NOTE: It may appear naive to try and compromise with an industry as powerful as the fossil fuel sector (accustomed to getting their way, no caveats) – never mind in a political climate defined by a Prime Minister who’s shown nothing but ideological bias on the issue of energy and climate. However: if the environmental lobby has any card to play on Keystone, it’s best played BEFORE a decision is made by the White House. Nothing will likely come of such an offer – I’m aware of that – but forcing the fossil fuel industry and Harper to explicitly ignore a compromise has it’s own value in the on-going discussion around the carbon sector’s social license to operate.

Keystone compromise faces up to economic and climactic realities

Ottawa should link additional petroleum flows going south on Keystone to a hard cap on future extraction rates.

By: Tom Rand Published on Fri Mar 29 2013

The expansion of the Keystone XL pipeline has become a lightning rod for the battle between long-term climate concerns and shorter-term economic benefit. Opponents say Canada’s tarsands are one of the world’s most carbon-intensive and environmentally destructive sources of oil. Proponents argue they’re a politically stable source of oil in a world fraught with risk. Both are correct. A compromise on Keystone is essential if Canada is to become a responsible energy superpower in the complex 21st century world of carbon constraints.

I suggest the Canadian government take the lead by linking additional flows going south on Keystone to a hard cap on future extraction rates and priority access in all Canadian pipelines based on the carbon content of the oil. This compromise reflects facts on the ground and aspirations for change. Like all good compromises, everyone loses and everyone wins.

Climate hawks like me recoil in horror at yet another long-term high-carbon infrastructure project, built in the very teeth of an increasingly angry climate. For us, Keystone reaffirms industry’s capacity and willingness to burn enough fossil fuels to tip an already unsteady climate into a very unfriendly state. The question behind the Keystone protests is simple: if we can’t stop now, when? But let’s be honest. We’re not shutting down what’s already developed anytime soon, no matter how urgent the climate crisis. That oil will get to market, by pipeline, truck or rail. A pipeline increases profit, not production.

But the oilpatch has not yet spoken openly about the hard limits on extraction that climate change demands. They, too, must be honest: we cannot burn all the economically recoverable resources we want. According to the International Energy Agency, more than 80 per cent of the world’s proven reserves of hydrocarbons must be left in the ground if we are to have even a slim hope of limiting warming to 2C. Oil companies the world over face the same problem. Canada has an opportunity to take the lead in that discussion. Our energy sector can easily accept development constraints and still profit. Indeed, a shortage of skilled labour already limits development.

But everyone also wins. The oilpatch gets another pipeline, and higher profits. Companies compete to lower the carbon content of their fuel in order to gain access to those pipelines. And by agreeing to limit production, Canada gets a stronger card to play in what will be intense international negotiations on carbon constraints.
Nobody who’s looked into Canada’s carbon kitchen thinks we have a snowball’s chance in July of meeting our existing obligations to reduce emissions. But with a renewed commitment to real carbon constraints — not just “emissions intensity” gobbledygook — we regain the credibility to negotiate an agreement that’s in our long-term interests.

Even our burgeoning biofuels sector benefits. Since the carbon content of fuel defines your place in the pipeline queue, biofuels will always have priority. There’s little need for biofuel pipeline access now, so it’s no threat to the oilpatch. But as the biofuel industry matures it will need infrastructure to grow into.

There are three kinds of biofuels. Additives like ethanol and biodiesel, as well as drop-in fuels like green diesel, have markets now. They’re mixed in the final fuel near the point of sale. They don’t need a pipeline, and couldn’t be mixed with heavy oil anyway. But next-generation mixed hydrocarbon biofuels — like that produced by Kior — require refining. With priority pipeline access they don’t need to raise extra capital for refining. The Keystone compromise means all pipelines become transitional infrastructure. They serve short-term energy needs, but enable a low-carbon future.

Keystone expansion also takes pressure off the Northern Gateway, which is off-the-charts when it comes to threatening pristine wilderness and aggravating native sensibilities. Environmentalists should be happy about that.

The tarsands are one of Canada’s most divisive subjects. Whether environmentalists like it or not, current development will not be shut down. But the oil sector’s social licence to expand operations is under legitimate threat.

Right now the world sees an aggressive Harper government battling environmental groups, a growing portion of the public, and angry native Canadians. They see a Canada that can’t have an adult conversation about climate change and carbon constraints. A compromise on Keystone offers us an opportunity to demonstrate we can still do what we’ve always done best: brings opposing sides together.

Cleantech @ MaRS Globe Feb. 11.13a

Given we’re selling oil from Alberta at 30% below market (and get negative federal revenue from it anyway – see the BlueGreen article here – the bad math of big oil), and the social licence to continue rabid development there is legitimately under attack – perhaps we might hedge our bets and go for a piece of the $3 trillion global cleantech market. Time for a national conversation about the low-carbon opportunity (if we still aren’t grown up enough to have an adult one about climate storms). See link above for my take on how to do it.

How much will it cost to turn down the thermostat? (Spoiler alert: It costs a coffee and donut, once a week, to save ourselves. Seriously.)

Depends how fast and deep we cut emissions. The faster we act, the cheaper it is. The deeper we go, the more expensive it gets. But let’s not beat around the bush – it’s a huge job and will cost lots of money. Trillions of dollars. But it’s relative: to what we already spend on fossil fuels; to the size of the economy; to the time it takes to spend it; to what we get in return; and, most importantly –to what happens if we don’t spend it.

Recall (Chapter 4) that typical climate cost and benefit analysis is a mugs’s game.  Proponents (and critics alike) try to justify the cost of (in)action by calculating the benefits. We might save some of our agriculture, forestry and fishery industries, for example. Or reduce damage from hurricanes, drought and floods. What’s that worth? To answer, we use models loaded with assumptions like the discount rate, damage function and dumbed-down climate science.

Let’s skip the nonsense of putting a dollar value our ecosystem. Call the benefit saving ourselves and our way of life, and peg its value at zero dollars. Let’s drop all claim to economic benefit. Not just saving our fisheries or agriculture. Not just avoiding mega-storms and droughts. But no economic stimulus from a redistributed carbon tax. No lowered imported energy bills. No health benefits from cleaner air. No upside for energy security. If we can accept the worst case, the economic arguments are over.

We’re buying climate insurance. It gets us a temperature target. The cost is incremental costs over business-as-usual. We can express it in dollars per tonne of carbon. Or we can put it in absolute terms – the ‘trillions of dollars’ language critics often use to scare us into inaction. Let’s use that language. With no benefits. And see how bad it really is.

The IEA has four scenarios representing pathways to 2035. Each has a different level of warming. Our climate insurance is the cost of subsidies for clean energy (direct and indirect) plus the carbon price (this double-counts some costs because carbon costs can fund the subsidies – again, the worst-case).

The Current Policies Scenario is business-as-usual. We don’t do much of anything and hit 6C. Bleak! For perspective, we still need to invest nearly $38 trillion between now and 2035 to meet growing demand, most of it on oil and gas. In the New Policies Scenario we make a bit of effort by supporting renewables with $4 trillion in additional subsidies. There’s carbon pricing in China and a few other countries. The temperature target drops to 3.6C. Still bleak! The most aggressive is the 450 Scenario. Emissions peak by 2020. We get a coin toss’ chance of limiting warming to 2C. Better! That requires an additional $16 trillion in investment and more aggressive carbon pricing.

This is starting to look expensive. $20 trillion in extra investment. Plus something like another $20 trillion in carbon costs. Wow! Maybe Lomborg’s right, and this is a bad deal.

Hang on a moment. The 450 Scenario includes the Efficient World Scenario, where aggressive investments in energy efficiency cost nearly $12 trillion, but save $17.5 trillion in reduced energy use and another $6 trillion in avoided supply infrastructure. We make $11.5 trillion. It’s Planet Traveler on steroids! There’s more. We could add the $18 trillion in increased GDP from more efficient allocation of resources. And the benefits of lower fuel costs due to lower demand. And … But we’re looking at the worst-case – let’s not count all that extra goodness.

The final bill – no economic benefits included – drops to $30 trillion. Call it a trillion a year. There’s seven billion of us. That’s $142 a year, per person. Climate insurance to give us a decent chance at saving civilization comes in at … three bucks a week for every man, woman and child on the planet.

A weekly coffee and donut to save us from ourselves. Maybe people in rich countries have to buy a few coffees, because the poor can’t afford to. That’s really such a bad deal?

But, of course, this overstates the cost. Someone’s going to invent new technologies, make all that equipment,  engineer a new grid, export technology to India and China. The world’s economy needs a shot in the arm, and rebuilding our energy infrastructure is one way to do it. To say nothing of that $18 trillion that comes from a more efficient use of our resources. And we get all those benefits that are so hard to calculate: fewer crazy storms, less drought and wildfire, maybe we’ll even save the global fishery.

Look at it another way. The IEA assumes a 3.5% annual growth in the global economy, from $70 trillion now to $165 trillion by 2035. Our insurance costs a delay of a few years in doubling our wealth. The cost of going without insurance is the near-certainty our economy shatters.

There is no cost to dialing down the thermostat. There is only benefit.

Climate sensitivity is not the same as climate warming, it’s a measure of how much the planet will warm given a doubling of CO2 from pre-industrial levels. Conservatively, it’s thought to be around 1.5C. Ridley lowballs it at 1.2C (based on a conversation with a financier friend …) and then absurdly concludes we’re heading for … 1.2C of warming this century. What? Sensitivity is like speed, and warming is like distance. How much we warm by the end of the century depends on climate sensitivity and total emissions (as well as positive feedbacks, like melting methane, dying forests, and CO2-burping warm oceans). Current business-as-usual takes us to 1000 ppm, which is 4x pre-industrial levels.

So – first mistake: climate sensitivity is not total warming. This isn’t even science – it’s basic math. Doh!

Second mistake – the IPCC estimates climate sensitivity to be around 3C. A conversation with a friend does not a relevant rebuttal make. Doh!

There are many other errors in the article. They are equally silly, and equally easy for an editor to catch. For example, he confuses clouds with water vapour. See Joe Romm’s full and forceful debunking here.

“Shocking” is the relevant term here.   These mistakes are so basic, so obvious, one has to wonder whether they are legitimate ‘mistakes’ or a strategic lapse of attention. Given the lack of apologetic correction, and Murdoch’s recent takeover of the WSJ, I veer to the latter. When such radical (!) groups as the International Energy Agency and PriceWaterhouseCoopers agree we are headed for a civilization-melting 5-6C this century, this journalistic nonsense from a herald of the business community is inexcusable. The stakes are too high.

If you disagree in some way, please think precisely why – and DO put that comment below.

Keith sees carbon sequestration as the way to unlock low carbon transportation fuels using existing infrastructure. His startup – Carbon Engineering – develops technology to capture atmospheric CO2 and inject it into older oil fields (enhanced oil recovery). The CO2 stays in the ground, offsetting the natural gas needed to capture it and the oil that later gets burned. End result is an oil that is up to 60% less carbon intensive. It requires two pieces of legislation to be effective: a price on carbon ($100), and a low-carbon fuel standard. The final product is still a $20 premium to oil.

Um – can’t we just burn the nat gas in our tanks and be just as well off carbon wise? But he’s right on target when it comes to scale; it’s got massive potential. And it allows existing players to stay in the game. And it’s the last bit that motivates him, I think.

I prefer a softer relationship between fuels and carbon sequestration: use huge amounts of marginal land to grow specialty plants that sequester carbon in the soil through their roots when they’re cut at the right time – the roots die when the plant is cut, permanently sequestering the carbon (see Tim Flannery’s latest book for details). As for the liquid fuel? Next-generation cellulosic refineries can turn those plants (and agricultural waste, and wood chips….) into drop-in fuels like diesel or ethanol. And it’s cheap to produce: a buck a gallon. No subsidies, just a lot of land. And possibly carbon neutral. But it does mean existing players who don’t change direction are cut out. And there are strict limits to production – perhaps a third of oil can be replaced this way. So we need mandated tough fuel-efficiency standards to reduce demand.

But here’s a subtlety: Keith argues (correctly) that existing companies and industries have “no business solving this problem” – literally. He’s a bit too sympathetic to their pain, in my view. But he’s right that they’re (largely) constrained to continue to do what they do – that’s what Boards and shareholders force on a CEO. Corporate Social Responsibility is window-dressing, core business remains core business. Even Suncor’s 20 MW wind project is just a scrap tossed on the field for effect. A coal company will stay a coal company – because that’s what they know best. So don’t expect them to do anything less than fight real carbon pricing to the death because it’s an existential threat. Same with the oil companies.

And that’s why Keith’s fuel solution has merit, even with the crappy economics and questionable carbon numbers. It invites fossil fuel companies to the party. Instead of fighting the required legislation, they endorse it and bring along their capital, expertise and infrastructure.

Keith is one of the world’s geo-engineering experts, and accepts the inevitability of putting a lid on our quickly-heating pot of water. I’ve argued before this game will likely end in tears, but I accept the depressing inevitability of the need to buy time. Keith’s preferred solution appears to be sulphur in jet fuel, which when burned in the upper atmosphere reflects the suns’ heat. Again, I favour a softer intervention: massive engineering of marginal and prime agricultural land to sequester carbon using specialty plants. His geo-engineering is a kind of karate – hard and muscular. Mine feels more like tai chi – use existing biological forces to bend nature our way. But he’s right. We’ll need both temperature mitigation and carbon-suction ….

Keith and I agree on nuclear: like it or not, the hard reality is we’re not going to de-carbon without it. And we need innovation, like next-generation breeder reactors that burn existing nuclear waste for fuel. Keith argues it will never come from government, the existing nuclear giants (Ariva, Westinghouse, etc), or the venture community. Only a single-minded, committed and deep-pocketed ‘super-angel’ can pull this off. Like Bill Gates’ Terrapower project.

Role of government? I’ve accepted less-than-perfect solutions like Ontario’s Feed-in-Tarriff given the lack of anything else at the table. But it’s inefficient, and as Keith argues – it can lock in existing technologies (don’t forget bankers only back the old stuff). I’m not as hard on these half-measures as he – a strong and growing price on carbon is the only effective tool to unlock the market’s might – because it gets something started. I don’t care it’s a bit inefficient. Keith does, and seems more hostile to active government in general. But that’s a minor left-right quibble.

Finally, Keith muses that Calgary just might get bulldozed if they don’t keep their eye on the carbon ball (literally – it’s a resource town, and when the resource goes …). If North America and Europe agree on a low-carbon fuel standard and lots more oil gets unlocked using fracking – goodbye Tar Sands. Keith sees a low-carbon standard as a good bet. I think there will still be a buyer – this makes clear why Harper is so set on the nutty Northern Gateway pipeline: China might just be the only buyer.
My feeling is Keith is as much motivated by defending the freedom of the market and a general distrust of government as he is by the numbers on carbon. But that’s a quibble. The guy is smart, motivated and is tackling the hardest problem of all: how to engage the existing players. Without them on board, the carbon fight never ends.

John N-G is one of the more broad-thinking climate scientists I’ve had the pleasure of meeting. He may be a hard-core scientist, but he’s just at home speaking philosophically of Bayesian probabilities and belief formation, cognitive biases, communication strategies around climate change. A good communicator, and passionate about both his core area of expertise and its surrounding environs, John N-G’s a great resource for anyone thinking about the subject. I imagine his analysis might have to be all the more rigorous, given his Texan audience … His blog in the Houston Chronicle – Climate Abyss – is a good place to start.

A key piece of Hot Water (my new book with, yes, the frog on the front cover) centres on the Siren Song of Denial – the seductive psychology of climate denial: cognitive biases that skew belief formation, and the ongoing effect of historical patterns of beliefs in our neurally-connected noggins. John N-G is more (sometimes less) aligned with my own views (so I’m guilty of peer group bias? affect bias?) – but he’s well worth reading. Crucially, while his subject matter can be complex, he’s highly readable …. Below are links to four of his blogs.

http://blog.chron.com/climateabyss/2011/12/e-t-jaynes-explains-why-people-aren%E2%80%99t-convinced-by-climate-change-evidence/ - Gauging our reaction to evidence for something we have decided – apriori – is extremely unlikely. If someone gives you evidence for ESP, for example, you’d likely consider the author dishonest, or mistaken, before you’d take the evidence seriously.

Note: On a Bayesian view this is being perfectly rational even if the evidence presented is strong. Bayesian probabilities for evidence evaluation involve prior probabilities, or the likelihood that other conditions leading to the evidence are sound (author integrity, etc).  Contra John, I would argue improper evaluation of prior probabilities is itself a form of irrationality, not evidence of the opposite.

http://blog.chron.com/climateabyss/2011/12/e-t-jaynes-on-why-mounting-evidence-causes-views-to-diverge/ My father – an academic and scientist – believed evidence and discussion would eventually lead to the ‘truth’. He believed this for social science, and not just sciency-science. He was wrong, of course. Here, John G-N further discusses the role of the key attribute of “trust” in belief formation, and why a lack of consensus on who to trust actually drives opinions further apart as more evidence comes in.

http://blog.chron.com/climateabyss/2012/01/three-lessons-from-jaynes-on-climate-communication/ Here, John N-G draws some (controversial, paradoxical) lessons from the last two blogs: scientists are trusted, but only as an (easily broken) default position; actions matter more than words, repercussions for self-policing of science and openness about doubt in scientific communication; ‘college matters’, the better educated we are the more likely we are to disagree.

http://blog.chron.com/climateabyss/2012/01/or-maybe-people-dont-reason-logically/ A subject dear to my heart: are we really rational? John N-G’s position is more subtle than mine (I say, bluntly, we are not); but ultimately, we both land on that old bug-bear of trust.

David Buckland, ever-present founder and visionary behind Cape Farewell, drives forward with art installations in Paris (Carbon12), Marfa (Carbon13) and soon Toronto (Carbon14) – among many others. The Marfa Dialogues, which took place in the middle of the Texas desert, brought together the likes of author Michael Pollan (Omnivore’s Dilemma), visual artists Amy Balkin and Adriane Colburn, Texas climatologist John Nielson-Gammon, muck-raker and publisher (Washington Spectator) Hamilton Fish (among others). Discussions on and off-stage were multi-layered, unblinking and – reflecting what’s clear to anyone who’s looked into the carbon kitchen – often quite bleak.

My role was to bat cleanup, paint a picture of how we might rebuild our energy systems; a story of capital, technology, policy and psychology. How we might kick our fossil fuel habit.

The panel on art and climate change addressed the central question head-on: what the hell can art do about it? After a lot of too-and-fro, an audience member asked the simple question: “where’s the iconic image?” Isn’t it from the art community that we’ll get that single, striking idea/image/icon that can pierce the armour of our collective denial? A good question, but art isn’t marketing. And climate change inaction is way too tough to fall on a single icon.

Adriane Colburn’s answer: it won’t be any one image, but perhaps we can weave into all our stories, all our work, a continued and many-formed presence of climate change. Perhaps by touching broad cultural streams, and by making many points of contact, we can shift our collective consciousness to – at the very least- acknowledge what’s happening. I think Adriane’s got it exactly right.

A cornerstone of my next book – Hot Water – is the siren song of climate denial, how seductive it is to ignore, dither or deny the cliff to which our economy is headed. It’s an analysis of just why it’s so hard to take in this impending, slow-motion catastrophe. When climate change comes knocking at our mind’s door, our minds play any number of tricks to avoid answering. It’s so much easier to lock that door than embrace the bleak truth this unwelcome guest brings.

There are many reasons this happens, and I’ll give an overview of The Siren Song of Denial (Chapter 2 of Hot Water) another time. But the short answer is this: unless we have repeated encounters with the idea of climate change, presented in many different contexts, from many different directions, we will simply walk away from the uncomfortable beliefs it brings. We’ll sleepwalk our way off the climate cliff. Adriane’s answer – to permeate culture with insights on climate – is precisely how we get through our cognitive biases, re-write the hard-wired worldview that blocks acknowledgement of this new reality.

That’s what Cape Farewell does. That’s what we were tying to do in Marfa Texas. The work Cape Farewell does is essential, difficult, long-term. And yes, it’s a bleak truth we seek to show. But something else came from the Texas desert: Texans are pragmatic, have a can-do attitude and don’t shy away from scale. Maybe we can channel some of that Texas spirit as we contemplate the work ahead.

What are Lomborg’s claims? Referring to the latest report by the IPCC, he claims extreme weather isn’t happening. Quoting that report, he assures us in a single cherry-picked sentence that the IPPC tells us not to worry:“North America, there is medium confidence that there has been an overall slight tendency toward less dryness (wetting trend with more soil moisture and runoff).” So don’t worry, there are no droughts coming. Really?What else does the IPCC say? And I quote:

- It is likely that the frequency of heavy precipitation will increase in the 21st century over many regions: [Translation: 66-100% certainty]

- It is virtually certain that increases in the frequency of warm daily temperature extremes and decreases in cold extremes will occur throughout the 21st century on a global scale. It is very likely—90 per cent to 100 per cent probability—that heat waves will increase in length, frequency, and/or intensity over most land areas.

- There is evidence, providing a basis for medium confidence, that droughts will intensify over the coming century in southern Europe and the Mediterranean region, central Europe, central North America, Central America and Mexico, northeast Brazil, and southern Africa. [Translation: 66-100% confidence].

This means floods, extreme temperatures and droughts. Exactly what Lomborg is telling us not to worry about. What on earth is going on?

First off, Lomborg is cherry-picking single sentences that appear to give us comfort. What’s happened so far – his single quote – is not as relevant as what’s coming – my quote. Also, wetter or dryer overall is not the issue – it’s about extreme weather. A drought and a flood render us .. um … neither wetter or dryer. So who cares about the average?

In addition, the IPCC clearly states what limits their confidence levels: “Confidence is limited because of definitional issues regarding how to classify and measure a drought, a lack of observational data, and the inability of models to include all the factors that influence droughts.” Translation: we argue about semantics, don’t have a lot of history, and the stuff is complicated. Yet they still claim near certainty on – you guessed it – floods, droughts, and extreme temperatures.

It’s easy to cherry-pick a single sentence from a long, technical and robust scientific analysis (like the IPPC’s latest) that makes climate change seem benign. But it’s dishonest, disingenuous, and dangerous. And for Lomborg – a statistician – to claim that the empirical data to date doesn’t warrant attribution of existing extreme weather to climate change is clearly disingenuous. He should know better. As Jim Hanson and others have pointed out, when the trend shows extreme heat records outpace extreme low records by a factor of 7:1 you are well into territory where individual events are precisely evidence for a changing climate.

We can continue to argue the fine points with sleights of hand. Or we can wake up and face the difficult truth that now stares us in the face: a storm’s coming, and we’d best mitigate its severity, and prepare for its fury.

Consul General John Prato got things going by hosting a lunch-time discussion at the Canadian official residence. Always hard to find new ways of going at the same territory but this discussion was hard-nosed, practical and high-level. Participants included ex-Mayor David Miller (still Mayor in my heart …), Canadian Cleantech pioneer Chrysalix, BDC, EDC, Chief of Innovation and Technology at NYC Transit, Chief Science and Technology Officer of DuPont, federal visionary Celine Bak, and others. Clearly this accelerator is going to do more than offer a cheap desk! Two clear points emerged:

Further to the recent MaRS initiative to “get past the demo” by engaging utilities, regulators and large corporates: the same vision is front and center in NYC. Best quote of the day came from BDC: “She who has project finance, wins”. True. We need to tie slightly higher risk-profile project finance to cleantech venture so our companies get some real work done. EDC and BDC are working on this, time will tell if they can step up to the plate to help up-and-coming Canadian stars (Hydrostor, Morgan, Temporal …) get past the demo.

Building a real value proposition for the utilities: also key. Solving a problem is very different from demonstrating something works – if you can place a value on that solution in the market there’s no reason regulators can’t justify those projects to the rate base. MaRS Clean Energy Institute will help drive that conversation in Ontario, and we’re looking forward to extending it to NY.

Afternoon pitch session had a surprise star: Stephanie McLarty of REfficient – a B2B re-use marketplace). Clear, concise, with revenues and growth. Look for more from REfficient.

Dinner had lots of American VCs and Canadian companies talking well past the end of food – a good sign. David Miller pitched fast-balls for Canada, and I and Andrée-Lise Méthot of Cycle Capital positioned a sense of urgency to get past small-time investments and start moving the needle.

If this sort of gathering is what NYC Cleantech Accelerator has in store, my advice to Canadian companies looking for US parters: get in touch, it’s the real deal. MaRS has a great new partner to get our Canadian stars to market.