PICS Climate News Scan - February 25, 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

February 25, 2016

Stories this week:

  • National wind energy group quits BC in a huff
  • Saskatchewan, Yukon reject Ottawa plan for national carbon price
  • Ontario, Britain adopt Norway-style electric-vehicle perks
  • Permafrost microbes producing GHGs faster than predicted
  • Apple issues massive green bond package

Energy

National wind energy group quits BC in a huff

Canada’s wind energy lobby group is quitting British Columbia, complaining the provincial government is not serious about developing the sector compared to its support for hydroelectricity.

The Ottawa-headquartered Canadian Wind Energy Association (CanWEA) announced last week that it is closing up its shop in the western-most province. It is to pull its regional director from BC and will focus more on Alberta and Saskatchewan, the trade association’s vice-president of policy, Jean-François Nolet, wrote in a letter to CanWEA’s members.

Alberta’s NDP government last November announced that by 2030 it wants to phase out its coal-fired power plants, which generate 55 percent of its electricity, and replace them with renewably-sourced electricity, primarily via subsidies to wind and solar. The same month, Saskatchewan’s power company declared that it aimed to produce 50 percent of its electricity from hydro, wind, solar and geothermal sources by 2030, up from the current 25 percent (20% hydro, 5% wind).

“While BC has tremendous untapped potential for wind energy,” CanWEA president Robert Hornung told Business in Vancouver magazine, “it’s also true that, at this time, there’s no vision of short-term opportunities emerging in BC.”

The sector has built four large-scale wind farms in the province, with a fifth set to start generating later this year. But BC Hydro has said it is unlikely to issue fresh calls for power from independent producers until 2030. The public energy company believes the controversial Site C hydroelectric dam currently under construction is sufficient to meet demand growth. While other onshore and offshore wind projects have been proposed, without power purchase agreements from BC, CanWEA thinks the future of the industry in BC is grim.

Some of the trade association’s members however, are not quite so pessimistic.

“It’s an understandable wake-up call to the BC government,” Juergen Puetter, the president of Aeolis Wind, developer of the province’s first wind farm, Bear Mountain, told the News Scan. “But I don’t subscribe to the doom and gloom. BC Hydro is tremendously underestimating future demand.”

He says both transport and industrial processes need to be electrified in order to become a zero-emission economy, and highlights in particular the need for the government’s liquefied natural gas (LNG) ambitions to be powered by clean electricity instead of fossil fuels. “But the government and BC Hydro aren’t conceiving of that, and soon the chickens will come home to roost.” 

However, BC is not the only location in North America where wind energy has hit the buffers. South of the border, wind energy development is flat and analysts reckon Washington, Oregon, Idaho and Montana are just about saturated. Because wind is intermittent, it works as a ‘displacement energy source’, displacing its back-up, typically coal or gas. But hydropower already provides the bulk of electricity in the US Pacific Northwest, with a minority share for fossil fuels and nuclear.

The $2.5 billion Cape Wind project off Cape Cod in Massachusetts, which would have been the first major offshore wind farm in the United States, last month suffered what many analysts fear is a fatal blow when two utilities that were to purchase most of its power cancelled contracts due to financing issues. In 2011, the Ontario government placed a moratorium on offshore wind development.

Meanwhile across the Atlantic, wind is booming, particularly in Denmark, Portugal and Spain. Offshore wind capacity in the European Union doubled between 2011 and 2014. So what’s the difference between Europe and North America?

“The problem with [North American projects] is they are too expensive,” says energy systems expert and engineer Andrew Rowe, the head of PICS’ 2060 Integrated Energy Pathways project. “The development of offshore wind in Europe has come through special tariffs to cover the capital costs – and these are pretty substantial tariffs.”

North America meanwhile a tough market because of the relatively low energy prices of other options, and weaker market incentives. “I think there will be some significant onshore wind in the future, but it will likely need policy support if gas prices stay low.”

Policy

Saskatchewan, Yukon reject Ottawa plan for national carbon price

Ottawa wants to set a Canada-wide minimum price on carbon of $15 a tonne in an effort to stitch together the country’s patchwork of differing provincial approaches to greenhouse-gas (GHG) mitigation.

Environment minister Catherine McKenna outlined on Friday the federal government’s intentions ahead of a summit in Vancouver on 3 March between the prime minister and his provincial and territorial counterparts where a national climate and energy strategy is to start being hammered out.

Under the plan, Ottawa would set a floor price for carbon pollution, matching the level set by Quebec’s cap-and-trade system and soon to be adopted by Ontario. This floor would then increase annually. Provinces that want to go further, such as British Columbia—which imposes a $30 per tonne, economy-wide carbon tax—are free to do so. Alberta plans to establish a $20-per-tonne carbon levy, rising to $30 in 2018. Provinces that currently do not have carbon pricing mechanisms would have the option of developing their own programmes whereby they would keep the revenues.

In December, Manitoba signaled its intentions to adopt a cap-and-trade plan. And this week, Ontario introduced new legislation that sets GHG reduction targets and establishes a cap-and-trade system that will fund various emissions reduction projects.

Details for the national plan have been left deliberately vague, according to media reports, with no preference for carbon taxation or emissions trading.

By setting a common minimum price across the country, the government also hopes to prevent what is termed ‘carbon leakage’, whereby carbon-intensive industries move from a province with tougher carbon regulation to one with a lighter touch.

Newfoundland and Labrador announced earlier this month that it is exploring different policy options, and the four Atlantic provinces as a whole have said they want to work together on a regional carbon pricing scheme.

Both Saskatchewan and the Yukon, neither of which have any form of carbon levy, immediately rejected McKenna’s proposal. Saskatchewan has opted instead for funding the world’s first commercial-scale carbon capture and storage (CCS) operation at Boundary Dam, which aims to scrub carbon dioxide from the emissions from a coal-fired power plant.

“Let’s be clear that it would be a tax, and that’s the very last thing the economy needs right now,” Saskatchewan premier Brad Wall told reporters. “We think technological investment should be a higher priority than fiscal instruments or new taxes that would hurt economic growth and potentially cost jobs here in Saskatchewan and across the country.”

Yukon premier Darrell Pasloski also came out swinging against a national carbon price. “Canada’s northern economies are small and developing,” he said in a press release, “where burning fuel for heat and transportation is a necessity, not a luxury.”

The leaders of the Northwest Territories and Nunavut for their part have not responded to Ottawa’s proposal, but in 2012, Yellowknife’s Department of Finance investigated the impact of carbon pricing and concluded that the lowest income individuals and those in small, remote communities would be “disproportionately burdened” due to their heavy reliance on diesel-powered electricity generation and heating.

The federal government wants agreement on a national strategy by September. 

Science

Permafrost microbes producing GHGs faster than predicted

We may have to worry about what microbes are getting up to in thawing permafrost more than we expected, according to new research.

Conversations about climate change often mention concerns about what is going to happen to permafrost—the soil that stays frozen from one year to the next. Over half Canada’s land mass is covered by permafrost. Some 50 percent of the global store of soil organic carbon—basically the carbon in dead biological material—is locked away in permafrost in the northern hemisphere, biological material that microbes go on to decompose now that it is unfrozen, releasing the locked-up carbon from the tundra in the form of carbon dioxide and methane.

While we know this is what the microbes do, the details remain rather sketchy. Models have predicted the amount of carbon released, and incubation studies have revealed some of what happens to microbial communities during permafrost changes in a laboratory setting.  But neither of these is the same thing as examining their responses to global warming in tundra ecosystems actually in the field. And very few studies have done this, until now.

Some 19 researchers from China and the United States manipulated the temperature of the soil in a series of plots by setting up ‘snow fences’, in essence adding snow pack to an area as snow works as an insulator of the ground. Uncompacted snow is mostly composed of air trapped among the accumulated snow crystals. As this air can barely move, heat loss is very much reduced. Then in the early spring, they removed the snow before it melted to avoid excess moisture, which could have confounded the results. After a year and a half, they gathered samples from these manipulated plots, as well as from a series of control plots, for geochemical and microbial analyses.

They expected there to be selective increase in microbial growth as the test period was only short-term, but what they found was that the warming had a bigger, more rapid impact on microbial communities than they had predicted. The genetic structure of microbes was markedly different from in the control samples. Microbes had developed a significant increase in the number of certain genes associated with processes that decompose biological material and thus release carbon. The amount of carbon dioxide produced by the “snow fenced” ecosystems investigated had increased by 38 percent compared to the controls. The genetic analysis suggested that the microbes may also be producing greater quantities of methane as well.

At the same time, the warming also gave rise to more genes associated with cycling of nutrients in the soil, particularly converting nitrogen into forms that plants can use. This should mean more plant growth, and thus a greater draw down of carbon dioxide from the atmosphere as plants respire. The researchers found that plant productivity had actually increased by 30 percent.

So the scientists wanted to know whether the increased plant growth was enough to balance out the increased release of carbon from the biological material in the soil. Further measurements revealed that the warmed plots experienced much higher net carbon losses than the control plots.

 

Society

Ontario, Britain adopt Norway-style electric-vehicle perks

Ontario is rolling out a series of policies to encourage the purchase of electric cars that the province hopes will replicate Norway’s success in recent years, where more than a quarter of all new vehicles sold are electric.

The populous province—which currently has just 5,800 electric vehicles (EVs) on the road—is to spend some $40 million on boosting ownership – half of that money will go towards a network of new charging stations, while the remaining $20 million is for subsidies. Rebates for fully electric (EV) and hybrid vehicles will increase from the existing range of $5,000-$8,500, depending on the cost of the vehicle, to $6,000 to $10,000. However, if the vehicle is worth more than $75,000, the subsidy is restricted to just $3,000 on the assumption that those who can afford such expensive vehicles do not need the government to help them purchase anything.

Many jurisdictions, including Norway and British Columbia, have rebate or other subsidy policies to encourage EV purchases. But some analysts believe that the Nordic country’s achievement, which has by far the highest zero-emissions vehicle market penetration in the world, is the result of a government-led build-out of charging stations across the country to reduce ‘range anxiety’, or fear that your car will run out of power before arriving at the destination, and, crucially, driver perks such as access to bus lanes, free parking, free ferries, free access to toll roads and bridges, and free charging.

And as part of its package of policies, Ontario is experimenting with giving owners of EVs access to high occupancy vehicle (HOV) and toll lanes on highways, even if there is just one person in the car. Police will be able to immediately see who is cheating, as only EVs are granted special green licence plates. The perk will initially be available until the end of June this year.

The UK has also enacted a series of pilot projects across eight towns and cities including London that emulate Norway’s strategy, but with a number of twists.

Milton Keynes and Derby are to offer EV owners the ability to drive in bus lanes while their counterparts in Bristol now park anywhere for free. In addition, Milton Keynes will offer plug-in vehicles the same congestion-beating priority at traffic lights that local buses enjoy.

Hackney and York for their part plan to build out car-charging street lighting and solar-powered charging stations at park-and-ride locations. Harrow will develop a ‘Low Emission Zone, offering free parking and traffic priority.

The municipalities were the winners of the national government’s Go Ultra Low City competition, an outlay of some £40 million (roughly CDN$76 million).

London is to receive £13 million to develop ‘Neighbourhoods of the Future’ where electric vehicles are given priority over conventional vehicles. For example, some streets will become EV-only.

Solutions

Apple issues massive green bond package

Apple has issued a $1.5-billion green bond package, the largest ever offered by a corporation, to finance clean energy initiatives across its global facilities.

The American multi-national technology company plans to use the proceeds to fund renewable energy, energy storage and efficiency, water recycling and conservation efforts.

The $1.5-billion package is part of a larger sale of $10 to $12 billion in new bonds.

Bonds are typically seen as a low-risk investment, and green bonds have been gaining popularity in recent years.

Valued at $42 billion last year – up from over $37 billion in 2014 – the global green bond market offers investors a debt instrument to divert capital into portfolios with specifically climate-friendly outcomes.

While the bond market is valued at $100 trillion globally, green bonds are on the rise, specifically as institutions such as university endowments and pension funds look to diversify their portfolios, with some estimating green bonds to value upwards of $1 trillion by 2020.

In Canada too, green bonds have seen a sharp rise since first being introduced in 2014, reaching $1.3 billion as of last year thanks largely to debt packages from TD Bank and the government of Ontario.

Indeed, Ontario has recently announced its second green bond as demand for its initial offering was five times oversubscribed. And earlier this month, the online investment platform CoPower offered its first green bond to individual investors.

Photo credits (in order of appearance): Kim Hansen, Carissa Rogers, Madhav Pai, Paul B, Dick Thomas Johnson

Authors: Leigh Phillips (PICS), Arman Kazemi (S3i)

Editors: Sybil Seitzinger, Robyn Meyer (PICS), Karen Taylor (S3i)