Shift to electric vehicles in emerging markets will ‘end oil era’ - China leads transition that may slash growth in global oil demand by 70% – Nothing to lose but your chains: The emerging market transport leapfrog

China is leading a switch to electric vehicles (EV) in emerging markets which will save governments $250 billion a year in oil imports and cut expected growth in global oil demand by 70%, finds a new report from the financial think tank Carbon Tracker published on Friday.

It’s thought to be the first study to reveal that transport in emerging markets accounts for more than 80% of all expected growth in oil demand up to 2030, based on an analysis of the International Energy Agency’s business as usual scenario. Half of the growth is forecast to come from China and India.

But the report notes that these countries are already reducing their dependence on oil and actively supporting EVs as prices fall close to those of petrol and diesel vehicles. China leads the world in the deployment of EV and India is following the same path.

“This is a simple choice between growing dependency on what has been expensive oil produced by a foreign cartel, or domestic electricity produced by renewable sources whose prices fall over time. Emerging market importers will bring the oil era to an end.” notes Kingsmill Bond, Carbon Tracker energy strategist and report lead author.

Most governments have strong incentives to electrify their transport systems. Emerging markets – India, China, South East Asia and most of Africa – spend huge sums on oil imports every year, and two thirds (68%) is used for transport. Oil imports cost 1.5% of China’s GDP and 2.6% of India’s GDP.

Nothing to lose but your chains: The emerging market transport leapfrog calculates that a switch to EVs could save emerging markets up to $250 billion a year collectively on oil imports by 2030, more than enough to pay for the infrastructure needed to support electrified transport. Annual savings would be over $80 billion in China and over $35 billion in India.

There are also strong public health grounds to cut oil use. Pollution linked to road transport causes 285,000 deaths a year in oil-importing emerging markets, including 114,000 in China and 74,000 in India, reports the International Council on Clean Transportation.

Battery prices have fallen 20% a year since 2010, stimulating huge new markets for EVs. The next few years will see them fall from $135/KWh to below $100/KWh, the point at which EVs become as cheap to buy as conventional vehicles. By 2030 they will be cheaper still – BNEF forecasts a battery price of $61/KWh while carmakers like VW and Tesla expect $50/KWh.

Chinese central planning has supported the country’s EV industry for many years as a means to reduce oil dependency and establish a lead in the emerging technology. China’s BYD is now the world’s fifth biggest carmaker, with a larger market capitalisation than General Motors.

In 2019, EVs accounted for 61% of China’s two-wheeler sales and 59% of bus sales, and the government plans that by 2025 one in five cars sold will be an EV. President Xi Jinping’s recent commitment to achieve net zero emissions by 2060 implies that all car sales in China will need to have an EV drivetrain by 2035.

Other countries are poised to follow. The Indian government plans for EVs to make up 30% of car sales by 2030, but local forecasters believe that by that date 30% of cars and 80% of two-wheeler sales could be electric.[1]

Shift to EVs will pay for itself

Countries can finance the shift to EVs from the huge savings they will make on oil imports. Carbon Tracker calculates that the cost of importing oil for the average car is ten times higher than the cost of the solar equipment needed to power an equivalent EV.[2]  The annual cost per car of imported gasoline is almost the same as the total cost of local charging infrastructure for an EV.[3]

Moreover, switching to EVs brings wider economic benefits by cutting the price of any remaining oil imports. Emerging markets are the single biggest driver of expected growth in demand for oil, so if that trend plays out it could contribute to prices falling by up to a quarter.

Lead in Drinking Water and Birth Outcomes: A Tale of Two Water Treatment Plants

Abstract

The recent drinking water crisis in Newark, New Jersey's largest city, has renewed concerns about the lead-in-water crisis becoming a persistent and widespread problem owing to the nation's aging infrastructure. We exploit a unique natural experiment in Newark, which exogenously exposed some women in the city to higher levels of lead in tap water but not others, to identify a causal effect of prenatal lead exposure on fetal health. Using birth data that contain information on mothers' exact residential addresses, we find robust and consistent evidence that prenatal exposure to lead significantly raises the probability of low birth weight or preterm births by approximately 1.4 to 1.9 percentage points (14-22 percent), and the adverse effects are largely concentrated among mothers of lower socioeconomic status. Our findings have important policy implications in light of the long-term impact of compromised health at birth and the substantial number of lead water pipes that remain in use as part of our aging infrastructure.

...

With infant health being an important predictor of later-life outcomes, these estimates are critical towards evaluating the cost-benefit calculus of infrastructure investments, including replacing all of the nation’s lead service lines, an initiative supported by the EPA as well as many states and communities at a potential cost of between $29 to $47 billion (EPA, 2019)... The EPA (2019) noted 6.1–10 million lead service lines (LSL) nationally, with an average estimated replacement cost of $4,700 per LSL

https://www.nrdc.org/experts/nrdc/groups-plan-lawsuit-response-high-lead-levels-newark-drinking-water

...

In March 2019, Newark commenced a program to remove and replace all of the city’s lead service lines in the water system at no cost to the homeowner, at a projected public cost of $90–$180 million. With the lifetime societal economic burden of a preterm birth estimated to be approximately $66,331 2018 dollars. The Institute of Medicine (2007) estimated the societal burden of a preterm birth to be $51,589 in 2005 dollars. The societal cost of the lead crisis in Newark could amount to $1.99–$2.65 million per year, just from an estimated increase of 30 to 40 preterm births linked to the heightened lead exposure each year. [30 (or 40) preterm births×66,331 per preterm births = $1.99 million (or $2.65 million)],

Assuming a discount rate for public policy of 2 percent based on the social rate of time preference (Council of Economic Advisers, 2017), societal cost savings from averting this adverse fetal health could be between $100 and $133 million, significantly offsetting the cost of public infrastructure investment. [There is ... debate as to the appropriate discount rate to apply for public policy (see for instance, Council of Economic Advisers,2017; Li and Pizer, 2018) depending on the social rate of time preference or the social opportunity cost of capital, and the length of the time horizon under consideration. The U.S. federal guidance requires agencies to use both a 3% and a 7% real discount rate in regulatory cost-benefit analyses. Under this guidance, the societal cost savings of averting the adverse fetal health would be between $66.3 million and $88.3 million (social discount rate of 0.03) and between $28.4 million and $37.9 million (social discount rate of 0.07). Clearly, the cost implications are sensitive to the discount rate employed. With long-term real interest rates decreasing substantially over the past decade, a recent issue brief by the Council of Economic Advisers (2017) recommends lowering the estimate of the social discount rate in applications to public policy cost-benefit calculus.

...

https://www.nber.org/papers/w27996

by Dhaval M. Dave & Muzhe Yang

National Bureau of Economic Research (NBER) www.NBER.org

Working Paper 27996; October 2020

Monetising the savings of remotely sensed data and information in Burn Area Emergency Response (BAER) wildfire assessment

Abstract

We used a value of information approach to demonstrate the cost-effectiveness of using satellite imagery as part of the Burn Area Emergency Response (BAER), a US federal program that identifies imminent post-wildfire threats to human life and safety, property and critical natural or cultural resources. We compared the costs associated with producing a Burn Area Reflectance Classification map and implementing a BAER when imagery from satellites (either Landsat or a commercial satellite) was available to when the response team relied on information collected solely by aerial reconnaissance. The case study included two evaluations with and without Burn Area Reflectance Classification products: (a) savings of up to US$51 000 for the Elk Complex wildfire incident request and (b) savings of a multi-incident map production program. Landsat is the most cost-effective way to input burn severity information into the BAER program, with savings of up to US$35 million over a 5-year period.

https://en.wikipedia.org/wiki/Wildfire#/media/File:The_Rim_Fire_in_the_Stanislaus_National_Forest_near_in_California_began_on_Aug._17,_2013-0004.jpg

https://www.publish.csiro.au/wf/WF19209  https://doi.org/10.1071/WF19209

by Richard Bernknopf, Yusuke Kuwayama, Reily Gibson, Jessica Blakely, Bethany Mabee, T.J. Clifford, Brad Quayle, Justin Epting, Terry Hardy, and David Goodrich

International Journal of Wildland Fire - https://www.publish.csiro.au/wf

Published online: 22 October 2020 

via/hat tip Resources For the Futre www.RFF.org https://www.rff.org/publications/journal-articles/monetising-savings-remotely-sensed-data-and-information-burn-area-emergency-response-baer-wildfire-assessment/

Combining information on others’ energy usage and their approval of energy conservation promotes energy saving behaviour

Households reduced their electricity use the most when they learnt both that they were using more energy than their neighbours and that energy conservation was socially approved. This suggests that efforts to use social information to nudge conservation should combine different types of social feedback to maximize impact.

Messages for Policy

• The content of social information messages determines their impact on energy conservation.
• Combining descriptive information on neighbours’ efficient energy usage and injunctive social approval for energy efficiency maximizes the effectiveness of social information.
• Delivering inconsistent descriptive and injunctive information reduces the impact of each piece of feedback.
• Simply adding more pieces of feedback of the same type has a limited effect.

Based on J. Bonan et al. https://doi.org/10.1038/s41560-020-00719-z (2020).

The policy problem

Home Energy Reports (HER) are a popular means of encouraging energy conservation, reaching millions of energy utility customers across many countries. HERs typically rely on social information about the energy usage of a customer’s neighbours (descriptive feedback) and their social approval of energy conservation (injunctive feedback) to nudge recipients toward more energy-efficient behaviour. The specific content of both types of feedback depends on how the recipient’s energy usage compares to that of their neighbours (Fig. 1). Available evidence indicates that the impact of HERs on energy consumption varies significantly both across countries and across individuals. This raises the question of whether the heterogeneity in the effectiveness of HERs can be attributed to how social information feedback is conveyed. Answering this question could inform the design of more effective communication campaigns relying on social information.

Fig. 1: Home Energy Report.

a–c, Layout and content of a Home Energy Report for a user receiving three thumbs-up (a); and a user receiving two thumbs-up (b). Both versions of the report contain injunctive feedback, that is, the thumbs-up (top), and descriptive feedback, that is, the bars displaying actual energy consumption (bottom). The figure also displays the position of the randomized descriptive or injunctive norm primes, whose text is shown in (c). Reproduced from Bonan, J., Cattaneo, C., d’Adda, G. & Tavoni, M. Nat. Energy https://doi.org/10.1038/s41560-020-00719-z (2020). Copyright 2016-2020

The findings

Energy customers who received two different types of social feedback (descriptive and injunctive) encouraging them to save energy reduced their consumption more than low-energy users for whom conforming with the descriptive feedback would entail consumption increases, at odds with the injunctive feedback praising energy saving. The addition of a second piece of information of the same type (for example, adding a second descriptive messages that encouraged energy saving) had a limited impact. When feedback was inconsistent, the piece of feedback delivering the strongest message prevailed, where strength reflected the difference between the user’s energy consumption and that of their neighbours (descriptive feedback) and the intensity of social approval conveyed through visual cues (injunctive feedback). These results suggest the significance of synergies between different types of feedback, rather than the superiority of any one type of feedback. The results may be specific to the precise wording and graphical representations used to provide feedback in our HER (Fig. 1), and may not generalize to the whole customer base.

The study
We carried out a randomized controlled experiment in Italy in which households received HERs. We disentangled the impact of descriptive and injunctive feedback in two ways. First, we exploited the discontinuities in the injunctive feedback, which changed discretely as users’ consumption crossed certain thresholds, for instance shifting from one to two ‘thumbs-up’ as a user’s consumption dropped below the average of their neighbours. Second, we randomly assigned customers to receive a message at the bottom of the HER emphasizing either a descriptive or an injunctive norm of energy conservation (Fig. 1). Using data on the content of the HERs received by users and on their energy consumption, we were able to evaluate the impact of each piece of feedback in isolation, and when combined with others of the same or of different types.

https://www.nature.com/articles/s41560-020-00727-z
by Jacopo Bonan, Cristina Cattaneo, Giovanna d’Adda & Massimo Tavoni 
Nature Energy Policy Brief https://www-nature.com/nenergy/

Volume 5, Published: 02 November 2020; Pages 832–833 (2020)

The main article "The interaction of descriptive and injunctive social norms in promoting energy conservation" by the same authors published on the same day at https://www.nature.com/articles/s41560-020-00719-z (pages900–909) notes

.....
the magnitude of the average savings from the programme (−0.353%) is outside the range of those generated by similar ones in the United States (minimum = 0.88%, maximum = 2.55%), they are in line with the existing evidence from Europe. Various factors, such as lower average consumption in Europe than that in the United States, the specific features of the programme we studied or differences in beliefs across contexts, may be responsible for these differences. The heterogeneous effects, although not robust and only marginally statistically significant, are qualitatively in line with the existing evidence on the larger impact of social information on high electricity users and on the absence of boomerang effects among low users

These results provide initial, albeit weak, support for our conceptual framework. For high users, normative and injunctive feedbacks pull behaviour in the same direction, which results in a reduction in electricity almost twice as large as that in the average treatment effect. For low electricity users, conforming to the reference groups’ behaviour motivates a consumption increase (’boomerang’), but the injunctive feedback included in the eHER counterbalances the negative effect of the descriptive feedback. 

We Energies to retire 1.8 gigawatts of fossil fuel; utility adding solar, wind, battery storage

Wisconsin’s largest utility plans to replace nearly half its coal-fired generation with a portfolio of solar, wind, batteries and natural gas plants as part of a $16.1 billion spending plan that the company says will generate profits for investors and save money for ratepayers.

WEC Energy Group plans to retire 1,800 megawatts of fossil fuel generation — including the South Oak Creek coal plant near Racine — over the next five years while adding 1,500 megawatts of clean energy and storage capacity along with 300 megawatts of natural gas generation.

Oak Creek, Wis., coal-fired electrical power stations. 

Coburn Dukehart/Wisconsin Watch

https://www.wpr.org/states-largest-utility-will-retire-1-800-megawatts-fossil-fuel-generation

Utility chairman Gale Klappa announced the capital plan during a call with investors Tuesday, in which he said it would help WEC meet its goal of carbon neutral electricity by 2050 and achieve a 55% reduction in carbon emissions by 2025.

Klappa said the spending plan, which is $1.1 billion larger than the previous five-year plan, will increase company profits by 5% to 7% a year while also saving ratepayers what amounts to $50 million a year over the next two decades.
...
In broad terms, the plan calls for building 800 megawatts of solar generation and 100 megawatts of wind generation coupled with 600 megawatts of battery storage, which can be used to balance those intermittent renewable resources.

“The data show that battery storage has now become a cost-effective option for us,” Klappa said.

The announcement comes as Wisconsin’s first utility-scale solar plant came online. Jointly owned by WEC subsidiary Wisconsin Public Service Corp. and Madison Gas and Electric, the 150-megawatt Two Creeks Solar Farm in Manitowoc County began commercial operation Monday.

Curtis Waltz Wisconsin Public Service Corp

WEC also intends to purchase a 200-megawatt share of Alliant Energy’s new West Riverside natural gas plant and build 100 megawatts of natural gas-powered peaking plants.

The company said those acquisitions will allow it to retire the 1,100-megawatt South Oak Creek power plant, whose four generators are all more than 50 years old, in 2023 and 2024.

WEC’s oldest coal-fired plant, South Oak Creek is the single largest source of toxic metals dumped into Lake Michigan, according to a Chicago Tribune analysis of federal data.

Last year, the Department of Natural Resources gave WEC until the end of next year to stop using water to remove ash from the boilers, a process that can lead to mercury and other toxins seeping into groundwater.
...
Klappa said closing an older plant like South Oak Creek could save $50 million a year in operational and maintenance costs.
...
Consumer advocates cautioned that ratepayer savings will depend on how regulators handle the hundreds of millions of dollars WEC has invested in fossil fuel plants over the past two decades.
...
On Thursday the Public Service Commission approved a plan for WEC to refinance $100 million of its remaining investment in pollution controls at its Pleasant Prairie coal plant, which WEC retired in 2018 saying it would save millions of dollars for ratepayers.  The financing arrangement, known as securitization, is expected to save ratepayers about $40 million.  Consumer and environmental advocates, as well as regulators, say securitization could be a key tool for paying off plants that are no longer economic to run.

Despite attempts by the Trump administration to prop up the coal industry, South Oak Creek is the 329th U.S. coal plant targeted for retirement since 2010, according to the Sierra Club.  Over the past decade, U.S. utilities have retired or replaced 95,000 megawatts of coal-fired capacity in response to tighter air pollution standards and increasingly unfavorable economics, according to the Energy Information Administration. Another 25,000 megawatts of coal capacity are expected to retire by 2025.  In the first six months of 2020, the U.S. electric power sector consumed 30% less coal than in the first half of 2019, according to recent data from the EIA.
...
Alliant Energy, which plans to add 1,000 megawatts of solar generation in Wisconsin, this year has announced plans to close its 415-megawatt Edgewater plant in Sheboygan by the end of 2022, while the company’s Iowa utility said last month it would also close a 275-megawatt coal plant in Lansing on the Mississippi River.

FOR FULL STORY GO TO:

https://www.kenoshanews.com/news/state-and-regional/we-energies-to-retire-1-8-gigawatts-of-coal-replace-with-solar-batteries-gas

by Chris Hubbuch 
Kenosha News https://www.kenoshanews.com

November 6, 2020

also see https://www.wpr.org/states-largest-utility-will-retire-1-800-megawatts-fossil-fuel-generation

Building Performance Standards: Lessons from Carbon Policy

Summary:

This paper reviews the relevant design elements of carbon and environmental markets and explores how they could influence the design of Building Performance Standards (BPS) programs. Carbon and environmental markets have existed for more than three decades, giving policymakers experience with scope and target setting and the design of flexibility provisions. The paper also sketches out how the sector-specific BPS programs overlap and interact with existing cross-sectoral programs—state-level clean energy and renewable portfolio standards (RPS), the Regional Greenhouse Gas Initiative (RGGI), electricity markets, and transport electrification.

...

Discussion

BPS programs can use several design options pioneered in the carbon markets— multiyear compliance periods, absolute or benchmarked targets, and various flexibility mechanisms—to provide flexibility, help balance environmental goals and compliance costs, and even generate revenues to fund related building efficiency programs. Initially focusing on the largest buildings or largest emitters allows a program to capture the bulk of the relevant emissions or energy consumption while lowering the administrative burden. Because BPS programs have a small geographic scope, leakage is a risk: the highest emitters, notably data centers and industrial sites, would have an incentive to exit the city if compliance costs become significant. This risk can be mitigated with tailored baselines, special allocation provisions, or a broader geographic scope—all strategies that have been used in carbon markets.

Understanding how trading of compliance obligations affects building owners’ retrofit decisions, compliance costs, and savings opportunities requires knowledge of the building sector’s abatement options and costs. Including tradable markets in a BPS design increases compliance flexibility, both across entities and across time when allowance banking is permitted. However, for a market to work effectively, building owners must have a clear understanding of the cost and the energy or emissions savings of various retrofit packages for their properties. The benefits of trading within a corporate bubble versus across all covered entities is difficult to gauge without an indepth understanding of the ownership structure of the city’s covered building stock.

BPS policies target both electricity and energy consumption and thus interact with other environmental programs. These interactions can take different forms, which are not always intuitive:

• The environmental benefits can be additive. For example, the New York City BPS should create demand for local renewable energy that is supplemental to the state’s Clean Energy Standard since New York State RECs can be sold only to compliance entities.

• Program-related emissions reductions could be offsetting. That might be the case with RGGI if emissions reductions tied to a BPS reduce the compliance burden for RGGI generators but not the RGGI cap.

• Buildings might be subject to conflicting measures if, for example, the state RPS drives emissions reductions that are not fully factored into a city BPS program’s algorithms used to calculate emissions, or if electric car charging stations increase electricity consumption covered by the program.

Although that list reveals potential policy and market interactions with BPS policies, further quantitative analysis is required to understand the magnitude of these interactions and their effects on emissions. As they develop future policies and modify current designs, municipal officials should recognize these interactions and adapt policy designs as necessary to counter or limit adverse consequences.

...

Scope

The first carbon market design question is, Which entities should be covered? The answer must balance two goals: capturing as much of the sector’s emissions as possible while keeping the number of compliance entities reasonable. Carbon markets therefore do not cover individual homes or vehicles but set the point of compliance at the power plant, refinery, or point of fuel distribution. BPS program designers must choose whether to regulate entities based on their size or based on their consumption or emissions level.

...

Price Formation

Regulatory programs entail compliance costs that can be expressed as cost per unit of emissions or energy consumption reduced. These compliance costs are reasonably transparent in tradable programs, which have transactable prices, and they are implicit in nontrading programs. This section uses a very simple conceptual model to illustrate price formation and trading dynamics in BPS programs.

Our hypothetical program targets energy reductions, which can be translated into carbon reductions. It has five buildings and two owners. All buildings face a 10 percent reduction target in the first phase of compliance. Each building has three abatement options: a lighting retrofit, the addition of window films, and an HVAC retrofit; not all options are available to all buildings (Table 3).

In reality, buildings have many options to reduce consumption and emissions. The Department of Energy’s Scout16 building efficiency software has close to 30 built-in commercial energy efficiency measures. The Tokyo program lists 20 distinct measures that span demand-side management and operational measures, appliance and lighting efficiency, heating and cooling systems, software, and sensors. Organized from lowest to highest cost per unit of avoided consumption or cost per unit of avoided emissions, these measures form the buildings’ marginal abatement cost (MAC) curve. In our conceptual example, lighting retrofits cost $0.90 per square foot for an assumed 12 percent reduction in building consumption. Using average office building consumption data, this represents a cost of $0.10 per Btu reduced: it is the most cost-effective option. Window film abatement costs are $0.13 per Btu, and HVAC upgrades’ cost-effectiveness is $0.44 per Btu. Our example builds an abatement cost curve in units of dollars per thousand Btu reduced; however, it could also be translated into dollars per ton of greenhouse gas reduced, given information on emissions rates and time of use for various energy forms, electricity in particular. The MAC curve is built by aggregating the effectiveness of the available measures over the building stock (Figure 1). For the five buildings at hand, the three measures can reduce consumption by almost 2 mmBtu, which represents 30.2 percent of the total consumption.