Navigant Research Blog

Commitments to Change in the Aftermath of the Paris Conference

— December 18, 2015

In my previous blog about the 2015 United Nations Climate Change Conference (COP21), I said there was cautious optimism that a multilateral deal could be reached. Well, there was in fact good news coming from Paris on December 11. At the conference, 187 countries committed in a legally binding agreement to reduce their greenhouse gas (GHG) emissions.

The commitments in Paris will not immediately deliver the 2°C or 1.5°C  temperature limits suggested by the United Nations’ panel of experts as the maximum allowed to avoid the worst effects of climate change. Instead, the agreement commits to a process of increasing emissions cuts every 5 years to eventually curtail emissions to a level that limits temperature increases within the 2°C-1.5°C range. More importantly, it commits countries to a “balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of the century.” In short, this means that the world will need to be net zero emissions early after 2050.

The Paris agreement did push forward the financial agreements to developing nations that were introduced in Copenhagen. There is room to improve in this area, but it’s becoming less relevant as renewable generation becomes competitive with new conventional capacity.

In parallel to the conference, there were a large number of commitments from investors and businesses to move investments to clean energy and even to divest from fossil fuels. For the first time, major businesses and investor groups lobbied for strong long-term goals and stringent rules to increase ambition (and reduce investment risk).

One interesting commitment came from the automotive industry. Led by Renault, a group of 13 CEOs from the industry committed themselves to decarbonizing transportation over the next 2 to 3 decades. They anticipate 2 billion vehicles on the road by 2050, but are clear in saying that, “We cannot continue to rely on fossil fuels to power those vehicles.” If they deliver on this promise, they will break what was perhaps the most successful partnership between two industries in the 20th century. It would hit the transport fuel market, the most important market of the oil industry and one that has been less affected by renewable penetration to date.

Point, Set, Match?

COP21 was successful thanks to the technological advances in renewables in the last decade and a combination of societal changes (i.e., improved economic performance in the United States, the Chinese population facing dreadful air quality issues, and extreme weather patterns in parts of the world) that make political inaction less tolerable.

However, minimizing GHG emissions in the global economy is not going to be easy, especially as some countries might need to shift funding toward adaptation and increased resilience. Until recently, renewables grew on the shadow of conventional sources, barely affecting their business models or hitting their core markets. This has changed in the last few years, and the Paris agreement sets a ticking clock in the face of oil companies and utilities with large generation capacity reliant on fossil fuels that says that these technologies are on their way out (or at least that they will play a minor role in the second part of the century). The problem that arises is how to keep the standards used in the old system while laying the base for the success of the new system. Smart thinking and lots of innovation will be needed to go through this transition without rocking the boat (too much).

 

More Wastewater, Less Waste

— December 14, 2015

In these dry times, many cities are forced to turn to new sources of supply water to keep the pipes flowing. Reclaimed or recycled wastewater is becoming an increasingly popular option. Orange County in drought-stricken California has utilized a toilet-to-tap system since 2008, and in Texas, cities such as Wichita Falls are using recycled water for drinking. With a common aversion to drinking what once occupied a sewer, public opinion of reclaimed water in the taps is not high. Many towns have now taken to using so-called purple pipes, which mark reclaimed water and transport it only to non-potable uses, such as irrigation or flushing toilets. However, increasing acceptance of these systems has spurred the use of reclaimed water in a myriad of previously untapped applications.

The onset of winter is once again drawing the collective outdoor eye toward the mountains. Ski resorts, in an effort to open earlier in the season or just maintain better skiing conditions, frequently make their own snow. The popular Vail Resorts in Colorado, a state known as a winter sports haven, all make snow. However, some ski resorts are now doing so in an eco-friendly fashion.

Who Has the Green Snow?

Arizona Snowbowl is the first ski resort in the United States to use water reclamation technology for making snow. Located just outside of Flagstaff, the company started using this technology in 2013, but had some pushback from nearby residents and environmental groups with concerns of pharmaceuticals in the water. There are outspoken forums such as Protect the Peaks that can’t seem to stomach water reclamation at a ski resort. The ‘ick’ factor is a major barrier to widespread adoption, according to resort management. The water itself is treated to a very high standard; pathogen removal is key in reclamation systems.

The city of Flagstaff itself is utilizing recycled water for lawns, gardens, and golf courses. The reclaimed water replaces nearly 1.8 million gallons a day of freshwater. This system combines greywater (from sinks, tubs, and laundry machines) with blackwater (from toilets), and this combined stream goes to the Rio De Flag Wastewater Reclamation Plant. The city has utilized this system for 25 years.

Despite the pushback on using reclaimed water in ski resorts, Snowbowl is still the most popular resort in Arizona. Given the increasing adoption of water reclamation for municipal use, it could become a major trend at ski resorts that already make snow.

 

Smog Settles on Beijing as World Leaders Gather for Paris Summit

— December 8, 2015

As we enter the second week of the 2015 United Nations (UN) Climate Change Conference in Paris, nearly 150 world leaders representing 195 countries have called for action on the issue of climate change. French president Francois Hollande told the delegates of the conference that “the stakes of an international meeting [have never] been higher” and the fate of the world depends on the Paris climate deal; Prince Charles of Britain told fellow delegates that climate change is the world’s greatest threat and leaders must act now; and the UN climate chief, Christiana Figueres, said “never before has a responsibility so great been in the hands of so few.” While this responsibility technically lies in the hands of 150 world leaders, many experts and think tanks have argued that China and the United States play a leading role and will be the keys to success for the summit and in mitigating climate change.

The two countries bring to the Paris summit a joint presidential statement, which was made in Beijing in November 2014. The statement emphasizes the presidents’ commitment to targets reducing their respective nations’ carbon emissions. Essentially, the United States brings to the table the Clean Power Plan, which is currently taking heat on the domestic front, and China brings the world’s soon-to-be largest cap and trade program, a pledge to have carbon emissions peak around 2030, and a $3.1 billion contribution to help developing countries fight climate change. Chinese President Xi Jinping stated at the summit that the Paris agreement should chart a course for green development, put effective control on greenhouse gases, and excite global efforts to cut emissions. He also stated that addressing climate change should not impair countries’ ability to develop.

However, these statements come at a time when President Xi’s domestic environment is in dire circumstances. On December 8, Beijing issued the city’s first ever red alert pertaining to smog levels. The red alert is the highest possible alert and results in the city effectively shutting down, meaning closed schools, halted outdoor construction, and cars with odd and even numbered license plates banned from driving on alternate days. The order will last from 7:00 a.m. local time Tuesday to 12:00 p.m. local time Thursday, when a cold front is expected to push the smog away from the city. The poisonous smog over Beijing covers an area of North China the size of Spain; it’s caused by burning coal for industry and heating and dust from construction and exacerbated by low wind and high humidity. Air pollution monitors in the capital showed that areas of Beijing had more than 256 micrograms per cubic meter of poisonous particles, a number much higher than the World Health Organization’s unsafe level of 25 or more.

Smog in Beijing, December 1st and December 2nd

Paige Smog Blog(Source: British Broadcasting Corporation)

Perhaps President Xi’s attendance at the Paris Climate Change summit comes at a time when the country needs it most. Though a strong global agreement on climate change from the Paris summit, as well as President Xi’s efforts to mitigate greenhouse gases and develop more sustainability, will not immediately solve China’s air pollution issues, these efforts are a step in the right direction. China’s goals and participation in the Paris summit could play a major role in not only solving the country’s air pollution issues in the long term, but also in helping to mitigate global climate change.

 

State-Regulated Energy Efficiency and Renewable Energy Use in California

— December 2, 2015

California’s newest energy bill, senate bill (SB) 350, passed 26 to 14 and was signed into law on October 7. The Clean Energy and Pollution Reduction Act of 2015 aims to increase the Renewable Portfolio Standard (RPS) to 50% by 2030 (up from the previous target of 33%), establishing that a percentage of electricity be generated by renewables and requiring an increase in energy efficiency in existing buildings by 50% by 2030. The bill originally proposed to cut petroleum use by 50% by 2030, but this was removed from the bill shortly before it was passed. The bill supports a previous order by Governor Edmund Brown reducing greenhouse gases by 40% below the 1990 levels by 2030.

According to the American Lung Association, the top five ozone and particle polluted cities in the United States, both year-round and short-term, are in California. Senator Kevin de León, the author of the bill, stated at the signing ceremony in Los Angeles that, “with SB 350, we are making clean power sources like wind and solar the mainstream, democratizing the benefits to our economy and environment. … Soon, those communities living in the shadows of smokestacks and freeway overpasses will breathe a little easier.” Funded by the Los Angeles Department of Water and Power, Pacific Gas and Electric Company, the Sacramento Municipal Utility District, San Diego Gas & Electric Company, and Southern California Edison Company, a study by Energy and Environmental Economics, Inc. concluded that achieving the 50% RPS set forth by SB 350, while aggressive, is feasible. The study found a number of short-term solutions, including increased regional coordination, increasing the diversity of renewable resources, and energy storage.

Impact on Utilities

Austin Whitman, Director of Regulatory Affairs for FirstFuel Software, stated that the benefits of SB 350 to utilities include an increase in data-driven improvements. Utilities will need to reduce demand hour-by-hour, not just on a yearly basis.

SB 350 requires the State Energy Resources Conservation and Development Commission to establish annual targets for energy efficiency savings, the California Public Utilities Commission to establish efficiency goals for private utilities, and the California Energy Commission to do so for municipal utilities. ReedSmith explained that while these commissions are required to set annual targets, the local, publicly owned electric utilities are required to set annual targets for energy savings and demand reduction. Utilities are encouraged to participate in cost-effective activities, such as peak load reduction. The bill is expected to transform the independent system operator (ISO), which is required to propose modifications to the states legislature for approval, in to a regional organization. The bill stresses the importance of the use transportation electrification (TE) and increase’s the state’s authority to direct investor-owned utilities to implement TE, which will likely create a plethora of new programs.

California as a Test Pilot

The regionalization of the ISO is intended to encourage the growth of regional electricity transmission markets in western states, which will increase access to customers within these areas. The ISO must conduct additional studies on the impacts of a regional market enabled by the proposed governance modifications. If the studies are found successful, it is likely this could be adapted with other states and even neighboring countries, as well.

California has continually been leading the country—and the world—in its efforts to fight climate change. A 50% RPS is the highest anywhere worldwide, and all eyes will be focused on California to see how these goals can be achieved by 2030.

 

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