Nuclear News - Nuclear Monitor #811, 23 Sept 2015

Nuclear Monitor Issue: 

Climate change: Citigroup shows the way?

Sometimes confirmation comes from the most unexpected quarters. For example, consider a 132-page report from Citigroup: 'Energy Darwinism II; Why a Low Carbon Future Doesn't Have to Cost the Earth'.

The authors ask the question: Can we afford not to take effective action on climate change in Paris this coming December? And they answer: No. "Paris offers a generational opportunity; one that we believe should be firmly grasped with both hands."

The path of action Citigroup recommends is based heavily on investments in renewables and energy-saving technology. Nuclear power receives little attention. The report states: "One of the key theories from the original energy Darwin report was highlighting these differing rates of cost evolution of different generation technologies. Solar in particular was exhibiting learning rates in excess of 20% (i.e. the cost of a panel would fall by >20% for every doubling of installed capacity), wind at 7.4%, gas was evolving via the shale revolution in the US, while nuclear was becoming more expensive, and liquefied natural gas (LNG) had also increased in cost by around 10% per annum over the last decade."

In Citigroup's 'Action' scenario, renewables would account for 29.4% of global electricity generation in 2020 (hydro 17.0% and other renewables 12.4%), nuclear 12.4% and fossil fuels 58.3%.

The gap in actual outlays for the two alternatives over the next 25 years turns out to favor taking action now: "Citi's 'Action' scenario implies a total spend on energy of [US]$190.2 trillion while our 'inaction' scenario is actually marginally larger at $192 trillion. While in the Action scenario we spend considerably more on renewables (reducing in cost over time) and energy efficiency (effective negative energy usage), the resulting lower use of fossil fuels lowers the total cost in later years."

The up-front costs are entirely defensible investments, the authors argue; they help to prevent "profound impacts on countries, industries and companies" worldwide. The incremental costs are limited, they write, and ultimately lead to savings; they offer reasonable returns on investment and should not impact too harshly on global growth.

Calculated over the longer term, non-action will be far more costly to the business world – not to mention humanity.

The authors' treatment of the concept 'stranded assets' is interesting. Oil companies frequently point to the 'costs' (to them) of not pumping up every last drop of identified reserves. The authors turn the argument around: Acknowledging the companies' "pain", they point out that low commodity prices have already 'stranded' some of these resources, and are likely to continue to do so: "Over time, impacts may spread further to lower cost or lower emissions fuels, including currently producing projects."

Energy sources that require high investment with long-term payback, the report underlines, are especially vulnerable to subsiding demand and lower prices. Shale oil and developing entirely new coal provinces, as Australia is considering, are the examples offered. (Although unmentioned, nuclear new build springs to mind.)

One of the report's principal recommendations is that world credit institutions and market actors be engaged to help cover the initial costs. The report points to the emergence of international coalitions of investors that have taken pro-active stands on climate change, with a view to faciltate the transition to a low-carbon economy, and some innovative financing schemes to enable consumer-level investments in energy efficiency that have been implemented in various parts of the USA. It would seem that some parts of 'the market' are already taking positive measures spontaneously – that is, without demanding costly publicly financed enticements.

Citi Global Perspectives & Solutions, 14 Aug 2015, 'Energy Darwinism II: Why a Low Carbon Future Doesn't Have to Cost the Earth',

− Charly Hulten, WISE Sweden

Global Apollo Program

An coalition of prominent people has come together to ask the world's governments to find US$15 billion per annum to invest in scientific research and development dedicated to the goal of making renewable energy cheaper than coal within 10 years.

The coalition includes

  • a former chief executive of oil company BP,
  • BBC documentary maker and naturalist David Attenborough,
  • a former UK minister for energy,
  • one of the world's leading economists on the study of what determines our happiness,
  • a leading climate scientist,
  • the former head of the UK's major business lobby group
  • the chief executive of consumer products company Unilever,
  • former World Bank chief economist Nicholas Stern
  • and other prominent scientists and economists

The coalition draws its inspiration from President John Kennedy's Apollo Program which targeted putting a man on the moon and returning him safely to earth within the decade. They note that publicly-funded renewable energy R&D has been "starved" of funding, making up under 2% of the total of publicly funded research and development.

The coalition statement reads as follows:

We the undersigned believe that global warming can be addressed without adding significant economic costs or burdening taxpayers with more debt. 

A sensible approach to tackling climate change will not only pay for itself but provide economic benefits to the nations of the world. 

The aspiration of the Global Apollo Program is to make renewable energy cheaper than coal within 10 years. We urge the leading nations of the world to commit to this positive, practical initiative by the Paris climate conference in December.

The plan requires leading governments to invest a total of $15 billion a year in research, development and demonstration of clean energy.

That compares to the $100 billion currently invested in defence R&D globally each year.

Public investment now will save governments huge sums in the future.

What is more, a coordinated R&D plan can help bring energy bills down for billions of consumers.

Renewable energy gets less than 2% of publicly funded R&D. The private sector spends relatively small sums on clean energy research and development.

Just as with the Apollo space missions of the 1960s, great scientific minds must now be assembled to find a solution to one of the biggest challenges we face.

Please support the Global Apollo Program – the world's 10 year plan for cheaper, cleaner energy.