Toward a sun-powered planet

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Fossil Fuel Subsidies: an inconvenient Truth.

5300 billion dollars per year. This is the amount of direct and indirect global subsidies to fossil fuels, according to the last IMF valuation: that is to say 6.5% of global GDP. Talking about direct and indirect subsidies implies this amount not only involves the subsidies to production and consumption of fossil fuels, but also an estimate of the main negative externalities produced. These are very difficult to calculate and are probably underestimated. It is surprising discovering half of these 5300 billions are sanitary costs1: this means more than 3% of global GDP is composed by pollution sanitary costs. shanghai-1 00114320db41126195bb0e

The other side of the coin is that subsidies to renewables add up to 120 billion dollars2, a fifth of direct subsidies in favor of fossil fuels, and a nullity in comparison to the amount of 5300 billion dollars that represent the overall cost of fossil fuels. If we got rid of these subsidies to dirty energy sources, we could cut CO2 emissions up to 20% and make renewables competitive without subsidies3. The paradox is that we are promoting energy sources which generate positive externalities, such as renewables, whose marginal benefits are higher than marginal costs4; but in the meantime we are subsidizing in a larger scale polluting energy sources, whose economic, social and environmental costs turned out to be extremely higher than benefits. A strategy that clearly does not make any sense and underlines the absolute hypocrisy of policy makers.Alternative_Energies

In may, at Garmisch, in Germany, took place the annual G7 conference where the Prime Ministers of USA, Great Britain, France, Germany, Italy, Canada and Japan claimed that global warming has to be maintained within 2°C, as wished by German Prime Minister Angela Merkel. It is a praiseworthy and encouraging statement along the path that brings to the COP21 in Paris. But unfortunately too many times world political leaders turned out to be extremely good at speaking but failed to deliver the goods when it was necessary to act.  For instance, let’s think over Obama, elected for the first time US President in 2008 with the promise to be a champion in the fight against climate change and to lift US economy out of the crisis through the creation of thousands green jobs too. Facts speak for him. Pursuing the energy strategy “All of the above” he has set out the rush to fossil fuels unconventional extractions that are more expensive and produce more greenhouse gases. In the meanwhile, in the US renewables cover only a tiny 13% of electrical production, a poor performance in comparison to many EU countries. Overseas, in Europe, in addition to the 20/20/20 binding law a new Roadmap 2030 was laid down that involves a 27% share of renewable energy and a 40% curb in CO2 emissions with respect to 1990 levels, all within 2030. In short, not enough. Only Sweden and Portugal support a binding agreement that contemplates 40% of energy produced from renewable sources by 2030. Germany, Denmark and Greece aim at 30%, all the other countries, first of all UK, aim at a downward agreement5. In Germany Angela Merkel has leaded the country out of nuclear and toward a gradual transition to green sources also thanks to local communities that chose to regain property of electric utilities, and to enhance ambitious plans for renewable energies development. On the other hand, simultaneously with nuclear plants closure German coke consumption increased, partially undermining the project credibility. In Italy the Prime Minister Matteo Renzi has turned out to be very shy in front of green policies in contrast with his proclaims. He first tried to tax self-consumption of electrical energy produced by private citizens with PV panels on their rooves. Then he cut retroactively by 20% the subsidies to photovoltaic and finally, with the Stability Law, set up new drills in the Adriatic Sea.18412508669_53cc2116a5_o

The same hypocrisy can be found among the top institutions of world economy. In 2014 World Bank increased funds to fossil fuels from 2.7 to 3.3 billion dollars even though it took a stand publicly against fossil fuel subsidies and in favor of a carbon tax. Moreover, there are lots of free trade treaties that often violate States’ autonomy in policy decisions in order to protect multinationals’ profits. For instance in 2013 Germany had to pay 3 billion euros to Vattenfall  to compensate for the economical damages due to the decision to phase out German nuclear plants. In such contest, in January IMF President Christine Lagarde claimed that low oil price gave the opportunity to introduce the much needed Carbon Tax, a fundamental instrument to collect the necessary funds to fight climate change and finance green technologies development in poorest nations. Was this speech followed by any action? Unfortunately not. I hope that anytime soon we can pass from speech to action, as the time to hesitate is over. It is high time for radical changes.

1-WHO data (World Health Organisation)

2-IEA data (International Energy Agency)

3-From an article of “Qualenergia

4-Source: IEFE Bocconi research

5-From an article of “Huffington Post”

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Solar Warriors: an alternative to fossil fuels is possible


A training session at Red Cloud Renewable Energy Center

They are called Solar Warriors. They are a group of Native Americans from Colorado who, since 2008, deal with clean energy production in Red Cloud Renewable Energy Center. Henry Red Cloud is a Lakota Chief who has spent ten years of his life to understand how adapt renewable energies to the needs of Native Americans villages. Nowadays he leads the homonymous center where young of different tribes are taught how to produce solar and PV panels. Solar Warriors’ mission is to pursue economic development preserving their ancestors land. In extremely remote lands, where Cherokee and Lakota live, this means getting heating and electricity at restrained costs, in an autonomous and environment-respectful way. Renewable energies have thus been a revolution for such tribes. Solar energy technologies produced by Lakota Solar Enterprise and Red Cloud Renewable Energy Center, combined with building renovation works aimed at enhancing energy efficiency, have reduced energy costs and created dozens of jobs in a reality where unemployment is very high. This is even more remarkable if we take into account that fossil fuels corporations aim at taking possession of Natives’ lands in order to extract coal, shale gas or tar sands oil, the most polluting fossil fuels for the environment. Renewable sources and green jobs related with them have turned out to be the best weapon to cope with the power of fossil fuels corporations that bring devastation to the territory and offer in exchange wretched royalties. Either it is about coal mines, fracking or tar sands you can be sure of this: the water of the soils subjected to these extractive techniques will be poisoned. But for the native populations that inhabit those lands water is life. In Cheyenne the word to mean “water” is the same used for “life”.

Maybe few k111147_182358now that to produce a megawatt-hour of electricity with coal 2600 liters of water are used and 2550 with nuclear energy, only 100 using solar energy and almost null it is instead wind energy water consumption¹.  The IEA assesses that coal-fired energy production wastes an amount of water sufficient to satisfy the basic water need² of one billion people. In India, the second country in the world for coal production, in the last decade more than 40,000 peasants have committed suicide due to lack of water to irrigate fields. And the more we pursue extreme extractive technologies, the more negative externalities like water consumption increase. For instance 2.3 barrels of water are needed to produce a single barrel of oil from tar sands, whereas 0.1-0.3 barrels of water are necessary for every single barrel of conventional oil³.

What Solar Warrior experience tells us is that opposing to fossil fuels extraction is not enough, we must put forward an alternative. Because otherwise petrodollars will always take over the right to have clean air, water and soil, and especially where poverty and unemployment are high. For example in Nebraska a family of peasants whose property should have been crossed by the contested oil pipeline Keystone XL³ has built a barn powered by solar and wind energy painstakingly on the zone that should have been crossed by the pipeline. They have so challenged the Canadian multinational TransCanada and the US politician who had to take a decision about the project. But something really similar has happened in Balcombe, in Great Britain, where local community in opposition to a fracking plan on its land has created a cooperative, named REPOWERBalcombe, which aims at producing 100% of the electric power the collectivity needs from renewable sources reinvesting the profits in energy efficiency in the buildings of the cooperative members. Similarly, in Germany and Denmark the fight to phase out nuclear power plants has been won coupling the NO to nuclear power with renewable energy projects, decentralized and self-managed by local communities, keeping so the profits on site. Nowadays more than ever we can state that an alternative is possible.

Written by Lorenzo Sala

1-National Renewable Energy Laboratories

2-that the WHO valuates between 50-100 liters daily per person

3-Naomi Klein, “This Changes Everything”

4-Keystone XL is a project of 5 billions of dollars which should have carried Canadian bitumen in the USA in order to be refined

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The desperation oil

The recent collapse in oil prices, that have fallen as low as $45 per barrel from about $110 only last june, caused many different reactions and analyses. The sure thing is that none seven months ago would have never expected  such a sharp decline. But what are the reasons behind it and what  are the consequences of a low oil price? And above all, what is the real cost of a barrel of oil today?


Before and after: Alberta forests wiped out by tar sands extraction.

According to Bloomberg financial analysts this decline  is more a demand shock, caused by a global economic slowdown (chinese GDP is not growing as expected), more than a boost in oil production. The lag of global demand caused oversupply and the price drop. The first victim of this was Russia, whose economy is heavily reliant on fossil fuels exports, and whose currency, Rublo, depreciated dramatically. Then in December OPEC members decided  not to cut oil production, the only measure in a weak demand scenario that could stabilise prices. The strategy behind this choice is quite simple: who is the most damaged by low oil prices?

Who has got the highest production costs. Saudi Arabia revenues are undoubtedly curbed with a $ 45 p/b price, but, given its low extraction costs ($ 4-6 p/b), it still remains a very lucrative business. Therefore, mantaining prices at these levels for a while is a powerful weapon against competitors. Indeed U.S. shale oil and Canadian tar sands will have few odds to survive for long with current exchange rates. These are among the most expensive and dirtiest oil sources in the world. Extracting oil from tar sands costs between $70 and $85  p/b. As a consequence of that, new projects and investments are being cancelled. Also the Keystone XL pipeline, that should enable U.S. to import oil from Canada, is currently called into question, even though the Republican-controlled congress is determined to approve it. Tar Sands are a nonsense in a world endangered by Climate Change, in which the majority of conventional fossil resources (2/3 according to a recent research on Nature) will have to remain underground if we want to avoid the worst effects of global warming. Tar sands are expensive, destructive for the environment at an unprecedented level, and also with a poor EROEI (energy return on energy invested) around 5. While we are pouring money down the drain with tar sands and other mega fossil projects, investments should be directed towards renewables and efficency.

Costs of different oil sources.

Costs of different oil sources.

Likewise, american shale oil is not profitable with prices under $60 p/b. So far, shale production has not decreased significantly, only less productive wells have been halted, as investors are trying to maximise profits to recover the upfront investment, even producing with very low or negative margins. However, the investment in new wells has dropped dramatically and the shale boom could soon turn out to be the shale bubble, triggering billions in bank losses at Wall Street (that will be sistematically paid by american taxpayers).

C02 concentration levels are steadily rising.

C02 concentration levels are steadily rising.

Both Tar sands and Shale Oil are examples of what I call the “desperation oil”, as well as arctic oil and other kinds of unconventional resources. The common characteristics are: very high extraction and refination costs due to huge consumption of water and energy in both processes, with consequent extremely low value of EROEI. Destructive impact on the environment (from water reserves pollution, risks of earthquakes for fracking, deforestation and GHG emissions), with extremely fragile ecosystems (e.g. the Arctic) under threat. We are increasingly relying on these sources because we have reached the peak of cheap oil production. This momentary low oil price can be an opportunity for introducing a carbon tax, that could boost divestment from fossil companies and increase competitiveness of alternative sources. Energy systems are slow and complex to change, investing now in new fossil projects will tie us down for the future excluding alternatives. I don’t believe in the “all of the above” philosophy. I think it’s high time for courage, consistency and decision. 2014 was the warmest year since 1880, nine out of the ten warmest years have occurred after 2000 (the only exception is 1998…). What else do we need to take action?


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The Economics of Renewable Energy

A major costraint to the development of renewables has always been cost competitiveness. It was generally believed that only with generous feed-in tariffs RES projects could make economic sense, limiting them to rich developed countries willing to pay these extracosts in their energy bills. The good news is this is not true anymore, and many different signals seem to suggest that renewableFoote Creek Wind Farm and Elk Mountains are getting more and more competitive, cheaper than fossil fuels,  just right now. This result is even more significant considering that it has been achieved in such a short time (solar power cost has decreased 70% from 2008, wind power has nearly halved) and without a carbon tax to make fossil fuels pay even a small part of their externalities. In addition to that, RES have been fighting an unequal struggle against fossil fuels as, though blamed for their consequences over climate and pollution, they went on being subsidized much more than renewables in these years. According to the International Energy Agency (IEA), in 2012 global fossil fuel subsidies totalled $544bn (392bn euros), while those for renewables amounted to $101bn. In spite of all these obstacles, investments in renewables in the past years have paid off leading many technologies to reach economies of scale that have dramatically plunged costs. A recent article on The New York Times has pointed out that many wind and solar projects in the U.S. are already offering PPA at a lower cost than fossil fuels. In Texas, the local utility has signed a deal for 20 years of output from a solar farm at less than 5 cents a kWh. In Oklahoma, American Electric Power ended up tripling the amount of wind power purchased after seeing how low the price was (1.4 cents a kWh). In comparison  natural gas comes at 6.1 cents and coal at 6.6. Even without current subsidies, set to expire in 2016, solar would cost about 7.2 cents a kWh and wind 3.7 cents (half than coal). This suggests that there is by now a real economic convenience to push us towards renewable energy, even though many distortions remain in the market to remind us that the myth of equal competition is just a myth. This revolution is not taking place only in rich countries, such as Europe or U.S., but it’s  increasingly spearheaded by emerging countries, such as China, India and Brasil. The bulk of new solar PV installations (that this year should tap 50 GWp)  is shifting from Europe to emerging markets, with China getting the lion’s share. Last year the Asian giant has installed more new RES power than coal and this year the first projections seem to announce an historic reduction of 1% in coal consumption. In the light of these numbers we can read the U.S.-China deal to reduce greenhouse-gas emissions as a genuine sign of commitment by the two biggest and polluting economies of the planet. I hope this important step will be followed by a decisive global action on the energy and climate agenda. Now more than yesterday we have plenty of reasons to do that.

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Perchè un Blog sulle Rinnovabili?

Si tratta del mio primo articolo, ed è con un misto di preoccupazione, passione e speranza che mi accingo a scriverlo. Preoccupazione perché forse il tema dell’energia può sembrare a molti ostico e privo di interesse, qualcosa di cui qualcun altro deve occuparsi, altri penseranno che è  un argomento trito e ritrito e non vale la pena di aggiungere altro. Passione perché la decisione di aprire questo spazio di dialogo è nata dalla voglia di condividere conoscenze, riflessioni e novità su un tema che mi sta molto a cuore e che penso riguardi ciascuno di noi. La nostra società può permettersi l’attuale livello di consumi solo grazie a un immenso e continuo flusso di energia mai sperimentato nella storia umana. Lo sapevate ad esempio che la potenza erogata da un motore di 80 kW, tipico di una vettura di media cilindrata, necessiterebbe dell’impiego di circa 1600 esseri umani per essere prodotta? Una centrale termoelettrica da 800 MW  equivale addirittura al lavoro continuativo di 16 milioni di persone, circa un quarto della popolazione italiana! Oggi disponiamo di fonti energetiche ben più sostanziose della forza umana, prevalentemente combustibili fossili (petrolio,carbone e gas naturale) che da soli provvedono a circa l’85% del fabbisogno energetico mondiale. Queste risorse sono un dono che l’uomo sta consumando voracemente e a un tasso un milione di volte più elevato della loro formazione, sono dunque risorse non rinnovabili e prima o poi si esauriranno, oppure saranno talmente scomode da estrarre che non sarà più conveniente energeticamente ed economicamente. Inoltre il loro utilizzo rilascia in atmosfera milioni di tonnellate di CO2, alterando pesantemente la concentrazione di questo gas serra in atmosfera con irrefutabili conseguenze sul clima terrestre. Inquinamento, sfruttamento delle risorse, perdita di interi ecosistemi, guerre, disuguaglianze… queste sono solo alcune delle conseguenze del nostro attuale sistema di approvvigionamento energetico. Sono le cosiddette “esternalità negative”, alle quali non viene attribuito un costo economico forse perché sarebbe talmente elevato da far schizzare il prezzo di un barile di petrolio a livelli mai visti. Infine speranza, perché, sebbene l’umanità stia dimostrando ben poca razionalità e lungimiranza, l’alternativa esiste: il Sole invia ogni ora sulla terra 400 milioni di miliardi di joule, pari all’energia che l’umanità consuma in un anno intero. Questa energia rinnova tutti i processi fisici e biologici che avvengono sul nostro pianeta: il ciclo delle acque, la fotosintesi, la formazione dei venti, la vita stessa. La transizione verso una società basata sull’energia solare, in tutte le sue forme, è la sfida che ora ci attende, una sfida che dobbiamo affrontare con consapevolezza perché non è più possibile indugiare adducendo scuse o sventolando argomenti falsi. Attraverso questo Blog, desidero contribuire a diffondere la consapevolezza sul problema energetico ed aprire uno spazio di discussione per quanti vorranno partecipare!