Topaz solar farm planned in San Louis Obispo Country, California will produce 550 megawatts of electricity that will benefit 160,000 homes in the state and will also produce an estimated $417 million in positive benefits to the region in the form of new jobs and savings to homeowners. Further, a solar panel firm called Semprius will be opening a manufacturing facility in Henderson, North Carolina which will employ 250 people in assembling state of the art solar panels. These solar panels are based on a concept called Concentrated Photovoltaic or C.P.V. panels which use lenses to focus sunlight cells increasing the amount of electricity produced. The C.P.V. panels convert 33.9% of sunlight energy into electricity as contrasted to the typical poly silicon solar cells which convert around 24%.
The technology created by Semprius was supported by the US Energy Department’s National Renewable Energy Laboratory and Siemens which now has a 16% stake in Semprius. Its major customers will be Pratt & Whitney, Rocketdyne, and Siemens. The plant will produce solar panels that generate up to 5 to 6 megawatts of energy with plans to expand to panels that generate 35 megawatts of energy. This is an excellent example of public/private investment in the US It also shows the global nature of business since Siemens, which has a huge US and North Carolina presence, is a German firm. Siemens’ reputation is stellar and their involvement as an investor and key user of the product worldwide will be key to its success. We might also note the new Risk Management program on climate change established by Georgia State University, one of the largest risk management programs in the US.
Another encouraging sign comes from Duke Energy which was reported to have retired three older coal powered plants in the Carolinas and its new subsidiary, Progress Energy, is retiring one of its older coal powered plants and three oil-fired plants. Duke said it has shut down 587 megawatts of coal-powered plants and will shut down 1,080 more megawatts by 2015. It has been replacing these plants with cleaner coal (“clean” coal being a misnomer) and natural gas-powered plants. They still have issues with retrieval of the coal and natural gas–hence the term “cleaner”–but they are far better than the older coal-powered plants. The cleaner coal actually converts the coal to a gas that is then burned with many of its by-products captured.
I mention this as Duke is leading the way by gradually diminishing its use of fossil fuel based power. This process is not dissimilar to what is being done in China. Duke reported in 2011 that only 46% of its energy comes from coal, so they are continuing to make strides. Energy companies in the region announced they have retired 12 gigawatts of coal-fired power since 2009 and will retire 30 gigawatts more by 2015, when two federal air-pollution measures for power plants take effect. It has been reliably reported that the amount retired may be closer to 54 gigawatts.
As noted above, the US is third in the world behind China and Germany in alternative energy development. What developments have taken place have been due to federal pollution standards, the miles per gallon standards, and what independent states and private investors have done. Thus a great deal of the current US standing is based on a smattering of smaller efforts which are unfocused, but replicable. With solar energy on the uptick and wind energy in 38 states, along with various biomass, tidal, and river current efforts,we have much to build on. At this point, we simply lack the holistic, long-term eco-energy strategy which will tie this all together and help us move as rapidly as we can away from our dependence on fossil fuels. In the meantime we must be content with hit-or-miss measures on a comparably small scale.
Ironically, those measures have made a few far-seeing people quite wealthy from investing in clean energy. Let me close by looking at one of the more public figures, Al Gore, who has become a very rich man. The Washington Post recently reported that his net worth these days is around $100 million–50 times what it was after leaving the office of Vice President–mostly as a result of investments in clean energy. This gives the lie to those nay-sayers who insist that investing in clean energy will not pay dividends and that the government should ignore clean energy and continue to pursue such projects as off-shore drilling, fracking, “clean” coal–while maintaining the $2.7 - $4 billion a year in tax subsidies to Big Oil.
Moreover, the success rate of renewable energy companies may be far higher than some opponents of clean energy would like to admit. During the first Presidential debate candidate Romney claimed that over half the green energy companies benefiting from stimulus dollars failed. In fact, just 1.4 percent of the US dollars invested in green energy went to companies that had failed by the end of 2011, according to CleanTechnica.
In this country we need to begin coordinated long-range planning with all concerned parties involved. The fact the European Union and Asia-Pacific regions are leading the charge is telling. We cannot have one of the major US political parties denying publicly what they know privately is perfectly true. They are doing a disservice to their voters, their country and the planet in encouraging us to continue down our present path. As I said above, this is a path that will lead to calamity. To be sure, the US cannot divorce itself completely from fossil fuels. But we need a coherent plan to lessen their use beginning yesterday. The fuel for solar energy is free and harnessing it continues to become more efficient and cost-effective. The same is true for energy from the tides as well as wind energy which blows almost constantly in many regions in the US and off its shores.
The stimulus packages made available by the Obama administration clearly have helped bring money into the clean energy industry, but Congress has been known to play keep-away with those subsidies; both sides of the political aisle need to get foursquare behind the clean energy movement, help create jobs, boost the economy, and head in the direction of countries like Germany and China. The reason this has not happened to this point is a matter of some speculation. But it is fairly clear that the companies that make huge profits from the continued use of fossil fuels would prefer that we not wean ourselves from those sources of energy (despite the damage we are doing to the environment and the planet itself ), and they pour large amounts of money into the pockets of politicians to see to it that it doesn’t happen. One would like to think that these companies will eventually see the handwriting on the wall and come on board the clean energy train: there’s money to be made and theirs are, after all, finite resources. In the meantime the clean energy success stories continue to pop up from time to time and people like Al Gore still believe and their belief is clearly paying off.
It’s time for the dirty energy industry and the Congress to join people like Al Gore, Warren Buffet, and T. Boone Pickens and stop fiddling while Rome (and the rest of the world) burns. [Note: This paper is a collaborative effort that draws on a good deal of material provided by a friend and fellow-blogger who prefers to remain anonymous. You are encouraged to visit his blog at www.musingsofanoldfart. wordpress.com.]
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