the colours that are spring

PHOTO POST

The calendar says spring started weeks ago – and there has been a quiet explosion of new colour. As modelled by our migratory birds, the season’s first flashy hues run to black, white, and the whole gamut of earth tones.

The marsh, of course, hasn’t warmed enough to start sending up new vegetation.

Ripple Painting 17 (click images for larger views)

But the restricted colour palette works beautifully for the secretive diving machine known as a Pied-Billed Grebe.

Pied-Billed Grebe

The Hooded Merganser uses similar colours to make a bolder statement.

Hooded Merganser

And the female of the so-called “Red-Wing Blackbird” can achieve either perfect camouflage or stand-out beauty with this pattern of browns and golds. Who needs red or black?

Gold-Winged Brownbird

Unlike most of the birds, the mammals in the marsh don’t migrate and most of them don’t change colours with the season. But they are getting out and about much more since the ice and snow has gone.

The muskrat and the beaver patrol the same banks at the junction of Bowmanville and Soper Creeks, and they wear the same rich colours. Do they tease each other, when we’re not listening, about their opposite choices in tail fashion? “Hey Beave, you must get strong muscles lugging around that massive rudder.” “I’ve been thinking, Rat, that your delicate little butt-rope must be great for doing a warning slap that won’t disturb anybody’s sleep.”

Soper Creek Muskrat

Bowmanville Creek Beaver

No doubt the beaver is as eager as the rest of us to see fresh green branches emerging from the drab mud. For the Eastern Phoebe, though, the creek banks are the colour of home – home being nests of mud and dried grass hidden near the edges of woods.

Eastern Phoebe

The Eastern Phoebe is one of the earliest returning migrants, along with the more numerous Red-Wings.

Watching Water & Sky

Tone Poem

The even hardier Canada Geese have waited here all winter and many are now sitting on nests in the marsh – when they aren’t making spectacular landings. (Never mind a few missing tail feathers.)

Landing Gear

Whether it’s touchdowns or liftoffs, the marsh is full of excitement.

Exit Left

The Common Mergansers, above, add a rare dash of green to this early-spring pallette. Likewise, in the right sunlight the otherwise black-and-white Bufflehead flashes an iridescent headdress with shades of maroon, blue and green.

Black-and-White in Colour

And if you must see green to feel that it’s spring, the Mallard drake says “Look no further”.

The Green Starts Here


Top photo: Common Mergansers in Misdirection (larger view)

 

Pulling the plug on fossil fuel production subsidies

Also published at Resilience.org

How long would the fossil fuel economy last if we took it off life support?

Or to state the question more narrowly and less provocatively, what would happen if we removed existing subsidies to fossil fuel production?

Some fossil fuel producers are still highly profitable even without subsidies, of course. But a growing body of research shows that many new petroleum-extraction projects are economically marginal at best.

Since the global economy is addicted to energy-fueled growth, even a modest drop in fossil fuel supply – for example, the impact on global oil supplies if the US fracking industry were to crash – would have major consequences for the current economic order.

On the other hand, climate justice demands a rapid overall reduction to fossil fuel consumption, and from that standpoint subsidies aimed at maintaining current fossil fuel supply levels are counterproductive, to say the least.

As a 2015 review of subsidies put it:

“G20 country governments are providing $444 billion a year in subsidies for the production of fossil fuels. Their continued support for fossil fuel production marries bad economics with potentially disastrous consequences for the climate.” 1

This essay will consider the issue of fossil-fuel production subsidies from several angles:

  • Subsidies are becoming more important to fossil fuel producers as producers shift to unconventional oil production.
  • Many countries, including G20 countries, have paid lip service to the need to cut fossil fuel subsidies – but action has not followed.
  • Until recently most climate change mitigation policy has been focused on reducing demand, but a strong focus on reducing supply could be an important strategy for Green New Deal campaigners.

Ending subsidies to producers can play a key role in taking the fossil fuel economy off life support – or we can wait for the planet to take our civilization off life support.

Producer subsidies and the bottom line

A 2014 paper from the Oxford Centre for the Analysis of Resource Rich Economies takes a broad look at subsidization trends in many countries and over several decades. In “Into the Mire”2, Radoslav Stefanski aims to get around the problem of scarce or inconsistent data by, in his words, “a method of so-called revealed preference to back out subsidies.”

Stefanski does not focus specifically on subsidies to producers. Instead, he is concerned with inferring an overall net subsidy rate, which is the difference between subsidies aimed at either fossil fuel producers and consumers, and the taxes levied on fossil fuels at the production and consumption end.

He finds that “between 1980 and 2000 the world spent – on average – 268 billion USD (measured in 1990 PPP terms) a year on implicit fossil fuel subsidies.” Starting from the late 1990s, however – when it should have been clear that it was globally essential to begin the transition away from fossil-fuel dependence – the rate of subsidization grew rapidly in several regions.

In particular, Stefanski finds, “the vast majority of the increase comes from just two countries: China and the US.”

In North America, he says “until the 1990s the policy was fairly neutral with a slight tendency towards subsidization. Subsequently however, fossil fuel subsidies exploded and the region became the second highest subsidizing region after East Asia.”

Not only did the global price of oil see a rapid rise after 2000, but North American production saw a huge growth in production through two unconventional methods: hydraulic fracturing of oil-bearing shale, and mining of tar sands. These oil resources had been known for decades, but getting the oil out had always been too expensive for significant production.

A 2017 paper in Nature Energy shows how crucial subsidies have been in making such production increases possible.

Entitled “Effect of subsidies to fossil fuel companies on United States crude oil production”, the paper quantifies the importance of state and federal subsidies for new oil extraction projects.

The authors found that at then-current prices of about US$50 per barrel,

“tax preferences and other subsidies push nearly half of new, yet-to-be-developed oil investments into profitability, potentially increasing US oil production by 17 billion barrels over the next few decades.3

The projects that would only be profitable if current subsidies continue include roughly half of those in the largest shale oil areas, and most of the deep-sea sites in the Gulf of Mexico – all areas which have been critical in the growth of a reputed new energy superpower often referred to triumphantly as “Saudi America”.

From Erickson et al, “Effect of subsidies to fossil fuel companies on United States crude oil production”, 2017.

The authors also estimate the greenhouse gas emissions that will result from continuing these subsidies to otherwise-failing projects. In their tally, the additional carbon emissions coming from these projects would amount to 20% of the US carbon budget between now and 2050, given the widely accepted need to keep global warming to a limit of 2°C. In other words, the additional carbon emissions from US oil due to producer subsidies is far from trivial.

Extending this theme to other jurisdictions with high-cost oil – think Canada, for example – the authors of Empty Promises note “the highest cost fields that benefit most from subsidisation often have higher carbon intensity per unit of fuel produced.”4,5

The Nature Energy study is based on an oil price of US$50 per barrel, and says that subsidies may not be so important for profitability at substantially higher prices.

Another recent look at the fracking boom, however, reveals that the US fracking boom – particularly fracking for crude oil as opposed to natural gas – has been financially marginal even when prices hovered near $100 per barrel.

Bethany McLean’s book Saudi America6 is a breezy look at the US fracking industry from its origins up to 2018. Her focus is mostly financial: the profitability (or not) of the fracking industry as a whole, for individual companies, and for the financial institutions which have backed it. Her major conclusion is “The biggest reason to doubt the most breathless predictions  about America’s future as an oil and gas colossus has more to do with Wall Street than with geopolitics or geology. The fracking of oil, in particular, rests on a financial foundation that is far less secure than most people realize.” (Saudi America, page 17)

Citing the work of investment analyst David Einhorn, she writes

“Einhorn found that from 2006 to 2014, the fracking firms had spent $80 billion more than they had received from selling oil and gas. Even when oil was at $100 a barrel, none of them generated excess cash flow—in fact, in 2014, when oil was at $100 for part of the year, the group burned through $20 billion.” (Saudi America, page 54-55)

It seems sensible to think that if firms can stay solvent when their product sells for $50 per barrel, surely they must make huge profits at $100 per barrel. But it’s not that simple, McLean explains, because of the non-constant pricing of the many services that go into fracking a well.

“Service costs are cyclical, meaning that as the price of oil rises and demand for services increases, the costs rise too. As the price of oil falls and demand dwindles, service companies slash to the bone in an effort to retain what meager business there is.” (Saudi America, page 90)

In the long run, clearly, the fracking industry is not financially sustainable unless each of the essential services that make up the industry are financially sustainable. That must include, of course, the financial services that make this capital-intensive business possible.

“If it weren’t for historically low interest rates, it’s not clear there would even have been a fracking boom,” McLean writes, adding that “The fracking boom has been fueled mostly by overheated investment capital, not by cash flow.”7

These low interest rates represent opportunity to cash-strapped drillers, and they represent a huge challenge for many financial interests:

“low interest rates haven’t just meant lower borrowing costs for debt-laden companies. The lack of return elsewhere also led pension funds, which need to be able to pay retirees, to invest massive amounts of money with hedge funds that invest in high yield debt, like that of energy firms, and with private equity firms—which, in turn, shoveled money into shale companies, because in a world devoid of growth, shale at least was growing.” (Saudi America, page 91)

But if the industry as a whole is cash-flow negative, then it can’t end well for either drillers or investors, and the whole enterprise may only be able to stay afloat – even in the short term – due to producer subsidies.

Supply and demand

Many regulatory and fiscal policies designed to reduce carbon emissions have focused on reducing demand. The excellent and wide-ranging book Designing Climate Solutions by Hal Harvey et al. (reviewed here) is almost exclusively devoted to measures that will reduce fossil fuel demand – though the authors state in passing that it is important to eliminate all fossil fuel subsidies.

The authors of the Nature Energy paper on US producer subsidies note that

“How subsidies to consumers affect energy decision-making is relatively well studied, in part because these subsidies have comparatively clear impacts on price …. The impact of subsidies to fossil fuel producers on decision-making is much less well understood ….” 8

Nevertheless there has been a strong trend in climate activism to stop the expansion of fossil fuels on the supply side – think of the fossil fuel divestment movement and the movement to prevent the construction of new pipelines.

A 2018 paper in the journal Climatic Change says that policymakers too are taking another look at the importance of supply-side measures: “A key insight driving these new approaches is that the political and economic interests and institutions that underpin fossil fuel production help to perpetuate fossil fuel use and even to increase it.”9

The issue of “lock-in” is an obvious reason to stop fossil fuel production subsidies – and an obvious reason that large fossil fuel interests, including associated lending agencies and governments, work behind the scenes to retain such subsidies.

Producer subsidies create perverse incentives that will tend to maintain the market position of otherwise uneconomic fossil fuel sources. Subsidies help keep frackers alive and producing rather than filing for bankruptcy. Subsidies help finance the huge upfront costs of bringing new tar sands extraction projects on line, and then with the “sunk costs” already invested these projects are incentivized to keep pumping out oil even when they are selling it at a loss. Subsidy-enabled production can contribute to overproduction, lowering the costs of fossil fuels and making it more difficult for renewable energy technologies to compete. And subsidy-enabled production increases the “carbon entanglement” of financial services which are invested in such projects and thus have strong incentive to keep extraction going rather than leaving fossil fuel in the ground.

Carbon-entangled governments tend to be just as closely tied to big banks as they are to fossil fuel companies. Sadly, it comes as no surprise that in 2018 the G7 Fossil Fuels Subsidy Scorecard noted that “not a single G7 government has ended fiscal support or public finance to oil and gas production, with Canada providing the highest levels of support (per unit of GDP).”10

Fossil fuel producer subsidies and the Green New Deal

Major international climate change conferences have long agreed that fossil fuel subsidies must be phased out, ASAP, but little progress has been made.

The first step in getting out of a deep hole is to stop digging, and at this point in our climate crisis it seems crazy or criminal to keep digging the hole of fossil fuel lock-in by subsidizing new extraction projects.

Many major fossil fuel corporations have expressed their support for carbon taxes as a preferred method of addressing the climate change challenge. I am not aware, however, of such corporate leaders advocating the simpler and more obvious approach of removing all fossil fuel subsidies.

Perhaps this is because they know that carbon taxes almost always start out too small to make much difference, and that every attempt to raise them will stir intense opposition from lower- and middle-income consumers who feel the bite of such taxes most directly.

The costs of producer subsidies, on the other hand, are spread across the entire population, while the benefits are concentrated very effectively among fossil fuel corporations and their financial backers. And by boosting the supply of fossil fuels, especially oil, to a level that could not be maintained under “free market” requirements for profitability, these subsidies maintain the hope of continuous economic growth based on supposedly cheap energy.

The sudden popularity of “Green New Deal” ideas in several countries raises essential questions about political strategy. There is no single silver bullet, and a range of political and economic changes will need to be made. Though one major goal – eliminate most fossil fuel use by about 2030 and the rest by 2050 – is simple and clear, there are many means to move towards that goal, not all of them equally effective or equally feasible.

A swift elimination of producer subsidies, and a redirection of those funds to employment retraining and rehiring in renewable energy projects, strikes me as a potential political winner. Major fossil fuel interests, including big investment firms, can be counted on to oppose such a shift, of course – but they have shown themselves to be determined lobbyists for the preservation of the fossil fuel economy anyway.

Among the overwhelming majority of voters without big financial portfolios, the cessation of handouts to corporations strikes me as an easier sell than carbon taxes levied directly and regressively on consumers.


Photo at top: port of IJmuiden, Netherlands, September 2018.


Footnotes

1 Empty Promises: G20 subsidies to oil, gas and coal production, published by Overseas Development Institute and Oilchange International, 2015, page 11

2 “Into the Mire: A closer look at fossil fuel subsidies”, by Radoslav Stefanski, 2014.

3 Peter Erickson, Adrian Down, Michael Lazarus and Doug Koplow, “Effect of subsidies to fossil fuel companies on United States crude oil production”, Nature Energy 2, pages 891-898 (2017).

4 Empty Promises: G20 subsidies to oil, gas and coal production, published by Overseas Development Institute and Oilchange International, 2015, page 17

The same hurdles to unsubsidized profitability apparently apply outside of North America. See, for example, this article detailing how major fracking ventures in Argentina are likely to stall or fail due to declining subsidies: “IEEFA report: Argentina’s Vaca Muerta Patagonia fracking plan is financially risky, fiscally perilous”, March 21, 2019

 Saudi America: The Truth About Fracking and How It’s Changing the World, by Bethany McLean. Columbia Global Reports, 2018.

McLean’s reading echoes the analysis in the 2017 book Oil and the Western Economic Crisis, by Cambridge University economist Helen Thompson.

Peter Erickson, Adrian Down, Michael Lazarus and Doug Koplow, “Effect of subsidies to fossil fuel companies on United States crude oil production”, Nature Energy 2, pages 891-898 (2017).

Michael Lazarus and Harro van Asselt, “Fossil fuel supply and climate policy: exploring the road less taken,” Climatic Change, August 2018, page 1

10 G7 Fossil Fuels Subsidy Scorecard, Overseas Development Institute, Oilchange International, NRDC, IISD, June 2018, page 9

birds birds birds

Today’s post features just a few of the birds seen in the waters, on the shore, and in the treetops in recent weeks in our neighbourhood.

Dive (click images for larger views)

 

Angles

 

Swimming in green

 

Perched

 

Killdeer in dune grass

 

Rocky shore

 

Portrait

 

Night falls

 

Motion studies, or Thanks for all the fish

 

St Marys Underground Expansion: A whole lotta truckin goin on

St Marys mine – Article Index

Can the current Waverly Road/Highway 401 interchange handle a doubling of truck traffic to and from the St Marys Cement quarry?

Given that the Waterfront Trail shares the road in this section with the St Marys traffic plus the Highway 401 on/off traffic, can the Waterfront Trail be promoted as a safe and healthy recreational feature?

What mitigation measures will St Marys Cement propose to compensate for a large increase in heavy truck traffic which will affect commuters as well as recreational cyclists?

These are key questions raised by the Project Description for the Bowmanville Expansion Project.

A previous post (Special Delivery: Moving 4,000,000 Tonnes) provided rough estimates for the number of shiploads or truckloads of limestone aggregate the project would move each year.

The Project Description says that the aggregate will be moved “using existing road, rail and/or dock infrastructure”. But at the project’s Public Information Centre in Bowmanville on December 5, St Marys representative David Hanratty made clear that for the foreseeable future, the aggregate would go out by truck, not by ship or rail, primarily to customers on the east side of the Greater Toronto Area.

It is simply not cost-effective to load the aggregate onto ship, then load it again onto trucks enroute to construction projects, Hanratty said. Rail freight is now too expensive for a low-cost product like limestone aggregate, he added, in addition to the problem of needing to reload the material onto trucks for the “last mile” in any case.

So the 4,000,000 tonnes of limestone will all go out by truck. At 20 tonnes per truck, that would mean 200,000 truckloads per year, or 770 truckloads per day if the aggregate is hauled five days/week.

(Put another way, truck traffic in and out of St Marys is likely to more than double. While the current quarry extracts a similar amount of limestone as the underground expansion is projected to add, much of the current output is in the form of cement clinkers shipped out on the Capt. Henry Jackman. With a capacity of 30,000 tonnes, this ship can carry the equivalent of 1500 20-tonne truckloads each time it leaves port. But the aggregate shipments from the new underground mine will all go by truck.)

The timing of shipments to market will also affect traffic volume. If buyers are not prepared to stockpile aggregate through the winter, the hauling might be concentrated in the summer construction season – meaning the impact on the Waverly Road/Highway 401 interchange, and on the Waterfront Trail, could be especially heavy during summer.

The current Highway 401 on- and off-ramps in this location are far from ideal. On the south side, traffic coming off the eastbound 401 has to get past two stop signs before making it onto Waverly Road. The left turn onto Waverly Road will be more difficult when several hundred more trucks per day are heading north on Waverly.

Traffic getting off the eastbound 401 faces two stop signs before turning onto Waverly Road (red Xs), causing frequent back-ups along the off-ramp. Assuming most of the loads of aggregate from St Marys will go to the eastern GTA, the loaded trucks will travel north along Waverly Road (red arrow) to the 401 westbound ramp, making it more difficult for Bowmanville-bound traffic to turn onto Waverly Road from Energy Drive. The volume of traffic on the eastbound off-ramp will also be increased, due to empty aggregate trucks returning from GTA markets via the eastbound 401. (Image from Google Maps, December 13, 2016)

Perhaps this interchange can be re-engineered to handle the new traffic load. Is St Marys prepared to fund this reconstruction as part of its impact mitigation efforts?

As for the Waterfront Trail, the addition of several hundred more trucks per day to the section of shared Trail/roadway will make the Trail less attractive and less safe. Two changes might be made to mitigate this impact.

First, perhaps the Trail could be rerouted here to eliminate the sharing of congested roadway on Waverly Road and Energy Drive. Ironically, Google Maps currently shows an incorrect routing for the Waterfront Trail as shown below; could this route become reality in the future?

Although the Waterfront Trail is currently routed on Waverly Road and then along Energy Drive (as shown by the red arrows), Google Maps incorrectly shows a routing along the north edge of the St Marys property (the solid blue line). Could this route become reality in the future? (Image from maps.google.ca, December 13, 2016) click for larger view

Second, there is no safe and attractive route between the Waterfront Trail and most of the populated areas of Bowmanville. Cyclists from the north side of the 401 have two choices, both poor, for routes across the 401 to the Waterfront Trail (see Getting across the 401). One of these routes is Waverly Road, which will be more dangerous for cyclists if there is a major increase in truck traffic without an appropriate “complete streets” redesign.

Perhaps St Marys can mitigate the expansion project’s negative impact on the Waterfront Trail by funding a separate walking/cycling overpass or underpass at the 401. Such a routing would be a significant improvement to Bowmanville’s recreational trails, which currently offer no safe connection to the Waterfront Trail.

Top photo: Bumper-to-bumper traffic on off-ramp to Waverly Road from eastbound 401, December 13, 2016

Open-pit coal mine in south-east Saskatchewan.

Density of power

A photo feature to accompany the series Accounting for energy: thoughts on the work of Vaclav Smil.

  • 01 P1130243 pylon
  • 02 P1130254 insulators
  • 03 P1090142 zoom grid
  • 04 P1130319 Cameco
  • 05 P1130672 Pickering Nuclear Wind Turbine
  • 06 P1010480 wind farm
  • 07 Bakken flare
  • 08 Sask oil wells with flare
  • 09 P1060218 Line 9b
  • 10 three trucks
  • 11 Sask coal mine
  • 12 P1130299 st mary’s cement
  • 14 P1100260 Cresswell
  • 13 P1050815 Toronto Power Gen falls

Slabs of granite, and other bicycle cargo

Some people are sure they need a car for their shopping – a bike just won’t do. That’s probably true, if they go shopping for anything bigger than a sidewalk.

This video was uploaded in 2010, based on a project I completed the previous summer at my then-home in Port Hope. If I’d had a bigger budget, I surely would have hired a better narrator!