NewEnergyNews: 02/01/2020 - 03/01/2020


Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge now: To make every day Earth Day.

While the OFFICE of President remains in highest regard at NewEnergyNews, the administration's position on the climate crisis makes it impossible to regard THIS president with respect. Therefore, until November 2020, the NewEnergyNews theme song:


  • TTTA Wednesday- ORIGINAL REPORTING: Achieving A Distributed Energy System Could Require A Self-Driving Grid
  • TTTA Wednesday-Grid Modernization Planning Jumped 33% In 2019

  • MONDAY’S STUDY: All About Storage

  • Weekend Video: 2020 Is Even Hotter
  • Weekend Video: Real Estate Values Sinking From Rising Climate Crisis
  • Weekend Video: Tesla’s Role In The New Energy Future

  • FRIDAY WORLD HEADLINE-Accelerated Ocean Currents Show Crisis Is Getting Faster
  • FRIDAY WORLD HEADLINE-Big Money Going To New Energy Thru 2025

  • TTTA Wednesday-ORIGINAL REPORTING: The Known Unknowns For 100% Renewables
  • TTTA Wednesday-Now “Cheaper To Save The Climate Than To Destroy It”
  • --------------------------


    Founding Editor Herman K. Trabish



    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart




      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.


    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

  • ---------------
  • FRIDAY WORLD, February 21:
  • NatGas Driving The Climate Crisis
  • Proven And Promising Utility-Scale Storage

    Friday, February 21, 2020

    NatGas Driving The Climate Crisis

    Oil and gas production is contributing even more to global warming than was thought, study finds

    Drew Kann, February 19, 2020 (CNN)

    “…Scientists say that atmospheric methane is now responsible for about 25 percent of the human-caused warming…[and] a new study finds that methane emissions from fossil fuels are between 25% and 40% larger than past research had estimated, revealing that oil and gas production is contributing far more to warming the planet than previously thought…[Sources of methane in the earth's atmosphere] can be divided into two categories: biological and fossil…Biological methane is released by the decay of plants and animals in environments like wetlands, but also from human activity like cattle farming, landfills and rice fields…[Fossil methane] can seep naturally from underground, or it can be released into the air by human extraction of oil and gas…

    ...[M]ethane concentrations in our atmosphere have soared by about 150 percent in the roughly two centuries since the Industrial Revolution…[The new research shows] that oil and gas production account for nearly half of all the methane in our air that is attributable to human activity…There is not as much methane as carbon dioxide in our atmosphere, but a molecule of methane has a global warming potential that is 20 times greater than carbon dioxide…[which means] the methane emissions associated with natural gas production are a serious problem for the planet…[H]uge amounts of methane are being released from oil and gas facilities around the US…” click here for more

    Proven And Promising Utility-Scale Storage

    Renewable Energy Worldwide: 100%

    February 10, 2020 (PR Newswire via Yahoo Finance)

    “…Utility scale energy storage is an essential aspect of achieving a no carbon world energy profile…This study shows the opportunity for companies in the renewable energy business to leverage storage as a way to gain strategic advantage in the market…Batteries are changing in response to the implementation of wind and solar renewable energy systems. Lithium Ion batteries represent the state of the art now. Solid state batteries represent the next generation of power storage for vehicles. Nanotechnology permits units to be miniaturized, standalone, and portable. Utility scale lithium flow batteries have been developed to offer utility scale advantages…

    ...[L]imitations that are still being addressed by vendors…[Projects can now be financed but a] wave of advances is bringing a new generation of utility scale batteries. Flow batteries support deployment of wind and solar power on a grand scale…Demand for storage increases as the value it provides is recognized. Utility scale energy storage is useful in balancing the proportion of variable, renewable generation…Batteries increasingly will be chosen to manage this dynamic supply and demand mix…Global energy storage is on an upward trend in any case, promising a multi-fold increase every year…[SolarReserve has demonstrated 400 MWh storage capability for concentrating solar power projects and its Sandstone project] will have 20,000 MWh of storage…” click here for more

    Wednesday, February 19, 2020

    ORIGINAL REPORTING: Achieving A Distributed Energy System Could Require A Self-Driving Grid

    As utilities scramble to manage explosive DER growth, is power grid autonomy a solution? The U.S. electric grid could face hundreds of millions of distributed resource deployments in the near future. But optimizing these data points may exceed human ability.

    Herman K. Trabish, Sept. 11, 2019 (Utility Dive)

    Editor’s note: Real artificial intelligence and autonomy are still a long way off but there are some autonomous functions that can help with today’s challenges to managing an increasingly complex distribution system.

    Within a decade, there may be more distributed energy resources (DER) coming onto distribution systems than any utility control room can manage. An autonomous energy grid (AEG) could optimize those high levels of DER for the benefit of power system and DER owners, research under development by the National Renewable Energy Laboratory (NREL) shows. But if this groundbreaking system autonomy proves elusive, utilities could face voltage and frequency fluctuations, potential supply-demand imbalances or even outages, according to distribution system experts.

    NREL’s concept “is about controlling hundreds of millions of different kinds of devices in real time on a second-by-second basis," DOE Power Systems Engineering Center Director Benjamin Kroposki told Utility Dive. A successful AEG concept would require greater technical precision than autonomous driving and the Internet, the two most comparable examples in terms of data management, data analyst specialists and utility system authorities told Utility Dive. But the expected massive growth of DER makes NREL's ambition necessary, according to Kroposki.

    Residential solar installations are expected to grow approximately 8% annually through 2050. Behind-the-meter storage deployments are anticipated to hit almost 1.9 GW by 2024. Current forecasts project around 18.7 million EVs on U.S. roads in 2030. It is not unreasonable to imagine electricity customers a decade from now having up to five devices at a time — a rooftop solar system, a home battery, a smart thermostat, a smart water heater and an EV charger, said Kroposki. By that math, the 4 million customers in the San Francisco Bay area could leave PG&E with 20 million devices to manage.

    Utilities will also see rising penetrations of bulk system wind and solar generation that will create supply-demand imbalances that traditional control centers will not be able to manage simply by ramping supply up or down, he said. Instead, it will require managing demand, which could be done through DER technologies. But the sheer volume of DER could exceed a utility's ability to optimize. A comparable challenge is managing the Internet's hundreds of millions of data points, but the power system is under higher pressure to maintain precise moment-by-moment supply-demand balance and avoid any delays, he added.

    The basic element of NREL's theoretical AEG architecture is the optimization and control of a "cell," which can be a home or building energy management system and their controllable devices. Kroposki describes the AEG as "distributed cells with a hierarchical, scalable, reconfigurable and self-organizing control structure on top of them."

    The next level up may be the distribution circuit, and the level above that might be a substation, Kroposki said. "Each level's cells have parameters and constraints, like voltage, currents or system pricing, that they use to self-optimize and maximize self-optimizing at each level." Pilots are testing optimization algorithms… click here for more

    Grid Modernization Planning Jumped 33% In 2019

    The 50 States of Grid Modernization: Grid Modernization Activity Continues to Climb in 2019 February 5, 2020 (North Carolina Clean Energy Technology Center [NCCETC])

    “…Grid modernization actions were taken by 46 states and the District of Columbia during 2019, the 2019 annual review and Q4 2019 update edition of The 50 States of Grid Modernization found. The greatest number of actions related] to energy storage deployment, customer data access policies, smart grid deployment, utility business model reforms, and distribution system planning…[NCCETC’s top ten grid modernization trends of 2019 were] State regulators establishing guidelines for distribution system plans…Utilities failing to justify the costs of grid modernization investments…Utilities including new energy storage capacity in integrated resource plans…

    ...States considering performance incentive mechanisms…States enabling access to customer energy usage data…Utilities pursuing advanced rate design pilots…States considering major utility business model reforms…Utilities including energy storage offerings within energy efficiency and demand-side management plans…Regulators emphasizing programs and rates to make full use of smart meter functionality…[and] States examining interconnection and compensation rules for battery storage…A total of 612 grid modernization actions were taken during 2019, representing a 33 percent increase in activity over 2018 (460 actions)…” click here for more

    Monday, February 17, 2020

    MONDAY’S STUDY: All About Storage

    Introduction to Energy Storage

    Faith M. Smith, January 23, 2018 (ClearPath)

    Energy storage can help the grid in so many ways – it allows us to save electricity for a more appropriate time or can be used in multiple applications to assist in balancing and maintaining the grid. While energy storage can be complicated, this paper is meant to break it into digestible pieces. The electricity grid is the centerpiece of the puzzle. The grid can be broken into three parts: generation, transmission, and distribution. In order to meet demand, utilities must be prepared to distribute electricity instantaneously, through a constant balance of supply and demand. The grid receives its electric current from electricity generation and in some cases from stored electricity through energy storage. In the simplest terms, energy generation controls time, from when and how we use it.

    Energy storage applications can fall into all portions of the grid and can be helpful as a way to improve the overall energy grid.

    Generation is where electricity is produced and energy storage applications can assist in various ways to ensure adequate electricity supply is available. Energy storage can supply energy when demand is larger than current supply, if there are any disruptions in traditional forms of generation, and at times when renewable resources are not generating electricity. One prime example of assisting in meeting demand is the use of storage during “peak,” where the demand reaches its highest point during the day. Rather than turn on a natural gas power plant to meet peak demand, storage applications can be used instead. Using storage in some cases can potentially reduce the carbon consumed or save in cost in some locations. In most cases, energy generation occurs far from population centers, which requires the generation to be transmitted across long distances.

    Transmission lines then carry the generated electricity to be distributed. Energy storage applications can help in the meantime to help relieve congestion, potentially deferring transmission upgrades, and can provide grid stabilization and maintain continuous power supply. Distribution to customers occurs after being converted to a lower voltage from the transmission lines. Energy storage applications can also apply in distribution to provide backup power in case of outages, for microgrids, and in reducing demand charges for customers by providing additional electricity during peak demand.

    The Origins of Energy Storage

    Energy storage as a technology has been around for almost a hundred years in the United States and Europe through pumped hydroelectric storage.2 Modern energy storage as we know it began in 1978 at Sandia National Lab through a program called “Batteries for Specific Solar Applications,” which focused on developing batteries along with other renewables.3 This program began shortly after the formal creation of the Department of Energy and was expanded quickly with a focus on batteries for electric vehicles. Over time, this program, now known as the Energy Storage Systems Program (ESSP) grew to include additional energy storage technologies such as flywheels and compressed air energy storage. While the ESSP initially began at Sandia National Lab, cross-collaborative research from materials science to demonstrations of energy storage technologies continues at Argonne National Lab, Oak Ridge National Lab, and Pacific Northwest National Lab. Research from these labs have continued to develop in the private sector, alongside separate private research and will continue to evolve over time.

    Types of Technologies

    Energy storage as a whole includes multiple technologies within chemical, mechanical, thermal, and kinetic energies. Chemical energy includes current batteries through chemical reactions within various battery types. Mechanical energy includes pumped hydro and compressed air energy storage. Thermal energy includes solar thermal power plants as well as heating and cooling objects by creating large temperature differences to store excess energy for later use. Flywheels are an example of kinetic energy.

    Lithium-ion Batteries

    Lithium-ion batteries range in chemistry composition, but all lithium-ion batteries transfer lithium-ions between their cathode and anode, where the cathode is usually a metal oxide and the most common anode is made up of graphite. Lithium-ion batteries can have a liquid electrolyte or a solid state electrolyte. Lithium-ion batteries have a lithium polymer where the electrodes are bonded together by a porous polymer matrix. This means the battery itself has a specific chemistry that varies, changing the battery’s capabilities. Depending on chemistry differences, there are benefits and concerns with each type as well as some being more successful than others. The benefits of lithium ion include: high energy density, less expensive, have long lifetime cycles, are rechargeable, have low maintenance, and have high rate discharge capability. Lithium-ion batteries have been successfully deployed in electric vehicles, mobile phones, and laptops. There is growth in research, design, and manufacturing for large scale projects for use in grid scale storage applications.

    Solid State Batteries

    Solid State Batteries have solid electrodes, cathodes, and anodes regardless of their chemistry. Basic chemistry varies in the types of solid state batteries, with three being very common: lithium-ion, nickel-cadmium, and sodium-sulfur. In addition to solid state lithium-ion batteries, other solid state batteries include those with the chemical compositions of nickel-cadmium and sodium-sulfur. Nickel-cadmium batteries are considered a traditional battery, meaning they remain a valid option to provide a long and reliable life cycle even when energy density and cost are not as great as lithium-ion. Nickel-cadmium batteries have been used successfully in grid scale storage as well for short duration use, and in island grid systems. Sodium-sulfur batteries are another stationary application with high efficiency. Japan has demonstrated this technology at multiple locations for six hour duration for peak shaving purposes.4 While both of these battery chemistries have been tested and deployed they are still not nearly as common as lithium-ion batteries, which currently dominate the market.

    Flow Batteries

    Flow batteries consist of a reversible chemical reaction, which occurs in multiple tanks. The electrodes are dissolved in electrolyte solutions stored in tanks – an anolyte tank containing an anode and a catholyte tank containing a cathode. These are pumped into cell stacks where the reversible reactions occur when the battery charges and discharges.5 There are two main flow battery systems: True flow or pure flow where all materials are stored separately from the cell and hybrid flow batteries where one or more of the active materials are stored within the cell.

    Flow batteries can also vary depending on the materials used for the chemical reaction in the electrolyte tanks. Flow batteries store energy in the liquid electrolyte tanks while traditional batteries store energy in their electrode materials. Flow batteries have high energy efficiency, long life cycles, can be long duration with fast response times as well as being capable of deep discharges. However, electrolyte stability is always a concern along with potential corrosion of materials.


    Flywheels are a very short duration form of energy storage that store energy by accelerating and braking a rotating mass – it’s connected to a reversible electrical machine that acts as a motor during charge that draws electricity from the grid to spin the flywheel up to a selected operating speed. The amount of energy that can be stored in a flywheel depends primarily on the momentum of inertia of the rotor (weight) and the speed at which it rotates. While flywheels have fast discharging capabilities, long life cycles, and no capacity degradation over time, they have low energy density, and can self-discharge. Overall flywheels would be best for frequency stabilization in the power grid rather than medium or long duration storage.

    Compressed Air Energy Storage

    Compressed Air Energy Storage or CAES stores energy in the form of compressed air in an underground reservoir for use at a later time. CAES is very similar to pumped hydro power in storage concepts, however, usage of the stored air is different than simply releasing water through a turbine. CAES systems release the pressurized air by heating it in order to expand it, which then turns a turbine, generating electricity.6 This is done through two systems – diabatic or adiabatic. Diabatic systems are really hybrid systems, where natural gas is used to heat the compressed air, resulting in expansion and a way for the turbine to generate electricity. Adiabatic systems do not use natural gas to reheat the air in the expansion process, rather the excess heat is stored above ground for future use when the air is meant to be expanded. Currently, only two CAES diabatic grid scale systems exist, one in Alabama and one in Germany. CAES have several benefits, but ideally they work best in balancing energy, for greater integration of renewable energy, ancillary services for the grid such as regulation, black-start, and grid stabilization.

    Thermal Energy Storage

    Thermal energy storage takes excess energy and stores it in various materials, including rocks, cement, storage tanks, hydrogen, and in liquid air. This is really a transfer of energy into a material that is capable of storing the energy for a longer time frame instead of wasting the excess or less expensive energy. A great example of this is solar thermal water heating.

    Heating and Cooling of Materials

    Some promising industry experiments are focused on storing excess energy in the form of thermal energy in materials such as rocks. The temperature in these substances can be cold or hot as there is energy in both forms. Siemens is currently conducting an experiment in heating rocks with excess energy until it is needed at a later point, when it will be used to drive a steam turbine to generate electricity.7

    Traditional Pumped Heat Electrical Storage compresses and expands gas through tanks filled with crushed rocks. This is usually a closed circuit where the gas is connected between a compressor and expander heating and cooling the crushed rocks as needed to store or use energy.

    Hydrogen Energy Storage

    Hydrogen Energy Storage stores electrical energy in hydrogen through electrolysis. This means electricity is used for hydrogen production through a process called electrolysis where water molecules are split into oxygen and hydrogen ions. The oxygen is released and the hydrogen is stored in pressurized containers and can be used as a fuel to be burned in combined cycle gas fired power plants or re-electrified later through fuel cells.8

    Liquid Air Energy Storage

    Liquid Air Energy Storage stores energy through compressed and liquefied air. This works in three steps – charging occurs when electrical energy pulls air from the environment, cooling the air until it liquefies and is then stored in an insulated tank at low pressure until it is needed later. When the energy is needed, the liquid air is pulled from the tank and pumped to a higher pressure, where it evaporates and is heated, producing a high pressured gas that is used to turn a turbine.9

    Pumped Hydropower

    Pumped Hydropower uses gravity to turn a turbine. While this technology has been successful since the 1920s, it has been modified for additional uses such as underground pumped hydro, reservoir pumped hydro, and variable speed pumped hydro.10 In many cases, pumped hydropower is used as a form of baseload electricity generation because it is reliable and inexpensive. However, over time it has become much more complex, and can be used in various ways to help improve grid stability and even act like a “peaker plant,” used at times when peak energy demand is at its highest to help reduce consumption of natural gas in natural gas peaker plants through variable speed pump-turbines.

    Traditional pumped hydropower stores energy in an upper reservoir or one higher in elevation than a lower reservoir. When wanting to store energy, water is pumped to the higher reservoir for later use. To “discharge,” or use the stored energy, it is released to the lower reservoir to generate electricity by turning a turbine.

    Underground pumped hydropower uses two reservoirs as well, they are both underground. These can be in man made storage reservoirs, mines, or caverns as well. In this system, energy is pumped from the lower reservoir to the higher reservoir as it “charges” the system, and to generate electricity, the water is released from the higher reservoir to the lower reservoir.

    What role does Energy Storage play in the future

    The future of energy storage is very promising and will continue to evolve as new technologies are developed. As costs decrease and renewables continue to grow, energy storage may have a larger market share. Currently there are no federal energy storage policies or mandates, however, there are a few states with energy storage mandates or policies. State policies, wholesale market rules, retail rates, and technological innovations are expected to impact the future of energy storage as a whole.

    The Federal Energy Regulatory Commission (FERC) released Order 841’s “Final Rule” for storage participation to remove barriers for energy storage in capacity, energy generation, and ancillary services markets in February 2018. The purpose of the order is to increase competition within the markets while supporting resiliency of the power system.11 Current markets are very difficult for energy storage to fully participate due to regulations in various markets, limiting how and if storage could participate. Generally, storage was not being utilized and could not compete with less expensive resources as a stand alone option. With this Order, each Regional Transmission Organization (RTO) is required to create a participation model that opens up market participation for energy storage resources.

    As the RTOs create rules based on the requirements given by FERC, it will directly impact the value of energy storage in each market. Due to FERC Order 841, state mandates or proceedings, energy storage as a whole is difficult to predict, however, significant growth is expected in the market due to benefits and the evolution of electricity generation. Recent RTO filings will also impact how the storage space as a whole continues to move forward. This is due to each RTO’s unique plan to incorporate energy storage into the future. As things progress, each region will continue to develop uniquely based on how storage is viewed and how it is integrated will have significant impacts on storage developments and electricity markets as a whole. While this will be a learning curve for storage resources in the grid as a whole, each plan will allow the markets to be more competitive and adaptive to storage needs over time.

    New Promising Technologies

    As technology continues to improve and costs decline, there are several promising energy storage technologies that may become viable options in the next few years. Most of these technologies are simply adaptations of traditional or well-known energy storage technologies, but have been changed to reduce cost, reduce use of resources, or to increase energy efficiency for example. Several organizations have spurred out of the Department of Energy, universities, and think tanks all with a variety of funding from government grants or loans to foundation investments. Some interesting and promising technologies include storing energy in cement blocks as a way to mimic pumped hydro, an adapted version of subsurface pumped hydro, and liquifying air in a similar manner to compressed air energy storage.

    Saturday, February 15, 2020

    2020 Is Even Hotter

    Two new temperature records: 2020 had the warmest January in history and Antarctica has never been this hot. And projections show “it continues to get worse to the extent that we do not change our behavior.” From CBS News via YouTube

    Real Estate Values Sinking From Rising Climate Crisis

    Nobody knows how bad it will get because the market does "now" risk and the climate crisis keeps threatening worse and worse "future" risk. From CNBC via YouTube

    Tesla’s Role In The New Energy Future

    Analysts see Tesla as a good investment. From CNBC Television via YouTube

    Friday, February 14, 2020

    Accelerated Ocean Currents Show Crisis Is Getting Faster

    Climate change models predicted ocean currents would speed up — but not this soon; Ocean currents are the undersea conveyor belts that help regulate Earth's climate and influence weather systems around the world.

    Denise Chow, February 11, 2020 (NBC News)

    “Ocean currents — undersea conveyor belts that help regulate Earth's climate and influence weather systems around the world — have been speeding up over the past two decades as the planet warms…The puzzling discovery…highlights that climate change could have wide-ranging effects that are unexpected or severely understudied…Climate models had predicted that ocean circulation would accelerate with unmitigated climate change, but the changes had not been expected until much later this century…[This] suggests that some climate models may underestimate the effects of global warming…

    [C]urrents in three-quarters of the world's oceans have accelerated [by 36 percent since the early 1990s], driven primarily by faster, more intense winds…Ocean currents form a complex web of underwater highways that move water and heat around the globe. Warm water funneled by currents from the equator to the poles, for example, helps regulate land temperatures and drive weather systems…Scientists have observed an increase in the intensity of surface winds, combined with a steady rise in greenhouse gas emissions, since the 1990s…[The exact links] are still unknown…[but] major impacts on fisheries could have cascading effects up and down the food chain, with impacts on countries and communities that depend on fishing…” click here for more


    Big Money Going To New Energy Thru 2025

    Renewable Energy Market by Type (Hydroelectric Power, Wind Power, Bioenergy, Solar Energy, and Geothermal Energy), and End Use (Residential, Commercial, Industrial, and Others): Global Opportunity Analysis and Industry Forecast, 2018–2025

    November 2019 (Valuates Reports)

    “…Increasing awareness and knowledge about carbon footprint management is expected to generate lucrative growth prospects for the renewable energy market globally…The global renewable energy market was estimated at USD 928.0 Billion in 2017 and is expected to reach USD 1,512.3 Billion by 2025, posting a 6.1 percent CAGR from 2018 to 2025…Increased greenhouse gas emissions (GHGs), especially CO2 from the use of fossil fuels for energy generation and the dwindling existence of fossil fuel on Earth coupled with its high costs, are fueling the renewable energy market…

    However, the generation of energy from renewable sources requires huge capital…Continuous technological advancements and increasing government support in the renewable energy sector is expected to provide lucrative opportunities for renewable energy market growth during the forecast period. The size of the market for renewable energy is expected to grow in the developed and developing economies due to the implementation of strict government regulations regarding climate change…Asia-Pacific emerged as a renewable energy market leader in 2017, and its dominance is expected to continue over the forecast period…

    China is predicted to account for the highest market share on the renewable energy market…The market is divided by type into the hydroelectric, wind, Bioenergy, solar, and geothermal energy sectors. During the forecast period, the hydroelectric power segment is expected to dominate the market…[T]he Solar Energy segment is expected to grow at the highest growth rate…” click here for more

    Wednesday, February 12, 2020

    ORIGINAL REPORTING: The Known Unknowns For 100% Renewables

    The unknown costs of a 100% carbon-free future; State approaches to a 100% carbon-free future vary and while several costs remain unknown, some solutions are emerging.

    Herman K. Trabish, Sept. 3, 2019 (Utility Dive)

    Editor’s note: The value of distributed resources and the future balance between central station and distributed renewables continue to make the cost of a 100% future uncertain.

    Opponents claimed zero emissions mandates in Hawaii, California, Washington, Colorado, New Mexico and New York would drive up electricity rates, but ample evidence in today's falling renewables prices led to lawmaker approval. Now, utilities and policymakers are trying to determine what the full costs of a high renewables power system will ultimately be.

    But cost impact forecasts cannot be certain until technologies protecting reliability are in place, Washington and New York utilities told Utility Dive. In contrast, Colorado and New Mexico were able to use utilities' expectations of lower costs to bolster political support. There are still many unknowns about the mandates' costs, advocates acknowledged. But that is not a reason to prevent enacting them, they added.

    The six mandates share a goal of very high levels of renewables and much lower greenhouse gas emissions than any state has achieved today. But their policies differ in detail. Utilities in these states don't have definitive formulas for achieving the long-term goals or a final calculation of costs. The transition to a fully decarbonized U.S. power system using currently available technologies would cost $4.5 trillion, according June's Wood Mackenzie analysis. That could mean nearly $2,000 per U.S. household per year for 20 years. But it is uncertain how much of the cost would fall on shareholders, companies or customers. Although wind, solar, and storage will make up the bulk of California's high renewables power supply, the need for "firm" generation creates another unknown, Energy + Environmental Economics found…But renewables advocates say if leaders establish a vision, engineers and advocates will find the way to achieve it…” click here for more

    Now “Cheaper To Save The Climate Than To Destroy It”

    Renewable Energy Prices Hit Record Lows: How Can Utilities Benefit From Unstoppable Solar And Wind?

    Silvio Marcacci, January 21. 2020 (Forbes)

    “…[Solar and wind energy are forecast to dominate America’s new generation in 2020, making up 76% of new generation] while coal and natural gas will dominate 2020 retirements with 85% of plant closures…[For the utilities engaged in the power sector transformation, this could be a big] economic opportunity…U.S. renewable energy prices continued falling fast in 2019, with wind and solar hitting new lows…Over the last decade, wind energy prices have fallen 70% and solar photovoltaics have fallen 89% on average…

    Utility-scale renewable energy prices are now significantly below those for coal and gas generation, and they're less than half the cost of nuclear…In other words, it is now cheaper to save the climate than to destroy it…[and New Energy] prices are expected to continue declining, with prices falling even farther over the next three decades…[The] utilities that stick with a business-as-usual approach do so at their own peril, increasing the risk of expensive stranded assets and higher consumer electricity prices…Instead, utilities could replace fossil fuel plants with new renewables…[New regulatory approaches and wholesale market reform can help utilities…” click here for more

    Monday, February 10, 2020

    MONDAY’S STUDY: Details On The Risks In The Climate Crisis

    Climate risk and response: Physical hazards and socioeconomic impacts

    January 2020 (McKinsey and Company)

    In Brief

    After more than 10,000 years of relative stability—the full span of human civilization—the Earth’s climate is changing. As average temperatures rise, acute hazards such as heat waves and floods grow in frequency and severity, and chronic hazards, such as drought and rising sea levels, intensify. Here we focus on understanding the nature and extent of physical risk from a changing climate over the next three decades, exploring physical risk as it is the basis of both transition and liability risks. We estimate inherent physical risk, absent adaptation and mitigation, to dimension the magnitude of the challenge and highlight the case for action. Climate science makes extensive use of scenarios ranging from lower (Representative Concentration Pathway 2.6) to higher (RCP 8.5) CO2 concentrations. We have chosen to focus on RCP 8.5, because the higher-emission scenario it portrays enables us to assess physical risk in the absence of further decarbonization. We link climate models with economic projections to examine nine cases that illustrate exposure to climate change extremes and proximity to physical thresholds. A separate geospatial assessment examines six indicators to assess potential socioeconomic impact in 105 countries. The research also provides decision makers with a new framework and methodology to estimate risks in their own specific context.

    Key findings:

    Climate change is already having substantial physical impacts at a local level in regions across the world; the affected regions will continue to grow in number and size. Since the 1880s, the average global temperature has risen by about 1.1 degrees Celsius with significant regional variations. This brings higher probabilities of extreme temperatures and an intensification of hazards. A changing climate in the next decade, and probably beyond, means the number and size of regions affected by substantial physical impacts will continue to grow. This will have direct effects on five socioeconomic systems: livability and workability, food systems, physical assets, infrastructure services, and natural capital.

    The socioeconomic impacts of climate change will likely be nonlinear as system thresholds are breached and have knock-on effects. Most of the past increase in direct impact from hazards has come from greater exposure to hazards versus increases in their mean and tail intensity. In the future, hazard intensification will likely assume a greater role. Societies and systems most at risk are close to physical and biological thresholds. For example, as heat and humidity increase in India, by 2030 under an RCP 8.5 scenario, between 160 million and 200 million people could live in regions with an average 5 percent annual probability of experiencing a heat wave that exceeds the survivability threshold for a healthy human being, absent an adaptation response. Ocean warming could reduce fish catches, affecting the livelihoods of 650 million to 800 million people who rely on fishing revenue. In Ho Chi Minh City, direct infrastructure damage from a 100-year flood could rise from about $200 million to $300 million today to $500 million to $1 billion by 2050, while knock-on costs could rise from $100 million to $400 million to between $1.5 billion and $8.5 billion.

    The global socioeconomic impacts of climate change could be substantial as a changing climate affects human beings, as well as physical and natural capital. By 2030, all 105 countries examined could experience an increase in at least one of the six indicators of socioeconomic impact we identify. By 2050, under an RCP 8.5 scenario, the number of people living in areas with a non-zero chance of lethal heat waves would rise from zero today to between 700 million and 1.2 billion (not factoring in air conditioner penetration). The average share of annual outdoor working hours lost due to extreme heat and humidity in exposed regions globally would increase from 10 percent today to 15 to 20 percent by 2050. The land area experiencing a shift in climate classification compared with 1901–25 would increase from about 25 percent today to roughly 45 percent.

    Financial markets could bring forward risk recognition in affected regions, with consequences for capital allocation and insurance. Greater understanding of climate risk could make long-duration borrowing unavailable, impact insurance cost and availability, and reduce terminal values. This could trigger capital reallocation and asset repricing. In Florida, for example, estimates based on past trends suggest that losses from flooding could devalue exposed homes by $30 billion to $80 billion, or about 15 to 35 percent, by 2050, all else being equal.

    Countries and regions with lower per capita GDP levels are generally more at risk. Poorer regions often have climates that are closer to physical thresholds. They rely more on outdoor work and natural capital and have less financial means to adapt quickly. Climate change could also benefit some countries; for example, crop yields could improve in Canada.

    Addressing physical climate risk will require more systematic risk management, accelerating adaptation, and decarbonization. Decision makers will need to translate climate science insights into potential physical and financial damages, through systematic risk management and robust modeling recognizing the limitations of past data. Adaptation can help manage risks, even though this could prove costly for affected regions and entail hard choices. Preparations for adaptation—whether seawalls, cooling shelters, or droughtresistant crops—will need collective attention, particularly about where to invest versus retreat. While adaptation is now urgent and there are many adaptation opportunities, climate science tells us that further warming and risk increase can only be stopped by achieving zero net greenhouse gas emissions…


    Saturday, February 08, 2020

    Wind’s Future

    Here’s how wind’s federal tax credit grew the nation’s biggest New Energy industry and what its phase out as of January 1, 2021, means. From PBS NewsHour via YouTube

    The Storage That Makes New Energy Last

    Compressed Air Energy Storage (CAES) is a cheaper, longer-duration form of energy storage than batteries and it has already been proven by the oil and gas industry. But it faces challenges. From Seeker via YouTube

    A Farm In The Wilds

    Rethinking the whole concept of farming. From World Economic Forum via YouTube

    Friday, February 07, 2020

    The Smart Money Will Fight The Climate Crisis

    Fighting Climate Change Is The Cheapest Option We Have Left, Modelling Shows

    Daniel Nield, 3 February 2020 (ScienceAlert)

    “…[New research investigating the future costs of dealing with a warming planet shows] the longer we wait to take action, the more we're going to have to pay…[The cheapest option] is to pay what it takes to limit the global temperature rise over the next century to 2 degrees Celsius…

    …[The research weighed] the costs of cutting greenhouse gas emissions (through a reduction in the use of coal) against the costs of further climate change – increasing weather extremes, reduced human labour capacity, and so on…There are a lot of variables to consider – how consumption patterns might alter, the impact climate change might have on conflicts around the world, the effects of various tipping points that we haven't calculated for yet…[Based on the best data we have, putting] action off to a future date is only going to become more and more costly…” click here for more

    Big Business's New Energy Buys Set Records

    Corporate Clean Energy Buying Leapt 44% in 2019, Sets New Record

    January 28, 2020 (BloombergNEF)

    Corporations bought a record amount of clean energy through power purchase agreements, or PPAs, in 2019, up more than 40% from the previous year’s record. The majority of this purchasing occurred in the United States, but also underpinning the strong uptrend is a surge in corporate sustainability commitments around the world…[According to the BloombergNEF (BNEF) 1H 2020 Corporate Energy Market Outlook, 19.5GW] of clean energy contracts were signed by more than 100 corporations in 23 different countries in 2019. This was up from 13.6GW in 2018, and more than triple the activity seen in 2017…[T]he 2019 total was equivalent to more than 10% of all the renewable energy capacity added globally last year – and the projects involved are likely to cost between $20 billion and $30 billion to develop and build…Technology companies once again dominated clean energy procurement. Google signed contracts to purchase over 2.7GW of clean energy globally in 2019, more than any other corporation…

    Facebook (1.1GW), Amazon (0.9GW) and Microsoft (0.8GW) were the next largest buyers globally in 2019…[A] growing number of oil and gas companies are signing clean energy deals…PPAs in the Americas region totalled an unprecedented 15.7GW last year…It was also a record year for corporate PPAs in the Europe, Middle East and Africa (EMEA) and Latin America…Brazil and Chile have emerged as top markets…Nearly 400 companies around the world committed to setting a science-based target in 2019, more than doubling the total number of firms with these goals…The RE100 totalled 221 members through 2019, collectively consuming 233TWh of electricity in 2018…[T]hese 221 RE100 companies will need to purchase an additional 210TWh of clean electricity in 2030 to meet their targets…[That] would catalyze an estimated 105GW of new solar and wind build globally. Funding these new additions would be expected to require an additional $98 billion of investment…” click here for more

    Wednesday, February 05, 2020

    ORIGINAL REPORTING: PG&E may answer the billion dollar grid modernization question

    PG&E may answer the billion dollar grid modernization question; A step-by-step regulatory process in California confronts the technical challenges and "obscene expenses" of distributed resource investments.

    Herman K. Trabish, Aug. 26, 2019 (Utility Dive)

    Editor’s note: The momentum behind grid modernization is growing and the search for best practices for executing it is accelerating.

    California regulators have taken the biggest step forward yet to clarify what grid modernization is, how to prioritize technology deployments and what costs are appropriate…A new framework, prompted by the controversial Southern California Edison (SCE) $1.9 billion grid modernization spending request, gave Pacific Gas and Electric (PG&E) clear direction on its proposed grid modernization expenditures and on what is eligible for cost recovery through rates.

    The outcome could be new clarity for utilities and regulators across the country on the ill-defined grid modernization concept and allow higher penetration of distributed energy resources (DER), stakeholders told Utility Dive. There is a lot of money at stake. Utilities proposed $14.2 billion across 17 grid modernization proceedings pending in Q2 alone, according to the North Carolina Clean Energy Technology Center grid modernization policy quarterly. California's next steps could influence that spending, as well as the many investments likely to follow.

    Two factors made California the national leader, according to stakeholders: California's 2013 Assembly Bill 327 established a public utility code section that required distribution system planning. A subsequent ruling by the California Public Utilities Commission (CPUC) required utilities and stakeholders to develop a framework for IOU grid modernization proposals in their General Rate Cases (GRCs).

    The framework had two objectives: identify investments needed "to integrate the growing number of DERs" and determine how customer-owned DER should be valued.A CPUC Distribution Resource Planning Order followed, establishing guidance on IOU grid modernization expenditures. It was not put in place in time to guide SCE's proposals, but will be used to evaluate PG&E's December 2018 GRC application. Unlike other GRC expenditures, grid modernization spending must, in addition to being "just and reasonable," also make possible "net benefits" for ratepayers, the commission ruledclick here for more

    The Fight For Solar In 2019

    The 50 States of Solar Report: 46 States and DC Took 265 Distributed Solar Policy and Rate Design Actions During 2019

    January 29, 2020 (North Carolina Clean Energy Technology Center)

    “…[The 2019 annual review and Q4 update edition of The 50 States of Solar found] 46 states and the District of Columbia took some type of distributed solar policy action during 2019…[The greatest number of actions related] to net metering policies, residential fixed charge increases, and community solar policies…[The ten top distributed solar policy trends of 2019 were] encouraging distributed solar development…[focus] on the netting period for net metering successor tariffs…fewer and smaller residential fixed charge increases…[demand charges changing] to system capacity-based charges…

    …increasing net metering system size limits… encouraging low-income participation in community solar… extensive value of solar studies to inform net metering successors…refining existing community solar programs…separate net metering rules for different project or customer types…[and] net metering for solar-plus-storage facilities…A total of 265 state and utility level distributed solar policy and rate changes were proposed, pending, or decided in 2019. Net metering actions increased by 30% over 2018, while residential fixed charge increases decreased by 25%…” click here for more

    Monday, February 03, 2020

    MONDAY’S STUDY: The Threat Of The Green Swan

    The Green Swan: Central banking and financial stability in the age of climate change

    Patrick Bolton, Morgan Despres, Luiz Awazu Pereira Da Silva, Frédéric Samama, And Romain Svartzman, January 2020 (Bank for International Settlements/Banque de France)


    Climate change poses new challenges to central banks, regulators and supervisors. This book reviews ways of addressing these new risks within central banks’ financial stability mandate. However, integrating climate-related risk analysis into financial stability monitoring is particularly challenging because of the radical uncertainty associated with a physical, social and economic phenomenon that is constantly changing and involves complex dynamics and chain reactions. Traditional backward-looking risk assessments and existing climate-economic models cannot anticipate accurately enough the form that climate-related risks will take. These include what we call “green swan” risks: potentially extremely financially disruptive events that could be behind the next systemic financial crisis. Central banks have a role to play in avoiding such an outcome, including by seeking to improve their understanding of climaterelated risks through the development of forward-looking scenario-based analysis.

    But central banks alone cannot mitigate climate change. This complex collective action problem requires coordinating actions among many players including governments, the private sector, civil society and the international community. Central banks can therefore have an additional role to play in helping coordinate the measures to fight climate change. Those include climate mitigation policies such as carbon pricing, the integration of sustainability into financial practices and accounting frameworks, the search for appropriate policy mixes, and the development of new financial mechanisms at the international level. All these actions will be complex to coordinate and could have significant redistributive consequences that should be adequately handled, yet they are essential to preserve long-term financial (and price) stability in the age of climate change.

    Executive Summary

    This book reviews some of the main challenges that climate change poses to central banks, regulators and supervisors, and potential ways of addressing them. It begins with the growing realisation that climate change is a source of financial (and price) instability: it is likely to generate physical risks related to climate damages, and transition risks related to potentially disordered mitigation strategies. Climate change therefore falls under the remit of central banks, regulators and supervisors, who are responsible for monitoring and maintaining financial stability. Their desire to enhance the role of the financial system to manage risks and to mobilise capital for green and low-carbon investments in the broader context of environmentally sustainable development prompted them to create the Central Banks and Supervisors Network for Greening the Financial System (NGFS).

    However, integrating climate-related risk analysis into financial stability monitoring and prudential supervision is particularly challenging because of the distinctive features of climate change impacts and mitigation strategies. These comprise physical and transition risks that interact with complex, far-reaching, nonlinear, chain reaction effects. Exceeding climate tipping points could lead to catastrophic and irreversible impacts that would make quantifying financial damages impossible. Avoiding this requires immediate and ambitious action towards a structural transformation of our economies, involving technological innovations that can be scaled but also major changes in regulations and social norms.

    Climate change could therefore lead to “green swan” events (see Box A) and be the cause of the next systemic financial crisis. Climate-related physical and transition risks involve interacting, nonlinear and fundamentally unpredictable environmental, social, economic and geopolitical dynamics that are irreversibly transformed by the growing concentration of greenhouse gases in the atmosphere.

    In this context of deep uncertainty, traditional backward-looking risk assessment models that merely extrapolate historical trends prevent full appreciation of the future systemic risk posed by climate change. An “epistemological break” (Bachelard (1938)) is beginning to take place in the financial community, with the development of forward-looking approaches grounded in scenario-based analyses. These new approaches have already begun to be included in the financial industry’s risk framework agenda, and reflections on climate-related prudential regulation are also taking place in several jurisdictions.

    While these developments are critical and should be pursued, this book presents two additional messages. First, scenario-based analysis is only a partial solution to apprehend the risks posed by climate change for financial stability. The deep uncertainties involved and the necessary structural transformation of our global socioeconomic system are such that no single model or scenario can provide a full picture of the potential macroeconomic, sectoral and firm-level impacts caused by climate change. Even more fundamentally, climate-related risks will remain largely unhedgeable as long as system-wide action is not undertaken.

    Second, it follows from these limitations that central banks may inevitably be led into uncharted waters in the age of climate change. On the one hand, if they sit still and wait for other government agencies to jump into action, they could be exposed to the real risk of not being able to deliver on their mandates of financial and price stability. Green swan events may force central banks to intervene as “climate rescuers of last resort” and buy large sets of devalued assets, to save the financial system once more. However, the biophysical foundations of such a crisis and its potentially irreversible impacts would quickly show the limits of this “wait and see” strategy. On the other hand, central banks cannot (and should not) simply replace governments and private actors to make up for their insufficient action, despite growing social pressures to do so. Their goodwill could even create some moral hazard. In short, central banks, regulators and supervisors can only do so much (and many of them are already taking action within their mandates), and their action can only be seen as enhancing other climate change mitigation policies.

    To overcome this deadlock, a second epistemological break is needed: central banks must also be more proactive in calling for broader and coordinated change, in order to continue fulfilling their own mandates of financial and price stability over longer time horizons than those traditionally considered. We believe that they can best contribute to this task in a role that we dub the five Cs: contribute to coordination to combat climate change. This coordinating role would require thinking concomitantly within three paradigmatic approaches to climate change and financial stability: the risk, time horizon and system resilience approaches (see Box B).

    Contributing to this coordinating role is not incompatible with central banks, regulators and supervisors doing their own part within their current mandates. They can promote the integration of climate-related risks into prudential regulation and financial stability monitoring, including by relying on new modelling approaches and analytical tools that can better account for the uncertainty and complexity at stake. In addition, central banks can promote a longer-term view to help break the “tragedy of the horizon”, by integrating sustainability criteria into their own portfolios and by exploring their integration in the conduct of financial stability policies, when deemed compatible with existing mandates.

    But more importantly, central banks need to coordinate their own actions with a broad set of measures to be implemented by other players (ie governments, the private sector, civil society and the international community). This coordination task is urgent since climate-related risks continue to build up and negative outcomes could become irreversible. There is an array of actions to be consistently implemented. The most obvious ones are the need for carbon pricing and for systematic disclosure of climate-related risks by the private sector.

    Taking a transdisciplinary approach, this book calls for additional actions that no doubt will be difficult to take, yet will also be essential to preserve long-term financial (and price) stability in the age of climate change. These include: exploring new policy mixes (fiscal-monetary-prudential) that can better address the climate imperatives ahead and that should ultimately lead to societal debates regarding their desirability; considering climate stability as a global public good to be supported through measures and reforms in the international monetary and financial system; and integrating sustainability into accounting frameworks at the corporate and national level.

    Moreover, climate change has important distributional effects both between and within countries. Risks and adaptation costs fall disproportionately on poor countries and low-income households in rich countries. Without a clear indication of how the costs and benefits of climate change mitigation strategies will be distributed fairly and with compensatory transfers, sociopolitical backlashes will increase. Thus, the needed broad social acceptance for combating climate change depends on studying, understanding and addressing its distributional consequences.

    Financial and climate stability could be considered as two interconnected public goods, and this consideration can be extend to other human-caused environmental degradation such as the loss of biodiversity. These, in turn, require other deep transformations in the governance of our complex adaptive socioeconomic and financial systems. In the light of these immense challenges, a central contribution of central banks is to adequately frame the debate and thereby help promote the mobilisation of all capabilities to combat climate change.

    From Black to Green Swans

    The “green swan” concept used in this book finds its inspiration in the now famous concept of the “black swan” developed by Nassim Nicholas Taleb (2007). Black swan events have three characteristics: (i) they are unexpected and rare, thereby lying outside the realm of regular expectations; (ii) their impacts are wide-ranging or extreme; (iii) they can only be explained after the fact. Black swan events can take many shapes, from a terrorist attack to a disruptive technology or a natural catastrophe. These events typically fit fat tailed probability distributions, ie they exhibit a large skewness relative to that of normal distribution (but also relative to exponential distribution). As such, they cannot be predicted by relying on backward-looking probabilistic approaches assuming normal distributions (eg value-at-risk models).

    The existence of black swans calls for alternative epistemologies of risk, grounded in the acknowledgment of uncertainty. For instance, relying on mathematician Benoît Mandelbrot (1924–2010), Taleb considers that fractals (mathematically precise patterns that can be found in complex systems, where small variations in exponent can cause large deviation) can provide more relevant statistical attributes of financial markets than both traditional rational expectations models and the standard framework of Gaussian-centred distributions (Taleb (2010)). The use of counterfactual reasoning is another avenue that can help hedge, at least partially, against black swan events. Counterfactuals are thoughts about alternatives to past events, “thoughts of what might have been” (Epstude and Roese (2008)). Such an epistemological position can provide some form of hedging against extreme risks (turning black swans into “grey” ones) but not make them disappear. From a systems perspective, fat tails in financial markets suggest a need for regulation in their operations (Bryan et al (2017), p 53).

    Green swans, or “climate black swans”, present many features of typical black swans. Climate-related risks typically fit fat-tailed distributions: both physical and transition risks are characterised by deep uncertainty and nonlinearity, their chances of occurrence are not reflected in past data, and the possibility of extreme values cannot be ruled out (Weitzman (2009, 2011)). In this context, traditional approaches to risk management consisting in extrapolating historical data and on assumptions of normal distributions are largely irrelevant to assess future climaterelated risks. That is, assessing climate-related risks requires an “epistemological break” (Bachelard (1938)) with regard to risk management, as discussed in this book.

    However, green swans are different from black swans in three regards. First, although the impacts of climate change are highly uncertain, “there is a high degree of certainty that some combination of physical and transition risks will materialize in the future” (NGFS (2019a), p 4). That is, there is certainty about the need for ambitious actions despite prevailing uncertainty regarding the timing and nature of impacts of climate change. Second, climate catastrophes are even more serious than most systemic financial crises: they could pose an existential threat to humanity, as increasingly emphasized by climate scientists (eg Ripple et al (2019)). Third, the complexity related to climate change is of a higher order than for black swans: the complex chain reactions and cascade effects associated with both physical and transition risks could generate fundamentally unpredictable environmental, geopolitical, social and economic dynamics, as explored in Chapter 3…

    Conclusion – Central Banking And System Resilience

    Climate change poses an unprecedented challenge to the governance of socioeconomic systems. The potential economic implications of physical and transition risks related to climate change have been debated for decades (not without methodological challenges), yet the financial implications of climate change have been largely ignored.

    Over the past few years, central banks, regulators and supervisors have increasingly recognised that climate change is a source of major systemic financial risks. In the absence of well coordinated and ambitious climate policies, there has been a growing awareness of the materiality of physical and transition risks that would affect the stability of the financial sector. Pursuing the current trends could leave central banks in the position of “climate rescuers of last resort”, which would become untenable given that there is little that monetary and financial flows can do against the irreversible impacts of climate change. In other words, a new global financial crisis triggered by climate change would render central banks and financial supervisors powerless.

    Integrating climate-related risks into prudential regulation and identifying and measuring these risks is not an easy task. Traditional risk management relying on the extrapolation of historical data, despite its relevance for other questions related to financial stability, cannot be used to identify and manage climate-related risks given the deep uncertainty involved. Indeed, climate-related risks present many distinctive features. Physical risks are subject to nonlinearity and uncertainty not only because of climate patterns, but also because of socioeconomic patterns that are triggered by climate ones. Transition risks require including intertwined complex collective action problems and addressing well known political economy considerations at the global and local levels. Transdisciplinary approaches are needed to capture the multiple dimensions (eg geopolitical, cultural, technological and regulatory ones) that should be mobilised to guarantee the transition to a low-carbon socio-technical system.

    These features call for an epistemological break (Bachelard (1938)) with regard to financial regulation, ie a redefinition of the problem at stake when it comes to identifying and addressing climaterelated risks. Some of this break is already taking place, as financial institutions and supervisors increasingly rely on scenario-based analysis and forward-looking approaches rather than probabilistic ones to assess climate-related risks. This is perhaps compounding a new awareness that is beginning to produce a repricing of climate-related risks. That, in turn, can contribute to tilting preferences towards lower-carbon projects and might therefore act, to some extent, as a “shadow price” for carbon emissions.

    While welcoming this development and strongly supporting the need to fill methodological, taxonomy and data gaps, the essential step of identifying and measuring climate-related risks presents significant methodological challenges related to:

    (i) The choice of a scenario regarding how technologies, policies, behaviours, geopolitical dynamics, macroeconomic variables and climate patterns will interact in the future, especially given the limitations of climate-economic models. (ii)

    The translation of such scenarios into granular corporate metrics in an evolving environment where all firms and value chains will be affected in unpredictable ways.

    (iii) The task of matching the identification of a climate-related risk with the adequate mitigation action.

    In short, the development and improvement of forward-looking risk assessment and climaterelated regulation will be essential, but they will not suffice to preserve financial stability in the age of climate change: the deep uncertainty involved and the need for structural transformation of the global socioeconomic system mean that no single model or scenario can provide sufficient information to private and public decision-makers. A corollary is that the integration of climate-related risks into prudential regulation and (to the extent possible) into monetary policy would not suffice to trigger a shift capable of hedging the whole system again against green swan events.

    Because of these limitations, climate change risk management policy could drag central banks into uncharted waters: on the one hand, they cannot simply sit still until other branches of government jump into action; on the other, the precedent of unconventional monetary policies of the past decade (following the 2007–08 Great Financial Crisis), may put strong sociopolitical pressure on central banks to take on new roles like addressing climate change. Such calls are excessive and unfair to the extent that the instruments that central banks and supervisors have at their disposal cannot substitute for the many areas of interventions that are necessary to achieve a global low-carbon transition. But these calls might be voiced regardless, precisely because of the procrastination that has been the dominant modus operandi of many governments for quite a while. The prime responsibility for ensuring a successful low-carbon transition rests with other branches of government, and insufficient action on their part puts central banks at risk of no longer being able to deliver on their mandates of financial (and price) stability.

    To address this latter problem, a second epistemological break is needed. There is also a role for central banks to be more proactive in calling for broader change. In this spirit, and grounded in the transdisciplinary approach that is required to address climate change, this book calls for actions beyond central banks that are essential to guarantee financial (and price) stability.

    Central banks can also play a role as advocates of broader socioeconomic changes without which their current policies and the maintenance of financial stability will have limited chances of success. Towards this objective, we have identified four (non-exhaustive) propositions beyond carbon pricing:

    (i) Central banks can help proactively promote long-termism by supporting the values or ideals of sustainable finance.

    (ii) Central banks can call for an increased role for fiscal policy in support of the ecological transition, especially at the zero lower bound.

    (iii) Central banks can increase cooperation on ecological issues among international monetary and financial authorities.

    (iv) Central banks can support initiatives promoting greater integration of climate and sustainability dimensions within corporate and national accounting frameworks.

    Financial and climate stability are two increasingly interdependent public goods. But, as we enter the Anthropocene (Annex 4), long-term sustainability extends to other human-caused environmental degradations such as biodiversity loss, which could pose new types of financial risks (Schellekens and van Toor (2019)). Alas, it may be even more difficult to address these ecological challenges. For instance, preserving biodiversity (often ranked second in terms of environmental challenges) is a much more complex problem from a financial stability perspective, among other things because it relies on multiple local indicators despite being a global problem (Chenet (2019b)).

    The potential ramifications of these environmental risks for financial stability are far beyond the scope of this book. Yet, addressing them could become critical for central banks, regulators and supervisors insofar as the stability of the Earth system is a prerequisite for financial and price stability. In particular, the development of systems analysis has been identified as a promising area of research that should inform economic and financial policies in the search for fair and resilient complex adaptive systems in the 21st century (Schoon and van der Leeuw (2015), OECD (2019a)). Future research based on institutional, evolutionary and political economy approaches may also prove fundamental to address financial stability in the age of climate- and environment-related risks.

    Faced with these daunting challenges, a key contribution of central banks and supervisors may simply be to adequately frame the debate. In particular, they can play this role by: (i) providing a scientifically uncompromising picture of the risks ahead, assuming a limited substitutability between natural capital and other forms of capital; (ii) calling for bolder actions from public and private sectors aimed at preserving the resilience of Earth’s complex socio-ecological systems; and (iii) contributing, to the extent possible and within the remit of the evolving mandates provided by society, to managing these risks.