The De-Growth Economy and Lifestyles

Paper produced for Economic De-Growth for Ecological Sustainability and Social Equity, Paris, 18/19th April 2008 http://events.it-sudparis.eu/degrowthconference/en/themes/

Abstract

The transition to a de-growth economy cannot be effected in gradual incremental change and will be experienced by most people as a lifestyle transition from one life style "package" to another. Most of the time people manage their lives in largely stable routines in which they more or less hold in balance an age related job with a pattern of skills and abilities, a level of income (and debt), habitat and domestic arrangements including their diet, a state of health and disability, a network of emotional and instrumental relationships. All of these reflect and give rise to a corresponding mind-set of assumptions, aspirations, expectations and social and community values. Inside this interrelated complex structure there is an inertial weight which bestows on certain behaviours addictive features. For example the network of relationships and geographical habitat make it difficult to break consumption patterns that are shared by peers without risking damaged relationships - e.g. meal routines and rituals with close relations provide security in a changing world or again a routine weekend leisure journey may provide the binding features to a close relationship.

A transition to a de-growth economy caused by oil and gas peaks, responses to climate change and the credit crisis will create radical disjunctures and a break up of these routines for millions of people in a way that will be frightening and disorientating for many. There is a danger that groups will channel their anger at scapegoats - perhaps led by demagogic thugs with simple explanations for the crisis that blame vulnerable people and foreigners. Millions of single unsupported people will find it difficult to cope. Practical movements like that of the UK Transition Towns are needed to provide people with new models for their lifestyles in order to avoid a community health crisis. The Transition Towns are beginning to provide a social network in which people support each other to develop new skills to conserve resources and supplement their means of living close to their habitats. They help collectively develop alternative energy and resource-light lifestyle packages and community focused value systems. A movement like this will be needed to provide people with an alternative basis for self respect and dignity as more and more recognise the futility and destructiveness of living according to the values and goals of the debt burdened consumer society.

End of Abstract

"The great advantage of being in a rut is that when one is in a rut, one knows exactly where one is" Arnold Bennett - British novelist and playwright 1867-1931

Routines

It is sometimes by re-examining the most mundane and obvious, that which we take for granted, that we learn the most.

Most of the time most people live in routines which are the constants, the stability in their lives. It is very difficult not to - no individual and no society could function if all its members were constantly on the move, constantly changing jobs, constantly changing instrumental and work relationships. Although nomadic lifestyles and a range of agriculture and pastoral skills can make for great variety even they must happen in known locations. They must involve arrangements between people in conformity to routines imposed by the seasons and nature - the need to sow and to harvest at the same times of the year. Matching temporal rhythms are also necessary if people are to sustain relationships - to be in a relationship people must not only spend time together they must to a degree synchronise their emotional states and practical inclinations. Thus it is that to find their identity people must hold in balance a habitat with all its domestic arrangements and chores of eating, sleeping, toilet and hygiene with their work and income and their network of instrumental and emotional relationships. These are constituted as interrelated patterns - as a generalisation we cannot have a large habitat without a large income. The number and quality of our relationships will depend upon the size of our habitats. Our income will depend partly on our work and skills. Our work, skills and incomes will determine our relationships. These in turn will affect our state of health, our morale and aspirations. How these arrangements are managed together depends on our age, gender, state of health and disability. They also embedded in spatial, economic and cultural arrangements which will affect what kind of neighbourhood or settlement we live in, how it organises the supply of essential means of life, how far we must travel to work.

Lifestyles considered as "packages" and lifestyle transitions

Because the different elements in our lives have to be managed as a package - as interrelated elements which must be consistent with each other - the routines and the ordinary features of our lives can be thought of as having an inertial character. To be sure, even a routinised lifestyle will have some variety and novelty in each day, up to a point - however, beyond that point, adjusting one aspect of our lives to a greater extent will mean that we must adjust other elements in our lifestyle package. In turn this will is likely to bring with it a degree of uncertainty and unpredictability. To take an example - if we decide to move where we live then we will be faced with different financial circumstances and that will have a knock on effect on work, relationships and so on.

As is obvious periods of comprehensive lifestyle change are of different types. There are some changes which are inevitable age specific processes - the obvious cases being late adolescence and early adulthood when most people start living independently, move from education to a job (if they are lucky) with an independent income and set up their own adult sexual relationships. As they are doing this all at once it is a difficult and challenging time - but it is happening with all the others of their age group. At the other end of life there are the challenges associated with retirement. In between there are also typical lifestyle transitions triggered when children leave home, parents die, people evaluate their lives so far and perhaps have a mid life crisis, deciding if they really want to live as they have been doing for the rest of their lives. As should be clear there are situations where a life style shift is happening to all one's peers - for example when a firm goes bust and there is mass redundancy which affects an entire community and there is the rather different situation in which only one person, or a family, decides to launch out in a change of direction. There are situations too which are willed, which are entered into deliberately and those which are entered into because people are forced to change - as in the redundancy situation.

The risks of launching into the unknown

Now it is clear that all these situations share in common that they involve largely launching out into the unknown. As such all these situations involve risks. As the English author Arnold Bennett expressed it:

“Any change, even a change for the better, is always accompanied by drawbacks and discomforts.” Arnold Bennett

At its worst a change in life launched into with insufficient skills, resources and friends can go badly wrong. Indeed there are arguments that mental breakdowns sometimes have this character. The stresses, tedium and limitations of an existing lifestyle may become too much and a person decides to launch into new territory - risks leaving a job without a new one, risks changing where they are, leaving a relationship and giving up a secure habitat in the process. To others this seems like a crazy choice as they do not have the resources and skills and support to make the move - and indeed they fall in the process. Their emotional turmoil therefore becomes greater. This is described by the psychiatrist Anthony Storr in psychological terms

"Suppose that I become dissatisfied with my habitual self, or feel that there are areas of experience or self understanding which I cannot reach. One way of exploring these is to remove myself from present surroundings and see what emerges. This is not without its dangers. Any form of new organisation or integration within the mind has to be preceded by some degree of disorganisation. No one can tell, until he has experienced it, whether or not this necessary disruption of former pattern will be succeeded by something better". (Anthony Storr, "Solitude", HarperCollins 1994 page 35)

This is a very good description of how madness might arise in a lifestyle transition that goes wrong. Sometimes the new surroundings and new setting are not better and the people in the old relationships resist or counsel against the change. Sometimes the change, which has financial implications, is badly managed. Sometimes the new surroundings requires skills and an orientation that we do not have. In those circumstances the psychological stresses that have impelled our movement become even worse in our new surroundings. To those who observe the process it appears that we have gone mad, that we have chucked ourselves recklessly into a new lifestyle for which we are not suited and not equipped.

Degrowth as a political-cultural movement for lifestyle transitions

In so far as the idea of "de-growth" becomes a cultural movement that inspires people to change their lifestyles it is enormously helpful that there are other people who are treading the same path and helping each other along the way. This gives some sense of what to do and what to expect. In this sense de-growth as a movement, with complementary and similar movements like permaculture, can be a powerful support for change. The risks are that much less when one is not on one's own in the change process. It is perhaps for this reason that movements that form around causes can be so intoxicating. Although one knows that change will be challenging and discomforting the fact that other people are making these changes in the services of a cause is actually making it easier.

“A cause may be inconvenient, but it's magnificent. It's like champagne or high heels, and one must be prepared to suffer for it.” Arnold Bennett

Without such causes the danger of being stuck in a rut is that one does not explore sides of oneself and that by staying in situations of safety one limits what one can become.

“The real tragedy is the tragedy of the man who never in his life braces himself for his one supreme effort, who never stretches to his full capacity, never stands up to his full stature” Arnold Bennett

It is in this way that one can understand the attraction and the possibility that people would decide to adjust their lives and be prepared to sacrifice their income and purchasing power to be able to do so. The attraction of de-growth is clearly that by having less income and purchasing power to acquire consumer goods one will be able to get certain experiences and satisfactions in life that money cannot buy directly. Perhaps it is more time to spend with one's children as they are growing up. Perhaps it is too learn a new trade that is regarded as more interesting, more challenging and more socially responsible. Perhaps it is to engage with social and community responsibilities. At such times the absence of work and contractual obligations may free people up to be more creative and use their time better. The purchase of freedom by less money is often a very good bargain.

Downshifting and upshifting

The number of people who have made this choice over recent years, for a preferred lifestyle at a lower income, is not inconsiderable in rich industrial countries. The term "downshifting" has been used to describe what is happening. In his book, 'Growth Fetish', Clive Hamilton, reports a number of studies on the extent of downshifting. For example 19% of the US adult population declared that over the previous five years they had voluntarily decided to make a change to their lives that resulted in making less money. This fifth excluded those taking a scheduled retirement. A similar survey in Australia found that 23% of 30-60 year olds had downshifted, citing as their reasons a desire for more balance and control in their lives, more time with their families and more personal fulfilment. ("Growth Fetish", Pluto Press, 2004, page 206)

For all of those people who have chosen to make a lifestyle change of this type there will be others who want to make this kind of change but who, whether because of a lack of support, knowledge or resources may lack the will to take the plunge. Perhaps, with more support, they can be persuaded to do so. However there are also people who will have only recently entered into lifestyle choices which are fundamentally antithetical to a de-growth agenda - perhaps they will just be starting or consolidating a lifestyle which is fundamentally growth focused and within the mainstream values of the current economic system. After all there are powerful forces encouraging them to do so. Perhaps they will be too tightly bound into the messages and values of the growth system, its routines and its obligations, particularly debt and a consumption lifestyle to even consider or be aware of a degrowth approach to life. At the moment it has to be said that this group probably constitutes the majority of the population and this group are only amenable to change messages at those points where they are going through fundamental changes - like moving job or house, or having a child, which compel a re-evaluation of self and behaviour.

Growth and mainstream institutions

This group are bound into a relationship with the mainstream institutions of our society who can only run smoothly if the future is predictable and mostly organised in bureaucratic routines. Growth gives the arrangements and routines of an increasingly complex society leeway for adjustment and for coping with stresses and change. Access to additional resources is typically seen as the way to solve problems and these resources are seen as arising out of extra income, extra production or through borrowing. In the last case extra resources to solve problems are generated by shifting payment into the future and paying an interest payment to buy the right to do this. However any macro growth of output and real income is ultimately only possible through an increase in physical energy available to the economy multiplied by the efficiency with which the energy can be applied to the production process. Once the amount of energy available is no longer rising the scope for real output growth dries up. At that point solutions for problems cannot be found in extra resource availability but must be found in greater ingenuity for improvised solutions working with the same or less. This means more psychic work and stress levels may rise.

Downshifters as a pioneering minority

This majority are however currently stressed and challenged by the difficulties of the economy. So far this paper has described the situations of people who have decided to change their lives in a degrowth direction. These people may be acting, whether they are aware of it or not, as the leaders and pioneers of new life styles. They create the community gardens, the social enterprises, the community exchange systems, the cultural arrangements which provides seeds for a new de-growth economic order. Hopefully those who have voluntarily changed their lives will have created the lifeboat institutions and arrangements which can support millions who are compelled to change when the existing economic system can no longer continue.

Degrowth as an involuntary process

As is obvious some life transitions are not voluntarily entered into. Sometimes abrupt lifestyle shifts take place across society that most people do not want. In the early stages of wars and economic catastrophes people may watch with interest the novelty of things going seriously awry. They may even, perversely, celebrate in the hope that change will make a normally humdrum existence more exciting and dramatic. However grim experience may take away the excitement, replacing it with unwanted and unpleasant experiences that had not been expected. Fundamental change may confront a lot of people with painful and frightening challenges.

This possibility cannot be avoided. Most people are likely to be forced into degrowth lifestyle changes that they have not wanted. They may enter the process enormously stressed, very angry, frightened and unhappy. This would be very dangerous - historical experience suggests that millions of people can be mobilised by channelling their emotions of frustration and fear against scapegoat minorities and foreign enemies. We are already seeing how shortages of oil and gas are being conceptualised by governing elites and the media as "energy security" issues in which nations are pitted against each other. Military intervention to secure oil and/or gas fields and pipeline routes has inflamed and polarised cultural and religious divisions. Such conflicts are in the short term interests of armaments manufacturers, aerospace, military logistics, security companies and the builders of gaols. Opportunities for profit in these circumstances will increasingly arise out of what Naomi Klein has termed 'disaster capitalism' or 'shock capitalism'. The degrowth movement will have its work cut out to develop a positive alternative to this frightening scenario of increasing conflict and destruction.

Reaching the limits to growth

Degrowth as an involuntary process which people are flung into looks increasingly likely as the outcome of both the credit crunch and the oil and gas supply crisis. The degrowth agenda derives from the sustainability agenda. 'Sustainability' has been a word in circulation for over a decade and the people who use the word have mostly lost sense of its original meaning. To be sustainable means to be able to continue. If something is unsustainable then it cannot continue and comes to an end. If there are limits to growth then, at some point, growth will no longer happen.

The climate crisis occurs with a time lag which has lulled political and economic elites into a false sense of security. However, the increasing costs of recovering depleting fossil fuels compared to the global demand for those fuels is taking place in real time. The credit crisis, which is as an over extension of the globalised banking system, is also taking place in real time. Together with imbalances arising out of the uneven development of the global economy these processes look set to throw millions of people into a period of economic chaos. Taken together they will compel lifestyle changes which provide the possibility and necessity to change to a de-growth economy and society.

There is thus no doubt that degrowth will happen - but not mainly as the result of a political and cultural degrowth movement but, rather, because of the consequences of passing the peak of global oil production, then global gas production, and because of the overextended position of the global financial system which cannot any longer be propped up.

The financial system has 'dis-credited' itself in both senses of the world - though a radical loss of reputation and as a loss of its ability to lend into an economy where debt had reached its mathematical limits of financial sustainability. In the financial newspapers we read over and again the idea that the banks do not trust each other. This is ironic because the original meaning of the word "credit" is trust and belief. Without trust and belief the financial system cannot continue to expand and it will not continue to expand - it will collapse.

This does not mean that the promotion of degrowth economics and politics has been a waste of time. To prevent the coming collapse turning into a catastrophe we need the prior development of a movement which can show how a degrowth economy and society might be managed. Without this ability to show how things might be organised differently we will be tipped into a catastrophe of wars and conflicts. We need arrangements to manage life within the capacity constraints of the global ecological system in ways that are felt as equitable and fair. Otherwise the eco-system will be destroyed and society will tear apart.

Common resources which we share must be managed in the interests of everyone in contemporary society as well as in the interests of future generations. For example, in rationing and reducing greenhouse gas emissions, the scarcity rent for permits for using the earth's atmosphere should go to citizens directly - not to the state and certainly not to the big companies. The atmosphere is a commons and should be managed as such - that means propertising it but not privatising it. A Global Atmosphere Trust should be under a legal obligation, enforceable by the courts, to manage the atmosphere in the interests of everyone equally. The monetary system can also be regarded as a common arrangement that should be managed in the interests of all. Currency trusts with duties, enforceable by the courts, need to be set up to manage the money system in the interests of everyone in a currency zone equally. Instead of debt money, repayable with interest, created and owned by private banking corporations, with an inherent growth dynamic, we need a non debt money supply made available for and through the people, including at a local level.

These are the kinds of overarching framework institutions that we need in an ecological society. They will complement the local projects and arrangements to meet basic needs that people will be forced to make to try to re-stabilise lives which are in turmoil. That means creating initiatives like local community gardens and food arrangements; make do and mend initiatives for clothes; mutual aid and simple support for building and rebuilding structures to make them energy efficient; arrangements to help people share resources, tools and skills for energy light lifestyles. We need to create local renewable energy systems where we can. We will need cultural and artistic programmes for people to find new reasons for living and simpler pleasures.

Transition Initiatives and the Degrowth Process

In the UK the Transition Initiatives movement is beginning very much to occupy the space for this movement. The prospect of energy famine requires the organisation of a response and Transition Initiatives are a way of preparing at a community level. There are now many Transition Initiatives springing up around the country - initially in small towns like Totnes, Stroud, Lewes, Falmouth, Penwith but increasingly also in cities like Bristol, inner city areas like Brixton and in Nottingham.

The thinking behind Transition Initiatives (formerly Transition Towns) is simply that settlements using much less energy and resources than we presently consume could, if properly planned for and designed, be more resilient, more abundant and more pleasurable than at present. Transition
Initiatives develop Energy Descent Action Plans as a tool for designing a positive timetabled way down from the oil peak AND as a response to climate change.

The basic formula for the development of Transition Initiatives is a number of steps

1. Awareness Raising about peak oil and gas as well as climate change and its implications.

2. Lay the Foundations of groups and networks to respond to the crisis.

3.The Official "Unleashing" - telling the public with much publicity that you are there and what it is all about.

4. Forming Groups - for example around food and peak oil, transport, health and social welfare and the support of vulnerable people etc etc

5. Use Open Space - this is a way or organising meetings where the agenda is not pre-fixed but is created by and from the people who have come to the meeting.

6. Develop Visible Practical Manifestations of the Project - for example in Totnes they have started to plant nut trees as a way of re-developing local food sources. This should not be a talking shop!

7. Facilitate The Great Reskilling helping people with the skills they will need in the very different economy that will develop on energy descent - e.g. skills to grow, cook and prepare food, repairing bicycles etc.

8. Build a Bridge to Local Government - obviously we want support if we can get it and need a harmonious working relationship. At some point we will need policy support - the sooner the better.

9. Honour the Elders - elder people will still have skills developed in a less energy intensive era. (They will also be vulnerable in energy descent)

10. Let it Go Where It Wants to Go and Reflections…not pre-planning or trying to fix or steer such a big process too much.....

To conclude with another quote from Arnold Bennett:

“Pessimism, when you get used to it, is just as agreeable as optimism.”

Brian Davey
March 2008

Land, Land Values and Land Tax after peak Oil

As we approach peak oil a major challenge for society is going to be the re-organisation of
the agricultural and food supply system to grow enough food. The current rise in food prices is just an indicator of things to come. Another challenge is likely to be how we can grow enough biomass to take CO2 out of the atmosphere and then convert into bio-char.

In both cases a major challenge is where is the land going to come from for all of this? The answer is not as straightforward as one might think - as food prices rise, and as the money and banking system wobbles and returns from money lending becomes insecure, the clever money is now trying to transfer wealth into the place from which the food comes in the first place - into agricultural land, pushing up its price. This is a world wide trend. (See the articles from the Financial Times at the bottom of this e mail).

People in Transition Nottingham (and other Transition Initiatives) might like to think about the implications of this. As we consider how we are going to grow more food close to home the scope for growing food in allotments and gardens is going to be rather limited. So it will be important that we turn a lot of land, currently lawns and other sterile spaces, into cultivated areas.
But that is not going to provide us with bulk foodstuffs which will require a substantial amount of land close to the cities and close to home.......

But it will not be straightforward doing this is the land that we want to use is owned by financiers who charge higher and higher rents for the privilege of working to put something in our mouths.

One prospect for the future would be a situation where competition for land means that you slog your guts out to grow food, but can only keep just enough to live on while the landlord makes an extremely nice living on your efforts (and does not invest this money into increasing agricultural yields either - preferring to invest the money into buying yet more land an a rather luxurious lifestyle).

A good part of human history has been the story of this kind of parasitism.

In fact it is surprising how little people who are social and economic radicals know about land and land rent. For decades radicals have focused the relations between labour and capital but how the land property system works is a closed book to most people.

It was not always so. At the same time that Karl Marx was expounding his ideas about the exploitation of the working classes another author, Henry George, was writing a different account of how one might understand poverty and exploitation. It is still relevant today. Few people realise how, despite the progressive tax system, poor people who pay taxes are actually subsidising the rich people. It works like this. Taxation revenues and council taxes are used to build a social infrastructure of roads, parks, social facilities, in which some places are very nice to live or very favourable business locations. Public expenditure on the infrastructure near these places builds up capital values and helps them command high rents. In other words state
expenditure bestows real monetary value on places that are already owned by the rich and they capture this value for themselves. This far outweighs anything that they pay in taxes, if indeed the rich pay anything in taxes at all - so the poor end up subsidising the rich.

In general terms the most favoured locations for business, the best agricultural land (in terms of fertility and in terms of proximity to markets) commands a premium value that the landowner has done nothing at all to earn - rather the extra value is created because this land cannot be
created and reproduced at will but is scarce in relation to society's needs. It is society that creates the value, not the landowner who does nothing at all to earn their income - except capturing an asset that others want.

So what's the solution? As peak oil morphs into a deeper and deeper food crisis are we all going to end up paying a nouveau landed gentry for the privilege of growing our food when they have done nothing except cleverly escaped out of the collapsing financial sector in time and bought up the land that we need to grow food?

Well, if we let it happen! But there is another way. That other approach is a land value tax. Rather than trying to expropriate the landlords we can let them keep their land on condition that they pay back the additional income in rising rentals and land values back through rising taxes. And that land value tax is then used as a revenue that would allow the abolition of income tax
and/or as a way of supporting vulnerable and socially dependent people.

This requires a bit more spelling out. A land value tax is not a tax on the additional income that arises from your work and effort on improving some land by building or growing on it. It is a tax on the value that the land has - even if nothing is happening on it - because of its favourable location in relation to a community (and the collective expenditures and developments of
a community).

The point about a land value tax is that this not only it gives the community back a value that rightfully belongs to the community but that it liberates land and makes it available for use. The reason is this. When land is owned by a landowner and the land value from the piece of land accrues to the landowner as a capital gain then landowners typically have an interest in
holding back land from development for speculative reasons. However, if rising land values are taken back by the community then landowners have no reason to do this - indeed the reverse is the case. If a landowner hangs onto land and does not use it, but, nevertheless finds that they must pay a tax on the land equal to its value, then they give it up pretty quickly and makes
the land available to someone who can use it.

That way land gets into use and is used by the people who can use it best - to grow food on if that's the best use.......and the community gets the additional revenue that accrues because of favoured locations...and can use that revenue in the interests of all.

Here are a few links which explain the idea from the Labour Land Campaign (including a YouTube Video) plus some FT articles about rising agricultural land prices...

http://www.labourland.org/

http://www.labourland.org/the_campaign/latest/movie.php

http://www.labourland.org/manifesto/

Link to Financial Times article:

European farmland hits record prices

By Andrew Bounds in Brussels

http://www.ft.com/cms/s/0/55c8dc0c-1159-11dd-a93b-0000779fd2ac.html

Last updated: April 24 2008 08:23

With prices of commercial and residential property falling, investors are increasingly turning to a more traditional asset: farmland. Long seen as a declining industry, farming has received a fillip in the last few months as global demand for food has increased. As a result, the cost of agricultural holdings across the European Union has risen to record levels.

In response several funds have recently been set up to buy farmland. In particular the UK, where prices have risen 40 per cent over the last year, has been active. Braemar, a fund manager, is one example. The Manchester-based group has been swamped with offers since it launched a fund
this year.....

The Architecture of Carbon Trading - Who Owns the Sky?

The Public do not understand and distrust carbon trading

I think it true to say that when most lay people approach the issue of carbon trading they do with a degree of scepticism, bewilderment and not a small amount of distrust. The immediate gut reaction is to say " If you want to reduce emissions of carbon dioxide in the atmosphere how on earth is having the right to trade in permits to emit CO2 going to help? You want to stop this thing happening not make money out of allowing it to happen".

They smell a rat and suspect that business and government are trying to pull a fast one - letting money making in markets take priority over the real job of reducing carbon emissions which should occur through regulation and through carbon taxes driving technological innovations and behavioural changes.

The public are right to be suspicious of offsets

Unfortunately there is quite enough in the early experience of voluntary carbon markets - the sorts of schemes called "offsetting" to promote "carbon neutrality" - and also in the early experience of the European Emissions Trading scheme to justify suspicion. Just under a year ago the Financial Times did some research and ran an article which said this:

“Industry Caught in Carbon Smokescreen – Companies and Individuals rushing to go green have been spending “millions” on carbon credit projects that yield few if any environmental benefits. A Financial Times investigation has uncovered widespread failings in the new markets for greenhouse gases, suggesting that some organisations are paying for emissions reductions that do not take place. Others are meanwhile making big profits from carbon trading for very small expenditure and in some cases for clean ups that they would have made anyway” http://www.ft.com/cms/s/0/48e334ce-f355-11db-9845-000b5df10621.html

And the public are also right to be suspicious of the European Union Scheme

So there is actually good reason for being sceptical - and there is good reason to be sceptical too of the European Union's Emissions Trading scheme which, in its first phase did not really succeed in reducing carbon emissions in Europe, is so complicated that most people and politicians do not understand it and, for a time, was seen to be giving rise to windfall profits to big power companies.
(£1.2 billion electric utilities 2005. DTI in addendum to CCBill)

Pendulum swinging to carbon taxes and regulation

Given this bad start it is not surprising that many politicians and campaigning organisations are now tending to favour carbon taxes and regulations rather than carbon trading - for example the Lib Dems, perhaps the Conservatives, or the Green Fiscal Commission, a think tank set up by the great and the good in the environmental, business and government policy making world.

What has been discredited are poorly designed schemes

Despite this what I want to argue is that there are many different possible architectures for the control of carbon emissions in a way that involves markets and that what has been discredited have been poorly designed systems not the per se possibility of having a system that could bring greenhouse gases under control.

In order to make this point strongly in a complicated field I want to try to get over three very basic points about any scheme to control carbon emissions.

The necessity for an overall cap

Firstly the necessity of having an overall cap that is enforced - otherwise a reduction happening at one place in the economic system simply slips into being energy and carbon that becomes available and is then used and emitted somewhere else. Thus - you buy carbon credits to offset the carbon emissions of your flight to India and the money goes to buy low energy light bulbs which are given to people in Goa. Hurray. However the power station burning coal to supply the light bulbs of Goa now has some surplus capacity which is available for another use - and the people using the low energy light bulbs have more cash in their pockets because their electricity bills have gone down. When most people buy low energy light bulbs what happens is that they leave them on longer. Without an absolute cap on the amount of energy and carbon used there is what is called a rebound effect. The existence of this rebound effect has been known to economists for almost 150 years. The emissions from your flight are still in the atmosphere and there is no net gain to the climate. Voluntary offset schemes which have no caps are ineffectual.

Control of carbon emissions should take place "upstream" and not "downstream"

The second point I want to make is that it matters a great deal where you enforce your control of carbon emissions. Here the key point that I want to make is that, to be effective, one really ought to control emissions, in the jargon, "upstream". Unfortunately most current schemes, and also most proposed schemes to extend current arrangements, are what are called "downstream systems".

The Garden Hose and Sprinkler analogy - two choices to reduce flow - the tap is upstream and the sprinkler is downstream

Let me explain these terms. Imagine you are watering the garden with a hose attached to a tap in your house at one end and a sprinkler at the other. After watering your garden you decide that you want to stop the flow of water. You have two choices. You can try to plug up the holes in the sprinkler - for example by stuffing match sticks into each of the sprinkler holes - or you can turn down the tap. The former is the upstream control mechanism. The latter is the downstream control mechanism. Which would you do?

Now think of fossil fuels entering and moving through the economy until they reach the point where they are purchased by the organisations and the individuals that will burn them giving rise to greenhouse gas emissions. We are talking about coal, natural gas and oil which is refined into petroleum and diesel and then sold on. It is burning these fuels that causes 3/4 of the emissions.

The upstream fuel taps - 10 oil refineries, 4 natural gas terminals, 40 coal mines and 12 coal ports

These fuels enter the economy though 10 oil refineries, 4 natural gas import terminals on the North Sea coast, 10 deep mines and 30 open cast mines and 12 dedicated coal port facilities - in all under 70 locations. These are the upstream locations - and figures are collected at these locations about exactly how much oil, gas, coal enters the economy.

Downstream - Sprinkler "holes" of varying sizes - including 900 larger users

The fossil fuels are then sold and distributed to users across the whole country. About a half of the fuel - a large part of it coal and natural gas - goes to very large users like power stations and iron and steel furnaces and blast furnaces - there are about 900 such large users in the UK.

Tens of thousands of organisations and smaller companies and millions of individuals

The rest goes to smaller companies, local authorities - and to us, the general public - every time we buy gas for the house or for the cooker or every time that we buy petrol or diesel for the car.

So our garden hose analogy has to be stretched a bit but is basically still true. There are a number of energy hoses attached to about 70 taps and they go on to sprinklers with a range of different size holes. There are 900 largish holes on the sprinklers and tens of thousands for smaller ones and about 60 million small ones for each of us as individual energy users.

Two possible approaches - at 70 locations or

Now there are two ways of controlling emissions through a permits system.

One can either impose a permit system on the upstream suppliers and require them to have permits before they sell fuels into the economy. This would be a system imposed at most at 70 locations.

Or one can try have a permit system downstream - requiring organisations and individuals to have permits before they can buy and use fossil fuels.

At 900 larger downstream locations - the EU ETS

And this, is exactly what has happened. With the EU Emissions Trading Scheme ETS they have started with a system requring the ETS at the 900 larger users to have permits.

.....then at thousands of smaller companies and local authorities - the Carbon Reduction Commitment

They are now moving to an extension with carbon trading extended to smaller units - hotels, supermarkets, local authorities and the like. This is the so called Carbon Reduction Commitment.

.....then at individual level - personal carbon allowances or TEQs

The next steps being considered by Defra might require every individual in the country to have a personal carbon allowance - there is quite an army of officials and academics researching this idea.

If you ask me this is plain bonkers but it is exactly what is happening.

What they ought to be doing is turning down the taps, or spigotts, at 70 different upstream locations which would be very simple and cost virtually nothing to administer.

So that is my second point - imposing carbon caps upstream rather than downstream. The basic principle is simple - as 3/4 of the global climate crisis is caused by burning fossil fuels you say that it is not allowed to sell fossil fuels into the economy without a permit. Fossil fuels are toxic goods and we need to get off them asap. You denominate the permits in the greenhouse gas content of the fuels when burned and you screw down the cap. In this way you can control the entire greenhouse gas content emitted from burning fossil fuels throughout the entire economy.

Who Owns the Sky? A resource that was though to be unlimited has to be made scarce

My third point concerns ownership rights - the question - who owns the Sky? For what I have not talked about is to whom and how should the permits be issued? Permits are in effect tradeable permissions to use the sky as a greenhouse gas dump. Up to now the right to use the earth's atmosphere in this way has not required anyone's permission. It has been free - now we are restricting that right so that it becomes valuable in the sense that companies and people will be prepared to pay money for it.

Scarce resources acquire a price, a scarcity value. Who get this scarcity rent?

So we can think about the right to use the earth's atmosphere in this way as a resource - it is a limited resource. No individual or company created this resource. They didn't invent it so can claim no intellectual property right over it. They didn't work or invest capital to create it. The income that arises from selling the permits arises solely from the fact that there is a scarcity which, in this case, is created legally and administratively. This is what economists call a scarcity rent. And a key question is - who gets this rent? Who owns the sky? There are logically only 3 possible answers to this question - either we all own it collectively, or the state and governments of the world owns it, or polluting companies own it.

3 Possible ownership and payments arrangements - each affects the design of carbon trading

Each of these different possibilities has a different consequence for how a carbons emissions scheme would run.

Possibility 1 - States and governments own the sky

If states or governments own the sky then they would sell or auction the permits to whoever wants to buy them and keep the auction revenues for whatever purpose they think important.

Possibility 2 - the people own the sky as a common resource - per capita shares

If the sky is owned by the people then one would either initially distribute all the permits to the people and require those who need them to buy them from the people - intermediary market makers like banks or post offices might buy them and sell them on. Or, another way of organising a people owned sky would be through a Sky Trust, operating on behalf of the people which would auction the permits and make per capita cash payments to the people. So what I am envisaging here are two different ways of recycling the sky rent to the people on a per capita basis.



Possibility 3 The sky belongs to the polluting companies - grandfathering free permits distributions

The other possibility is that the sky belongs to polluting companies. For example, in a downstream system you could say that, if Eon's Ratcliffe on Soar power station is currently creating, say, 3% of UK emissions covered in the ETS (that’s a guess) then next year when the permits for the Emissions Trading Scheme are distributed it would be given, for free, 3% of them. The jargon word here is "grandfathering". "Grandfathering" means that, when you set a cap or a limit then the principle for distribution of the limited number of permits is to match the proportional use that existed prior to the scheme. And the permits would be given for free. In this case the assumption is that the right to use the earth's atmosphere belongs to the companies.

So there are these three approaches. The atmosphere is owned by the state, the people or the polluting companies. Would you cynics like to guess which principle has been adopted for the European Union's ETS?

The EU System

At present the EU ETS gives some 90% of permits to big polluters free. There is an argument about whether it should auction them in the future, the figure of 50% has been mentioned after 2012.

You may read in the papers how many big companies are very keen on carbon trading. For example in the USA they are pressing Bush to have it. The PR machines of these companies love to give the impression that they are keen to be green if only there is a level playing field for the policy.

The enclosure of the sky - comparison to the enclosure of the common lands

Maybe... but the cynical view is that the big companies smell money. One way of seeing the situation is as an enclosure of a commons. In the 16th to 18th century the idea that the common lands could and should be enclosed into exclusive private property and no longer available to all for grazing livestock or collecting firewood and other foraging was seen by the poor as a theft by their masters. What we are looking at here is another enclosure process - this time of the atmosphere in favour of the corporate giants who want to take the Sky rent for themselves.

What there are is not is any idea that since this is a commons it doesn't belong to the state either. To me there is a real danger that if the sky rent went to the state it would be spent on big industrial schemes of dubious benefit like subsidising nuclear power. The earth's atmosphere could and should be managed as a commons and that means that the rents should come to us equally - in which case the money will go into the base of the economy and help ordinary people with the resources to insulate their homes and get their own lifestyles in order for a time of more expensive energy.

Equity implications - who will lose as there is less carbon energy and the price rises?

This is actually quite important because who gets the Sky rent has considerable equity and social justice implications. The consequence of any effective permits scheme will be to put up the price of energy considerably. Without any adjustments this will fall heaviest on the poor and so when it comes to making the reductions in energy use it will be them that take the heaviest hit as they will not have the purchasing power to pay for the rising energy prices. So we could face a situation in which the energy companies are making money which are coming out the pockets of the poor. That is in fact what we have in the EU ETS - if you want to sum it up you could describe it as a "poor people pay the polluter" principle.

Cap and Share

The policy I think would work is called 'cap-and-share'. Here a cap is set yearly, permits are sold to primary fossil fuel companies and the money rebated direct to all adults on an equal basis. The control is fully upstream and everyone, including the poor are compensated for rising energy and food prices. The higher price of embedded carbon makes green products and services more competitive and so start to transition the economy to a low carbon future.

As many people and companies gain from the system, deep cuts can be made in emissions and the price of carbon pushed up-and-up over several decades. If we want to make 90% or deeper cuts by 2050, I’d argue that it is the only system that is going to work. And here, therefore, lies a major thread of our hope to stabilise the climate – a hope that should not be delayed any longer.

Sources of further information

www.capandshare.org
www.feasta.org

The Phoney War Against Climate Change - the Crisis of Trust in Carbon Markets

There is no greater challenge in the world today than responding adequately to the threat posed by climate change. As time goes by the scale of the challenge gets bigger and bigger. It exists on may different levels - technological, economic and political. But above all, as Al Gore said in his film, "An Inconvenient Truth" the climate crisis is an ethical challenge. It is this not only because it compels us to re-consider personal lifestyle and consumer choices but because, as a society we must find ways of responding to the climate crisis together and that involves deciding on equitable burden sharing and human relationships.

Leading climate experts are now telling us that we have a very short window of opportunity to make a massive transformation in our economic and social arrangements as a world society and that the nearest comparable situation is that it is as we are all entering a war together - not against each other but a war to transform our ways of living profoundly in the space of one generation. Thus Lester R Brown in his latest book Plan B write of the need to reduce carbon emissions by 80% by 2020. Meanwhile leading climate scientist, James Hansen and colleagues, writing of the need to phase out all coal power generation without carbon capture in the next 20-25 years, refers to this task as "herculean, yet feasible when compared with the efforts that went into World War II." They go on "The stakes, for all life on the planet, surpass those of any previous crisis. The greatest danger is continued ignorance and denial, which could make tragic consequences unavoidable."
"Target Atmospheric CO2: Where Should Humanity Aim?" by James Hansen, Makiko Sato, Pushker Kharecha, David Beerling, Valerie Masson-Delmotte, Mark Pagani, Maureen Raymo, Dana Royer, James C. Zachos

So what are the tools to do this collctive job that is akin to the challenge of a war? In a war people have to bind together against a common enemy - in this case the problem is not other people but the threat of climate change. Or is this actually true?

To make a massive transformation like a war possible there needs to be a sense that everyone is looking after and responsible to everyone else. If a society becomes divided in a war, if there is a sense of injustice, that some people have to bear a heavier burden than others, that some profiteer while others do the fighting and the dying, that some people are half hearted and do not really support the fight, then this will eventually lead to a break down of trust, a bitterly divided and fragmented society and victory will not be possible.

It has to be said that this describes well the current phoney war against climate change. A large part of the political and business elite that run the global economy is uninterested in, ignorant of, unprepared for, reluctant or even hostile to doing anything about climate change. They are pre-occupied with other power agendas - making money - and have to be constantly pressured to do something about climate change. In consequence, although the rhetoric has changed in recent years the policy mechanisms put in place so far are, at best, half hearted gestures that show clear signs that they don't really mean it. While there are a tiny number of business and political leaders who have studied the climate crisis, and who have become appropriately alarmed, there are not many of these. According to MPs who should know there are, for example, probably only 20 British parliamentarians who understand anything about climate change.

For most of the rest of the business and political elite it seems self evident that the only way action will be taken on climate change is if there is some money in it for them. Thus the idea of developing carbon markets has struck a chord because it will make carbon more expensive and thus drive a process to use less carbon. For most politicians and business people their thinking does not go further than that. As we are using war analogies here this is rather like the way arms manufacturers support a war effort.

It should come as no surprise then that while the official rhetoric of carbon markets is all about fighting climate change the reality is far more to do with making money. This is why so many people who have devoted huge amounts of time and emotional energy at their own personal expense to thankless tasks of being the bearers of bad news about climate change are cynical and contemptuous of this way of fighting climate change. If these campaigners who have got the issue taken up had been in it for the money then nothing at all would happen. At the interface between the campaigners and the political economic elite is the deepest of all cultural divides - where people meet who simply do not share the same purposes. Indeed the market focused elite have no place in their concept system for the campaigners as, in the world of theology of market economics in which they believe, everyone is supposed to be principally motivated by making money.

That explains why many campaigners reject any idea of carbon trading and regard it, with some revulsion, as self evidently a veritable ethical swamp whose manner of operation is the very same as the problem that needs dealing with.

Looking at the situation from across the cultural divide the other way, from the markets, there is either indifference, incomprehension, irritation or cynicism. It is a hallmark of power that one single mindedly pursued one's agendas (i.e. money making), that in the time pressure of everyday decision taking one does not have the luxury, like academics to take a wider view and explore all the wider issues before one acts. To do that is to prevaricate, to lose the initiative to others, to load oneself with additional complications and additional costs. In large measure decision making is a process of self fulfilling prophecies - well resourced action in a well connected and powerful network creates a momentum that others fall in with, follow and then facilitate - this way political and business leaders make headway. This means that single minded pursuing money agendas and the self confidence to ignore others goes with the territory. The mind set is one in which all other issues are re-constructed - so that it is self evident that climate change is a fantasy or exaggerated idea in order to trip up business leaders and be used as a further excuse for taxation.....Either that or it is another way to make money. If the customers are concerned with climate change - then charge them more and use the money to do the things that one was going to do anyway. As the Financial Times put it:

“Industry Caught in Carbon Smokescreen – Companies and Individuals rushing to go green have been spending “millions” on carbon credit projects that yield few if any environmental benefits. A Financial Times investigation has uncovered widespread failings in the new markets for greenhouse gases, suggesting that some organisations are paying for emissions reductions that do not take place. Others are meanwhile making big profits from carbon trading for very small expenditure and in some cases for clean ups that they would have made anyway” http://www.ft.com/cms/s/0/48e334ce-f355-11db-9845-000b5df10621.html

A year later with global financial markets in turmoil the UK Financial Services Agency have produced a report saying something very similar.

" FSA warns of false 'green' claim risks

Emissions trading firms risk damaging the integrity of the nascent market by making false claims about their green credentials, the City watchdog has warned.

In a 37-page study, the FSA identified a number of risks specific to the emissions market, including investors being sold unsuitable products, confusion over the regulation of emissions traders and insufficient official data.

It warned that these could "pose a risk to the FSA's statutory objectives" if they spilled over into the emissions derivatives markets that it regulates. The FSA's objectives include a duty to maintain market confidence in the financial system and a duty to protect consumers.

"Some authorised firms are seeking to positively market themselves as 'carbon neutral'. This marketing must be credible, sustained and accurate to avoid jeopardising the firms' and the market's reputation," warned the paper.

"There may be instances where unsuitable products are sold to investors, either at the request of the firm or of the investor itself, because of the climate change association. This could potentially lead to damage to consumers, or to disorderly markets, and so a lack of confidence in the market."

The paper added: "The market is also at risk if the perceived favourable reputational dividend of participating in it is jeopardised by unsatisfactory advice being given to investors. There have been claims of firms that have held out their FSA, or other, authorisation in emissions-related business as
a mark of endorsement for activities that do not fall within the FSA's regulatory perimeter.

"Aside from being misleading and leading to a potential enforcement action, this type of behaviour undermines confidence in the market."

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/01/cnemissions101.xml

It is important to note that this is happening at the same time that the financial markets in general are in the grip of a serious crisis that is caused by a break down in trust. In the newspapers it is repeatedly said that the banks do not trust each other because they are aware that they have been sold securities from the sub prime sector of the USA which are of little or no value. Indeed a closer look at the entire sub prime debacle reveals that it was a massive exercise in predatory lending that was contrary to US law. However, the Federal government blocked action against the institutions making huge fees out of making loans to people that should never have taken them on and then selling them on to pensions funds and banks the world over. Now that the banks that were responsible for this catastrophe are being bailed out and their executives walking away with huge pay offs the cultural and ideological shock should not be underestimated. So the crisis of trust in the carbon markets is taking place against the backdrop of a collapse of trust in the cornerstones of the global economic system - the banks. Against this backdrop too the political system is showing itself for what it is - in the pockets of the bankers and incapable of effective and real control.

This creates huge dangers - but it also creates huge opportunities. For the politicians, business leaders who have been leading the phoney war against climate change are the ones currently being discredited and in panic and confusion. The time is therefore ripe for a New Deal that seriously addresses the climate crisis, peak oil and the economic crisis at once. Such a New Deal must be carefully constructed so that it is seen to be fair to all and constructs unity to use economic resources for a transformation of the economy and society in the short window of opportunity that still exists to save the planet from a climate catastrophe. This is nothing like the current arrangements with the European Union's Emissions Trading System which starts from the assumption that the right to emit belongs to the polluting companies.

Policies like Cap and Share must be part of that comprehensive New Deal. At the moment the big financial interests seeing the financial market in turmoil are trying to turn their wealth into real commodities like foodstuffs, oil, metals and gold. Huge volumes of financial power is currently seeking to get out of traded paper instruments into real goods. This is likely to push out the ordinary people of the world who have done nothing to create this crisis but are in danger of being set up to be its victims - priced out of the market for food and fuel. It is important in this situation that those who own the fossil fuels must buy their right to bring it to market from the ordinary people of the earth. This matches the Cap and Share agenda neatly.

Under Cap and Share the right to sell fossil fuels into the economy is limited to those companies that have permits for the greenhouse gas content of the fuels when later burned. The money from the sale of permits is rebated to the people on a per capita basis from a Trust set up for the purpose of protecting the atmosphere in the interests of everyone equally. Such a Trust would be responsible for auctioning the limited number of permits to primary energy producers and then ensuring that all are treated equally (or, in alternative arrangement the permits must be bought from the people by the energy companies via intermediaries).

Under a system like this, if it were applied globally, the vast majority of the earth's population would benefit from a high carbon price that would go to them. They would get what economists call the scarcity rent arising from limiting the use to the earth's atmosphere. Most people on a low income could get a revenue from the sale of their permits that would be more than they had to pay out extra. The people who would be paying this extra amount would be the people with the carbon intensive lifestyles - this is when the prices of goods rose because the cost of carbon was passed on to fuel purchasers and then passed on again to those who bought carbon fuel intensive goods.

If we are to build trust in the transformation of the world it must be those who have and are using most carbon that must pay most and those who have not caused this problem, those who are the poorest, must be supported and get most out of it. Trust can only be built on equity.

The Future for Coal Power

Abstract

After a century in which it was overshadowed by oil and then gas as an energy source, today it looks as if coal is going to make a comeback because reserves of oil and gas are not sufficient to meet growing energy demands. Coal generates 40% of the world’s electricity, and with the International Energy Agency predicting a supply crunch for oil in as little as five years, this share is growing. By 2010, coal is projected to become the largest source of CO2 emissions from fossil fuels. But at least in the mainstream media, and certainly according to “official” sources, coal appears to be losing its “dirty” image and is now widely touted as a “clean” fuel thanks to the development of carbon-mitigation technologies designed to convert and store safely underground the CO2 produced when coal is burned. However, the main technologies being promoted remain largely untested on the scale demanded by an energy supply crunch. Perhaps more significantly, even if their effectiveness is proven, these technologies are almost certain to arrive too late to prevent the damage done by the resurgence of coal power and the substitution of coal for oil and gas. The consequent enormous rise in CO2 emissions will mean that humankind will pay a terrifying price in terms of climate change for what is likely to prove a very temporary energy fix, as worst-case scenarios envisage coal peaking in as little as 15 years. It would be far better to recognise that we have reached the limits of growth within a fossil-fuel economy and to invest as quickly as possible in energy efficiency, renewable energy systems and developing energy-lite lifestyles, while we still have the resources to do so. Cap and Share and the Transition Towns movement are presented as examples of a policy and movement, respectively, that present alternative, more equitable solutions to the climate crisis.

Contents


PART ONE: UNCERTAINTIES AND THE PRECAUTIONARY PRINCIPLE


PART TWO: COAL AND THE LIMITS TO GROWTH

PART THREE: THE SUBSTITUTES FOR COAL ARE RUNNING OUT

PART FOUR: COAL AS AN ENERGY SOURCE - THE RATE OF DEPLETION

The Depletion of Coal

Official reserves assessed against rising energy demand

The pessimistic viewpoint. Are estimates of the official reserves too high?

Increasing coal reserves - the optimistic viewpoint

New extraction technologies

Accelerating depletion — coal as a substitute energy source

Coal to Liquid (CTL) conversions

Plug-in cars

The Energy Returned on Energy Invested (EROEI) of coal

PART FIVE: COAL AND CARBON CAPTURE AND STORAGE

“Optimism Bias” and “Strategic Misrepresentation”

Will the technology work — and work well enough? What percentage of the CO2 can be captured?

The risk of leakage of CO2

Available underground storage capacity

Transport of CO2

Deadlines for coal power mitigation technologies

"Capture ready" power stations - a misnomer for power stations not yet ready to capture CO2

Why it will take so long - evolving a highly complex process

Competition from renewables


PART SIX - POLITICAL ECONOMY: ALTERNATIVES AND HOW TO ACHIEVE THEM

The power struggle for Power Down

The power elite’s agenda

Loss of control - when stress surges meet too much complexity and resilience breaks down

Pre-figuring a simpler society - energy descent planning and Transition Towns

The Cap and Share approach to carbon control - the people controlling the energy giants and taking the scarcity rent for the earth's atmosphere

A global movement for change

PART ONE - UNCERTAINTIES AND THE PRECAUTIONARY PRINCIPLE

We know that climate change poses enormous risks for the planet but there is still much that is uncertain. Precautionary policy should therefore be guided by scenarios of the future that are pessimistic, as long as those scenarios are credible.

Anyone attempting to predict the future of the world's energy system is soon faced with huge uncertainties and, if their viewpoint hasn’t been distorted by vested interest(s), they cannot fail also to perceive the extraordinary risks facing humankind as a result of climate change, not least the threats to energy security. Official versions of the future, i.e. those put forward by government and industry, do not favour scenarios with high levels of uncertainty and risk, however. Indeed, in an increasingly complex society where investment decisions involve the commitment of huge levels of resources, the ideal future is seen as one that is predictable—or at least one where risks can be carefully calculated so that clear decisions can be made about investments. Maintaining business and elector confidence is seen as crucial because, without it, investment and growth falter and elections are lost. That confidence is bolstered largely by a vast public-relations industry that seeks not only to frame but also influence the issues and debates as they are reported in the mass media. In the course of the 200 years or so of development since the Industrial Revolution, a mindset has emerged that argues that economic problems will always be solved through a combination of markets and new technologies. This mindset is reflected in official versions of the future, which forecast investment in a variety of technological solutions to resolve crises in the energy economy arising from climate change and the peaking of fossil-fuel supplies. The mass media is concerned mostly with selling us this viewpoint, and the political and economic elites that invest in it frequently believe their own propaganda.

But precisely what is the situation with coal and coal power? Various studies and sources present radically different versions of the future for coal power. Study the literature and one can find forecasts in which fossil-fuel supplies, including coal supplies, deplete rapidly, undermining the basis of the current economy but sparing humankind the worst possible effects of the climate crisis. There are also scenarios that envisage sufficient coal reserves to accelerate the climate crisis beyond a tipping point that would see world temperatures spiral out of control. But these scenarios are presented not in the mainstream media, but in reports destined for experts, industry and politicians. Meanwhile, most stories aimed at the general public are full of publicity about the new technologies that governments claim will make coal power a clean energy source. The emerging "mainstream story", the one that governments and the energy giants would have us believe, is that although there is a surge in the use of coal power, new technologies can make this “safe” by capturing the carbon dioxide arising when coal is burned and storing it safely underground in a liquefied form. This process is called carbon capture and storage, or CCS. But there are good reasons to question the effectiveness of CCS, its practicability in many places in the world and whether it is really more cost efficient than an alternative strategy that would invest scarce resources in renewable energy and energy efficiency. Above all, it’s important to note that even if CCS can prove its effectiveness, it is almost certain to arrive too late to prevent the damage done by the resurgence of coal power and the substitution of coal for oil and gas.

Faced with a bewildering variety of future energy scenarios, what should one believe and what policies should the public be calling for? Given that the world appears to be on the edge of an economic and ecological precipice, this report leans towards the pessimistic rather than the optimistic scenarios. It adopts this stance not because of some perverse desire to be a harbinger of doom; rather, such an approach is consistent with the precautionary principle. Whereas governments and big industry try constantly to sell us the optimistic view, the responsible approach, in a highly dangerous situation, is to be a pessimist. To quote from a recent essay by economist Richard Douthwaite, co-founder of Dublin-based systems think-tank Feasta: The Foundation for the Economics of Sustainability (www.feasta.org):

"As Philip Sutton, an Australian thinker on ecological sustainability, has written, we “wouldn't fly in a plane that had more than a 1% chance of crashing. We should be at least as careful with the planet.” Yet..... there is far less than a 99% chance of maintaining a satisfactory climate at the CO2 concentration levels being recommended by Stern and other environmental economists. This is basically because environmental economics is a branch of political economics and its practitioners tailor their findings to suit what they think their audience will accept rather than what is necessary. As a result, they have failed both to research and to recommend the really radical changes to both the economic system and the distribution of income around the world that a lower-risk response would entail. One can see why. According to Sutton, “the greenhouse gas levels in the air now pose an unacceptably high risk of damage to nature and an unacceptably high risk of triggering runaway heating. The only way to bring the risk down to an acceptable level is to cut greenhouse gas emissions to zero, to take the excess CO2 out of the air as fast as possible, and to find environmentally acceptable ways to cool the planet. The transformation of the economy from a business-as-usual structure to a sustaining structure must be physically accomplished within 10 years.”

This report on coal power is written in that spirit.

PART TWO - COAL AND THE LIMITS TO GROWTH

The coal sector illustrates the dilemmas of a world economy that is growing past its sustainable scale. The sector is resurgent because of the depletion of preferable substitutes such as cleaner natural gas and oil. This puts pressure on the climate and speeds up the depletion of coal. One scenario being presented envisages the world being spared the worst excesses of climate change thanks to the limits to economically recoverable coal, gas and oil. But even if that were to occur, the limited energy resource for the economy would create its own severe problems.

Coal at the capacity limit of the growth economy

The mainstream assumption that economic growth can, will and must continue is driving the global economy past its sustainable scale. Nowhere is this clearer than in the coal sector. Coal provides over one quarter of the world's primary energy needs and generates 40 per cent of the world's electricity. Two-thirds of global steel production depends on coal. Its emissions are also the most damaging of the fossil energy sources when it comes to pressure on the absorptive capacity of the eco-sphere in general and as a cause of climate change in particular. Depending on the power-generation technology, coal emits roughly twice the carbon emissions of natural gas per kWh, although this comparison is further complicated by supply chain emissions, particularly when using liquefied natural gas (LNG)

In recent years, the continued growth of the world economy and the depletion of oil and natural gas have led to a resurgence in the use of coal. According to the International Energy Outlook for 2007, produced by the International Energy Agency (IEA), coal’s share of total world energy consumption is projected to increase to 28 per cent by 2030, while in the electric power sector its share is projected to rise from 43 per cent in 2004 to 45 per cent by 2030. Although coal currently is the second-largest fuel source of energy-related CO2 emissions (behind oil), accounting for 39 percent of the world total in 2004, it is projected to become the largest source by 2010. By 2030, coal’s share of energy-related carbon dioxide emissions is projected to be 43 per cent, compared with 36 per cent for oil and 21 per cent for natural gas.
(See http://www.eia.doe.gov/oiaf/ieo/coal.html)

Using more coal speeds the depletion of coal reserves and strains the absorptive capacity of the eco-sphere, so coal depletion and climate change are of course connected. Various technologies are being developed to reduce the environmental and climate impact of burning coal, and the installation and use of these technologies have an energy cost. This means that, while coal technologies are undoubtedly becoming more efficient—for example, the heat at which coal can be burned in power stations—mitigating the climate effects of coal will still exact an energy penalty. Depending upon the process chosen, an additional 20 to 44 per cent energy input of coal for the same electricity output by power stations is to be anticipated, according to the calculations of the Wuppertal Institute in Germany.
(See http://www.wupperinst.org/uploads/tx_wibeitrag/II-Kap4-8-RECCS-Endbericht.pdf )

If, as it should be, that penalty is paid in order to protect the climate, the rate of depletion of coal put through systems equipped with CCS technology will speed up by between 20 and 44 per cent. If the energy penalty is not paid then the climate crisis will be that much worse.

Another connection between coal depletion and climate change might give rise to something more optimistic. This possibility is explored by Dave Rutledge of the California Institute of Technology in his paper (published on the internet) "Hubbert's Peak, The Question of Coal, and Climate Change".

In his lecture, Rutledge combines projections for future global coal depletion and for oil and gas depletion. He then works out the consequences of this depletion for the climate, basing his calculations on the argument that if all the fossil fuels decline in the near future then so too will the emissions that arise from burning them. In fact, Rutledge projects trends for future fossil-fuel production and combustion which are less than any of the 40 UN scenarios considered in climate-change assessments. The implication is that producer limitations could provide useful constraints in climate modelling. (See http://rutledge.caltech.edu/ and also http://www.theoildrum.com/node/2697)

If we ignore those voices, and they exist, that we may already be in the early stages of runaway climate change then this analysis from Dave Rutledge would give us some grounds for hope about the climate crisis at least —and the climate crisis is certainly the problem we should worry about most. However it would still not be cause for celebration from an economic perspective because a developing energy famine would undermine the global economy dependent on huge inputs of energy for further growth. More importantly perhaps, it would indicate the danger that there will be a shortage of energy resources that will be needed to develop a renewables energy sector. The conclusion that follows from this is that renewables sector needs to be built now, while the resources are still available.


PART THREE - THE SUBSTITUTES FOR COAL ARE RUNNING OUT

An imminent peak in global oil production and "continental peaks" for gas production will drive the demand for coal as a substitute. This has not been not the “official” view however. This section describes how this view is now seen as being increasingly out of touch and is currently changing to be more in line with unfolding events. After many years in which oil and then gas have been substituted for coal, it now looks as if the reverse will be the case.

Until recently, the official viewpoint has denied any fundamental problem with oil and gas supplies, although today it does concede there are "challenges". When a recent report appeared claiming that oil had already peaked, a British government spokesperson said: "Over the next few years, global oil production and refining capacity is expected to increase faster than demand. The world's oil resources are sufficient to sustain economic growth for the foreseeable future. The challenge will be to bring these resources to market in a way that ensures sustainable, timely, reliable and affordable supplies of energy."

This view has relied heavily on the positions of the IEA, the major adviser and forecaster for the world's leading economic powers on energy. Its "reference scenarios" have been taken as gospel by many, including the British government. The IEA, meanwhile, has until very recently remained unconvinced by peak oil arguments.

The IEA approaches the depletion issue using standard economics. It assumes that if oil and gas become scarce their prices will rise and that this will encourage the search for more oil, as well as making it more of a paying proposition to develop and use technologies to extract more oil from wells (so-called reserve growth). The key idea was that increased profits arising from rising prices to the oil and gas companies will flow into new investment and that this investment will eventually bring more oil and gas on stream. This is further based on the idea that there are still ample reserves of oil and gas to be found, as predicted by the US Geological Survey (USGS) in 2000.

In the last year the IEA has been gradually altering its position, however, in recognition that discoveries have not been made at the anticipated rate and that new investment in new fields is simply not happening at the rate that it expected. This should not come as a surprise. The idea that higher oil prices will automatically lead to higher profits and thus higher investment and then more oil, overlooks a few salient economic points. As depletion proceeds, more and more investment is needed to get smaller and smaller additional returns. Furthermore, the price of energy is not just a revenue variable, it is also a cost variable. This means that a greater volume of energy—energy that is also more expensive per unit—has to be used to prospect for and develop a greater number of smaller and smaller fields. When the energy returned is less than the energy invested, the process is no longer worthwhile from an energy viewpoint, and a supply crunch becomes inevitable. Recognising the reality at last, the IEA has now forecast a "supply crunch" for oil in as little as 5 years, causing Barclays Capital to liken its forecasts to “Not quite full blown King Lear territory” but “certainly up to Richard III’s levels of despair and foreboding”.

Sometimes things really are as bad as they seem. The IEA prediction matches the forecast of peak oil theorist Chris Skrebowski of the Petroleum Review, who has tabulated details of 'mega oil projects'. More large projects bringing new oil supplies on stream are needed if oil supply is to continue to increase, because there are now 60 countries where oil production is in decline. Large new production projects must be initiated to offset these declines, and, as more countries go into decline, progressively more production from mega projects is needed. Skrebowski has found, however, that fewer mega projects are being started. New discoveries that could be turned into new production are simply not happening.

Towards the end of 2007 the IEA moved its thinking yet more towards acknowledging the imminence of peak oil. It has revisited the issue of how much oil there is by questioning the USGS World Petroleum Assessment published in 2000. With good reason: Seven years later, the USGS predictions appear highly unrealistic. As economics writer David Strahan has pointed out:

"For the USGS numbers to come good the world would need to discover 22 billion barrels of oil per year between 1995 and 2025. But as the USGS has now acknowledged, so far the world has only discovered 9bn bbls per year - a massive 60% less than forecast. Even if the rate of oil discovery were now to plateau at that level for the next two decades, the USGS resource numbers would still be 500 billion barrels too high. But since oil discovery has been in long term decline since 1965, despite rising oil prices and advancing technology, it is rather more likely that discovery will continue to fall and the USGS numbers prove yet more astray.....

"In an interview with lastoilshock.com Mr Birol went on to reveal that the IEA would also review the oil resource base afresh, and would be "addressing the limitations and uncertainties" of the USGS data. The Agency would also incorporate other sources of information to assess the "implications of different type[s] of data on our long term thinking".

Given the widely acknowledged over-inflation of the USGS figures—the Survey recently slashed its estimate for East Greenland from 47bn barrels to 9 billion—it is likely the IEA's reappraisal will prompt a major downward revision in its long-term production forecast. And this in turn will undercut the generally sanguine view held by many IEA member countries such as the United States and Britain. "

(See http://www.davidstrahan.com/blog/?p=69#more-69)

The reluctance by the IEA to acknowledge peak oil is understandable. The IEA has a position of status and for it to give out a peak oil message would create a major shock to business confidence. The decision-makers of the growth economy need to feed on an optimistic view that continued growth will continue as the norm; they simply cannot cope with the idea that there are capacity limits to the global economy.

The issues for natural gas are slightly different. When gas passes its peak production it declines very rapidly. This has serious implications for the UK as the North Sea gas fields are now in decline and Britain became a permanent net importer of gas in 2004. The new Langeled pipeline that supplies gas to the UK from Norway has the capacity to supply a maximum of 20 billion cubic metres (bcm) to the UK from Autumn 2006. This is roughly equal to the amount that the UK will lose to North Sea gas depletion over a period of two to three years. Langeled is therefore likely to defer Britain’s potential gas supply crisis only until the end of this decade. Britain is also going to get gas indirectly from Russia, though Russian gas production is also peaking.

Until recently facilities have not existed to transport natural gas except through pipelines connecting gas reserves and gas users in relative proximity to each other. Rather than an imminent global gas peak, the key problem with gas depletion is one of “continental peaking”. In North America, Britain and elsewhere there have been strenuous efforts to set up facilities so that gas can be sent by sea (liquefied natural gas, or LNG). This is one of many processes where the energy costs of imported gas can be seen to be hugely more expensive than for gas piped from fields nearby. LNG entails an energy loss of between 15 and 30 per cent for liquefaction, transportation and regasification, as LNG must be cooled to –165 C for transportation by ship, with attendant greenhouse gas emissions.
(See http://www.aspo-usa.com/fall2006/presentations/pdf/Hughes_D_NatGas_Boston_2006.pdf)

Gas and oil production are commonly associated with each other in the extraction process because what typically comes out of the ground is usually a joint gas and oil stream. Early in the extraction process from oil and gas fields, the oil content is high and the gas content low. Towards the end of field exploitation the reverse is the case. In theory, as the oil gives way to gas, the production emphasis would switch from one to the other but in most cases this is not what is happening. This is because when oil prices are very high it makes more commercial sense to concentrate on recovering the oil and to re-inject the gas underground to enhance oil recovery and/or flaring the gas produced. High oil prices in fact discourage the switch to natural gas production and also force up gas prices. In addition, building a gas infrastructure is very expensive indeed, particularly the costs of transport when compared to oil, which can be moved around far more conveniently or cheaply. The same arguments apply to stranded natural gas, which is gas produced in areas associated with oil production; the cost and time constraints of developing an LNG infrastructure are very considerable.

To take the US example. Covering predicted shortfalls of 4-11 tcf (trillion cubic feet)/year from declining US production will require nearly two to three times the world's present LNG capacity—involving 200 new 3 bcf (billion cubic feet) capacity LNG tankers; 30 New 1 bcf North American receiving terminals, 56 New Foreign based 200 bcf/year liquefaction trains; and capital investment of the order of $US100-200 Billion. It would take 10-20 years to develop this capacity.
(See “Natural Gas in North America: Should We be Worried?” at
http://www.aspo-usa.com/fall2006/presentations/pdf/Hughes_D_NatGas_Boston_2006.pdf )

Like every other economic sector, the gas industry is guilty of “optimism bias” and “strategic representation” (these are explained below) about both the costs of developing a gas infrastructure and the time it will take to do so.

As energy economist Andrew McKillop explains: "Taking only the time constraint, increasing world LNG to say 10% of current world oil production in energy terms (producing about 8.6 Mbd oil equivalent of LNG) is likely impossible in less than 15 or 20 years even if unlimited capital spending was given to this quest."

To this should be added a degree of misrepresentation (or over-optimism) about the size of gas fields. The availability of natural gas has been subject to a fair amount of misrepresentation. Many observers now believe, for example, that Russian firm Gazprom’s claims that it has “almost unlimited” gas reserves are no more than boasts, identical to the oil reserve bragging by OPEC countries; it’s designed to suck in capital and bolster investor confidence. In the real world, the diminishing but critical gas reserves of the three biggest west Siberian gas fields are unable to meet even short-term gas demand of Russia’s domestic, CIS (Commonwealth of Independent States, consisting of 11 former Soviet states) and EU consumers. Only massive capital spending and immense luck would make it possible for Russia to meet projected gas export demand in the 2009-2015 period.

(Peak Oil to Peak Gas is a short ride, by Andrew McKillop. See also http://www.energybulletin.net/23462.html)

But that massive capital spending is showing no signs of coming on stream and the IEA is clearly very worried. In a recent report it argued that: "Investment in the gas sector is a serious cause for concern, having worsened in comparison to the GMR 2006 [Natural Gas Market Review 2006]. Current upstream investment to 2015 is considerably below the amount required, with particular weakness in several regions."

Meanwhile, countries like Russia are in no hurry to raise production because of contango?the idea that future prices for gas will be much higher than current prices; this means that it makes sense to leave the gas in the ground for now to develop it much later. Nor is Russia (or countries like it) keen to see foreign investment in the development of its own strategic resource.

Are there alternative energy sources available?

It must be conceded that the people who believe that technology and human ingenuity will always find a solution can point to possible candidates for new energy sources. Later we will examine the claims for underground coal gasification. It would be unwise to deny that these sources exist. The argument here is that with world energy demand growing ever larger we do not know yet what these sources will yield - energy technologies have appeared promising in the past and decades later have failed to me to fruition - like fusion energy for example or fast breeder nuclear reactors. These are the other candidates:

Oil from Algae

They can double their mass several times a day and produce at least 15 times more oil per hectare than alternatives such as rape, palm soya or jatropha. Moreover, facilities can be built on coastal land unsuitable for conventional agriculture. However this does not tell us directly what the net energy from the process is -
arrangements to keep water circulating to prevent the algae settling and interrupting photosynthesis will require water treatment plants to keep the correct balance of minerals and nutrients and that's going to involve an energy cost for the process and reduce net energy.
http://www.shell.com/home/content/media-en/news_and_library/press_releases/2007/biofuels_cellana_11122007.html

Tapping seabed methane hydrates with sequestered CO2

There is a lot of interest in this in China and India. According to the pressure at the specific sea bed environment (laboratory) research suggests one methane molecule can displaced and captured for very 3 to 5 CO2 molecules injected into hydrate deposits. The methane hydrate resources that might be tapped are on the edge of continental shelves in great quantities but the danger might be that tapping them creates sea bed slippage which, in turn, might create Tsunamis.
http://en.wikipedia.org/wiki/Methane_clathrate
http://www.ozean-der-zukunft.de/presse/poster/clusterflyer2007-en.pdf

Nuclear power

It is not the purpose of this paper to argue the claims of the nuclear industry but there are good reasons to be sceptical of them. As David Fleming argues: "1. The world's endowment of uranium ore is now so depleted that the nuclear industry will never, from its own resources, be able to generate the energy it needs to clear up its own backlog of waste..... Shortages of uranium - and the lack of realistic alternatives - leading to interruptions in supply, can be expected to start in the middle years of the decade 2010-2019, and to deepen thereafter. 4. The task of disposing finally of the waste could not, therefore, now be completed using only energy generated by the nuclear industry, even if the whole of the industry's output were to be devoted to it. In order to deal with its waste, the industry will need to be a major net user of energy, almost all of it from fossil fuels. 5. Every stage in the nuclear process, except fission, produces carbon dioxide. As the richest ores are used up, emissions will rise." The greenhouse gases from uranium include large volumes of uranium hexafluoride, a halogenated compound (HC). Other HCs are also used in the nuclear life-cycle. HCs are greenhouse gases with global warming potentials ranging up to 10,000 times that of carbon dioxide. It is a myth, perpetuated by the nuclear industry that it can dig us out of the energy hole just as it is a myth that it is a climate clean energy source. http://www.theleaneconomyconnection.net/nuclear/summary.html

Without extra clean energy the era of economic growth is over

The deeper significance of all of this is that it will be very difficult for the economy to continue to grow, since other energy sources, like natural gas, coal and nuclear, will struggle to make up the shortfall, especially as adjusting the infrastructure of the economy to this situation will take several years, perhaps a decade. Analysis has shown that virtually all the production growth in the economy can be accounted for by increases in the energy available, adjusted for improvements in the efficiency by which energy is turned into physical work. If the available energy is not increasing, because fossil-fuel supplies cannot be sustained, then the economy will go into a deep crisis. The last time this occurred, in the 1970s, the result was “stagflation”—a period in which the economy was stagnant but inflation was occurring. But to build up renewables as an alternative will require huge expenditure of the remaining energy resources—resources that will have to come out of what is currently consumption. At the time of writing there is no sign that this will happen and every reason to believe that governments and the energy sector will revert to coal as their main response to oil and gas depletion.


PART FOUR: COAL AS AN ENERGY SOURCE - THE RATE OF DEPLETION

Given the growing consumption of coal and its substitution for other energy sources, it is misleading to quote coal reserves in terms of the number of years’ supply at current rates of use. Recent studies also cast doubt on whether coal reserves are as large as is often claimed. One credible, pessimistic view is that coal supply will be highly constrained in a few years and that a lot of energy will be needed to recover lower grades safely, further reducing the available net energy from coal. Underground coal gasification (UCG) might change this picture but it is still largely an unknown quantity.

The Depletion of Coal

The official coal story is usually based on the assumption that coal is "abundant and cheap" (See, for example, the recent MIT interdisciplinary study on coal power and CCS at http://web.mit.edu/coal/). However, recent studies reveal there are fewer economically recoverable reserves than previously supposed. In any case, depletion will be accelerated by the rising demand for coal that will result from economic growth. So too will oil and gas depletion, which is likely to put pressure on coal as an energy source for transport. On the other hand, there are optimistic scenarios that see new extraction technologies like UCG turning coal resources that were previously unrecoverable into new sources of energy.

Official reserves assessed against rising energy demand

According to the World Coal Institute global coal reserves at the end of 2006 were 909,064 million tonnes and, using a formula currently found in official and industry publications, these reserves would last for 147 years at current production levels. This is not a very useful formula however, since coal consumption is projected to rise considerably; China, for example, is currently building a coal power station a week. The US Department of Energy (USDoE) predicts that annual global coal consumption will grow by 2.5 per cent a year up to 2030, by which time world consumption will be nearly double that of today. At that rate, coal reserves current reserves would last 77 years. Whichever way you look at it, even using "official" figures, coal reserves would be exhausted by the end of the century. (See http://www.energybulletin.net/29919.html)

The pessimistic viewpoint. Are the official reserves assessed too high?

But even this prediction for exhausted coal reserves by the end of the 21st century may be optimistic. An EU-sponsored research project at the Institute of Energy (B. Kavalov and S. D. Peteves, authors) argues that "World proven reserves that are economically recoverable at current economic and operating conditions are decreasing fast.....Coal production costs are steadily rising all over the world, due to the need to develop new fields, increasingly difficult geological conditions and additional infrastructural costs associated with the exploitation of new fields" (See http://ie.jrc.cec.eu.int/)

Other credible studies exist that suggest smaller reserves. A German research group called Energy Watch has conducted a comprehensive critical analysis of available statistics, country by country, to provide an outlook on coal production in the coming decades. Its conclusion? That there is probably far less coal left to burn than most people think and that global coal production may peak in as little as 15 years. (See http://www.energywatchgroup.org/files/Coalreport.pdf)

Energy Watch claims that oft-quoted coal reserves are based mostly on old data that have not been updated. A study of the US National Academy of Sciences claims likewise:

"Recent estimates of coal reserves” which take into account location, quality, recoverability, and
transportation issues, are based upon methods that have not been updated since their inception in 1974 and much of the input data were compiled in the early 1970s. Recent programs to assess coal recovera-bility in limited areas using updated methods indicate that only a small fraction of previously estimated reserves are actually recoverable." (See http://dels.nas.edu/dels/rpt_briefs/coal_r&d_final.pdf )

Increasing coal reserves - the optimistic viewpoint

Coal reserves are calculated on the basis of what is "economically" recoverable, so industry and official viewpoints hold that rising coal prices would mean that more would become recoverable and thus be counted in the reserves. This stance envisions mines that were once closed possibly being re-opened if they have not been too damaged either during or following closure; it might also be economic to prospect for coal in new locations. Given that the reserves to current production ratio are about 150 years, it has hardly made sense to go looking for more coal in recent years, particularly if, as local resources of coal deplete, there are plenty of places in the world where it can be purchased. Should it become necessary to look for more coal in the future, it will probably be possible to find more.
This stance views the decline in past coal reserves as the consequence of the interaction of declining production from mines as a result of depletion and an available coal price. At a higher coal price, driven up because oil and gas are so expensive, resources that were previously uneconomic to mine might once more become economic. One factor in the economics of this process would be the ability to find men willing to work in a difficult and dangerous job for relatively low wages. There may indeed be circumstances in which this would occur but if it did, this in itself would reflect growing desperation arising from the energy crisis at that time.
That isn't all. More expensive oil will not only drive up the demand for coal, it will also increase the costs of its production. Something like 50 per cent of the energy used to mine coal comes from oil. As oil becomes more expensive the coal industry will increasingly have to use CTL for its own fuel needs. The amount of (coal) energy required to recover any given amount of (coal) energy will rise so that the net energy from mining will fall. This will reduce the amount of economically recoverable coal, and meanwhile, rising oil prices dragging up coal prices may not create nearly the amount of extra economically recoverable coal reserves that the optimists might expect. (See http://wolf.readinglitho.co.uk/subpages/coal.html#future)

'New' Extraction Technologies

Nevertheless, new coal sources are likely to be found and new technologies are likely to be developed to extract coal energy. CTL technologies might add to resources where they tap previously stranded coal—coal that was too far away to be transported easily to markets. The main “new” technology, however, appears be underground coal gasification, or UCG.

In the future, UCG might conceivably give the coal industry a new lease of life, because it may allow the tapping of previously unrecoverable coal seams that were out of reach for conventional mining. Strictly speaking this is not a new idea. The first mention of the idea of gasifying coal in its original deposits was by William Siemens in 1868 in Great Britain, and in 1913 Lenin spoke in favour of in-situ gasification as a means of freeing coal miners from their back-breaking work. For a long time it was only in the USSR that the technology was developed to a technologically mature stage, with three commercial power stations driven by underground gasification at Podmoscovia, Yuznho Abinsk and Angren. (Source: "Kohleveredelung", by H. G. Frank, A. Knopp, Springer Verlag, 1979).

According to the theory, UCG works as follows. Air or oxygen is injected into a cavity in a coal seam, water enters from surrounding rock, and partial combustion and gasification take place at the coal seam face after ignition. The resulting high-pressure syngas stream is returned to the surface, where the gas is separated and contaminants are removed. UCG thus offers the potential to produce fuels and hydrocarbon feedstock from coal deposits which may otherwise be unrecoverable. According to a World Energy Council 2007 Survey of World Energy Resources studies suggest that the use of UCG could potentially increase world coal reserves by as much as 600 billion tonnes - that would add a further 70% in magnitude to the existing estimates of recoverable coal reserves.

Proponents of UCG argue that it can operate in thinner seams than mining and at depths inaccessible through conventional mining. UCG also requires no coal handling at surface and no mining or ship transportation, all of which have significant emissions of CO2 and reduce the net energy from coal extraction. Re-injecting the CO2 underground in the vicinity of the UCG extraction process, either offshore or onshore, will result in near-zero emissions.

A UCG project would take about the same time to develop as a new oil and gas field. Hence the process could make an impact in the short to medium term, if sufficient resources were put into its development; in contrast, an oil or gas field will take about 7 or 8 years to develop.

The US did much of the pioneering work in applying new drilling technology to UCG, in some 20 or so trials, but cheap natural gas prevented widespread adoption of the process. There is now a renewed interest, and demonstration projects have started up again. The process has parallels with coal bed methane, which currently contributes around 8 per cent of the gas supply in the US. Other trials have occurred elsewhere in the world, some with success.

Much of the energy involved in coal mining is used to put miners underground and keep them safe, but none of that would be required with UCG.

For over a century, however, technical problems have frustrated the development of UCG and its predicted potential has not be realised; problems such as underground water contamination and uncontrolled fires have prevented what initially seemed a promising idea from coming to fruition. In response, UCG proponents argue that new technologies offer innovative ways of dealing with these problems; for example, the oil industry has developed directional drilling at depth, which provides new ways to create channels through coal seams.

Many are still sceptical though, arguing, among other things, that the processes will be hard to control in cases where there are many faults to be found in mine seams and in underground geological strata, particularly when no-one is down there to see what is going on at great depth. Directional drilling by the oil industry is fine in theory but drilling into coal seams involves drilling into a far smaller target than drilling into an oil reservoir. And the CCS part of the idea remains largely untested.

UCG is one of the major uncertainties in a resurgent coal sector. It seems that research is called for but it does not seem sensible to assume that UCG will save the coal sector; one should adopt a degree of pessimism appropriate for the precautionary principle. If UCG is viable as a major source of energy, it will have to carry a lot of substitutions for the declining oil and gas sector, and be accompanied by a method of underground storage of CO2 that actually works.

Accelerating depletion - coal as a substitute energy source

The demand for coal is likely to rise considerably as it is used as a substitute for oil and gas. If we accept that oil and gas will peak soon, then we can expect that coal will be used as an energy source to replace gas and—to a degree—oil in electric power generation. Between 1973 and 2005, the share of oil in electric power generation in the world fell from 24.7 per cent to 6.6 per cent. This will fall even further as oil peaks. A much bigger substitution will occur away from gas power generation.

Pressure is also likely to grow for substitutions of coal for oil in transport, through either CTL conversions or the use of coal in electric power generation; this would then be used to charge 'plug-in' electric cars and/or in hydrogen-powered vehicles.

CTL conversions

CTL conversion would involve the least amount of change in existing transport fuel arrangements but would entail the greatest drain on coal reserves. It is also a very dirty process giving rise to large greenhouse gas emissions. For this reason, equipping CTL conversion with CCS carbon capture is sometimes proposed. But CCS makes the whole process yet more costly - and requires yet more coal to produce the same amount of transport fuel.

With regard to emissions, one study predicts that "Gasoline derived from CTL plants with no CCS could increase GHG emissions from vehicles by almost 60%. If CCS is available, then a reduction of less than 6% could be obtained." (See http://www.greencarcongress.com/2007/06/cmu_plugin_hybr.html#more).

In terms of depletion, one tonne of coal can be converted to produce two barrels of oil. Since two barrels of oil is equivalent to 0.273 tonnes of oil, that is a conversion ratio of 3.6 tonnes of coal to produce one tonne of oil. (See C. Lowell Miller, “Coal Conversion—Pathway to Alternate Fuels” US Department of Energy March 2007 at www.eia.doe.gov/oiaf/aeo/conf/miller/miller.ppt)

This ratio gives rise to some revealing hypothetical comparisons. World oil consumption in 2006 was 3,889 million tonnes. If all the oil had to be derived from coal, there would be enough coal for 65 years at this rate.

According to the IEA, 3,936 million tonnes of oil were produced in 2006 compared to 5,370 million tons hard coal and 914 million tons brown coal, or 6,284 million tons coal of mixed grades. Applying a conversion of three tonnes of coal needed to produce one tonne of oil would mean that if all the coal were used to produce oil, it would produce 2,095 tons of oil—only 53 per cent of total global oil production. To replace all of the oil would therefore require double the current rates of world production. To maintain existing uses for coal as well would take then three times current coal rates.

The conclusion is unavoidable: If peak oil occurs soon and CTL technologies are brought into play, any remaining coal reserves would be used up very soon indeed AND there would be an enormous increase in greenhouse gases without CCS.

Plug-in cars

Plug-in cars would be far more efficient and a smaller drain on coal reserves if coal was the fuel used for the electric power source.

“Plug-in hybrids look more promising as a pathway for reduction of GHG emissions. Even if coal electricity without CCS is used, plug-in hybrids could lead to a GHG emissions reduction of almost 25%. This demonstrates the worst case for plug-in hybrids, as GHGs would be further reduced with a low-carbon electricity portfolio. It is important to note however, that this analysis does not include the emissions from manufacturing the storage battery used in plug-in hybrids. If GHG emissions from lithium-ion batteries for plug-in hybrids are included, total annual GHGs from plug-ins would increase by about 800-1,500 pounds of CO2 equivalents, depending if a twelve or eight-year vehicle life is assumed (Samaras and Meisterling 2007). Battery technologies are difficult to predict, but even when emissions from current battery production are included, plug-in hybrids result in substantially lower emissions than CTL pathways."
(See http://www.greencarcongress.com/2007/06/cmu_plugin_hybr.html#more ).

An economic development with plug-in cars has many advantages. Unfortunately for the proponents of coal power, the main case for plug-in cars is that they could be a valuable adjunct to a renewables-based energy system. The chief barrier to the development of wind energy and other renewables is their intermittent character; wind turbines generate electricity when the wind blows and not necessarily when it is wanted by consumers, so a key problem for wind power is how to store the electricity it generates. A study by the UK Centre for Alternative Technology in Wales explains a possible solution:

"As a form of transport, electric vehicles combine a high level of energy efficiency with the ability to use renewably generated electricity. In addition, their batteries can double as energy stores for the Grid. Technologies have been developed to allow energy to flow in either direction between vehicle batteries and the Grid, while at the same time preventing discharge below a minimum level (set according to the owner’s anticipated requirement).

Known as vehicle-to-grid power(V2G), the concept involves harnessing the energy storage of electric vehicle batteries for load balancing. When the Grid’s supply exceeds its demand, the surplus is used to top up the batteries of all connected vehicles. When demand exceeds supply, those batteries are used to make up the shortfall. This effectively turns connected vehicles into additional grid storage.

The National Travel Survey (2005) found the average car in Britain travels around 25 miles per day. Thus, cars remain parked for about 23 out of every 24 hours. If they are connected to the grid, their storage capacity can be used to smooth the fluctuations of electricity supply and demand, thus reducing the necessary peak generating capacity." (ZeroCarbon Britain Chapter 10, see http://www.zerocarbonbritain.com/)

This seems much more promising, but even here, a closer look at the figures reveals some problems. The emissions that arise in making the batteries are just one. Some back of envelope calculations reveals that, in a 2050 global economy in which everyone had an electric car, just making the battery in their car would use up almost all of an individual’s very much smaller annual CO2 budget at that time. That's before one even begins to take into account the emissions from the energy source to power it up. Of course technologies will improve but it all remains so much speculation.

The EROEI of Coal

In an energy-scarce world, the ratio of energy returned on energy invested (EROEI) is crucial. When the steam pump to drain the water out of coal mines was first invented it transformed mining because, for the investment of a relatively small amount of coal energy to fuel the pump, a huge amount of new coal energy became available from mines that had previously been flooded and unworkable. It may be that UCG will be the technological innovation that will again increase the EROEI in coal mining and coal power technologies. However, in every other respect the EROEI of coal and coal power is moving in the other direction. More of the coal that is being recovered is of lower energy content, and more is recovered from smaller seams available in more difficult mining conditions. The EROEI therefore declines. The coal is also being recovered further away from where it is used, which means more energy is used in building and using the coal transport networks. This decline in the EROEI takes place against the background of a similar decline across the whole hydrocarbons sector. Thus the oil used in mining becomes more expensive, forcing the mining sector to create its own using CTL technologies, and so once again the energy that one must invest to get energy increases, or, put the other way round, the EROEI declines. And when one uses coal instead of oil as a transportation fuel, energy is lost in the conversion process. For society as a whole, once again, the EROEI can be seen to be declining. More and more energy resources are needed to recover the coal resources.

And coal production brings with it other considerations too, such as the need to restore landscapes destroyed by mining and to prevent damage to human and environmental health from soot and fly ash, nitrogen oxides, sulphur oxides, mercury, dioxins and polycyclic aromatic hydrocarbons? This takes energy too and further reduces the EROEI of coal. As the fossil-fuel economy evolves it reaches a point where the amount of energy needed to gain energy starts to squeeze the resources available for consumption.






From Hall C., Powers R. and Schoenberg W Peak oil, EROI, investments and the economy in an uncertain future (forthcoming). The diagrams are explained in Professor Hall's lecture on

www.feasta-multimedia.org/2007_feasta_lecture/Charles_Hall_Lecture.mov

The latest and final act of the drama of a resurgent coal sector is the need to use even more energy to build up an infrastructure to capture the climate-destroying gases of coal and hydrocarbons. One can ask - should we really be concerned? As Sir Nicolas Stern says in his report for the British government, it will all bring jobs and further growth. However these jobs would be created by in the construction of an ever larger technological infrastructure owned and run by the carbon energy sector for which we will all pay dearly in the form of a high carbon price - and out of this progressively large technological infrastructure we will not actually see any increase in consumer welfare. What's more, as we will see in the next section, the chances are very slim indeed that the climate strategy of the energy giants embodied in all this technological kit will actually work.

PART FIVE - COAL AND CARBON CAPTURE AND STORAGE

Current policies for coal are based on an optimistic faith that a largely untried technology can clean up coal power and make it climate safe. The available evidence casts doubt on the effectiveness of CCS, however, and suggests that even if it does "work", it will be generalised only when it is far too late. By the time CCS comes on stream renewables would be cheaper anyway. Research on CCS should go ahead but no more power stations should be built until CCS has proven itself.

Can the resurgence of coal be made climate-change safe? Probably not, and certainly not within the time frame needed. At the time of writing the IEA forecasts an increase in coal power generation capacity of 1800GW up to 2030. At current power station technological efficiencies, 1800GW of coal power capacity, when built, would be emitting 3 giga tonnes of carbon a year (3 gt C/ year). When we compare this figure with the current total global emissions of 7 gt C/year we can easily see that it would be a disaster for the global climate system. Unless they are willing to risk being seen as involved in a venture of catastrophic environmental irresponsibility, it is in the interests of the coal and power companies to have us believe that they can capture all of this CO2, liquefy it and pump it into safe underground storage. Yet to capture and sequester 3 gt C/year would be an absolutely gigantic undertaking, involving pumping underground a volume of liquefied gas equal to three times the amount of oil currently flowing out of the earth. And this would just be to cover emissions from electric power generation. It does not take into account the CO2 that would have to be sequestered if CTL technologies were being developed on a wide scale because, as has already been explained, the emissions from CTL conversion are considerable. It is thus vitally important to critically examine the CCS project and its consequences.

There are three main areas of focus when it comes to assessing CCS:
(1) whether the technology will work - or how well it will work
(2) whether it can be developed in time to prevent a climate crisis
(3) whether it is the least costly option when measured against the alternatives, such as the development of a mix of renewables.

All of these issues must be assessed critically and empirically tested, bearing in mind what management-theory literature terms “optimism bias” and “strategic misrepresentation”. Since there is a huge amount of money and capital that depends upon CCS being effective, cheap and on-time, there are also vested interests that one would reasonably expect to be prone to “wishful thinking”, misrepresentation or even, in the worst cases, lying.

Optimism Bias and Strategic Misrepresentation

Wikipedia defines "Optimism bias” as “the demonstrated systematic tendency for people to be over-optimistic about the outcome of planned actions. People tend to see the future through "rose-colored glasses," as the saying goes. Optimism bias applies to professionals and laypeople alike, and arises in relation to estimates of costs and benefits and duration of tasks. It must be accounted for explicitly in appraisals, if these are to be realistic. Optimism bias typically results in cost overruns, benefit shortfalls, and delays, when plans are implemented." (See http://en.wikipedia.org/wiki/Optimism_bias).

There are arguments about the degree to which "optimism bias" is actually accounted for by "strategic misrepresentation"—the deliberate underestimation of costs and overestimation of benefits in order to get projects approved, especially when projects are large and organizational and political pressures are significant.

Such “wishful thinking” and misrepresentation are the norm in business. A study by Flyberg et al found that in 9 out of 10 transport infrastructure projects in the USA, costs were underestimated. Moreover, he continues: "In addition to cost data for transportation infrastructure projects, we have reviewed cost data for several hundred other projects including power plants, dams, water distribution, oil and gas extraction, information technology systems, aerospace systems, and weapons systems..... The data indicate that other types of projects are at least as, if not more, prone to cost underestimation as are transportation infrastructure projects.” (Flyvberg, Bent et al "Underestimating Costs in Public Works Projects: Error or Lie”? Journal of the American Planning Association, vol 68, no 3 Summer 2002 pp 279-295)

While Flyberg et al's study relates to cost, the same issues arise in relation to project duration; project time overruns are so much the norm that governments actually take steps to re-calculate time expectations. For example the British Treasury issues guidance to government officials in order to correct for optimism bias. The rational is as follows: "There is a demonstrated, systematic, tendency for project appraisers to be overly optimistic. To redress this tendency appraisers should make explicit, empirically based adjustments to the estimates of a project’s costs, benefits, and duration.....it is recommended that these adjustments be based on data from past projects or similar projects elsewhere, and adjusted for the unique characteristics of the project in hand."
(See www.hm-treasury.gov.uk/media/D/B/GreenBook_optimism_bias.pdf)

As far as the British Treasury is concerned, "non standard civil engineering" projects are typically between 3 and 25 per cent over-optimistic about their duration. Projects of an "equipment and development" character have typical duration overruns of 10-54 per cent. In order to arrive at realistic time frames, the Treasury adopts a correction method in which it takes the upper figure and then revises it downwards to the extent that optimism-bias risks have been mitigated.

In the case of CCS it can be said that the "capture ready" concept requirement for new power stations will be a mitigation of time overruns, but this covers only part of the whole process. It would be prudent to apply correction factors to stated expectations about CCS, and all statements from official sources should be treated with scepticism. With this in mind let's look at all the issues in turn.

Will the technology work (well enough)?
What percentage of the CO2 can be captured?

Reading most mainstream PR material on CCS, one can be forgiven for assuming that it will capture all the greenhouse gases arising from the power generation process. This is not the case. No capture technology will be 100 per cent effective. A World Coal Institute report on CCS claims that CCS will reduce emissions by 80-90 per cent. However a study conducted by the Wuppertal Institute and a number of other German research organisations points out that 5 per cent of the CO2 emissions associated with a power station occur in the production chain leading up to the delivery of the fuel—in the mining and in the transport of the fuel to the power station. Because CCS reduces the efficiency of the power station there will have to be far more mining and transport - and the dirtier the power station, and the higher its emissions, the more that this is true. Anything between 20-44 per cent more energy input is needed. When one takes that into account, the real reduction of CO2 begins to look more like 72 to 78 per cent (starting from an assumption of 88 per cent capture at the power station itself). However, it gets worse because not only is more CO2 released in mining and transporting extra coal, but there will also be more methane released too - so the effect of the extra mining of the coal could mean that the greenhouse gas reduction, measured in CO2 equivalents, is more like 67-78 per cent. (See http://www.wupperinst.org/uploads/tx_wibeitrag/II-Kap4-8-RECCS-Endbericht.pdf )

Leakage of stored CO2

A question that is more commonly posed is - will the CO2 actually leak back to the surface?

This is a valid question. A Wuppertal Institute study argues: "Basically all the geological storage options have a risk of leakage; either though unsealed or insufficiently sealed drill holes or galleries (oil and gas fields and coal mines), along unknown or newly appearing faults or interruptions in channels in the geological formation intended for storage or though leakages caused by seismic activity. These can lead to CO2 coming to the surface or into other rock strata such as those through which groundwater flows. In aquifers the introduction of CO2 can lead to the acidification of the water already present and the corrosion of rock formations and the seals on some tunnel holes. CO2 storage in deep coal seams also risks displacing methane, which has a much higher greenhouse gas potential than CO2. In disused coal mines, the risk of leakages into densely populated areas (like the Ruhr settlements) would be quite high due to the limited depth of the covering geological layers, the multi-branching nature of the underground passageways with connections to active mine areas and partly "forgotten" mine galleries with pervious connections (the author’s translation; Wuppertal Institute Study, page 183).

Of course the leakage rate will be low when a storage area is first being set up, but when it is full it will be much larger. With a 1 per cent leakage rate per year, only about one half of the CO2 stored after a 30-year build-up would be still underground 70 years later. For CCS to make sense at all it must have a leakage rate of much less than 1 per cent.

Leakage rates depend on the availability of suitable storage locations, ideally close to the places where the CO2 would be generated. What information on that is available?

Available underground storage capacity

So, much is clear: There are plenty of places in the world where CO2 can be stored. But are they in the right places? The answer is, not entirely. Many thermal power plants in the US are located near depleted oil fields which perhaps have potential for CCS, but for Japan, China, and Korea, the potential for underground storage is very poor, which is why those countries are examining undersea storage as a possibility.



http://jp.fujitsu.com/group/fri/en/column/economic-topics/200606/2006-06-16-1.html

Another desk study for the Asia Pacific Economic Cooperation Zone (APEC) countries assesses the prospectivity for CCS in a variety of Asian countries (prospectivity is a perception of the likelihood that a resource is present in a given area based on available information; it considers if it’s worth prospecting there). The study compares emissions levels against prospectivity for emissions storage. This reveals that there are areas where there would be a considerable mismatch between close storage options and sources of emissions. This is true, for example, of Taipei and the Republic of Korea.

In China itself the study shows that: "sources in Western China are negligible in relative terms. Sources are concentrated in Northern China.....Southern areas (e.g. Guangzhou) are challenged to the absence of any obvious high prospectivity onshore basins - offshore basins may offer a solution."

(See www.co2crc.com.au/PUBFILES/STOR0405/APEC/APEC_Ph1_FinalReport_Summaries.pdf)

Transport

From an ecological, economic and energy point of view, it makes sense to transport CO2 only via pipelines and large ocean tankers. This will require the prior agreement of many different stakeholders and agencies. Transport represents probably 10 per cent of the financial costs of the overall process. More important, however, are the costs and logistics of transporting the fuel and existing grid connections, which will create a pre-disposition to use existing power station sites. The increased freight in and out of the plants will put a considerable extra load on the transport system, and although the risks per ship or per mile of pipeline will be small they will still be greater than before.

Because CO2 does not burn there would be no danger of fire but, because it is heavier than air, leakages would be focused on specific land topographies and give rise to a risk of suffocation. It would therefore be necessary to regulate pressure and temperature carefully; CO2 has to be kept cold or it may suddenly and uncontrollably go over into gaseous form. This would mean that pipelines and installations would have to be monitored and, worse, that installations may become targets for military or terrorist attacks. Offshore pipelines can also be damaged by ships' anchors and fishing nets. With already existing onshore US CO2 pipelines, there were ten accidents between 1990 and 2002?a rate of 0.032 accidents per 100 km per year. Onshore gas pipeline accidents in Western Europe in 2002 were 0.02 per 100 kilometres per year. (Wuppertal Institute Study part 2 p.77).

The consequences for human populations, animals and vegetation from too much leakage are not negligible. For geological reasons there is a location in the USA where significant amounts of CO2 are emitted from underground - at Mammoth Mountain in the Sierra Nevada, in California. "Mammoth is outgassing large amounts of carbon dioxide out of its South flank, near Horseshoe Lake. The concentration of carbon dioxide in the ground reaches over 50%. Measurements of the total discharge of carbon dioxide gas at the Horseshoe Lake tree kill area range from 50-150 tons per day. This high concentration causes trees to die in six regions that total about 170 acres (0.688 km²) in size. Camping has been prohibited in the tree kill area since 1995, to prevent asphyxiation of campers due to accumulation of carbon dioxide in tents and restrooms.... in March 1990, a United States Forest Service ranger became ill with suffocation symptoms after being in a snow-covered cabin near Horseshoe Lake. Doctors later determined the cause: carbon dioxide poisoning. Measurements around the lake found that restrooms and tents had a greater than 1% C02 concentration (toxic), and a deadly 25% concentration of CO2 in a small cabin. " http://en.wikipedia.org/wiki/Mammoth_Mountain

The key point here is that although the risks are small, they are tangible and, if they are to be acceptable to the public, they will demand careful consideration in consultation with interested parties. But this will all take time, and the problem is that humanity does not have the time.

Deadlines for coal power mitigation technologies

One huge failing in many presentations of clean coal technology is that the timescales given for the development of CCS are based on the technological and institutional requirements of that development. They do not reflect the time that humanity actually has left to take the necessary action to deal with the climate crisis.

Unfortunately, the earth's climate system has not been calibrated to the timescales that researchers, engineers and legislators can achieve. A recent paper by the Institute for Public Policy Research (IPPR) showed that, to be confident of keeping the increase in global temperatures to below 2 degrees centigrade, emissions of CO2 will need to peak between 2010 and 2013, achieve a maximum annual rate of decline of 4-5 per cent between 2015 and 2020, and fall to around 70-80 per cent of their current levels by the middle of the century. That, it should be stressed, is what needs to happen globally; if there is to be any space for growing emissions by developing countries then the reduction in the EU will have to be much greater.

This IPPR target is also likely to be an underestimate. In the last few months the climate debate has been altered by news of the melting of the Arctic sea ice some 20 years sooner than predicted, and by new, more complex “coupled climate models”. Coupled modelling means the effects of some of the positive feedbacks from vegetation are now included in mathematically modelled assessments of how much, and how quickly, all human emissions need to be reduced to keep below two degrees temperature rise and so avoid ‘runaway’ rates of climate change. Evidence from the Intergovernmental Panel on Climate Change in its Fourth Assessment Report, AR4, shows that zero net emissions globally by 2060 are required if we are to keep below 450 ppmv atmospheric CO2 concentration.
(See http://ww.gci.org.uk/briefings/Channel_Four.pdf)

"Capture ready" power stations - a misnomer for power stations not yet ready to capture CO2

CCS does not measure up against these time lines. It will be 2020 at the earliest before the EU feels it will be able to require all European coal power stations to be equipped with CCS. It would then take four years to retrofit so-called "carbon ready" plants.

Moreover, the main increase in coal power generation capacity is occurring in developing countries. China, India and other developing countries do not see why they should bear primary responsibility for the costs and risks of developing CCS, and they are strongly indicating that the onus is on developed countries to show leadership and to prove the validity of the technology, firm up costs and reduce the technical risks before they act. This in turn means that it would not be before 2025, at the earliest, that there would be generalised introduction of carbon mitigation technologies for coal power in developing countries.

Thus until 2020 the optimistic estimates are that CCS will have reduced global CO2 emissions below what they would otherwise be by no more than 3 per cent, rising by 2030 to at most a 16-20 per cent reduction. Until 2020 the EU will merely require that new power stations are "capture ready". This will mean that the technology of the power stations does not preclude retrofitting capture technologies, that there is enough space on-site at power stations for the technology, and that the power companies have done a desk study showing where the CO2 from their station will be pumped to. The same idea of "capture readiness" is being adopted as a policy idea all over the whole world. Yet while they are merely "capture ready," power stations are not mitigating CO2 emissions. In effect, “capture ready” means that any station is still 4 years away from actually capturing any CO2 at the point where retrofitting begins.

These estimated timelines ought to be further corrected for optimism bias and strategic misrepresentation. Applying British Treasury optimism bias corrections to these time lines would add 25 to 54 per cent to the expected times. This means that through most of the world CCS is pretty irrelevant for climate mitigation until 2030.

Why it will take so long - evolving a highly complex process

Doubtless industrial and official representatives would say that this is too pessimistic. But, as we have argued above, the precautionary principle is based on reasoned pessimism. Governments and companies should not be gambling with the future of life on the planet. There are good reasons to believe that CCS will take too long time to come through. Certainly, if it is to become a generalised reality, various technical, legal and regulatory issues must be worked out, as well as financial and economic ones. Certain events must unfold before any company will risk embarking on the very considerable capital investment in CCS. Legal and regulatory questions cannot be sensibly formulated until the features of the technology are known, for example, yet that knowledge cannot emerge until research and development of commercial-scale trials have taken place. The trials make better knowledge of capital and running costs available, and without that knowledge the financial requirements of the process cannot be firmly established. Any company considering investing in CCS will need not only a functional legal framework and knowledge of costs, but also some kind of long-term guarantee that the costs can be met in some way. So, things are far from simple.

Unravelling the tangle of issues may take considerably longer than people imagine. Some thorny issues must be resolved. For example, there is a problem, common to the nuclear industry, about legal and other issues for a waste product that will be in storage for centuries, long past the likely lifetime of individuals and corporate institutions. Who owns or is liable for this commodity CO2 - or this waste product CO2 - and how is it classified? Who will be liable in generations to come if and when companies go bust? What arrangements are in place to monitor storage, who will be liable and what procedures will be followed if leakage occurs on a significant scale? How can you insure a process the dimensions of which are so unclear? Legal issues in environmental, spatial planning, mining, water and waste law all need to be worked on - in all of the countries in which CCS will be implemented. Of course, to amend laws is a political process and such processes do not always run smoothly.

In order to be clear about the technical issues that will shape any relevant legislation, the EU and other countries are driving the research and development process forward. One key milestone will be the construction and operation of a number of demonstration projects to work through the technical issues in practice. In the EU it is hoped that 10-12 of these projects will be up and running by 2015. The technical issues arise with both capture and storage, and the whole situation is made more complex for the legislators by the fact that there is a range of potential technologies on offer for both capture and storage.

There are three potential CO2 capture technologies, each with its own technical issues: a post-combustion process of flue gas scrubbing; a process (oxyfuel) that involves burning coal not in air but in oxygen, which leaves a flue gas consisting almost entirely of CO2; and what is known as the integrated gasification combined cycle process – which first turns the coal into syngas, that is then burned.

Testing the effects of these technologies will require investment for which the EU currently does not have a budget. It is relying on member states to supply the necessary funding. Current estimates are that the demonstration plants would cost $500 million and $1,000 million for the first 250 MW – 50 per cent of which would be for the CCS installations. It is estimated that the CCS will add less later; according to the IEA it will then add 20 to 25 per cent to capital costs. The cumulative investments with carbon capture in OECD power generation over 30 years will then be in the region of $517 billion to $641 billion. By way of comparison Gulf Oil revenues in 2006 were of the order of $500 billion.

Capital investment on this scale will not happen unless and until the economics of the carbon market are put on a much more secure footing, based on any successor regime to Kyoto, so that companies can feel secure about carbon prices in the long term. Yet to date this has not been established.

Working through this complex maze will take much time and there is plenty of room for conflicts to arise to delay the process further, such as when governments decide they want to favour some approaches but not others. On 22 October, 2007, an article by Russell Hotten appeared in British newspaper the Daily Telegraph titled "Carbon Capture Plea from Energy Firms,” which explains how "British Gas owner Centrica, ConocoPhillips, and Richard Budge's Powerfuel, are among those companies that considered seeking a judicial review when they were excluded from a contest to build the world's first green coal plant......Almost two weeks ago John Hutton, the Secretary of State for Business, said the companies' pre-combustion carbon capture technology was barred from the race to build a clean coal plant. Instead, the Government would support an alternative post-combustion method. The companies said Mr Hutton's decision went back on a Government promise that both technologies would be supported." (See http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/22/cnets122.xml)

It should be stressed that this is not an argument against CCS or against research into it; rather, it is an argument against a policy that allows and encourages the construction of coal power stations based on the implied prospect—that CCS is the solution to climate dangers. As we have seen, this is not true, because CCS will not be up and running in time to make a difference to the operation of these coal power stations. It is hard to avoid the conclusion that the public is being “sold a line” about coal power. To use a particular analogy, it is rather like telling someone with six months to live that medical science stands every chance of finding a cure for their condition in two years’ time.

In any case, given the lengthy time lines the consideration of alternatives that are less costly at the time that CCS might be generalised should be considered.

Competition from renewables

One of the great ironies of a coal resurgence is that by the time CCS comes on stream in a generalised way there is a strong probability that renewables would in any case be more competitive. If we take the view that CCS will have been able to cover only 20 per cent of coal power by 2030 then it is worth taking account of other things that will be happening by that date. According to research by the Wuppertal Institute, a mixture of renewable-energy systems has the competitive advantage over both coal and gas with CCS from 2030 onwards. (See http://www.wupperinst.org/uploads/tx_wibeitrag/0-Inhalt-RECCS-Endbericht.pdf Zusammenfassung, p.18)

The coal and power industries have made much of estimates in the Stern Review that coal power with CCS is a cheaper alternative than renewables. But it is worth pointing out that cost estimations for most renewables are based on real experience for an already existing industry, whereas cost estimations for CCS are based on almost no experience of actual practice at all. This makes it legitimate to suggest that the optimism bias and strategic representation are more likely to be found in the CCS figures.

The Wuppertal Study is summarised by Dr Klaus Brendow of the World Energy Council in one of his slides



PART SIX: POLITICAL ECONOMY—ALTERNATIVES AND HOW TO ACHIEVE THEM
The political and economic systems have co-evolved so that the huge companies dominating energy production have immense power to shape policy and policy perceptions. In consequence the political-economic elite continues to give scant priority to the immense dangers of a climate catastrophe and/or energy winter. Rather than the top-down, large-scale, costly and complex solutions presented by the current elite , what is needed is a bottom-up re-development of communities centred on energy efficiency, renewables and energy-lite lifestyles. The resources for a move towards re-organising everyday life as we know it could potentially come from a new type of greenhouse emissions control —an economic policy known as Cap and Share (see www.capandshare.org). Cap and Share would oblige energy giants to buy production-authorisation permits for fossil fuels from the general population; only then could they sell a capped, and reducing, volume of climate-destroying fuels. The money generated would pass the scarcity rent for using the Earth's atmosphere to the base of the economy and society.

The Power Struggle for Power Down

Frequently politicians and the media speak about the need to stay below an increase in 2 degrees centigrade for the average global temperature. They rarely mention that this is 2 degrees above pre-industrial levels and that it actually means only 1 degree above 2000 levels. Nor do they mention that with a time lag of 30 years between emissions and the consequences of those emissions for the climate, there is only a short time left in which humanity can make the necessary changes. The risks are very high indeed that the climate system will go over a tipping point into a different state, accelerated by amplifying feedbacks. The gravity and seriousness of our collective situation should be seen to be analogous to a war emergency. In a war, societies can be mobilised to deal with extraordinary changes in resource allocation. This is the real challenge now facing humankind.

e.g. Military outlays as a percentage of national income

UK

1939 15
1940 44
1941 53
1942 52
1943 55
1944 53

If this is the situation we face, then the idea of 1800 GW of new coal power stations represents a disaster and a “declaration of war” on the climate system by energy companies and any governments or regimes that support their corporate interests. CCS as it is currently being touted should then be regarded as little more than a colossal case of “wishful thinking”.

On the other hand, there are enormous uncertainties about the future. One scenario, for example, envisions a situation where, because of depleting oil, gas and coal reserves, emissions cannot continue for long on their upward trends and will start to decline, simply because the economically recoverable reserves will not be available to burn. If this scenario is accurate, then the boom in building coal power stations is in any case a waste of resources because in a few years there will not be enough fuel for them.

But there is another, more serious challenge. If coal reserves do deplete at the rapid rate that some predict, there will not be sufficient recoverable fossil energy resources to build up a renewables-based energy sector to take over from it.

In an ideal world the transition to a renewables-based economy would look like this:




This is a scenario in which fossil energy reserves are sufficiently available and can be diverted into the investment necessary to build up a renewables sector. However, developing a renewables sector on the back of a rapidly depleting fossil-fuel base would not be nearly so easy; the physical energy resources from the renewables sector are not yet available, nor is the energy to do the physical work. In that case then something more like this will occur:



From: Mulder HAJ and Biesiot W (1998) Transition to a Sustainable Society - cited in JJ Battjes, "Dynamic Modelling of Energy Stocks and Flows in the Economy. An Energy Accounting Approach" ISBN 90 367 1063 4 page 46


The power elite agenda
There is no indication that the world’s power elites are able to acknowledge the likelihood of such a scenario. This should not come as a surprise. For over 200 years the carbon energy sector has co-evolved with the industrial, economic, political, social and cultural life of society. Not only does the energy sector provide the physical motive power that underpins virtually all economic activity, but it also has vast purchasing and political power to match. The energy sector, banks and financial institutions are closely intertwined, as are the institutions of national states, international state agencies and the big media empires. Finally, the armed forces or mercenaries and security companies work closely to protect the companies that help to fuel the war machines of the different states. To call the energy sector well resourced, well connected and well informed is to understate its vast power to shape all political-economic agendas, including matters of war and peace. In country after country around the world, the state and energy companies enjoy a symbiotic relationship: the state owns the energy companies and the energy companies virtually “own” the state. In the USA the Bush presidency is based in the oil and military logistics sector. In Russia Putin's government is based in the gas and oil industry. When asked who was more powerful than himself while he was chancellor, the now British premier Gordon Brown indicated that he considered Lord Browne, then head of British Petroleum, as the most powerful person in the UK.


The coal industry has for many years been in decline in this network of influence. Now it is making a comeback. Coal, oil and gas companies are finding that their interests are converging and they are offering us a corporate version of sustainability that on close inspection appears to recklessly ignore huge dangers while pursuing a direction completely at odds with the precautionary principle. In the European Union, for example, we appear to be locked into a process that is explicitly in favour of a resurgence of coal power. In recent years the European Commission has confirmed its coal revival strategy in its Green Paper “A European Strategy for Sustainable, Competitive and Secure Energy” (March 2006), in the 7th Framework Program for R&D (2006-13) and in the Communication on Sustainable Fossil Fuels (January 2007).

At the same time, an alternative to the corporatist growth agenda is emerging, in recognition, perhaps, that an entirely different way of living is needed. An increasing number of people see that there is no chance that current Western “affluenza” lifestyles can be reproduced globally. In any case, the most advanced thinkers in the field of economics now recognise that human welfare is not based primarily on ever-increasing levels of consumption. (Richard Layard. "Happiness. Lessons from a New Science," Penguin Books 2005). Energy-lite ways of living that support human well being are both possible and necessary. But the emergence of new lifestyles must coincide with the move to a renewables-based energy system and an urgent drive toward energy efficiency. In this alternative vision, the fossil fuels that remain should be used only for the production of absolute essentials and otherwise ploughed as a matter of urgency into the development of a renewables sector.

Loss of control - when stress surges face too much complexity and resilience breaks down

The problem facing humankind is that the existing political economic system is locked into a different dynamic and is still too inflexible to evolve the bottom-up approach described in this report. Various systems theorists and historians provide us with the clues for understanding our current condition. The climate crisis and resource depletion are "stress surges"—huge challenges for a civilisation that has simply become too big and too complex to be able to respond effectively on the scale and in the time-frame necessary. We have reached the outer limits of growth, and the political economic system is attempting a techno-response based on old paradigms. As we have seen, there is a huge risk that this solution will not work well enough, will arrive too late and may even be irrelevant if the coal reserves run out too fast.

In his book The Collapse of Complex Societies, archaeologist Joseph Tainter describes how civilisations become ever more complex and how, after a point, this level of complexity is so great that they cannot find the mechanisms to respond to a threat and thus collapse. Other theorists argue that human and natural systems evolve on different time and geographical scales in three dimensions: interrelatedness, productivity and resilience. After a new system first emerges it becomes more interrelated and its productivity increases, but only up to a point. Beyond that point the dense relationship of interdependencies becomes a vulnerability. Problem management becomes more difficult because problems become increasingly complex. When breakdown occurs it cascades through all the interrelated features of the system. The resulting collapse is a reduction of productivity, interrelatedness and complexity. If we are describing a human economic system this means a decline in production, which frees up resources for new forms of socio-economic and ecological organisation. (See Joseph A. Tainter, The Collapse of Complex Societies, CUP, 1988 and Gunderson L. H. and Holling C. S. , Panarchy Understanding Transformations in Human and Natural Systems, Island Press, London 2002)

Systems are also nested inside each other: The economic system is nested inside the ecological system. A key issue then is on how many levels the collapses happen when they do occur - will a collapse of the economic system also be a collapse of the ecological system? That is certainly a danger - but we can at least hope and work to try to ensure that things do not reach that stage.

Pre-figuring a simpler society – energy-descent planning and Transition Towns

Ideas like these help us with a wider view, a broader orientation, as we consider responses. Humankind must begin now to develop the simpler ways of living, the skills and the resource-lite ways to welfare which pre-figure a post-growth economy. There is a need for a movement with a practical approach to the reorganisation of economic life that realistically matches up to the features of the global ecological and economic emergency. Such a movement cannot come out of the existing growth system. Instead it is emerging in the form of initiatives, experiments, projects and networks outside of the mainstream, a prime example being the growing Transition Towns network. The agenda of the Transition Towns movement is not an attempt to cling onto the carbon infrastructure but, on the contrary, calls for dispersed small-scale initiatives to re-organise everyday life along energy-saving lines. Welfare is seen as residing in a healthy, resilient community that can meet most of its needs locally in a clean environment. At the same time, renewable energy systems are developed in such a way that they can be integrated into the new arrangements.

A movement like this needs a distinctive political style that, while being critical of the mainstream, remains constructive, not least because violent revolutions waste scarce resources and leave everyone poorer. The movement can however work towards demonstrating how the state could be organised in a way that would really assist in getting us out of our present dilemmas. (Roy Madron and John Jopling "Gaian Democracy." Schumacher Briefing no. 9). When it is shown that the mainstream economy and its political superstructure are in a state of destructive paralysis - when it becomes apparent that it is incapable of responding to the complexity and all the many features of the crisis - growing numbers of people are likely to gravitate to these bottom-up, constructive grassroots initiatives, initiatives that revolve around simpler and less energy-intensive forms of living and push people towards an alternative politics.

The Cap and Share approach (a potential approach to an international climate treaty) to carbon control - the people controlling the energy giants and taking the scarcity rent for the Earth's atmosphere

A central feature of such an alternative politics is a different approach to the control of carbon emissions. Current approaches in operation are far too complex, with their focus on the billions of places around the globe where the combustion of fossil fuels takes place. A simpler approach—one advocated by cap-and-share — is one that focuses on the far smaller number of locations where the fuel comes out of the ground and enters the economy “upstream,” controlled by only a few hundred companies worldwide. To use an analogy, it is as if greenhouse gases enter the economy through a relatively small number of pipes attached to thousands of sprinklers with billions of holes. Instead of trying to plug up billions of holes, policy should focus on turning down the taps feeding the pipes—by requiring fossil-fuel producers to have production-authorisation permits for the greenhouse gas content of their fuels, when burned. The number of these permits would be capped and brought down year by year as quickly as possible. This means putting limits and controls on some of the most politically powerful organisations and industries in society - the fossil fuel producing organisations and industries which will otherwise lead us in the direction of collective suicide.

But for a policy like cap and share to evolve on the scale required it will require a global political movement and an attendant struggle to impose a “power down” approach on the energy giants whose production is destroying the global environment.

Just how might such a movement be developed? And can global levels of discontent over rising fuel prices be neutralised? The answer to both questions is the same: The bulk of production-authorisation permits should be distributed to adult populations on an equal per capita basis. The fossil-fuel companies would then have to purchase the permits from the population (via intermediaries) and the population would capture the scarcity rent that arises from limiting use of the Earth's atmosphere. This is not only equitable—because if the sky belongs to anyone it belongs to us all equally—but it also puts money into the base of the economy. It would draw the bulk of the population into climate change politics in a way that policy makers have so far failed to do. It would also help to provide the general population with some of the capital resources they need to develop millions of localised small-scale solutions to energy transformation at a dispersed local level.

There are at the moment excellent beginnings for the transformation of sociey and economy at the base of society, like the Transition Towns movement. This movement needs resourcing and help to involve the bulk of the population. There are few better ways to involve everyone than to give them permits that are worth money - which can then lead to a dialogue about the ideal way of spending it. (It is not suggested that this should be the official policy of Transition Towns as this might be divisive, but many people in Transition Towns and similiar movements may wish to support such state policies alongside the practical work they do locally).

A Global Movement for Change

The full potential of this idea would be realised at a global level, because it would alter the balance between rich and poor in favour of the latter, both within countries and between them; because poor people use little fossil energy, they would therefore gain more than they lose through rising prices. Such a system would be likely to benefit the majority of the world’s population.

When a common understanding emerges, and when societies and communities realise that they are in an emergency situation, then and only then can great sacrifices be asked of people and only then will people make these sacrifices willingly. At this point nothing less will do. There is no avoiding a future in which great sacrifices are called for. Our task now is to recognise these and create a society in which today's children have a chance. Otherwise we are sending them to an early grave.