Energy

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Could a Landfill Power Your Home?

Published by Anonymous (not verified) on Thu, 02/05/2024 - 6:00pm in

Tags 

Energy

Across the United States, landfills are accumulating trash faster than materials can decompose. In the nearly 2,000 landfills in the US, food waste contributes over 50 percent of fugitive methane emissions from municipal solid waste landfills, those invisible plumes of potent greenhouse gas emissions that seep out of landfills and into the atmosphere.

Landfills rank as the third-largest human-generated source of methane emissions in the US, according to the Environmental Protection Agency (EPA). While diverting trash altogether would be the preferred outcome for pollution reduction, about 500 landfills across the country have turned to a novel way of combating pollution from the waste that is ending up in landfills: capturing the gas emitted from organic materials and transforming it into electricity.

“Methane is already in our environment today. You either use it or lose it,” says Mike Bakas, alluding to the methane that is wasted if it’s not captured. Bakas leads all landfill projects and renewable natural gas business at Ameresco, a company that designs, builds and operates renewable energy plants for landfills around the US.

Methane gas drawn from Waste Management Inc.’s Palmetto Landfill provides energy for BMW’s manufacturing facility in Spartanburg, South Carolina.Methane gas drawn from Palmetto Landfill provides energy for BMW’s manufacturing facility in Spartanburg, South Carolina. Courtesy of Ameresco

Methane is a potent greenhouse gas, about 28 times as potent as carbon dioxide at trapping atmospheric heat. Capturing it removes the gas’s ability to stimulate the greenhouse effect that comes with its infiltration into our atmosphere.

Landfills that utilize Landfill Gas-to-Energy (LFGTE) systems, which allow for the conversion of methane to energy, are equipped with infrastructure designed to collect the gas, often encased with a layer of clay or synthetic membrane to prevent gas from escaping into the atmosphere. Once collected, the methane can be utilized in one of a few ways, as electricity to use on-site or feed into the local power grid, or as natural gas.

The amount of energy generated through LFGTE projects varies widely depending on the size and age of the landfill, the composition of waste and the efficiency of the gas collection system. 

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One massive landfill that spans 629 acres in Virginia produces enough landfill gas (LFG) to create 70,000 megawatt hours of energy each year — that’s enough to power about 6,700 homes for a year, based on the average US household’s annual electricity consumption

While most landfills using LFGTE are actively collecting waste, not all of them are. “We’ve got a landfill that’s been shut down for about 10 years and we still have another 10 to 20 years of gas in it,” says Bakas.

Puente Hills in California is the largest LFGTE program in the country, producing enough energy to power about 70,000 homes. Before the Puente Hills landfill closed in 2013, it was the largest landfill in the US, spanning 700 acres and reaching a whopping height of 500 feet above ground level.

The Keller Canyon Landfill.In California, the Keller Canyon Landfill’s gas-to-energy plant generates enough electricity to power nearly 2,200 homes. Credit: Ameresco

These types of projects first came on the scene in the mid-1970s, and experienced a big rise in popularity in the ’90s — largely due to the fact that, in 1994, the EPA began encouraging landfill operators to develop LFGTE projects through its Landfill Methane Outreach Program

So why isn’t every landfill owner taking advantage of its latent treasure trove of energy? Funding, mostly.

According to Bakas, LFGTE systems can cost between $10 million and $100 million to implement. 

The Inflation Reduction Act (IRA) provided tax deductions for landfills to install these systems, but there are still limitations that prohibit smaller landfills from being able to finance LFGTE. Specifically, the IRA didn’t explicitly permit the use of Investment Tax Credits (ITC) for LFGTE projects, something Bakas says the industry is pushing for, as it would go a long way in helping smaller landfill projects that wouldn’t otherwise be economically feasible. 

There are also caveats embedded among the IRA’s tax offerings that restrict landfills from receiving any of these benefits unless its owner owns both the landfill collection system and the energy processing plant, which, according to Bakas, is often not the case.

“So we need the treasury to come out and say, you can own either one or both, which would free us up to invest money in the equipment we need to do it,” says Bakas.

Ameresco’s Woodland Meadows Landfill gas-to-energy facility at sunset.Ameresco’s Woodland Meadows Landfill gas-to-energy facility in Michigan opened in 2018. Courtesy of Ameresco

And supporting these projects isn’t just good for our air quality and atmosphere, but potentially for our pockets too. The dollars put into building these systems can be returned through the sale of electricity. And in some regions, landfill gas projects can generate renewable energy credits, which can be sold to utilities needing to meet renewable energy standards, providing an additional revenue stream.

But these projects aren’t always profitable, and some may not have the capacity to ever be.

“To the extent that the site is economic, which I don’t think it’s a guarantee that it is, operators would probably look at how much [energy] can we produce … and how close are we to where the energy can be used?” says Daniel Bresette, president of the Environmental and Energy Study Institute.

Bresette says that if a plant is processing landfill gas for electricity, as opposed to other types of energy, the plant may be able to do so with existing equipment, and with less concern for where the landfill is located. This is because the electricity can be fed directly into the energy grid, rather than needing to be transferred off-site to be processed.


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The EPA estimates that a project that requires the installation of a new capture system would cost about $8.5 million to install and maintain, and would cost about another $3.5 million over the course of its 15-year lifespan. That number would drop dramatically for a project that doesn’t require the support of a supplemental capture facility to process the LFG. It would also drop if tax credits, carbon credits or on-site electricity are utilized.

Landfills of a certain size are required by the Clean Air Act to install and operate gas collection systems. For those that don’t meet sizing requirements, the industry is pushing for more government support.

“If the treasury confirms that we can use the ITC tax credits under the IRA towards these projects, then those smaller projects that were not economic might very well become economic,” says Bakas.

The post Could a Landfill Power Your Home? appeared first on Reasons to be Cheerful.

The transmission channels of geopolitical risk

Published by Anonymous (not verified) on Thu, 04/04/2024 - 7:00pm in

Samuel Smith and Marco Pinchetti

Recent events in the Middle East, as well as Russia’s invasion of Ukraine, have sparked renewed interest in the consequences of geopolitical tensions for global economic developments. In this post, we argue that geopolitical risk (GPR) can transmit via two separate and intrinsically different channels: (i) a deflationary macro channel, and (ii) an inflationary energy channel. We then use a Bayesian vector autoregression (BVAR) framework to evaluate these channels empirically. Our estimates suggest that GPR shocks can place downward or upward pressure on advanced economy price levels depending on which of the two channels the shock propagates through.

The channels of GPR

To assess the effects of geopolitical tensions on the macroeconomy, it is first necessary to quantitatively measure GPR. Our approach to measuring GPR follows the work of Fed researchers Caldara and Iacoviello (2022), who develop an index GPR based on the number of articles covering adverse geopolitical events in major newspapers. This index reflects automated text-search results of the electronic archives of 10 major western newspapers. It is calculated by counting the number of articles related to adverse geopolitical events in each newspaper for each month (as a share of the total number of news articles).

Chart 1 shows the behaviour of the GPR index from 1990 to 2023. The index is relatively flat during large parts of the sample, and spikes around major episodes of geopolitical tension, such as the outbreak of the Gulf War, 9/11, the beginning of the Iraq invasion in the 2000s, and the Russian invasion of Ukraine in 2022.

Chart 1: The GPR index

Source: Caldara and Iacoviello (2022).

In the same paper, Caldara and Iacoviello (2022) show that on average, an increase in the GPR index is associated with lower economic activity, arguing that these effects are associated with a variety of macro channels, ranging from human and physical capital destruction, to higher military spending and increased precautionary behaviour.

However, episodes of geopolitical tension often involve increased concerns about the supply of energy to global markets. Chart 2 shows the cumulated percentage change in the three months ahead West Texas Intermediate (WTI) futures around key geopolitical events. Oil future prices rose following most of these episodes, potentially reflecting expectations of supply cuts to energy production or disruption of the flow of energy.

Chart 2: WTI futures three months ahead prices during the 30 days following major recent geopolitical events (associated with tensions on energy markets)

Source: Refinitiv Eikon.

This suggests that GPR can also transmit via an additional energy channel, whose effects are more akin to an adverse supply shock. Whether the shock transmits through this channel, and how strong it is relative to the macro channel, will depend on the wider context and/or location of the events relating to the shock. Disentangling the two effects is, therefore, important for correctly assessing the economic consequences of a GPR shock.

Measuring geopolitical surprises

We begin our analysis by constructing a series of exogenous surprises in (i) GPR, and (ii) oil prices that can be assumed to be entirely driven by geopolitical events to a reasonable degree of approximation.

In order to construct our surprise series, we adopt a selection of 43 main GPR events from 1986 to 2020 proposed by Caldara and Iacoviello (2022), which we update to include four important events that have occurred in the past three years: the escalation of the Afghanistan Crisis in August 2021; the Russian invasion of Ukraine in February 2022; the Istanbul bombings in November 2022; and the events in the Middle East in October 2023.

We compute the GPR surprise as the daily log difference in the GPR index around these events. For the oil price surprise, we compute the daily log difference in WTI future prices from one to six months ahead around the same dates. We then take the first principal component of these to capture movements in energy prices driven by the geopolitical shock.

Decomposing the macro and energy supply components of geopolitical surprises

We then use our event-study data set in a Bayesian-VAR setting for the euro area, the UK, and the US from January 1990 up to October 2023 to disentangle the effects of the macro uncertainty channel from the energy supply channel of GPR. We adopt the two-block VAR structure proposed by Jarociński and Karadi (2020), which uses high frequency data combined with narrative and sign restrictions to identify shocks.

Within the high-frequency block, we include our surprise series of (i) log changes in the GPR index in the main geopolitical event days, and (ii) the first principal component extracted from changes in WTI futures from one to six months ahead in the main geopolitical event days, both cumulated at monthly frequency in case of multiple events occurring in one month. Within this block, we impose the sign restrictions at the core of our identification strategy, which we outline in Table A.

We impose that the response associated with the macro channel drives upward surprises in the GPR index and negative surprises in the oil future curve during the first day the news is reported, as oil prices drop following a contraction in economic activity. Conversely, we impose that the response associated with the energy supply channel drives upward surprises in the GPR index jointly with positive surprises in the oil future curve during the first day the news is reported, as precautionary oil demand rises in response to concerns about future supply cuts or shipping disruption.

Table A: The sign restrictions associated with each channel of GPR

GPR MacroGPR EnergyGPR surprises++WTI surprises–+

In our monthly frequency block, we include the GPR index in logs, real Brent crude prices spot in logs, real natural gas spot prices in logs (as measured by the IMF benchmark), and the monetary-policy relevant price indices in levels (in deviation from their long-run trends, as is standard in the VAR literature).

Identifying two distinct channels of GPR

Chart 3 plots the response to a geopolitical shock that leads to a 100 basis points increase in the GPR index. The first row reports the responses of oil and natural gas prices to an ‘average’ geopolitical shock, which does not disentangle the effects of the macro and the energy channel, along the lines of Caldara and Iacoviello’s work. The second and the third rows display the responses when we assume that all of the increase in the GPR index propagates via just the macro channel and just the energy channel respectively.

Chart 3: Impulse response functions associated with an ‘average’ 100 basis points GPR shock, as opposed to a 100 basis points shock acting exclusively either through the macro or the energy channel­

In the ‘average’ case, the real Brent price spot rises by about 10% on impact, before then dropping of beyond 10% after around six months. However, these dynamics mask the two underlying channels. On the one hand, the energy supply channel is associated with a rapid 20% surge in the oil price. On the other, the macro channel is associated with a more gradual decline of beyond 20%.

The response of gas prices tends to be more persistent than oil prices: the effect of the energy channel on oil prices is concentrated in the first six months whilst the effect on gas prices wanes only during the second year after the shock.

The response of price levels across regions follows a pattern that is broadly consistent with energy price dynamics. As Chart 4 shows, inflation unambiguously drops in the ‘average’ case: the price level drops persistently by about 0.1% in the US, and shortly by about 0.25% in the euro area, while the response is not statistically significant for the UK. This finding is consistent with the interpretation of Caldara and Iacoviello (2022) of geopolitical shocks behaving, from an empirical perspective, as contractionary demand shocks.

However, this similarly masks the effects of the different underlying channels. On the one hand, the pure macro channel gives rise to a more pronounced drop in the median price level than in the case of the ‘average’ GPR shock, reaching -0.5% in the US and the UK, and -0.4% in the euro area. On the other hand, the response associated with the energy supply channel is inflationary, with the price level rising persistently by about 0.5% in the US, 0.7% in the UK, and 0.6% in the euro area.

Chart 4: Impulse response functions associated with an ‘average’ 100 basis points GPR shock, as opposed to a 100 basis points shock acting exclusively either through the macro or the energy channel

Summing up

This analysis highlighted the existence of two separate and intrinsically different transmission channels of GPR: (i) a deflationary macro channel, and (ii) an inflationary energy supply channel. Policymakers should be aware of these distinct channels: GPR shocks may propagate in different manners and require different responses.

Samuel Smith works in the Bank’s International Surveillance Division and Marco Pinchetti works in the Bank’s Global Analysis Division.

If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below.

Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.

McCluskey: looking after Ogle after cancer was ‘Unite culture when I was general sec’

Published by Anonymous (not verified) on Wed, 28/02/2024 - 1:25am in

Former Unite head says he felt uncomfortable testifying against his old union and didn’t want to be critical of successor Sharon Graham – but testimony to employment tribunal in discrimination case was still explosive

Len McCluskey did not want to be photographed as he left the WRC in Dublin

Long-time former Unite general secretary Len McCluskey testified to the Irish Workplace Relations Commission (WRC) in Dublin today in union legend Brendan Ogle’s discrimination case against the union now run by Sharon Graham. Despite McCluskey’s obvious discomfort having to testify against his old union and his expressed determination not to speak critically of his successor, his testimony was infused with explosive criticism nonetheless. McCluskey was not thrown off course by hostile questioning from the union’s expensive legal team from Dentons, the world’s largest law firm, which has been engaged by Graham and Unite for both the tribunal and Ogle’s separate defamation claim. The adjudicator in the case is former war-crimes prosecutor Elizabeth Spelman.

Unite’s lawyers tried to portray McCluskey’s insistence – that Unite was always going to keep Ogle on full pay if he was able to return to work from treatment for life-threatening cancer, regardless of the duties he was able to carry out – as somehow outlandish. In a bristly cross-examination, McCluskey told the tribunal he was astonished that anyone would contend that it was bizarre not to want someone to be penalised for being ill and that such a matter of basic decency was part of the ‘union’s culture when I was general secretary’.

Sharon Graham has been heavily criticised among union members and activists in the union – and by more than one Irish politician – for Unite’s treatment of Brendan Ogle, one of and perhaps the highest-profile and effective union figures in Ireland. Ogle, who backed Howard Beckett rather than Graham during the last Unite general secretary election, returned from successful cancer treatment expecting to take up his old duties, but was ‘sidelined’ to a lesser position in Dundalk, over fifty miles from his Dublin base. The situation caused such outrage that union members picketed Graham’s long-delayed visit to Dublin, Unite’s Community section condemned it as ‘disgusting’ and a whole sector branch threatened to disaffiliate.

Unite’s lawyers claimed the union’s policy was to ‘red-ring’ the salaries of ill employees for two years only, but McCluskey said that this had not been Unite’s practice when he was in charge. The union’s legal team also tried to claim that Ogle’s position had been created specifically for him, presumably implying that this was some kind of ‘grace and favour’ position, but McCluskey angrily rejected this, pointing to the union’s changes in Ireland during its disaffiliation from the Irish Labour party over the party’s support for austerity, the organisational changes this necessitated, and the extensive approval of Unite’s executive for the need for such a position and for Ogle’s appointment as the most suitable candidate by a distance.

McCluskey told Skwawkbox that he felt very uneasy testifying against the union he and his team had built, but had been forced to do so because Unite had included claims about him in its submissions to the tribunal in the case.

Ogle’s testimony began this afternoon but is expected to continue into tomorrow.

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A Theory of Everyone: Who We Are, How We Got Here, and Where We’re Going – review

Published by Anonymous (not verified) on Mon, 29/01/2024 - 10:49pm in

In A Theory of Everyone: Who We Are, How We Got Here, and Where We’re GoingMichael Muthukrishna contends that the core issue affecting Western societies is increasing energy scarcity, leading to economic struggles, political disillusionment, and global instability. Though the public policy solutions Muthukrishna proposes – like better immigration systems and start-up cities – are outlined only vaguely, the book offers fresh ideas in an engaging writing style, according to James Sewry.

A Theory of Everyone: Who We Are, How We Got Here, and Where We’re Going. Michael Muthukrishna. Basic Books. London. 2023.

Find this book: amazon-logo

Book cover of A Theory of Everyone by Michael Muthukrishna with orange yellow blue and green stripes radiating out from a black circle, white font.A Theory of Everyone by Michael Muthukrishna, Associate Professor of Economic Psychology at LSE, is a bold and ambitious book. It argues that the underlying cause of the present malaise of western societies is increasing energy scarcity. There is no doubt that the malaise is real. Since the global financial crisis, the UK has struggled to achieve economic and productivity growth; living standards are stagnant; inflation recently reached almost double figures; and the cost of energy spiked. As faith in politics and institutions is eroded, voters are drawn towards populism. Social media polarises us. The global order seems precarious: wars rage in Ukraine and the Middle East. In the words of Muthukrishna, “we can feel in our bones that the world is breaking – that something is wrong”.

The global order seems precarious: wars rage in Ukraine and the Middle East. In the words of Muthukrishna, ‘we can feel in our bones that the world is breaking – that something is wrong’.

The ultimate cause of all these different problems, Muthukrishna argues, is the lack of excess energy. Tapping into the energy contained within fossil fuels has driven society’s development since the Industrial Revolution, precipitating prosperity and increasing standards of living. Until relatively recently, energy seemed abundant. But fossil fuels are running out. The energy return on investment (EROI) that they offer is diminishing. For every single barrel of oil discovered in 1999 one could find at least another 1,000, but by 2010, this number had reduced to five. As Muthukrishna contends, we came to take energy for granted and stopped thinking about it. But as it becomes more expensive and more effort is spent on its extraction, life becomes harder. This matters because, as the availability of excess energy reduces, the “space of the possible”, that is, what humans are collectively able to achieve, shrinks with it. Humanity’s pressing challenge, therefore, is how to arrive at the “next level of abundance that leads to a better life for everyone”. Otherwise, according to Muthukrishna, the future will be bleak, with humanity beset by conflict over dwindling energy and resources.

Tapping into the energy contained within fossil fuels has driven society’s development since the Industrial Revolution, precipitating prosperity and increasing standards of living. Until relatively recently, energy seemed abundant.

To provide an approach to this enormously challenging future, A Theory of Everyone is divided into two parts. The first explains “who we are” and “how we got here”, detailing what the author proposes as the four “laws of life” which underpin human development: energy, innovation, cooperation and evolution. This layout is justified on the grounds that “the forces that shape our thinking, our economies, and our societies have become invisible to us”, and that in order to solve problems, we must first understand them. Part two then considers practical policy solutions that might begin to address our current predicament: “how this comprehensive theory of everyone can lead to practical policy applications.”

What distinguishes us is our capacity for social learning and imitation which has enabled each generation of humans to add to the stock of knowledge which is then acquired and marginally improved upon by each subsequent generation.

Given the scale and ambition of the book, it is perhaps unsurprising that the reader is left feeling disappointed by its suggestions for public policy. Muthukrishna essentially offers the following ideas: better designed immigration, educational and tax systems; start-up cities; programmable politics; the curation of free speech and genuine meritocracy; and improving the internet and social media. Taken by themselves, many of these ideas are sound, and if there were sufficient political will, ought to be implemented as soon as practically possible. There are also many powerful insights within the book that might help shift some common understandings, such as the assumption, which Muthukrishna powerfully counters, that what differentiates us as a species is our innate intelligence and ability to reason. Instead, what distinguishes us is our capacity for social learning and imitation which has enabled each generation of humans to add to the stock of knowledge which is then acquired and marginally improved upon by each subsequent generation. Our intelligence is therefore more the result of this evolving cultural “download” than it is thanks to raw ability.

It is difficult to see how the book’s policy ideas sufficiently match the scale of the challenges the author outlines.

However, some of these practical applications are frustratingly light on detail. For example, his proposals for “start-up cities” and “programme politics” in his chapter on governance in the twenty-first century are both sketched out only vaguely, with little sense of how they might be realised. Where ideas are fleshed out, they are sometimes caveated with qualifiers such as “this approach is one of many and may not even be the best approach”. On occasion the author struggles to move beyond platitudes, as in his very brief discussion of artificial intelligence: “More progress is needed to know the true limits of what machines can achieve and our role in all of this. The tides of progress can only be held back for so long.” It is difficult to see how the book’s policy ideas sufficiently match the scale of the challenges the author outlines.

Muthukrishna does not seem to appreciate, or at least makes no room for, the fact that a number of his fundamental assumptions, such as a belief in the underlying virtue of capitalism and economic growth, might not be universally shared. Others would want to see climate change given more thorough treatment.

These flaws do not mean that the book is without merit. A recognition of the world’s complexity and the author’s commitment to truth and the scientific method means he is robustly unafraid to court controversy. He lauds unfettered free speech, expresses scepticism towards affirmative action, and explores sex-based differences in intelligence, while on immigration he contends that new migrants bring “with them cultural values both desirable and less desirable”. Muthukrishna is arguably right not to shy away from these controversial areas for, as he argues, “we can only arrive at the truth in a diverse environment of different backgrounds, considering all hypotheses and ideas – both those we like and those we don’t.”

Muthukrishna is arguably right not to shy away from […] controversial areas for, as he argues, ‘we can only arrive at the truth in a diverse environment of different backgrounds, considering all hypotheses and ideas’

The book is also written in an engaging and accessible manner, and whilst it might fail to attain the heights it purports to reach, in its fresh thinking it is a welcome addition to the basket of literature that helps contemporary politicians, policymakers, and anyone with an interest in the direction of humanity grapple with the complexity of today’s challenges.

This post gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science. The LSE RB blog may receive a small commission if you choose to make a purchase through the above Amazon affiliate link. This is entirely independent of the coverage of the book on LSE Review of Books.

Image Credit: blvdone on Shutterstock.

Massaging the Message: How Oilpatch Newspapers Censor the News

Published by Anonymous (not verified) on Sat, 23/12/2023 - 4:55am in

Download: PDF | EPUB

In their book Manufacturing Consent, Edward Herman and Noam Chomsky argue that the mainstream media functions largely as a propaganda arm for the state. When the war drum beats, the corporate media tows the government’s line, censoring facts that don’t fit the official narrative.

Outside of war, media bias is typically less overt. But to the careful observer, it can still be discerned. In this case, our careful observer is Canadian oil critic Regan Boychuk.

Boychuk lives in Calgary — a prairie city that is famous for two things. Calgary hosts the world’s largest rodeo. And it is the corporate heart of the Canadian oil business. Calgary … home to cowboys and crude-oil CEOs.

As you might guess, our story of media censorship is not about cowboys. Calgary’s main newspaper, the Herald, is staunchly pro-oil. And that means its editorial pages are filled with oilpatch jingoism. However, the rest of the paper is an archetype of neutral reporting.

Just kidding.

Unsurprisingly, the Herald’s pro-oil stance shapes the content that appears in the paper. This post takes a quantitative look at the editorial ‘curation’.

Most of the heavy lifting has been done by Boychuk, who had the brilliant idea to track the reporting of environmental journalist Mike De Souza. Between November 2010 and July 2013, De Souza wrote a series of articles documenting scandals related to the Canadian oilpatch, and its staunch defender, the Harper government.

At the time, De Souza was working for Postmedia, a news conglomerate that operated a wire service for its many subsidiaries. So when De Souza’s pieces were published, they were delivered to local papers like the Ottawa Citizen, the Edmonton Journal, and the Calgary Herald.

Here’s the catch. Although owned by the same conglomerate, these local papers had leeway to edit (or shelve) their wire-service articles. The result, Boychuk realized, was a controlled setting to analyze media censorship. Earlier this year, Boychuk published his findings in a piece called ‘Proximity to Power: The oilpatch & Alberta’s major dailies’.

My contribution here is mostly visual. I’ve taken Boychuk’s investigation and translated it into charts. The results largely speak for themselves. As De Souza’s articles approached the center of Canadian oil-and-gas power in Calgary, they were increasingly gutted, and their message changed. It’s a fascinating case study of how business interests shape the news.

The geography (and geology) of Canadian oil-industry power

This post is mostly about the myopia of human bickering. But since that’s a depressing topic, let’s start with something more majestic. Let’s frame the ideological landscape of the Canadian oilpatch by looking at the big picture of fossil fuels.

***

Long before humans existed, life on Earth was doing chemical magic, taking energy from the sun and converting it into biomass. In the ancient seas, dead organisms fell to the seabed where they slowly accumulated. Over the eons, the Earth ground and compressed this seafloor biomass until its chemistry changed into the hydrocarbons we call ‘oil’.

In many regions, this oil remained locked under the sea. But in other places, moving continents and changing climates pushed the seabed above water, where it awaited discovery by a scrappy group of primates.

The North American plains are one of these above-ground-waiting-to-be-discovered places.

One hundred million years ago, though, the great plains were not ‘plains’ at all. They were a sea that ran the length of today’s North America, connecting the Arctic Ocean to the Gulf of Mexico. On the seabed, biology and geology did their thing, slowly forming an immense deposit of oil. When the poles later froze and sea levels sank, the whole area rose above land, awaiting primate infestation.

***

It’s here that we return to human myopia. Roughly ten thousand years ago, the great plains were discovered by indigenous peoples. Much later, Europeans conquered the territory, setting up a nation-state called ‘Canada’. In the 20th century, Canadians began to exploit the fossil fuels underfoot, drilling hundreds of thousands of oil wells, building teeming oil-driven cities, and, of course, squabbling about the business of exploiting oil.

Before we focus on this fossil-fuel bickering, though, let’s connect the big picture of geology and geography to the Canadian ideological landscape. Due to quirks of geology, oil formed in the west of North America. But due to quirks of human history, Europeans conquered the continent from the east. As a consequence, eastern centers of power — cities like Toronto and Ottawa — were established long before western oil was discovered. And so these cities never became dominated by the oil business.

The same was not true for the western cities of Edmonton and Calgary. At the turn of the 20th century, both places were rural backwaters — settlements with a few thousand people. But the discovery of oil changed that. By the late 20th century, Edmonton had grown into a sprawling industrial hub for the Canadian oilpatch. And Calgary became the oil business’ corporate epicenter, with a downtown brimming with oil-company headquarters. In short, the politics of both cities became dominated by the oil business.

Pulling together this interplay of geology and geography, Figure 1 shows the big picture of Canadian oilpatch myopia. In Canada’s east sit the cities of Toronto and Ottawa — centers of corporate and government power with no oil to their name. In the west sit Edmonton and Calgary — cities that are geographically in the thick of the Canadian oilpatch, and ideologically under its spell.

Figure 1: The big picture of Canadian oilpatch myopia. Canada’s oil reserves formed millions of years ago under an ancient sea that eventually became North America’s great plains. The result is that today, the western cities of Edmonton and Calgary lie in the thick of the oilpatch, and are ideologically under its spell. Meanwhile, Europeans conquered North American from the east, long before oil was discovered. So that’s where the centers of corporate and government power are located — in Toronto and Ottawa, respectively. (Side note: this map plots data for over 700,000 oil wells, with depth shown in color. Zoom in for a closer view of the individual wells.) [Sources and methods]

Looking at this map of Canada, keep the geography in mind as we turn to the ideologically charged business of publishing the news. We’ll watch Mike De Souza’s environmental reporting get sliced and diced as it leaves Postmedia (headquartered in Toronto) and journeys to papers in Ottawa, Edmonton and Calgary.

Of course, it’s conceivable that our three papers — the Ottawa Citizen, the Edmonton Journal, and the Calgary Herald — could treat De Souza’s work with an equal hand. But as you’ll see, that’s not what happened.

Environmental reporting during the Harper years

To set the stage for De Souza’s journalism, let’s wind the clock back to 2006. In Canada, it was a year of jarring political change — the moment when neocon politician Stephen Harper became Prime Minister.1 It’s not an exaggeration to say that Harper — a former employee of Imperial Oil and resident of Calgary — ran the country for the benefit of oil companies. As you’d expect, a string of controversies ensued. And De Souza was there to document the political flames, publishing a string of exposés.

In 2014, De Souza left Postmedia, prompting environmental magazine The Narwhal to write a retrospective ranking his twenty most important pieces. Seeing the opportunity to study censorship, muckraking investigator Regan Boychuk took these twenty pieces and tracked down how (or if) they’d been published by the Ottawa Citizen, the Edmonton Journal, and the Calgary Herald.

In ‘Proximity to Power’, Boychuk conducted an article-by-article analysis of the censorship. In this post, we’ll leave the specifics of De Souza’s articles behind. Instead, we’ll take a bird’s-eye view of how his reporting was censored as it approached the heart of the Canadian oil business.

Saving space? … Or saving face?

Every day, newspaper editors face a dilemma: far more stories are written than can possibly be published. The result is a kind of constant ‘editorial churn’ in which numerous worthy stories are axed.

Turning to Mike De Souza’s environmental reporting, editorial churn means that for banal, space-saving reasons, some of his stories will inevitably get cut as they journey from paper to paper. But amidst this churn, there could also be politically motivated censorship. So how can we separate this censorship from the non-political churn?

Regan Boychuk has devised a simple solution: we see if the ‘churn’ has a geographic pattern. We watch a sample of De Souza’s reporting leave Postmedia, and then observe how the articles get cut as they travel across the country. When we carry out this exercise, we find that the editorial ‘churn’ has a conspicuous direction.

Figure 2 shows the pattern. As we approach the heart of oil-and-gas power in Calgary, newspapers mysteriously run out of space for De Souza’s reporting. Of the 20 De Souza articles that left Postmedia, the Ottawa Citizen was able to publish 14, the Edmonton Journal had room for 12, while the Calgary Herald had space for only 11. Funny. When the Herald ‘saves space’, it looks a lot like saving the oil business’ face.

Figure 2: Saving space or save face? A geographic pattern to newspapers’ ‘editorial churn’. This figure tracks twenty Mike De Souza articles as they leave Postmedia and travel to subsidiary papers in Ottawa, Edmonton, and Calgary. Curiously, papers closer to the heart of oil-and-gas power seem to have less space for De Souza’s environmental journalism. [Sources and methods]

Diving shallow

Before we lay charges of ‘censorship’, we should consider some non-incendiary explanations for the pattern in Figure 2.

Here’s a possibility: maybe the Herald opted for depth over breadth. In other words, the Herald might have published fewer of De Souza’s articles because it was saving space for long-form content. If so, then counting words (instead of articles) should remove our geographic trend.

Except that it doesn’t.

Figure 3 shows the pattern. When we count the number of De Souza words published, we again find that the editorial churn has a geographic direction. As we journey to the corporate epicenter of the Canadian oilpatch, newspapers spill less and less ink publishing De Souza’s work.

Figure 3: Diving shallow — a curious case of declining De Souza word counts. As De Souza’s twenty articles travel from Postmedia into the oilpatch (headquartered in Calgary) the total published wordcount declines. [Sources and methods]

Back-page news

Although the case for ‘objectivity’ looks bleak, let’s continue to hand the Herald olive branches. When it comes to De Souza’s work, maybe the Herald is substituting prominence for quantity — making a splash by publishing a few pieces at the front of the paper.

Unfortunately, the opposite seems to be true. Not only did the Herald print fewer De Souza articles, it tended to bury these pieces at the back of the paper. Figure 4 runs the numbers.

Looking at the evidence, the contrast between the Citizen and the Herald is stark. In the Citizen, most of De Souza’s pieces were published in the first four pages of the paper. But in the Herald, none of De Souza’s pieces graced the first four pages, and several were placed deep within the paper. In short, if the Herald editors aren’t biased against De Souza’s environmental reporting, they have a funny way of showing it.

Figure 4: Back-page news — the published location of De Souza’s articles. For each newspaper, the ‘violins’ show the distribution of the published location of De Souza’s articles. Black points show the location of individual articles. As we move from the Citizen to the Herald, De Souza’s reporting gets pushed to the back of the paper. [Sources and methods]

Headlines hacked

Forging ahead, perhaps there’s a more creative way to show that the Herald really cares about De Souza’s journalism. Maybe the proof lurks within its headlines.

On that front, let’s turn to Figure 5. Here, each word cloud shows the top dozen (or so) words that appear in the published headlines of De Souza’s articles. If the Herald is trying to preserve De Souza’s message, it has an odd way of showing it. The Herald’s headline vocabulary seems palpably different than the source material from Postmedia.

Figure 5: Hacking De Souza’s headlines. Each word cloud shows the dozen (or so) most-used words in the published headlines of De Souza’s articles. Font size indicates word frequency. [Sources and methods]

Let’s put some numbers to this game of headline hackery. We’ll start with the ten most frequent words used in De Souza’s Postmedia headlines. Then we’ll track the frequency of these words as our headlines journey across the country.

Figure 6 shows the results, which remind me of a bad game of telephone. As De Souza’s headlines move from the Citizen to the Journal to the Herald, the original message gets progressively lost.

Figure 6: A game of De Souza telephone? Tracking headline vocabulary across newspapers. This figure tracks the frequency of the ten words shown in the grey panel. (These words are the most frequent vocabulary in De Souza’s Postmedia headlines.) As we journey to the center of oil-and-gas power in Calgary, these headline words gradually disappear — like a game of telephone gone wrong. [Sources and methods]

Content, creatively curated

So far, the Herald’s editorial churn looks a lot like censorship. But let’s not give up. Perhaps the key to the Herald’s lack of De Souza bias lies in the content of its published articles.

Speaking of content, there’s no substitute for actually reading the different versions of De Souza’s articles and observing how the text changes. If this close reading interests you, head over to ‘The De Souza Files’, where you can browse annotated versions of each published De Souza article.

Here, though, I’m going to skip the close reading and instead, count words. In what follows, I use word frequency to measure how the content of De Souza’s writing varies across papers. The patterns are … not subtle.

Communication clawbacks

Looking at our De Souza content, let’s start with words that describe communication. For some reason, the frequency of these words declines precipitously as we journey into the Canadian oilpatch. Figure 7 shows the pattern.

Figure 7: Communication clawbacks. As we move from Postmedia to the Herald, communication words become less frequent in the published versions of De Souza’s articles. [Sources and methods]

So why is the Herald cutting communication content? Here’s my guess. These communication words are associated with the nuts and bolts of good investigative journalism — the part where a journalist describes what people say. If you happen to gut this investigative reporting, a plausible side effect is that you gut the language of communication. In short, the pattern in Figure 7 smells of biased editing.

Glossing over government

Next, let’s look at vocabulary associated with government. Figure 8 shows how this vocabulary varies across the different versions of De Souza’s articles. After a modest surge in the Ottawa Citizen, government language collapses as we head into the oilpatch.

Figure 8: Glossing over government. As we move from Postmedia to the Herald, government words become less frequent in the published versions of De Souza’s articles. [Sources and methods]

Given that the Citizen is published in the national capital, it’s understandable that it would have a governmental emphasis. But what’s with the Journal and the Herald? Why would they gut governmental language?

To understand the pattern, recall that our De Souza articles documented a series of scandals involving the Harper government — a regime that was staunchly pro oil. Now, if you happened to publish a pro-Harper, pro-oil newspaper, you might want to dampen news about government scandals. And if you carried out this dampening, you might end up cutting lots of government vocabulary, giving rise to a pattern much like Figure 7.

Hmm … there’s that censorship smell again.

Indigenous exclusion

Speaking of the aroma of censorship, let’s look at Figure 9. Here, I’ve plotted the frequency of words referring to indigenous peoples. For some reason, in the Herald versions of our De Souza articles, this indigenous vocabulary collapses.

Figure 9: Indigenous exclusion. As we move from Postmedia to the Herald, indigenous words become less frequent in the published versions of De Souza’s articles. [Sources and methods]

To understand this pattern of indigenous extirpation, it helps to understand the relationship that indigenous peoples have with big oil.

Going back a century, indigenous peoples signed a series of treaties with the Canadian government — treaties that they believed would preserve indigenous land. But by ‘treaty’, the Canadian government mostly meant ‘piece of paper that we will honor until we discover natural resources on you land.’ When the resource boom started, the (hidden) understanding was that different pieces of paper took precedence — the legal documents that leased indigenous lands for corporate exploitation.

Fortunately, the Canadian government has since embarked on a mission of ‘truth and reconciliation’. So there’s no need to worry about the on-going exploitation of indigenous lands, or the censorship of indigenous issues.

What’s that you say? Something about the ‘oilsands’? Well that’s uncomfortable. Yes, there does seem to be a huge land rush to secure exploitation rights to the oilsands. And this massive resource trove does seem to cover a significant swath of treaty land, as Figure 10 illustrates. But I’m sure that oil companies have a harmonious relationship with indigenous groups, with no need for corporate censorship.

Figure 10: A fossil-fuel land rush — oilsands lease agreements on treaty lands. The colored regions show the Alberta territory cover by historic First Nations treaties, signed with the federal government during the late 19th and early 20th century. The black regions indicate land agreements for oilsands extraction, made with the Alberta provincial government. [Sources and methods]

What’s that you say? Indigenous groups have been taking provincial governments to court, challenging oilsands lease agreements … and winning? Well, that does look bad. But I’m sure oil companies are playing fair.

True, this ‘fair play’ sometimes has the air of one-sidedness. For example, it seems that historically, when the Alberta government consulted indigenous groups about oilsands exploitation, it did so on a project-by-project basis. And it seems that this tunnel-vision had the effect of downplaying cumulative impacts, much to the chagrin of First Nations communities.

In this light, it does seem that a pro-oil, pro-corporate paper would have compelling reasons to censor indigenous issues from the reporting of an environmental journalist. So again, the Herald’s behavior has the scent of censorship.

Removing resistance

Continuing with our censorship sniff test, it seems that when the Herald published De Souza’s work, it rescinded words describing resistance. Figure 11 shows the pattern.

Now admittedly, this evidence doesn’t look good. At face value, it seems like the Herald is running a PR machine — a machine that guts language describing anti-oil resistance. Alternatively, the Herald was just chronically short on space, and these resistance words were by chance, the first to go.

Figure 11: Removing resistance. In the Herald versions of De Souza’s articles, words describing ‘resistance’ are noticeably less frequent than in the original pieces. [Sources and methods]

Glorifying growth-speak

So far, we’ve quantified the Herald’s tendency to cut certain themes from De Souza’s writing. While the direct effect of this cutting is to de-emphasize what was gutted, the indirect effect is to emphasize what remains. And what remains, it turns out, is growth-speak.

This is my term for words like ‘income’, ‘jobs’, and ‘profit’ — vocabulary that gets wielded whenever someone wants to justify ecological harm in the name of economic growth. In De Souza’s reporting, growth-speak appears as he seeks comments from various government and industry representatives.

As we head into the oilpatch, hefty chunks of De Souza’s reporting get cut. But for some reason, the language of growth-speak avoids the knife. The result is the trend in Figure 12 — an magical rise of growth-speak on the road to Calgary. It’s as if the Herald edited De Souza’s reporting in a way that emphasized oil-business revenue. Now why would a pro-oil paper, located at the corporate heart of the oipatch, do a thing like that?

Figure 12: Glorifying growth-speak. As we move from Postmedia to the Herald, business growth-speak becomes more frequent in the published versions of De Souza’s articles. [Sources and methods]

Looking at the weight of evidence, we get the clear impression that Mike De Souza’s environmental journalism didn’t get a fair shake. As his pieces made the journey into oil country, they were curated in a rather conspicuous way.

Numerous articles were cut. And the ones that did get published were pushed to the back of the paper. Headlines were changed. Text was gutted, de-emphasizing themes of communication, government, indigeneity, and resistance. Meanwhile, as if by magic, the language of growth-speak got emphasized.

In sum, the editorial evidence reeks of censorship.

I doubt that Herman and Chomsky would be surprised. In Manufacturing Consent, they note that since the corporate media is funded by ads, it is beholden to the interests of business.

That said, business capture doesn’t mean that all corporate journalism is heavily censored. Far from it. Topics that offend a niche set of businesses are fair game, so long as that niche is a marginal advertising client. But when that niche becomes the dominant player — like the oil business is in Calgary — the demands of censorship set in.

Thus we get the Calgary Herald’s blatant gutting of Mike De Souza’s environmental reporting. It’s disturbing behavior … if you think that newspapers have a duty to deliver inconvenient truths. But while this duty may be part of newspapers’ journalistic motto, it’s not part of their business model. So in a business sense, the Herald was just doing its job — making sure that journalism didn’t interfere with the more important business of selling oil.

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Sources and methods

The De Souza Files

For the interested reader, I’ve made a webpage (below) where you can browse the published versions of De Souza’s articles.

https://sciencedesk.economicsfromthetopdown.com/data/2023/desouza/home.html

Article position

Here’s how I quantify the page number of De Souza’s articles. In the simple case that the article is published in the A section, the page number is simply the section page number (i.e. A7 = page 7). This covers all but two cases — both of which are in the Herald.

The Herald saw fit to bury two De Souza articles in the D section. To quantify the position of these articles, I used ProQuest data to figure out how many pages were in the A, B and C sections of the relevant Herald issue. Then I summed this page count and added it to the section page number in the D section.

Map data

  • Shape files for Canada (Figure 1) and Alberta (Figure 10) are from Statistics Canada and can be downloaded here.
  • Shape files for the geological regions of Canada (Figure 1) are from Natural Resources Canada, and can be download here.
  • Shape files for Alberta oil wells (Figure 1) are from the Alberta Energy Regulator, and are available here. I used depth and location data for ‘bottom holes’.
  • Data for BC oil wells (Figure 1) is from the BC Energy Regulator (formerly the BC Oil and Gas Commission). A list of available data lives here. I used the following datasets:
    • Drilling Data for All Wells in BC [BCOGC-41984]
    • Directional Survey Data [BCOGC-2354]
  • Data for Saskatchewan oil wells (Figure 1) is from the Government of Saskatchewan, and can be downloaded here.
  • Data for Manitoba oil wells (Figure 1) is from the Government of Manitoba and is available here.
  • For oil wells in the Northwest Territories (Figure 1), I couldn’t find data about actual wells. As a substitute, I used data for oil-and-gas rights (i.e. well leases). The data is available here.

Note: In Manitoba and the Northwest territories, I couldn’t find data for oil-well depth. So I assumed a generic depth of 1 km.

  • Shape files for First Nations Treaties (Figure 10) are from Global Forest Watch, and can be download here.
  • Shape files for oilsands leases are from the Alberta Energy Regulator, and can be downloaded here.

Notes

  1. Harper’s ascent was jarring in much the same way as the election of George Bush south of the border. It’s not like the previous governments — the Clinton administration in the US and the Chrétien regime in Canada — were progressive. They weren’t. But they hid their neoliberal zeal below banal centrist rhetoric. Not so with Bush or Harper, who governed with neocon bravado.↩

Further reading

Achbar, M., & Wintonick, P. (1992). Manufacturing consent: Noam Chomsky and the media. https://www.youtube.com/watch?v = Li2m3rvsO0I

Boychuk, R. (2023). Proximity to power: The oilpatch & Alberta’s major dailies. Capital as Power. https://capitalaspower.com/2023/01/proximity-to-power-the-oilpatch-albertas-major-dailies/

Herman, E. S., & Chomsky, N. (1988). Manufacturing consent: The political economy of the mass media. Pantheon Books.

Linnitt, C. (2014). Mike De Souza’s 20 most important articles for Postmedia. The Narwhal. https://thenarwhal.ca/mike-de-souza-s-20-most-important-articles-postmedia/

The post Massaging the Message: How Oilpatch Newspapers Censor the News appeared first on Economics from the Top Down.

Approaching the Energy Cliff

Published by Anonymous (not verified) on Fri, 22/12/2023 - 1:21am in
by Dave Rollo

1970s cars at a Texaco gas station during the gas shortage

Back to the future? (Getarchive)

Warn anyone in the USA about the coming energy crisis and you’re likely to see eyes roll. “What energy crisis? That was half a century ago! Markets and technology won. Today we’re back among the top oil suppliers!”

All true, but the response gives a false sense of security that has policymakers and publics sleepwalking toward a cliff. An energy crisis is likely ahead, no matter our rank (currently third) among oil supplying nations. Seeing the coming crisis requires looking beneath the veneer of oil supply claims and asking some deeper questions.

The issue of energy scarcity is important because energy, fossil or otherwise, is tightly tied to economic output. A prolonged energy crisis—one in which substitutes for scarce energy are too expensive, environmentally harmful, or beyond humanity’s technological capabilities—would likely put an end to growth of industrial economies. While degrowth to a steady state economy is what steady staters seek, a lengthy and substantial period of degrowth would be a nightmarish outcome that would produce unnecessary suffering and conflict.

Revisiting an Energy Price Shock

 Fifteen years ago, the world suffered an economic downturn that required intervention by central banks and governments to prevent a depression-level economic collapse. Economies in much of the world had been expanding since 2001, but deregulation of mortgage lending  produced a bubble that sent shockwaves through the global financial and economic system. This much is well understood, but what is little recognized is the pin that burst the bubble. The pin was the price of oil, which doubled between 2007 and 2008.

aerial view of fracking sites

Fracking has left its mark. (Flickr)

Oil prices rose because world petroleum output could not keep up with demand. Because oil is a “master resource” used for energy or as a feedstock in practically every economic sector, rising prices caused the global economy to slow. The over-leveraged housing industry, already vulnerable because of a lack of credit-worthiness of some buyers, began to unravel. And although government intervention has been extensive, GDP growth after the 2008 crisis remained tepid.

But the economy recovered as energy extraction picked up, underlining the critical importance of energy to the economy. With higher oil prices and a period of low interest rates, extraction relying on a new technology—fracking—was added to the oil industry’s toolbox. Fracking increased oil supply by opening access to so-called “light tight oil” from mid-continental U.S. shale deposits. This period of increased supply is known as the “shale boom.” It made the USA a major supplier, and concerns about energy supply slid into the rear-view mirror.  Indeed, headlines about ”Peak Oil” that were common before the Great Recession of 2008-09 soon disappeared as fracking opened up supply.

The last decade, however, has brought new attention to the limits of energy availability and has shown that the shale boom may be short-lived. Because of oil producer obfuscation (particularly on the part of OPEC) we are still unsure of total global oil reserves, and by a terminological sleight of hand (described below), what was once considered oil has changed meaning, adding to confusion about reserve totals.

An Accounting Problem

Oil accounts for about 40 percent of total global energy consumption. Given its critical importance to economies worldwide, you’d think estimates of the remaining stocks of oil would be a settled matter. Yet experts have offered a wide range of estimates for decades. Determining the remaining recoverable reserves of countries and of the world is difficult for several reasons.

First is a lack of transparency; producers are reluctant to disclose the extent of their assets, or they wish to exaggerate them for greater global influence. Oil analysts have been suspicious of some producer claims for many years. A recent analysis suggests that OPEC reserves are overstated by 300 Gb (billion barrels), and FSU reserves by 100 Gb. (The reduction in OPEC reserves would align with the long-held theory to explain the “mystery” of sudden reserve additions in the 1980’s—the additions were likely a maneuver to increase export quotas.)

graph of global energy consumption, by source

Fossil fuels continue to dwarf renewable sources. (Our World in Data)

Another problem in counting oil reserves results from conflating heavy oils with conventional oil. Heavy oil resources are plentiful, but less economically useful than conventional oil, and extracting them is economically (and environmentally) costly and difficult to scale up. Yet heavy oils are counted in production as though they were equivalent in quality and accessibility to conventional oil. In fact, because they are harder to extract, their “flow rate” is limited and they cannot provide significant spare capacity in times of need.

Shale oil also complicates the oil accounting question. The USA is endowed with the best oil shale deposits (for oil production) on the planet and has more than doubled its production over the past ten years. This output has boosted all-liquids fossil fuels production and helps to explain how world demand has been met over the last decade. As seen in the figure, conventional oil has plateaued. Nearly all new additions to consumption have come from U.S. tight (shale) oil.

Shale oil is beset by several problems, however. One is the daunting and capital-intensive nature of the extraction process. Unlike extraction in conventional fields, fracking shale for oil is a constant effort involving drilling down one to three miles, then laterally for miles more before hydraulically fracturing the shale (injecting fluids under tremendous pressure containing large quantities of sand to keep the fractures open), and finally, pumping the liberated oil out of the deposit. This must be done continually to exploit a field.

A second problem with shale is the nature of the “oil” produced. Analysis by petroleum geologist Art Berman indicates that fully 30 percent of reported oil production in the USA, much of it from shale, is natural gas liquids—light hydrocarbons that have significantly less energy content than conventional crude. The light grade of oil is not suitable for heavy transport that relies on diesel.  So, much of the fracked shale oil produced by the USA cannot be used in the country and must be exported, so it does not contribute to U.S. energy supplies.

graph of US oil production showing conventional oil plateauing since 2005 while tight oil and deep water and oil sands account for increase in total production since 2005

Growth in U.S. oil production since around 2005 has come from hard-to-get sources (blue and yellow). (Art Berman).

The other problem for shale is the spectacular decline rate of a typical well. A conventional well may have a decline rate of 6 percent per year after peaking, but fracked wells plummet dramatically from the start, with a decline rate of 60 percent in the first year and 25 percent the second.

This means that companies need to drill new wells continually just to maintain production at a constant level. This is “The Red Queen” predicament, after Lewis Carroll’s “Through the Looking Glass,” in which the Queen advises Alice to run as fast as possible just to stay in place. It’s a very apt metaphor for fracking.

If world oil demand continues to increase as expected by energy advisory bodies such as the International Energy Agency and the U.S. Energy Information Agency, fracked deposits will have to perform increasingly well in the years to come. Yet production at two of the major oil shale plays—the Eagle Ford in 2013 and the Bakken in 2020—has apparently peaked, leaving only the Permian Basin as a prospect for expansion.

In sum, given the plateauing of conventional oil, the likely exaggeration of some countries’ reserve levels, and the rapid decline of fracking as a strategy for boosting conventional output, a peak in total liquids should be of urgent concern to policymakers and the public.

The Net Energy Cliff

The lengths humans will go to extract oil illustrates its value as an energy source. Gone are the days when an explorer could stick a pipe in the ground and hit a “gusher.” Today we drill miles deep in the ocean, mine dirty oil sands, and crack open deep rock (fracking) to find oil. But these increasingly extreme measures themselves require increasing inputs of energy.

This raises a key question: How much energy is being expended to get various forms of energy? What is the energy cost of energy production?  Analysts studying the question developed the concept of “energy return on energy invested,” or EROEI, to answer this question. The measure expresses the energy in the extracted resource compared to the energy cost of its exploration and development.

graph showing the EROEIs of various types of energy

The Net Energy Cliff. (Adapted from Wikipedia)

For example, extraction of 50 units of energy in oil (as in historic oil and gas fields) may require one unit of energy, for an EROEI of 50 to 1. But over time, as oil extraction requires increasing effort, oil’s EROEI might fall to 30 to 1, then 15 to 1. Declining EROI is precisely what characterizes the current state of fossil hydrocarbon extraction, as the graphic shows.

The implications are staggering. A declining EROEI reveals that extraction of energy will be increasingly expensive and eventually, cost-prohibitive. Hydrocarbons will still be in the ground, but the costs of their extraction will continue to climb. This also means that, barring the development of some new type of energy source, society will have to adapt to a much lower energy future. And it suggests that the monetary costs of extraction will erode GDP growth and eventually cap economic expansion.

Action is Needed Now

In 2005, just a few years before the rising price of oil triggered the 2008 economic crisis, the U.S. Department of Energy commissioned a report from the think tank SAIC titled “Peaking of World Oil Production: Impacts, Mitigation and Risk Management.” It’s clear from interviews that the authors were shocked by the implications of soon-to-arrive global Peak Oil, which they termed “an unprecedented risk management problem.” Analyzing the supply and demand side of the oil scarcity challenge, they concluded that at least a decade, and more likely two, would be needed to prepare for Peak Oil and prevent social and economic upheaval.

The report garnered a great deal of attention at the time, as did other warnings of energy limits. But the subsequent “shale revolution” changed everything. Instead of being recognized as a last domain of exploration and recovery, the media framed shale and fracking as an energy elixir. The intervening years have not produced the preparatory planning that Hirsch warned should occur.

Perhaps a peak visible on the horizon will draw attention to the predicament we are in: Perpetual economic growth cannot be reconciled with energy limits. The longer we wait to act, the higher the cliff, the more painful the landing, and the more difficult the transition to a steady state economy. Some local communities have been planning for energy scarcity, and I will share their work of conservation and adaptation in a future post.

Dave Rollo is a Policy Specialist at CASSE.

The post Approaching the Energy Cliff appeared first on Center for the Advancement of the Steady State Economy.

‘We’re Crossing a Global Tipping Point on Fossil Fuels and There’s No Going Back’

Published by Anonymous (not verified) on Sat, 16/12/2023 - 12:37am in

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The COP28 agreement has provoked mixed feelings. Some are rejoicing that finally the elephant in the room, ignored for 27 years, has now been made visible. Some are despairing that 28 years of talking has left us with a banal recognition of the obvious.

Both have missed the more critical issue: that the world has crossed a global tipping point in which every country has now woken up to the reality that the age of fossil fuels is drawing to a close. We're walking into a whole new world. And this is a genie that can never be put back into the bottle.

Markets move on the basis of perceptions. The global reverberations of this agreement will impact decisions at all scales – not only among governments and intergovernmental agencies, but among boardrooms, investors, local authorities, business of all sizes, civil society, and beyond.

This COP will be remembered as the one where an energy executive presiding over the seventh-largest oil producer in the world, managed to get Saudi Arabia, Iraq, China, Russia and many other oil-producing detractors on board, however reluctantly, with the recognition that we should “transition away from fossil fuels in energy systems”.

Above all, though, we should be wary of some of the loudest voices – such as Al Gore – who have done their best to singularly blame Arab petrostates for an agreement that did not endorse a total phase-out of fossil fuels.

While the latter certainly played their part in watering down the final text, Al Gore carefully shielded the world’s number one petrostate, the United States, from serious scrutiny – the country has the biggest fossil fuel expansion plans of all; and he obscured the fact that the trillions worth of finance needed for the transition was not actually being offered by the Western countries pontificating about a phase-out.

Despite his criticisms, the UAE's COP28 presidency achieved what no previous COP had ever even tried, let alone achieved: it got the Saudis on board with a text endorsing the global move away from fossil fuels. And the latter weren't happy about it: the delegation refused to applaud when COP president Sultan Al Jaber noted this was the first time that language on fossil fuels had ever been mentioned in a global UN climate agreement. Even Russia’s representative commented: “We are not happy but we all agree.”

For 27 years, COP after COP failed to even recognise fossil fuels as the root cause of the climate crisis. Which is why we should not dismiss the significance of this language taking the global stage, against the early opposition of oil-producing nations.

EXCLUSIVE

‘Keeping Carbon in the Ground’ Missed the Point: How COP28 Signals End of Oil

Western hypocrisy nearly scuppered global climate negotiations. But now the direction of travel is clear. Byline Times’ columnist sums up his conclusions after addressing the Dubai summit

Nafeez Ahmed

It prompted the UN climate chief, Simon Stiell, to describe the text as “the beginning of the end” for oil, gas and coal – wording that mirrors what the International Energy Agency concluded in the 2023 World Energy Outlook.

So yes, it's only the beginning, and it's a text that is far from perfect. But it's going to have a seismic impact, because it signals how global consciousness, major institutions, all governments, have signed up to the inescapable vision of the final necessity of a world after oil.

This result is as much a reflection of how slow governments are to catch up with the reality of the current transformation, as it is an amplifier of that transformation.

The naming of fossil fuels on a global scale achieved at this UN climate summit might well seem stupendously obvious to those who are fighting at the coalface of the climate crisis. And I sympathise with that sense of perplexed frustration, that it’s taken this long for the world to formally face up to what we all know.

Yet, now that governments are finally collectively acknowledging the fact that fossil fuels must be made a thing of history, this in itself will trigger markets to move even faster in that direction. Of course, there are critical gaps in the text, not only on key areas around the energy transformation, but around climate finance. We need to work harder than ever to close these gaps.

There is a broader issue that remains poorly understood by world governments.

During the first week of the summit, I had warned heads of state at COP28 that the age of oil is being driven to extinction by unstoppable exponential technology disruptions in energy, transport, food and information.

Those disruptions are undoing the sinews of the global industrial production paradigm, and on track to completely displace them within the next two decades in what I’ve called a ‘global phase shift’ – faster than most believe possible, but still too slow to evade the climate danger zone (experts looking at these confounding disruptions warn that the current pace of change is too slow to avoid breaching the 1.5°C safe limit – we’re currently hurtling closer toward a planet-wrecking 3°C).

But it’s still faster than conventional analysts understand. Consider, for instance, that Sinopec – the world’s largest oil refining, gas and petrochemicals conglomerate, based in China – has brought forward its forecast of the coming peak of Chinese oil demand by two years, concluding it’s already arrived.

So this global transformation cannot be stopped. And even while its scale and pace will continue to surprise, it’s still not happening as comprehensively and at the speed it needs to – most of all, if we fail to understand it and adapt our entire civilisational structures to it, we will face the risk of not just ecological collapse, but also economic and social collapse at multiple scales.

COP28 has taken the first major step over the past three decades to bring foundational clarity on one of the most important components of this transformation: that we are, indeed, in the midst of a great global phase-shift which will see us move beyond fossil fuels, one way or another, before mid-century.

Even Big Oil has hailed the agreement. Is it greenwashing? Probably – but we now have a basis to double-down on why Big Oil itself admits to being a dinosaur.

Is it cause for celebration? Perhaps not, at a time when earth systems continue to collapse at a rate that far exceeds the transition, and when mounting evidence suggests we are on track to breach the 1.5°C safe limit.

But will this agreement help us move faster? I think so.

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Perhaps the most important message I tried to deliver at COP28 was that this will not necessarily require painful sacrifices: to the contrary, it will open up new avenues for prosperity within planetary boundaries, allowing us to escape the clutches of outmoded industries which are not just hurting the earth but crumbling under their own weight.

And we can partly accelerate the system changes we need by leveraging market forces to ramp up key technologies in energy, transport, food and beyond, which will help transform the rules and dynamics by which these sectors currently work.

The biggest and most transformational victory, by far, is the global adoption of the 2030 tripling renewable energy goal, which was also specifically endorsed by 130 countries, two-thirds of the world. No COP has ever even contemplated a renewable energy target before.

But COP28 defied sceptics by becoming the first time all governments recognised renewables as the primary vehicle to solving the climate crisis. Bruce Douglas, CEO of the Global Renewables Energy Alliance, rightly called it it “a paradigm shift in the energy transition”.

If implemented, this will accelerate clean energy adoption, slashing costs by half, helping to push past the tripling target, and taking a major chunk out of global fossil demand – in turn accelerating the phase-down and eventual phase-out of fossil fuels.

Change is already exponential in energy: but we’re still only at the beginning of those exponential S-curves, which means it’s not going to slowdown, it’s going to speed up. We have to hit the pedal to the metal by marshalling investments, restructuring regulations, expanding grids, creating new energy ownership and trading rights, and eliminating barriers.

Citizens everywhere now have a basis to pressurise their governments on real delivery, based on having agreed at COP28 that leaving fossil fuels behind while ramping up renewables is necessary, and inviting each other to do so.

But the biggest elephant in the room – the one that left the building – has to be addressed: demanding and expecting a country which has an entire economy is dependent on oil to phase it out, especially a developing one, without offering that country a lifeline and roadmap to phase up a thriving post-carbon energy system is a kind of madness.

We have to do more than righteously demand a phase-out. We have to focus on extending those lifelines and charting those roadmaps to make every country in the world and its citizens say 'this is the future we want’. That means ensuring that the support, the finance, the logistics, the expertise and the technology is available.

Whether it’s at the next COP, or by building new coalitions across nations and regions, we can this use step forward to take the next giant leap into our post-carbon future.

Nafeez Ahmed is an investigative journalist and director at Futures Lab

Affordable electricity Decarbonization in OECD countries? Part I

Published by Anonymous (not verified) on Tue, 14/09/2021 - 12:56pm in

After eight extensive posts about the Ontario electricity sector, I am expanding my geographic coverage to look at the electricity sectors in selected OECD countries. My focus will be on the historical and relative performance of each country’s sector with respect to decarbonization and prices. As in the case of Ontario, whole volumes could and have been written about each of these countries, and the electricity sector in general, including with respect to current and future reliability and technologies and preferred vs. feasible future decarbonization pathways and other matters. To keep this manageable, my analysis will be a high-level data-driven overview of past and current generation technology mix, sector emissions and prices only, all based on internationally-comparable data from reputable sources. Interested readers should check out my earlier posts and other writing as to why my focus on the question of affordable decarbonization. In this blog I start with Canada, France, Germany and Japan. Future editions will cover additional countries.

I look at data from 1990 to 2019/20 to ensure to ensure I capture trends in the sector, which, because of its capital intensity, tend to be relatively slow-moving. I look at electricity generation mix by country based on International Energy Agency (IEA) data. I present it in seven groups: nuclear, hydro, non-hydro renewables (this includes wind, solar), natural gas, petroleum products, coal products and biomass and waste. To control for aggregate generation changes over time within a country and for country size differences, I present these in percentage terms. But these technologies are just means to an end, which is sector decarbonization – I source sector emissions directly from the respective country National Inventory Reports (NIR) submitted annually to the Secretariat to the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC format combines emissions from public electricity and heat, which is the same combined manner that the IEA presents emissions data. Ideally, we would only include public electricity emissions but relative few countries present this on a stand-alone basis. Public heat provision, generally in the form of district heat systems, is generally a few percentage points of public electricity. To control for differences over time and country differences I present sector emissions intensity (kg CO2/MWh). From an accounting perspective, so as to not “double count”, the UNFCCC does not allocate emissions from the generation of electricity from the combustion of biomass to electricity (the Energy Sector), but rather to the Land Use, Land-Use Change and Forestry (LULUCF) sector. For this analysis, given that I am focussing on the electricity sector only, and not the economy as a whole, I include emissions from the generation of electricity from the combustion of biomass to the electricity sector. Lastly, I source household electricity prices from the IEA, which include base prices, plus any consumer-oriented or taxes and specific levies, in USD(PPP)/MWh. After I provide an overview of the countries I present some initial comparative analysis, which I expect to fine tune as I cover more countries in future blogs, including with more sophisticated multivariate regression analysis.

Country Overviews: Canada, France, Germany & Japan

Starting close to home, Figure 1 shows that the technology mix in Canada has been relatively stable over the last 30 years, with a high percentage (ranging between 70% to 80%) of generation coming from zero-emissions technologies (nuclear, hydro and non-hydro renewables). This has resulted in relatively low emissions intensity over the study period, with three phases: a decrease from the displacement of coal by nuclear and hydro from 1990 to 1996; an increase as some nuclear generation went off line from 1996 to 2003; and a steady decline from 2004 to 2019 as nuclear comes back on line and non-hydro renewables are introduced and expand to 6%, which together with gas increasingly displace coal. Household prices increased moderately during almost the entire period, but started to increase in 2015, primarily due to the increase in high-contracted-priced non-hydro renewables in Ontario (see my earlier blogs).

Crossing the Atlantic, Figure 2 shows that the technology mix in France has also been relatively stable over the last 30 years. France has had an even higher percentage (around 90%) of generation coming from zero-emissions technologies, resulting in relatively very low emissions intensity over the study period. Like in Canada, changes in emissions initially relate to the addition/subtraction of zero-emission technologies, but starting in the mid 2000’s there was also substitution away from higher-emitting coal to lower emitting gas. Household prices were stable until about 2009, after which they increased by about 6% per year in the ten years to 2020.

Moving north-east in Europe, Figure 3 shows that the technology mix in Germany has been much more dynamic over the last 30 years. For the period from 1990 to about 2016 Germany had a relatively low percentage (between 30% to 40%) zero-emission generation, resulting in relatively very high emissions intensity. This is specially given the case that its largest emitting generation was coal. Emissions decreased from 1990 to about 1999 as nuclear and hydro increased and gas displaced some coal and then stabilized over the next decade until the large policy-driven decrease in nuclear (in reaction to the Fukushima accident) in 2011 resulted in a large spike in emissions that were not bright back to trend by fast-increasing non-hydro renewables until 2015-16, which by 2020 accounted for 31% of generation. Household prices in Germany were stable until about 2000, after which they increased by more than 8% per year for 13 years to 2013, after which they increased moderately at 1% per year to 2020. As in Ontario, who modeled their Green Energy Act (GEA) on the Energiewende, the increase in prices in Germany are primarily due to the increase in high-contracted-priced non-hydro renewables.

Heading to Asia, Figure 4 shows that the technology mix in Japan has also been relatively dynamic. For the period from 1990 to about 2010 Japan had a relatively low percentage (between 30% to 40%) zero-emission generation, resulting in relatively high emissions intensity. It was lower than Germany, however, because it relied on relatively lower-emitting gas and oil and less on higher-emitting coal. Emissions decreased from 1990 to1999 as nuclear increased and then increased moderately as nuclear decreased slightly until 2010. As a policy matter in reaction to the Fukushima accident in 2011, however, Japan took most of its nuclear generation offline. This decrease resulted in a very large spike in emissions, as zero-emission generation dipped to only 10%. Emissions decreased moderately to 2019 as some nuclear was brought back on line and non-hydro renewables increased to 9% of generation. By 2019 zero-emission generation, at 21% was only half of what Japan had achieved in 1998. Household prices increased moderately until after 2011, when they increased at 4% per year to 2019.

Comparative Analysis and Discussion

Figure 5 shows the emissions intensity for the four countries from 1990 to 2019. It confirms that due to their large legacy zero-emission generation grids of 70%-80% for Canada and 90% for France these are the countries that have already deeply decarbonized their electricity sectors, both hovering around 100 kgCO2/MWh in 2019. After relatively stable but relatively very high emissions for most of the study period, Germany finally broke through the 550 kgCO2/MWh threshold in 2015 and has reduced emissions intensity by 6% since then to reach 420 kgCO2/MWh in 2019. Japan had been unable to make much progress from 350 00 kgCO2/MWh before 2011, after which emissions spiked and have since slowly been reduced to about 400 kgCO2/MW.

Figure 6 plots emissions intensity against the % of zero-emission generation for every year and country in the study. To give a sense of the direction of the movement in this two-dimensional space, I identify years 1990, 2000, 2010 and 2019 for each country. The strong negative correlation (downward sloping trendline) confirms the almost linear tradeoff between the amount of zero-emission generation and emissions. The time progression, with the exception of Japan, is from higher emission down and to the right. I am interested in seeing whether this linearity holds for the USA, a country for which much of the decarbonization has been attributed to the switch from higher–emitting coal to lower-emitting gas. Stay tuned for future blogs.

Figure 7 shows household prices for the four countries from 1990 to 2020 and confirms our earlier observation that while all prices have increased after a period of relative stability, the prices in some countries began increasing earlier and faster than in others. Germany is the outlier in this respect, where prices have almost tripled since 1990.

I am interested in exploring affordable decarbonization. From this perspective, both Canada and France had already achieved this by 1990 and so the process of decarbonization, and whether it was affordable, would involve looking further back in time. For Canada that may be 1960s to 1980s when many of current large hydro-electric projects and nuclear generation stations came online to displaced emitting technologies. For France it would be from the mid 1970’s to 1990 when its nuclear fleet displaced fossil technologies. In both cases, however, given that both countries started the period as the two lowest-priced countries in the sample, it is reasonable to assume that the transition was likely affordable, and certainly no less unaffordable than the approaches adopted in Germany and Japan prior to 1990. After that year and specially for Germany from 2000 and the coming into law of the German Renewable Energy Sources Act (EEG) and the introduction of high-contracted-priced non-hydro renewables, we see very significant price increases to 2015 but no reductions in emissions until that year because, as discussed above, Germany was in parallel reducing nuclear generation.

In these last two figures I start an initial correlation analysis, which I expect to fine tune as I cover more countries in future blogs, including with more sophisticated multivariate regression analysis. In my previous blogs I have discussed studies showing that any increases in electricity prices have been mostly due to the introduction and growth of non-hydro renewables, due to their higher-than market contracted prices and broader integration costs. This is certainly the case in Ontario, Canada and Germany. I am interested if this holds in other countries and what is the likely scale of the impact. I begin with the simple correlation analyses in Figures 9 and 10.

Figures 9 and 10 separate out zero-emission generation into dispatchable nuclear and hydro and intermittent non-hydro renewables and plots them against prices to examine any corresponding correlation. To also provide a sense of the direction of the movement in this two-dimensional space, I identify years 1990, 2000, 2010 and 2019 for each country. Figure 9 shows a generally negative (downward sloping) correlation, indicating that nuclear and hydro are correlated with lower prices. Figure 10, on the other hand, shows a generally positive (upward sloping) correlation, indicating that non-hydro renewable are correlated with higher prices. Based on prior studies, we knew that for Canada (via Ontario) and Germany this non-hydro renewables/higher price association had been shown to be stronger, of statistical significance suggesting causation, but it is good to replicate this via a simple correlation analysis. Looking at Figure 9 and 10 together, this correlation also holds for France and to lesser extent Japan. Note to my inner econometrician – there could be some time effect in the last decade or two (for example the introduction of liberalized electricity markets) that could separately be contributing to higher prices and thus could be a confounding variable to the simple non-hydro renewables/higher price association… That statistical question to be resolved down the road once I review a larger number of countries.

Next Steps

I am expecting to be able to cover four other OECD countries in the edition of this series, hopefully to come out in a few weeks, time permitting. I am aiming to include the USA, either Australia or New Zealand, and two countries in Europe.

Affordable electricity Decarbonization in OECD countries? Part I

Published by Anonymous (not verified) on Tue, 14/09/2021 - 12:56pm in

After eight extensive posts about the Ontario electricity sector, I am expanding my geographic coverage to look at the electricity sectors in selected OECD countries. My focus will be on the historical and relative performance of each country’s sector with respect to decarbonization and prices. As in the case of Ontario, whole volumes could and have been written about each of these countries, and the electricity sector in general, including with respect to current and future reliability and technologies and preferred vs. feasible future decarbonization pathways and other matters. To keep this manageable, my analysis will be a high-level data-driven overview of past and current generation technology mix, sector emissions and prices only, all based on internationally-comparable data from reputable sources. Interested readers should check out my earlier posts and other writing as to why my focus on the question of affordable decarbonization. In this blog I start with Canada, France, Germany and Japan. Future editions will cover additional countries.

I look at data from 1990 to 2019/20 to ensure to ensure I capture trends in the sector, which, because of its capital intensity, tend to be relatively slow-moving. I look at electricity generation mix by country based on International Energy Agency (IEA) data. I present it in seven groups: nuclear, hydro, non-hydro renewables (this includes wind, solar), natural gas, petroleum products, coal products and biomass and waste. To control for aggregate generation changes over time within a country and for country size differences, I present these in percentage terms. But these technologies are just means to an end, which is sector decarbonization – I source sector emissions directly from the respective country National Inventory Reports (NIR) submitted annually to the Secretariat to the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC format combines emissions from public electricity and heat, which is the same combined manner that the IEA presents emissions data. Ideally, we would only include public electricity emissions but relative few countries present this on a stand-alone basis. Public heat provision, generally in the form of district heat systems, is generally a few percentage points of public electricity. To control for differences over time and country differences I present sector emissions intensity (kg CO2/MWh). From an accounting perspective, so as to not “double count”, the UNFCCC does not allocate emissions from the generation of electricity from the combustion of biomass to electricity (the Energy Sector), but rather to the Land Use, Land-Use Change and Forestry (LULUCF) sector. For this analysis, given that I am focussing on the electricity sector only, and not the economy as a whole, I include emissions from the generation of electricity from the combustion of biomass to the electricity sector. Lastly, I source household electricity prices from the IEA, which include base prices, plus any consumer-oriented or taxes and specific levies, in USD(PPP)/MWh. After I provide an overview of the countries I present some initial comparative analysis, which I expect to fine tune as I cover more countries in future blogs, including with more sophisticated multivariate regression analysis.

Country Overviews: Canada, France, Germany & Japan

Starting close to home, Figure 1 shows that the technology mix in Canada has been relatively stable over the last 30 years, with a high percentage (ranging between 70% to 80%) of generation coming from zero-emissions technologies (nuclear, hydro and non-hydro renewables). This has resulted in relatively low emissions intensity over the study period, with three phases: a decrease from the displacement of coal by nuclear and hydro from 1990 to 1996; an increase as some nuclear generation went off line from 1996 to 2003; and a steady decline from 2004 to 2019 as nuclear comes back on line and non-hydro renewables are introduced and expand to 6%, which together with gas increasingly displace coal. Household prices increased moderately during almost the entire period, but started to increase in 2015, primarily due to the increase in high-contracted-priced non-hydro renewables in Ontario (see my earlier blogs).

Crossing the Atlantic, Figure 2 shows that the technology mix in France has also been relatively stable over the last 30 years. France has had an even higher percentage (around 90%) of generation coming from zero-emissions technologies, resulting in relatively very low emissions intensity over the study period. Like in Canada, changes in emissions initially relate to the addition/subtraction of zero-emission technologies, but starting in the mid 2000’s there was also substitution away from higher-emitting coal to lower emitting gas. Household prices were stable until about 2009, after which they increased by about 6% per year in the ten years to 2020.

Moving north-east in Europe, Figure 3 shows that the technology mix in Germany has been much more dynamic over the last 30 years. For the period from 1990 to about 2016 Germany had a relatively low percentage (between 30% to 40%) zero-emission generation, resulting in relatively very high emissions intensity. This is specially given the case that its largest emitting generation was coal. Emissions decreased from 1990 to about 1999 as nuclear and hydro increased and gas displaced some coal and then stabilized over the next decade until the large policy-driven decrease in nuclear (in reaction to the Fukushima accident) in 2011 resulted in a large spike in emissions that were not bright back to trend by fast-increasing non-hydro renewables until 2015-16, which by 2020 accounted for 31% of generation. Household prices in Germany were stable until about 2000, after which they increased by more than 8% per year for 13 years to 2013, after which they increased moderately at 1% per year to 2020. As in Ontario, who modeled their Green Energy Act (GEA) on the Energiewende, the increase in prices in Germany are primarily due to the increase in high-contracted-priced non-hydro renewables.

Heading to Asia, Figure 4 shows that the technology mix in Japan has also been relatively dynamic. For the period from 1990 to about 2010 Japan had a relatively low percentage (between 30% to 40%) zero-emission generation, resulting in relatively high emissions intensity. It was lower than Germany, however, because it relied on relatively lower-emitting gas and oil and less on higher-emitting coal. Emissions decreased from 1990 to1999 as nuclear increased and then increased moderately as nuclear decreased slightly until 2010. As a policy matter in reaction to the Fukushima accident in 2011, however, Japan took most of its nuclear generation offline. This decrease resulted in a very large spike in emissions, as zero-emission generation dipped to only 10%. Emissions decreased moderately to 2019 as some nuclear was brought back on line and non-hydro renewables increased to 9% of generation. By 2019 zero-emission generation, at 21% was only half of what Japan had achieved in 1998. Household prices increased moderately until after 2011, when they increased at 4% per year to 2019.

Comparative Analysis and Discussion

Figure 5 shows the emissions intensity for the four countries from 1990 to 2019. It confirms that due to their large legacy zero-emission generation grids of 70%-80% for Canada and 90% for France these are the countries that have already deeply decarbonized their electricity sectors, both hovering around 100 kgCO2/MWh in 2019. After relatively stable but relatively very high emissions for most of the study period, Germany finally broke through the 550 kgCO2/MWh threshold in 2015 and has reduced emissions intensity by 6% since then to reach 420 kgCO2/MWh in 2019. Japan had been unable to make much progress from 350 00 kgCO2/MWh before 2011, after which emissions spiked and have since slowly been reduced to about 400 kgCO2/MW.

Figure 6 plots emissions intensity against the % of zero-emission generation for every year and country in the study. To give a sense of the direction of the movement in this two-dimensional space, I identify years 1990, 2000, 2010 and 2019 for each country. The strong negative correlation (downward sloping trendline) confirms the almost linear tradeoff between the amount of zero-emission generation and emissions. The time progression, with the exception of Japan, is from higher emission down and to the right. I am interested in seeing whether this linearity holds for the USA, a country for which much of the decarbonization has been attributed to the switch from higher–emitting coal to lower-emitting gas. Stay tuned for future blogs.

Figure 7 shows household prices for the four countries from 1990 to 2020 and confirms our earlier observation that while all prices have increased after a period of relative stability, the prices in some countries began increasing earlier and faster than in others. Germany is the outlier in this respect, where prices have almost tripled since 1990.

I am interested in exploring affordable decarbonization. From this perspective, both Canada and France had already achieved this by 1990 and so the process of decarbonization, and whether it was affordable, would involve looking further back in time. For Canada that may be 1960s to 1980s when many of current large hydro-electric projects and nuclear generation stations came online to displaced emitting technologies. For France it would be from the mid 1970’s to 1990 when its nuclear fleet displaced fossil technologies. In both cases, however, given that both countries started the period as the two lowest-priced countries in the sample, it is reasonable to assume that the transition was likely affordable, and certainly no less unaffordable than the approaches adopted in Germany and Japan prior to 1990. After that year and specially for Germany from 2000 and the coming into law of the German Renewable Energy Sources Act (EEG) and the introduction of high-contracted-priced non-hydro renewables, we see very significant price increases to 2015 but no reductions in emissions until that year because, as discussed above, Germany was in parallel reducing nuclear generation.

In these last two figures I start an initial correlation analysis, which I expect to fine tune as I cover more countries in future blogs, including with more sophisticated multivariate regression analysis. In my previous blogs I have discussed studies showing that any increases in electricity prices have been mostly due to the introduction and growth of non-hydro renewables, due to their higher-than market contracted prices and broader integration costs. This is certainly the case in Ontario, Canada and Germany. I am interested if this holds in other countries and what is the likely scale of the impact. I begin with the simple correlation analyses in Figures 9 and 10.

Figures 9 and 10 separate out zero-emission generation into dispatchable nuclear and hydro and intermittent non-hydro renewables and plots them against prices to examine any corresponding correlation. To also provide a sense of the direction of the movement in this two-dimensional space, I identify years 1990, 2000, 2010 and 2019 for each country. Figure 9 shows a generally negative (downward sloping) correlation, indicating that nuclear and hydro are correlated with lower prices. Figure 10, on the other hand, shows a generally positive (upward sloping) correlation, indicating that non-hydro renewable are correlated with higher prices. Based on prior studies, we knew that for Canada (via Ontario) and Germany this non-hydro renewables/higher price association had been shown to be stronger, of statistical significance suggesting causation, but it is good to replicate this via a simple correlation analysis. Looking at Figure 9 and 10 together, this correlation also holds for France and to lesser extent Japan. Note to my inner econometrician – there could be some time effect in the last decade or two (for example the introduction of liberalized electricity markets) that could separately be contributing to higher prices and thus could be a confounding variable to the simple non-hydro renewables/higher price association… That statistical question to be resolved down the road once I review a larger number of countries.

Next Steps

I am expecting to be able to cover four other OECD countries in the edition of this series, hopefully to come out in a few weeks, time permitting. I am aiming to include the USA, either Australia or New Zealand, and two countries in Europe.

Ontario Electricity VIII: Now also going backwards on climate

Published by Anonymous (not verified) on Thu, 01/07/2021 - 6:20pm in

There have been a number of important developments in the Ontario electricity sector since my last update when I summarized my arguments in front of the Standing Committee on General Government of the Legislative Assembly of Ontario against the proposed provincial Conservative legislation, now enacted, that eliminated the provincial Liberal rate-based borrowing scheme to subsidize electricity prices and replaced it with subsidies from Government revenues. The tax-payer financed subsidy of $2.8 billion in 2018/19 has now ballooned to $6.5 billion in 2021/22 and will continue to increase. This amounts to 0.7% GDP, and is now larger than Long Term Care (LTC) public financing in the Province. Ontario is the only jurisdiction in North America where the Government directly subsidizes electricity prices – indeed, I have a standing public “challenge” for anyone to refute my contention that Ontario’s current in-budget end-user price subsidies are the largest on a GDP basis of any high-income jurisdiction in the world.

But let us set aside that financial disaster for now…. In this post I want to focus on climate, and specifically on greenhouse gas (GHG) emissions and carbon-pricing schemes (carbon “tax” or “taxes” for short). Despite grave governance errors and poor policy implementation that resulted in Canada’s highest electricity systems costs, one very significant Ontario achievement was that in a short decade it was able to wean itself off coal generation and reduce sector GHG emissions by more than 90%. However, as a result of a series of recent operational and policy decisions, Ontario is in danger of losing some of these hard fought gains.

The relative and absolute success of Ontario’s achievement to eliminate coal from the electricity grid is evident from Figure 1, which shows GHG emissions intensity of the 10 provincial electricity grids and of Canada as a whole from 2005 to 2019. In 2005 Ontario was at the Canadian average intensity of around 0.200 tCO2/MWh, but after a 90% reduction by 2019, Ontario is now one of six very low emission provinces, along with PEI, Newfoundland, Quebec, Manitoba and BC. On the other side of the ledger are New Brunswick, Nova Scotia, Saskatchewan and Alberta, all of which still have significant coal, coke and oil generation (combined ratios of 18%, 52%, 30% and 42% for 2019, respectively for each of these four high-emission provinces).

Gas Electricity Generation

Now that coal generation has been eliminated in Ontario, the only GHG emitting source in the electricity sector is gas generation. Figure 2 shows gas generation in Ontario from 2005 to 2020, and projections to 2030 based on the average of Scenarios 1 and 2 from Ontario’s Independent Electricity System Operator (IESO) 2020 Annual Planning Outlook (APO).

Figure 2 shows that coming out of the 2002 Ontario electricity crisis, gas capacity was running at around 5 GW. However, based on a series of Ministry of Energy (MoE) directives, the monopoly government procurement agency, the Ontario Power Authority (OPA) – whose functions have been folded into those of IESO – procured additional gas plants so that capacity doubled from 2007 to 2012, to the current range of between 10-11GW. Output doubled as well, but the average capacity factor (the % of actual vs. potential output if the plant was to run 24/365) remained around 20%. With declining output over the last 5 years, the capacity factor has now dipped to 10%.

Modern gas plants are designed for, and in most other countries run, at much higher capacity factors. The unnumbered figure below for the USA as a whole shows the distribution and average capacity factors for gas plants for 2005 and 2015 (increasing from 35% to 56%). From a post-facto perspective, it is clear that much, if not most, new MoE-centralized procurement of gas generation in Ontario after 2005 was socially unnecessary. As I have argued in the past, this over-procurement resulted in excess generation capacity in the grid that still has to be paid for and is one of the main drivers of why Ontario has the highest electricity system costs in Canada.

Emissions and Carbon Taxes

Now back to the future… and other acronyms….

Along with creating OPA and IESO, the Conservative sector reforms of 2002 also split up the provincially-owned Ontario Hydro into a generation-only corporation (Ontario Power Generation (OPG)) and a transmission entity, Hydro One (which also retained the distribution networks of rural areas not served by the 70-odd municipally-owned local distribution companies (LDCs)). OPG remains a 100% provincially-owned Crown corporation (Canadian terminology for what is generally referred to as a “state owned enterprise” (SOE), while Hydro One has been 51% privatized.

In 2019 OPG announced that it had decided not refurbish its Pickering Nuclear Generating Station (PNGS) and to shutter it in 2024-25. Ontario will need to replace that 20-23 TWh of output to make sure the lights stay on. Figure 2 shows that IESO projects that nearly all of that “missing output” will be taken up by increasing gas output from current gas plants, increasing gas output from the current 10 to 30 TWh by 2030. This will push Ontario gas capacity factors to a “record” 30% by 2030 – still 5% below what the USA achieved in 2005 and 26% below 2015 levels!

Figure 3 shows the emissions impact of this move away from nuclear to gas. GHG emissions from gas move more-or-less in step with output and are expected to increase to 10-11 MT for the 2027-2030 period, from the current range of about 4 MT. As Figure 3 shows, that 7MT increase to 11MT in 2030 would result in the highest ever emissions in Ontario for gas. And this is with the most modern and efficient gas plants. Figure 3 shows that gas emissions intensity has dropped significantly as newer gas plants have come online, from generally over 0.500 tCO2/MWh earlier in the period, to an average of 0.408 from 2014 to 2019. In its APO IESO expects this to decrease slightly to 0.390 by 2030.

So why would OPG decide to shutter PNGS? Clearly not for climate reasons, in spite of their net-zero commitment by 2040; under the current provincial Conservative government OPG went on a buying spree in 2019, purchasing two large existing gas plants from Trans-Canada Energy (TCE) and the remaining 50% of two others, so that under its newly-formed subsidiary Atura Power, it became the single largest gas generation company in Ontario with 2.7 GW of installed capacity. Adding to that is the OPG-held Lennox dual-fuel generation station and its shares in other gas generating stations, so OPG has a total has installed gas installed capacity of 4.8 GW or nearly half of installed gas capacity in Ontario.

The Market Surveillance Panel (MSP) of the Ontario Energy Board (OEB), the electricity sector regulatory agency, prepares semi-annual monitoring reports on the IESO-administered markets. In Report #32 released in July 2020 it noted the potential market power concerns associated with having one generation company, OPG, having 48% of installed gas generation capacity and 48% total Ontario installed capacity after its acquisitions. This was after the original recommendations on market opening in 2002, via the Market Power Mitigation Agreement (MPMA), that OPG reduce its market share of installed capacity from 90% pre-reform to 35%. It has overshot that 35% to the current 48%.

Why would the provincial Conservatives, the party of small business and free enterprise, allow OPG to bulk up? One possible explanation is that OPG could be a more attractive entity for privatization. That was the original plan of the provincial Conservatives in the 2002 reforms, but they backed off that initiative due to public opposition. It is perhaps ironic that the 51% privatization of Hydro One was done by the Liberals, that had apposed such selling off in 2002.

Speaking of politics, keen observers recall the out-sized role that gas generation and specific gas plants have played in Ontario politics. The “gas plants scandal” during the 2011 provincial election wherein the governing Liberals relocated two gas plants originally slated for Oakville and Mississauga, contributed to the resignation of the Liberal Premier McGuinty in 2013 and the criminal conviction of his Chief of Staff David Livingstone for “mischief in relation to data” and “attempted misuse of computer system to commit mischief” and served 35 days in jail in the summer of 2018. Perhaps ironically, it was the TCE-owned Oakville gas plant (that the Auditor General estimated cost tax-payers $675 million to relocate), that was eventually built in eastern Ontario near Bath. That Napanee generation station was one of the two that was sold by TCE to OPG in 2019.

So if the OEB and MoE won’t provide market power due diligence over OPG and the MoE will not do so from a climate perspective, perhaps Canada’s or Ontario’s carbon taxes can come to the rescue and mitigate this climate reversal?

Unfortunately, not as currently planned…..

Figure 4 shows the minimal effect that the current and proposed carbon taxes, as currently-designed, are likely to have. I divide the time-line into pre-carbon tax (2005-2018) and post-carbon tax (2019-2030) periods. Data is from the same sources as in Figures 2 and 3. The first period coincides to the coal phase-out, which was done without a carbon tax, so I designate the coal and gas emissions as “untaxed”. This is a fundamentally important political-economy consideration – carbon taxes are neither necessary nor sufficient for decarbonization. But public ownership sure helps… All of the coal plants were owned by OPG; the coal phase-out was made more achievable in Ontario because the financial costs were absorbed by OPG under direction of its sole shareholder, the Province. A different set of challenges, including outright monetary compensation, apply when the State decides to shut down privately-owned coal plants in other provinces (e.g. Alberta, Nova Scotia, etc.).

For the second period, in which the carbon tax applies, the only GHG emitter remaining in Ontario is gas. The political economy of carbon taxes in general and how they relate to a federal country such as Canada could be the subject of a whole series of blogs, as could the relative role that carbon taxes could or should play in a decarbonization strategy.

Federal Backstops and “Made in Ontario” Alternatives

To focus the discussion, therefore, this post will not debate whether or not Canada or Ontario should have a carbon tax. In essence, and as a result of the recent Supreme Court of Canada decision that ruled the Federal “backstop” as constitutional, carbon taxes are the law of the land in Ontario. Given that, this post focuses on whether the carbon tax to be applied to the electricity sector in Ontario is likely to reduce GHG emissions in the short and long term.

So by way of background, Federal law stipulates that the Federal “back-stop” carbon taxes would apply in provinces that the Federal Government does not “certify” have a sufficiently stringent provincial carbon tax. The Federal scheme is based on an end-user fuel-specific levy and a separate large emitter programme, the Output Based Pricing System (OBPS). For example, the former applies to gasoline and diesel bought by consumers to power their cars and natural gas to power their heating furnaces, while the latter applies to specific cement producers and aluminum smelters facilities.

The OBPS is one type of what is generally-referred to as an emission trading system (ETS), sometimes called a “baseline or benchmark and credit” system. The other type of ETS is a “cap and trade” system.  This is what had been proposed by the previous Liberal Government in Ontario, which was cancelled by the current provincial Conservatives, which triggered the back-stop application of the OBPS in Ontario for 2019, 2020 and 2021. As set out below, Ontario will return to a provincial programme, the Emission Performance Standard (EPS) in 2022. This yo-yo policy is in contrast with Quebec and BC which have had systems in place for over a decade that have been already “certified” by the Federal Government.

There are number of policy reasons that a jurisdiction would choose to impose an ETS. One of the reasons Governments implement ETS is that their design features make them very flexible to take into account local conditions and preferences. One aspect is degree of coverage, which I’ll cover further below. Another aspect relates to “carbon leakage”, which is the idea that in a globalized economy, over-taxation in jurisdiction A may reduce emissions in A, but could increase emissions in lower-taxation jurisdiction B. Hence, in “high emissions” and “trade exposed” sectors, ETS schemes typically have “benchmarks” or “performance” levels under which emissions are exempt. These levels are typically set at 80% to 95% of sector averages, so that only 20% or 5% of emissions would be taxed, respectively. The idea here is that the large emitters are still incentivized at the margin to reduce their emissions (the marginal carbon tax), but are not “over taxed” and thus made uncompetitive (by the lower average carbon tax, compared to if they had to pay on 100% of their emissions).

Electricity generation is generally not considered a “trade exposed” sector, yet it was included in the OBPS. This was a controversial decision by the Federal government. The technical reasons behind treating the electricity sector as a “trade exposed” has never been specifically explained by the Federal Government – my take is that it constitutes a form of “lowest common denominator” realpolitik compromise necessary to make the back-stop less unacceptable to Provinces with high-emission electricity sectors, such as Nova Scotia, New Brunswick, Alberta and Saskatchewan.

The problem is that Ontario is not a high-emission province. It is a low-emission province. So the OBPS Federal backstop designed for a “lowest common denominator” high-emitting province is a very bad fit in Ontario for three reasons:

  1. As argued above, electricity generation in Ontario is neither high-emission nor trade exposed, and hence does not meet the criteria for inclusion in a large emitter programme, whether the OBPS or the EPS.
  2. For Ontario, the OBPS/EPS are a) insufficiently stringent and b) have restrictively narrow coverage
  3. The lack of stringency will lead to low average carbon taxes and the narrow coverage will lead to relative under-investment in zero-emitting generation.

Low Stringency

The OBPS established a fuel-specific benchmark of 370 g/kWh for gas generation in Ontario. In effect, this exempts about 91% of gas emissions in Ontario, as set out in Table 1 (which also includes the data included in Figure 4). Last year the Federal Government “certified” Ontario’s proposed ETS, the Emission Performance Standard (EPS), which is now scheduled to take over from the OBPS in Ontario beginning January 2022. The EPS is a carbon copy (pardon the pun) of the OBPS as it relates to the electricity sector, with a one-year lag in the size of the carbon tax.

Neither the OBPS or the EPS set out stringency goals past 2022. Table 1 assumes that the current 370 g/kWh holds to 2030. The Base Case presented in Figure 4 and Table 1 would be a climate failure because it would exempt perhaps 95% of gas emissions by 2030. While the marginal incentive to abate would remain, the average cost to pollute would only be 5%, and so make gas generation cheaper to operate and make it relatively more attractive compared to zero-emission generation against which it competes.

It would also be a financial failure. Figure 5 shows the estimated proceeds from the application of the carbon tax under the Base Case, collecting only about $90 million in 2030, while exempting $1,700 million. In fiscal economics we call this “tax expenditures” the dollar amount of forgone revenues from the application of exemptions or deductions, commonly referred to as “loopholes”.

Increasing Stringency “Alternative A”: Gradual reduction of the Exemption

What would happen if the MoE were to decide to gradually eliminate the current benchmark exemption? Could be in 2023 or in 2030 or some other time. Table 2 shows the static results of Alternative A which would lower the 370 g/kWh benchmark starting in 2022 to zero in 2030 , thus reducing exempted emissions to 0% by that same date. This Alternative A would essentially remove the electricity sector in Ontario from the EPS and have it treated like any other consumer or industry that has to pay carbon taxes on 100% of their emissions.

Figures 6 and 7 are the Alternative A equivalents of the Base Case Figures 4 and 5, showing the evolution of taxed and exempt emissions, and the taxation revenues and tax expenditures, respectively. Note, these are all “static” calculations, assuming (unrealistically) that that there is no abatement as a result of higher stringency – I will leave the calculation of dynamic responses to those with specific models. One example of such modelling, is here, for instance.

Narrow Programme Coverage – Base Case

For carbon taxes to play their theoretical role of revealing socially-optimal prices, coverage should be as broad as possible, including in the electricity sector. This is not the case for the OBPS, which only covers fossil fuel generation and has a fuel-specific benchmark. This means that non-fossil zero-emission generation, including nuclear, wind and solar, are uncovered and therefore are not eligible to receive credits for emissions under the relevant benchmarks. ETS schemes do not have to be designed in this manner – the recently-revised TIER scheme in Alberta covers all generation technologies, resulting in an even level playing field and has been proposed as a better alternative to the OBPS, and by extension, the EPS.

Table 3, which is the Base Case, is how the EPS is currently designed. For illustrative purposes, I have calculated a “typical” forward-looking year, based on the average 2022-2030 period. This includes a period average carbon tax of $100 which is only applicable to gas generation. Table 3 shows that the EPS only covers gas, which has a benchmark exemption of 0.370 CO2 kg/kWh, average emission intensity of 0.391 and output of 22 TWh. The resulting payment in carbon taxes is $45 million for that average/typical year. The formula is (0.391 – 0.370) * 22 * $100 = $45 million.

Sector-Wide Coverage – Alternative B

In contrast, Table 4, which is the Alternative B, is the scenario under which all generation technologies are covered by the EPS, as is the case in Alberta under the TIER. The EPS benchmark could stay the same at 370 g/kWh, but that would create a surplus of sector compliance units (credits). This is not necessarily a problem if other covered sectors in the economy are in deficit, so that as whole the covered sectors are in rough balance. But for this scenario I want to set the benchmark to roughly balance the net tax/credits, relative to the Base Case. I do this by applying the principle of setting the performance level at between 80-95% of average sector emissions intensity. Specifically I set the standard at 0.055 tCO2/MWh in Table 4 so as to have the same net tax/credits as the Base Case ($45 million). Other alternatives are, of course, possible.

Using the same formula, we can calculate what would be the results of Alternative B. One difference would be much higher payments by gas plants. On the other hand, low and zero emission generation would now receive credits. Overall, the net proceeds of the scheme would remain the same. The value of the credits would of course be determined based on trading, but for simplicity I set them in Table 4 to have the same value of as the corresponding carbon tax. As above, these are only static results.

In comparing these two scenarios it is clear from Table 3 that only covering fossil fuel generation sends the wrong climate investment signals with respect to electricity generation. The difference in carbon taxes paid per MWh between gas and hydro, for example is only $2.08/MWh. In contrast, Table 4 levels the playing field by ensuring that zero-emissions technologies are credited relative to gas generation. The difference in carbon prices paid between gas and nuclear, for example, increases by nearly 20 times, to $39.08/MWh, making zero-emission generation relatively much more attractive, which is one of the goals of carbon taxes! Would OPG have made the same decision not to refurbish PNGS and buy nearly 3GW of gas plants if it had faced these set of relative prices reflecting carbon costs?

Further layers of complexity could be added to Table 4 to take into account price, cost and subsidy levels. For example, the Alberta TIER scheme, some non-hydro renewables that are already subsidized are therefore not eligible for carbon credits.

Concluding Thoughts

The provincial Conservatives touted the EPS as a “made in Ontario” solution to climate change. As it relates to the electricity sector, the EPS, when in comes into force in January 2022, is a continuation of the Federal Liberal non-solution that is the OBPS. This is perhaps not surprising because Ontario was one of the three provinces that challenged the constitutionality of the Federal backstop, on which the Supreme Court has recently ruled. In parallel, the provincial Conservatives were working to replace the OBPS with the EPS (there are no plans to replace the federal fuel levy, which continues to apply in Ontario). Given this political context, the provincial Conservatives were never going to make the EPS more stringent than the OBPS, regardless of the conditions “on the ground” in Ontario.

That is a pity, and a wasted opportunity.

As proposed, for the electricity sector in Ontario, the EPS is fatally flawed. One, the electricity sector is neither emissions-intensive nor trade exposed, so it should not be included in the EPS in principle. Two, by only covering non-fossil generation technologies, the EPS tilts the playing field in favour of fossil generation and disincentivizes future investment in zero-emission generation. Three, the EPS will exempt about 91% of fossil generation in Ontario when it comes into effect in 2022, a figure that is likely to increase to perhaps 95% by 2030.

It is clear that the provincial Conservatives will not change course on the electricity file before the next Ontario provincial election scheduled for the summer of 2022. By then they would have spent another $6.5 billion of Government revenues to keep electricity prices low and out of the headlines. Also by that time the EPS would have been in place for half a year, with gas generators paying carbon taxes on 9% of their emissions. Such low emissions carbon tax coverage is likely to have a minimal impact on end-user electricity rates, which is perhaps why it is favoured by the current Conservative Government? The inequity, however, of residential consumers using the very same gas would of course continue to pay the fuel levy on the full 100% of their consumption to heat their homes, is presumably something that they would prefer not be shouted from the rooftops….

Will electricity play its out-sized role in the 2022 election that it did in the three previous Ontario elections? I think yes – the decision to shutter Pickering and thus increase GHG emissions from additional gas generation and not to seriously tax those emissions are all political decisions. Previous elections focussed on political corruption in the handling of the electricity file and on rising electricity prices that increased inequality that drove energy poverty. With heightened public awareness of climate change, the key role that the electricity sector could play in decarbonization in Ontario should make it an important election topic in 2022.

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