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Environmental impact of Renewables

By Dave Elliott

Renewable energy technologies are usually considered to have low environmental impacts compared with conventional energy systems. That seems obvious in terms of direct emissions of carbon dioxide and other greenhouse gases – for most renewables (biomass apart) there are none. Similarly for emissions of radioactive materials- none.   However, the use of renewable sources does lead to some impacts, most of them being small and local.  How can they be assessed and compared?

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Rural and urban energy conflicts

by Dave Elliott

In my last post, I looked at how cities would have to rely in part on imported green power, given their spatial constraints and high energy use, if they want to be fully sustainable. That may worry some environmentalists. It also has social implications for cities and for rural areas, and their interactions, as I will explore in this post. Continue reading

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Macro and Climate Economics: It’s Time to Talk about the “Elephant in the Room”

This blog was written for the Cynthia and George Mitchell Foundation, and originally appeared here: http://www.cgmf.org/blog-entry/213/.

This is the first of a two-part series. Part 2 is: “The most important and misleading assumption in the world.

If we want to maximize our ability to achieve future energy, climate, and economic goals, we must start to use improved economic modeling concepts.  There is a very real tradeoff of the rate at which we address climate change and the amount of economic growth we experience during the transition to a low-carbon economy.

If we ignore this tradeoff, as do most of the economic models, then we risk politicians and citizens revolting against the energy transition midway through.

On September 3, 2016, President Obama and Chinese President Xi Jinping each joined the Paris Climate Change Agreement to support U.S. and Chinese efforts to greenhouse gas emissions (GHGs) limits for their respective country. This is an important signal to the world that the presidents of the two largest economies and GHG emitters are cooperating on a truly global environmental matter, and it provides two leaps toward obtaining enough global commitments to set the Paris Agreement in motion.

The economic outcomes from models used to inform policymakers like Presidents Obama and Xi, however, are so fundamentally flawed that they are delusional.

The projections for climate and economy interactions during a transition to low-carbon economy are performed using Integrated Assessment Models (IAMs) that link earth systems models to human activities via economic models. Several of these IAMs inform the Intergovernmental Panel on Climate Change (IPCC), and the IPCC reports in turn inform policy makers.

The earth systems part of the IAMs project changes to climate from increased concentration of greenhouse gases in the atmosphere, land use changes, and other biophysical factors.  The economic part of the IAMs characterizes human responses to the climate and the changes in energy technologies that are needed to limit global GHG emissions.

For example, the latest IPCC report, the Fifth Assessment Report (AR5), projects a range of baseline (e.g., no GHG mitigation) scenarios in which the world economy is between 300 and and 800 percent larger in the year 2100 as compared to 2010.

The AR5 report goes on to indicate the modeled decline in economic growth under various levels of GHG mitigation. That is to say, the economic modeling assumes there are additional investments, beyond business as usual, needed to reduce GHG emissions.  Because these investments are in addition to those made in the baseline scenario, they cost more money and the economy will grow less.

The report indicates that if countries invest enough to reduce GHG emissions over time to stay below a policy target of a 2oC temperature increase by 2100 (e.g., CO2, eq. concentrations < 450 ppm), then the decline in the size of the economy is typically less than 5 percent, or possibly up to 11 percent.  This economic result coincides with a GHG emissions trajectory that essentially reaches zero net GHG emissions worldwide by 2100.

Think about that result: Zero net emissions by 2100 and, instead of the economy being 300 to 800 percent larger without mitigation, it is “only” 280 to 750 percent larger with full mitigation.  Apparently we’ll be much richer in the future no matter if we mitigate GHG emissions or not, and there is no reported possibility of a smaller economy.

This type of result is delusional, and doesn’t pass the smell test.

Humans have not lived with zero net annual GHG emissions since before the start of agriculture.  The results from the models also indicate the economy always grows no matter the level of climate mitigation or economic damages from increased temperatures.

The reason that models appear to output that economic growth always occurs is because they actually input that growth always occurs.  Economic growth is an assumption put into the models.

This assumption in macroeconomic models is the so-called elephant in the room that, unfortunately, almost no one talks about or seeks to improve. 

The models do answer one (not very useful) question: “If the economy grows this much, what types of energy investments can I make?”  Instead, the models should answer a much more relevant question: “If I make these energy investments, what happens to the economy?”

The energy economic models, including those used by United States government agencies, effectively assume the economy always returns to some “trend” of the past several decades—the trend of growth, the trend of employment, the trend of technological innovation.  They extrapolate the past economy into a future low-carbon economy in a way that is guesswork at best, and a belief system at worst.

We have experience in witnessing disasters of extrapolation.

The space shuttle Challenger exploded because the launch was pressured to occur during cold temperatures that were outside of the tested range of the sealing O-rings of the solid rocket boosters.  The conditions for launch were outside of the test statistics for the O-rings.

The firm Long Term Capital Management (LTCM), run by Nobel Prize economists, declared bankruptcy due to economic conditions that were thought to be practically impossible to occur.  The conditions of the economy ventured outside of the test statistics of the LTCM models.

The Great Recession surprised former Federal Reserve chairman Alan Greenspan, known as “the Wizard.”  He later testified to Congress that there was a “flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.”

Greenspan extrapolated nearly thirty years of economic growth and debt accumulation as being indefinitely possible. The conditions of the economy ventured outside of the statistics with which Greenspan was familiar.

The state of our world and economy today continues to reside outside of historical statistical realm. Quite simply, we need macroeconomic approaches that can think beyond historical data and statistics.

How do we fix the flaw in macroeconomic models used for assessment of climate change?  Part two of this two-part series will explain that there is research pointing to methods for improved modeling of what is termed “total factor productivity,” and, in effect, economic growth as a function of the energy system many seek to transform.

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Cities and renewable energy

By Dave Elliott 

Urban areas account for around 75% of the world’s energy use and there are ambitious plans to reduce their reliance on fossil fuels. Around the world, cities are beginning to think in terms of meeting their energy needs from renewable sources, so as to limit air pollution and climate change problems.  The case for this transition is strong, not least given the likely rise in air-conditioning demand as climate change impacts more,  and there have been many interesting initiatives launched around the world, often led by city governments.  Continue reading

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Labour’s green gas push

By Dave Elliott

‘Turning certain rubbish materials and farm and food waste into various types of biogas – ‘green gas’ – holds the potential to cut costs, radically reduce pollution, and decrease our reliance on imports. Crucially, using more green gas could make a real impact on the decarbonisation of heat without the need to overhaul our national gas pipeline and heat delivery infrastructure and without significant technical barriers’. So say Labour MPs Lisa Nandy and Caroline Flint in the Green Gas book published by the Parliamentary Labour Party Energy and Climate Change Committee.

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Green heat infrastructure

By Dave Elliott

Imperial College has looked at Heat System Decarbonisation (PDF) in the UK in a new report. Provocatively it says solar and biomass heat can only play limited roles for direct space heating, and focuses mainly on three other low carbon system options: a shift to using hydrogen in the gas grid, the use of decarbonized electricity to run heat pumps, and the creation of local heat networks.

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Green heat and energy saving

By Dave Elliott

Heat supply is one of the key weak links in the UK government’s attempt to meet the EU-imposed 15% by 2020 renewable energy target. That target still applies – until the UK finally leaves the EU, if it ever does fully. Although there is talk of green heat networks, for the moment the focus is mostly on direct green heat supply for business and private consumers, and there are some changes underway. The UK’s Renewable Heat Incentive (RHI) has escaped cuts so far. Indeed it is set to expand, but the government wants to restructure it to keep energy costs down for consumers and get better value for money. So, concerned also about impact on food growing, it wants to support the use of food and farm waste-based biomass feedstock rather than crop-based feedstocks for biogas production in Anaerobic Digestion (AD) plants. It has also proposed cutting support for solar heating since it is not seen as good value for taxpayer support.

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Storage will cut renewable balancing cost

By Dave Elliott

Energy storage is all the rage at the moment, with a Daily Telegraph columnist even claiming that ‘cutting-edge research into cheap and clean forms of electricity storage is moving so fast that we may never again need to build 20th Century power plants in this country, let alone a nuclear white elephant such as Hinkley Point’.

And it could be cheap. The recent Carbon Trust/Imperial College report on energy storage says that ‘the UK can realise significant cost savings if market arrangements for the electricity system allow for an efficient deployment and use of energy storage, alongside other flexibility options such as demand response and interconnectors’. It claims that many of the changes needed ‘are likely to be cost neutral and require no additional funding from the government’.

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Nuclear Prospects

By Dave Elliott

‘Supporting early new nuclear projects could lead to higher costs in the short term than continuing to support wind and solar. The cost competitiveness of nuclear power is weakening as wind and solar become more established’. So said the National Audit Office in its recent review of UK nuclear policy: www.nao.org.uk/report/nuclear-power-in-the-uk 

It did, however, say that ‘the decision to proceed with support for nuclear power therefore relies more on strategic than financial grounds: nuclear power is needed in the supply mix to complement the intermittent nature of wind and solar’. That’s an odd view. As the NAO admitted, nuclear is inflexible and cannot balance variable renewables, and the ‘security of supply’ argument may not be as strong as is sometimes claimed. Continue reading

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Delivering the goods – clean energy policy

By Dave Elliott

‘Delivering Energy Law and Policy in the EU and the US’, edited by Raphael J. Heffron, Gavin F. M. Little and published by Edinburgh University Press, is a compilation of short chapters from a very wide range of academics that reviews the state of play in the energy policy field in the West. As the editors note, one issue that emerges is the slow progress in relation to the adoption of new cleaner, greener energy options, which they say ‘encourages incumbents and in essence maintains their status’.  The reviews in this book look at what has been done so far and at what could be done to move things on in the future, via new policies and legislation.

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