25 Years Later: Did We Learn Anything from the Exxon Valdez Oil Spill?

This year’s traditional Iditarod dog sled race began, as usual, with great excitement along the snowy streets of my hometown, Anchorage, Alaska. Dogs yelped and cried, straining their harnesses, eager to leap into the air and run. Meanwhile, we Alaskans, dressed in bright, traditional parkas, were packed tightly on the sidewalks surrounding the staging areas. But there was another presence in the crowd—a sea of people carrying bags emblazoned in red with the words “ExxonMobil” and handing out promotional tchotchkes.

We were celebrating this Iditarod a few weeks before the 25th anniversary of one of the greatest environmental disasters of all time: the Exxon Valdez oil spill. This was one of the biggest oil disasters in history and spilled over 11 million gallons of crude oil into Alaska’s pristine Prince William Sound—covering 1,300 miles of coastline and 11,000 square miles of ocean. It wiped out sea otter populations, a unique pod of killer whales, entire herring and crab populations, and tens of thousands of birds.

The Exxon Valdez oil spill in 1989 covered 1,300 miles of coastline and 11,000 square miles of ocean and is one of the worst human-caused environmental disasters in history.

The Exxon Valdez oil spill in 1989 covered 1,300 miles of coastline and 11,000 square miles of ocean and is one of the worst human-caused environmental disasters in history.

Watching Exxon’s commercial fanfare at this year’s Iditarod, I could not help but think, “Are we all gripped by collective amnesia?”  How could we forget that after creating the disaster in the first place, Exxon compounded the damage by spraying tons of deadly chemicals along our beaches to break up the oil? (Coincidentally, the company also produced these chemical dispersants and profited heavily from using them in its “clean up.”) How could we not remember that Exxon then went to the courts to avoid paying compensation and damages to fishermen and communities who suffered greatly from the loss of livelihoods and subsistence resources? Using a popular tactic from the corporate playbook, Exxon made sure that the lawsuits dragged on for so long that many of the fishermen died before ever receiving a dime.

Today, oil can still be found on some of Prince Williams Sound’s beaches, and some critical fish and wildlife populations have not yet recovered—and may never recover. But if nothing else, at least now the region and its people are better prepared to minimize, though not eliminate, the risks posed by shipping crude oil through this unique, and extremely fragile, marine environment.

Disaster relief crews spent countless hours cleaning up the 11 million gallons of crude oil spilled in Prince William Sound, some of which still remains today.

Disaster relief crews spent countless hours cleaning up the 11 million gallons of crude oil spilled in Prince William Sound, some of which still remains today.

Citizen monitoring groups were established in Prince William Sound and Cook Inlet.  More tug boats and oil spill recovery gear have been put in place. Satellites now track vessels.

Sadly, the same can’t be said for oil companies planning to drill for oil in Arctic waters or commercial ships traveling through the Arctic.

Last year, Shell’s foray into Arctic exploratory drilling was a disaster. The company breached numerous environmental, health, and safety regulations. And eventually, a federal court decided that Shell’s permits were granted prematurely and illegally. Ridiculously, the company publicly blamed its woes largely on “the weather”—not its incompetence.

Still, Shell does have a point when it talks about the weather. The Arctic presents oil drillers with severe weather problems that include extreme cold temperatures and thick ice slabs that can crush vessels and damage or sink platforms. In addition, during certain times of the year, vast cyclones rage across the region, creating a perfect storm for the loss of lives and potential oil spill disasters—the likes of which we have never seen, and hopefully never will see.

The Arctic Council, an intergovernmental forum comprised of the world’s eight Arctic nations, explicitly stated that the biggest threat to the Arctic is an oil spill similar to the Exxon Valdez disaster because water currents would carry the oil above and below the ice across vast distances. This could ultimately result in a total ecosystem collapse because the Arctic, while bountiful in marine life and nutrients, is home to fewer species than oceans further south. Predator species often rely on only one or two prey species for survival, so if one species is wiped out, the entire ecological chain could unravel. The Arctic truly is one of the most vulnerable places on our planet.

Perhaps in the future measures will be developed that reduce the risks oil poses to the fragile Arctic. Vessels may be required to operate on lighter fuels that simply evaporate instead of heavy fuel oil, which tends to persist in the environment. The oil and shipping industry may develop new technologies to minimize risk.

But today an oil spill would still threaten the very survival of the Arctic. And if we don’t admit this, then we have not learned a thing from the Exxon Valdez disaster.

Posted in Alaska, Arctic, Biodiversity, Energy, Fisheries, Marine, Oceans, Water | Comments Off

Will the U.S. Fund Russian Gas Exports?

First published in the Huffington Post

As the geopolitical crisis in Ukraine grows, Western governments are talking tough about sanctions against Russia. President Obama and the European Union have now leveled sanctions against Russian and Crimean political figures and a bank, but not yet against other companies. As Rachel Maddow points out, with these sanctions, the United States and European Union fired the first economic shots in a larger escalation of sanctions that could be leveled at companies like Exxon and Rosneft — which coincidentally have a massive joint venture underway that includes terribly harmful fossil fuel projects in Russia’s environmentally sensitive Arctic region.

Given Russia’s use of natural gas exports to bully Ukraine and Western Europe in the current crisis, sanctions should be expanded to include companies working in Russia’s oil and gas export sector. Yet, so far, Western governments have not issued sanctions against oil and gas exporting companies in Russia, likely due to lobbying by politically powerful Western oil and gas companies that are involved in these projects.

What’s worse, the U.S. is even considering providing federal subsidies for a massive expansion of the Russian oil and gas export sector. The U.S. government’s largest export promotion agency, the Export-Import Bank is actively considering financing the enormous Yamal Liquid Natural Gas (Yamal LNG) export project in Northwest Siberia–an enormously harmful fossil fuel scheme led by Russia’s Novatek and France’s Total companies. Gennady Timchenko, one of the people that Obama has sanctioned, is a co-owner in Novatek. The project threatens Russia’s ecologically delicate Arctic region and is drawing vocal opposition from Russian and international environmental groups.

The U.S. Export-Import Bank is considering financing the Yamal Liquid Natural Gas export project in Northwest Siberia, a environmentally devastating fossil fuel scheme.

The U.S. Export-Import Bank is considering financing the Yamal Liquid Natural Gas export project in Northwest Siberia, a environmentally devastating fossil fuel scheme.

The amount of U.S. government financing sought for Yamal LNG has not been publicly revealed, but it is likely not a trivial amount: Export-Import Bank financing for three recent LNG projects has totaled nearly $8 billion.

In addition to being recipients of wasteful federal subsidies, these LNG projects are incredibly harmful to the environment, local communities and the global climate. Two of the projects are damaging Australia’s stunning Great Barrier Reef and have drawn environmental opposition and a lawsuit against the Export-Import Bank. A third LNG project in Papua New Guinea — led by ExxonMobil — has sliced gas pipelines through priceless tropical forests and sparked violent conflicts between tribal communities and the company.

But a different course of action by the U.S. Government is possible. Export-Import Bank and other Western public finance institutions have withheld financing for Russian oil and gas projects based on a combination of political and environmental concerns in the past. Between 2003 and 2007, the enormous sub-Arctic Sakhalin II oil and gas project in the Russian Far East sought billions of dollars in financing from the Export-Import Bank, the U.K. government, and the multilateral European Bank for Reconstruction and Development. However, these government finance institutions balked at funding the project due to irreconcilable environmental concerns. Eventually, they walked away completely after the Russian gas giant, Gazprom, grabbed a controlling share in the project in a way that struck many Western governments as quasi expropriation.

The U.S. pulled out of financing Sakhalin II oil and gas project, lead by Russian gas giant Gazprom, once it learned of its harmful environmental impact.

The U.S. pulled out of financing Sakhalin II oil and gas project, lead by Russian gas giant Gazprom, once it learned of its harmful environmental impact.

As an interesting historical note, the Export-Import Bank was established in 1934 to lend to the Soviet Union, but ultimately didn’t do so due to unpaid war debts. Soon after, a reconstituted Export-Import Bank was established to lend to Cuba and “any part of the world except Russia.”

Let’s hope that the Obama administration will pull the plug on public financing for Yamal LNG — a project that’s bad for the Arctic and for regional security, instead of bending to the will of dirty fossil fuel bullies in the United States, Russia, and beyond.

Follow Doug Norlen on Twitter: www.twitter.com/dougnorlen

Posted in Energy, Export Credit Agencies, Finance, Global, Grassroots Activism, Liquefied Natural Gas, Policy, Responsible Finance, Russia | Comments Off

Russia Celebrates International Day of Rivers

First published on Rivers without Boundaries

On March 14, 2014, at public hearings in the town of Mogocha, located in Zabaikalsky Province in eastern Russia near the border of China, local people endorsed an ambitious plan to develop a nature reserve on 330,000 hectares.

This protected area is being designed to safeguard the upper flow of the Amur River and valleys of its two principal sources: the Shilka River and the Argun River.

This area is the symbolic origin of the Amur – the last great free-flowing river that empties from Eurasia into the Pacific some 3000 kilometers downstream. The Argun (Erguna) and Amur (Heilongjiang) Rivers form the Sino-Russian border for almost 3000 kilometers. The Amur river is an important migration route for fish such as endemic Kaluga Sturgeon (Huso davhuricus) which may reach 4 meter length and weigh more than 1000 kg. This river valley is a globally significant biogeographic corridor that allows exchange between far eastern and Siberian fauna and flora. Locals also use the river valley for recreation, shipping, fishing, and hunting.

The Amur River creates the border between China and Russia and is home to diverse flora and fauna.

The Amur River creates the border between China and Russia and is home to diverse flora and fauna.

Two years ago, Russian En+ Group signed an agreement with China Yangtze Power Co. to develop new hydropower plants, one of which was proposed at the lower Shilka River and that resulted in continued public protests throughout the Amur River Basin for which the Shilka is the primary source. In addition, several years ago, Chinese Xin Ban Guoji Company from Heilongjiang Province began construction of a pulp mill nearby on the Amazar River, which is the large left-bank tributary of the Amur. This presented a grave threat both for the river and for the surrounding forests, because the company rented almost all remaining forests— adding up to 1 million hectares in the Mogocha district of Zabaikalsky Province.

Local people hope that establishment of the new nature reserve will protect the river valleys from logging and pulp-mill impacts and prevent construction of the hydropower dam. Their main message to the Zabaikalsky Provincial Government, which sponsors the development of  this nature reserve and opposes construction of large hydropower plants, is to expand the new protected area as much as possible safeguarding resources crucial for sustainable development and well-being of local people. The nature reserve was planned and designed on the initiative of Mogocha district administration with support from local scientists, provincial government, WWF Amur Branch and Rivers without Boundaries (RwB). When the hearings are over, documentation has to be prepared so that the provincial government can complete the classification process of the protected area.

sharovpetr_Amur4 - Copy

The new nature reserve will protect the Amur River Basin from man-made destruction, including logging, pulp-mill impacts, and the creation of hydropower dams

In addition, 20 Russian environmental groups united by the Rivers without Boundaries Coalition (RwB) signed a petition addressing the Russian government’s questioning of the feasibility of a grand plan to control Amur River floods by building multiple dams on its tributaries (including Shilka River). Such a plan was proposed by President Putin in the wake of a large flood that hit the Amur in summer 2013. However, the real motive behind it is to make use of public money to support development of export-oriented commercial hydropower.

The petition shows that “flood-control hydropower” is a controversial undertaking, which is hardly justifiable on economic and environmental grounds. Even the Russian Ministry of Energy publicly expressed doubts that these dams are feasible unless Chinese investors pay for their construction and guarantee buying generated electricity for a fair price.

RwB and its allies suggest considering an alternative comprehensive plan focused on investment into climate adaptation and modernization of settlements in the Amur river valley, which will guarantee improvements for local people and drastically reduce losses from inevitable future floods. Such measures cost less and could be implemented much faster than dam building.

Environmental groups urge the Russian government to use their recommendations to revise the current approach and make the resulting “anti-flood program” subject to public hearings and strategic environmental assessment.

On the 17th International Day of Action for Rivers, Rivers without Boundaries Coalition (RwB) congratulates friends and colleagues who protect other rivers around the world, and hopes that our efforts will save them from destruction!!!

Posted in Biodiversity, Civil Society, Communities, Fisheries, Forests, Freshwater, Grassroots Activism, Rivers, Russia, Water | Comments Off

Taking Polluters to Court in China: A New Tool Emerges

Coauthored by Kristen McDonald and Alex Levinson

What do you do when all else fails to stop a polluter in China?

Increasingly, local communities impacted by pollution are turning to the courts to settle disputes.  Pacific Environment helps local environmental groups support pollution victims in their communities, while also giving these local leaders the tools they need to participate in citizen enforcement of China’s environmental laws. These types of citizen enforcement activities are routine in the United States but quite novel and untested in China.

China interns

Pacific Environment’s 2013 Rule of Law Project interns (pictured here) are helping environmental groups across China use legal tools to stop polluters and help pollution victims.

Here is a short overview of the current state of environmental public interest law in China and the role local groups play in advancing environmental justice.

China’s Environmental Courts

The opening of regional environmental courts in the past several years is a positive sign of changing attitudes about enforcement of environmental laws in China. Between 2007 and 2012, more than 60 environmental courts opened, and the most active of these courts have heard hundreds of cases.

Rachel Stern, author of a recent book on environmental litigation in China, notes that once a case reaches court, it has about a 50% chance of providing the victims with some kind of compensation. The number of environmental lawsuits in China increased over the past decade, but Stern notes that the reasons are unclear. The increased use of courts could mirror the devastating increase in pollution or the opening of new regional environmental courts and a corresponding willingness of Chinese authorities to allow a certain level of citizen enforcement.  Even though this is a huge step for the environmental movement in China, environmental courts have yet to openly show they have teeth. For example, they still have not accepted any cases against the largest companies and most important polluters.  

Public Interest Lawsuits

In the United States, public interest environmental lawsuits are part of the fabric of our environmental protection system. In China, the vast majority of environmental suits are personal injury or “tort” cases. These kinds of cases can only be brought by a victim directly injured by, for instance, a factory spill, and the victim carries the difficult and expensive burden of proof to establish that the individual factory’s actions directly caused her injury. Suffice it to say, most victims in China lack the resources to pursue these cases in court.

But times are changing. By 2011, some 15 public interest cases had been brought to environmental courts by public entities and municipal governments. In 2012, two environmental organizations in China successfully brought the first public interest environmental law caseby independent citizen groups, suing two companies in Yunnan for spilling 5,000 tons of toxic cadmium waste. The case was widely reported in China and elsewhere, but the lawsuit has not yet resulted in compensation for the pollution victims or any punishment for the mining companies—in part because the environmental groups cannot afford an expert appraisal of the extent of the damage.

The Role of Citizens

While major cases against heavy polluters, such as the cadmium case, have not yet succeeded, Chinese citizen organizations have won cases establishing important precedents for the right of citizens to information—a core element of any system of public participation. Last year, Pacific Environment’s partner Green Anhui won a case against the city of Anqing , which refused to release environmental information the group had requested. This is one of the first cases in the nation that demonstrates that China’s open information laws will be enforced— at least by some courts.

With the help of a Rule of Law Project intern, Pacific Environment’s partner, Green Anhui, with the won a precedent-setting case against city of Anqing that forced the city to release environmental information that it had  previously refused to provide to the group.

With the help of a Rule of Law Project intern, Pacific Environment’s partner, Green Anhui, with the won a precedent-setting case against city of Anqing that forced the city to release environmental information that it had previously refused to provide to the group.

But there are countervailing winds. Pending revisions to China’s environmental laws by the government threaten to weaken citizen enforcement of environmental laws in court by local environmental organizations. This move has generated widespread criticism because it will strip most environmental organizations of their right to bring public interest citizen suits to court.

Which Way?

In economically thriving but heavily polluted China, the need for and popularity of legal remedies for environmental problems is dramatically increasing. Yet, the institutional and legal structures necessary for a robust use of courts as venues for environmental justice are not well established.

Pacific Environment and our environmental partners in cities across China, are exploring what the current limits are. In collaboration with Ocean University’s School of Law and Policy, our Rule of Law Project pairs graduate students with three of our partner organizations: Green Anhui in Hefei Province, Green Stone in Nanjing, and Green Camel Bell in Lanzhou. Some students will work directly on environmental law cases, while others will provide partners with improved legal tools. For example, Green Stone’s intern will help establish stronger information sharing systems that will allow local citizens to better participate in environmental reviews.  Green Camel Bell’s intern will review and compare environmental laws and enforcement in Lanzhou city with national standards to set the stage for local advocacy efforts.

Through training the next generation of China’s public interest lawyers, and connecting them with their future clients—citizen groups in communities across China—we help build strong voices for a robust environmental law system in years to come.

Posted in Uncategorized | Comments Off

Creating a Strong Polar Code is Our Priority

We all know climate change is having a huge impact here in the northland – and with it the Arctic Ocean is changing rapidly. Arctic sea ice is disappearing fast. Credible research now suggests that the Arctic may be ice free during the summer as early as this decade —84 years earlier than previously predicted by climate change models.

Nations and corporations are eager to exploit the newly “open” Arctic seas. The sea ice reductions will lengthen the navigation season, open new routes, and dramatically increase ship traffic throughout the region. Rising ship traffic threatens marine biodiversity and indigenous food security through potentially devastating oil spill disasters, routine oil discharges, chemical pollution, underwater noise, collisions with whales and other marine wildlife, introduction of invasive species, and destruction of ecosystems.

Experts predict that by 2016, the Arctic will be ice free during the summer, which means that trans-Arctic shipping is going to dramatically increase.

Experts predict that by 2016, the Arctic will be ice free during the summer, which means that trans-Arctic shipping is going to dramatically increase.

This is where Pacific Environment comes in. Pacific Environment is one of only a handful of environmental groups in the world with a seat at the table at the United Nation’s International Maritime Organization (IMO).  The IMO is in the process of creating the first international set of rules to govern shipping in Arctic waters, the so-called “Polar Code.”

Over the past two years, Pacific Environment’s highly collaborative efforts and targeted advocacy have helped shape the Polar Code and achieved the inclusion of several important environmental provisions—despite often strong resistance among IMO members.

These policy wins include a ban on discharge of oil and oily waters in the Arctic ocean, sharp restrictions on sewage and garbage discharge, and provisions that will make the code applicable not just to new but also, very importantly, to existing ships. These issues are very important for indigenous communities in the Arctic, some of which depend on pristine Arctic waters for up to 80 percent of their food. This is not just an environmental issue but a human rights and food security issue.

The new Polar Code will ban the discharge of oil and oily waters in the Arctic ocean and restrict the discharge of sewage and garbage for both existing ships and new ships planning to cross the Arctic Sea.

The new Polar Code will ban the discharge of oil and oily waters in the Arctic ocean and restrict the discharge of sewage and garbage for both existing ships and new ships planning to cross the Arctic Sea.

Despite our wins, we are facing a big fight this year. Both industry groups and the flag-ship states are feverishly working to weaken the Polar Code to the point where it would be relatively meaningless.

But we have solid strategies to win. We are partnering with indigenous leaders in Alaska and Russia to ensure their issues are brought to IMO’s attention. We are working behind the scenes to boost support from many countries’ delegations, including the U.S. delegation, to support strong protections.And, we are developing a media campaign to ensure the public knows what’s at stake in the Arctic and what they can do. Together, with your support, we will make a big difference in protecting our pristine Arctic Ocean and the marine resources which people there rely on.

Posted in Alaska, Arctic, Bering Sea, Biodiversity, Climate Change, Communities, Global, Marine, Oceans, Policy, Water | Comments Off

Endangered Western Gray Whales Once Again Saved From Big Oil

A few months ago we told you about a great victory for the Western Gray Whale: Shell Oil and Russian oil giant Gazprom scrapped its plan to build an oil drilling platform in the middle of the whales’ summer feeding ground.

Now, I’m happy to tell you that there has been another win in our efforts to protect the endangered whales. Together with our grassroots partners, and a group of Russian experts, we have delayed the construction of a new pier that would have been used to ship supplies to an oil project operated by another oil giant, ExxonMobil.

A planned pier by oil giant Exxon Mobile would have disturbed the critically endangered western gray whale’s calving ground, where mother whales teach their calves critical survival skills.

A planned pier by oil giant Exxon Mobile would have disturbed the critically endangered western gray whale’s calving ground, where mother whales teach their calves critical survival skills.

There are only about 150 Western Gray Whales left in the world, and their summer feeding grounds in the waters near Russia’s Sakhalin Island are right in the middle of two major oil and gas projects. ExxonMobil, the operator of one of these projects, recently decided that it needs a new pier to unload drilling equipment. However, ExxonMobil pledged years ago to protect the gray whales, and construction of the pier would cause a major disturbance to their feeding and calving grounds.

Dmitry Lisitsyn won the prestigious Goldman Environmental Prize for ensuring that one of the world’s largest oil developments in Russia’s Far East cleans up its toxic sludge, stops dumping its waste straight into the ocean, and abides by strict environmental regulations.

Dmitry Lisitsyn won the prestigious Goldman Environmental Prize for ensuring that one of the world’s largest oil developments in Russia’s Far East cleans up its toxic sludge, stops dumping its waste straight into the ocean, and abides by strict environmental regulations.

We worked with Sakhalin Environment Watch, one of Russia’s strongest environmental organizations and helmed by Goldman Environmental Prize winner, Dmitry Lisitsyn, to conduct an environmental assessment of the pier project. Sakhalin Environment Watch convened a diverse group of experts on marine mammals, fisheries, and oceanography to examine the potential environmental impacts of the pier project. All of the experts agreed that the pier would not only cause higher gray whale mortality, but would also damage local fisheries—a major source of income for many locals–and destroy seabird habitat.

Upon reviewing the experts’ conclusions, a government panel determined that it needs more time before making a final decision about permitting ExxonMobil to build the pier. This temporary delay is an important victory that may ultimately result in the cancellation of the project.

As more and more mining and logging projects and oil pipelines encroach on Russia’s last untouched wilderness areas, conservation organizations can increasingly count on scientists, and even businesses and government agencies, to agree that protecting the environment must be a priority. We will work with all of these allies as we continue our fight against the pier.

Stay tuned for more updates on our campaign to save the Western Gray Whale from extinction.

Posted in Arctic, Biodiversity, Marine, Oceans, offshore drilling, Russia, Russia Community Partners, Sakhalin, Water | Comments Off

Energy Access and the True Cost of Fossil Fuel Projects in Africa

Coauthored by  Doug Norlen and Daniel M. Kammen, Ph.D.

First published on the Huffington Post Energy Blog.

Last year President Obama launched Power Africa, an initiative to double access to power in sub-Saharan Africa, where more than two-thirds of the population is without electricity. In a parallel move, the House Foreign Affairs Committee leadership introduced the Electrify Africa Act to encourage access to electricity in sub-Saharan Africa. Since then, there has been quite a bit of debate about how federal agencies can best provide support for sustainable energy access for the region.

On February 10, in the Council on Foreign Relations’ Energy, Security and Climate blog, Michael Levi posted a thoughtful piece entitled, “Is U.S. Fossil Fuel Policy Keeping Millions Poor?” This question is critical to not only how to most effectively use overseas investment and development funds, but how to transition the energy system at the household, regional and global levels in a way that addresses the crippling problem of insufficient energy access for the global poor in an environmentally responsible way. This issue is one where we have done a considerable amount of analysis, and the results should be eye-opening to those looking largely retrospectively at the evolution of energy provision and end use technologies and policies.

In the post Levi critiques a January 2014 Center for Global Development (CGD) paper that calls for the weakening of the landmark climate and development policy of the U.S. Government’s development finance agency, the Overseas Private Investment Corporation (OPIC). This policy, which requires OPIC to reduc

e its fossil fuel financing and increase its renewable energy financing, has shifted the agency from providing $131 million in renewable energy projects in 2009 to now around $1 billion annually — roughly 30 percent of total agency financing — to the developing world. This transition away from fossil fuels to a renewables-intensive portfolio is consistent with both the global imperative to reduce carbon emissions , and the very pressing need that United National Secretary General Ban-ki Moon has identified as a crippling issue for the global poor: energy access.


Over 2/3s of the population of Africa does not have access to electricity. United National Secretary General Ban-ki Moon states this is a crippling issue for the global poor and renewable energy sources are the best way to increase access.

Yet, CGD argues that a revision of OPIC’s climate policy is needed to allow more financing for gas projects, and that could somehow result in more than 60 million additional people in poor nations gaining access to electricity generated by those projects.

Levi highlights a number of key issues, and in turn makes a set of important critiques, beginning with the finding that that CGD’s analysis is based on dubious assumptions of higher finance leveraging ratios from OPIC support for natural gas projects than for renewables. He notes that:

Historical leverage ratios do not tell us that for every additional dollar OPIC spends on gas the private sector will spend four. They actually tell us nothing about how much private investment a dollar of OPIC spending will leverage, because they don’t tell us what happens at the margin, and they don’t tell us anything about causality… It’s entirely possible that public spending on natural gas projects appears to leverage more private capital than spending on renewables does simply because more private capital is already there for natural gas than for renewables.

Levi also argues that CGD’s cost estimates focus on capital costs for plant construction and omit expensive fuel costs for gas plants over time — a problem that renewable energy does not face.

In fact, the CGD memo contains a number of problematic statements that warrant further exploration, namely:

Obsolete Data: CGD bases much of its cost estimates on a 2008 Congressional Research Service (CRS) report and a 2010 Department of Energy report on U.S. power plant capital costs. However, renewable energy capital costs have plummeted throughout the world since these reports were released. For example, the 2008 CRS estimates that the average cost of installed capacity of selected solar photovoltaic projects is $6,552 per Kilowatt (or $6.55 per watt). However, a 2013 report by the Lawrence Berkeley National Laboratory and U.S. Department of Energy demonstrates that by 2012 the median cost of installed photovoltaic projects in the U.S. decreased to between $4.6 and $5.3 per watt, and costs for 2013 and beyond are expected to drop still further. In fact, using the U. S. Department of Energy’s SunShot objectives of $1/watt commercial-scale solar by 2020 (a target most analysts believe that the world will hit based on current R&D and market-based policies), we recently found that solar could reasonably provide one-third or more of the energy for much of the United States. Africa is not removed — in fact it is benefitting greatly on both energy access and price containment — from this global trend. According to a 2013 market research paper by Deutsche Bank, in South Africa solar energy for residential use is already capable of being deployed cheaper than the current price of electricity from the grid. This finding is consistent with the work of the IFC and U.S. DoE supported Lighting Africa program, which find that even in the short-term, solar beats off-grid and mini-grid based fossil fuels, a finding our own laboratory at UC Berkeley has confirmed in field-studies in East Africa, southeast Asia and Central America.1

Increased use of sustainable energy sources, such as solar panels, could make electricity cheaper and more accessible than traditional grid electricity.

Increased use of sustainable energy sources, such as solar panels, could make electricity cheaper and more accessible than traditional grid electricity.

High Fossil Fuel Operating Costs Over Time: The 2008 CRS report found that the most variable cost for fossil fuel projects is the cost of fuel, since “it takes years to build a power plant, and plants are designed to operate for decades, generation plans largely pivot on fuel price forecasts. However, fuel prices have been notoriously difficult to predict.” Also, Levi notes that in Africa the cost of using gas domestically includes forgone gas export revenues. Higher export prices compete with, and can drive up domestic prices, which can be expected in Africa as countries there seek to increases exports. This high variability and lack of predictability should be of great concern in the context of energy access, since lower income communities may likely not have the financial means to pay for fuel when costs fluctuate to high levels. Meanwhile, the CRS study states what is perhaps obvious, that fuel prices are “irrelevant to solar, geothermal and wind power.”

Moreover, the high capital cost of large centralized fossil fuel projects typically result in long-term power purchase agreements, thus locking countries into expensive long-term fossil fuel supply contracts, sometimes over two decades, thus forgoing the opportunity to displace more expensive fossil fuel projects with cheaper renewable energy projects as the costs of renewables drop. And, large centralized fossil fuel projects can take several years to construct before generating electricity, while renewable energy can be more quickly deployed and does not saddle poor communities with expensive long term fossil fuel supply costs. According to a Baker McKenzie survey of 140 senior business executives from project developers, bank, investors and service providers:

Renewables [in Africa] can be installed much more rapidly than conventional fossil fuel generation. Solar PV also has a natural advantage over other renewable technologies in that it can be deployed on a relatively small scale — 85 percent of survey respondents believe that solar PV’s suitability for rural, off-grid applications is a strong driver for its installation.

Transmission and Distribution Costs Omitted: By comparing only the capital cost of power plants, CGD omits one of the most crucial costs associated with energy access in Africa — the cost of transmission and distribution. According to the International Energy Agency’s (IEA) report, Energy for All: Financing Access for the Poor, of people without access to electricity globally, more than 95 percent are either in sub-Saharan Africa or developing Asia and 84 percent are in rural areas. According to the IEA, due to the high cost of extending the grid to these areas, to achieve universal energy access 70 percent of these rural areas should be connected either with mini-grids or with small, stand-alone off-grid solutions, and that 90 percent of mini-grid and off-grid must be provided by renewables. According to the IEA:

Mini-grids, providing centralized generation at a local level and using a village level network, are a competitive solution in rural areas, and can allow for future demand growth, such as that from income-generating activities.

According to Baker & McKenzie, such small scale renewables “are attractive, being relatively quick and cheap to deploy relative to fossil fuels, making them suitable in areas where there is no grid connection, where they can also compete on cost with conventional energy sources.”

Externalized Costs Omitted: CGD correctly states that pollution from the current use of solid fuels used for lighting, heating, and cooking in Africa contributes to health problems including premature deaths. However, CGD omits the fact that fossil fuel power projects that it proposes also cause health problems, including cardiovascular and respiratory illness that likewise contribute to premature deaths. Additional harmful externalities from fossil fuel projects can cause damage to community resources and commons, as well as losses to agricultural productivity.

Through administration, interagency and international efforts, methodologies to calculate the economic costs of these externalities — called the social cost of carbon — are increasingly common. These methodologies attempt to estimate economic costs associated with carbon dioxide, as well as other pollutants released simultaneously, such as sulfur dioxide, particulate matter, and mercury. While the tragic human toll from this pollution is never simply monetary, the existence of social cost of carbon methodologies demonstrates that there is increasingly mainstream awareness of the economic costs that fossil fuel projects externalize to the public. The recently revised U.S. Export-Import Bank Guidelines for High Carbon Intensity Projects require that “subsidies and externalities, such as the social cost of carbon emissions, even if not quantified,” be included in obligatory assessments to determine whether economically feasible alternatives exist for proposed coal plants in the poorest countries. Environmental and developmental NGOs are urging OPIC to also include the social cost of carbon in its comparisons of all power generation options. However, CGD omits any mention of these externalities in its analysis of fossil fuel versus renewable power plant options. If the goal of increase energy access includes health and environmental considerations, these costs must be factored in.

Installed Capacity Does Not Translate to Energy Access: Perhaps the most startling thing about the CGD analysis is the assumption that increased federal financing for American gas companies doing projects in Africa will result in 60 million poor people in those countries somehow gaining access to the electricity generated by those projects — despite the lack of a grid that connects them. An independent review of past energy projects at major international development financial institutions since 2008 shows an opposite result — over $28 billion to natural gas projects with zero dollars actually targeting energy access for the poor. Meanwhile, the CGD analysis provides no strategy — much less cost estimates — to ensure that access is extended. Foreign investors, seeking the highest profits possible, will naturally gravitate to projects that do not require them to absorb the cost of expensive grid extensions to poor communities. More likely, the CGD approach would result in a shift back to the old days with OPIC clients that pursue polluting centralized fossil fuel projects that will be connected to established grids or that extend to industrial zones or urban areas that can pay for higher costs of electricity — rather than distributed renewable energy projects that do not require massive grid expansion.


1) Casillas, C. and Kammen, D. M. (2010) “The energy-poverty-climate nexus,” Science, 330, 1182 – 1182
2) Insights into the renewable energy sector: A conversation with Lynn Tabernacki, OPIC’s managing director of renewable and clean energy programs, The OPIC Blog, October 29, 2012, available here.
3) Stan Kaplan, “Power Plants: Characteristics and Costs,” Congressional Research Service Report, November 13, 2008
4) Tidball, Rick, Joel Bluestein, Nick Rodriguez, and Stu Knoke, “Cost and
Performance Assumptions for Modeling Electricity Generation Technologies,” National Renewable Energy Laboratory, Department of Energy, November 2010
5) Ibid #3 at pg 92
6) Tracking the Sun VI: An Historical Summary of the Installed Price of Photovoltaics from 1998 to 2012, Lawrence Berkeley National Laboratory, July 2013, available here.
7) Mileva, A., Nelson, J. H., Johnston, J., and Kammen, D. M. (2013) “SunShot Solar Power Reduces Costs and Uncertainty in Future Low-Carbon Electricity Systems,” Environmental Science & Technology, 47 (16), 9053 – 9060
8) Q2 Preview: Improving Fundamentals, Outlook, Deutsche Bank Market Research: Solar, July 31, 2013, available here.
9) Ibid at pg 23-24.
10) The Future for Clean Energy in Africa, Baker & McKenzie, June 2013, available here, see also here.
11) Energy for All, Financing Access for the Poor, International Energy Agency, October 2011, at pg 3, and pg 21-26.
12) The Future for Clean Energy in Africa, Baker & McKenzie, June 2013
13) See here.


Posted in Communities, Energy, Export Credit Agencies, Finance, Global, Policy, Responsible Finance, Sustainable Development, Uncategorized | Comments Off

Shell Abandons Plan for Drilling in Arctic Seas

Yesterday, the CEO of Shell Oil announced sharply lower earnings and canceled plans to try to drill in Arctic seas off the coast of Alaska.  While couched in terms of a temporary decision applying only to this summer’s drilling season, the actual press announcement by the company had the feel of a more dramatic change of course:

“The recent [federal appeals court] decision against the Department of the Interior raises substantial obstacles to Shell’s plans for drilling in offshore Alaska. As a result, Shell has decided to stop its exploration programme for Alaska in 2014. ‘This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014,’ van Beurden said. ‘We will look to relevant agencies and the Court to resolve their open legal issues as quickly as possible.’”

Pacific Environment was one of the first to start this fight, back in the mid-2000s, challenging oil and gas leases the Bush administration was selling to Shell and other oil companies. Our early concerns centered around the fears and concerns of Native Alaskan leaders how oil drilling might harm their traditions and food security.

The fight has snowballed as major environmental allies have joined, pulling out the stops to alert U.S. citizens of what could be lost if oil companies try to use current technologies in extreme Arctic conditions. When BP was unable to cap the Deepwater Horizon spill disaster in Gulf Coast waters, it demonstrated the much graver risk of trying to cap a spill in frigid, dark Arctic waters.

A huge part of the victory has been strategic use of the courts, challenging a complicit government’s failure to hold Shell accountable for oil spill preparation in Arctic conditions and to honestly account for the true risk to the Arctic’s polar bears, whales, walruses, and other iconic wildlife. A special shout-out is warranted to Earthjustice, NRDC, and pro bono lawyers who led that part of the charge so winningly.

If this sounds like a valedictory, it is not quite.  The ground now turns to President Obama’s administration to back up the strong, welcome rhetoric about addressing climate change with meaningful action against opening up our Arctic to oil multinationals—and meaningful action against an “all of the above” energy policy. In a world of changing climate, we’ll need a “no-carbon energy policy,” and “all of the above” isn’t the path to get there.

Posted in Alaska, Arctic, Climate Change, Communities, Energy, Oceans, offshore drilling | Comments Off

Kicking off 2014 with a bang


For more than seven years, Pacific Environment and allies have single-handedly been stopping Shell Oil from drilling in fragile Arctic seas.

Now, Shell is busy preparing to return to the Arctic in time to drill during the summer season. But this week a federal court threw a wrench into the oil giant’s plans when it ruled against our government’s decision to open up America’s Arctic to international oil corporations. In fact, this is the second time a court ruled against oil drilling in the Chukchi Sea off the coast of Alaska.

The Chukchi Sea is part of America’s Arctic Ocean, north of Alaska, and home to many iconic wildlife species like the beluga whale above.

The Chukchi Sea is part of America’s Arctic Ocean, north of Alaska, and home to many iconic wildlife species like the beluga whale above.

The Chukchi Sea is part of America’s Arctic Ocean, north of Alaska, and home to many iconic wildlife species like the beluga whale above.

Together with our allies, we went to court (again) because the Bush administration violated the law when it sold oil and gas leases to Big Oil. The court agreed, and now the Department of the Interior must conduct a careful and honest analysis of the harm oil drilling may inflict on iconic wildlife like polar bears, walrus, whales, and seals, as well as on the food security of indigenous peoples.

This is an historic opportunity for President Obama to prove that he is committed to fighting climate change. Instead of allowing Big Oil to extract more dirty fossil fuels that will only worsen Arctic ice melt, the President should halt all drilling and cancel the ill-conceived Chukchi leases.

Remember when Shell tried to drill for oil off the coast of Alaska in 2012? 

It was a complete fiasco—and demonstrated that no oil company on earth is currently prepared to safely drill in extreme Arctic conditions. One of Shell’s drill rigs ran aground and together with another malfunctioning rig incurred over a million dollars in fines for air pollution violations, while the Coast Guard and the Department of Justice opened investigations for marine pollution and safety violations.

We’re running out of time. The Arctic is warming twice as fast than the rest of the world, and the Arctic ice that helps regulate the planet’s climate is melting at record speed.

Let’s hope the President and his administration will seize this historic opportunity to cancel America’s Arctic oil drilling program and get back on the path toward a clean energy future.

Posted in Biodiversity, California, Marine, Oceans, Uncategorized | Comments Off

U.S. Government Finance Agency Curbs Coal Support

Today, the Directors of the U.S. Government’s largest trade promotion agency, the Export-Import Bank (Ex-Im Bank), approved restrictions on financing for coal plants abroad. In doing so, the Ex-Im Bank became the first government export credit agency in the world to curb coal plant financing.

But the restrictions include unnecessary exemptions. For example, in some circumstances, the Ex-Im Bank will be allowed to continue supporting coal plants that pollute the world’s poorest countries. In addition, in most countries, it will be permitted to finance coal plants that employ Carbon Capture and Storage—a technology to sequester carbon dioxide that has not been proven to be viable for most commercial coal plants. The policy also allows financing for most coal mines.

“It’s great that the Export-Import Bank is curbing coal financing, but the loopholes appear big enough to drive a coal train through,” said Doug Norlen, Policy Director, Pacific Environment.

At the same time, the policy conditions financing for coal plants in poor countries on an analysis demonstrating that there are no economically feasible alternatives.  This analysis must factor in externalities such as the “social cost of carbon,” including the cost of harm to human health from coal plant pollution which, if properly measured and internalized, will make most coal plants non-viable when compared to renewable energy alternatives.

In recent years, the Ex-Im Bank has supported enormous coal power plants, including providing $805 million in financing for the enormous Kusile coal power plant and mine in South Africa in 2011, and $917 million in financing of the Sasan coal power plant and mine in India in 2010. The Kusile and Sasan coal power plants and mines will spew local air pollution leading to increased health problems in local communities that, according to Physicians for Social Responsibility, include respiratory and cardiopulmonary disease and cancer deaths. The 3,690 megawatt Sasan and 4,800 Kusile coal power plants are far larger than the typical 500 megawatt coal plant in the U.S.

The Ex-Im Bank will continue to finance coal plants in developing countries, including the Sasan plant in India.

The Ex-Im Bank will continue to finance coal plants in developing countries, including the Sasan plant in India.

The Ex-Im Bank’s continued support of certain coal projects have prompted Pacific Environment and other groups to file a federal lawsuit against the agency for financing coal exports from Appalachia without conducting any environmental or health analysis.  Pacific Environment and other groups have filed a separate federal lawsuit against Ex-Im Bank for financing liquid natural gas projects being built within the Great Barrier Reef World Heritage Area—projects which source gas from coal beds.

As part of their larger government commitments to curb public financing for coal plants abroad, Nordic countries are expected to decide in early 2014 whether to restrict coal financing by their export credit agencies.

“It’s high time for progressive governments in the Nordic countries to do the right thing for local communities and the global climate by banning export credit agency financing for coal,” said Norlen.

Meanwhile, the U.K. exempts its export credit agency, UK Export Finance (UKEF), from the country’s recently announced coal financing restrictions. UKEF has provided $100 million in financing for coal mines in recent years.

Posted in Coal, Energy, Export Credit Agencies, Finance, Global, Policy, Responsible Finance | Comments Off