Warren Buffett’s coal problem

Warren Buffett

Warren Buffett

Last winter, I traveled to southeastern Montana (brr!) to report on a battle over a coal mine being proposed by Arch Coal, America’s second-biggest coal company, and a coal-carrying railroad that’s needed to transport the coal from the mine to coal-burning power plants, either in the U.S. or in Asia. The railroad, called the Tongue River Railroad, is owned by Arch Coal, by the BNSF Railway, which is a unit of Warren Buffett’s Berkshire Hathaway and by the candy billionaire Forrest Mars Jr.

It’s a fascinating story, for a bunch of reasons. The coal mine and the railroad are interdependent; both will be built, or neither will be. They need the approval of state and federal regulators. And opposing them are an unlikely coalition of Montana cattle ranchers, members of the northern Cheyenne tribe, a small Amish farming community that recently moved to to the state in search of peace and quiet, and some very determined environmental activists from the Northern Plains Resource Council, the National Wildlife Federation and the Sierra Club.

My story was as just published in the May/June issue of by Sierra, the magazine of the Sierra Club, under the headline, Warren Buffett’s Coal Problem. Like the Sierra Club, I think this coal mine is a bad idea–a very bad idea–and that’s one reason why I wanted  to write the story. [click to continue...]

2012′s green business heroes

Bill McKibben does the math

Bill McKibben does the math

Some say, and with reason, that 2012 was the best year ever. Never in the history of the world has there been less hunger, less disease and more prosperity. Of course there’s plenty to worry about–the fiscal cliff, gun violence, chaos in Syria and the Congo–as always there will be. But, to paraphrase Martin Luther King, the long arc of history bends towards a more just and sustainable world.

In the little corner of the world that occupies much of my attention–the places where business and sustainability intersect–it has not been a good year. Global greenhouse gas emissions continue to rise. We’re burning more coal, oil and gas than ever. Policy is stuck, in the US and internationally. This will be the hottest year on record in the US, and still people don’t accept the science of climate change. Go figure.

That said, in this final blogpost of 2012,  I’d like to salute some people (again, mostly from the world of business and sustainability) who fought the good fight during the year  just past. Some are business people, others are politicians, activists and even journalists, but they are all doing what they can to bend the arc of history. They’re my green business heroes for 2012. [click to continue...]

Do the math: Bill McKibben takes on Big Oil

Most Americans own cars. Most cars run on gasoline.

Can we be persuaded to think of the oil industry as the enemy? What about the coal industry, which supplies more than a third of the electricity we use?

“Movements need enemies,” declares Bill McKibben, the author, activist and leader of grassroots group 350.org. So last week, with allies including the Sierra Club and Greenpeace, McKibben and 350.org began a 20-city, month-long coast-to-coast tour called Do the Math that targets the fossil fuel industry. It’s designed to invigorate the climate movement by calling upon colleges, foundations and governments to sell their stock in coal, oil and natural gas companies.

The campaign is modeled after the 1980s South Africa divestment campaign, which helped pressure the government to enter negotiations that eventually led to the end of apartheid. To underscore that point, South African Bishop Desmond Tutu will make appearances, on video, during the tour.

It’s time to focus on the polluters, McKibben said last week by phone from Seattle, where the tour kicked off. “We’ve spent so much time focusing on our elected officials, and so little time focusing on the players behind them,” he said.

“The fossil fuel industry is now the tobacco industry,” he told me. “They are now a rogue force in our society.”

Not surprisingly, the oil companies aren’t happy about any of this. Rayola Dougher, a senior economic advisor at the American Petroleum Institute, told me that McKibben’s attacks on U.S. oil companies, if they lead to higher carbon taxes or caps, would raise energy prices and risk American jobs, while doing little or nothing to curb greenhouse gas emissions. “Demonizing an industry is not a good starting point for dealing with a big and complex issue like this one,” she said. [click to continue...]

Sierra Club’s Brune: We’re stopping coal

Michael Brune

“We are starting to create the ecological U-turn that David Brower talked about, decades ago. On coal, it’s dramatic. We’ve seen a halt to the coal rush.”

“Primarily because of regulations (from)  the Obama administration, we can now project a future where our oil consumption will decline.”

“It’s not sufficient to address the problem, but it’s a positive trend.”

So says Michael Brune, executive director of the Sierra Club. [David Brower, who was made famous in John McPhee's Encounters with the Archdruid, was one of his predecessors.] Others fret that the environmental movement is on the defensive these days. Mike, an optimistic, sees progress.

Indeed, Mike argues that the effort by Republicans in the House to roll back a slew of environmental regulations as a sign that the enviros are winning.

“Republicans in Congress and their corporate benefactors are worried about the threat to the status quo in the energy industry,” he says. “That’s the reason this is happening. We’re making progress.” [click to continue...]

Mike Bloomberg takes on coal

Sierra Club's Mike Brune, Rep. Jim Moran and Michael Bloomberg

In a gutsy move, New York Mayor Michael Bloomberg today announced that his Bloomberg Philanthropies has pledged $50 million to the Sierra Club to fight coal plants.

He didn’t do it quietly, either. Bloomberg chartered a boat to take about 100 Sierra Club activists, friends, TV cameras and reporters out onto the Potomac River for a press conference in front of an Alexandria, Va., coal plant that environmentalist have been try shut, so far without success. Fittingly, he came to D.C. on a day when the heat was sweltering and authorities declared a “Code Orange,” an alert meaning that the air is too dirty for kids to play outside.

“The burning of coal does terrible harm to mothers, children and families across the country,” Bloomberg declared, calling coal a “self-inflicted public health risk.”

Bloomberg and Mike Brune, the Sierra Club’s executive director, set an ambitious goal for the group’s “Beyond Coal” campaign: They want to shut down about one-third of the nation’s coal plants and replace them with clean energy as quickly as possible.

“If we succeed, and I believe we will,” Bloomberg said, “we will save millions of lives and we will help millions of children avoid asthma and its debilitating effects.”

For those who care about climate change, air pollution and public health, this is the best news out of Washington, D.C., in some time. It comes in stark contrast to the goings-on on Capitol Hill, where House Republicans are doing everything they can to tame the EPA. [click to continue...]

The Gulf disaster, and the future of coal

If you like the BP oil spill…

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you’re going to love carbon capture and storage.

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Carbon capture and storage, or CCS, is the technology that offers the best hope of generating electricity from coal in a way that doesn’t further heat up the planet. When people talk about “clean coal” – a phrase that deserves quotes because coal is never entirely clean — they’re often talking about CCS.

CCS technologies, which can be applied before or after the coal is burned, are designed to capture carbon dioxide, transport it to a secure location, typically deep under the ground, and then sequester it safely for a long, long time, with little or no risk that it will ever escape.

Get the connection? Just as the oil industry assures that they can safely drill for oil a mile under the ocean, the coal companies and utility industry are very confident that can bury CO2 deep under the ground, with little or no risk that it will ever escape.

Do you want to take them at their word?

I asked Mike Brune, the executive director of the Sierra Club and a leading anti-coal activist, about BP and CCS. He replied by email:

The BP deep water oil disaster is an example of how seeking out new and riskier ways of feeding our addiction to fossil fuels leads to new and more catastrophic problems….If there’s a lesson in this, it’s that relying on unproven and complicated methods to sustain our dependence on oil and coal has disastrous consequences.

You may be surprised to learn that CCS isn’t favored just by the coal guys or the utilities. Some environmental groups like the technology, too. David Hawkins, the estimable head of the climate program at the Natural Resources Defense Council, which strongly opposes conventional coal plants, says it’s essential that we figure out CCS. Here’s his very thoughtful argument on behalf of CCS, from NRDC’s Switchboard blog:

As a community, we have achieved great success in blocking new coal plants one by one but we need a comprehensive coal policy as well.  Showing CCS is an available tool helps us to convince policymakers that they should oppose construction of coal plants that do not capture their carbon.  Is such a policy as attractive to many in our community as a law that says no more coal plants, period? No.  But we need to ask ourselves — what are the realistic odds of getting Congress or any significant coal-using state to adopt a “no new coal, period” policy in the next handful of years?   I have fought the coal industry for 40 years and in my judgment the odds of a total ban on new coal plants are not large.

The Obama administration is also an enthusiastic supporter of CCS on a grand scale, in the form of a controversial, costly project known as Future Gen. Just a week ago, even as oil was spewing into the gulf, Obama’s DOE  announced that it would spend up to $612 million in recovery act money (to be matched by $368 million in private funding) to demonstrate large-scale CCS from industrial sources (not power plants, although the technology is similar).

One project will store CO2 in a “deep saline formation,” as part of a corn ethanol project. Two others will use the CO2 in “enhanced oil recovery” in the Gulf, believe it or not. Such well-connected companies as Archer Daniels Midland and GE are among the beneficiaries. From the DOE announcement:

·         Leucadia Energy, LLC (Lake Charles, LA)—Leucadia and Denbury Onshore LLC will capture and sequester 4.5 million tons of CO2 per year from a new methanol plant in Lake Charles, LA. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield, starting in April 2014. The project team includes Leucadia Energy, Denbury, General Electric, Haldor Topsoe, Black & Veatch, Turner Industries, and the University of Texas Bureau of Economic Geology.  (DOE share: $260 million)

·         Air Products & Chemicals, Inc. (Port Arthur, TX)—Air Products will partner with Denbury Onshore LLC to capture and sequester one million tons of CO2 per year from existing steam-methane reformers in Port Arthur, Texas, starting in November 2012. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield. The project team includes Air Products & Chemicals, Denbury Onshore LLC, the University of Texas Bureau of Economic Geology, and Valero Energy Corporation.  (DOE share: $253 million)

·         Archer Daniels Midland Corporation (Decatur, Ill.)—The project will capture and sequester one million tons of CO2 per year from an existing ethanol plant in Illinois, starting in August 2012. The CO2 will be sequestered in the Mt. Simon Sandstone, a well-characterized saline reservoir located about one mile from the plant. The project team includes Archer Daniels Midland, Schlumberger Carbon Services, and the Illinois State Geological Survey. (DOE share: $99 million)

Unfortunately, these subsidies don’t appear to be linked to actual tons of carbon sequestered. They support demonstration projects. Still to be determined are such issues as who “owns” the store CO2, who will be responsible, financially, if it escapes, etc.  To be fair, CO2 has been stored underground for years as part of enhanced oil recovery, but we’ve also been doing deepwater drilling for a long time.

Interestingly, the connection between the BP disaster and CCS was suggested to me,  not by an environmentalist, but by a very sophisticated investor in clean technology. This investor—who asked not to be identified, because he works closely with big companies like GE and with the Obama team—has placed bets on solar power, energy storage and efficiency, so he’s no fan of coal, but he’s also driven by a personal passion around the climate crisis.

Since I can’t quote the investor, I’ll give the last work to the Sierra Club’s Mike Brune:

Relying on carbon capture and storage is like a heroin addict finding a new vein to shoot. It’s not a solution, it’s simply a new way to perpetuate the problem. The Sierra Club has no objection to using private, corporate resources to fund CCS research to see if CCS can ever be done safely, cheaply, and without requiring massive amounts of energy. In the meantime, we shouldn’t be seeking out more expensive and dangerous ways to feed our dependence on oil or coal. Instead, we should be putting our innovation and resources to work in the service of clean energy that will create jobs and keep our coasts, wild places, and communities healthy and intact.

Photo links/credits: duck (Audubon Society of Florida)  coal plant (wikimedia)

PNC Bank: Helping to destroy mountains

2825430279_a3aa7cd059_oPNC, a big regional bank (annual revenues: $16 billion) based in Pittsburgh, has become the bank that environmental activists love to hate because of its support for mountaintop removal mining.

The bank was identified as the worst of the worst in Grading the Banks: A Mountaintop Removal Scorecard, a new ranking compiled by the Rainforest Action Network and the Sierra Club.

According to the report, the bank has made loans to six companies engaged in mountaintop removal mining: Massey Energy, Patriot Coal, Alpha Natural Resources, International Coal Group, Arch Coal and Consol Energy.

PNC, by the way, was a recipient of TARP funds (since paid back) so these loans were, at least in a small way, your tax dollars at work.

I emailed PNC to ask for their comment and got a prompt reply from Fred Solomon, vice president, corporate communications:

PNC’s practice is not to comment on analyst or other research reports, and in general, our credit policies are proprietary information.

Interesting. We’ll see how long that no-comment approach lasts, if any of the enviro groups decide to bring pressure directly on PNC, a major consumer bank in the mid-Atlantic region. Transparency, evidently, is not for now part of the PNC culture.

I’m returning to the topic of banks and coal after just a couple of weeks (See J.P. Morgan Chase’s Coal Problem) because of a couple of significant new developments. The first is the RAN/Sierra club report card–a tactic that, in the argot of the corporate campaigns, is known as “rank ‘em and spank ‘em”. The second is a new policy from by JP Morgan Chase, released just before the bank’s annual meeting, which was held today. [click to continue...]

JP Morgan Chase’s coal problem

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Activists target Chase

Do we really want to keep blasting the tops off mountains, destroying forests and dumping the rubble into waterways, in order to extract and burn coal that is messing up the climate?

For now, the answer to that question is yes, despite vigorous efforts by environmentalists and activists in Appalachia to stop mountaintop removal mining. Some are behind a bill in Congress sponsored by Lamar Alexander, a Republican, to end the practice. Others are calling on big banks–in particular JP Morgan Chase–to stop financing mountaintop mining.

The pressure on JP Morgan Chase is coming from activist groups including the Sierra Club, the Rainforest Action Network and an Appalachian group called Climate Ground Zero which calls itself an “ongoing campaign of nonviolent civil disobedience in southern West Virginia to address mountaintop removal coal mining.” All are stepping up their efforts in advance of JP Morgan Chase’s annual shareholder meeting on May 18. They plan to release a list of the worst funders of MTR mining before then, and chances are Chase will be at or near the top.

What’s wrong with mountaintop removal mining? Lots. Here’s an overview from a [click to continue...]

Your parents were wrong

The Sierra Club and American Electric Power, the nation’s largest coal-burning utility, don’t agree on much, but there is this:

Money does grow on trees.

Along with other big environmental groups and such businesses as Duke Energy and El Paso Corp., they are part of a coalition that wants to use markets to protect the world’s forests and curb climate change.

Jeff Horowitz

Jeff Horowitz

The coalition—called Avoided Deforestation Partners, a name that will never win a branding contest—is the brainchild of Jeff Horowitz, a 58-year-old architect and newcomer to the environmental movement who has quietly become an influential player as climate change legislation inches its way through a divided Congress.

Protecting forests “is our single most important strategy, with respect to solving the climate crisis,” Horowitz says. “If we don’t tackle forestry immediately, we can’t buy enough time to get at the technological advances we need and scale them.”

I met Jeff in December at the UN climate talks in Copenhagen, and visited him last week at his office in a lovely, hilly neighborhood of Berkeley. A mechanism to protect forests by steering millions of dollars from the developed world to poor countries, known as REDD (Reducing Emissions from Deforestation and Forest Degradation), was endorsed by governments in Copenhagen, so Horowitz felt good about the climate talks. “As far as we’re concerned, Copenhagen was a tremendous victory,” he told me.

Now he wants to make sure that forestry offsets are part of a U.S. climate bill. That will enable regulated polluters in the U.S. to offset their carbon emissions by paying to protect forests elsewhere. Protecting forests is a cheaper and quicker way to curb emissions than by switching from coal or natural gas to low-carbon energy sources like nuclear, wind or solar power. [click to continue...]

COP15: Hopehagen–or Flopenhagen?

cop15_logo_b_mSo the verdict is in on the UN climate negotiations that just wrapped in Copenhagen and it’s all but unanimous:

Carl Pope, Sierra Club: The world’s nations have concluded a historic–if incomplete–agreement to begin tackling global warming.  Tonight’s announcement is but a first step and much work remains to be done.

Frances Beinecke, Natural Resources Defense Council: We have taken a vital first step toward curbing climate change for the sake of our planet, our country and our children…. There’s still more work to be done.

Fred Krupp, Environmental Defense Fund: A lot of hard work remains, but a lot of hard work is finished. The new positive steps taken here…president the U.S Senate and President Obama with a n historic opportunity.

Jonathan Lash, World Resources Institute: “Much more is needed, but today marks a foundation for a global effort to fight climate change.

Elliot Diringer, Pew Center for Global Climate Change: The Copenhagen Accord is an important step forward in the international climate effort…it lays the foundation for a system to hold countries accountable. …Much remains to be negotiated.

Hmm..  I thought the 1992 Earth Summit in Rio or the 1997 Kyoto Protocol or the 2007 Bali Roadmap were first steps. Shouldn’t we be taking the second, third or fourth steps by now? Or, if you prefer the foundation metaphor, shouldn’t we hurry up and build the house, before sea levels rise and storms intensify?

This isn’t to suggest that the 15,000 or 20,000 people who descended on Copenhagen during the last two weeks wasted their time. What is being called the Copenhagen Accord sets a target of limiting global warming to a maximum 2 degrees Celsius over pre-industrial times. It promises billions of dollars of aid for poor countries. It points the way towards a resolution of the fundamental conflict between U.S. and China over their so-called “common but differentiated” responsibilities to deal with global warming. That’s important–when it comes to climate and the global economy, the G-2 of the U.S. and China tower over the rest of the world. The leaders of Europe, Japan and other countries at the summit were largely left to rubber-stamp the deal, as The Washington Post reported.

The trouble is, none of this is good enough. Nations can now set own emission reduction targets. (Earlier versions of a political agreement being discussed in Copenhagen had called for specific reductions by 2020 and 2050.) It does not set a deadline for signing and binding treaty. (Until fairly recently, that deadline was supposed to be now.) Sure, aid is promised to poor countries, but aside from some token amounts, no one can be sure where the money will come from.

This isn’t a strong deal. It isn’t  a weak deal. It’s not a deal at all.

It’s a disaster waiting to happen.

Having said that, I understand the thinking behind the first-step-much-work-needs-to-be-done analysis coming from the inside the Beltway environmental groups. With the climate debate now shifting from Copenhagen to the U.S. Senate, they need to tread carefully. They can’t be overly critical of President Obama or undecided senators; they need to suggest that something real was accomplished in Copenhagen, to help persuade legislators that the U.S. can enact strong climate regulation without giving a competitive edge to China or India. Carl Pope of the Sierra Club made this argument explicitly, saying: “Now that the rest of the world–including countries like China and India–has made clear that it is willing to take action, the Senate must pass domestic legislation…”

But, again, the rest of the world has not committed to anything.

For a reality check on where we stand, let me refer you to the Climate Scoreboard put together by scientists at MIT, the Sustainability Institute and Ventana Partners, with the support of Nike, Citigroup, Fidelity Investments and others, which uses computer simulations to  model the long-term climate impacts of decisions being undertaken today. Please see the Climate Interactive blog for more detail.

Put simply, we’re not going where we need to go.

A big part of the problem here, as Bill McKibben has written eloquently, is that the world’s governments treat climate change as just another political problem–and it’s not.

Think about the health-care agreement reached this weekend. It’s the product of a series of compromises, some of them quite ugly, but it has the support of President Obama and Democrats in Congress because they believe it’s the best they can do, for now. Maybe they’ll come back to “reform” health care again in a few years. It’s a step, even a big step, in the right direction.

This is how politics usually works. It’s incremental. Even on great moral issues like civil rights, governments move piece by piece–first the military was desegregated, then came schools, then  voting rights, finally housing and employment bias were barred, if I remember my history right. This approach gives people time to get used to change. It’s the mindset behind first-step-much-work-needs-to-be-done.

But incrementalism isn’t going to do the job when it comes to climate change. Every day that goes by when we emit more global warming pollutants into the atmosphere than nature can take out, the job gets harder to do. So a small but inadequate step, even one in the right direction, can actually leave us worse off than before.

One metaphor that helped me understand this is a bathtub: The faucet (industry, transportation, deforestation) is pouring more water in to the tub than the drain (nature’s ability to absorb CO2) can take away, and there’s no way to make the drain any bigger. Just turning down the faucet a little doesn’t help; the water level in the tub can keep rising, albeit not as fast as before. The longer the faucet pours in more water than the drain can take away, the more radically we have to turn it down to stop the tub from overflowing.

McKibben explains it this way:

Physics has set an immutable bottom line on life as we know it on this planet. For two years now, we’ve been aware of just what that bottom line is: the NASA team headed by James Hansen gave it to us first. Any value for carbon dioxide (CO2) in the atmosphere greater than 350 parts per million is not compatible “with the planet on which civilization developed and to which life on earth is adapted.”  That bottom line won’t change: above 350 and, sooner or later, the ice caps melt, sea levels rise, hydrological cycles are thrown off kilter, and so on.

And here’s the thing: physics doesn’t just impose a bottom line, it imposes a time limit. This is like no other challenge we face because every year we don’t deal with it, it gets much, much worse, and then, at a certain point, it becomes insoluble—because, for instance, thawing permafrost in the Arctic releases so much methane into the atmosphere that we’re never able to get back into the safe zone. Even if, at that point, the U.S. Congress and the Chinese Communist Party’s Central Committee were to ban all cars and power plants, it would be too late.

Oh, and the current level of CO2 in the atmosphere is already at 390 parts per million, even as the amount of methane in the atmosphere has been spiking in the last two years. In other words, we’re over the edge already.  We’re no longer capable of “preventing” global warming, only (maybe) preventing it on such a large scale that it takes down all our civilizations.

There’s the argument for Flopenhagen.

As for Hopenhagen, well, I saw a lot of things to get excited about during my week in Copenhagen.

Denmark itself, for one: The nation gets 20% of its energy from wind, it’s rolling out a national system for charging all-electric cars and roughly 55% of the people of Copenhagen ride a bike every day, most to go to work. You won’t be surprised to hear that they are thinner as a group than those of us in the U.S.

Speaking of wind, Tulsi Tanti, the founder of Suzlon Energy, told me that China is the world’s biggest and fastest growing market for win energy. His company is manufacturing turbines in China, and he says the government there is committed in a serious way to clean energy — even if it doesn’t want to be held to absolute limits on emissions.

Finally, the kids. There were thousands of them in Copenhagen. They are committed to organizing to stop climate change, they are smart, they are idealistic, they are not pragmatic and they are not fans of the first-step-much-work-needs-to-done approach. For more, check out 350.org or Avaaz or the Youth Climate Movement.

You know how people say we need to save the earth for our kids? I’m starting to think that it’s the other way round, that they are going to have to save it for us.

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