All posts by Adam Aston

GreenBiz

Why wholesale POWER markets matter SO MUCH to big ENERGY buyers | GreenBiz

When a big brand such as Google, General Motors or Walmart unveils an eye-popping commitment to use more renewable energy, the news usually gets attention. And as these pledges have multiplied in number and scale, corporate energy buyers are having impacts beyond the headlines. They’re reshaping larger U.S. power trends by pulling investment into renewables.

Already, roughly half of the Fortune 500 have climate and clean energy goals; over 250 large companies have committed to using 100 percent renewable energy. Corporate buyers have collectively deployed over 23 gigawatts (GW) of new renewable energy over the past five years, according to the Renewable Energy Buyers Alliance (REBA). Over the next decade, renewable energy demand from Fortune 1000 companies could add 85 GW.

To speed progress, REBA and its membership of 200-plus energy buyers and sellers have launched a set of guiding principles to standardize wholesale electricity markets across the U.S. 

By making it easier for big power buyers to synchronize terms with utilities and project developers, the principles should stimulate investment, drive down renewable energy prices and, the alliance hopes, boost market competition while growing supply. REBA’s goal is to catalyze 60 GW of new renewable energy projects over the next five years.

Wholesale power markets already serve most U.S. consumers. The largest of these — such as the middle-Atlantic’s PJM or MISO, which spans Louisiana to Minnesota — straddle multiple states and coordinate the intricate flow of power from thousands of power plants, across millions of miles of wires, to tens of millions of customers. Today, roughly 80 percent of corporate power purchase agreements take place within existing wholesale energy markets, according to REBA. 

The principles are significant because American businesses are making wholesale market design a central priority not just to meet their own clean energy goals but also to shape the market structures …

Yet large swaths of the economy remain outside these regions. So standardizing rules for all the participants and extending wholesale markets across the entire country could enable even more deals. 

In a document released during a breakout session at last week’s VERGE 20 event, REBA laid out key principles to organize extant and new wholesale markets. According to this roadmap, well-functioning wholesale energy markets are defined by three core principles which should:

  • Unlock wholesale market competition to catalyze clean energy by ensuring a level playing field, large energy buyer participation, and services that provide actual value for energy customers.
  • Safeguard market integrity through independent and responsive governance structures, transparency and broad stakeholder engagement and representation.
  • Design to scale to the future by ensuring operational scale, customer-oriented options to meet decarbonization goals, alignment with federal and state public policy and predictable investment decisions.

Improving wholesale markets

“The principles are significant because American businesses are making wholesale market design a central priority not just to meet their own clean energy goals but also to shape the market structures that are critical to help decarbonize the entire power most affordably, for everyone,” said Bryn Baker, director of policy innovation at REBA.

Operators should ensure customers have pathways to engage in decision-making, which is not always the case today, Baker explained. “Energy buyers can and want to have a seat at the table. It’s going to be really important that a broad cross-section of customer voices are present in these markets.” 

From the perspective of a big buyer such as GM, an effective wholesale market can capture supply from a larger geographical area. This can help optimize for price, by buying wind one day in one region and switching to solar in another area on another day. 

Diversity of sources reinforces grid resiliency, said Rob Threlkeld, GM’s global manager of sustainable energy, supply and reliability. In one region, solar power may be surging, while in another wind output is waning.

“A wholesale market allows you to really match that generation with the load at the lowest cost possible,” Threlkeld said.A wholesale market allows you to really match that generation with the load at the lowest cost possible.

“As we think about the wholesale markets, we want to drive toward a clean and lean grid,” Threlkeld added. “We’re moving from big, centralized plants to more decentralized operations … It allows us to optimize the grid itself, matching generation with load.”

GM has accelerated its commitment to renewable energy, aiming to power 100 percent of U.S. facilities by 2030 and global operations by 2040. Wholesale markets can help, Threlkeld said, by hastening the deployment and procurement of cost-effective clean energy. 

Energy consumers take the lead

REBA’s efforts reflect wider trends in the energy industry, where households and big businesses alike are pushing energy companies to respond to their needs. “The conversation is shifting from a production focus to one where consumers are driving the next wave. It’s about what customers want and how they’re consuming power,” said Miranda Ballantine, REBA’s chief executive. 

Localization of renewable energy is also guiding REBA’s agenda. In the past, companies had little choice but to contract renewable capacity from far-off markets. Today, more are seeking to procure renewable energy near their facilities on the same grid they operate. “More companies are saying that they want to time match those renewable electrons with their consumption,” Ballantine said. 

Google recently unveiled plans that highlight the challenges corporate energy buyers face in upgrading their renewables sourcing from such a first-generation approach, where they may still use local fossil-generated energy but net that out against purchases elsewhere. In April, the internet goliath unveiled complex software-based plans to dynamically match its actual minute-by-minute consumption with low-carbon electricity supplies by region, a technical challenge no other large company has yet solved.

For other companies, simply accessing regional grids with sufficient low-carbon energy remains a challenge. Somewhere between 30 and 40 percent of corporate assets are not in the kinds of regional transmission organizations (RTOs) that can draw and balance power from a wider region, Ballentine said. 

“Those customers have very little opportunity in those markets to actually make choices to drive zero-carbon electrons to power their facilities,” Ballantine added. Absent organized wholesale markets, companies can’t really use their demand signals to drive change in the type of electricity they’re consuming. 

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Originally published at Greenbiz.com.

GreenBiz

As crises collide, can California meet its climate goals? | GreenBiz

Climate. Heatwaves. Wildfires. Blackouts. Pandemic. Recession. Unemployment. Social unrest. Climate, again. 

The tangle of troubles California is struggling with has no precedent. Against a backdrop of rising environmental anxiety, with wildfires lasting longer, spreading further and damaging more acreage and communities than ever before, the pandemic triggered a sharp recession and spike in unemployment. With COVID-19 and joblessness hitting low-income and minority communities especially hard, police killings sparked months of protests against systemic racism and economic inequity. And just as the need for public safety-net programs couldn’t be higher, California faces a crippling collapse in tax revenue. 

For Mary Nichols, chair of the California Air Resources Board — the state’s key architect of climate and environmental policy — these near-term problems may be worse than we’ve seen, but they are not new, and the fix will come from commitment:

We’ve been shouting it from the rooftops for a long time that we were headed in this direction, although we hoped we wouldn’t get here quite so quickly, or quite so drastically. I have seen that people can think their way out of amazingly difficult traps if they decide to. We have the human capital and intelligence, if we have the will… You can’t fix one thing without the other. If we don’t come up with solutions that are multi-factored, we won’t get very far. 

To explore how California can solve these interlinked problems, Nichols was joined by Southern California Edison’s Carla Peterman in a dialogue moderated by Sarah Golden, GreenBiz’s senior energy analyst, during a breakout session at last week’s VERGE 20 conference. 

Nichols, a veteran of state and federal environmental and energy policy since the 1970s, is retiring from CARB soon and is a contender for a top environmental role in a Biden administration, as GreenBiz Senior Writer Katie Fehrenbacher recently reported.

As senior vice president of strategies and regulatory affairs at Southern California Edison (SCE), Peterman manages a business that serves more than 15 million Californians and more than 280,000 businesses across 15 counties, including much of Los Angeles and a swath of the state that stretches to the Nevada border. 

Double duty

For Peterman, who also served as a commissioner at the California Public Utilities Commission, which regulates the state’s electricity, water and natural gas services, the economic crisis has exacerbated troubles stemming from the wildfires. Utilities have been pushed not just to stabilize a damaged grid but also to maintain energy services to some customers who are suddenly less able to pay. As Peterman said:

To give you an example of how these things all collide, we’re seeing the impact of climate change from severe heat on grid reliability. Dealing with these issues is complicated by the pandemic. It’s more difficult to help people in emergency situations. We’ve seen an increase in electricity usage during COVID of 8 percent because people are at home. We also saw an increase in use during the heatwave a couple of months ago. And we’ve seen an increase in need for our customer assistance programs of 18 percent. Utilities have stopped disconnecting anyone who’s not able to pay. It’s so important to be in a state that has those safety nets for individuals. 

Funding the recovery will be a challenge. “The pandemic has had an impact on our ability to roll out any kind of new programs until we can get the state budget back in shape,” Nichols said. Yet much of the investment necessary to transition California away from fossil fuels can do double duty, helping hard-hit communities restore jobs while also improving energy services. 

SCE is seeing wildfire mitigation and grid investment as opportunities to invest in local businesses, and to cultivate more diverse partners, including a scholarship program to bring more Blacks into the skilled energy workforce, Peterman said. 

The shift to electric vehicles (EVs), accelerated by a recent state order curtailing sales of fossil fuel-powered vehicles by 2035, creates a need for investment that can rebuild and upgrade the grid in underserved communities, Peterman explained: 

We believe that a significant amount of electrification ultimately is the lowest-cost way to reach California’s climate targets. But it’s important to make sure that everyone can access all of those EVs, having access to renewable energy and building electrification. It can oftentimes be those in disadvantaged communities who don’t make that transition as quickly and then end up paying more. Ultimately, we want to make sure electricity stays affordable because we want people to use it more. 

Towards this goal, SCE recently got the OK to launch a $436 million buildout of EV charging infrastructure, the most ambitious of any U.S. utility, Peterman said. The plan calls for half of chargers to be installed in disadvantaged communities. It’s our job to set the bar high and to show the fortitude.

If all goes to plan, SCE will be able to both improve electrical service to those communities while also improving its business. This kind of synergy — with private companies innovating pragmatic strategies that help advance climate policy and benefit the public — are crucial to recovering and moving towards net-zero emissions. And the scale of the crisis demands more collaboration, faster. But not all businesses are there yet, Nichols said: 

What I see as a major impediment is the lack of willingness on the part of at least some of our business ecosystem to come to the table with their most constructive contribution. I am going to call out — because I think I have to — the debate over what we mean by zero, whether we’re going to zero or “near zero.” It boils down to: Are we going to continue to subsidize somewhat cleaner technologies versus setting our sights out on the ultimate goal and doing everything we can to get there? 

Promising precedents

By this measure, California’s track record of pioneering climate technologies offers promising precedents. From solar panel materials to EVs and grid management software, homegrown technologies are rapidly remaking California’s energy, transportation and economic systems. Yet in the next phase of recovery and decarbonization, affordability and accessibility will be a higher priority. Peterman is hopeful that innovation can help drive down costs. She said: 

I’m starting to geek out thinking about things like sensors and technologies that help to reduce latency. How do we allow devices to communicate with each other? And how do we really bring customers’ distributed resources forward to support grid resiliency? … With technology advancements and the need for affordability, it’s important to keep pushing the envelope. That’s my shout-out to all the techie people out there: We still need your ingenuity! 

From a policy perspective, Nichols is adamant the state will continue to lead. “It’s our job to set the bar high and to show the fortitude that says we’re going to stick with these goals even if somebody gets a little bent out of shape along the way, and we have to figure out how to accommodate them,” Nichols said. “Maybe we need to be flexible about the means for getting there. But we got to be willing to say, ‘We know we can get there.’ We’ve got to set that goal.”

After all, the Golden State is already home to the largest cap-and-trade program in the United States. More recently, Sacramento has unveiled ambitious goals to be carbon-neutral by 2045, to shift the grid and its nation’s largest fleet of cars to be zero-emission by 2035. Along the way, the state has emerged as a hothouse of climate-focused businesses, from innovative manufacturers such as Tesla to renewable energy giants such as Sunrun to efficiency standard-setters such as Google.  

No state can match California’s challenges, or the scale of its possibilities, in untangling this knot of problems. “But if anyone can do it, it’s California,” GreenBiz’s Golden said. 

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Originally published at Greenbiz.com.

GreenBiz

How to value solar plus storage | GREENBIZ

In the wake of California’s summer of wildfires, blackouts and planned outages, many consumers and businesses are clamoring for more resilient options. The crisis has turbocharged interest in systems that deliver power even when the grid is down. Solar plus storage is fast emerging as a top choice, both at scale on the grid and also “behind the meter,” installed in a home, apartment or commercial building. 

“Solar plus battery storage can provide value in two ways: first, energy reliability for customers during emergency power outages, and second, during non-emergencies, to help the grid balance demand and generation,” said Dawn Weisz, chief executive of California utility MCE, during a breakout session at last week’s virtual VERGE 20 event. 

Founded in 2008 as California’s first not-for-profit, community choice aggregation program, MCE today serves over 1 million residents and businesses in four San Francisco Bay area counties: Contra Costa; Marin; Napa; and Solano.

When it comes to reliability, solar-with-storage systems offer the ability to charge a battery that can keep the power on during an outage. “It’s worth a lot to know you can keep your power on, especially for customers that have medical needs that rely on electricity,” Weisz said. “And those that need electricity for heating, cooling, and to keep food fresh.” 

Solar plus storage also helps the wider grid and environment by letting consumers shift the time when they consume solar power: by storing solar energy when it’s abundant during the day, and using it at night, in place of power generated from fossil fuels.

“Behind-the-meter storage lets you optimize solar consumption, taking up excess output during the day, and discharging it in the evening, when demand spikes,” explained Michael Norbeck, director of grid services business development at Sunrun, a San Francisco-based provider of residential solar systems and services. 

Indeed, absent storage, too much solar can become a challenge, when supply exceeds demand. In California, “We started to see so much solar going onto the grid that our ability to use it was diminishing,” Weisz said. 

In extreme cases, that can mean curtailing output: switching off the excess power flowing from solar farms. Storage can put that excess output to good use, flowing it back onto the grid when needed. “It’s in California’s best interest to be sure we’re using as much of those electrons as we can,” she said. “More batteries will help eliminate curtailment.” 

It’s no secret that the cost of solar energy has plummeted. In an October analysis of the levelized cost of energy — a measure that blends the full cost to finance, build and fuel an energy system over time — investment bank Lazard calculated that large-scale grid solar beats all fossil fuel options on cost, even absent any subsidies. Even rooftop solar, installed on homes or commercial buildings, is close to par with power from conventional sources such as natural gas peaker plants, coal and nuclear. 

Meanwhile, battery costs have followed a similar downward path. Average market prices for battery packs plunged by 87 percent in real terms in the decade to 2019, reports Bloomberg New Energy Finance (BNEF).

MCE commercial battery storage project in partnership with Tesla and the College of Marin. The installation is estimated to save the college $10,000 per month on electricity bills. Courtesy of MCE.

Yet even as prices continue to fall, making these systems accessible to more consumers and businesses, concerns persist about equal access. Weisz noted that even as prices for combined systems fall, the market is following in the footsteps of early solar, when panels were installed first by wealthy customers but lower-income customers couldn’t afford the systems. 

As a not-for-profit dedicated to community energy services, MCE has tapped state subsidy programs, grants and other funding sources to extend the benefit of solar plus storage. “We don’t want to replicate the same patterns of disenfranchising our lower-income customers,” Weisz said. 

For its part, Sunrun has pioneered a pricing strategy that often results in power prices below the grid average, thereby reducing customers’ long-term costs. For instance, to minimize both installation costs and monthly fees, Sunrun’s most popular plan, BrightSave Monthly, leases panels to homeowners for $0 down, paid for via a long-term, stable price. 

With wildfires emerging as a nearly year-round threat to western states, the resilience that solar plus storage offers is growing in importance. Sunrun’s systems have grown increasingly responsive to remote management. When grid conditions grow unstable, Sunrun’s systems can island themselves and call on a reserve portion of the battery to support critical needs. 

Panels recharge batteries during the day, which can then discharge at night, even when blackouts can stretch from hours to days or even weeks. “During the wildfires last year, we had a customer on uninterrupted power for over 142 consecutive hours,” or nearly six days, Norbeck said. 

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Originally published in Greenbiz.com.

Open Air Collective

Open Air Weekly, Ep. 2 | Open Air Collective

In this second installment of OpenAir Weekly Adam chats with superstar collector/OpenAir technical director Chris Chung about VIOLET – what it means, where the idea came from, and where it’s all headed as of October 2020. VIOLET, OpenAir’s founding mission which got us rolling last year, will be the world’s first and only miniature open source direct air carbon capture (DACC) machine.

Chris is one of the key contributors to the project and his energy, creativity, leadership and general commitment to getting sh*t done are keeping us on track and moving us forward to our goal. In this conversation Chris and Adam get into the origins of VIOLET, and discuss the significance of the project within the broader context of both open source/maker culture and Direct Air Carbon Capture (DACC) R&D.

Enjoy!

GARP

Growing greener bonds | GARP

Better standards could help cut climate risk by deepening markets for green debt to fund low-carbon solutions

In the struggle to recover from the COVID-19 economic crash, the European Union has set out to rekindle growth via green stimulus. In early September, European leadership upped the bloc’s already ambitious green goals, aiming to cut emissions 55% by 2030 against 1990 levels, up from an earlier reduction target of 40%.

To fund the effort, Europe mapped out plans to issue €225 billion ($267 billion) in green bonds as part of the overarching €750-billion Next Generation EU coronavirus recovery fund. Some 37% of the fund will target climate-change projects such as hydrogen power, energy-efficient building renovations, and one million electric vehicle charging points, reports The Wall Street Journal.

The program accelerates Europe’s already world-leading push to hit net-zero emissions by 2050, a goal formalized as part of the European Green Deal. As a secondary benefit, a surge of EU-backed green bonds could help transform a nascent market with increased liquidity just as the appetite is growing for long-term, stable, green-tinted investments among insurers, pension funds, endowments, and other long-term investors.

Green bonds are growing quickly, but remain a niche in global debt markets. From less than $1 billion a decade ago, issuance of green bonds eclipsed $250 billion in 2019 (chart, via The Financial Times, or FT), comprising about 3.5% of the global total of $7.15 trillion, according to a recent note from the Bank of International Settlements.

Rising appeal — and challenges

Green bonds offer a way to raise long-term, lower-cost funds for projects that target climate change and/or benefit the environment. Green bonds let companies and governments tap into rising demand for environmentally-focused investments from insurers, pension funds, ESG funds, and the like.

Yet for all their appeal, green bonds are selling a promise of sustainability that, so far, lacks the sort of rigorous rules and rating regimes that define legacy bond markets. For that reason, a bigger wave of green bonds will up the pressure to improve standards and deepen confidence in a financial tool that could help firms and governments alike mobilize trillions of dollars of capital to fund climate-related transformation.

As green bond volumes rise, so too has scrutiny. In 2019, a top executive at Japan’s Government Pension Investment Fund — the world’s biggest pension fund — expressed concerns over the space. He told the FT that, without greater volume and higher confidence in selection standards, the asset class risks becoming “a passing fad.” Such doubts could slow green bonds’ growth.

In the wider bond market, where tiny differentials in risk and yield can rapidly redirect huge capital flows, green bonds’ smaller market size, relative immaturity, and rising popularity can lead to unexpected outcomes. For instance, in 2019, Verizon issued $1 billion in green bonds that were oversubscribed eight fold. This led to a yield that was lower than the company’s conventional bonds.

Verizon’s successful listing, albeit anecdotal, suggests that green bonds may benefit from the sort of investor enthusiasm that has already lifted flows into green equity markets. Stock funds focused on environmental, social, and governance (ESG) factors have outperformed conventional investments over the past decade. To be sure, green bonds are subject to different market dynamics, yet both asset types could benefit from rising public sentiment.

Cultivating greener standards

Debt markets could see similar gains unfold in green bonds but are more reliant on an ecosystem of regulated ratings processes and investment standards. Hence, the need for more evolved rules around — and understanding of — what qualifies as “green” in a bond, and why it should thus merit different pricing and risk consideration.

Specialized green standards are emerging, and Europe is taking the lead. In 2019, the EU approved a set of guidelines (see the April 2020 EU technical report on sustainable finance here) better defining what counts as a sustainable investment. The new rules are “a clear signal to the financial markets that sustainable investment should become the new mainstream,” Bas Eickhout, a Green MEP told the FT.

These extend a foundation of green bond certifications and standards developed by private rating agencies. Issuers can get a green label if individual projects are in line with standards set out by the Green Bond Principles (GBPs) of the International Capital Market Association (ICMA).

To widen these criteria, Torsten Ehlers, Benoit Mojon, and Frank Packer at the Bank of International Settlements have endorsed an approach that would create firm-level ratings based on carbon intensity (carbon emissions relative to revenue) that would complement project-level bond assessments.

Their proposal addresses another concern in the nascent market, where green bonds are not yet generating measurable carbon reductions for their issuers: “green bond projects have not necessarily translated into comparatively low or falling carbon emissions at the firm level.”

When factored into project-based bond issuances, a firm-wide measure of carbon intensity could help would-be buyers and rating agencies better assess the overall climate impact of a green bond offering.

By this logic, automaker ABC Co. with an all-electric fleet would be rated somewhat higher on a green bond to fund a new EV plant compared with legacy car company XYZ Inc. issuing a similar bond to build its first EV factory. Such a system could reward ABC Co. with a lower cost of debt, thereby incenting long-term, systemic commitments to a low-carbon strategy.

Imperative innovation

This is a helpful reminder that, for all of the necessary minutiae around green bond ratings and standards, the higher goal is to fund investments that cut carbon.

Indeed, vital as energy innovations are –– from high-output wind turbines to low-cost batteries — to solving the climate crisis, markets face a related urgency to advance the technology behind the financial instruments needed to efficiently fund the decarbonization of energy systems. Accordingly, financial instruments that advance environmental sustainability are a growing priority for asset managers, corporate debt issuers, and governments alike.

Financial innovation sits at the heart of the 2015 Paris climate goals. The accord includes language committing signatories to make “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

By this logic, the imperative is clear. For green bonds to fulfill their promise — to drive decarbonization and lower climate risk — the finance industry must advance reliable rules to incent long-term investments that begin to deliver real reductions in carbon intensity.

Adam Aston is a senior writer, editor, and content consultant specializing in energy and climate. Connect with him on LinkedIn and Twitter.

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Originally published at garp.com on 2020-10-02 at https://climate.garp.org/insight/growing-greener-bonds/

Open Air Collective

Open Air Weekly, Ep. 1 | Open Air Collective

In our very first episode Adam chats with OpenAir co-founder Chris Neidl (@neidl_c) about our inaugural policy advocacy efforts related to low carbon concrete in New York – where it came from, why it’s relevant to carbon removal and DACC, where things currently stand, and how its starting to spread to other places.

1:50 – Why OpenAir is involved in low carbon concrete

4:48 – Origins of New York State LECCLA legislation

6:23 – What the LECCLA bill would do as law

8:20 – CCU /Low carbon concrete and cement 101

13:00 – “The math in the sky” – why carbon removal and DACC are essential

18:44 – Getting to carbon negative (positive?) concrete

20:57 – Binging action: the open, informality of OpenAir’s concrete activism

24:40 – Joining the Collective

Links:

– The NYS Low Embodied Carbon Concrete Leadership Act (LECCLA) bill shorturl.at/wFQ67 – LECCLA explainer video: justification and policy https://www.youtube.com/watch?v=WfmwM…

– LECCLA campaign site: www.openaircollective.cc/leccla (sign up and join!)

– “Can the concrete jungle sink carbon?” American Prospect piece about LECCLA and why it matters (Feb 2020). https://prospect.org/environment/can-…

– “Minimizing CO2 in Concrete Today” – Twenty-Something minutes with Zach Grasley [Video]. https://www.youtube.com/watch?v=H9qcz…

GARP

Hotter, sooner: A landmark effort refines — and raises — the warming outlook | GARP

Improved climate model narrows prediction uncertainty and raises the odds of serious climate impacts from global warming

Risk managers and climate scientists share a fundamental challenge: How to identify, weigh, and process a dizzying mix of signals to better model a range of possible future outcomes. Accordingly, the complex mathematical methods underlying both disciplines tend to advance slowly. It’s rare to see big improvements in the precision of their forecasts.

Yet this past July, climate scientists achieved just such a leap, with the publication of an outlook — conducted under the World Climate Research Programme (WCRP) and published in the Review of Geophysics — for global warming that, for the first time, merges three disparate data sets and methodologies. Important as the technical improvements are, however, the conclusions have broader bearing for both climate science and risk managers.

The improved model predicts more warming in a world where CO2 levels hit twice their pre-industrial level, a threshold anticipated to hit mid-century, rather than closer to 2100. The findings thus boost the probability of serious climate impacts to energy operations, financial markets, human health, and the environment.

How much more warming by when?

To better understand the recalibration of this forecast, it’s helpful to revisit its predecessor. Since a landmark study published in 1979, scientists have expressed their outlook for temperature increase as a range — given a doubling of CO2 to pre-industrial levels — from a lower bound of 1.5°C to an upper limit of 4.5°C. From regulators to boardroom executives, planners have used this range as a reference for policy and business strategy over the past 40-odd years.

The new study narrows the bounds of this forecast range. It raises the lower limit of the estimate to 2.6°C while slightly reducing the upper bound, to 3.9°C by 2100. (See chart, via Science.)

“Narrowing the uncertainty is relevant not only for climate science but also for society that is responsible for solid decision making,” said Masahiro Watanabe, a professor at the University of Tokyo’s atmosphere and ocean research institute and one of the report’s authors, in an interview with The New York Times.

The study underscores a rising sense of certainty that the rate of warming is increasing. Today, global temperatures are already 1.2°C higher than their pre-industrial average.

The goal of the 1.5°C target was enshrined in the 2015 Paris climate accords, and has galvanized policy, business and public attention in part because it also represents what many scientists believe may be a critical threshold, a temperature gain beyond which the destabilizing effects of warming could accelerate sharply.

How is this study different?

For the first time, the new assessment unifies findings from three previously independent fields of climate research and analysis spanning vastly different eras.

The oldest numbers were taken from records of prehistoric temperatures preserved in sediment layers and tree rings. The next youngest come from direct measurement of temperatures taken since the start of the industrial revolution in the 1800s. And the most recent set of inputs was drawn from satellite measurements and computer models beginning in the 1980s.

On their own, none of these data sets could help refine the range of the temperature outlook. Simply synthesizing the disparate data sets was a challenge without precedent. The researchers were also able to enhance the precision of how feedback loops shape the outlook — for instance, how the loss of highly reflective white sea ice accelerates how quickly polar waters absorb heat. By merging and refining each vintage of findings, the meta-analysis delivered precision greater than the sum of its parts.

What’s more, the data proved to be more convergent than researchers anticipated. Co-author Gabriele Hegerl, a professor of climate system science at the University of Edinburgh, told The New York Times that she was surprised by the way the models converged. “We don’t expect these three lines of evidence to agree completely,” she said, but they did.

Data from the refined forecast will be used by the U.N.’s Intergovernmental Panel on Climate Change (IPCC) for its next major assessment in 2021 or 2022, Science magazine reports. From there, the data is likely to ripple into other national, academic, and private-sector models and inform projections for sea-level rise, economic damage, and other climate impacts.

Implications for risk managers

When offered equally probable good and bad outcomes, most folks tend to be too optimistic. Human nature is biased to think the good outcome is more likely; conversely, people tend to spend too little time thinking through the implications of the bad outcome. Put plainly, a lot of us tend to translate uncertainty as things should be okay.

Yet as risk professionals know all too well, uncertainty is always a double-edged sword. In the realm of climate change the risks vary from less severe and arriving more slowly to more intense and happening faster. To date, evidence is mounting that the outlook is tilted towards the bad, with disruptive changes happening faster and sooner than prior models anticipated. This has much to do with the complexity of the science behind modeling planet-sized physical systems. It also stems from science’s conservative culture: scientists tend to err on the side of caution when forecasting.

In the here and now, energy risk planners are already reckoning with climate phenomenon that are hitting energy markets and operations harder and faster than anticipated:

  • Wildfires are happening earlier, growing larger and impacting wider areas, in Australia, Russia, and the western U.S., damaging facilities and disrupting the extraction, processing, generation, and distribution of energy.
  • The intensity of hurricanes and tropical storms is rising at unseen speeds in the warming waters of the Atlantic Ocean and Gulf of Mexico, imperiling petrochemical plants.
  • Heat and heat-related illnesses kill more Americans each year than any other form of severe weather, according to the National Weather Service. Worldwide, similar patterns are likely, as heat stress raises physical and liability risks for workers and customers.

For business leaders, the challenge is growing more urgent. While the new scientific study shifts up the long-term temperature forecast, it remains in many ways a pure abstraction — an estimate off in the future.

And for risk managers, the challenge is to take these multi-decadal temperature forecasts and translate them into material risk recommendations. How will another degree — or more — of warming change business conditions? Over the next five years, the next decade, or by mid-century? Where and in what ways could the increase manifest?

Further reading: For a deeper look at the science behind the revised assessment, see Paul Voosen’s “After 40 years, researchers finally see Earth’s climate destiny more clearly” at sciencemag.org.

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Originally published at garp.com on 2020-09-09, https://climate.garp.org/insight/hotter-sooner-a-landmark-effort-refines-and-raises-the-warming-outlook/

GreenBiz

This carbon challenge is bigger than cars, aviation and shipping combined | GreenBiz

You may not know it, but you rely on industrial heat every day. It helped make the bricks that hold up your home; the cement underfoot. It forged the steel and glass in your car, and it also cooked the aluminum, plastic and silicon in the very screen on which you may be reading these words.

Industrial heat is essential but largely invisible. To transform basic inputs into stuff we need, manufacturers constantly heat (and cool) minerals, ores and other raw materials to extreme temperatures. And for all the magic of this everyday alchemy, industrial heat poses a growing threat to the climate. The world’s kilns, reactors, chillers and furnaces are powered mostly by fossil fuels.

High-temperature industrial heat, over 932 degrees F, poses a particular challenge because that’s the point at which fuels beyond electricity become the mainstay. Overall, industrial thermal energy accounts for about a tenth of global emissions, according to a December study by Innovation for Cool Earth Forum (ICEF, a Japan-backed multinational expert group). At 10 percent, industrial heat ranks on par with the combined emissions of cars (about 6 percent), planes (about 2 percent) and ships (about 2 percent).

Yet while those transport sectors are advancing towards low-carbon solutions — with promising technologies cultivated by multilateral accords — industrial heat lacks any consensus plan and has a long to-do list to develop low-carbon alternatives.

The options include biodiesel, renewable electricity, renewable natural gas, solar thermal, geothermal, thermal storage and hydrogen. Yet as a best guess, if these were market-ready today, renewable thermal solutions would cost from two times to over 10 times more than fossil fuels, according to an October report from the Center for Global Energy Policy (CGEP) at Columbia University.

Making natural gas renewable

In time, decarbonizing industrial heat is likely to require an all-of-the above mix of solutions. But for now, renewable natural gas (RNG) may offer a fix soonest. Chemically similar to the fossil gas piped to our kitchens, RNG is instead generated from the breakdown of organic matter at landfills (the biggest current source), municipal sewage treatment plants, farm waste and similar sites. RNG also can be blended into regular natural gas pipelines with minimal modification, much the way that input from windmills can flow onto the same grid as power generated by a coal plant.

In fact, the wind example can help illustrate how early efforts to decarbonize industrial thermal energy are shaping up. In the 2000s, when wind and solar weren’t yet cost-competitive, market players pioneered ways to sell renewable energy indirectly. The solution was a set of standards and trading rules known as renewable energy credits, or RECs. The credits let a business in, say, Pittsburgh buy wind power generated in California, even before renewables were yet available on Pennsylvania’s grid.

What’s more, RECs allow a wind farm to sell both the power it generated and the renewable attributes of that power. As consumer and corporate demand for renewables grew, the value of the RECs rose, thereby incenting new wind and solar projects. Over time, RECs let companies source the renewable energy they needed, even when it wasn’t available locally, which made it easier for companies and states to slowly boost their targets for renewables.

Certifying renewable thermal solutions

Fast forward to 2020, and a team of collaborators is hoping to adapt learnings pioneered with RECs to nurture a nascent market for zero-carbon fuels, such as RNG, that buyers including L’Oréal USA and the University of California System are already using to generate renewable thermal energy.

Today, RNG is held back in part by a Catch-22 financial trap. Costs add up quickly: equipment to collect biogas (the unprocessed methane-rich vapor given off by waste); upgrade the gas to pipeline quality; and connect to existing gas pipelines.

Capital needs for smaller landfill projects run from $5 million to $25 million. Larger projects — such as agriculture and wastewater plants — can hit $100 million, according to Jade Patterson, BloombergNEF’s analyst covering RNG. On average, each RNG project requires $17 million of capital investment, based on data from the RNG Coalition.

At that price, most farms or town dumps can’t afford to develop biogas collection on their own. “An effective certification program could give lenders the confidence to fund new installations,” Patterson said. And if farms see reliable demand for their RNG, more are likely to make the investment: supply grows; prices fall; and the Catch-22 can be broken.


“Companies are trying to decarbonize the heat piece of their Scope 1 carbon footprint,” explained Blaine Collison, an Environmental Protection Agency veteran and senior vice president at David Gardiner and Associates, a co-convener – along with the World Wildlife Fund and the Center for Climate and Energy Solutions – of the Washington, D.C.-based Renewable Thermal Collaborative. “Creating renewable thermal attributes and trading instruments is critical to enable companies to act, to show the actions they’re taking and to demonstrate the reductions they’re achieving.”

The effort to extend a REC model to renewable thermal energy is being co-led by the Center for Resource Solutions (CRS), a San Francisco based non-governmental organization that’s been advancing sustainable energy via policy and market-based innovations since 1997.

The first step? CRS is building a set of rules that meet the highest environmental standards and ensure that when customers buy green fuel, such as RNG, they can verify its lower carbon intensity, said Rachael Terada, CRS’ director of technical projects, in a recent webinar. 

Now in its first draft, CRS’ Green-e certified fuel certificate standard is focusing initially on RNG, already being produced and sold on a small scale across North America. The standard can be extended to other renewable fuels in time. (Watch out for more news in this space at CRS’ Renewable Energy Markets 2020, convening online Sept. 21-24.)

Covering the U.S. and Canada, CRS’s Green-e certification program will include rules for registries such that each dekatherm (equal to 1 million British thermal units) is unique and cannot be double-counted, Terada said.

There’s already demand from industry to buy more RNG, said Benjamin Gerber, chief executive of Minneapolis-based M-RETS (formerly Midwest Renewable Energy Tracking System), which is working to develop a registry to track RNG certificates. 

“Having clear standards for renewable thermal products along with robust trading platforms will help drive greenhouse gas reductions,” Collison said. “We know that there’s a growing corporate need for these solutions.”

Thermal energy, in the long run

CRS’ Green-e initiative has the potential to accelerate investment in renewable fuels, and thereby open up ways to decarbonize industrial energy markets.

Before then, companies can take some basic first steps, such as auditing their thermal energy use. “A lot of organizations simply haven’t done the work to understand how they’re heating and cooling their operations,” said Meredith Annex, who heads BloombergNEF’s heating decarbonization research team.

The urgency is growing. As industrialization accelerates in China, India and other emerging markets, global demand for industrial heat has grown by 50 percent since 2000, estimates BloombergNEF, and without lower carbon options, will continue to rise. 

Without a fix, global climate goals may not be achievable. “Decarbonizing industrial heat production will be essential to meeting the Paris Agreement goals,” notes David Sandalow, a former Obama administration official and lead author of ICEP’s roadmap to decarbonize industrial heat. 

Published 2020-08-13 https://www.greenbiz.com/article/carbon-challenge-bigger-cars-aviation-and-shipping-combined

T Brand Studio

How T Brand Studio Created a Culture of Content Innovation | IBM Industries Blog

When The New York Times first debuted T Brand Studio, its branded content unit, in 2014, branded content didn’t exactly have the best reputation in the industry. Other publishers generating branded content at the time had a tendency to confuse readers by failing to clearly differentiate between content from the newsroom and content from advertisers. Some would further muddy the waters by using newsroom editors and writers to create that content.

Newsroom leadership was initially “very anxious” about the new unit, said T Brand Vice President and Executive Editorial Director Adam Aston. But the need to create a new revenue stream in the organization was clear. The Times had to move from a print sales-based ad model to a digital-first model, and they had to get it right.

“We were watching our print advertising on a linear straight path down, which is where most publishers up to that point were getting most of their revenue and profit. That undermined the economics of subsidizing a news operation. And if you’re cutting back on getting news it’s a vicious cycle. For many of our peers it was a death cycle,” Aston said.

The studio started small, with just a handful of employees producing content hosted on the New York Times website. But it soon proved its mettle with the release of “Women Inmates: Why The Male Model Doesn’t Work,” a beautiful interactive piece for Netflix to promote the second season of “Orange Is the New Black.” This, clearly, was not branded content as usual.Women in Prison, Part 1 | Presented by Netflix

Four years later, T Brand Studio has grown 25-fold, employing more than 100 people across offices in New York, London, Paris and Hong Kong. In 2016, it acquired HelloSociety, an influencer marketing agency, and FakeLove, a Brooklyn-based experiential agency. (IBM’s “Outthink Hidden” campaign was T Brand’s first project with the agency.)

And it has expanded beyond producing native branded content to providing a whole suite of creative services for companies on their own platforms. T Brand Studio is not simply an in-house creative unit, it’s an agency—and it’s successful, growing both production and media revenue by double digits every year.

If you’re looking for a study in how to disrupt your own organization, look no further than T Brand Studio.

“Even when sitting on an incredible foundation of writing, reputation, and loyal customers, change isn’t easy,” Aston said. “The Studio’s success is part of a much larger digital transformation across the Times’ newsroom and business operations that’s accelerated in the past five years.”

A crucial ingredient in T Brand’s success has been its mix of personnel. While similar content organizations essentially hired the usual cast of characters one might find at a creative agency, Aston said, T Brand looked for content makers who were “a little bit different than your standard marketing copywriter creative type.” In hiring, he said, the intent was to “borrow the best of the Times journalism and fuse it with the kind of goals brands would be pursuing.”

“That’s a rule of thumb for all business—you’ve got to master the best of disciplines and bring them together in ways that haven’t been done before. Getting the chemistry right can be hard and getting the casting right can take time,” Aston said.

Another crucial differentiator for T Brand has been its use of new technology, including VR, AR and 360 video. But while the studio has been an early adopter—and in some cases, a first adopter—of those technologies at the Times, Aston said it’s just as important to know when not to use a new technology as it is to know when to use it. VR, AR, and 360 video are incredible storytelling tools, he said, but they’re not right for every project.

“You don’t want to add gratuitous technology to something just because it’s neat,” Aston said.

Once a source of anxiety within its organization, T Brand is now a source of inspiration as it drives innovation within the Times while contributing to a viable new business model. As T Brand gears up to launch its 400th paid post this quarter, it’s intent on carrying that spirit of innovation into the future.

“The more we experiment and the more it’s successful, the more comfortable the Times has gotten at experimenting,” Aston said. “The organization is more confident knowing, ‘Hey you can try this. It may be complicated, it may be hard, it might not always be a home run, but you have to experiment,’” Aston said.

See the original post here: https://www.ibm.com/blogs/industries/t-brand-studio-created-culture-reinvention/