PICS Climate News Scan - April 7, 2016

PICS Climate News Scan

Global climate news analyzed for British Columbia

PICS summarizes and analyzes the major climate-change related science, technology, and policy headlines each week, and shows how these advances are directly relevant to the BC provincial and the Canadian federal governments and more generally to businesses and the public. The scan brings cutting-edge climate science to the discussion, with a focus on solutions. The scan is produced by PICS, with some content provided by the Sauder School of Business Centre for Social Innovation & Impact Investing. Access to some referenced articles may require a subscription, paid or free, and appropriate links are provided. To provide content feedback or suggestions, please email dlp@uvic.ca. To be added to the distribution list click here.

All News Scans

April 07, 2016

Please note that the PICS News Scan will be going on hiatus for one week. We shall return the week of 21 April with a brand new look, functionality and sharability. Watch this space!

Stories this week:

  • Netherlands, India want to eliminate fossil-fuel cars in next decade
  • Carbon tax may not be enough to pay for Alberta renewables
  • Pacific coast acidification requires urgent regional response
  • Climate change to cause trillions in financial asset losses
  • Ontario, Nova Scotia blaze a path to fund energy efficient retrofits

Energy

Ontario, Nova Scotia blaze a path to fund energy efficient retrofits

Energy-efficient home retrofits have taken off in Ontario and Nova Scotia as a result of small tweaks to legislation in the last five years.

The two provinces amended local improvement charge (LIC) legislation to allow municipalities to launch their own retrofit programmes that let homeowners pay for renovations such as insulation, solar hot water, heat pumps and draft-proofing via their property taxes. Instead of paying sometimes tens of thousands of dollars up front, or via sometimes hard-to-access bank loans, households can pay back the sums over time to their town or city government.

In 2011, as Halifax was first launching an LIC retrofit pilot programme, Vancouver’s Columbia Institute, a centre-left think-tank, issued a first study of the concept. Last month, the institute issued a second report, This Green House II, outlining how since then the two provinces have seen the concept take off. Toronto has established a Home Energy Loan Program, Guelph passed a by-law last fall to replicate the scheme, and 18 other governments in the province are now exploring similar efforts. In Nova Scotia, beyond the provincial capital, Bridgewater, Shelburne, Berwick and Guysborough have all passed similar by-laws to establish LIC programmes.

The PICS-supported study concludes that key to success is simplicity – specifically, offering a one-stop-shop to process applications for financing, building permits, inspections, retrofit evaluation and matching grants and rebate programmes, which often are administered by other levels of government.

The report also references the findings of PICS research performed in 2015 on a similar mechanism known as on-bill financing, whereby instead of the municipality, energy utilities are the ones that underwrite loans to homeowners or commercial building owners to pay for the improvements. Akin to the property-tax mechanism, loan payments are then added to a household’s utility bill. In the latter case, the decreased energy demand as a result of the retrofit lowers energy costs so that there’s little to no net change in utility bills until the loan is paid off.

While energy efficiency building retrofits may not seem as sexy as solar farms or electric vehicles, in Canada, they are a large piece of the clean economy puzzle. Energy use in buildings accounts for a major part of the country’s emissions, largely as a result of how cold Canada can be in the winter, even in some of the warmer regions. In British Columbia, residential and commercial buildings account for some 20 per cent of energy use and 12 per cent of greenhouse gas (GHG) emissions. In some communities such as Saanich, BC, heating and cooling are responsible for 30 per cent of greenhouse gas emissions. According to the green house report, widespread energy efficiency investments in the residential sector could reduce Canada’s entire GHG emissions by four percent, as well as make homes healthier and cheaper to run. 

Policy

Carbon tax may not be enough to pay for Alberta renewables

Alberta may need to raise extra funds from somewhere other than its planned carbon tax if it is to cover the cost of renewable energy subsidies, according to energy policy experts.

Last November, the province’s newly elected government unveiled its climate strategy, which included a phasing out coal-fired electricity generation by 2030, and a rise in renewable generation to 30 percent over the same period. Many of the details have yet to be decided, but the government is likely to employ a carrot and stick approach: the introduction of a carbon tax of $30 per tonne to make dirty energy more expensive and some form of renewable energy subsidy or credit (REC) to make clean energy cheaper to produce.

Researchers with the Pacific Institute for Climate Solutions’ 2060 Project, a group of engineers and energy policy experts exploring the future of Canada’s electrical systems, ran a model comparing two versions of such a carrot and stick strategy to test which would best meet Alberta’s stated targets.

The first version they call the ‘Big Stick’ approach, with an economy-wide carbon tax and a $15 per megawatt hour (MWh) renewable credit. The second, the ‘Small Stick’ approach, deploys the same $30 per tonne carbon tax, but it only kicks in for electricity producers that are unable to match or beat the current best-in-class gas-fired power plants. This limits the tax to a smaller part of the economy and thus would produce less of a price shock for consumers. To make up for this, the renewable credit would be substantially higher: $25 per MWh.

The researchers found that the Big Stick approach results in only marginally higher emissions reductions than the Small Stick. However, they found that going for the softer approach means that carbon tax revenues are much lower, and not enough to cover the cost of the much higher renewable credits. This in turn means that if the province goes for the Small Stick, the money to cover these credits will have to come from somewhere else in the economy than the carbon tax.

The models also suggest that whether the REC is $15 or $25 per MWh, wind power will likely be far and away the main source of renewable energy that is built out. That sounds good, but wind is intermittent—that is, the wind does not always blow. Alberta could buy hydroelectricity from neighbouring British Columbia, which is not intermittent, in order to balance the fluctuating electricity coming from wind turbines. But the government has said it would prefer a made-in-Alberta solution. According to the researchers, this would mean that a new fleet of gas turbine generators will have to be built in the province to do the balancing out instead. 

The researchers say that this gas-fired electricity would also need some sort of subsidy to incentivise the build-out, particularly for highly flexible but also more expensive gas-fired plants that only operate a few hours a day to service peak demand.

Science

Pacific coast acidification requires urgent regional response

The waters off North America’s Pacific coast from British Columbia down to California are steadily acidifying, according to a blue-ribbon panel of ocean scientists who have recommended that regional governments sharply step up their response to the human-induced phenomenon.

The same carbon dioxide (CO2) emissions that contribute to global warming have a second, lesser known effect. Oceans absorb roughly between 30 and 40 percent of atmospheric CO2, and as the gas dissolves, it reacts with the water and forms carbonic acid, which inhibits shell growth in marine organisms, among other impacts.

A team of 20 researchers was convened by ocean management agencies from BC, Washington, Oregon and California three years ago to studying the phenomenon off their respective coasts. The researchers issued their findings this week.

The process occurs the world over, but the panel, which includes former PICS director Tom Pedersen, concluded that there are specificities to the West Coast that “dramatically heighten the potentially devastating effects” and will ensure that this region faces some of the earliest, most challenging changes in ocean carbon chemistry.

Over the course of 30-50 years, ocean currents carry Asian waters that have absorbed CO2 from the atmosphere to the West Coast. During this transit, they sink deep below the surface and CO2 levels rise even further as natural processes break down sinking organic matter, produce CO2 and also deplete dissolved oxygen. Coastal upwelling then pulls these CO2-rich and oxygen-poor waters to the surface, which then spread across the full length of the West Coast’s continental shelf.

In addition, because these physical and biogeochemical processes take many decades to play out, even if the rise in atmospheric CO2 emissions could immediately be halted, the West Coast would still be faced with steadily more CO2-rich waters for at least another 30 years.

The panel acknowledged that local actions are insufficient to wholly undo the impacts of acidification and hypoxia, but ocean management officials can improve local conditions by implementing better controls on nutrients and organic matter pollution that flow from land into coastal waters, as these substances provide nourishment for algae and bacteria that, in turn, can exacerbate the hypoxia and acidification.

They also encouraged the conservation and restoration of seagrass and kelp beds, which remove CO2 from coastal waters as they grow and have the potential to offset the acidification. Small-scale and short-term studies on such effects now need to be upscaled to larger proof-of-concept studies across a range of habitats to see under which conditions this CO2 removal works best to counteract the problem.

They also called for sweeping revisions to state and provincial water-quality regulations to take into account the effects of acidification, as most rules were written long before researchers were aware of the problem. The panel also encouraged the enhancement of a coast-wide monitoring network to assist with adaptation planning.

Society

Climate change to cause trillions in financial asset losses

Climate change is set to strip trillions off global financial assets, according to economists.

Researchers employed economic modelling to assess the impact of global warming on economic growth, and hence on stocks and other financial assets. They found that in a situation of an average worldwide temperature increase of 2.5°C by the end of the century, the average value of current financial assets that could be wiped out totaled $2.5 trillion. A worst-case scenario for this level of temperature rise would see $24 trillion lost.

Such risk can be mitigated by lowering greenhouse gas emissions, but only to a certain extent. At 2°C of warming by this period, the economic fall-out is a lower, but still substantial, $1.7 trillion. Here, the worst-case scenario would see $13 trillion lost.

According to the researchers, whose study was published this week in Nature Climate Change, such financial losses would be the result of two types of effects: the destruction or accelerated depreciation of assets, or disrupting economic activities. Both can occur as a result of higher temperatures, extreme weather events, changed patterns of precipitation, and political instability.

To put this figure in context, the world’s non-bank financial assets total $143 trillion according to the Financial Stability Board, while the sums squirreled away by the super-rich in tax havens is estimated to be $32 trillion.

In 2011, Canada’s National Roundtable on the Environment and the Economy performed a similar exercise assessing climate change’s economic impacts for the country but looking at a wider set of subjects than financial assets.

The federally appointed roundtable members concluded that global warming will cost the Canadian economy CAN$5 billion a year by the end of this decade, rising to between $21 and $43 billion by the 2050s, depending on what sort of action is taken to tackle and respond to climate change. The worst-case scenario for Canada clocks in at $91 billion per year in losses.

Examples of the impacts include flood damage from rising sea levels amounting to between $1 billion and $8 billion a year by mid-century, with particularly bad impacts in Atlantic Canada; increased pest outbreaks and wildfires would cost $2-17 billion a year by then; and poorer air quality from higher temperatures would increase hospital visits, resulting in millions in additional expenditure in the country’s major urban centres Toronto, Montreal, Vancouver and Calgary.

In 2014, Natural Resources Canada produced a 292-page report on the effects of climate change in the coming decades from additional floods, storms and other extreme weather events, but its section devoted to economic impacts noted that much research emphasis in this area has tended to focus on those sectors with clear relationships with ecosystems sensitive to climate change, such as agriculture, forestry and water management, or otherwise directly impacted such as the insurance and tourism sectors. Those parts of the economy less straightforwardly climate sensitive such as manufacturing, the service sector and trade, as well as consumer demand, remain under-analyzed.

Solutions

Netherlands, India want to eliminate fossil-fuel cars in next decade

The Dutch parliament is developing a legislative plan to ban the sale of all conventional oil and gas vehicles from 2025.

Last week, the motion put forward by the government’s junior coalition partner, the Labour Party, passed with support from centre-left liberals, greens and the Christian Union, despite vehement opposition from its senior coalition partner, the VVD.

House leader Halbe Zijlstra described the idea as “crazy” because automakers are unlikely to be producing a full fleet of electric cars within nine years. However Labour leader Diederik Samsom disagreed, saying the rapid development of new technologies and innovations made it feasible.

Furthermore, the Labour Party says it wants the country to emulate Norway, which has the highest electric vehicle penetration in the world, last spring hitting over a quarter of all new vehicles sold. The Netherlands has the second highest penetration, at 8.5 percent for all of 2015.

Some 6,000 kilometres away, the Indian government announced its intention to reach 100 percent zero-emission vehicle penetration by 2030. Last week, the minister of state for power, Piyush Goyal, said that a small working group including himself and the three ministers for roads, oil and the environment will this week start crafting a plan that will likely involve offering electric vehicles without any need for a down payment, and with regular payments covered by what consumers would have spent on gasoline.

“We are trying to make this programme self-financing. We don’t need one rupee support from the government,” the minister said.

The Dutch Labour Party for its part said that the move is necessary because the country committed itself to taking strong action in the near and medium term to wean its vehicle fleet off fossil fuels last December. That month in Paris at the UN climate summit, the country signed on to the International Zero-Emission Vehicle Alliance along with three other countries, eight US states and Quebec and British Columbia (BC). Signatories are committed to ensuring that all new vehicle sales are free of fossil fuels by 2050.

BC currently has the second highest per capita adoption of electric vehicles in Canada after Quebec, and the largest public charging infrastructure in the country. In 2011, the province introduced its Clean Energy Vehicle programme, which offered incentives of up to $5,000 for the purchase or lease of a new battery-electric or plug-in hybrid electric vehicle, and up to $6,000 for a hydrogen fuel cell vehicle. The programme was renewed in April last year and for a third time last month, along with new funding for charging stations in apartment buildings and to upgrade to fast-charging stations. Premier Christy Clark also announced in March that BC would permit electric vehicles access to high-occupancy-vehicle (HOV) lanes when there is only a single occupant, a policy also adopted last month by Ontario.

Photo credits (in order of appearance): Henk Sijgers, BASF, Paul Asman, Ahmad Nawawi, Alexander

Authors: Leigh Phillips (PICS)

Editors: Sybil Seitzinger, Robyn Meyer (PICS)