Category: General

The UN is calling on investors and business to pump up their financing of low-carbon technologies

By Lisa Palmer

Major investors and big business met with government leaders at the United Nations recently  to address the urgency of clean energy investments. Their mission? To close a huge investment gap. More specifically, the 500 investors and policymakers examined how to make a four-fold jump in current investment levels – an additional trillion dollars is needed annually to finance the low-carbon technologies that will help avoid the worst impacts of climate change.

In a report by Ceres, the non-profit focused on sustainable business practices, $1tn is needed above current levels to invest in renewable energy such as wind and solar, energy efficiency and energy smart technologies such as power storage, fuel cells, and carbon capture.

So why does the UN care what large institutional investors do with their money?

The Guardian has my complete story.

With prospects in the U.S. increasingly uncertain, Peabody Energy, the world’s largest private coal company, is expanding its operations abroad. But that strategy could carry significant risks, as coal-consuming powerhouses like China are working to reduce their dependence on the fossil fuel.

By Lisa Palmer

THE FUTURE OF COAL: AN E360 REPORT

Gregory H. Boyce, the CEO and Chairman of Peabody Energy — the world’s largest private coal company — is facing his share of troubles. President Obama is planning to regulate greenhouse gas emissions from coal plants. The natural gas boom in the U.S. has cut into coal’s traditional dominance of the electric power sector. Public opposition has helped kill scores of proposed coal-fired power plants in the U.S., and the coal industry’s plans to build terminals in the Pacific Northwest to export coal to Asia are in jeopardy. In the U.S. and around the world, growing concerns about climate change are clouding the future of coal.

But to hear Boyce and Peabody tell it, the company is entering a golden age as it positions itself globally to mine and sell an ever-cleaner source of energy that will continue to dominate the world electricity market for decades to come.

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In April, Boyce told a development summit in Beijing, “As China’s unprecedented urbanization continues, coal provides the holistic path that the nation needs to provide abundant affordable energy that drives social and economic progress while meeting the nation’s environmental goals.”

In a June visit to Australia — where Peabody’s coal mines generate 43 percent of the company’s $8 billion in global revenue — Boyce said that Europe’s and California’s low-carbon policies have had “catastrophic effects,” and he decried Australia’s carbon tax and called for its repeal. Speaking on CNBC in 2011, Boyce touted the booming demand for coal in China and India, saying, “We’re talking about a super-cycle for coal in the globe today, and we think that’s going to be for two, three, four decades.”

That interview came the year after Boyce unveiled the “Peabody Plan to Eliminate Energy Poverty and Inequality,” which sounded the main public relations message being voiced today by the World Coal Association: The key challenge facing the planet is not global warming, but the fact that 3 billion people in the developing world do not have access to electricity. And the only fuel that can reliably and affordably bring electricity to the masses, says Boyce, is coal.

“The greatest crisis we confront in the 21st century is not a future environmental crisis predicted by computer models, but a human crisis today that is fully within our power to solve,” Boyce told the World Energy

Peabody says the main challenge today is not global warming but lack of access to electricity.

Congress in Montreal in 2010. “For too long we have been focused on the wrong end of the game. For everyone who has voiced a 2050 greenhouse gas goal, we need 10 people and policy bodies working toward the goal of broad energy access.”

Boyce’s vision includes the introduction of higher efficiency coal-fired power plants that emit less CO2, as well as the eventual adoption of carbon capture and storage technologies.

Unapologetic and on the attack, Boyce — a 58-year-old mining engineer with a pay package that totaled $9.5 million in 2012 — heads a company whose roots run 130 years deep in the United States. For much of that time, St. Louis-based Peabody has prospered, especially in recent decades as coal power reliably provided nearly half of U.S. electricity production.

But with the U.S. market becoming more inhospitable, Boyce and his company are increasingly looking overseas to drive growth. In addition to its operations in Australia, which have placed the company in a good position to supply coal to China, Peabody says it is expanding joint ventures with Chinese coal companies and is also enlarging operations in Indonesia, the world’s top coal exporting country.

Peabody is also exploiting other export markets for its U.S. coal, most of which is acquired at bargain prices from federally owned land in the Powder River Basin in Wyoming and Montana. Peabody ships that coal to South America and Europe through ports on the Gulf of Mexico and the Eastern seaboard. European coal-fired electricity generation rose 18 percent in 2012, and the U.S. had record coal shipments to Europe, thanks in part to Germany’s move away from nuclear power. But with Germany and other European nations gearing up their renewable energy sector, the switch to coal in Europe is expected to be temporary.

In Asia, the “super-cycle” of coal that Boyce has predicted in China and India isn’t looking quite as super as it did a few years ago. China’s economic expansion has slowed from double digits to around 8 percent, and rapidly growing concerns about air pollution in China are forcing the central and local governments there to reduce electricity generation from coal. Beijing has announced that by 2015 it will slash its coal consumption by nearly half, compared with 2010 levels. Kelly Mitchell, a coal campaigner for Greenpeace, noted that China’s most recent five-year plan is calling for a major increase in renewables and a decline in coal-fired electricity.

“While it’s safe to assume that over the next couple of years, absolutely, China is going to be a huge consumer of coal,” said Mitchell, “I think when you look at the longer term trend that may not be the case.”

The major problem that Peabody and other U.S. coal companies face is the largely unforeseen flood of new, cleaner-burning natural gas extracted through hydraulic fracturing of deep shale formations. Historically, coal

Coal in the U.S. will almost certainly continue to lose ground to natural gas and the growth of renewable energy.

power has provided 50 percent of U.S. electrical generation, but last year that figure dropped to 37 percent, with natural gas providing 30 percent, according to the U.S. Energy Information Administration (EIA). So far this year, coal has rebounded to provide 40 percent of electricity generation because of rising natural gas prices, and the EIA forecasts that coal could hold on at that level through 2014.

In the long-run, however, analysts say that coal in the U.S. will almost certainly continue to lose ground to natural gas and the steady growth of wind and solar energy. A key element of President Obama’s recently announced climate plan is regulating CO2 emissions from new and existing coal-fired power plants.

Given the many problems it faces, Peabody’s shares on the New York Stock Exchange are down 45 percent this year. Its stock has fallen roughly 80 percent from its peak in 2008. Repeated attempts to elicit a comment from Peabody were unsuccessful.

Peabody’s challenges typify those faced by other leading U.S. coal companies, including Arch Coal, Alpha Natural Resources, and Cloud Peak Energy. These firms argue that the Powder River basin lode can power economies in Asia with low-sulfur coal, which burns more cleanly than coal mined in China.

But to ship that western coal to China at a reasonable price, U.S. companies need coal export terminals in the Pacific Northwest, and opposition to these projects is steadily growing. The coal industry and its

U.S. companies need coal export terminals in the Pacific Northwest, and opposition to these project is growing.

allies proposed six terminals in Oregon and Washington. Three of those have been scrapped, and in March Governor John A. Kitzhaber of Oregon and Governor Jay Inslee of Washington wrote a letter to the White House raising concerns about the proposed export terminals. Chief among them is that the terminals would mean a six-fold increase in coal exports from the Powder River Basin, which would commit the U.S. and China to burning planet-warming and heavily polluting coal for decades to come.

“We cannot seriously take the position in international and national policymaking that we are a leader in controlling greenhouse gas emissions without also examining how we will use and price the world’s largest proven coal reserves,” the governors wrote Nancy Sutley, the chair of the President’s Council on Environmental Quality.

Complicating matters for Peabody is that even if export terminals are approved in the Pacific Northwest, it could take up to a decade to clear environmental hurdles and build the facilities. And with China and India hoping to reduce coal use and import less coal, that could dampen long-term demand for U.S. coal. “The international economics of coal, and the supply-demand balance, is by no means a sure thing going out 10, 20, 30 years,” says Ben Collins, a campaigner with the Rainforest Action Network’s Energy and Finance Program.

“Peabody is basically touting all of their reserves in the United States as a moneymaking opportunity,” David Hawkins, director of Climate Programs at the Natural Resources Defense Council, said in an interview. “But to turn it into a moneymaking opportunity they have to get the coal out of the United States and across the ocean, half-way around the world, to markets where there are better positioned competitors.”

The fight over the proposed Northwest terminals has drawn attention to the generous deals that Peabody and other coal companies have been given

‘The international economics of coal is by no means a sure thing going out 10, 20, 30 years,’ says one activist.

in the Powder River Basin. According to the U.S. Interior Department’s Inspector General, the federal Bureau of Land Management, which owns the basin’s coal, has been granting coal leases, often without competitive bidding, for as low as $1.11 per ton — many times lower than market prices. An independent study estimated that such practices have deprived U.S. taxpayers of nearly $30 billion in the past 30 years.

Peabody and its allies in the coal, railway, and related industries have created the Alliance for Northwest Jobs and Exports, a public relations and lobbying campaign that argues that building the ports will create thousands of jobs and generate millions of dollars in badly needed revenues for state and local governments. But if the Northwest route to China and Asia is denied to Peabody, the company will have a hard time finding a home for the vast reserves of Powder River coal: Analysts say that the economics of shipping coal from Wyoming to the Midwest, down the Mississippi River, loading it onto freighters, sending it through the Panama Canal, and then crossing the Pacific to Asia don’t make sense.

Jason Hayes, associate director of the American Coal Council, noted that competition from natural gas and federal regulation of CO2 from coal-burning power plants could force the continuing closure of these plants. “Those closures continue to pressure producers and utilities and cost jobs,” Hayes said in an interview.

In 2005, Peabody divested itself of harder-to-mine and more costly Appalachian coal when it spun off Patriot Coal as a separate company. Then it bought coal-mining operations in Australia. In 2012 Peabody sold 33 million tons of Australian coal to Asia, a 30 percent increase over 2011. Still, Peabody’s coal reserves remain overwhelmingly in the U.S., with the company sitting on nearly 9 billion tons globally — 3.3 billion tons of which is in the Powder River Basin — compared to reserves of 1.2 billion tons in Australia.

Despite acknowledging a “challenging” market, Peabody CEO Boyce is still gung-ho. He maintains that his Peabody Plan offers a blueprint for coal to continue to provide half of all future power generation worldwide and to bring electricity to billions of people in the developing world. The Peabody Plan calls for the deployment of “supercritical” coal plant technology, which combusts the coal at higher temperatures and pressures and, according to the industry, emits 40 percent less CO2. The plan also calls for the coal industry and utilities to construct 100 major projects worldwide to capture and store carbon from coal-fired power plants.

Peabody and Boyce have not shied away from co-opting the language of the green movement, as the CEO did when he outlined the Peabody Plan in Montreal three years ago. “Coal is the only sustainable fuel with the scale to meet the primary energy needs of the world’s rising populations and economies,” said Boyce.

THIS STORY WAS ORIGINALLY PUBLISHED AT YALE ENVIRONMENT 360.

I recently talked with will.i.am of the Black Eyed Peas at Brainstorm Green in Laguna Niguel, California. The hip-hop band founder and innovator launched a brand initiative with Coca-Cola called EKOCYCLE, which inspires brands to not only design but innovate by using recycled materials in their products.

The potential for consumer goods to use more recycled material is huge. But a disconnect still exists between quality design and quality goods made with recycled materials that are attractive and that people want.

That’s the focus of my article which has just been published on the excellent Ensia website, a publication of the University of Minnesota’s Institute on the Environment.

Here is how my story begins:

Will.i.am was sweating. You couldn’t see it. But he was sweating on the inside.

“It’s intimidating, you know, to be in front of like all the top Coke execs,” the founder of the hip-hop group Black Eyed Peas said recently at Fortune’s Brainstorm GREEN in Laguna Niguel, Calif.

Will.i.am was describing the presentation he gave to the Coca-Cola Company that challenged the company and its executives to better convey sustainability. He had been searching for a way to turn the word “Coke” into a verb to create an initiative toward that end. (“And if you don’t believe that verbs are important for companies to become, you should Google it,” the rapper said.) He eventually found the solution by reworking the letters to form “Ekoc,” then adding sustainability concepts to the new word. So: Eko-cycle, Eko-consumption, Eko-credibility, Eko-consciousness.

The concept stuck.

Almost 42 billion aluminum cans end up in landfills, and $1 billion in aluminum resources goes to waste. Recycling them saves 95% of the energy it takes to make aluminum in the first place.

I hope more companies will begin to use recycled materials as a standard procedure. Coke will contribute $1 million for community recycling efforts through the project, but much more effort and involvement is needed to spur recycling on a broader scale.

Will EKOCYCLE help make a difference?

You can read the article, “Will Power,” here.

This week I’m in California at Fortune’s Brainstorm Green Conference. If you are attending, please contact me via the press room (#1002) or e mail me  [my first name] (a t) lisa-palmer.com.

By Lisa Palmer

The newly released National Climate Assessment from a team of federal agencies reinforces the climate-concerned messages from other reports and from a record year of natural disaster damages. But a question remains: Are the public and their leaders hearing the messages?

You may have heard that a draft of the National Climate Assessment has been released for public review by a federal advisory panel organized under the United States Global Change Research Program.

You may have heard too that the climate assessment was released just days after 2012 was named the hottest year on record for the contiguous U.S. It was the same day also that a new climate stabilization study highlighted 19, or as many as 31, stabilization wedges needed to prevent rapidly rising carbon emissions. (In 2004, scientists had suggested just seven wedges could do the job.)

You may have heard that a landmark study by 26 researchers from 47 institutions recently found that the rate of ice sheet melting in Antarctica and Greenland is now accelerating, and that those rates of melting are three times what had been projected in the 1990s. (It adds a half inch to rising sea levels — not a worst-case scenario — but the pace of melting in Greenland has heightened worry among scientists.)

And, you may have heard this week that recent record warm temperatures have resulted in the earliest spring flowering in the eastern U.S. in more than 150 years.

Feel the urgency of a warming planet, yet?

From ‘Distant Future’ … to Now ‘Firmly into the Present’

A dry California river bed shows the impacts of a 2009 drought. Photo credit: NOAA

“Climate change, once considered an issue for a distant future, has moved firmly into the present,” wrote the leaders who produced the National Climate Assessment report, in an introduction. “Americans are noticing changes all around them. Summers are longer and hotter, and periods of extreme heat last longer than any living American has ever experienced. Winters are generally shorter and warmer. Rain comes in heavier downpours, though in many regions there are longer dry spells in between.”

The latest alert about what some might consider to be climate change 2.0, the acknowledgement by 240 scientists that climate change is occurring faster than anticipated, culminates with the comprehensive assessment by the Global Change Research Program. Could this critical mass of studies trigger movement for climate change policy action? Given the “uncompromising language of the report, and the stark picture that its authors have painted of the likely effects of global warming,” The Guardian reported, evidence is stacking up that may tip the scales.

Or, it may not.

The climate assessment also reveals the workings of a science communications success. A conversational tone. Use of strong language. Revamped messaging. The report’s “Letter to the American People” states clearly that climate change is occurring and is caused by human activities, and that the U.S. is already seeing dramatic effects:

Residents of some coastal cities see their streets flood more regularly during storms and high tides. Inland cities near large rivers also experience more flooding, especially in the Midwest and Northeast. Hotter and drier weather and earlier snow melt mean that wildfires in the West start earlier in the year, last later into the fall, threaten more homes, cause more evacuations, and burn more acreage.

You get the message. Or, do you? And will the American public?

According to Texas Tech associate professor Katharine Hayhoe, a prominent climate scientist and lead author of the U.S. National Climate Assessment, and an expert reviewer for the Intergovernmental Panel on Climate Change, the language doesn’t differ all that much from previous national assessments.

National Guard soldiers conducting Hurricane Sandy reconnaissance patrols. Photo credit: U.S. Army

“This assessment is not written for other scientists; it’s written for everyone who is or will be affected by climate change in the United States, and today that includes nearly all of us,” she explained. “For that reason, to the extent possible, we have written the report using straightforward language that does not sacrifice scientific accuracy but aims to be much easier to understand than the average scientific study.”

The straightforward communication, coupled with widespread impacts and last year’s costly natural disasters, could combine to give climate change its 15 minutes of “fame” in the public and media consciousness and in the public policy spotlight. Since the last assessment, in 2009, the U.S. has observed enough accelerated effects of climate impacts and weather whoppers to lead the Los Angeles Times to call the assessment “a grim overview.”

Media Reporting on the Findings

Federal reports are a tricky thing, from the inter-agency politicking to the timing of the release and the messaging and all else that goes into the daily news cycle. Yet with strong language and a synthesis of robust research, the assessment vividly describes a heavy toll that climate change is causing.

And many in the media have paid attention:

• Associated Press reporter Seth Borenstein wrote that climate change is already changing daily life. “Global warming is already changing America from sea to rising sea and is affecting how Americans live …”
• USA Today put it this way: “How far off are the effects of climate change? Not far at all, says a new federal report that warns American lives are already being changed, and their behavior could make the problem worse.”
• And according to Reuters, “The consequences of climate change are now hitting the United States on several fronts, including health, infrastructure, water supply, agriculture and especially more frequent severe weather, a congressionally mandated study has concluded.”

Looking at the ‘What’s New?’ in the Assessment

One area in the report that has gained more attention than it did in the last assessment involves the social sciences and the economics of climate impacts. The climate has delivered accelerated effects and infrastructure is being compromised. Businesses are impacted. Governments are planning for adaptation. Meant as a guide for decisionmakers on how to prepare for climate change, the assessment has no policy recommendations. Instead, it looks at how society’s choices about climate change will affect impacts. It examines economic and social costs, and looks at how all levels of government need to address and prepare for impacts and reduce emissions. For example, the report says that “rapid population growth and development in areas that are particularly susceptible to climate change impacts can amplify those impacts. Recognition of these couplings, together with recognition of the multiple-stresses perspective, helps identify the information needs of decisionmakers as they manage risk.”

According to climate scientist Todd Sanford, of the Union of Concerned Scientists, the report reflects an evolution in scientific knowledge about climate change and makes it useful.

“They’ve included chapters on mitigation and adaptation that speak more to the ‘news you can use’ for the elected and appointed officials who are already integrating climate change into their planning,” he said.

Sanford points to the cross-cutting theme chapters, such as the nexus of water, energy, and land-use. He said that the assessment more clearly emphasizes how climate impacts combine with stressors or other elements of change, including changes to land use, increasing water use, and other factors.

“Climate change isn’t happening to individual regions or sectors alone,” Sanford says, “so putting it into a bigger context will help decisionmakers.”

Impacts on Business and Overall Economy Cited

So might the climate assessment, along with other recent reports and findings, help provide a fresh alert? Ceres president Mindy Lubber thinks so. She cites, among other things, economics as a key motivator.

Lubber said, “The draft report is a powerful message that climate change is having widespread impacts that are hurting businesses, hurting the economy and hurting taxpayers who oftentimes bear the biggest financial brunt of extreme weather events.

“We’re still reeling from a year that was marked by an unprecedented hurricane, a historic drought, damaging wildfires and other climate-influenced extreme weather. For insurers alone, U.S. losses last year from these natural disasters totaled $58 billion, more than double the 2000 to 2011 average yearly losses of $27 billion.”

The climate news hasn’t been so rosey lately. Human activity is warming the planet, and evidence indicates that the burning of fossil fuels has been the main contributor to that warming over the past 50 years.

Whether the assessment prompts action on climate is anyone’s guess. One thing’s for sure: There’s a clearer and clearer understanding by scientists and a continuing effort to find the most effective ways to get their message to the American public and their leaders.

• “Global climate is changing, and this is apparent across the U.S. in a wide range of observations. The climate change of the past 50 years is due primarily to human activities, predominantly the burning of fossil fuels.”
• “Some extreme weather and climate events have increased in recent decades, and there is new and stronger evidence that many of these increases are related to human activities.”
• “Human-induced climate change is projected to continue and accelerate significantly if emissions of heat-trapping gases continue to increase.”
• “Impacts related to climate change are already evident in many sectors and are expected to become increasingly challenging across the nation throughout this century and beyond.”
• “Climate change threatens human health and well-being in many ways, including impacts from increased extreme weather events, wildfire, decreased air quality, diseases transmitted by insects, food, and water, and threats to mental health.”
• “Infrastructure across the U.S. is being adversely affected by phenomena associated with climate change, including sea-level rise, storm surge, heavy downpours, and extreme heat.”
• “Reliability of water supplies is being reduced by climate change in a variety of ways that affect ecosystems and livelihoods in many regions, particularly the Southwest, the Great Plains, the Southeast, and the islands of the Caribbean and the Pacific, including the state of Hawaii.”
• “Adverse impacts to crops and livestock over the next 100 years are expected. Over the next 25 years or so, the agriculture sector is projected to be relatively resilient, even though there will be increasing disruptions from extreme heat, drought, and heavy downpours. U.S. food security and farm incomes will also depend on how agricultural systems adapt to climate changes in other regions of the world.”
• “Natural ecosystems are being directly affected by climate change, including changes in biodiversity and location of species. As a result, the capacity of ecosystems to moderate the consequences of disturbances such as droughts, floods, and severe storms is being diminished.”
• “Life in the oceans is changing as ocean waters become warmer and more acidic.”