Exxon, Keystone, and the Turn Against Fossil Fuels — The New Yorker (Bill McKibben)

The grass roots, Washington DC via the Washington Post
The grass roots in Washington, DC via the Washington Post

From The New Yorker (Bill McKibben):

The fossil-fuel industry—which, for two centuries, underwrote our civilization and then became its greatest threat—has started to take serious hits. At noon today [November 6, 2015], President Obama rejected the Keystone Pipeline, becoming the first world leader to turn down a major project on climate grounds. Eighteen hours earlier, New York’s Attorney General Eric Schneiderman announced that he’d issued subpoenas to Exxon, the richest and most profitable energy company in history, after substantial evidence emerged that it had deceived the world about climate change.

These moves don’t come out of the blue. They result from three things.

The first is a global movement that has multiplied many times in the past six years. Battling Keystone seemed utterly quixotic at first—when activists first launched a civil-disobedience campaign against the project, in the summer of 2011, more than ninety per cent of “energy insiders” in D.C. told a National Journal survey that they believed that President Obama would grant Transcanada a permit for the construction. But the conventional wisdom was upended by a relentless campaign carried on by hundreds of groups and millions of individual people (including http://350.org, the international climate-advocacy group I founded). It seemed that the President didn’t give a speech in those years without at least a small group waiting outside the hall to greet him with banners demanding that he reject the pipeline. And the Keystone rallying cry quickly spread to protests against other fossil-fuel projects. One industry executive summed it up nicely this spring, when he told a conference of his peers that they had to figure out how to stop the “Keystone-ization” of all their plans.

The second, related, cause is the relentless spread of a new logic about the planet—that we have five times as much carbon in our reserves as we can safely burn. While President Obama said today that Keystone was not “the express lane to climate disaster,” he also said that “we’re going to have to keep some fossil fuels in the ground rather than burn them.” This reflects an idea I wrote about in Rolling Stone three years ago; back then, it was new and a little bit fringe. But, this fall, the governor of the Bank of England, Mark Carney, speaking to members of the insurance industry at Lloyds of London, used precisely the same language to tell them that they faced a “huge risk” from “unburnable carbon” that would become “stranded assets.” No one’s argued with the math, and that math indicates that the business plans of the fossil-fuel giants are no longer sane. Word is spreading: portfolios and endowments worth a total of $2.6 trillion in assets have begun to divest from fossil fuels. The smart money is heading elsewhere.

Which brings us to the third cause. There is, now, an elsewhere to head. In the past six years, the price of a solar panel has fallen by eighty per cent. [ed. emphasis mine] For years, the fossil-fuel industry has labored to sell the idea that a transition to renewable energy would necessarily be painfully slow—that it would take decades before anything fundamental started to shift. Inevitability was their shield, but no longer. If we wanted to transform our energy supply, we clearly could, though it would require an enormous global effort.

Don’t you just love renewable energy capital markets moving the polluters out of the picture?

Here’s a report about the impending bankruptcy of Arch Coal from Elizabeth Shogren writing for The High Country News. Here’s an excerpt:

There’s no question that the president’s Clean Power Plan and his other air pollution regulations cloud the future of the industry. But coal’s bleak present has much more to do with other factors; chief among them the low price of natural gas and bad business decisions that the country’s biggest coal companies made in recent years. “These are undoubtedly difficult, if not unprecedented, times for the coal sector,” Glenn Kellow, chief executive officer of Peabody, the world’s largest coal company, reportedly said on the company’s recent earnings call.

Both Arch Coal and Peabody Energy paid billions of dollars to acquire metallurgical coal mines when prices of this type of coal, which is used to make steel and other metals, were soaring. The price has since collapsed, leaving the companies swamped in debt and their stock prices a small fraction of what they used to be. In Arch’s case, it spent $3.4 billion in 2011 to buy International Coal Group, Inc., acquiring 13 mines in the eastern United States. At the time, the only company more invested in metallurgical coal was Alpha National Resources, (remember that name), which was buying Massie Energy for $7.1 billion. That same year, Peabody shelled out $5.2 billion for metallurgical coal mines in Australia.

The companies borrowed to buy these metallurgical coal mines, with the expectation that Asia, especially China, would gobble up all the metallurgical coal they could produce. What they didn’t count on was the price of metallurgical coal spiraling downward due in part to increased supplies of metallurgical coal from other countries and slower growth in China. Now U.S. metallurgical coal sells for less than half what it did in 2011.

Arch’s debt comes due next year. Scrambling to avoid bankruptcy, Arch tried to get creditors to renegotiate its debt, but the effort collapsed at the end of last month. Peabody has until 2018, and yet its stock has fallen from more than $1,000 in 2011 to less than $13 this fall.

The West is largely a bystander to this high drama, except that the companies that produce the most coal in the West are caught in the middle of it. Profitable mines owned by these companies in Wyoming’s Powder River Basin likely still will operate under whatever slimmed-down companies emerge from bankruptcy or under new ownership. But underground mines, where it costs more to extract the coal, may be less lucky. Peabody’s Twentymile mine in northwestern Colorado reportedly already has experienced significant reductions in production.

Mines in the West are not immune from the other main factor vexing the coal industry: low natural gas prices. Coal’s share in electricity production dropped from 50 percent in 2005 to 39 percent in 2014, and natural gas overtook coal as the biggest electricity producer for two months this year. The Energy Information Agency expects an 8 percent decrease in total coal consumption in 2015 compared to 2014, mainly driven by electric companies shifting to low-cost natural gas. Retirement of coal-fired power plants due to the Obama administration’s Mercury and Air Toxics Standards contributed, but to a lesser degree, according to the Energy Information Agency. “The big story here is gas and how cheap it is,” says Robert Godby, associate economics professor at the University of Wyoming who focuses on coal.

@USGS: Map of Assessed Continuous (Unconventional) Oil Resources in the U.S., 2014

Canadian Broadcasting Corporation: New study says to avoid global warming most of Canada’s oilsands would have to be left in the ground

The tar sands reserves contain 2x amount of carbon emitted by entire global oil industry—in all of human history — Colorado Independent

Climate change: “The fossil-fuel industry…has been able to delay effective action” — Bill McKibben

Inylchek Glacier Kyrgyzstan
Inylchek Glacier Kyrgyzstan

Here’s an essay about the risk of doing nothing about climate change from Allen Best writing for The Mountain Town News. Click through and read the whole thing. Here’s an excerpt:

Bill McKibben, a writer and activist, has made the most cogent arguments. Two years ago, after crunching the numbers, he concluded that private companies own five times more carbon in the ground than the world can possibly absorb. “On current trajectories, the industry will burn it, and governments will make only small whimpering noises about changing the speed at which it happens,” he wrote in an essay titled “A Call to Arms” that was published in the June 8 issue of Rolling Stone.

He identifies a clear problem. “The fossil-fuel industry, by virtue of being perhaps the richest enterprise in human history, has been able to delay effective action, almost to the point where it’s too late,” he wrote. [ed. emphasis mine]

McKibben’s 350.org has been fighting the Keystone XL pipeline, which would export Alberta’s bitumen to refineries along the Gulf Coast. It’s largely a symbolic fight, as Michael Levi points out in his book The Power Surge. The tar/oil sands would, if fully developed, elevate atmospheric concentrations of C02 by 60 ppm. At current rates of tar/oil sands mining, that would take 3,000 years, he says. Isolating the climate debate to Alberta’s bitumen, he says, is a mistake.

But Keystone XL represents business as usual. We need accelerated change. The United States should follow the lead of British Columbia in levying a carbon tax. My impression of B.C.’s tax is that it not precisely the best model. We need a revenue-neutral tax, accelerating over time, giving the private sector clear market signals to instigate changes.

Henry Paulson, the former treasury secretary in the Bush years, made this case in an 1,800-word essay in the New York Times on June 22. A few days later, a group that includes Paulson, former New York City Mayor Michael Bloomberg, Stanford’s George Schultz, who is another former treasury secretary, and a number of other high-profile individuals — including billionaire Tom Steyer — released a report titled “The Economic Risks of Climate Change in the United States.”

More climate change coverage here and here.

CWCB: State of Colorado Receives Partners in Conservation Award


Here’s the release from the Colorado Water Conservation Board (Ted Kowalski):

The State of Colorado, as well as the other cooperating partners in the Colorado River Supply and Demand Basin Study (“Colorado River Basin Study” or “Basin Study”), were presented today with the prestigious “Partners in Conservation Award” by the Department of the Interior. This award was presented by Deputy Secretary David Hayes in recognition of the cooperation between these different entities on one of the most pressing natural resources issues in the Unites States–the future of the Colorado River basin.

The Colorado River Basin Study is the most comprehensive effort to date to quantify and address future supply and demand imbalances in the Colorado River Basin. The Basin Study evaluates the reliability of the water dependent resources, and also outlines potential options and strategies to meet or reduce imbalances that are consistent with the existing legal framework governing the use and operation of the Colorado River. To date, the Basin Study has published a number of interim reports and appendices, and the final report of the Basin Study is scheduled to be published by the end of November, 2012.

Jennifer Gimbel, Director of the Colorado Water Conservation Board, and Ted Kowalski, Chief of the Interstate, Federal and Water Information Section of the Colorado Water Conservation Board accepted the award on behalf of the State of Colorado. “The Basin Study reflects the cooperative spirit in which the Colorado River Basin States have worked since the adoption of the 2007 Interim Guidelines,” Gimbel said.“Colorado and the other Basin States, the tribes, the federal government, and the many diverse stakeholders must continue to work together in order to address the difficult water imbalances facing the southwestern United States in the next half century. It is clear that there are no silver bullets, but rather we must explore and develop multiple options and strategies in order to meet our projected future water supply/demand imbalance.”

More Colorado River Basin coverage here.

‘Water Wranglers’ is George Sibley’s new book about the Colorado River District #coriver



Here’s the link to the web page where you can order a copy. Here’s the pitch:

Water Wranglers
The 75-Year History of the Colorado River District:
A Story About the Embattled Colorado River and the Growth of the West

The Colorado River is one of America’s wildest rivers in terms of terrain and natural attributes, but is actually modest in terms of water quantity – the Mississippi surpasses the Colorado’s annual flow in a matter of days. Yet the Colorado provides some or all of the domestic water for some 35 million Southwesterners, most of whom live outside of the river’s natural course in rapidly growing desert cities. It fully or partially irrigates four-million acres of desert land that produces much of America’s winter fruits and vegetables. It also provides hundreds of thousands of people with recreational opportunities. To put a relatively small river like the Colorado to work, however, has resulted in both miracles and messes: highly controlled use and distribution systems with multiplying problems and conflicts to work out, historically and into the future.

Water Wranglers is the story of the Colorado River District’s first seventy-five years, using imagination, political shrewdness, legal facility, and appeals to moral rightness beyond legal correctness to find balance among the various entities competing for the use of the river’s water. It is ultimately the story of a minority seeking equity, justice, and respect under democratic majority rule – and willing to give quite a lot to retain what it needs.

The Colorado River District was created in 1937 with a dual mission: to protect the interests of the state of Colorado in the river’s basin and to defend local water interests in Western Colorado – a region that produces 70 percent of the river’s total water but only contains 10 percent of the state’s population.

To order the book, visit the Wolverine Publishing website at http://wolverinepublishing.com/water-wranglers. It can also be found at the online bookseller Amazon.

More Colorado River District coverage here.