US coal imports don’t offset emissions reduction from coal to gas switching

Alex Tremblath takes a hard look at the data. Robert Wilson rebuts Greenpeace on the same question:

Greenpeace's analysis is demonstrably wrong, and the comments made by Lauri Myllyvirta on Twitter suggests he should learn some basic facts before rating analysis that would get at best a C if submitted as a GCSE assignment. Unfortunately journalists who should no better reported his analysis with no outside comment. This happens too often with unrigorous reports by NGOs.

To figure out what wind is replacing all you know to look at is the marginal fuel. Any electricity come from a wind farm will replace whatever is on the margin.

In Britain it appears that wind farms currently displace gas 1-1. That was the conclusion that Chris Goodall came to after analysing recent output data (and written up in the Guardian alongside Mark Lynas). After looking at the numbers myself the arguments seem robust, though peer reviewed research has yet to be done, as far as I know. The marginal fuel has overwhelmingly been gas recently, so wind really just displaces gas.

In the US things are more complex, because there are an array of regional grids. The paper below (possibly paywalled) provided estimates of the marginal fuel mixes in the key regions (see their table 1).

http://pubs.acs.org/doi/pdf/10…

Some wind heavy places almost have gas exclusively as the marginal fuel. In Texas it is 84% gas. Others such as the midwest are more likely to have coal as the marginal fuel. But it is clear that the marginal fuel is more likely to be gas than coal.

This shows that Greenpeace's naive assumption that wind displaces coal 1-1 is not based on reality.

Liebreich: Germany’s self-inflicted nuclear disaster

Fact #1: Fossil Fuels continue to dominate global energy

Michael Liebreich, Chairman of the Advisory Board – Bloomberg New Energy Finance on the contradictory energy policy of Germany’s Energiewende. Following is a short excerpt from a long VIP comment on the global lack of progress on decarbonization: 

While Japan’s nuclear woes result from the Fukushima natural disaster, Germany’s are wholly self-inflicted. In 2011 Angela Merkel reversed her former determination to prolong the life of Germany’s nuclear fleet, quickly shutting eight of the country’s 17 reactors and returning to the previous policy of full nuclear phase-out by 2022. This left fossil generation’s contribution to the German electricity system largely unchanged until at least 2020, and possibly 2025. Combined with the collapse of the EU-ETS carbon price and a flood of cheap coal being squeezed out of the US by the glut of shale gas, and the result is Germany burning more coal and generating higher emissions.

Anyone who promotes the Energiewende as Germany’s solution to climate change needs to understand that it is first being used to retire Germany’s zero-carbon nuclear fleet, and only when that has been completed will it start to squeeze fossil-based power off the grid. Germany has given nuclear retirement a higher priority than climate action, pure and simple.

To anyone not ideologically anti-nuclear power, this is a manifestly wrong-headed policy. The arguments about nuclear waste and proliferation hardly apply to existing nuclear power stations. The problems are real, but they are not worsened by continuing operation. Nor are they mitigated by early shut-down. They may be powerful arguments against building nuclear capacity in new countries, but are poor arguments in the case of Germany or Switzerland.

The fact is, as I showed in the statistics I presented in my BNEF Summit keynote in April 2012, nuclear power is far safer than coal-fired power generation. Deaths per TWh are around 15 times lower for nuclear power than for coal-fired power in the developed world, and 300 times safer than coal-fired power in China. And this is including the impact of Three Mile Island, Sellafield, Chernobyl and Fukushima, but before taking into account the appalling toll inflicted on the wider population by coal-driven air pollution and smog. The tsunami that hit Fukushima killed nearly 16,000 people; however, so far no one has been shown to have lost their life as a result of the nuclear disaster.

So much for those countries that have – illogically and to the detriment of the climate – decided to shut their nuclear fleet prematurely. What about the countries that are pushing ahead and replacing aging nuclear plants? (…snip…)

Source.

Risks from low levels of ionizing radiation

This is a guest post by physicist Jani-Petri Martikainen @jpjmarti, proprietor of PassiiviIdentiteetti
(This post first appeared on Passiiviidentiteetti October 26, 2014)

This is one branch of the referenced Twitter discussion. 

There was a brief, but interesting discussion in Twitter about risks from exposure to low levels of ionizing radiation. Among pro-nuclear people this discussion erupts with some regularity. For some background there is this really clear discussion by @kasilas which you should read. The thing is that some (I suspect mostly people with engineering background) dislike LNT (linear no threshold) assumption in radiation protection. They say that below a dose of about 100 mSv it doesn’t have observational support and therefore one should not talk about “risk” below some threshold. Such risk is speculative and just gives ammo to anti-nuclear crackpots. On the other hand experts in radiation biology and protection gather around the “party line” and tend to see LNT, if not perfect, then at least good enough and certainly better justified than supposed alternatives. The sane on both sides nevertheless conclude that whatever risk model we use for low doses, the risks will  be small compared to many other risks we face on a routine basis. Both, by and large, hold the opinion that radiation from nuclear power is not an important public health concern relative to more pressing concerns.

Figure 1: Discussing hormesis and how it relates to LNT

Figure 1: Discussing hormesis and how it relates to LNT

I think this discussion is interesting not so much from the scientific perspective, but mainly from the sociological perspective. I suspect that engineering types dislike going through the trouble of minimizing all sources of exposure as much as possible while knowing that it adds to costs and that this work has no observable consequences. They feel that they could be working on much more important things. Radiation protection people on the other wish to protect scientific standards and probably feel a civic duty to maintain and built public trust on experts. Playing fast and loose with radiation risks might undermine that work. They dislike fear mongering by anti-nuclear folks as well as nonchalant attitude to small doses expressed by some pro-nuclear people. They are the doctors trying to keep inmates from running the asylum. (Although this task is complicated by the fact that only pro-nuclear folks have the courtesy to loiter close to the asylum. Antis have always been running free.)

Personally I have sympathy for both sides of this discussion, but I think this is fundamentally not a scientific question, but a question of public perception of risks and how that relates to policies. Due to decades of misinformation many people have fundamentally wrong perception of radiation risks. When we start by saying that radiation dose, no matter how small, poses a risk, we do not question that underlying default setting. We might then continue telling how this risk is nevertheless tiny, but many people have already tuned out. And in any case people are very bad at evaluating risks so they are more than likely to compress the message to “radiation BAD”. The conspiracy minded among the public will of course go even further. When official tells them small amount of radiation has risks, they will conclude that it is in fact deadly and the level that is really safe will be something much much lower. As the safety level is thus adjusted downwards possibilities for exceeding those “safe levels” multiply and the sense of danger will probably go up rather than down. Of course this is a complex issue. If on the other hand we say that the risk is not there, some will simply decide that you are not credible and tune out immediately. You have to adjust your message in response to craziness on the other side and hope they will gradually move to a sensible position. But does anybody know, how nuanced accurate discussion actually influences people whose opinions are at the start of the discussion bizarrely off base? Such discussion certainly is preferable with people whose opinions are more or less sensible to begin with, but with others? I am really not sure and would love to learn of some research on this topic.

Given my background I was (of course) thinking that isn’t this kind of similar to importance of quantum mechanics? We live in an imperfect world where most people do not need Planck’s constant in their daily lives. This natural constant is at the heart of quantum mechanics and indeed our world be inexplicable without it. (In fact some of those who actually need it in their daily lives, define their units in terms of it so that for them Planck’s constant has a value one. Being so down to earth and organic they even call such units “natural”.) However, as a practical matter it doesn’t make sense to incorporate the effects of Planck’s constant into building codes or environmental impact assessments etc. Most people will find it easier to just set Planck’s constant to zero and as a practical tool that is usually perfectly OK, even though it is fundamentally wrong. In fact, if we were to do the opposite, the risk of a backfire would be large. People would not know how to deal with Planck’s constant in practice and if asked about its magnitude they would be off by a large amount. (If we were to give them some additional information such that “Planck’s constant is related to the energy of  particles of radiation”, many would probably increase the value of the constant even more.)

Given the horrendously wrong public perception of radiation risks, I often feel they would be better served if their default settings were based on the idea of zero risk. This is fundamentally wrong, but it is less wrong, in a practical sense, than their current perceptions. Once the lowest order term has been correctly established we could start adding nuance and even move to discussion of such regimes where radiation risk is actually large. Nowadays people start from fears of cities attacked with nuclear weapons and then we expect them to make a reasonable extrapolation of risks into their daily lives. For most people I don’t think that will ever happen. On the other hand, I do not know how that more sensible starting point can be established in practice. Currently people pickup nonsense from NGO:s and media already as children and accurate information gets drowned in the noise.

[The Twitter discussion follows, Ed]:

Amelia Cook (@millysievert)

10/24/14, 3:33 AM

 

According to LNT-influenced guidelines, cancer risk starts to increase at 100mSv, right? Is that an annual dose, or some other duration?

Anders Örbom (@andersorbom)

10/24/14, 3:40 AM

 

@millysievert No, 100 mSv is where increased risk has been observed, but that is due to lack of data, not that 100 mSv is a “limit”.

Amelia Cook (@millysievert)

10/24/14, 3:41 AM

 

@andersorbom No, I understand that, just trying to find it if that assumption is made on an annual dose or some other duration.

Casey (@cthorm)

10/24/14, 4:48 AM

 

@millysievert @andersorbom LNT considers “dose”, not “dose rate,” while dose rate is actually what matters.

Casey (@cthorm)

10/24/14, 4:50 AM

 

@millysievert @andersorbom “accumulation” has no support in the data. Hormesis is observed, biological processes repair slow damage.

Amelia Cook (@millysievert)

10/24/14, 4:55 AM

 

@cthorm @andersorbom Thank you! Looking up ‘hormesis’ now, knew I’d have to do it at some point…

Anders Örbom (@andersorbom)

10/24/14, 4:57 AM

 

@millysievert Or don’t, it’s basically the “cold fusion” of radiobiology. Motivated reasoning and wishful thinking.

Amelia Cook (@millysievert)

10/24/14, 5:01 AM

 

@andersorbom @cthorm Now I don’t know what to believe…

Anders Örbom (@andersorbom)

10/24/14, 5:08 AM

 

@millysievert Believe unbiased trusted sources and the scientific mainstream, not either pro- or anti- activists and fringe researchers.

Janne M. Korhonen (@jmkorhonen)

10/24/14, 6:13 AM

 

@andersorbom @millysievert My heuristic: scientific mainstream is more often right than wrong,and only very rarely totally wrong.

Janne M. Korhonen (@jmkorhonen)

10/24/14, 6:14 AM

 

@andersorbom @millysievert My take after reading quite a bit: LNT model might overestimate cancers but radiation may cause other damage too.

Steve Darden (@stevedarden)

10/25/14, 7:55 AM

 

@jmkorhonen Where is your personal comfort level for annual exposure. E.g., 100mSv/yr? @andersorbom@millysievert

Amelia Cook (@millysievert)

10/26/14, 12:00 AM

 

@stevedarden @jmkorhonen @andersorbom Exactly what I’m trying to figure out! A good question, I’ll put it to more knowledgeable people.

Anders Örbom (@andersorbom)

10/26/14, 12:05 AM

 

@millysievert @stevedarden @jmkorhonen I’m sorry but “comfort level” is just a weird way to think abt it. You shld minimize dose, period.

Jani Martikainen (@jpjmarti)

10/26/14, 3:46 AM

 

@andersorbom @millysievert @stevedarden @jmkorhonen Actually,I disagree.There are risk levels that are too low to worry about. 1/2

Ben Heard (@BenThinkClimate)

10/26/14, 10:24 AM

 

@jpjmarti @andersorbom @millysievert @stevedarden @jmkorhonen Minimising dose beyond evidence of harm leads to costs, creating greater harm

Anders Örbom (@andersorbom)

10/26/14, 10:32 AM

 

@BenThinkClimate @jpjmarti @millysievert @stevedarden @jmkorhonen Weighing risk & benefit does nt req denying risk, and that’s all from me.

Jani Martikainen (@jpjmarti)

10/27/14, 2:19 AM

 

.@andersorbom @BenThinkClimate @millysievert @stevedarden @jmkorhonen I was left wondering…passiiviidentiteetti.wordpress.com/2014/10/26/ris…

Janne M. Korhonen (@jmkorhonen)

10/27/14, 9:06 PM

 

@jpjmarti @andersorbom @BenThinkClimate @millysievert @stevedarden Abandoning LNT politically impossible.Better fight battles we can win.

Jani Martikainen (@jpjmarti)

10/27/14, 9:11 PM

 

@jmkorhonen @andersorbom @BenThinkClimate @millysievert @stevedarden Yes,LNT is not the problem.Misguided perception of risks is the problem

Steve Darden (@stevedarden)

10/27/14, 11:25 PM

 

@jpjmarti Yes, so what can we do to correct mis-perception of risk? @jmkorhonen @andersorbom@BenThinkClimate @millysievert

N Nadir on bubonic plague — we picked the wrong policy there too

N Nadir said this so well I would like to quote an excerpt:

A nuclear power plant is an investment in the future, the main benefits will accrue to our children, our grandchildren and great grandchildren.

It's very clear that as a culture, we couldn't care less about the future.

I believe nuclear energy is the only form of truly sustainable energy and I would argue that a complaint about what might happen should the world economy collapse when the observed effects of dangerous fossil fuels without the collapse of the economy are disasterous, is inherently absurd.

But as much as I know nuclear energy is the only moral form of energy that exists, I do not expect it to be allowed to succeed as it might do, any more than it wasallowed to do what it might have done. One is a fool if one underestimates the power of fear, the power of ignorance.

I use this analogy a lot, because it sticks in my mind is seems dead on: Many lives might have been saved from the bubonic plague if people merely cleaned up the garbage on which rats fed. The actual means to address the crisis was not that however; it was prayer.

With nuclear energy we might clean up the garbage. But that won't happen. What will happen is just more prayers to the sun God while the devil within all of us burns ever more quantities of coal, oil, and gas, until the last molecule of CO2 that can be squeezed into the atmosphere issqueezed into it.

Source: a comment on Energy Collective.

 

China Studying Carbon and Coal Caps for Next Five-Year Plan

I’m seeing increasing optimism that China’s leaders are incrementally implementing climate-positive policies. These are policies that violate Roger Pielke Jr.’s “Iron Law”. While I’m reading the current 5 Year Plan, and going through my notes on policy hints, I found this June Bloomberg piece which closes with these comments on possible carbon taxes as well as coal and carbon caps.

At the moment, while the ETS is being piloted, the Ministry of Finance (MOF) is also studying the possible implementation of carbon taxes. Yang Fuqiang said the National Development and Reform Commission favors the ETS system and the MOF the tax system, but it is uncertain which will be the leading policy in the end.

According to the CNS report, He also said nonfossil-fuel-based sources are expected to reach 15 percent in 2020, to reach 20 percent to 25 percent in 2030, and to hit 33 percent to 50 percent of the energy mix by 2050 in China.

Text of a speech by He given at a Low Carbon Development Forum at Tsinghua University in March shows he is in favor of setting caps on coal consumption and carbon emissions beyond the carbon intensity targets that have already been set, to “give stronger binding targets to promote the transformation of the current economic growth model,” but He did not suggest any policies had officially been set by the central government for the next planning period.

Transforming the Electricity Portfolio: Lessons from Germany and Japan in Deploying Renewable Energy

Brookings held the captioned event to launch a new policy brief (download PDF). I listened to the audio podcast while cycling Saturday. There is also a transcript available.

When I study the Brookings graphic showing the fossil increases in Germany and Japan it makes me really sad. But the majority of citizens are happy that the hated nuclear is dead or dying.

I think Germany is driving their economy off a cliff. As RE penetration increases their generation costs will go convex. Germany is already around 27% RE, with “greens” talking about going to 100% as fast as possible. But the man on the street thinks this is all grand. It is political suicide for a politician to propose reversing the anti-nuclear Energiewende.

To my surprise the Brookings scholars speaking at the event do not seem concerned. E.g., they quote a new NREL study proposing a pathway to 80% RE. Among the “lessons learned”:

Implications for the United States:

Policymakers must work to build a baseline consensus on national energy objectives and then develop and implement consistent, durable and clear policy mechanisms to achieve those objectives

The U.S. needs to elevate environmental goals as part of its overall energy objectives—in particular addressing climate change through reduction of greenhouse gases—and link these environmental goals to economic and national security issues

Renewable energy needs to be considered a national asset, with the capacity to balance multiple objectives

Brookings is a big place. Evidently it's possible for the RE group to be unaware of other Brookings research just published in May this year “The Net Benefits of Low and No-Carbon Electricity Technologies” Charles Frank, summarized in the blog Why the Best Path to a Low-Carbon Future is Not Wind or Solar Power.

This is a placeholder for a longer post when I have time to write it. Check out the audio or transcript and the brief. What do you think?

 

China’s Twelfth Five Year Plan (2011- 2015) English language

In mid-March 2011, the National People’s Congress (NPC), China’s top legislature, approved the new Five-Year Plan (FYP). China’s FYPs are blueprints which outline key economic and development targets for the country for the next five-year period. The Plan is essential reading for businesses seeking to either expand their existing Chinaoperations or position themselves in the market for the first time.

Source: China’s Twelfth Five Year Plan (2011- 2015)

 

Climate Group Lecture keynote address from Professor Joseph B Lassiter

Prof. Lassiter delivered a 40 minute lecture in Scotland to an event sponsored by the 2020ClimateGroup. The video is in two parts

Keynote part 1

Keynote part 2

We found the lecture to be a useful and sometimes fascinating global perspective of what is happening in the energy markets. An “insider’s perspective” in some parts. What you think?

Discounting and costs (Part 2): IPCC WGIII report on mitigation

This is a guest post by physicist Jani-Petri Martikainen @jpjmarti, proprietor of PassiiviIdentiteetti
(This post first appeared on Passiiviidentiteetti April 22, 2014)
 

rightwrongIn an earlier post I briefly discussed the scale of the challenge. In this one I discuss briefly how the report discusses ethical issues surrounding responsibilities towards future generations, with a special focus on discounting and how it relates to cost estimates of various energy options.

The use of a temporal discount rate has a crucial impact on the evaluation of mitigation policies and measures. The social discount rate is the minimum rate of expected social return that compensates for the increased intergenerational inequalities and the potential increased collective risk that an action generates. Even with disagreement on the level of the discount rate, a consensus favours using declining risk‐free discount rates over longer time horizons (high confidence).

An appropriate social risk‐free discount rate for consumption is between one and three times the anticipated growth rate in real per capita consumption (medium confidence). This judgement is based on an application of the Ramsey rule using typical values in the literature of normative parameters in the rule. Ultimately, however, these are normative choices.” IPCC WGIII Chapter 3

 “A simple arbitrage argument favours using the interest rate as the discount rate for climate policy decisions: if one reallocates capital from a safe but marginal project (whose return must be equal to the interest rate) to a safe project with the same maturity whose return is smaller than the interest rate, the net impact is null for the current generation, and is negative for future generations. Thus, when projects are financed by a reallocation of capital rather than an increase in aggregate saving (reducing consumption), the discount rate should be equal to the shadow cost of capital.

This descriptive approach to the discount rate has many drawbacks. First, we should not expect markets to aggregate preferences efficiently when some agents are not able to trade, as is the case for future generations (Diamond, 1977). Second, current interest rates are driven by the potentially impatient attitude of current consumers towards transferring their own consumption to the future. But climate change is about transferring consumption across different people and generations, so that determining the appropriate social discount rate is mostly a normative problem. Thirdly, we do not observe safe assets with maturities similar to those of climate impacts, so the arbitrage argument cannot be applied.”  IPCC WGIII Chapter 3

This discussion on discount rates is in my opinion very important since discount rates capture lots of the ethical underpinnings of our responsibilities to future generations. Discount rates tell about our time horizons and about how patient we are in waiting for gains. If you are offered money right now and twice as much at a later date, how long are you willing to wait? If the discount rate is 10%, you might be ready to wait for about 7 years and if it is 5% you wait for 14 years. Stern review used a rate of 1.4% for climate change damages in which case you are ready to wait for 50 years. In this case the time horizon is truly inter-generational. As explained by the WGIII, how to discount is in the end of the day a normative choice. However, it is a choice whose impact should be openly discussed and a choice that should be reasonably defended. In general I found the Chapter 3 Social, Economic and Ethical Concepts and Methods” interesting and I have to read it more carefully later. I recommend that authors of WGIII Chapter 7  “Energy Systems” also read it.

WGIII gives the levelized cost of energy for different energy sources in Figure 7.7 of Chapter 7. If you look at figure 7.7 (below) carefully you will perhaps notice something funny. In the 4th assessment report at 2007 the costs were given as shown in Figure 4.27 (see copy here). It is not the most beautiful of figures, but clear enough.

Figure 7.7 from IPCC WGIII Chapter 7 (2014)

Figure 7.7 from IPCC WGIII Chapter 7 (2014)

Fig 4.27 from WGIII 2007

Fig 4.27 from WGIII 2007

It shows the results at two different discount rates with coal, gas, and nuclear as the lowest cost options. Somebody was clearly not happy with this and wanted to change the figure into Fig. 7.7 of the new report. As I glanced at the figure first I naturally choose to compare “red” bars with red bars and blue ones with blue. After all we shouldn’t compare apples and oranges. Maybe you did the same? However, I then noticed that red color assumed “high full load hours”. What does that actually mean? In order to figure out, one has to read the annex III for detailed assumptions (how many are going to do that?). For nuclear power “high full load hours” meant a capacity factor of 84 %, for onshore wind 40%, and 27% for solar PV. For nuclear power this a typical capacity factor (although many reactors do better), but for wind and solar power those capacity factors are very atypical. So the figure is constructed in such away that uninformed reader is likely to make incorrect comparisons. In fact, WGIII concludes the caption of Fig. 7.7 (its on the next page and likely to be missed) by saying “Note: The inter-comparability of LCOE is limited. For details on general methodological issues and interpretation see Annexes as mentioned above. ” Indeed. Given that comparisons cannot really be made, why was this approach chosen in the first place? If you can come up with a charitable explanation I am all ears, but to me this seems like authors of Chapter 7 were actively working to make comparisons hard.

How did the authors of Chapter 7 approach the discounting? Let us guess that economic growth in the future is around 2%. In this case the Ramsey rule mentioned by the IPCC in Chapter 3 suggests a discount rate in the range of 2-6%. What discount rate is used in chapter 7 to compare levelized cost of energy (LCOE) for different energy sources? That would be 10%! Authors of WGIII decided not only to use very high discount rate, but also not to give their results at different discount rates so that the effects of this assumption could be observed. Considering that authors of Chapter 3 specifically emphasized how crucial this issue is in evaluating mitigation policies, the approach in Chapter 7 seems indefensible. At minimum one would expect them to show results over broad range of discount rates, but this they decided not to do. Since they refused to do it,  I will quickly do it here and see what difference it makes. (Note that some results with 5% discount rate are hidden in annex III, but these are only for the high FLH case so no honest comparison is possible.) In order to make sure that I know what I am doing I try to reproduce typical LCOE figures for WGIII high FLH case. I copy typical numbers from the annex III and this is what I get.

LCOE $(2010)/MWh comparison based on WGIII high FLH case (warning: misleading comparison!):

 Technology LCOE 10% high FLH (IPCC median) My result
Nuclear 99 97
Coal PC 78 78
Wind onshore 84 85
Solar PV (rooftop) 220 220
CCS-coal-PC 130 123

OK, the numbers are not exactly the same, but close enough for me. I am not sure how WGIII defined the median here. Also, maybe there is some index inconsistency somewhere in the summations…who knows. Basic point is that I can reproduce the WGIII values reasonably well and I am on the same map as WGIII. We are ready to go! So let me then look at the things WGIII decided not to show. I will now compute typical LCOE for few technologies at 10%, 5% and 1.4% discount rates. It turns out that as discount rate is lowered the LCOE for nuclear power drops from 97$/MWh to 62$/MWh, and finally to 42$/MWh. I will summarize the rest of the results by giving the costs relative to nuclear power. The values colored green are higher than the LCOE of nuclear while red is lower.

Difference to the cost of nuclear (go right if you prefer responsible long term thinking): 

 Technology 10% discount rate 5% discount rate 1.4% discount rate
Nuclear 0% 0% 0%
Coal PC -18% +5% +34%
Wind onshore +40% +57% +77%
Solar PV (rooftop) +190% +210% +230%
CCS-coal-PC +27% +63% +110%
(Main assumptions: Most numbers are copied from annex III of WGIII and I just list the differences here.I choose the capacity factor for wind power as 25% which is higher than European or Chinese average, but somewhat less than US average. Most of the wind power capacity in the world does worse than this. I choose the wind turbine lifetime as 20 years as opposed to WGIII value of 25 years, since 20 year lifetime is given by wind turbine manufacturers. This doesn’t change anything of relevance though. I choose PV capacity factor as 15%. In good locations capacity factor can be higher than this, but for example in Germany it is around 10%. Therefore 15% seems fair. I assumed PV capital costs as 3000 $/kW which is substantially less than the WGIII median value of 4400 $/kW. You can check the calculations and assumptions from these Matlab files LCOE_IPCC.mIPCC_Compare.m, and CompareForReal.m. In combination with annex III files should be quite self-explanatory and not too difficult to translate to other number crunching tools.)

As you can see green dominates and with the possible exception of hydro power in good locations, nuclear power is the lowest cost zero carbon source of electricity no matter what discount rate was used.  At 10% discount rate it has difficulty at competing with coal, but at 5% it becomes cheaper than coal. As discount rate is lowered the cost advantage of nuclear relative to other low carbon energy sources is rapidly increased. With 1.4% discount rate and a time horizon extending across generations nuclear power is cheaper than other options by a very large margin.  These results are based on the WGIII numbers and the only changes are those listed above to mainly account for differences in capacity factors. We could make the above table all green by adding a carbon price of only around 20 $/tCO2.

Maybe this discussion on the role of discount rates is simply too radical and WGIII is just following conventions? Well, not really. It is certainly not too radical for WGIII since in its 2011 SSREN report focusing on renewables WGIII gave precisely this type of comparison with 10%, 7%, and 3% discount rates (Fig 10.29 p. 844 in Chapter 10). Some of its authors were even authors of this report. Of course from SSREN report nuclear power was purged at the outset and results which might give readers funny ideas did not have to be shown. Absurdly the discussion on discount rates in this context is far more extensive in SSREN while in this report it has been brushed aside contrary to the emphasis by the authors of Chapter 3 of WGIII. We can only speculate as to why.

To me it seems that on this issue the authors of Chapter 7 were working hard to make sure that uninformed would remain uninformed while giving a chance to say to informed ones: “We are not lying! We are open about the methodology…see annex III etc. Yeah, maybe figure 7.7 is not as clear as it could be. Thanks for the tip! Clear communication is super important and we will keep it in mind for the next assessment report! Blaah blaah blaah…” IPCC should be an expert body giving accurate evidence based material for policy discussions. Sadly in this case WGIII decided not to give this material and compromised its supposed “policy-neutrality”. In plain english, authors of Chapter 7 decided not to do their jobs since doing it would have provided facts suggesting that some mitigation policies are likely to be more effective than others. But this is what they should do! If people decide to brush the cost differences aside, that is their choice, but it is not the role of an expert to fudge figures in such a way that implications of different policy choices are hidden.

Authors of Chapter 7 did what?

Authors of Chapter 7 did what?

While the WGIII messed up the presentation of the costs that we are in a position to know fairly well, it spends a lot of time in speculating about long term costs using integrated assessment models. Since we are not able to predict the future of mankind, I do not think that these games are much more than computer generated guesses based on the preferences of whoever is doing the modeling. I think we are better of in focusing on issues that we can actually control at least to some degree. The Economists was also not very impressed about this:

The IPCC still thinks it might be possible to hit the emissions target by tripling, to 80%, the share of low-carbon energy sources, such as solar, wind and nuclear power, used in electricity generation. It reckons this would require investment in such energy to go up by $147 billion a year until 2030 (and for investment in conventional carbon-producing power generation to be cut by $30 billion a year). In total, the panel says, the world could keep carbon concentrations to the requisite level by actions that would reduce annual economic growth by a mere 0.06 percentage points in 2100.

These numbers look preposterous. Germany and Spain have gone further than most in using public subsidies to boost the share of renewable energy (though to nothing like 80%) and their bills have been enormous: 0.6% of GDP a year in Germany and 0.8% in Spain. The costs of emission-reduction measures have routinely proved much higher than expected.

Moreover, the assumptions used to calculate long-term costs in the models are, as Robert Pindyck of the National Bureau of Economic Research, in Cambridge, Massachusetts, put it, “completely made up”. In such circumstances, estimates of the costs and benefits of climate change in 2100 are next to useless. Of the IPCC’s three recent reports, the first two (on the natural science and on adapting to global warming) were valuable. This one isn’t.The Economist. While I think the report has some interesting things as well, when it comes to cost estimates I tend to agree with The Economists.

Finally, in my opinion the fact that companies use the short time horizons implied by 10% (or higher) discount rates is a clear indication of a market failure. Climate change requires longer term decisions and if such decisions cannot be delivered by current markets, those markets need to change. Either the state with a longer time horizon must become more active or appropriate sticks and carrots should be developed to discourage short term profit taking and promote longer term visions.