By Luis Fierro Carrión
[This is an English translation of the article published in Spanish in the February 2014 issue of “Revista Gestión”, Ecuador]
The devastating impact of typhoon Haiyan in the Philippines has highlighted once again how the Planet has begun to suffer the ravages of global warming. It is estimated that the typhoon (name given to tropical cyclones or hurricanes in the Western Pacific) caused more than 6,000 deaths and hundreds of thousands lost their homes and possessions, in the most severe cyclone on record, with winds reaching up to 315 kilometers per hour (equivalent to standing behind a turbine of a jet taking off).
Although the association between global warming and increased hurricane intensity is considered very likely but not a certainty, there is no doubt that the last decade has been the hottest in the historical record; the last 30 years have had the highest average temperature since at least the fourteenth century; and the global average temperature has already risen by 0.85 degrees Celsius since the nineteenth century. There have been devastating storms in different continents, exacerbated by the high temperature of the water, a gradual rise in sea level, and the erosion and deterioration of the increasingly populated coasts of the Planet.
The impact of hurricanes Katrina and Sandy in the United States was also severe, not so much because of the intensity of the storms, but rather given the overflow of the seas, inundating land, and the destruction of dams, canals and other control mechanisms.
The frequency and cost of natural disasters has increased in recent decades, and one study estimated that if current trends in emissions and global warming continue, the losses in the U.S. alone due to climate disasters may increase from an average of $ 33 billion per year (in 1980-2012) to one trillion per year (http://goo.gl/3W8k2O). The most expensive years to date in the U.S. have been 2005 with $ 160 billion in losses (four hurricanes, including Katrina) and 2012 ($ 110 billion in losses, including Hurricane Sandy and 10 other weather disasters – among them the drought in the Midwest) (http://goo.gl/67hfTg).
Even in the case of recent tsunamis (in Southeast Asia, Japan, etc.), which were caused by earthquakes, their impact may have been exacerbated by rising sea level and deterioration of coastal defenses. In Mexico, the unusual phenomenon of having simultaneous hurricanes on both coasts (Gulf of Mexico and the Pacific Ocean) occurred in late 2013, which caused 145 deaths and more than one million people affected.
We, humans, are to blame
A recent report of the Intergovernmental Panel on Climate Change (IPCC) established with near certainty (95% probability) that global warming observed since 1950 is caused by human activities, in particular the emissions of greenhouse gases (GHG) (http://goo.gl/GjanIM).
The Arctic Ocean is losing 1 million square kilometers of ice every decade since 1979, and globally there has been a thaw of 226 Gt (gigatons) per decade in that period. It is estimated that by 2050 the Arctic will have thawed completely.
The concentration of the greenhouse gases carbon dioxide (CO2), methane (CH4) and nitrous oxide (N20) has increased by 40%, 150% and 20% from their pre-industrial levels, reaching levels of 391 ppm (parts per million), 1803 ppb (parts per billion) and 324 ppb, respectively, in 2011. These levels have not been seen on Earth in the last 20,000 years.
If current policies are maintained, and nothing is done to control climate change, it is estimated that the global average temperature could rise by up to 4.8 degrees C by 2100 (and probably increase by at least 2 degrees C); and that the sea level could rise up to 80 cm (although one projection indicates that the rise could reach one meter) (http://goo.gl/KH5eXv).
The Poles and Greenland will continue to melt, many species will disappear, there will be more intense heat waves and droughts, but at the same time also more severe floods and hurricanes.
In the area of Ecuador, precipitation will increase significantly in the Galapagos Islands and the Coast, but is expected to fall in the Sierra and Amazon. The oceans are becoming more acidic, which is having a devastating effect on coral reefs.
At the same time, there are other more alarmist voices that state that if we are to have any chance of avoiding the most severe ravages of global warming, we must immediately reduce by 80% the emissions of carbon dioxide and other greenhouse gases generated by the consumption of fossil fuels. According to climatologist Bill McKibben (founder of www.350.org), for example, we should "keep in the ground” 80% of the hydrocarbon reserves that have already been identified, so that the increase in global average temperature does not exceed two degrees Celsius (http://goo.gl/CquxB3).
Unfortunately, recent international conferences on the subject have failed to establish a binding international commitment to reduce greenhouse gas emissions for all nations of the Earth, in particular for the biggest emitters - China and the United States –, and have only set voluntary “goals”. The "Copenhagen Accord", which effectively set no target for emissions but at least did establish the "goal" to keep additional global warming at less than two degrees, was not ratified by several countries, including the ALBA nations.
McKibben notes that two countries which, in rhetoric, have expressed the importance of reducing greenhouse gas emissions and the need to combat global warming, in practice have massively expanded the exploration and exploitation of their vast reserves of tar sands: Canada and Venezuela (despite being on opposite ideological poles).
A less alarmist view (but still alarming) is that held by the environmental economist and Nobel Prize winner, William Nordhaus, who recently published the book "The Climate Casino: Risk, Uncertainty, and Economics for a Warming World". While Nordhaus believes that there is uncertainty about the impact of GHG emissions, he however considers that this uncertainty should prompt an even stronger reaction today (given that the consequences could be even more catastrophic than what we now envision).
Based on his conservative and pragmatic estimates, he indicates that we should be considering an immediate tax on the emissions of carbon dioxide (the so-called "carbon tax"), which would significantly drive up the current price of coal and other fossil fuels, and to continue increasing said tax gradually, until it is doubled in 2030. Another option would severely restrict or prohibit emissions from power plants based on coal (which the Obama administration recently restricted in the U.S., but China has not even considered).
Ecuadorian Climate Change Strategy
Ecuador's government developed a national strategy to tackle climate change (http://goo.gl/8t5o76). According to the document, the most severe impacts that will affect Ecuador are the following:
- the intensification of extreme weather events such as those that occur due to the El Niño Southern Oscillation (ENSO) phenomenon;
- the rise in the sea level;
- the glacier retreat in the snow-capped mountains of the Sierra;
- the decrease in rainfall on agricultural land (runoff);
- the increased transmission of dengue and other tropical diseases;
- the expansion of populations of invasive species in Galapagos and other sensitive ecosystems of continental Ecuador; and
- the extinction of species.
Paradoxically, there will be excessive rainfall in areas prone to flooding (such as the Coast), and drought in other areas (such as the Sierra). The IPCC estimates that the magnitude of El Niño is likely to increase, and rainfall in the equatorial waters of the Pacific will increase significantly.
Melting glaciers in the snow-capped mountains would affect the provision of drinking water for cities, especially in the Sierra, and could also affect hydropower generation. The glaciers are estimated to have already shrunk by 30 % since 1950. Between 1960 and 2006, the temperature in Ecuador also increased on average by 0.8 degrees C; rainfall levels increased by 33% in the Coast; 66% of natural disasters in the country are associated with rainfall, while 12% of the population lives in areas subject to flooding. The Strategy estimates that the country could face annual losses of $ 5,600 million from 2025 on, as a result of global warming, if mitigation measures are not adopted (p. 67 of the National Strategy).
The Ecuadorian government has submitted proposals to the “Conference of the Parties” on climate change (the last one, COP 19, was held in November in Warsaw, Poland), including the following: creating incentives for those who avoid emissions (e.g., leaving the crude in the ground, such as the now abandoned Yasuni initiative); recognizing the "rights of nature", as does the Montecristi Constitution; and the "Socio Bosque" plan to generate incentives for conservation of forests and vulnerable ecosystems.
Policies to address global warming
It is necessary to reduce the consumption of fossil fuels (oil, coal), and other energy sources that emit greenhouse gases. This can be achieved in three ways:
a) Increasing energy efficiency, i.e. reducing the amount of energy required to produce the same amount of goods and services;
b) Promoting savings, recycling, a civic culture to turn off the light and water when not being consumed, including the adoption of automated mechanisms to regulate the use of such services (as is common today in European hotels and buildings, for example).
c) Promoting clean energy sources such as hydropower, solar, wind, tidal, etc.
Environmentalists and international organizations have recommended the removal of fuel subsidies that prevail in many countries (especially oil exporters, including Ecuador), and rather establishing a "carbon tax" that would capture the cost of the negative externality that GHG emissions represent. If the price of fossil fuels increases significantly, consumers will definitely seek alternatives (which, on the other hand, could affect Ecuador on the income side).
It is also imperative to take adaptation and mitigation measures, such as not allowing construction in coastal areas prone to flooding; adopt strong regulations regarding construction in the land management plans, to prevent natural disasters; create barriers, dikes, walls containment and other mechanisms to reduce the risk of natural disasters; adopting clean technologies; and, in an extreme case, the possibility of adopting "geo-engineering" measures have been mentioned, such as launching particles into space that reflect sunlight .
There are grant and concessional resources available to developing countries to address climate change (the so-called "climate finance"), including multilateral development banks like the World Bank, the IDB and the European Investment Bank; the Global Environment Facility (GEF); the European Union; several bilateral development agencies (e.g., KfW, AFD, AECID, etc.). A new Green Climate Fund (GCF) is also been established. Unfortunately, the assistance offered by the U.S. government to Ecuador was suspended, following the government's refusal to sign the Copenhagen Declaration.
HOW TO SAVE ENERGY WHILE REDUCING EMISSIONS
Interview with Jorge Luis Hidalgo, General Manager of Greenpower and Business Development Manager of Carbon Masters Ltd Ecuador
How can the analysis of carbon footprint measurement contribute to the decrease in energy subsidies in the country?
The problem of climate change is not only an environmental issue but also a problem of economics, energy security and sustainability. Many organizations in Latin America, and particularly in Ecuador, are still not clear on what the opportunities and benefits are of an evaluation of the impact of their carbon footprint, as well as an analysis of how to reduce the carbon emissions within your organization.
Some think that the issue of climate change is something remote, but the reality is that it is not far off. If we adopted a State policy to promote efforts to reduce our carbon emissions, we could also help the Ecuadorian economy.
For this purpose, it is important to analyze the economic impact generated by energy prices (mainly hydrocarbons) and especially the level of subsidies spent in the country.
According to the Central Bank of Ecuador, in 2012 slightly more than 9 million barrels of liquefied petroleum gas (LPG) were consumed, for a value of approximately 645 million dollars; in subsidies for LPG the same year an amount of $560 million was spent, and only 10 % of the total is produced in Ecuador, so there is a significant outflow of resources.
Another even more worrisome example is diesel: in 2012, a little more than 17 million barrels were consumed, representing $2.3 billion. Which meant that only in subsidies in the same year $1.9 billion was spent, and we only have capacity to produce up to 40 % of diesel that the country needs. The rest is imported and also represents an outflow of funds. The total fuel subsidies in 2012 were $3.1 billion.
Many associate these subsidies with transportation and vehicles, but there are other important factors to analyze. Currently 45% of our electricity comes from thermal power, i.e. the burning of hydrocarbons. Most of the country's industries are subsidized except the ceramic, mining and oil sectors. In fact, in the industrial sector several companies require over $3 million dollars a year in subsidies.
If you think that as an individual you are not affected significantly by the subsidies, you should think again. The State can "give" the average family $ 1,000 to $ 3,000 in subsidized fuel for their vehicles in a year.
The problem is compounded when we look at population growth, industrial growth, and the increasing dependency on new technological applications. For example, an iPhone can consume more energy than a refrigerator in a year.
However, why not turn a "problem" into an opportunity? The first thing we do when facing a medical condition is to request that diagnostic tests be made. That is exactly what they do in Europe and other countries with regards to energy and emissions. These "tests" that are needed to analyze energy consumption are the "Carbon Footprint" analysis. From an energy audit for industries and organizations, we can begin to discover excellent opportunities for energy efficiency and cost efficiency.
As the saying goes, do good by doing well. But what can organizations do after measuring their carbon footprint?
Our advice is to start the journey towards a low carbon future, to reduce risks and generate environmental benefits, both at the firm level and at the macroeconomic level.
Our proposal is based on three main objectives:
1. Energy efficiency (reduction of operating costs)
• Identify the parts of the operation or the production chain that generate emissions more intensively. An obvious example is the replacement of bulbs with energy saving bulbs.
2. Use of energy resources that are friendlier to the environment and are within an economic logic.
• For example a change in highly carbon-intensive fuels such as burnt oil, bunker, diesel and LPG, to Natural Gas, which in addition to offering lower costs (up to 70% cost reduction), is also less intensive in GHG emissions than other hydrocarbons.
3. Renewable Energy Sources
• There is much debate about the costs of renewable energy production. Nevertheless, there are economically attractive alternatives. For example, I consider that the national government is making a wise investment in hydropower, but there is much to be done in the production of biogas, solar energy, thermal power, wind, etc.
For Ecuador, it is strategic to redouble efforts to encourage industries and the general public to reduce their carbon footprint. This would generate cost efficiencies, reduce subsidies and have a lower environmental impact. It is for this reason that Carbon Masters (energy consultant) and Greenpower (engineering and technological change) are allied companies that are committed to helping the country and the industries in this endeavor.