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Last week was an eventful week on the political, regulatory and scientific stage. And it comes at a time when the world of cleantech investing remains impacted by public perception regarding the pace and impact of climate change, and how forcefully governments will push a move away from fossil fuel generated power. Two key news pieces dominated the conversation last week—Obama’s plan to limit carbon emissions from power plants and the long awaited UN report on climate change.
Friday saw the release of the Intergovernmental Panel on Climate Change (IPCC) new climate report. The last report was released in 2007 and the United Nations panel had a few meaningful revisions as to the state of climate change. The highlights:
1) The panel is now 95 to 100 percent sure that the global warming of the past few decades is human caused, up from 90 to 100 percent in the last released reports. Yeah, it’s a small revision but perhaps it’s getting incrementally more difficult to argue that a warming planet is somehow due to non-human causes.
2) If we want to keep warming to under 2 degrees Celsius, we’ll need to severely limit how much carbon we emit over the next 3 decades. Humans have emitted a bit over 500 billion metric tons of carbon. If we want to halt warming we can only emit about another 500 billion, which at current rates would occur by around 2040.
3) The rate of warming has slowed in the last 15 years. But as most scientists know the earth won’t warm in a linear fashion. Few things in nature happen in a linear way. Impacts are discontinuous. This hasn’t stop climate change deniers from using this fact to try and dominate the conversation.
4) Sea level rise will happen even if we halted greenhouse gas emissions today. This point is often overlooked but the question really is: do we want to shoot for the lower end of the range (0.26 meters) or the higher end (0.82 meters). Folks in vulnerable geographic areas places like Amsterdam, Venice and the Maldives care about this issue a great deal.
The impact of the continual flow of climate change reports is hard to gauge since they document what’s happened and provide theoretical predictions. Unfortunately, humans tend to respond to existing problems, not future ones. But at least in the U.S. there’s a fairly strong correlation between states where people believe strongly in climate change and where you find pro-renewable energy policy. So each report that supports this view can’t hurt.
And perhaps it was no coincidence that on the domestic front, the Obama Administration chose last week to announce new regulations governing carbon emissions from new power plants. Obama is hamstrung, unable to enact serious climate legislation as he fights an uncooperative House. Instead Obama has resorted to executive power, and the EPA’s ability to regulate emissions.
1) The proposed limits cap new coal power plants at 1,100 pounds of carbon dioxide per megawatt-hour. Given that the average coal plant emits about 1,800 pounds, many Republicans and pro-coal state Democrats are crying foul, calling the move Obama’s “war on coal.”
2) Coal power plants are effectively dead right now in terms of new construction largely due to the competitiveness of natural gas pricing. But also because of regulatory uncertainty about the future of coal regulation. In 2003 coal accounted for about half of electricity generation while it sits at just 37 percent today. The real fight is yet to come as EPA head Gina McCarthy will feel out support for limiting existing coal power plants to 1,100 pounds per megawatt hour, which would be a very significant change, forcing existing coal plants to capture and sequester their carbon.
3) All of this talk on capping coal power plant emissions is reviving talk of carbon capture and sequestration (CCS) technology. CCS has never been demonstrated on a large scale and most estimates indicate it’ll increase the cost of producing power by 75 percent. But perhaps some brave VCs will back a technology that could keep the coal industry alive, particularly since sinking domestic demand for coal could make the natural resource even cheaper. Skyonic, which converts carbon emissions to baking soda picked up $128 million in cash this year. Unsurprisingly the money came from the oil and gas industry.
The question with all of these regulatory changes and scientific reports is: Are we moving fast enough to curb climate change? There’s no simple answer because much depends on how good the predictive models prove to be at foretelling when impacts start occurring.
But my thinking has always been the following: Do we want to take the risk of being on the wrong side of the predictive model or should we do everything we can to ensure that we mitigate a consequence the magnitude of which we have a hard time conceiving of. In those terms, the answer is simple.