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.
A worrisome example of extinction would be the
disappearance of bees, which would affect agriculture and wildlife in general
(quoted in El Comercio http://goo.gl/jmzrlj).
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.
