Federal government subsidies, tax breaks, costs of renewable and fossil energy production GAO 2014

[ I’m far more interested in the energy returned on invested than money since that’s what really matters.  So I often stopped taking notes, and didn’t organize them. But the tables and figures give you an idea of subsidies and costs, but I left many out.  Read the report if you want to know more.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”]

USGAO. October 20, 2014 ENERGY POLICY. Information on Federal and Other Factors Influencing U.S. Energy Production and Consumption from 2000. 120 pages.


Table 1 shows the various ways businesses are subsidized by the government

Table 1 shows the various ways businesses are subsidized by the government



Table 1 shows the various ways businesses are subsidized by the government

GAO-14-836 Table 5a Seven Federal Tax Expenditures Targeting or Related to Renewable Energy 2000 –2013






GAO-14-836 Table 5b Seven Federal Tax Expenditures Targeting or Related to Renewable Energy 2000 –2013GAO-14-836 Table 5c Seven Federal Tax Expenditures Targeting or Related to Renewable Energy 2000 –2013GAO-14-836 Table 5c Seven Federal Tax Expenditures Targeting or Related to Renewable Energy 2000 –2013 GAO-14-836 Table 5d Seven Federal Tax Expenditures Targeting or Related to Renewable Energy 2000 –2013


GAO-14-836 Table 6 Three Federal Programs with Outlays Targeting or Related to Renewable Energy 2000–2013


GAO-14-836 Table 7 Two Federal Loan Guarantee Programs Targeting or Related to Renewable Energy 2000-2013


GAO-14-836 Table 8 Five Federal Programs and Activities with Outlays Generally Related to Energy Production and Consumption 2000-2013



GAO-14-836 Table 9 13 Federal Tax Expenditures Generally Related to Energy Production and Consumption 2000-2013GAO-14-836 Table 9b 13 Federal Tax Expenditures Generally Related to Energy Production and Consumption 2000-2013GAO-14-836 Table 9c 13 Federal Tax Expenditures Generally Related to Energy Production and Consumption 2000-2013GAO-14-836 Table 9d 13 Federal Tax Expenditures Generally Related to Energy Production and Consumption 2000-2013








GAO-14-836 Table 10 Four Federal Programs with Outlays for R&D Related to Specific Energy Sources 2000–2013





GAO-14-836 Table 11 Four Federal Programs with Outlays for R&D Generally Related to Energy Production and Consumption 2000-2013





GAO-14-836 Table 2 16 Federal Tax Expenditures Targeting or Related to Fossil Energy 2000-2013GAO-14-836 Table 2b 16 Federal Tax Expenditures Targeting or Related to Fossil Energy 2000-2013GAO-14-836 Table 2c 16 Federal Tax Expenditures Targeting or Related to Fossil Energy 2000-2013GAO-14-836 Table 2d 16 Federal Tax Expenditures Targeting or Related to Fossil Energy 2000-2013GAO-14-836 Table 2e 16 Federal Tax Expenditures Targeting or Related to Fossil Energy 2000-2013














Figure 13: Revenue from Federal Excise Taxes Targeting or Related to Fossil Energy, Fiscal Year 2000 – 2012

Figure 13: Revenue from Federal Excise Taxes Targeting or Related to Fossil Energy, Fiscal Year 2000 – 2012

Figure 14: Revenue from Royalty and Other Payments for Federal Oil, Gas, and Coal Leases, Fiscal Year 2003-2013

Figure 14: Revenue from Royalty and Other Payments for Federal Oil, Gas, and Coal Leases, Fiscal Year 2003-2013

GAO-14-836 Table 3a Three Federal Tax Provisions Related to Fossil EnergyGAO-14-836 Table 3b Three Federal Tax Provisions Related to Fossil EnergyGAO-14-836 Figure 16 Estimated Revenue Losses Associated with Royalty Relief for Federal Oil and Gas Leases 2000-2012

GAO-14-836 Figure 26 Revenue Losses and Outlays















































Why GAO Did This Study

Federal energy policy since the 1970s has focused primarily on ensuring a secure supply of energy while protecting the environment. The federal government supports and intervenes in U.S. energy production and consumption in various ways, such as providing tax incentives, grants, and other support to promote domestic production of energy, as well as setting standards and requirements. GAO was asked to provide information on federal activities and their influence on U.S. energy production and consumption over the past decade. This report provides information on U.S. production and consumption of fossil, nuclear, and renewable energy from 2000 through 2013 and major factors, including federal activities, that influenced energy production and consumption levels. It also provides information on other federal activities that may have influenced aspects of U.S. energy production and consumption from 2000 through 2013 but were not targeted at a specific energy source, as well as information on federal research and development. GAO analyzed DOE historical data on energy production and consumption, reviewed studies and reports from federal agencies and governmental organizations on federal energy-related activities, and analyzed data on federal spending programs and tax incentives, among other things.

Several major factors, including federal activities, influenced U.S. production and consumption of fossil, nuclear, and renewable energy from 2000 through 2013. Examples of these factors include the following:

Advances in drilling technologies enabled economic production of natural gas and crude oil from shale and similar geological formations. These advances led to increases in domestic production of natural gas and crude oil beginning around 2008 and contributed to declines in domestic prices of natural gas, as well as lower prices for crude oil in some regions of the United States.

The federal government limited oil producers’ liability associated with some oil spills, lowering the producers’ costs for liability insurance.

In addition, the federal government provided tax incentives encouraging production for oil and gas producers, resulting in billions of dollars in estimated federal revenue losses. Moreover, partly because of lower natural gas prices, domestic coal production decreased in recent years as utilities switched from coal to natural gas for electricity generation.

Nuclear energy. Declining prices for a competing energy source—natural gas—may have led to decreases in the production and consumption of nuclear energy in recent years. Federal activities may have also influenced this trend. For example, the Department of Energy (DOE) announced plans to terminate its work to license a disposal facility for certain nuclear power plant waste in 2009, creating uncertainty about how this waste would be managed. This uncertainty may have provided a disincentive for some nuclear power operators to stay in the market or expand capacity because of the cost of storing nuclear waste.

Renewable energy. Federal tax credits for ethanol and federal policies requiring the use of ethanol in transportation fuels were major factors influencing an 8-fold increase in the production and consumption of ethanol from 2000 to 2013.

State policies requiring the use of renewable energy in electricity production, as well as federal outlays and tax credits for renewable energy producers, were major factors influencing a 30-fold increase and a 19-fold increase in production and consumption of electricity from wind and solar energy, respectively, from 2000 to 2013

The federal government strengthened energy efficiency standards for vehicle fuel economy and consumer products such as appliances and lighting, provided electricity and transmission services to customers through its power marketing administrations and the Tennessee Valley Authority, and spent billions of dollars helping low-income households cover heating and cooling costs. In addition, the federal government supported research and development targeting a wide range of energy-related technologies at government- owned laboratories and through funding to universities and other research entities.

In pursuing the goals of a secure energy supply and a healthy environment, the federal government subsidizes or otherwise provides support to energy companies and consumers.2 For example, the federal government provides tax incentives and other support to promote the domestic production of energy (including the extraction of coal, oil, and natural gas) and the development of renewable energy (including wind and solar power). The federal government also intervenes in energy markets in other ways, such as setting standards and requirements (through laws and regulations) that may not be directed at specific sources of energy but that nonetheless may influence the types and quantities of energy that are produced or consumed. For example, the federal government promotes energy efficiency through appliance efficiency standards that are written into law and regulates pollutants that are created in the production and consumption of energy. See CRS, Energy Tax Policy: Historical Perspectives on and Current Status of Energy Tax Expenditures (Washington, D.C.: May 2, 2011) and Tax-Favored Financing for Renewable Energy Resources and Energy Efficiency (Washington, D.C.: Jan. 10, 2011).

The federal government has established a number of important energy policies over the past decade, and several federal organizations have studied some of the costs associated with these policies. For example, Congress passed several key laws affecting energy producers and consumers over the past 10 years, including the Energy Policy Act of 2005 (EPAct), the Energy Independence and Security Act of 2007 (EISA), and the American Recovery and Reinvestment Act of 2009 (Recovery Act). Several federal organizations, including the Department of Energy’s (DOE) Energy Information Administration (EIA), CRS, and the Congressional Budget Office (CBO), have published reports identifying and quantifying aspects of federal support for energy production and consumption associated with these policies. In general, these reports focused on costs associated with federal energy-related tax incentives, outlays, or loan or loan guarantee programs.

We also reviewed reports and studies from federal agencies and government organizations, including CBO, CRS, DOE, Department of the Treasury (Treasury), EIA, congressional Joint Committee on Taxation (JCT), Office of Management and Budget (OMB), and U.S. Department of Agriculture (USDA). To identify these reports and studies, we conducted searches of various databases, such as ProQuest and PolicyFile, and asked agency officials to recommend studies. In addition, we reviewed and analyzed data and documentation on outlays, royalties collected, excise taxes collected, tax expenditures, forgone royalties, and federal credit programs collected from DOE, Department of the Interior (Interior), JCT, OMB, and Treasury.

The United States consumes energy from three major categories of Energy fossil, nuclear, and renewable.

In 2013, the United States consumed over 97 quadrillion British thermal units (Btu)7 of energy, including over 12 quadrillion Btus of imported energy, according to EIA data. As shown in figure 1, most of this energy (or about 82 percent) came from fossil energy sources. The rest came from renewable and nuclear energy sources.

Btus are used to measure and compare the energy content of different energy sources. A Btu can be defined as the quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit. One quadrillion is equal to one thousand trillion. In physical terms, one quadrillion Btus is equivalent to the energy contained in 172 million barrels of crude oil, which is about how much petroleum the United States consumes in 9 days.

There are four major sectors of the U.S. economy that consume energy at the point of end use: • the industrial sector, which includes facilities and equipment used for manufacturing, agriculture, mining, and construction; • the transportation sector, which generally comprises vehicles (such as cars, trucks, buses, trains, aircraft, and boats, among others) that transport people or goods; • the residential sector, which consists of homes and apartments; and • the commercial sector, which includes buildings such as offices, malls, stores, schools, hospitals, hotels, warehouses, restaurants, and places of worship, among others, as well as federal, state, and local facilities and equipment.

End-use sectors obtain energy from different combinations of sources. The industrial sector mainly consumes natural gas and electricity but also uses some petroleum products as feedstock. The transportation sector mainly consumes gasoline, diesel, and jet fuel; it also consumes biofuels and natural gas, as well as small amounts of electricity. The residential and commercial sectors mainly consume energy from electricity and natural gas but also use some petroleum products. As described above, every sector consumes electricity produced by the electric power sector, which takes electricity generated from fossil, nuclear, or renewable energy and delivers it to the end-use sectors through transmission and distribution lines. As shown in figure 2, the industrial sector consumed the largest share of energy (32 percent or 31.3 quadrillion Btus) in 2013, followed by the transportation, residential, and commercial sectors.

Not all of the energy produced is available for consumption at the point of end use, mainly because energy losses occur whenever energy is converted from one form to another. For example, coal-fueled power plants produce electricity by burning coal in a boiler to heat water and produce steam. The steam, at tremendous pressure and temperature, flows into a turbine, which spins a generator to produce electricity. During this process, the burning of coal produces heat energy, some of which converts water into steam. In turn, some of the energy in the steam is converted into electrical energy. At each point in this process, some of the original energy contained in the coal is lost.9 According to EIA, about twothirds of the energy consumed to generate electricity is lost in conversion, and most of these losses occur in fossil-fueled and nuclear power plants that generate steam to turn turbines.

In addition to conversion losses, other losses include power plant use of electricity, as well as transmission and distribution of electricity from power plants to end-use consumers (also called “line losses”). See EIA, Monthly Energy Review (Washington, D.C.: November 2013).

The federal government supports or intervenes in U.S. energy production and consumption through a number of key methods, including (1) setting standards and requirements, (2) directly providing goods and services, (3) assuming risk, (4) providing funds, and (5) collecting or forgoing revenue from taxes or fees. The federal government also conducts and provides funding for energy-related R&D.

The federal government provides some goods or services directly—that is, through a government agency—rather than providing funds to another entity to provide these goods or services. For example, the federal government may produce and sell electricity generated at federally owned facilities and produce reports and information on energy markets, among other things. Government provision of goods or services may be deemed necessary to address certain circumstances, such as economic inequalities among segments of the public or a need for a good or service considered unlikely to be met by the private sector. Such activities may affect energy producers and consumers in different ways. For example, production and sales of electricity generated at federally-owned facilities may involve energy sources and prices that differ from those of electricity produced and sold by private market participants.

The federal government assumes risk (and potential costs associated with risk) in a number of ways, such as • making direct loans—disbursing funds to nonfederal borrowers under contracts requiring the repayment of such funds either with or without interest; • guaranteeing loans—providing a guarantee, insurance, or other pledge regarding the payment of all or a part of the principal or interest on any debt obligation of a nonfederal borrower to a nonfederal lender; • limiting liability; and • providing or subsidizing insurance.

By assuming some or all of the costs associated with risks for certain energy activities, the government may make those activities relatively less expensive, thus providing an incentive to pursue those activities. For example, if the federal government assumes the risk of default on a loan to a manufacturer of turbines (that generate electricity from wind energy), nonfederal lenders may offer a lower interest rate to the manufacturer than they would in the absence of the federal guarantee. Lowering the costs of capital for developers could result in certain projects being financed that would otherwise not be built.

The federal government directly provides (or outlays) funds for different purposes. For example, federal agencies purchase energy for their buildings, as well as vehicles and fuel for these vehicles.

Collecting or Forgoing Revenues

The federal government collects revenues using different methods. One prominent method is through the tax system, which includes personal income taxes, corporate income taxes, and excise taxes based on the value of goods and services sold, among other types of taxes.19 The primary purpose of the federal tax system is to collect the revenue needed to fund the operations of the federal government.

The federal government also collects revenues associated with its management of federal lands. The federal government owns and manages roughly 30 percent of the nation’s total surface area (or about 700 million acres onshore). It also has jurisdiction and control over the outer continental shelf, which includes about 1.8 billion acres of submerged lands in federal waters off the coast of Alaska, in the Gulf of Mexico, and off the Atlantic and Pacific coasts.20 The federal government leases federal lands for the production of oil, gas, minerals such as coal, or other resources. In exchange, the government generally collects revenues, including payments in the form of rents and bonuses, which are required to secure and maintain a lease, and royalties, which are based on the value of the minerals that are extracted.

However, the federal government may choose to forgo certain revenues. Tax expenditures are tax provisions that are exceptions to the “normal structure” of individual and corporate income tax necessary to collect federal revenue. These preferences can have the same effects as government spending programs; hence the name tax expenditures.2The Congressional Budget and Impoundment Control Act of 197423 identified six types of tax provisions that are considered tax expenditures when they are exceptions to the normal tax, as described in table 1. Tax expenditures may affect the behavior of energy producers and consumers by providing an incentive to engage in certain types of activities. For some tax expenditures, forgone revenues can be of the same magnitude or larger than related federal spending for some mission areas.

The outer continental shelf consists of submerged federal lands, generally extending seaward between 3 and 200 nautical miles off the coastline. EIA estimated that 28 percent of all fossil energy produced in the United States in 2012 was obtained on federal lands (including submerged lands in the outer continental shelf).

In addition to forgoing tax revenues, the federal government may choose to forgo revenues associated with its leases of federal lands and waters. “Royalty relief” is a waiver or reduction of royalties that companies would otherwise be obligated to pay for their leases of federal lands or waters. For example, the Outer Continental Shelf Deep Water Royalty Relief Act of 199525 mandated royalty relief for oil and gas leases issued in the deep waters of the Gulf of Mexico from 1996 to 2000.

The federal government plays a critical role in supporting energy-related R&D, which may involve conducting R&D at government-owned laboratories or funding another entity to conduct R&D. For example, as one of the largest research agencies in the federal government, DOE spends billions of dollars every year on R&D to support its diverse missions, including advancing scientific research and technology development and ensuring efficient and secure energy, among other things. However, because long time lags may occur between basic research activities and activities related to commercialization and deployment, it is often difficult to link government-funded R&D to specific effects on energy production, consumption, and prices in the future. DOE’s R&D covers a broad range of activities, and DOE program offices manage 17 national laboratories.

The following DOE program offices and laboratories primarily support energy-related R&D: • The Office of Science oversees six national laboratories with research areas focusing on energy: Ames Laboratory in Iowa, Argonne National Laboratory in Illinois, Brookhaven National Laboratory in New York, Oak Ridge National Laboratory in Tennessee, Pacific Northwest National Laboratory in Washington, and Princeton Plasma Physics Laboratory in New Jersey. The Office of Science is the nation’s single largest funding source for supporting research in energy sciences.  For purposes of this report, we included activities related to technology demonstration as part of R&D and excluded activities related to commercialization and deployment. Commercialization includes efforts to transition technologies to commercial applications by bridging the gap between research and demonstration activities and venture capital funding and marketing activities. Deployment includes efforts that facilitate or achieve widespread use of technologies in the commercial market.

  • The Office of Nuclear Energy oversees the Idaho National Laboratory in Idaho. The office’s primary mission is to advance nuclear power as a resource capable of meeting the nation’s energy, environmental, and national security needs by resolving technical, cost, safety, proliferation resistance, and security barriers. • The Office of Fossil Energy oversees the National Energy Technology Laboratory in Pennsylvania. The office’s primary mission is to ensure reliable fossil energy resources for clean, secure, and affordable energy while enhancing environmental protection. • The Office of Energy Efficiency and Renewable Energy oversees the National Renewable Energy Laboratory in Colorado. The office’s mission is to develop solutions for energy-saving homes, buildings, and manufacturing; sustainable transportation; and renewable electricity generation

Federal agencies other than DOE also provide funding for energy-related R&D. For example, as we found in February 2012, the Department of Defense and USDA implemented numerous initiatives to help develop renewable energy technologies.28 In addition, as we found in August 2012, the National Aeronautics and Space Administration, National Science Foundation, EPA, and National Institute of Standards and Technology implemented a number of energy initiatives related to batteries and energy storage.29 28GAO, Renewable Energy: Federal Agencies Implement Hundreds of Initiatives, GAO-12-260 (Washington, D.C.: Feb. 27, 2012). 29GAO, Batteries and Energy Storage: Federal Initiatives Supported Similar Technologies and Goals but Had Key Differences, GAO-12-842 (Washington, D.C.: Aug. 30, 2012).

U.S. Production and Consumption of Fossil Energy

several major factors influenced U.S. production and consumption of fossil energy from 2000 through 2013: • Advances in drilling technologies enabled economic production of natural gas from shale and other tight formations. These advances led to increases in domestic production of natural gas starting around 2008 and contributed to declines in domestic prices of natural gas starting around 2009. As domestic production rose and prices declined, domestic consumption increased, imports of natural gas decreased, and companies began taking steps to gain approval to export liquefied natural gas. • The same advances in drilling technologies also enabled the economic production of crude oil from shale formations. These advances led to increases in the domestic production of crude oil beginning around 2009, reversing a decades-long trend of decreasing production. Global crude oil prices generally increased between 2000 and 2013, the largest, sustained price increase since comparable data were available. Increased domestic production contributed to lower prices for some regions of the country; however, the impact of increased domestic crude oil production on global crude oil prices was likely small. Imports of crude oil decreased beginning around 2008 as domestic production displaced imported crude oil to U.S. petroleum refiners. Around 2010, U.S. refiners began consuming greater quantities of crude oil to produce more petroleum products. As domestic consumption of petroleum products generally decreased beginning around 2008, exports of petroleum products (mostly diesel fuel) increased.

Natural gas and crude oil are found in a variety of geological formations. Conventional natural gas and crude oil are found in deep, porous rock or reservoirs and can flow under natural pressure to the surface after drilling. In contrast, the low permeability of some formations, including shale, means that natural gas and crude oil trapped in the formation cannot move easily within the rock. Tight formations refer to low permeability formations that include shale as well as sandstones and carbonates.

Due in part to lower prices of natural gas, the use of coal for electricity generation decreased in recent years as utilities switched to natural gas. Domestic coal production decreased in recent years; however, coal exports increased as domestic consumption declined faster than domestic production.

Major Factors Influencing U.S. Production and Consumption of Nuclear Energy

According to the studies and reports we reviewed, several major factors may have influenced U.S. production and consumption of nuclear energy from 2000 through 2013. Specifically, declining natural gas prices, along with the 2011 accident at Japan’s Fukushima Daiichi commercial nuclear power plant, may have led to decreases in the production and consumption of nuclear energy in recent years.

  • Federal tax credits for ethanol and federal policies requiring the use of ethanol in transportation fuels were major factors influencing an 8-fold increase in the production and consumption of ethanol from 2000 through 2013. As domestic production of ethanol outpaced consumption in recent years, U.S. exports of ethanol increased. • State policies requiring the use of renewable energy in electricity production, as well as federal activities such as outlays and tax credits for renewable energy producers, were major factors influencing production and consumption of electricity from wind and solar energy. Technological advances also played an important role. These factors supported a 30-fold increase in production and consumption of wind energy from 2000 through 2013 and a 19-fold increase in the production and consumption of solar energy.

Other Federal Activities Influencing Aspects of U.S. Energy Production and Consumption

setting standards and requirements for energy efficiency, selling electricity, providing loans and loan guarantees related to energy efficiency, making outlays for energy consumption and energy efficiency, and forgoing revenues through tax expenditures for electricity transmission and energy efficiency, among other things

Natural Gas Production and Consumption

The year-to-year pattern of domestic production of natural gas fluctuated from 2000 through 2006 and then began to increase around 2007, according to Energy Information Administration (EIA) data, and as shown in figure 3. Specifically, the United States produced about 19.2 trillion cubic feet of natural gas in 2000; by 2005 and 2006, production had fallen below 19 trillion cubic feet but then began to increase, reaching over 24 trillion cubic feet in 2012 and 2013. Domestic consumption of natural gas exceeded domestic production throughout the period, with the difference coming from imports, primarily from Canada.1 However, as shown in figure 3, the difference between the domestic consumption and production of natural gas generally decreased between 2007 and 2013, leading to a reduction in natural gas imports.

the United States imported about 2.8 trillion cubic feet of natural gas from Canada and exported about 0.9 trillion cubic feet of natural gas to Canada and 0.7 trillion cubic feet to Mexico.

Natural gas is used by a number of sectors in the economy, most notably for electricity generation; for industrial use as a source of heat or as a feedstock for petrochemical production, among other things; for residential heating and other home uses; and for commercial heating and other uses.

according to EIA data, natural gas consumption for electricity generation (as well as other energy needs of the electric power sector) increased from about 5.2 trillion cubic feet in 2000 to about 8.2 trillion cubic feet in 2013. Natural gas consumption for commercial use also increased, from about 3.2 trillion cubic feet in 2000 to about 3.3 trillion cubic feet in 2013. Industrial and residential uses declined over the same period.

According to EIA data, natural gas withdrawals from shale formations increased from about 2 trillion cubic feet in 2007 to over 10 trillion cubic feet in 2012.

annual prices for natural gas in the Henry Hub spot market generally increased between 2000 and 2008 (although some fluctuations occurred) before decreasing between 2008 and 2013. Specifically, in 2000, the annual spot price was $4.31 per million British thermal units (Btu) of natural gas. This price generally increased to $8.69 per million Btus in 2005 and $8.86 per million Btus 2008. Since 2008, the annual price generally decreased to $3.73 per million Btus in 2013. 4CRS, Natural Gas in the U.S.

The primary users of petroleum products in the United States are the transportation and industrial sectors, according to EIA data. As shown in figure 9, the transportation sector consumed the largest share of petroleum products in 2000 and 2013 (at about 4.8 billion barrels). The industrial sector consumed the next largest share of petroleum products (at about 1.8 billion barrels in 2000 and about 1.7 billion barrels in 2013), while the remaining sectors (commercial, residential, and electric power) consumed the smallest share (at about 0.7 billion barrels in 2000 and about 0.3 billion barrels in 2013).

annual U.S. prices for bituminous and subbituminous coal generally increased from 2000 to 2012 (the latest year for which data are available). For example, for bituminous coal, prices increased from $24.15 per short ton in 2000 to $66.04 per short ton in 2012, or an increase of over 170 percent. Some of these cost increases may be due to increases in coal transportation costs and declines in mine productivity during this period, according to EIA.24 As the price of coal increased, it reduced coal’s price advantage relative to other energy sources, such as natural gas, which decreased in price over this period.

Figure 12: U.S. Coal Prices, 2000-2012

according to EPA, fossil fuel-fired electricity generating units are among the largest emitters of sulfur dioxide and nitrogen oxides, which have been linked to respiratory illnesses and acid rain, as well as of carbon dioxide, the primary greenhouse gas contributing to climate change. Numerous Clean Air Act requirements apply to electricity generating units, including New Source Review, a permitting process established in 1977. Under New Source Review, owners of generating units must obtain a preconstruction permit that establishes emission limits and requires the use of certain emissions control technologies. New Source Review applies to (1) generating units built after August 7, 1977, and (2) existing generating units—regardless of the date built—that seek to undertake a “major modification,” a physical or operational change that would result in a significant net increase in emissions of a regulated pollutant.

In general, the cost of complying with New Source Review requirements provided a disincentive for producing electricity from fossil energy sources. As we found in June 2012, EPA has investigated most coal-fired generating units at least once for compliance with New Source Review requirements since 1999, and has alleged noncompliance at more than half of the units it investigated.27 Specifically, of the 831 units EPA investigated, 467 units were ultimately issued notices of violation, had complaints filed in court, or were included in settlement agreements. In total, EPA reached 22 settlements covering 263 units, which will require affected unit owners to, among other things, install around $12.8 billion in emissions controls. According to our analysis of EPA data, these settlements will reduce emissions of sulfur dioxide by an estimated 1.8 million tons annually, and nitrogen oxides by an estimated 596,000 tons annually.

The federal government assumed some risks related to fossil energy production and consumption from 2000 through 2013. For example, the federal government assumed financial risks associated with potential cleanup costs for some oil spills, and the federal government acquired billions of dollars worth of crude oil to hold in reserve in case of supply disruptions, as discussed below:

Cleanup costs for oil spills. Under the Oil Pollution Act of 1990, as amended, which was enacted after the Exxon Valdez oil spill in 1989, the federal government established a “polluter pays” system that places the primary burden of liability for costs of spills on the responsible parties, up to a specified limit of liability.28 In general, the level of potential financial liability under the act depends on the kind of vessel or facility from which a spill originates and is limited in amount. However, if the oil discharge is the result of gross negligence or willful misconduct, or a violation of federal operation, safety, and construction regulations, then liability under the act is unlimited. In addition, the act provides the Oil Spill Liability Trust Fund to pay for oil spill costs when the responsible party cannot or does not pay. The fund’s primary revenue source is an 8-cent-per-barrel tax on petroleum products—a small fraction of the price of a barrel in 2013— either produced in the United States or imported from other countries. The fund is subject to a $1 billion cap on the amount of expenditures from the fund per incident.

Stockpiling crude oil. Congress created the Strategic Petroleum Reserve in 1975, following the Arab oil embargo of 1973 to 1974, to help protect the U.S. economy from damage caused by oil supply disruptions. The reserve is owned by the federal government and operated by DOE. It can store up to 727 million barrels of crude oil in salt caverns. The President has discretion to authorize release of oil in the Strategic Petroleum Reserve to minimize significant supply disruptions.31 In the event of such a disruption, the reserve can supply oil to the market by either selling stored crude oil or trading this oil in exchange for a larger amount of oil to be returned later. From fiscal year 2000 through 2013, the federal government received almost $3.9 billion from the sale of crude oil from the reserve, spent about $0.5 billion to purchase crude oil, and spent $2.5 billion for operations and maintenance of the reserve.

The assumption of liability by the federal government for some oil spills may have provided an incentive for oil production and consumption by potentially decreasing the overall cost associated with certain productionrelated activities. For example, the liability limitations established under the Oil Pollution Act may have lowered costs for liability insurance or other insurance paid for by oil producers. However, the extent to which this federal intervention influenced changes in petroleum or natural gas production or consumption is difficult to precisely measure. Moreover, the fund—which is paid by oil producers—raises the cost of producing oil by a small fraction, which may have a negative impact on oil production.

This tax generated about $2.8 billion for the fund from 2000 through 2012, the most recent data reported by the Internal Revenue Service. The tax is scheduled to expire to expire in 2017, putting the federal government’s longer-term ability to provide financial support in response to oil spills at risk, as we found in October 2011. See GAO, Deepwater Horizon Oil Spill: Actions Needed to Reduce Evolving but Uncertain Federal Financial Risks, GAO-12-86 (Washington, D.C.: Oct. 24, 2011).

From 2000 through 2013, the federal government collected revenues through excise taxes and royalty payments related to fossil energy production and consumption while forgoing other related revenues through tax expenditures and royalty relief. Regarding excise taxes, the federal government collected about $637 billion through excise taxes targeting or related to fossil energy—primarily motor fuels (gasoline, diesel, and others)—from fiscal year 2000 through 2012. The federal excise tax rate on gasoline is 18. 4 cents per gallon (the same amount as in 1993). Most revenues from these taxes are dedicated to the Highway Trust Fund, which was established by Congress in 1956 and is a major source of funding for various surface transportation programs.36 As shown in figure 13, revenues from excise taxes targeting or related to fossil energy were about $45 billion a year from fiscal year 2000 through 2004 and increased to about $50 billion a year for the rest of the period.

Of the 18.4 cent per gallon tax, 0.1 cents is dedicated to the Leaking Underground Storage Tank Trust Fund; the remainder is dedicated to the Highway Trust Fund.

Regarding royalty payments, the federal government collected more than $124 billion in revenues from royalty and other payments for federal oil, gas, and coal leases from fiscal year 2003 through 2013.37 As shown in figure 14, revenues from royalty and other payments increased from almost $8 billion in fiscal year 2003 to $23.4 billion in fiscal year 2008, then decreased to about $9 billion in fiscal years 2009 and 2010 before increasing to about $13.2 billion in fiscal year 2013.

Regarding tax expenditures, the federal government incurred revenue losses of almost $50 billion from fiscal year 2000 through 2013 due to 16 tax expenditures we identified as targeting or related to fossil energy according to the Department of the Treasury (Treasury) and the Joint Committee on Taxation (JCT) estimates. As shown in figure 15, revenue losses associated with these 16 tax expenditures increased from less than $2 billion in fiscal year 2000 to over $4.6 billion in both fiscal year 2006 and 2007. They decreased from fiscal year 2007 through 2010 before increasing to about $4.6 billion in fiscal year 2012 and declining to $4.1 billion in fiscal year 2013.

The tax code provides a credit of $3 per oil-equivalent barrel of production (in 1979 dollars) for certain types of liquid, gaseous, and solid fuels produced from selected types of alternative energy sources (or “nonconventional fuels”). Qualifying fuels include synthetic fuels (such as coke or coke gas) produced from coal, as well as gas produced from biomass, among other things. The credit is generally available if the price of oil stays below $29.50 (in 1979 dollars). The tax code allows firms that extract oil, gas, or other minerals a deduction to recover their capital investment in a mineral reserve, which depreciates due to the physical and economic depletion or exhaustion as the mineral is recovered. There are two methods of calculating this deduction: cost depletion and percentage depletion. Cost depletion allows for the recovery of the actual capital investment—the costs of discovering, purchasing, and developing a mineral reserve—over the period during which the reserve produces income from the specified total recoverable units. Under this method, the total deductions cannot exceed the original capital investment. Under percentage depletion, the deduction for recovery of capital investment is a fixed percentage of the “gross income”—i.e., revenue—from the sale of the mineral. Because eligible taxpayers must claim the higher of cost or percentage depletion, total deductions under percentage depletion may exceed the capital invested to acquire and develop the reserve. The percentage depletion rate for oil and gas is 15 percent and is limited to average daily production of 1,000 barrels of oil, or its equivalent in gas, and only for wells located in the United States. Percentage depletion is available for independent producers and royalty owners but not for integrated producers.

Firms engaged in the exploration and development of oil, gas, or geothermal properties have the option of expensing rather than capitalizing certain intangible drilling and development costs. Intangible drilling and development costs are amounts paid by the operator for fuel, labor, repairs to drilling equipment, materials, hauling, and supplies. They are expenditures incidental to and necessary for drilling wells and preparing a site for the production of oil, gas, or geothermal energy. They include the cost to operators of any drilling or development work done by contractors under any form of contract.

Estimated revenue losses $14.83 billion No expiration under current law. No expiration under current law. $10.15 billion $7.50 billion Consumption Name Temporary 50 percent expensing for equipment used in the refining of liquid fuels Exceptions for publicly traded partnership with qualified income derived from certain energy-related activitiesd Credit for enhanced oil recovery costs Capital gains treatment of royalties on coal

Taxpayers may elect to expense 50 percent of the cost of qualified refinery property used to process liquid fuel from crude oil and other qualified fuels. The deduction is allowed in the taxable year in which the refinery property is placed in service. The remaining 50 percent of the cost is recovered using a 10-year recovery period. Eligible refineries must have a binding construction contract entered into before January 1, 2010. As of October 3, 2008, qualified refineries include those used in the refining of liquid fuels directly from shale or tar sands.

The tax code generally treats a publicly traded partnership—i.e., a partnership traded on an established securities market or secondary market—as a corporation for federal income tax purposes. However, a notable exception occurs if 90 percent of the gross income of a partnership is passive-type income, such as interest, dividends, real property rents, gains from the disposition of real property, and similar income or gains. In these cases, the partnership is exempt from corporate level taxation, thus allowing it to claim pass-through status for tax purposes. In general, publicly traded partnerships favor the owners of publicly traded partnerships whose main source of qualifying income is from energy related activities. In contrast to an otherwise similar corporation, the owners of such a publicly traded partnership are not subject to a corporate level tax.

Taxpayers may claim a credit equal to 15 percent of enhanced oil recovery costs. An enhanced oil recovery project is generally a project that involves the use of one or more tertiary recovery methods to increase the amount of recoverable domestic crude oil. Qualified costs include (1) amounts paid for depreciable tangible property; (2) intangible drilling and development expenses; (3) tertiary injectant expenses; and (4) construction costs for certain Alaskan natural gas treatment facilities. This credit is reduced over a $6 phase-out range when the reference price for domestic crude oil exceeds $28 per barrel (adjusted for inflation after 1991). This tax preference is currently phased out due to high crude oil prices.

Owners of coal mining rights who lease their property usually receive royalties on mined coal. If the owners are individuals, these royalties can be taxed at a lower individual capital gains tax rate rather than at the higher individual top tax rate.

Estimated revenue losses $3.87 billion No expiration under current law. $3.70 billione No expiration under current law. $1.98 billion No expiration under current law. $1.34 billion Consumption Name Credit for investment in clean coal facilities Amortization of air pollution control facilities Alternative fuel mixture creditf Accelerated depreciation recovery periods for specific energy property: natural gasg

An investment tax credit is available for selected types of advanced coal technologies. The Energy Improvement and Extension Act of 2008 allocated $1.25 billion in credits for power generation projects that use integrated gasification combined cycle or other advanced coal-based electricity generation technologies. Qualifying taxpayers may be eligible for a 30 percent credit. The Energy Improvement and Extension Act of 2008 also allocated $250 million in credits for qualified gasification projects (with a credit rate of 30 percent). Prior allocations were awarded under the Energy Policy Act of 2005 and provided $800 million for integrated gasification combined cycle projects and $500 million for other advanced coalbased electricity generation technologies. The Energy Policy Act of 2005 also allocated $350 million for qualified gasification projects. Prior to 2005, investments in pollution control equipment for pre-1976 coal-fired plants were amortizable over 5 years. In addition, pollution control equipment added to “newer” plants (those placed in service after 1975) was depreciated using the same methods that apply to other electric generating equipment on the date they are placed in service (15- or 20-year recovery period). However, under the Energy Policy Act of 2005, investments in pollution control equipment made in connection with post1975 power plants qualify for amortization over seven years rather than five years. Qualifying pollution control equipment means any technology that is installed in or on a qualifying facility to reduce air emissions of any pollutant regulated by the Environmental Protection Agency (EPA) under the Clean Air Act.

The tax code provides a 50-cents-per gallon excise tax credit for certain alternative fuels used as fuel in a motor vehicle, motor boat, or airplane and a 50-cents-per gallon credit for alternative fuels mixed with a traditional fuel (gasoline, diesel or kerosene) for use as a fuel. Examples of qualifying fuels include liquefied petroleum gas, compressed or liquefied natural gas, liquefied hydrocarbons derived from biomass, and liquefied hydrogen. If excise tax credits exceeded excise tax liability, the credits could be claimed as income tax credits or received as payments.

Estimated revenue losses $1.41 billion No expiration under current law. $1.30 billione Excise tax credits for alternative fuels expired after December 31, 2013. Excise tax credits for liquefied hydrogen fuel will expire after September 30, 2014. $0.97 billion Property had to be placed in service before January 1, 2011. $0.69 billion Consumption Name Amortization of geological and geophysical expenditures associated with oil and gas exploration Exception from passive loss limitation for working interests in oil and gas properties Carbon dioxide sequestration credit Deduction for small refiners with capital costs associated with EPA sulfur regulation compliance

Geological and geophysical costs — exploratory costs associated with determining the precise location and potential size of a mineral deposit — are amortized by independent producers over 2 years and by major integrated oil companies over 7 years. This provision exempts working interests (investments) in gas and oil exploration and development from being categorized as “passive income (or loss)” with respect to the Tax Reform Act of 1986. In general, a working interest is an interest with respect to an oil and gas property that is burdened with the cost of development and operation of the property. The exception allows owners of working interests to offset their losses from passive activities against active income. Under normal rules, passive losses that remain after being netted against passive income can only be carried forward to apply against passive income in future years. The exception from passive loss limitation provision on oil and natural gas properties applies principally to partnerships and individuals rather than corporations. This categorization permits the deduction of losses in oil and gas projects against other active income earned without limitation and is believed to act as an incentive to induce investors to finance oil and gas projects. A credit of $10 per metric ton is available for qualified carbon dioxide that is captured by the taxpayer at a qualified facility, used by such taxpayer as a tertiary injectant including carbon dioxide augmented waterflooding and immiscible carbon dioxide displacement) in a qualified enhanced oil or natural gas recovery project and disposed of by such taxpayer in secure geological storage. In addition, a credit of $20 per metric ton is available for qualified carbon dioxide captured by a taxpayer at a qualified facility and disposed of by such taxpayer in secure geological storage without being used as a tertiary injectant. Both credit amounts are adjusted for inflation after 2009.

A small business refiner may immediately deduct as an expense 75 percent of the costs paid or incurred for purposes of complying with EPA’s Highway Diesel Fuel Sulfur Control requirement. A cooperative that qualifies as a small business refiner may elect to pass this deduction through to its owners. Costs qualifying for the deduction are those costs paid or incurred with respect to any facility of a small business refiner during the period beginning on January 1, 2003, and ending on the earlier of the date that is 1 year after the date on which the taxpayer must comply with the applicable EPA regulations or December 31, 2009.

The tax code provides a tax credit for income taxes paid to foreign countries, which helps to protect taxpayers who earn income abroad from double taxation. If a multinational company is subject to a foreign country’s levy, and it also receives a specific economic benefit from that foreign country, it is classified as a “dual- capacity taxpayer.” Dual-capacity taxpayers cannot claim a credit for any part of the foreign levy unless it is established that the amount paid under a distinct element of the foreign levy is a tax, rather than a compulsory payment for some direct or indirect economic benefit. JCT estimated that repealing this provision will increase revenue related to oil and gas production by $7.5 billion from fiscal year 2012 through 2022.

In general, for federal income tax purposes, taxpayers must account for inventories if the production, purchase, or sale of merchandise is a material income-producing factor to the taxpayer. Under the last-in, first-out (“LIFO”) method, it is assumed that the last items entered into the inventory are the first items sold. Because the most recently acquired or produced units are deemed to be sold first, cost of goods sold is valued at the most recent costs; the effect of cost fluctuations is reflected in the ending inventory, which is valued at the historical costs rather than the most recent costs. Compared to first-in, first-out (“FIFO”), LIFO produces net income that more closely reflects the difference between sale proceeds and current market cost of inventory. When costs are rising, the LIFO method results in a higher measure of cost of goods sold and, consequently, a lower measure of income when compared to the FIFO method. The inflationary gain experienced by the business in its inventory is generally not reflected in income, but rather, remains in ending inventory as a deferred gain until a future period in which sales exceed purchases. JCT estimated that repealing this provision will increase revenue by $106 billion from fiscal year 2014 through 2024; while OMB estimated that repealing this provision will increase revenue by almost $81 billion from fiscal year 2014 through 2023. However, neither JCT nor OMB quantified how much of its revenue estimate is related to fossil fuel production.

Section 199 of the American Jobs Creation Act of 2004 allows a deduction of qualified production activities from taxable income of 3 percent in 2005-2006, 6 percent in 2007-2009, and 9 percent thereafter. The deduction cannot exceed total taxable income of the firm and is limited to 50 percent of wages related to the qualified activity. This provision lowers the effective tax rate on the favored property, in most cases when fully phased in, from the top corporate tax rate of 35 percent to 31.85 percent. Production property is property manufactured, produced, grown, or extracted within the United States. Eligible property also includes domestic film, energy, and construction, and engineering and architectural services. For the latter, the services must be produced in the United States for construction projects located in the United States. The law specifically excludes the sale of food and beverages prepared at a retail establishment, the transmission and distribution of electricity, gas, and water, and receipts from property leased, licensed, or rented to a related party. The benefits are also allowed for Puerto Rico for 2007 through 2011. Oil extraction is permanently limited to a 6 percent deduction. JCT estimated that repealing this provision will increase revenues related to oil and gas production by $14.4 billion from fiscal year 2012 through 2022; while OMB estimated $17.4 billion in revenue from fiscal year 2014 through 2023 related to fossil energy production.

Regarding royalty relief, the federal government provided nearly $12 billion in royalty relief for oil and gas production from 2000 through 2012, according to Interior estimates.39 As shown in figure 16, revenue losses associated with royalty relief increased from $40 million in 2000 to more than $2 billion in 2011, before declining to about $1.9 billion in 2012 (the most recent estimate available).

Excise taxes. Because excise taxes raised prices on motor fuels, they provided a disincentive for consuming such fuels.40 However, because much of the revenue from these excise taxes was used to improve roads and other transportation infrastructure, these taxes could also have provided an incentive for motor vehicle use and thereby increased consumption of motor fuels.

Compared with other countries within the Organization for Economic Cooperation and Development, the United States has one of the lowest excise tax rates for motor fuels.

Royalties. Because royalty payments raised costs associated with the development and sales of fossil energy, they provided a disincentive to produce and consume fossil energy. However, we cannot say to what extent the federal royalties provided a disincentive for oil and gas development on federal lands relative to other places because oil and gas companies that lease federal lands look for the best economic terms across a wide range of land owners (such as state, private, federal, and international owners). We found in 2008 that studies of many resource owners indicated that the federal government collected less in total revenues than most other resource owners,41 but we do not have more recent comparisons of revenues collected.

Tax expenditures and royalty relief. In general, tax expenditures and royalty relief provided incentives for fossil energy production by lowering the costs associated with the exploration and development of oil and gas resources.

U.S. nuclear energy production and consumption trends may also have been affected, to a more limited extent, by increases in the price of uranium oxide, which is processed into fuel used by nuclear power reactors. As shown in figure 18, uranium oxide prices have increased considerably from 2000 to 2013, according to EIA data. Specifically, the average domestic price of uranium oxide increased from $11.45 per pound in 2000 to $52.51 per pound in 2013, an increase of more than 300 percent.

The federal government established or strengthened a number of standards and requirements related to nuclear energy from 2000 through 2013. For example, after the Fukushima incident, the Nuclear Regulatory Commission (NRC) accepted 12 recommendations from a task force that NRC had convened in 2011 to review its processes and regulations and determine whether lessons learned from the accident could inform its oversight processes. The task force recommended that NRC require licensees to reevaluate and upgrade seismic and flooding protection of reactors and related equipment, strengthen capabilities at all reactors to withstand loss of electrical power, and take other actions to better protect their plants for a low- probability, high-impact event.3 NRC’s activities to strengthen the safety and security of nuclear power plants after the Fukushima incident may have increased the costs associated with operating commercial nuclear power reactors, thereby providing a disincentive for nuclear power production.

Federal activities related to the Yucca Mountain repository may have provided a disincentive for nuclear energy production and consumption. For example, DOE’s actions regarding its license application for the construction of the repository may have caused uncertainty about the federal government’s long-term strategy for storing nuclear waste because Congress has not agreed upon a path forward. This uncertainty may have provided a disincentive for some nuclear plant operators to stay in the market or expand capacity because storing nuclear waste is expensive.

Assuming Risk

The federal government assumed certain risks related to nuclear energy production and consumption from 2000 through 2013. For example, under the Price-Anderson Act, the federal government limited the liability of nuclear plant operators in the case of a nuclear accident.8 The act requires each licensee of a nuclear plant to have primary insurance coverage equal to the maximum amount of liability insurance available from private sources—currently $375 million—to settle any such claims against it. In the event of an accident at any plant where liability claims exceed the $375 million primary insurance coverage, the act also requires licensees to pay retrospective premiums (also referred to as secondary insurance). The act places a limit on the total liability per incident, which is currently about $13 billion

In addition, the federal government assumed risks related to nuclear energy production and consumption by establishing a loan guarantee program. Specifically, Section 1703 of the Energy Policy Act of 200510 authorized DOE to issue loan guarantees for projects that avoid, reduce, or sequester greenhouse gases using new or significantly improved technologies. In 2010, DOE made conditional commitments under Section 1703 to provide $8.3 billion in loan guarantees for the construction of two advanced nuclear reactors at the Vogtle Electric Generating Plant in Georgia.

These federal activities provided an incentive for nuclear energy production and consumption by decreasing the overall cost associated with certain production-related activities. For example, according to the Congressional Budget Office (CBO), the Price- Anderson Act provides a benefit to nuclear plant operators by reducing their cost of carrying liability insurance.12 CBO estimated that the potential level of support was about $600,000 annually per reactor, which would be about $62 million annually for all reactors in the United States. Without the liability limitations provided by the Price- Anderson Act, the cost of obtaining insurance for nuclear power plant operators might have been higher. Consequently, the act may have supported higher levels of nuclear power production in the United States between 2000 and 2013 than would have otherwise occurred because the lower cost provided an incentive for increased production and consumption.

The insurance coverage has two layers: The owner of a nuclear plant is required to purchase primary insurance covering liability up to $375 million. In the event of an accident, liability for damages assessed at between $375 million and $13 billion would then be shared among the owners of all U.S. nuclear plants, who would pay a “retroactive premium.

DOE issued about $6.2 billion of these loan guarantees in February 2014. For more information, see GAO, DOE Loan Programs: DOE Should Fully Develop Its Loan Monitoring Function and Evaluate Its Effectiveness, GAO-14-367 (Washington, D.C.: May 1, 2014). 12CBO, Nuclear Power’s Role in Generating Electricity (Washington, D.C.; May 2008).

Forgoing Revenue

The federal government incurred revenue losses related to nuclear energy production and consumption from 2000 through 2013. Specifically, we identified one tax expenditure targeting nuclear energy that resulted in $7.9 billion in revenue losses from fiscal year 2000 through 2013.13 This tax expenditure—the special tax rate for nuclear decommissioning reserve funds—increased from $100 million in fiscal year 2000 to $1.1 billion in fiscal year 2013, as shown in figure 19. Under the special tax rate for nuclear decommissioning reserve funds, taxpayers (e.g., utilities) who are responsible for the costs of decommissioning nuclear power plants can elect to create reserve funds to be used to pay for decommissioning. The funds receive special tax treatment: amounts contributed are deductible in the year the contributions are made and are not included in the taxpayer’s gross income until the year they are distributed, thus effectively postponing tax on the contributions. Amounts actually spent on decommissioning are deductible in the year they are made. Gains from the funds’ investments are subject to a 20 percent tax rate—a lower rate than that which applies to most other corporate income.14 In general, this tax expenditure supported nuclear energy production and consumption by lowering the costs of nuclear energy production and providing an incentive to engage in nuclear power production.

Major Factors Influencing Ethanol Production and Consumption

The studies and reports we reviewed indicated that several federal activities had a major impact on the increase in ethanol production and consumption—most notably federal tax expenditures and requirements for the use of ethanol in transportation fuel. Regarding federal tax expenditures, alcohol fuel credits provided a 45-cent-per-gallon tax credit to gasoline suppliers who blend ethanol with gasoline.4 According to the Department of the Treasury (Treasury) data, the alcohol fuel credits resulted in more than $39 billion in revenue losses from fiscal year 2000 through 2013. As shown in figure 22, revenue losses associated with alcohol fuel credits increased from about $0.9 billion in fiscal year 2000 to $7 billion in fiscal year 2011, before decreasing to $3.7 billion in fiscal year 2012

In recent years, the United States also increased imports of ethanol from Brazil to meet renewable fuel requirements for advanced biofuels. Brazilian ethanol is made from sugarcane and qualifies as an advanced biofuel, while domestic ethanol produced from corn does not.

The 45-cents-per-gallon tax credit is also referred to as the volumetric ethanol excise tax credit. The federal government also provided tax credits (and a related excise tax credit) for biodiesel. See appendix VI for more information on the alcohol fuel credits and biodiesel credits.

The alcohol fuel credits generally expired in 2011, but some taxpayers were still able to claim the credit in 2012 and 2013 due in part to the timing and method of taxpayer filing and Internal Revenue Service processing, according to Treasury officials.

In our previous work, we found that the alcohol fuel credits were important in establishing and expanding the domestic ethanol industry.  , Biofuels: Potential Effects and Challenges of Required Increases in Production and Use, GAO-09-446 (Washington, D.C.: Aug. 25, 2009).

Requirements for federal fleets to use ethanol and other alternative fuels. The Energy Policy Act of 1992 requires that 75 percent of all vehicles acquired by the federal fleet in fiscal year 1999 and afterward be “alternative fuel vehicles,” which can use ethanol and blends of 85 percent or more of ethanol with gasoline, among other fuels. EPAct generally requires that all such vehicles be fueled with alternative fuel.11 In addition, EISA12 requires that no later than October 2015 and each year thereafter, agencies must achieve a 10 percent increase in vehicle alternative fuel consumption relative to a baseline established by the Energy Secretary for fiscal year 2005.

Another factor likely affecting ethanol production and consumption from 2000 through 2013 was the price of ethanol relative to the prices of corn and gasoline, according to U. S. Department of Agriculture (USDA) research. Ethanol prices generally increased from 2000 through 2013, according to USDA data, as shown in figure 23. Specifically, ethanol prices increased from an annual average of $1.35 per gallon in 2000 to $2.47 per gallon in 2013. Because ethanol is used as a gasoline substitute, and because nearly all ethanol produced in the United States comes from corn, the relationship between prices of ethanol, gasoline, and corn is complex. As gasoline prices rise, ethanol’s appeal as a substitute increases, as does the profitability of ethanol production and the demand for corn. As a result, according to USDA’s Economic Research Service, prices of corn, ethanol, and gasoline have become more interrelated in recent years.14 Specifically, from March 2008 to March 2011, ethanol supply and demand accounted for about 23 percent of the variation in the price of corn, while corn market conditions accounted for about 27 percent of ethanol’s price variation. At the same time, about 16 and 17 percent of gasoline price variation could be attributed to ethanol and corn markets conditions, respectively.

Wind is transformed into electricity using wind turbines. In terms of the electricity generated from wind turbines, domestic production and consumption of wind energy increased from 5.6 million megawatt-hours in 2000 to 167.7 million megawatt-hours in 2013

The studies and reports we reviewed indicated that the increase in wind and solar energy production and consumption resulted from a number of major factors—most notably state policies and federal activities, as well as technological advances. Regarding state activities, many states have created policies known as renewable portfolio standards that encouraged the production and use of renewable energy. These state policies generally require a percentage of electricity sold or generated in the state to come from eligible renewable resources, including wind and solar energy. According to EIA, 29 states and the District of Columbia had enforceable renewable portfolio standards or similar laws as of October

According to the Congressional Research Service (CRS), state policies have been the primary creator of demand for wind projects.

the federal government influenced increases in the production and consumption of wind and solar energy primarily through tax incentives. Specifically, the production tax credit and the investment tax credit, along with a related program that provided grants in lieu of these tax credits, resulted in almost $14 billion in revenue losses and almost $20 billion in outlays from fiscal year 2000 through 2013. These tax credits and grants, which are described below, supported wind and solar energy production by lowering the costs associated with production and providing an incentive to those firms engaged in the construction and operation of wind and solar energy projects. • Production tax credit. This credit provided a 10-year, inflation-adjusted income tax credit based on the amount of renewable energy produced at wind and other qualified facilities. The amount of the credit varied depending upon the source. The value of the credit was 2.2 cents per kilowatthour in 2012 for certain resources (e.g., wind, geothermal, and certain biomass electricity production) and was raised to 2.3 cents per kilowatthour in 2013. This credit resulted in about $9.6 billion in revenue losses from fiscal year 2000 through 2013. Specifically, as shown in figure 26, revenue losses associated with this tax credit increased from $40 million in fiscal year 2000 to $1.5 billion or more annually from fiscal year 2010 through 2013. This credit, which has periodically expired and then been extended, is available to facilities for which construction began before January 1, 2014. As we reported in March 2013, new additions of wind energy capacity fell dramatically in years following the credit’s expiration.

Investment tax credit. This credit, which has not expired, provides an income tax credit for business investments in solar systems and small wind turbines, among other things. Investments in solar and small wind turbine systems qualify for a 30 percent tax credit. In addition, temporary provisions enacted under the American Recovery and Reinvestment Act of 2009 (Recovery Act) allow taxpayers to claim this credit for property that otherwise would have qualified for the production tax credit. This credit resulted in over $4 billion in revenue losses from fiscal year 2000 through 2013. As shown in figure 26, no revenue loss estimates were reported for this tax credit from fiscal year 2000 through 2005; revenue losses then generally increased from $80 million in fiscal year 2006 to almost $2 billion in fiscal year 2013.

Section 1603 program. Section 1603 of the Recovery Act, as amended, allows taxpayers eligible for the production or investment tax credit to receive a payment from the Treasury in lieu of a tax credit. This Treasury program provided almost $20 billion in outlays from fiscal year 2009 through 2013, as shown in figure 26, of which about $13 billion were related to wind energy projects, and about $4 billion were associated with solar energy projects. This program, which is still available in some cases, applies to projects placed in service during 2009, 2010, or 2011, or afterward if construction began on the property during the specific years and the property is placed in service by a credit termination date (e.g., January 1, 2017 for certain energy property).

investment tax credit also provides a tax credit for geothermal systems, fuel cells, microturbines, and combined heat and power.

Figure 26: Revenue Losses and Outlays Associated with the Production Tax Credit, Investment Tax Credit, and Section 1603 Program, Fiscal Year 2000 – 2013

In addition to these tax credits, the studies and reports we reviewed indicated that the federal government provided incentives for the production and consumption of wind and solar energy in other important ways, including through the following activities:

  • Requirements for purchasing electricity. Under EPAct, federal agencies’ consumption of electricity from renewable sources has generally been required— to the extent economically feasible and technologically practicable—to meet or exceed 5 percent of total consumption in fiscal years 2010 through 2012, and 7.5 percent in fiscal year 2013 and thereafter.23 According to DOE’s most recent

data, federal agencies spent about $57 million in electricity purchases from renewable sources in fiscal year 2012.

EPAct also required installation of 20,000 solar energy systems in federal buildings by 2010.

  • Loan guarantees. DOE’s Title 17 Innovative Technology Loan Guarantee Program included a temporary program for the rapid deployment of renewable energy projects, among other things. As shown in table 4, DOE guaranteed 23 loans totaling more than $14 billion for wind and solar energy projects. Most of these loans (15 of 23) and most of the amount guaranteed went to projects to produce and sell electricity generated from solar energy. There have been two defaults on guaranteed loans, both for projects involving the manufacture of solar energy equipment. However, most of the long-term total estimated cost to the government is associated with solar generation projects.24 The authority to enter into loan guarantees under DOE’s temporary program expired on September 30, 2011.

Table 4: DOE’s Title 17 Innovative Technology Loan Guarantee Program Targeting Solar and Wind Energy, Fiscal Year 2000 – 2013 Dollars in billions Number of loan Amount of loan Number Estimated cost Type guarantees and loansa guarantees and loansb of defaults to the governmentc Solar generation 15 $11.62 0 $1.03 Solar manufacturing 4 $1.23 2 $0.62 Wind generation 4 $1.70 0 $0.04 Total 23 $14.55 2 $1.69 Sources: GAO analysis of DOE and

Office of Management and Budget data. | GAO-14-836 aThe number of guarantees and loans refers to all guarantees and loans that were issued, including three that were withdrawn or deobligated before any funds were drawn on the loans. bThe loan guarantee and loan amounts are the amounts at closing that appear in DOE’s accounting system. They include the full amount of the loans partially guaranteed through the Financial Institution Partnership Program and do not include capitalized interest. cThese costs are current estimates of the credit subsidy costs of disbursed amounts as reported in the President’s fiscal year 2015 budget. Credit subsidy costs represent the government’s estimated net long-term cost of extending or guaranteeing credit, in present value terms, over the entire period the loans are outstanding (not including administrative costs).

As a result of required federal purchases of electricity from renewable sources, the federal government provided incentives to produce wind and solar energy. In addition, through the loan guarantee program described above, the federal government assumed risks of defaults on loans to firms engaged in developing wind and solar energy projects. These federal actions had the potential to lower the costs for some of these projects. Such lower costs could have led to certain projects being financed that otherwise may not have been developed.

Outlays, and Loan Guarantees Related to Renewable Energy

Table 5 provides descriptions of the three federal tax expenditures we identified in appendix V as targeting or related to ethanol, wind energy, and solar energy, as well as four additional federal tax expenditures we identified as more broadly targeting or related to renewable energy. The table also provides information from the Department of the Treasury (Treasury) on tax expenditures that will or have expired, in full or in part, due to an expiration of legislative authority or some other expiration under the law as of the fall of 2014, as well as on tax expenditures that currently have no expiration. In addition, the table provides information on revenue loss estimates from Treasury (unless otherwise specified).

Alcohol fuel credits (including related excise tax credit) Description The tax code provides three income tax credits for alcoholbased motor fuels: the alcohol mixture credit (or blender’s credit), the pure alcohol fuel credit, and the small ethanol producer credit. The alcohol mixture credit is 45¢ per gallon of ethanol of at least 190 proof and is available to the blender (e.g., the refiner, wholesale distributor, or marketer). The alcohol mixture credit is typically claimed as an instant excise tax credit (referred to as the volumetric ethanol excise tax credit). The pure alcohol fuel credit is 45¢ per gallon of ethanol of at least 190 proof and can only be claimed by the consumer or retail seller. For small ethanol producers, the law also provides for a production tax credit in the amount of 10¢ per gallon of ethanol produced and sold for use as a transportation fuel. This credit is limited to the first 15 million gallons of annual alcohol production for each small producer, defined as one with an annual production capacity of fewer than 60 million gallons. This is in addition to any blender’s tax credit claimed on the same fuel. In addition, the tax code provides an income tax credit for cellulosic biofuels. The amount of the credit is $1.01 per gallon. In the case of cellulosic biofuel that is alcohol, the credit amount is reduced.

Most of these provisions expired as of December 31, 2011; the tax credit for cellulosic biofuels expired as of December 31, 2013.

Estimated revenue losses $39.28 billion Renewable Energy Name Production tax credit (also called energy production credit)a Biodiesel and small agri-biodiesel producer tax credits (including related excise tax credit) Investment tax credit (also called energy investment credit)b Description Taxpayers producing energy from a qualified renewable energy source may qualify for a tax credit on a per-kilowatthour basis. Qualified energy sources include wind, solar energy, geothermal energy, closed-loop and open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy sources. The credit amount in 2012 was 2.2 cents per kilowatt-hour for wind, solar, closed-loop biomass, and geothermal energy sources and 1.1 cents per kilowatt-hour for other energy sources. The credit amount is based on the 1993 value of 1.5 cents per kilowatt-hour, which is adjusted annually for inflation. This credit is generally available for 10 years, beginning on the date when the facility is placed in service. For facilities placed in service during 2009, 2010, and 2011, taxpayers could claim an investment tax credit or Section 1603 cash payment in lieu of receiving the production tax credit.

The tax code provides three income tax credits for biodiesel: the biodiesel fuel mixtures credit (i.e., blends of biodiesel and petroleum diesel); the unblended (pure) biodiesel credit, which is either used or sold at retail by the taxpayer; and the small biodiesel producer credit. These tax credits are $1.00 per gallon of biodiesel, including agri-biodiesel (i.e., biodiesel made from virgin oils) and renewable biodiesel. The mixtures tax credit may be claimed as an instant excise tax credit against the 24.4 cents per gallon tax on diesel blends. In addition, the tax code provides an income tax credit of 10 cents per gallon for the first 15 million gallons of agri-biodiesel produced by small agri-biodiesel producers each year. Small agri- biodiesel producers are defined as those with a production capacity less than 60 million gallons per year. This credit can be taken in addition to the $1.00 per gallon income or excise tax credit on the sale of the agri-biodiesel produced by small producers.

The tax code provides an income tax credit for business investments in solar, fuel cells, small wind turbines, geothermal systems, microturbines, and combined heat and power. Solar, fuel cell, and small wind turbine investments qualify for a 30 percent credit. (The credit for fuel cells is limited to $1,500 per 0.5 kilowatt of capacity.) The tax credit for investments in geothermal systems, microturbines, and combined heat and power is 10 percent. (The credit for microturbines is limited to $200 per kilowatt of capacity.) Provisions enacted as part of the American Recovery and Reinvestment Act of 2009 (Recovery Act) allow (1) taxpayers to elect to claim this credit for property that otherwise would have qualified for the production tax credit and (2) taxpayers eligible for this credit to receive a Section 1603 payment from the Treasury in lieu of tax credits.

Expiration information Construction must have begun before January 1, 2014.

Estimated revenue losses $9.59 billion These provisions expired as of December 31, 2013. $5.84 billion In general, this provision will expire on December 31, 2016; however, the credit for solar investments will decrease to 10 percent, and the credit for geothermal investments will remain at 10 percent. $4.30 billion Renewable Energy Name Accelerated depreciation recovery periods for specific energy property: renewable energyc

Advanced energy property credite Description A taxpayer is allowed to recover, through annual depreciation deductions, the cost of certain property used in a trade or business or for the production of income. The tax code provides a 5-year recovery period for certain renewable energy equipment, including solar, wind, geothermal, fuel cell, combined heat and power, and microturbine property. Renewable energy generation property that is part of a “small electric power facility” and certain biomass property are also recovered over 5 years. However, the Economic Stimulus Act of 2008 included a 50 percent first-year bonus depreciation provision for a wide range of eligible properties including renewable energy systems. This provision was extended by the Recovery Act, and by the Creating Small Business Jobs Act of 2010. Bonus depreciation was further extended through 2012 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, with a 100 percent deduction allowed for property acquired after September 8, 2010, and before January 1, 2012. The American Taxpayer Relief Act of 2012 extended 50 percent expensing for qualifying property purchased and placed in service before January 1, 2014. The 50 percent bonus depreciation narrowed any tax differences between eligible assets based on cost recovery provisions, and the 100 percent bonus depreciation eliminated those differences altogether under the provision for allowing a full write-off of asset acquisition costs.

The Recovery Act established a 30 percent tax credit for qualified investments in advanced energy property. Advanced energy projects that may qualify for the tax credit include those that reequip, expand, or establish eligible manufacturing facilities. Facilities that produce the following types of property may qualify: (1) property designed to produce energy using a renewable resource (i.e., solar, wind, geothermal), (2) fuel cells, microturbines, or energy storage systems for use with electric or hybrid-electric vehicles, (3) advanced transmission technologies that support renewable generation (including storage), (4) carbon capture and sequestration property, (5) property designed to refine or blend renewable fuels, (6) energy conservation technologies (i.e., energy-saving lighting or smart grid technologies), (7) plug-in electric vehicles and components, and (8) other advanced energy property designed to reduce greenhouse gas emissions. A total of $2.3 billion was allocated for advanced energy property investment tax credits. The tax credits were competitively awarded by the Department of Energy (DOE) and Treasury. Taxpayers receiving this credit cannot also claim the investment tax credit.

Expiration information Property had to be placed in service by January 1, 2014 (or January 1, 2015 for certain other assets) to quality for bonus depreciation. The 5-year recovery period for certain solar equipment will expire on December 31, 2016.

Estimated revenue losses $1.70 billiond No expiration under current law (other than the credit allocation limit). $1.40 billion

Renewable Energy Name Credit for holding clean renewable energy bonds

New clean renewable energy bonds help tax-exempt entities finance capital expenditures for new facilities that produce electricity from renewable sources. Bond holders receive tax credits at 70 percent of the tax credit interest rate, in lieu of interest payments. These bonds may be issued by a public power provider, a cooperative electric company, a governmental body, a clean renewable energy bond lender or a not-for-profit electric utility that has received a loan or loan guarantee under the Rural Electrification Act. Treasury publicly solicited applications for an initial volume cap, set by Congress at $800 million, and awarded allocations based on criteria and applications received. An additional $1.6 billion in new clean renewable energy bond authorization was provided under the Recovery Act. In March 2010, provisions included in the Hiring Incentives to Restore Employment Act allowed issuers of clean renewable energy bonds (and other qualified tax-credit bonds) to receive a direct payment from the Treasury instead of providing tax credits to bondholders.

Table 6 provides a description of the federal program we identified in appendix V as targeting or related to wind and solar energy, as well as two additional federal programs we identified as more broadly targeting or related to renewable energy. The table also provides information reported by the Office of Management and Budget (OMB) on outlays.

Section 1603 of the Recovery Act, as amended, established a program to provide payments to eligible applicants who place specified energy property (related to renewable energy, among other things) in service for use in a trade or business. Applicants could take the payment in lieu of either a production or investment tax credit. These payments provide an incentive for investment in property for electricity production, particularly those applicants without sufficient tax liability to utilize a nonrefundable tax credit. The program provided payments for eligible energy projects placed in service during 2009, 2010, or 2011, or after 2011 if construction began on the property during 2009, 2010, or 2011 and the property is placed in service by a certain date known as the credit termination date (e.g., Jan. 1, 2017 for certain energy property). The Bioenergy for Advanced Biofuels program, authorized under the Food, Conservation, and Energy Act of  2008, provides payments to eligible producers to support and ensure an expanding production of advanced biofuels, which are defined as fuel derived from renewable biomass other than corn kernel starch. The amount of each payment depends on the number of producers participating in the program, the amount of advanced biofuels being produced, and the amount of funds available. The Repowering Assistance program, authorized under the Food, Conservation, and Energy Act of 2008, provides payments to biorefineries to replace fossil fuels with renewable biomass as a means to produce heat and power. To be eligible, the biorefineries must be located in a rural area and must have been in existence as of June 18, 2008. Payments are available for periods of up to 3 years. Issuers of clean renewable energy bonds can choose to receive a direct payment from the federal government in lieu of the tax credit for bondholders.




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Interdependencies of Energy Infrastructure, Water, and Climate Change GAO 2014

[ This report shows the interdependencies of Climate Change and the nation’s energy infrastructure, which is especially vulnerable because it’s so old and falling apart already. Another GAO report discusses the energy-water nexus.  Interdependent systems are more vulnerable – climate change, water, or energy resource issues can affect other systems and damage them as well. While cheap and plentiful oil remains, these problems are fixed, temporarily hiding the true depth of decay our systems are I, with climate change increasing the speed and magnitude of failing infrastructure further.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts:  KunstlerCast 253, KunstlerCast278, Peak Prosperity]

USGAO. January 2014. CLIMATE CHANGE Energy Infrastructure Risks and Adaptation Efforts GAO-14-74. United States Government Accountability Office.

Excerpts from this 74 page document follow:

According to the Intergovernmental Panel on Climate Change, about 50% of carbon dioxide emitted by human activity will be removed from the atmosphere within 30 years, and a further 30% will be removed within a few centuries. The remaining 20% may stay in the atmosphere for many thousands of years. USGCRP estimates that another 0.5 degree Fahrenheit increase would occur even if all emissions from human activities were suddenly stopped.

According to assessments by the National Research Council (NRC) and the U.S. Global Change Research Program (USGCRP), U.S. energy infrastructure is increasingly vulnerable to a range of climate change impacts—particularly infrastructure in areas prone to severe weather and water shortages. Climate changes are projected to affect infrastructure throughout all major stages of the energy supply chain, thereby increasing the risk of disruptions. For example:

  • Resource extraction and processing infrastructure, including oil and natural gas platforms, refineries, and processing plants, is often located near the coast, making it vulnerable to severe weather and sea level rise.
  • Fuel transportation and storage infrastructure, including pipelines, barges, railways and storage tanks, is susceptible to damage from severe weather, melting permafrost, and increased precipitation.
  • Electricity generation infrastructure, such as power plants, is vulnerable to severe weather or water shortages, which can interrupt operations.
  • Electricity transmission and distribution infrastructure, including power lines and substations, is susceptible to severe weather and may be stressed by rising demand for electricity as temperatures rise.

According to DOE, the energy supply chain has grown increasingly complex and interdependent. In total, the U.S. energy supply chain includes approximately 2.6 million miles of interstate and intrastate pipelines, 6,600 operational power plants, about 144 operable refineries, and about 160,000 miles of transmission lines. Collectively, this infrastructure enables the United States to meet industrial, commercial, and residential demands, as well as to support transportation and communication networks.

Most energy infrastructure was engineered and built for our past or current climate and may not be resilient to continued and expected increases in the magnitude and frequency of extreme weather events and overall continued weather and climate change in the long-term. Further, this infrastructure is aging, according to DOE. For example, most of the U.S. electricity transmission system was designed to last 40 to 50 years; yet, in some parts of the country, it is now 100 years old.

The nation’s oil and gas infrastructure is also aging and about half of the nation’s oil and gas pipelines were built in the 1950s and 1960s. Changes in climate have the potential to further strain these already aging components by forcing them to operate outside of the ranges for which they were designed. DOE reported that aging infrastructure is more susceptible than newer assets to the hurricane-related hazards of storm surge, flooding, and extreme winds, and retrofitting this existing infrastructure with more climate-resilient technologies remains a challenge.

Climate change is a complex, crosscutting issue that could pose significant risks to the nation’s energy infrastructure. According to assessments by the National Research Council (NRC) and the United States Global Change Research Program (USGCRP), the effects of climate change are already under way and are projected to continue. Global atmospheric emissions of greenhouse gases have increased markedly over the last 200 years which has contributed to a warming of the earth’s climate as well as increasing the acidity of oceans. Changes observed in the United States include more intense weather and storm events, heat waves, floods, and droughts; rising sea levels; and changing patterns of rainfall. These trends, which are expected to continue, can adversely affect energy infrastructure such as natural gas and oil production platforms, pipelines, power plants, and electricity distribution lines, according to NRC and USGCRP, thus making it more difficult to ensure a reliable energy supply to the nation’s homes and businesses.

Energy infrastructure can be affected by both acute weather events and long-term changes in the climate, according to NRC and the Department of Energy (DOE). In particular, energy infrastructure located along the coast is at risk from increasingly intense storms, which can substantially disrupt oil and gas production and cause temporary fuel or electricity shortages. In 2012, for example, storm surge and high winds from Hurricane Sandy—an acute weather event-–downed power lines, flooded electrical substations, and damaged or temporarily shut down several power plants and ports, according to DOE, leaving over 8 million customers without power.

Long-term changes in the climate could also impact energy infrastructure, according to USGCRP and DOE. For example, warming air temperatures may reduce the efficiency of power plants while increasing the overall demand for electricity, potentially creating supply challenges. In addition, while many climate change impacts are projected to be regional in nature, the interconnectedness of the nation’s energy system means that regional vulnerabilities may have wide-ranging implications for energy production and use, ultimately affecting transportation, industrial, agricultural, and other critical sectors of the economy that require reliable energy.

As observed by USGCRP, the impacts and financial costs of weather disasters—resulting from floods, drought, and other weather events—are expected to increase in significance as what are historically considered to be “rare” events become more common and intense due to climate change (Karl 2009). According to National Oceanic and Atmospheric Administration’s (NOAA) National Climate Data Center (NCDC), the United States experienced 11 extreme weather and climate events in 2012, each causing more than $1 billion in losses. Two of the most significant weather events during 2012 were Hurricane Sandy, estimated at $65 billion, and an extended drought that covered over half of the contiguous United States estimated at $30 billion. While it is difficult to attribute any individual weather event to climate change, these events provide insight into the potential climate-related vulnerabilities the United States faces. In this regard, both private sector firms and federal agencies have documented an increase in weather-related losses. A 2013 study by the reinsurance provider Munich Re, for example, indicated that, in 2012, insured losses in the United States totaled $58 billion—far above the 2000 to 2011 average loss of $27 billion. The energy sector often bears a significant portion of these costs, according to USGCRP; for example, direct costs to the energy industry following Hurricanes Katrina and Rita in 2005 were estimated at around $15 billion.

Because emitted greenhouse gases remain in the atmosphere for extended periods of time, some changes to the climate are expected to occur as a result of emissions to date, regardless of future efforts to control emissions. When identifying agencies with key responsibilities related to energy infrastructure we focused on agencies with a direct role in overseeing and developing activities within the energy sector.

Climate Change Can Impact Resource Extraction and Processing Infrastructure

According to USGCRP, NRC, and others, climate change poses risks to energy infrastructure at all four key stages in the supply chain. In addition, broad, systemic factors such as water scarcity and energy system interdependencies could amplify these impacts.

Impacts from climate change can affect infrastructure throughout the four major stages of the energy supply chain: (1) resource extraction and processing infrastructure, (2) fuel transportation and storage infrastructure, (3) electricity generation infrastructure, and (4) electricity transmission and distribution infrastructure.

Much of the infrastructure used to extract, refine, and process, and prospect for fuels —including natural gas and oil platforms, oil refineries, and natural gas processing plants—is located offshore or near the coast, making it particularly vulnerable to sea level rise, extreme weather, and other impacts, according to USGCRP and DOE assessments.

The Gulf Coast, for example, is home to nearly 4,000 oil and gas platforms, many of which are at risk of damage or disruption due to high winds and storm surges at increasingly high sea levels. Low-lying coastal areas are also home to many oil refineries, coal import/export facilities, and natural gas processing facilities that are similarly vulnerable to inundation, shoreline erosion, and storm surges. Given that the Gulf Coast is home to approximately half of the nation’s crude oil and natural gas production—as well as nearly half of its refining capacity—regional severe weather events can have significant implications for energy supplies nationwide.

In 2005 high winds and flooding from Hurricanes Katrina and Rita caused extensive damage to the region’s natural gas and oil infrastructure, destroying more than 100 platforms, damaging 558 pipelines, and shutting down numerous refineries, effectively halting nearly all oil and gas production for several weeks.

Figure 2: Active Oil and Gas Platforms in the Central and Western Gulf of Mexico. Nearly 4,000 active oil and gas platforms are located in the central and western Gulf of Mexico. Source: U.S. Department of Energy, Comparing the Impacts of Northeast Hurricanes on Energy Infrastructure (April 2013).

Figure 2: Active Oil and Gas Platforms in the Central and Western Gulf of Mexico. Nearly 4,000 active oil and gas platforms are located in the central and western Gulf of Mexico. Source: U.S. Department of Energy, Comparing the Impacts of Northeast Hurricanes on Energy Infrastructure (April 2013).


Storm-related impacts on natural gas and oil production infrastructure can also have significant economic implications. Losses related to infrastructure damage can be extensive, particularly given the high value and long life span of natural gas and oil platforms, refineries, and processing plants. For example, a report by Entergy Corporation, an integrated energy company serving a number of southern states, estimated its infrastructure restoration costs at around $1.5 billion following Hurricanes Katrina and Rita. A 2009 DOE assessment reported that some damages resulting from the 2005 hurricanes were too costly to repair; as a result, a number of platforms were sunk, and significant crude oil production capacity was lost. In addition to causing physical damage, increasingly intense severe weather events can disrupt operations and decrease fuel supplies, resulting in broader economic losses for businesses and industries that depend on these resources. According to USGCRP assessments, damage to key infrastructure—especially to refineries, natural gas processing plants, and petroleum terminals—can cause fuel prices to spike across the country, as evidenced by Hurricanes Katrina and Sandy. Flood damage is the most common and costliest type of storm damage to oil production infrastructure, resulting in the longest disruptions, according to DOE’s 2010 report.

Warming temperatures and water availability may also present challenges for the nation’s extraction and processing infrastructure. For example, according to USGCRP, climate change impacts have already been observed in Alaska, where thawing permafrost has substantially shortened the season during which oil and gas exploration and extraction equipment can be operated on the tundra.

Oil refineries around the nation are also potentially at risk, according to USGCRP; they require both significant quantities of water and access to electricity, making them vulnerable to drought and power outages.

Climate Change Can Impact Fuel Transportation and Storage Infrastructure

USGCRP assessments identified several ways in which climate change can affect fuel transportation infrastructure, including pipeline systems that carry natural gas and oil; trucks, railways, and barges that transport coal, oil and petroleum products; as well as storage facilities, such as aboveground tanks, underground salt caverns, and aquifers.

Natural gas and oil pipelines, which generally require electricity to operate, are particularly vulnerable to extreme weather events, according to DOE. The U.S. pipeline system is a complex network comprising over 2.6 million miles of natural gas and oil pipelines, some of which have already been affected by past weather events. For example, electric power outages from Hurricane Katrina caused three critical pipelines— which cumulatively transport 125 million gallons of fuel each day—to shut down for two full days and operate at reduced power for about two weeks, leading to fuel shortages and temporary price spikes. In addition to the power outage, the Department of the Interior’s Minerals Management Service reported that approximately 457 pipelines were damaged during the hurricanes, interrupting production for months. More recently, in July 2011, ExxonMobil’s Silvertip pipeline in Montana, buried beneath the Yellowstone riverbed, was torn apart by flood-caused debris, spilling oil into the river and disrupting crude oil transport in the region, with damages estimated at $135 million, according to the Department of Transportation. Storm surge flooding can also affect above ground fuel storage tanks, according to DOE; for example, tanks not fully filled can drift off of their platforms or become corroded by trapped salt water.

By way of protection, the Alaska Department of Natural Resources limits the amount of travel on the tundra. Over the past 30 years, the number of days where travel is permitted has dropped from more than 200 to 100, thereby reducing by at least half the number of days that natural gas and oil exploration and extraction equipment can be used.

Crude oil and petroleum products are transported by rail, barge systems, pipelines, and tanker trucks. Coal is transported by rail, barge, truck, and pipeline. Corn-based ethanol, blended with gasoline, is largely shipped by rail, while bioenergy feedstock transport relies on barge, rail, and truck freight.

In addition to pipelines, rail, barge, and tanker trucks also play critical roles in transporting fuel across the country. According to USGCRP and DOE assessments, fuel transport by rail and barge can be affected when water levels in rivers and ports drop too low, such as during a drought, or too high, such as during a storm surge. During the 2012 drought, the U.S. Army Corps of Engineers reported groundings of traffic along the Mississippi River due to low water depths, preventing barge shipments of coal and petroleum products. Lower water levels can also affect the amount of fuel the barges are capable of hauling; according to DOE’s 2013 assessment, a one-inch drop in river level can reduce a barge’s towing capacity by 255 tons.

Disruptions in barge transportation due to extreme weather can also present challenges for areas such as Florida, which are nearly entirely dependent on barges for fuel delivery.

Intense storms and flooding can also wash out rail lines—which in many regions follow riverbeds—and impede the delivery of coal to power plants. According to DOE, flooding of rail lines has already been a problem both in the Appalachian region and along the Mississippi River. The rerouting that occurs as a result of such flooding can cost millions of dollars and can delay coal deliveries.

Colder climates present a different set of risks for fuel transportation infrastructure, according to DOE and USGCRP assessments. For example, in Alaska—where average temperatures have risen about twice as much as the rest of the nation—thawing permafrost is already causing pipeline, rail, and pavement displacements, requiring reconstruction of key facilities and raising maintenance costs.31 Melting sea ice caused by warmer temperatures can result in more icebergs and ice movement, which in turn can damage barges transporting natural gas and oil.

Fossil fuel and nuclear power plants . According to USGCRP, climate change is expected to have potentially significant consequences for fossil fuel and nuclear power plants. Fossil fuel plants—which burn coal, natural gas, or oil—are susceptible to much of the same impacts as nuclear power plants, according to USGCRP and DOE, including diminishing water supplies, warming temperatures, and severe weather, among others.

As permafrost thaws, the tundra loses its weight-bearing capabilities, according to DOE. Risks to onshore fossil fuel development could include the loss of access roads built on permafrost, loss of opportunities to establish new roads, problems with pipelines buried in permafrost, and reduced load-bearing capacity of buildings and structures.

According to USGCRP, episodic and long-lasting water shortages and elevated water temperatures may constrain electricity generation in many regions of the United States. As currently designed, most fossil fuel and nuclear plants require significant amounts of water to generate, cool, and condense steam. Energy production, together with thermoelectric power, accounted for approximately 11% of U.S. water consumption in 2005, according to one study33, second only to irrigation. Issues related to water already pose a range of challenges for existing power plants, as illustrated by the following examples cited by DOE:

  • Insufficient amounts of water. In 2007, a drought affecting the southeastern United States caused water levels in some rivers, lakes and reservoirs to drop below the level of intake valves that supply cooling water to power plants, causing some plants to stop or reduce power production.
  • Outgoing water too warm. In 2007, 2010, and 2011, the Tennessee Valley Authority had to reduce power output from its Browns Ferry Nuclear Plant in Alabama because the temperature of the river was too high to receive discharge water without raising ecological risks; the cost of replacing lost power was estimated at $50 million.
  • Incoming water too warm. In August 2012, Dominion Resources’ Millstone Nuclear Power Station in Connecticut shut down one reactor because the intake cooling water, withdrawn from the Long Island Sound, exceeded temperature specifications. The resulting loss of power production was estimated at several million dollars.

Water use by thermoelectric power plants can be generally characterized as consumption, withdrawal, and discharge. Water consumption refers to the portion of the water withdrawn that is no longer available to be returned to a water source, such as when it has evaporated. Water withdrawals refer to water removed from the ground or diverted from a surface water source—for example, an ocean, river, or lake—for use by the plant. For many thermoelectric power plants, much of the water they withdraw is later discharged, although often at higher temperatures. According to the U.S. Geological Survey (USGS), in terms of water withdrawal, thermoelectric power was the largest source of water withdrawals (49 percent) in 2005, followed by irrigation at 31%. The amount of water discharged from a thermoelectric power plant depends on a number of factors, including the type of cooling technology used, plant economics, and environmental regulations. Some “once-through” systems can harm aquatic life—such as fish, crustaceans, and marine mammals—by pulling them into cooling systems or trapping them against water intake screens. The habitats of aquatic life can also be adversely affected by warm water discharges.

USGCRP and NRC assessments project that water issues will continue to constrain electricity production at existing facilities as temperatures increase and precipitation patterns change. Many of these risks are regional in nature; research by the Electric Power Research Institute (EPRI), for example, indicates that approximately 25 percent of existing electric generation in the United States is located in counties projected to be at high or moderate water supply sustainability risk in 2030.

Water availability concerns are already affecting the development of new power plants, according to USGCRP’s 2009 assessment, as plans to develop new plants are delayed or halted at increasing rates. Moreover, as demands for energy and water increase, competition between the energy, industrial, and agricultural sectors, among others, sectors could place additional strain on the nation’s power plants, potentially affecting the reliability of future electric power generation.

USGCRP and DOE assessments also indicate that higher air and water temperatures may diminish the efficiency by which power plants convert fuel to electricity. A power plant’s operating efficiency is affected by the performance of the cooling system, among other things. According to USGCRP, warming temperatures may decrease the efficiency of power plant cooling technologies, thereby reducing overall electricity generation.

Even small changes in efficiency could have significant implications for electricity supply at a national scale. For example, an average reduction of 1 percent in electricity generated by fossil fuel plants nationwide would mean a loss of 25 billion kilowatt-hours per year, about the amount of electricity consumed by approximately 2 to 3 million Americans.

When projected increases in air and water temperatures associated with climate change are combined with changes to water availability, generation capacity during the summer months may be significantly reduced, according to DOE. Warmer water discharged from power plants into lakes or rivers can also harm fish and plants.

To prevent hot water from doing harm to fish and other wildlife, power plants typically are not allowed to discharge cooling water above a certain temperature. When power plants reach those limits, they can be forced to reduce power production or shut down.

In addition to the effects of rising temperatures and reduced water availability, power plant operations are also susceptible to extreme weather, increased precipitation, and sea level rise, according to assessments by USGCRP and DOE. To a large extent, this vulnerability stems from their location—thermoelectric power plants are frequently located along the U.S. coastline, and many inland plants sit upon low-lying areas or flood plains. For coastal plants, more intense hurricane-force winds can produce damaging storm surges and flooding—an impact illustrated by Hurricane Sandy, which shut down several power plants. Some power plants near the coast could also be affected by sea level rise, according to DOE, because they are located on land that is relatively flat and, in some places, subsiding. Increasing intensity and frequency of flooding also poses a risk to inland power plants, according to DOE. The structures that draw cooling water from rivers are vulnerable to flooding and, in some cases, storm surge. This risk was illustrated when Fort Calhoun nuclear power plant was initially shut down for a scheduled refueling outage in April 2011. According to Nuclear Regulatory Commission officials, the outage was subsequently extended due to flooding from the Missouri River and a need to address long-standing technical issues that continued to impair plant operations. According to USGCRP, seasonal flooding could result in increased costs to manage on-site drainage and runoff.

Hydropower—a major source of electricity in some regions of the United States, particularly the Northwest—is highly sensitive to a number of climactic changes. According to USGCRP and DOE, rising temperatures can reduce the amount of water available for hydropower—due to increased evaporation—and degrade habitats for fish and other wildlife. Hydropower production is also highly sensitive to changes in precipitation and river discharge, according to USGCRP and DOE assessments. According to USGCRP’s 2009 assessment, for example, studies suggest that every 1 percent decrease in precipitation results in a 2 to 3 percent drop in streamflow; in the Colorado Basin, such a drop decreases hydropower generation by 3 percent. Climate variability has already had a significant influence on the operation of hydropower systems, according to USGCRP, with significant changes detected in the timing and amount of stream flows in many western rivers.

Biofuels. According to USGCRP assessments, biofuels made from grains, sugar and oil crops, starch, grasses, trees, and biological waste are meeting an increasing portion of U.S. energy demand. Currently, however, most U.S. biofuels are produced from corn grown on rain-fed land, making biofuel susceptible to drought and reduced precipitation, as well as competing demands for water. These issues were highlighted when droughts in 2012 produced a poor corn harvest, raising concerns about the allocation of corn for food versus ethanol. Production of biofuel crops may also be inhibited by heavy rainfall and flooding, according to DOE. Climate change could also present some benefits; for example, warmer temperatures could extend the period of the growing season (although DOE also notes that extreme heat could damage crops).

Solar. The effects of climate change on solar energy—which generated about 0.05 percent of U.S. electricity in 2010—depend on the type of solar technology in use, according to DOE and USGCRP. Some studies suggest that photovoltaic energy production could be affected by changes in haze, humidity, and dust. Higher temperatures can also reduce the effectiveness of photovoltaic electricity generation. On the other hand, concentrating solar power (CSP) systems— unlike photovoltaic cells—require extensive amounts of water for cooling purposes, making them susceptible to water shortages.

Wind. Wind energy accounted for about 13 percent of U.S. renewable energy consumption in 2011. Unlike thermoelectric generation, wind energy does not use or consume water to generate electricity, making it a potentially attractive option in light of water scarcity concerns. On the other hand, wind energy cannot be naturally stored, and the natural variability of wind speeds can have a significant positive or negative impact on the amount of energy produced. Wind turbines are also subject to extreme weather, according to USGCRP.

Geothermal power plants extract geothermal fluids—hot water, brines, and steam—from the earth by drilling wells to depths of up to 10,000 feet. According to EIA, geothermal energy represented approximately 2 percent of U.S. energy consumption in 2011, with most geothermal reservoirs located in western states, Alaska, and Hawaii. As with fossil fuel power plants and concentrating solar power, increases in air and water temperatures can reduce the efficiency with which geothermal facilities generate electricity, according to DOE’s 2013 assessment. Geothermal power plants can also withdraw and consume significant quantities of water, according to DOE, making them susceptible to water shortages caused by changes in precipitation or warming temperatures.

According to DOE, CSP power plants using recirculating cooling water typically consume more water than a fossil fuel or nuclear power plants.

Climate Change Can Impact Electricity Transmission and Distribution Infrastructure

Transmission and distribution infrastructure can extend for thousands of miles, making it vulnerable to a variety of climate change impacts. According to assessments by USGCRP and others, transmission and distribution lines and substations are susceptible to damage from extreme winds, ice, lightning strikes, wildfires, landslides, and flooding. High winds, especially when combined with precipitation from tropical storms and hurricanes, can be particularly damaging, potentially interrupting service in broad geographic areas over long periods of time.  [My comment: 12 to 31 days of electricity outage could allow nuclear stored fuel pools to catch on fire and release enough radioactive material that up to 18 million people would need to evacuate (Stone 2016) ]

In the winter months, heavy snowfall and excessive icing on overhead lines can cause outages and require costly repairs, according to a review of literature published in the journal Energy. According to USGCRP, increasing temperatures and drought may increase the risk of wildfires, which in turn may cause physical damage to electricity transmission infrastructure and decrease available transmission capacity. Apart from transmission and distribution lines, severe weather can also present risks for substations, according to DOE, which modify voltage for residential and commercial use, as well as for operation centers that are critical components of any electricity supply system.

Apart from risks related to extreme weather events, increasing temperatures may decrease transmission system efficiency and could reduce available transmission capacity, according to DOE. Approximately 7 percent of generated power is lost in transmission and distribution, according to information publicly available on the EIA’s website. As temperatures rise, the capacity of power lines to carry current decreases, according to DOE, as does the overall efficiency of the grid. Higher temperatures may also cause overhead lines to sag, posing fire and safety hazards. All of these factors can contribute to power outages at times of peak demand, according to USGCRP. In 2006, for example, electric power transformers failed in Missouri and New York, causing interruptions of the electric power supply in the midst of a widespread heat wave.

Broad, Systemic Factors Could Amplify Climate Change Impacts on Energy Infrastructure

Based on our previous work, as well as reports from USGCRP, NRC, and others, we identified several broad, systemic factors that could amplify the effects of climate change on energy infrastructure. These factors—which include changes in water availability, system interdependencies, increases in energy demand, and the compounding effects of multiple climate impacts—could have implications that extend throughout the energy sector and beyond.

Changes in Water Availability May Significantly Impact Energy Supply

As our series of reports on the energy-water nexus has shown, water and energy are inextricably linked and mutually dependent, with each affecting the other’s availability. Many aspects of energy production require the use of water to operate (see fig. 7). As discussed earlier in this review, fossil fuel and nuclear power plants—which accounted for about 90 percent of U.S. energy consumption in 2011—rely heavily on water for cooling purposes. As we reported in 2012, recently developed hydraulic fracturing methods also require significant amounts of water—3 to 5.6 million gallons of freshwater per well, according to our previous work on shale resources and development. Increased evaporation rates or changes in snowpack may affect the volume and timing of water available for hydropower. Water is also required to mine and transport coal and uranium; to extract, produce, and refine oil and gas; and to support crops used in biofuel production, among other uses. According to the Congressional Research Service, the energy sector is the fastest growing water consumer in the United States and is projected to account for 85 percent of the growth in domestic water consumption between 2005 and 2030. This increase in water use associated with energy development is being driven, in part, by rising energy demand, increased development of domestic energy, and shifts to more water- intense energy sources and technologies.

Since 2009, GAO has issued six reports on the interdependencies that exist between energy and water:

  1. GAO, Energy-Water Nexus: Improvements to Federal Water Use Data Would Increase Understanding of Trends in Power Plant Water Use, GAO-10-23 (Washington, D.C.: Oct. 16, 2009)
  2. GAO, Energy-Water Nexus: Many Uncertainties Remain about National and Regional Effects of Increased Biofuel Production on Water Resources, GAO-10-116 (Washington, D.C.: Nov. 30, 2009)
  3. GAO, Energy-Water Nexus: Amount of Energy Needed to Supply, Use, and Treat Water Is Location-Specific and Can Be Reduced by Certain Technologies and Approaches, GAO-11-225 (Washington, D.C.: Mar. 23, 2011)
  4. GAO, Energy- Water Nexus: A Better and Coordinated Understanding of Water Resources Could Help Mitigate the Impacts of Potential Oil Shale Development, GAO-11-35 (Washington, D.C.: Oct. 29, 2010)
  5. GAO, Energy-Water Nexus: Information on the Quantity, Quality, and Management of Water Produced during Oil and Gas Production, GAO-12-156 (Washington, D.C.: Jan. 9, 2012)
  6. GAO, Oil and Gas: Information on Shale Resources, Development, and Environmental and Public Health Risks, GAO-12-732 (Washington, D.C.: Sept. 5, 2012)

Water used in shale oil and gas development is largely considered to be consumptive and can be permanently removed from the hydrologic cycle, according to EPA and Interior officials. However, it is difficult to determine the long- term effect on water resources because the scale and location of future operations remains largely uncertain. Similarly, the total volume that operators will withdraw from surface water and aquifers for drilling and hydraulic fracturing is not known until operators submit applications to the appropriate regulatory agency. As a result, the cumulative amount of water consumed over the lifetime of the activity remains largely unknown.

Water consumption is the portion of the water withdrawn that is no longer available to be returned to a water source, such as when it has evaporated. Energy production (which includes biofuel production), together with thermoelectric power, is the second largest consumer of water in the United States, accounting for approximately 11 percent of water consumption in 2005. Irrigation was the largest consumer, at approximately 74 percent. (Elcock, D., “Future U.S. Water Consumption: The Role of Energy Production, Journal of the American Water Resources Association vol. 46, no. 3 (2010): 447-460.). However, according to the U.S. Geological Survey, in terms of water withdrawal, thermoelectric power was the largest source of water withdrawals (49 percent) in 2005, followed by irrigation at 31 percent. Water withdrawal refers to water removed from the ground or diverted from a surface water source, such as an ocean, river, or lake.

According to USGCRP and NOAA, increasing temperatures and shifting precipitation patterns are causing regional and seasonal changes to the water cycle—trends that present significant risks for the U.S. energy sector. More frequent and intense droughts, reduced summertime precipitation, and decreased streamflows are likely to adversely affect available water supply in some regions, particularly during the summer months.51Given the energy sector’s dependence on water, these changes are likely to have wide-ranging impacts on the costs and methods for extracting, producing, and delivering fuels; the costs and methods used to produce electricity; the location of future infrastructure; and the types of technologies used. In recent years, a number of weather and climate events have served to illustrate some of the risks associated with water scarcity, as reported by DOE:

  • In 2010, below-normal precipitation and streamflows in the Columbia River basin resulted in insufficient hydropower generation to fulfill load obligations for the Bonneville Power Administration, resulting in reported losses of approximately $233 million or 10 percent from the prior year; In 2007, a severe southeast drought reduced river flow in the Chattahoochee River by nearly 80 percent; reducing hydroelectric power in the Southeast by 45 percent; In 2012, drought and low river levels disrupted barge transportation of petroleum and coal along the Mississippi River.

USGCRP and DOE assessments further note that the energy sector’s demand for water will increasingly compete with rising demand from the agricultural, industrial, and other sectors.

The energy sector comprises a complex system of interdependent facilities and components, and damage to one part of the system can adversely affect infrastructure in other phases of the supply chain, according to DOE and USGCRP. Many different types of energy infrastructure—from pipelines to refineries—depend on electricity to function; as such, they may be unable to operate in a power outage, even if otherwise undamaged. Recent events associated with Hurricane Sandy illustrate these interdependencies—over 7,000 transformers and 15,200 poles were damaged, according to DOE, causing widespread power outages across 21 states. These outages affected a range of infrastructure dependent on electricity to function—for example, two New Jersey refineries were shut down, and a number of petroleum terminals and gas station fuel pumps were rendered inoperable. Because many components of the U.S. energy system-–like coal, oil, and electricity-– move from one area to another, extreme weather events affecting energy infrastructure in one region can lead to significant supply consequences elsewhere, according to USGCRP.

According to EPA, water from snowpack declined for most of the western states from 1950 to 2000, with losses at some sites exceeding 75 percent. Annual streamflows are expected to decrease in the summer for most regions, according to USGCRP, and drought conditions—which have become more common and widespread over the past 40 years in the Southwest, southern Great Plains, and Southeast, according to USGCRP— are expected to become more frequent and intense. Groundwater resources are already being depleted in multiple regions, according to USGS, and these impacts are expected to continue. See EPA, Climate Change Indicators in the United States, EPA 430-R-10-007 (Washington, D.C.: 2010) and United States Geological Survey, Groundwater Depletion in the United States (1900–2008), Scientific Investigations Report 2013–5079 (Reston, VA: May 2013).

Interdependencies also link the energy sector to other sectors, such as transportation, agriculture, and communications. The energy sector requires railways, roads, and ports to transport resources such as coal, oil, and natural gas, for example; conversely, many modes of transportation rely on oil, gasoline, or electricity. Given these interdependencies, disruptions of services in one sector can lead to cascading disruptions in other sectors.

Higher Temperatures Are Expected To Increase Energy Demand

Increases in temperature are expected to affect the cost, type, and amount of energy consumed in the United States, according to NRC and USGCRP assessments. Over the past four decades, the demand for cooling has risen and the demand for heating has declined (see fig. 8). As average temperatures rise and extreme weather events—such as heat waves—become more common, these trends are expected to continue, although specific impacts will vary by region and season.52 Net electricity demand is projected to increase in every U.S. region, but particularly in southern states, since homes and businesses depend primarily on electricity for air conditioning.

Increases in peak electricity demand caused by extreme high temperatures could potentially strain the capacity of existing electricity infrastructure in some regions, according to DOE. In the summer heat wave of 2006, for example, some Midwest nuclear plants were forced to reduce output and several transformers failed, causing widespread electricity interruptions and making it difficult to access air conditioning. Climate change-related increases in demand could also be exacerbated by a number of ongoing trends, such as population growth and increased building sizes.

Multiple Climate Impacts May Have Compounding Effects

According to DOE and IPCC, some climate change impacts are likely to interact with others, creating a compounding effect. For example:

  • Higher air and water temperatures may contribute to both an increase in electricity demand and a decrease in electricity supply.
  • The effects of sea level rise may be exacerbated by more severe storms and coastal erosion, causing flooding across a larger area. Storms can also damage natural features, such as wetlands, and manmade structures, such as sea walls, that help protect coastal infrastructure from sea level rise and storm surges.
  • Both warmer temperatures and drought heighten the risk of flooding and wildfires, which—alone or in combination—could ultimately limit the amount of electricity that can be generated and transmitted during times of peak demand.

According to DOE, projected increases in air and water temperatures could significantly reduce electricity generation capacity, particularly in the summer months, by (a) decreasing the efficiency of power plant generation, (b) forcing power plant curtailments due to thermal discharge limits, (c) reducing electricity generated through hydropower and photovoltaic solar sources, and (d) increasing the temperature of local water sources

References (a few of them)

Bhatt, V., J. Eckmann, W. C. Horak, and T. J. Wilbanks, Possible Indirect Effects on Energy Production and Distribution in the United States in Effects of Climate Change on Energy Production and Use in the United States. A Report by the U.S. Climate Change Science Program and the subcommittee on Global Change Research (Washington, D.C..: 2007).

Department of Energy, Infrastructure Security and Energy Restoration, Office of Electricity Delivery and Energy Reliability, Hardening and Resiliency U.S. Energy Industry Response to Recent Hurricane Seasons (August 16, 2010).

Department of Energy, U.S. Energy Sector Vulnerabilities to Climate Change and Extreme Weather, DOE/PI-0013 (July 2013).

Karl, Thomas R. Karl, Jerry M. Melillo, and Thomas C. Peterson, eds., Global Climate Change Impacts in the United States (New York, NY: Cambridge University Press, 2009), otherwise known as the 2009 National Climate Assessment.

NRC, America’s Climate Choices: Panel on Adapting to the Impacts of Climate Change, Adapting to the Impacts of Climate Change (Washington, D.C.: 2010).

Stone, R. May 24, 2016. Spent fuel fire on U.S. soil could dwarf impact of Fukushima. Science Magazine.

USGCRP, Draft Third National Climate Assessment Report, Chapter 4 – Energy Supply and Use (January 2013).

List of Requesters:  The Honorable Ron Wyden Chairman Committee on Energy and Natural Resources United States Senate, The Honorable Al Franken United States Senate, The Honorable Tom Harkin United States Senate, The Honorable Harry Reid United States Senate The Honorable Mark Udall United States Senate






Posted in Climate Change, Energy, Energy Production, GAO Government Accountability Office, Interdependencies | Tagged , , , | Leave a comment

U.S. GAO on mutually dependent water and energy

[ This post contains excerpts from a Government Accountability Office on the interdependency of water and energy.  Mutual dependencies make the essential systems that keep us alive more fragile, since disruption in one can cause shortages or failures in related systems.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”]

USGAO. September 2012. ENERGY-WATER NEXUS. Coordinated Federal Approach Needed to Better Manage Energy and Water Tradeoffs GAO-12-880. United States Government Accountability Office.

Report to the Ranking Member, Committee on Science, Space, and Technology, House of Representatives

Excerpts from this 38 page report (rearranged, sometimes reworded/shortened):

Water and energy are inextricably linked and mutually dependent, with each affecting the other’s availability.  Water is needed for energy development and generation, and energy is required to supply, use, and treat drinking water and wastewater. Water and energy are also essential to our health, quality of life, and economic growth, and consequently the demand for both of these resources continues to rise.

Water is increasingly in demand to meet the needs of the public, farms, and industries, and for recreation and wildlife; and while freshwater flows abundantly in many of our nation’s lakes, rivers, and streams, it is a dwindling resource in many parts of the country.

Similarly, energy is increasingly in demand to support manufacturing and transportation, among other things. As the demand for water increases, the demand for energy is similarly expected to grow. While the growth rate in energy consumption in the United States has slowed over time, overall consumption continues to rise, with estimates from the Department of Energy’s (DOE) Energy Information Administration (EIA) showing an expected growth of 10% between 2010 and 2035. To help meet this increased energy demand, domestic energy production is rising, along with its associated water usage. According to the Congressional Research Service, the energy sector has been the fastest growing water consumer in the United States in recent years and is projected to account for 85% of the growth in domestic water consumption between 2005 and 2030. This increase in water use associated with energy development is being driven, in part, by rising energy demand, increased development of domestic energy, and shifts to more water-intense energy sources and technologies.

Since 2009, GAO has issued five reports on the interdependencies between energy and water.  GAO’s work has demonstrated that energy and water planning are generally “stove-piped, with decisions about one resource made without considering impacts to the other resource.

Water for Oil and Gas

A considerable amount of water is used to extract oil and natural gas, which often produce wastewater— known as “produced water”—that must be managed or treated.

Water for Thermoelectric power plants

Thermoelectric power plants use a fuel source—for example, coal, natural gas, nuclear material such as uranium, or the sun—to boil water to produce steam. The steam turns a turbine connected to a generator to produce electricity.  And even biofuel refineries require cooling.

A considerable amount of water is used to cool thermoelectric power plants.  Some of this is consumed – no longer available because it’s evaporated. Thermoelectric power (and biofuels) are the second largest consumers of water in the U.S. (11%).

Thermoelectric was the largest in terms of water withdrawals – 49% — from oceans, rivers, lakes, and aquifers to cool power plants down, though this water becomes available afterwards.

Energy for thermoelectric power plants

Advanced cooling technologies, such as dry cooling that use air rather than water for cooling, can reduce water use at thermoelectric power plants. But these technologies may incur “energy penalties” since the energy required to power the cooling systems may reduce the plant’s net energy production to a greater extent than traditional cooling systems, potentially leading to higher electricity prices. In addition, advanced cooling technologies can have capital costs that are up to 4 times as expensive as traditional cooling systems, and they may operate less efficiently in dry, arid locations, among other concerns.

Water for Biofuels

A considerable amount of water is used to grow feedstocks to produce biofuels. The impact of increased biofuel production on water resources will depend on where the feedstock is grown and whether or not irrigation is required.  Biofuels, also require the use of large amounts of fertilizers and pesticides to grow the feedstock which may negatively affect water quality.  Water is also used in the fermentation, distillation, and cooling processes of converting the feedstock into biofuel.

Water consumption refers to the portion of the water withdrawn that is no longer available to be returned to a water source, such as when it has evaporated.  Irrigation was the largest consumer, at approximately 74% (Elcock 2010). Biofuel production (and thermoelectric power) are the second largest consumers of water in the U.S. consuming 11% of water.

Biofuels were the second largest cause of water withdrawals (after thermoelectric plants) with irrigation accounting for 31%.

Some of the largest increases in corn acres for biofuel production are projected to occur in the Northern Plains, which relies on irrigation and is already water-constrained. Parts of this region draw heavily from the Ogallala Aquifer, where water withdrawals for agriculture and other uses are already greater than the natural recharge rate from precipitation.

Even in typically water-rich states, such as Iowa, concerns have arisen over the effects of increased biofuel production, and research is needed to assess the hydrology and quality of a state’s aquifers to help ensure the state is on a path to sustainable biofuel production.

Conversion of cellulosic feedstocks is expected to use less water compared with conventional feedstocks in the long run. Since commercial-scale production has not yet been demonstrated; any estimates on water use by cellulosic biorefineries are simply guesses at this time. Focusing only on certain potential benefits of new technologies without understanding the full impacts of such technologies can have unintended consequences.

Water for Concentrating Solar Power Plants

Concentrating solar power plants that use wet cooling could significantly increase water demand, consuming up to twice as much water per unit of electricity produced as traditional fossil fuel power plants. Concerns with concentrating solar power plants are particularly acute in the Southwest—a prime location for siting these facilities because of abundant sunshine—because water supplies in the region are already limited.

According to DOE officials, concentrating solar power plants are generally being built with dry cooling systems in the Southwest to minimize water use. However, according to a 2009 DOE report to Congress, while dry cooling can eliminate over 90% of the water consumed by wet-cooled concentrating solar power plants, wet cooling is preferred to minimize cost and maximize efficiency.

Water for Oil Shale

Oil shale development would also require a great deal of water if commercial production of this energy source becomes economically feasible in the future.  Production of oil shale requires the heating of rock containing solid organic matter to between 650 and 1000 degrees Fahrenheit and injecting water into the formation to stimulate the oil to flow. To date, there has been no commercial production of oil shale resources, in part, because the energy requirements to heat the rock and the water needed to stimulate the flow of oil make the process too costly to compete with other sources of oil. Current known processes for producing oil from oil shale deposits, however, are not economically feasible—the oil costs more to produce than it could be sold for.

Water for Carbon Capture and Sequestration (CCS)

Research to determine how new technologies will affect the energy-water nexus has not been conducted to demonstrate the effects of these technologies at commercial scales. For example, according to many specialists we spoke with and some studies we reviewed, implementing CCS technologies would consume large amounts of freshwater and affect the quality of nearby water supplies.

Energy for water supply

Pumping water accounts for 80 to 90 percent of the energy used to supply drinking water in some systems. Moving water over hills and long distances can increase the level of energy consumption significantly.

Providing drinking water and wastewater services to an urban environment involves extracting, moving, and treating water. Energy plays a crucial role throughout this life cycle. Energy is needed to:

  • extract raw water from the source—such as lakes, rivers, and underground aquifers
  • convey it to water facilities
  • treat and distribute as drinking water to customers
  • circulate, pressurize, and heat water for use inside households and businesses
  • water lawns, etc.
  • convey wastewater to treatment facilities
  • treat the wastewater
  • discharge the treated effluent into a receiving body of water.


The price customers are charged for the water they consume does not reflect all of the costs required to extract, treat, and supply the water. Therefore, consumers may be unaware of the true costs of water and more likely to waste it, which in turn leads to unnecessary energy use to produce more water.

Reducing the energy required to move and treat water is hindered by the costs of retrofitting water treatment facilities and other obstacles, as we discussed in our March 2011 report on energy for water supply. For example, the use of variable frequency drives at water treatment facilities, which allow operators to accommodate variations in water flows and run pumps at lower speeds, can reduce energy use by 5 to 50% or more. However, installing the drives can be cost prohibitive, and they are not necessarily well suited in all instances, such as when water flow is relatively constant.

Biofuels – reducing water consumption

[The GAO neglects to note that conservation tillage means less material to make biofuels out of below].

Agricultural conservation practices can reduce the potential effects of increased biofuel feedstock cultivation on water resources, but there are barriers to their widespread adoption. For example, conservation tillage practices—such as “no-till” systems or reduced tillage systems, where the previous year’s crop residues are left on the fields and new crops are planted directly into these residues—can help reduce soil erosion. Research conducted by USDA has shown a substantial reduction in cropland erosion since 1985, when incentives were put in place to encourage the adoption of conservation tillage practices. However, many farmers do not have the expertise or training to implement certain agricultural practices, and some practices may be less suited for some places. For example, farmers usually need a year or more of experience with reduced tillage before they can achieve the same crop yields they had with conventional tillage, and the amount of agricultural residue that can be removed varies by region and even by farm. Consequently, a national policy encouraging additional biofuel production would benefit from continued education and outreach provided by the federal government to help farmers better understand the advantages of adopting such conservation practices.

Climate change, population growth, competition for resources

According to the literature we reviewed and specialists we spoke with, climate change, population growth, increased competition for resources, and demographic shifts are expected to exacerbate the challenges associated with water and energy supply and demand, and shifts in any of these areas are expected to increase demand for both of these resources.

Moreover, the effects of climate change are expected to vary by location and, in some locations, are expected to increase demand for both energy and water resources while simultaneously decreasing water supplies. According to the literature we reviewed, higher temperatures from climate change are expected to lead to additional demand for air conditioning and, therefore, electricity. This increased electricity demand will, in turn, lead to increases in water consumption associated with power generation. However, at the same time, climate change is expected to change the quantity and reliability of water supplies so that less water may be available in some regions, thereby resulting in reduced water supplies for use by the energy sector, according to some specialists we spoke with. In addition, as one specialist told us, higher temperatures from climate change will produce more evaporation from water reservoirs and other bodies of water, such as the Great Lakes, which can produce significant water losses.

Problems associated with climate change are only exacerbated by population growth and competition for water resources. More people will consume more water, increasing the municipal sector’s water demand. To meet these increasing demands, some states, especially those in areas that are already water stressed, such as Texas, have pursued alternative sources of water, such as desalinated water, which are more energy- intensive than traditional groundwater and surface water supplies. In addition, because of a warmer climate and decreased precipitation, farmers are expected to withdraw more water to irrigate crops. Minimum water levels are also necessary for other uses, such as recreation and industry, as well as to support wildlife and maintain ecosystems. Demographic shifts, such as migration to the hot, arid Southwest, could place additional demands on both energy and water supplies.

References (not all of them)

Elcock, D., “Future U.S. Water Consumption: The Role of Energy Production,” Journal of the American Water Resources Association, vol. 46, no. 3 (2010): 447-460.

GAO, Energy-Water Nexus: Improvements to Federal Water Use Data Would Increase Understanding of Trends in Power Plant Water Use, GAO-10-23 (Washington, D.C.: Oct. 16, 2009)

GAO, Energy-Water Nexus: Many Uncertainties Remain about National and Regional Effects of Increased Biofuel Production on Water Resources, GAO-10-116 (Washington, D.C.: Nov. 30, 2009)

GAO, Energy-Water Nexus: Amount of Energy Needed to Supply, Use, and Treat Water Is Location-Specific and Can Be Reduced by Certain Technologies and Approaches, GAO-11-225 (Washington, D.C.: Mar. 23, 2011)

GAO, Energy-Water Nexus: A Better and Coordinated Understanding of Water Resources Could Help Mitigate the Impacts of Potential Oil Shale Development, GAO-11-35 (Washington, D.C.: Oct. 29, 2010)

GAO, Energy-Water Nexus: Information on the Quantity, Quality, and Management of Water Produced during Oil and Gas Production, GAO-12-156 (Washington, D.C.: Jan. 9, 2012).




Posted in Energy Production, GAO Government Accountability Office, Interdependencies | Tagged , , , | Leave a comment

Why Civilizations Fail by William Ophuls

[ These are my notes from the book, not a proper book review, and since the notes are disjointed, you’d be wise to buy the book–  it’s excellent!  Plus then it’s on your shelf for future generations to understand what happened. It’s possible that after the crash, future politicians and religious leaders will have explanations far from the truth to gain more followers and wealth.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”]

William Ophuls. December 28, 2012. Immoderate Greatness: Why Civilizations Fail. 118 pages.


My analysis suggests that there is very little that we can do. Most of the trends I identify are inexorable, and complex adaptive systems are ultimately unmanageable.

The city is an ecological parasite. It arrogates to itself matter and energy that do not naturally belong to it by sucking resources away from its hinterland. So the central institution of civilization exists, and can only exist, by systematically exploiting its rural and natural periphery. It is this exploitation that supports the higher level of social and economic complexity that characterizes civilization.

Thus every known civilization has caused environmental harm and ecological degradation to some degree.

Nor does the city live by bread alone. It needs water, so it must build dams and aqueducts. It needs wood for fuel and timber, so it must chop down forests. It needs metal for coins, swords, and ploughshares, so it must dig mines. It needs stone to erect palaces, courts, temples, and walls, so it must quarry away mountains. And it must build the roads and ports needed to transport all the necessities of urban life.

A city lives by both consuming and damaging a wide array of ecological resources.

It is in the nature of civilizations to wax greater. In a positive feedback loop, the ready availability of virgin resources generates a larger, wealthier population that consumes more; increased demand then spurs further resource development, and so on. Thus, little by little, renewable flow resources like forests and fisheries are overexploited, and nonrenewable stock resources like minerals are drawn down.

As a process, civilization resembles a long-running economic bubble. Civilizations convert found (or conquered) ecological wealth into economic goods and population growth. As the bubble expands, a spirit of “irrational exuberance” reigns.

Few take thought for the morrow or consider that they are borrowing from posterity. Finally, however, resources are either effectively exhausted or no longer repay the effort needed to exploit them. As massive demand collides with dwindling supply, the ecological “credit” that has fueled expansion and created a large population accustomed to living high off the hog is choked off. The civilization begins to implode, in either a slow and measured decline or a more rapid and chaotic collapse.

Stealing resources from others is not a permanent solution, because conquest, too, has serious costs: “imperial overstretch” has spelled the downfall of many empires. Even peaceful trade provides no escape from biophysical limits. To get resources from others, you must normally give something valuable in return—either resources themselves, or goods and services that depend ultimately on resources.

If you use renewable resources faster than they can regenerate, they will dwindle and ultimately disappear; if you produce wastes faster than they can be rendered harmless, they will poison you; and if you use nonrenewable resources to fuel current consumption, they will eventually run out.

To make matters worse, it is not resources in general that matter, for natural processes are governed by a basic ecological principle called “the law of the minimum.” Thus the factor in least supply is controlling. For example, to grow cereals takes soil, seeds, fertilizer, and water as well as labor. Not only must all of these factors of production be present for there to be a crop, but they must be present in the right quality or proportion. Thin soils or poor seeds will stunt crop growth even if all the other factors are present in abundance. Thus some resources are more critical for civilization than others. The most critical of all is water, without which life simply cannot be sustained. But as civilizations develop, they tend to overuse and misuse their water supplies, with consequences that can be serious.  For example, salinization due to inappropriate irrigation plagued many ancient civilizations (and continues to be a problem today). Civilizations also damage watersheds by cutting down the forests that mode rate climate, promote rainfall, and store water.

A money economy takes the disconnection, and therefore the failure, one step further. The higher the level of economic development, the more money tends to become an abstraction rather than a counter for something concrete. Thus the economy can boom as the ecology disintegrates. This is particularly true if the society resorts to currency debasement or loose credit as a way to evade encroaching physical limits and foster an artificial prosperity, for then the economy becomes completely unhinged from concrete ecological reality. Overshoot and collapse is the inevitable result.

Why is it that civilizations have tended to see the natural world as cornucopian—that is, as a banquet on which they were free to gorge without limit? In large part this deluded view has prevailed because human beings do not readily comprehend the nature and power of exponential growth.

The human mind is still fundamentally Paleolithic. That is, it was hardwired by evolution for the life of a hunter-gatherer on the African savannah, a life centered on day-to-day survival in small bands of intimates and kinsmen. In practice, this means that human beings excel at concrete perception but are much less adept at abstraction. And they are quick to perceive the immediate and dramatic but likely to overlook long-term trends and consequences. They are therefore strongly present-oriented and tend to neglect or devalue the future. The upshot is that the human mind is not well equipped for the cognitive demands of civilized life in general, and it is singularly ill equipped to deal with the implications of exponential growth in particular.

Although the logic is irrefutable, the flaw in the reasoning lies precisely in the term “present value,” which reveals that the economist is still a caveman at heart. It is now that matters—not next year, let alone twenty or a hundred years from now. So industrial civilization quite “rationally” burns through its stocks of fossil fuels, even though a moment’s reflection shows that they will be much more valuable in the future. Moreover, even if people sense that something is not quite right—civilization has gotten too big, too complex, too hard to manage—they may still not see that the problems are caused in large part by exponential growth and that the solution therefore lies in controlling that growth, not in programs or technologies designed to allow it to continue. For if you remove one constraint, renewed growth quickly pushes the civilization up against the next one, and so on, until it buckles under the strain.

Agricultural production is the foundation of civilized life. But the word production is a misnomer, for what humans actually do is mine the topsoil. Virgin soil is a complex ecosystem developed over millennia that contains a myriad of chemical elements and biological beings within a very specific physical structure. Humanity breaks into this ecological climax to profit from the rich store of energy that it contains. The product is food for human consumption—but the byproduct is erosion, compaction, leaching, and other damage to the soil’s vitality and integrity. And the nutrients in the food are not usually returned to the land but instead excreted into latrines and sewers, whence they are dispersed into rivers, lakes, and oceans never to be recaptured (except in the negative form of pollution). Thus the entropy of the system has increased. The originally rich topsoil has become poorer or has even eroded away, and the wider environment has also been impoverished.

Or take one of the great inventions of civilization: the bath. Whether it is the Roman thermae, the Arab hammam, or the traditional Japanese furo, they were all heated with wood. But in the process most of the energy in the wood was wasted. That is, it turned into smoke, ashes, and heat—some of which did the work of making hot water, but most of which escaped up the chimney. And even the useful heat in the bath water was soon dissipated into the atmosphere, just like the cold in the glass of lemonade. In addition, it took matter and energy to build the baths in the first place and to maintain them thereafter (not to mention aqueducts, roads, and other supportive infrastructure). Creating the amenity that elevates civilization over savagery therefore involves converting concentrated energy and matter into useless waste products, while extracting a modicum of useful work along the way. A contemporary example will illustrate the point more concretely and also make clear why technology cannot forever overcome the limits imposed by thermodynamics. When coal is burned to produce electricity, only about 35% of the energy in the coal is converted into electrical energy. The rest becomes waste heat, various gases (such as carbon dioxide), various chemicals (such as sulfuric acid), particulates, and ash. And even the electricity dissipates into the environment as waste heat once it has done its work. From the physicist’s point of view, the books are balanced—there is just as much matter and energy in the overall system as before—but what remains is significantly lower in quality. The upshot is that for every unit of good that man creates using this particular technology, he manufactures two units of bad—and even the good is ephemeral.

To make a car requires not only many direct inputs—steel, copper, fuel, water, chemicals, and so forth—but also many indirect ones such as a factory and labor force as well as the matter and energy needed to sustain them. To use a technical term, the “embodied energy” in the car is many times that in the horse.

The auto requires oil wells, refineries, tankers, gasoline stations, mechanics’ shops, and so on.

Above all, technology depends critically on energy density. The total amount of available energy is staggering, but very little of it is available in concentrated form. That is the beauty of fossil fuels. They are the energy-dense residue of past solar energy in the form of buried organic matter that has been subjected to eons of geological heat and pressure. With such a concentrated source of energy, technology can perform wonders.  Dispersed energy can do much less work and therefore limits what technology can do. Solar rays will make hot water for a household but do not lend themselves to running a large power plant.

In addition, the law of the minimum applies. For instance, many “unconventional” fossil-fuel projects require water to enable the process, often in large quantities, and water is already becoming scarce.

A homely metaphor will illustrate the point. A juggler, no matter how dedicated and skilled, can only handle only so many balls. Add even one more, and he loses control. Now imagine that same juggler trying to keep his own balls in the air while simultaneously fielding and throwing balls from and to multiple others. That is roughly the situation in a complex civilization: many millions of individuals and entities are engaged in a mass, mutual juggling act. How likely is it that there will be no dropped balls? And how will it be possible to keep adding balls and participants and not overload the system so that it begins to break down?

Modern civilization offers numerous examples of diminishing returns. We have already seen that extracting energy resources has become more difficult, dangerous, and expensive and will become even more so in the future. We picked the low-hanging fruit first and must now scrabble for smaller, poorer, or dirtier deposits in hostile locations.

We like to think that we have attained our current level of complexity through sheer scientific prowess. But this is at best a half-truth. It takes vast energy resources to implement the technological solutions that enable our complexity. For example, we have already seen that the enormous “productivity” of industrial agriculture is a sham. It is a machine for converting ten calories of fossil-fuel energy into one calorie of food. Thus if the quantity or quality of available energy declines significantly—either because of supply problems or because more energy is required to achieve the same ends—the civilization is in trouble. It can no longer afford its attained level of complexity and must either simplify itself until complexity and energy are once again in balance, or it must, like the Romans, squeeze more out of its resource base than can be sustained over the long term, which simply postpones the inevitable. In short, because energy is the sine qua non of complexity, anything that diminishes the quantity, quality, or efficiency of energy threatens a complex civilization’s survival.

“An actor in a complex system controls almost nothing,” says Scott Page, yet “influences almost everything.”  Just understanding system behavior, let alone controlling it, challenges the human mind. As Meadows points out, our minds and language are linear and sequential, but systems happen all at once and overwhelm us intellectually: Systems surprise us because our minds like to think about single causes neatly producing single effects. We like to think about one or at most a few things at a time…. But we live in a world in which many causes routinely come together to produce many effects.

In short, limited, fallible human beings are bound to bungle the job of managing complex systems. What they can neither understand nor predict, they cannot expect to control, so failure is inevitable at some point. The tedious repetition of financial crises provides a perfect illustration. The financial system is the epitome of a chaotic system, and generation after generation of highly motivated, talented, and well-capitalized individuals in both the public and private sectors have time and again failed to prevent intoxicating booms from becoming devastating busts—and this despite the lessons of economic history, which are quite well understood.

The potential for catastrophe is ever present in chaotic systems. The gradual accumulation of small changes can push a system over an unseen threshold and thereby precipitate rapid and radical change. For example, once over exploitation causes fish stocks to decline below a critical, but unquantifiable, level they can no longer reproduce.

The very fact that complex systems have key links and nodes connected by multiple feedback loops means that they are vulnerable to a cascade of failure. To put it another way, systems that are too tightly coupled or too efficient are fragile; they lack resilience. That is how region-wide electrical outages propagate. The failure of one sector brings down another and another until the grid itself fails, and once down it takes heroic effort to get it up and running again.

Dire implications follow directly from seeing civilizations as chaotic in the scientific sense. Complex adaptive systems are stable until they are overstressed. Then one perturbation too many, or one that arrives at the wrong moment, can tip the system into instability virtually overnight, with unpredictable and frequently distressing consequences. As Will Durant noted, “From barbarism to civilization requires a century; from civilization to barbarism needs but a day.” Thus, says Niall Ferguson, the standard historian’s view of decline and fall—that it is a relatively gentle and gradual process—is too sanguine: Empires do not in fact appear, rise, reign, decline, and fall according to some recurrent and predictable life cycle. It is historians who retrospectively portray the process of imperial dissolution as slow-acting, with multiple over-determining causes. Rather, empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse…. [T]he shift from consummation to destruction and then to desolation is not cyclical. It is sudden.

Once a civilization is plagued by numerous intractable problems, most attempts at reform will therefore either fail or make matters worse. Indeed, ironically, it may be the very effort to reform that precipitates the collapse. It was perestroika and glasnost that allowed the stupendous fabric of the USSR to implode. Similarly, it was Louis XVI’s convening of the Estates-General that triggered the revolution and regicide that liquidated the ancien régime. As these examples suggest, the timing and trajectory of collapse are essentially unpredictable and uncontrollable. Hence planning to avoid breakdown or to make a gentle and controlled transition from one stable state to another may be next to impossible. That does not mean that planning is useless.

Indeed, the real product of genuine systems analysis is not solutions but wisdom. To wit, understanding that excessive complexity is both costly and perilous and that management in the sense of control is unachievable. This would lead us to see that the proper (or only) way to “manage” civilization is by not allowing it to become too complex—in fact, deliberately designing in restraints, redundancy, and resiliency, even if the price is less power, freedom, efficiency, or profit than we might otherwise gain through greater complexity. To revert to our financial metaphor, to prevent busts, one must stop booms from happening in the first place by taking away the punchbowl of credit well before the party has gotten out of hand.

Unfortunately, although naturally clever, human beings are not innately wise, and any attempt to take away the punchbowl meets with fierce resistance.

However, the most dangerous byproduct of the unceasing cacophony is a growth in civil dissension. As Glubb notes, people are “interminably different, and intellectual arguments rarely lead to agreement.” To the contrary, they lead to polarization, so “internal rivalries become more acute.”

Another source of division within the polity arises from an influx of foreigners drawn irresistibly to the panoply of imperial wealth and glory. The result is an increasingly polyglot population that no longer shares the same values.

Thanks to the demolition job performed by the intellectuals, the society is increasingly “value free”—that is, it no longer believes in much of anything or takes anything seriously. The original élan, the moral core, and the guiding ideal of the civilization are now a distant memory. An Age of Decadence inevitably follows. Frivolity, aestheticism, hedonism, cynicism, pessimism, narcissism, consumerism, materialism, nihilism, fatalism, fanaticism, and other negative attributes, attitudes, and behaviors suffuse the population.

Politics is increasingly corrupt, life increasingly unjust. A cabal of insiders accrues wealth and power at the expense of the citizenry, fostering a fatal opposition of interests between haves and have-nots. Mental and physical illness proliferates. The majority lives for bread and circuses; worships celebrities instead of divinities; takes its bearings from below rather than above; throws off social and moral restraints, especially on sexuality; shirks duties but insists on entitlements; and so forth.  The society’s original vigor, virtue, and morale have been entirely effaced. Rotten to the core, the society awaits collapse, with only the date remaining to be determined.

In theory, says Glubb, a wider knowledge of this historical trend should enable societies to make different choices and thereby forestall the descent into decadence. In reality, however, he sees no escape from the socioeconomic dynamic he identifies. Stability and peace are bound to foster manufacture, trade, and the rise of a commercial class; affluence and all the later stages follow as a matter of course. And there is also no escape from the succession of generations; each new cohort grows up in altered circumstances that incline it to move further away from the original values, virtues, and ideals of the civilization. Rung by rung, the civilization drops ever lower on the ladder of decline. Indeed, Glubb finds a remarkable regularity in the historical record. Barring an earlier dissolution due to external forces, it seems to take a mere ten generations for a civilization to traverse the arc from élan to decadence. Hence they appear to have a natural lifespan of roughly 250 years that human action can do little to extend.

As has been shown, a developing civilization grows steadily more complex and increasingly less manageable over time, preparing the way for its eventual demise. Only a race of supremely intelligent, rational, and wise beings could so order their affairs and so limit their behavior as to avoid this outcome. Human beings are not such a race. At best, they manage their affairs by muddling through—a mode of operation that has many virtues and advantages but that also postpones dealing with fundamental issues until they become intractable. At worst, they actively prepare their own downfall through greed, arrogance, obstinacy, shortsightedness, laziness, and stupidity. Because humans are more focused on the present than the future, and complex systems are unpredictable, decisions at all levels of society are bound to be increasingly “suboptimal” as a civilization grows in complexity.

Selfishness crowds out sacrifice, the interests of mass and elite diverge, and the elite itself is divided into warring factions. Solvable problems turn into insolvable plights. Planning for the long term becomes an unaffordable luxury. The society drifts, following the line of least resistance by taking merely expedient actions that postpone rather than resolve problems. Posterity is left to fend for itself. Complexity is only one part of the challenge. As it develops, a civilization accumulates an investment in physical and social infrastructure that increasingly limits its freedom of action, and it adheres to a certain way of thinking that increasingly limits its freedom of choice. These entrenched habits, patterns, structures, institutions, ideologies, and interests prevent adaptation to changed conditions.  In effect, civilizations suffer from a structural incapacity to respond to altered circumstances.

It could not be otherwise. Institutions are by their very nature resistant to change, for if not, society would be in a constant state of flux. As time goes on, institutions therefore grow steadily more hidebound, inflexible, and unresponsive.

Like Gulliver, the civilization finds itself tied down by a multitude of vested interests—physical, social, economic, financial, political, and psychological. Enmeshed in this legacy of the past, it cannot save itself.

The civilization’s elites may understand that the system is dysfunctional, but fundamental reform would require major sacrifice on their part, so they fight to preserve their privilege and power instead. Increasingly polarized, they dissipate their energy in factional struggle instead of problem solving. Besides, says Ronald Wright, “They continue to prosper in darkening times long after the environment and general populace begin to suffer.

In the end, the elites prefer an advantageous present, however problematic, to an uncertain and poss ibly disadvantageous future. Again, the upshot is stagnation.

Human societies are addicted to their ruling ideas and their received way of life, and they are fanatical in their defense. Hence they are extraordinarily reluctant to reform. “To admit error and cut losses,” said Tuchman, “is rare among individuals, unknown among states.”  Instead of changing their minds, leaders redouble their efforts to do what no longer works, wooden-headedly persisting in error until the bitter end.

The society is in crisis. What used to work no longer does. Institutions and infrastructures have broken down. A hypertrophied bureaucracy strangles the society in red tape. Rent-seeking insiders batten on the public purse, and selfish elites feather their own nests. The gap separating rich and poor becomes a chasm. As problems multiply and become chronic, overloaded leaders struggle to cope. Addressing one problem creates new ones; not addressing small problems turns them into big ones. The elite is divided by interest or ideology into factions, so politics is gridlocked, or even fratricidal.

In the end, the social contract unravels. The populace and even members of the elite lose all faith in the system and in their leaders, who are seen as ineffective at best, incompetent and corrupt at worst.

But if incompetent or corrupt leaders certainly make matters worse, they are not the real cause of failure. Faced with deteriorating ecological, physical, social, economic, and political conditions and with declining returns on the civilization’s investment in complexity, even capable and honest leaders have no viable way forward. Although the problems may be insoluble, something must be done, and since expediency no longer suffices, they resort to stupidity—doing what has never worked in the past, what cannot succeed in the present, and what will destroy the future both morally and practically. First, by engaging in unnecessary wars or imperial ventures that drain the civilization of blood and treasure. Second, by buying off the populace with bread, circuses, and entitlements, thereby promising more than can be delivered over the long term. Third, by deliberately debasing the currency—that is, consciously adopting a policy of inflation.

Leaders resort to inflation because they are desperate. They have been backed into a corner by events and lack the moral courage or the political support to institute fundamental reforms, which would require them to inflict pain on the mass of commoners and vanquish powerful elites. (In addition, as previously noted, those in power instinctively understand that reforming a corrupt polity can precipitate chaos and collapse, so they legitimately fear embarking on change.) Charged with governing a populace accustomed to living well beyond its means, overwhelmed by a multiplicity of difficult problems, hemmed in by a host of vested interests, burdened by a deteriorating physical and social infrastructure that is increasingly costly to maintain, encumbered with ecological, thermodynamic, and fiscal debts that have come due, rulers bereft of backbone, ingenuity, and capital attempt to postpone the impending crisis by inflating, whether this takes the form of clipping coins, printing money, or loosening credit.

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

Most actions that the Roman government took in response to crises—such as debasing the currency, raising taxes, expanding the army, and conscripting labor—were practical solutions to immediate problems. It would have been unthinkable not to adopt such measures. Cumulatively, however, these practical steps made the empire ever weaker, as the capital stock (agricultural land and peasants) was depleted through conscription and taxation. In the end, says Tainter, “The empire could no longer afford the problem of its own existence.”  A mature civilization is caught in an entropy trap from which escape is well-nigh impossible. Because the available energy and resources can no longer maintain the existing level of complexity, the civilization begins to consume itself by borrowing from the future and feeding off the past, thereby preparing the way for an eventual implosion.

Once a civilization has reached this point, not even a miraculous new technology can save it. Even if it had the will, it no longer has either the resources or the time to dismantle the legacy of the past and build the infrastructure of a viable future.

There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries, who have the laws in their favor; and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.

Civilizations are unnatural accumulations of wealth and power that cannot be sustained over the long term. Insuperable biophysical limits combine with innate human fallibility to precipitate eventual collapse.

As Gibbon said, instead of asking why Rome fell, “we should rather be surprised that it had subsisted so long.

Before civilization became universal, the consequences of decline and fall may have been catastrophic for a particular society and for many or even most of its inhabitants, but they were not fatal to civilization itself. There were always others to keep the flame alive. Or a lurking horde of barbarians poised to bring fresh blood to a tired and moribund society.

But now that a highly interdependent, global, industrial civilization extends its monopoly to the ends of the earth, there are no others to pick up the baton, nor any barbarian reservoirs to replenish its élan. “Collapse, if and when it comes again, will this time be global,” says Tainter. It will also be uniquely devastating. Given the enormous growth of populations and the extent of ecological devastation and social dislocation caused by industrialization—as well as the degree to which the methods and materials of traditional agriculture have been abandoned in the rush to ramp up yields by converting fossil fuel into food—a gradual and gentle transition to a viable agrarian civilization capable of supporting large numbers of people and a reasonable level of complexity is extremely unlikely. In fact, says Tainter, the collapse of today’s highly developed societies “would almost certainly entail vast disruptions and overwhelming loss of life, not mention a significantly lower standard of living for the survivors.” Wright’s metaphor perfectly captures our plight: “As we climbed the ladder of progress, we kicked out the rungs below,” leaving ourselves with no non-catastrophic way back to a less complex mode of existence.

At this point, even a return to hunting and gathering would be challenging. Apart from a few bands of isolated Tupi-Guarani in the Amazon, almost all of the remaining, scattered tribal peoples have lost the territory, knowledge, and traditions that would enable them to survive if industrial civilization were to collapse. What is to be done? First, we must recognize that the deep structural problems elucidated above have no feasible solutions.

Like Glubb, but for different reasons, Tainter does not believe that today’s societies can escape the dynamic that eventuates in collapse. A military-industrial arms race among the sub-units of the existing global civilization “drives increased complexity and resource consumption regardless of costs, human or ecological.”  Hence, second, the task is not to forestall a foreordained collapse but, rather, to salvage as much as possible from it, lest the fall precipitate a dark age in which the arts and adornments of civilization are partially or completely lost. To this end, just as prudent mariners carry lifeboats and practice abandoning ship, a global civilization in its terminal phase would be well advised to prepare arks, storehouses, and banks designed to preserve the persons, tools, and materials with which to retain or reconstitute some semblance of civilized life post-collapse.

This appeal to prudence will not be readily accepted. For the hubris of every civilization is that it is, like the Titanic, unsinkable. Hence the motivation to plan for shipwreck is lacking. In addition, the civilization’s contradictions and difficulties are seen not as symptoms of impending collapse but, rather, as problems to be solved by better policies and personnel. In other words, the populace does not yet understand that the civilization has reached an impasse. As Tainter notes, “It takes protracted hardship to convince people that the world to which they have been accustomed has changed irrevocably.”  Moreover, although collapse may be foreordained, its course and timing are largely unpredictable. Collapse could happen suddenly or gradually, sooner or later, so why act now? To make matters worse, preparing for this uncertain future requires present sacrifice—that is, the diversion of resources from both current consumption and from the task of coping with today’s problems—at a time when those very same resources are becoming scarcer and more expensive. In short, denial, evasion, and procrastination are all but inevitable. Thus if preparations for collapse are made at all, they are likely to be too little and too late.

Modern civilization is therefore bound for a worse fate than the Titanic. When it sinks, the lifeboats, if any, will be ill provisioned, and no one will come to its rescue. Humanity will undoubtedly survive. Civilization as we know it will not.

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Invasive insects

March 1, 2016.  Buzzkill: Deadly hornets set to invade UK, chop up bees, experts warn. rt.com

A dangerous group of insect invaders accused of killing six people in France are now heading to the UK, wildlife experts have cautioned.  Asian hornets could devastate England’s dwindling bee population, as they are known to kill up to 50 honey bees per day, mainly by chopping them up and feeding them to their larvae. “It is feared that it is just a matter of time before it reaches our shores,” according to Camilla Keane of the Wildlife and Countryside group.  She said in a statement that hornets will be incredibly difficult and costly to tackle once they arrive, causing “significant environmental and economic damage”.  The aggressive predator first arrived in France 12 years ago via pottery and quickly spread to Portugal, Italy, and Belgium.  It is expected to soon reach northern France where it could easily spread across a channel. From April onwards, the hornets produce eggs and don’t stop until the hive population peaks at around 6,000 insects. Bees are estimated to contribute £651m ($908m) a year to the UK economy as honey-producing slaves.

María Virginia Parachú Marcó. 2015. Red Fire Ant (Solenopsis invicta) Effects on Broad-Snouted Caiman Nest Success. Journal of Herpetology 49(1):70-74.

Argentinian fire ants are held in check by native predators.  But in the USA where no natural predators exist, they could kill 70% of turtle hatchlings in Florida, and they’ve been caught eating snakes, lizards, birds, and even deer fawns who freeze when in danger, giving the ants the chance to attack.

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Ugo Bardi on money, gold, and silver

What follows is from a really great book:

Bardi, Ugo. 2014. Extracted: How the Quest for Mineral Wealth Is Plundering the Planet. Chelsea Green Publishing.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts:  KunstlerCast 253, KunstlerCast278, Peak Prosperity]


The emergence of paper currencies provided state institutions with a crucial controlling mechanism over investor expectations.

Without any physical links to restrain their supply, paper currencies can be managed so that they never become better investments themselves than tangible assets.

In other words, they are abstract, and modern abstract currencies function as stores of value only if properly invested. Without this system, the economic growth of the second half of the 20th century would not have been possible.

But for this system to work, central banks have to manage the prices of precious metals. The goal is to avoid the latter becoming more desirable investments than paper currencies. To this end, central banks built strategic gold stocks, selling or leasing these stocks in order to stabilize prices as necessary.

By allowing a tame appreciation, they activate recycling processes that convert jewelry into bullion, thus guaranteeing an influx of metal into the market. The value of gold has been a sort of sword of Damocles over the heads of modern abstract currencies, but so far central banks have managed to maintain control, weathering serious crises in 1968 and 1980.

At the end of 2011 the World Gold Council estimated that over 170 kilo tons of above ground gold was distributed across jewelry (50%), central bank stocks (18%), investment assets such as coins and bars (19%), and industrial stocks.

These ratios largely reflect the relative abundance of these two metals in the Earth’s crust: for each gram of gold in the crust there are about 18 of silver.  After 1900 silver progressively lost value against gold, reaching a low of 100 to 1 in 1990 and hovering around 55 to 1 today. This devaluation of silver is possibly associated with modern mining techniques, whereby silver is obtained through catalytic refining of ores extracted in mines dedicated to other metals like copper, nickel, and zinc. This depressed price has promoted the loss of silver stocks. Silver dispersed in cheap jewelry, outdated coins, photographic film, obsolete electronic devices, and other items has been ending up in dumps, and some of it might have even already been lost at sea (in the form of finely dispersed particles eroded from silver artifacts), from where it will never be recovered. The result is a relatively small industrial stock of silver, equaling about 25 kilotons—less than 4 grams per person on the planet, less than one year of mining supply, 25 and less than one-sixth of the world’s gold stocks.

All this makes for an unsustainable scenario in the coming years: growing demand, dwindling reserves, uncertain stocks, and prices unaligned with physical abundance. This scenario could lead to three outcomes:

  1. an increase in silver recycling, with a relevant rise of nonindustrial stocks flowing to the market;
  2. the evolution of mining toward silver-dedicated mines, if lower ore grades are technically feasible;
  3. the substitution of silver by copper in industrial applications where possible.

All of these outcomes, not mutually exclusive, will certainly require considerably higher silver prices, and possibly a return to the historical silver-to-gold ratio. This poses a serious challenge to central banks, which largely lack mechanisms to fight liquidity runs into silver.

Gold and silver are not precious by chance, and considering that two-thirds of gold and three-fourths of silver reserves have already been mined, they will certainly retain their value in coming years.

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Why can’t we have a global government?

MacKenzie, D. September 6, 2014. Imagine there’s no countries…it isn’t hard to do, sang John Lennon. Actually it is. Is there an alternative?  NewScientist.

Nation states cause some of our biggest problems, from civil war to climate inaction.

Try, for a moment, to envisage a world without countries. Imagine a map not divided into neat, colored patches, each with clear borders, governments, laws. Try to describe anything our society does – trade, travel, science, sport, maintaining peace and security – without mentioning countries. Try to describe yourself: you have a right to at least one nationality, and the right to change it, but not the right to have none.

Those colored patches on the map may be democracies, dictatorships or too chaotic to be either, but virtually all claim to be one thing: a nation state, the sovereign territory of a “people” or nation who are entitled to self-determination within a self-governing state. So says the United Nations, which now numbers 193 of them.

Even as our economies globalize, nation states remain the planet’s premier political institution.

Yet there is a growing feeling among economists, political scientists and even national governments that the nation state is not necessarily the best scale on which to run our affairs. We must manage vital matters like food supply and climate on a global scale, yet national agendas repeatedly trump the global good. At a smaller scale, city and regional administrations often seem to serve people better than national governments.

How, then, should we organize ourselves? Is the nation state a natural, inevitable institution? Or is it a dangerous anachronism in a globalized world?

Before the late 18th century there were no real nation states, says John Breuilly of the London School of Economics. If you travelled across Europe, no one asked for your passport at borders; neither passports nor borders as we know them existed. People had ethnic and cultural identities, but these didn’t really define the political entity they lived in.

But they also had limits. Robin Dunbar of the University of Oxford has shown that one individual can keep track of social interactions linking no more than around 150 people. Evidence for that includes studies of villages and army units through history, and the average tally of Facebook friends.

But there was one important reason to have more friends than that: war. “In small-scale societies, between 10 and 60 per cent of male deaths are attributable to warfare,” says Peter Turchin of the University of Connecticut at Storrs. More allies meant a higher chance of survival.

Turchin has found that ancient Eurasian empires grew largest where fighting was fiercest, suggesting war was a major factor in political enlargement. Archaeologist Ian Morris of Stanford University in California reasons that as populations grew, people could no longer find empty lands where they could escape foes. The losers of battles were simply absorbed into the enemy’s domain – so domains grew bigger.

How did they get past Dunbar’s number? Humanity’s universal answer was the invention of hierarchy. Several villages allied themselves under a chief; several chiefdoms banded together under a higher chief. To grow, these alliances added more villages, and if necessary more layers of hierarchy.

Hierarchies meant leaders could coordinate large groups without anyone having to keep personal track of more than 150 people. In addition to their immediate circle, an individual interacted with one person from a higher level in the hierarchy, and typically eight people from lower levels, says Turchin.

These alliances continued to enlarge and increase in complexity in order to perform more kinds of collective actions, says Yaneer Bar-Yam of the New England Complex Systems Institute in Cambridge, Massachusetts. For a society to survive, its collective behaviour must be as complex as the challenges it faces – including competition from neighbours. If one group adopted a hierarchical society, its competitors also had to. Hierarchies spread and social complexity grew.

Larger hierarchies not only won more wars but also fed more people through economies of scale, which enabled technical and social innovations such as irrigation, food storage, record-keeping and a unifying religion. Cities, kingdoms and empires followed.

But these were not nation states. A conquered city or region could be subsumed into an empire regardless of its inhabitants’ “national” identity. “The view of the state as a necessary framework for politics, as old as civilization itself, does not stand up to scrutiny,” says historian Andreas Osiander of the University of Leipzig in Germany.

One key point is that agrarian societies required little actual governing. Nine people in 10 were peasants who had to farm or starve, so were largely self-organizing. Government intervened to take its cut, enforce basic criminal law and keep the peace within its undisputed territories. Otherwise its main role was to fight to keep those territories, or acquire more.

Even quite late on, rulers spent little time governing, says Osiander. In the 17th century Louis XIV of France had half a million troops fighting foreign wars but only 2000 keeping order at home. In the 18th century, the Dutch and Swiss needed no central government at all. Many eastern European immigrants arriving in the US in the 19th century could say what village they came from, but not what country: it didn’t matter to them.

Before the modern era, says Breuilly, people defined themselves “vertically” by who their rulers were. There was little horizontal interaction between peasants beyond local markets. Whoever else the king ruled over, and whether those people were anything like oneself, was largely irrelevant.

Such systems are very different from today’s states, which have well-defined boundaries filled with citizens. In a system of vertical loyalties, says Breuilly, power peaks where the overlord lives and peters out in frontier territories that shade into neighboring regions. Ancient empires are coloured on modern maps as if they had firm borders, but they didn’t. Moreover, people and territories often came under different jurisdictions for different purposes.
Simple societies

Such loose control, says Bar-Yam, meant pre-modern political units were only capable of scaling up a few simple actions such as growing food, fighting battles, collecting tribute and keeping order. Some, like the Roman Empire, did this on a very large scale. But complexity – the different actions society could collectively perform – was relatively low.

Complexity was limited by the energy a society could harness. For most of history that essentially meant human and animal labor. In the late Middle Ages, Europe harnessed more, especially water power. This boosted social complexity – trade increased, for example– requiring more government. A decentralised feudal system gave way to centralised monarchies with more power.

But these were still not nation states. Monarchies were defined by who ruled them, and rulers were defined by mutual recognition – or its converse, near-constant warfare. In Europe, however, as trade grew, monarchs discovered they could get more power from wealth than war.

In 1648, Europe’s Peace of Westphalia ended centuries of war by declaring existing kingdoms, empires and other polities “sovereign”: none was to interfere in the internal affairs of others. This was a step towards modern states – but these sovereign entities were still not defined by their peoples’ national identities. International law is said to date from the Westphalia treaty, yet the word “international” was not coined until 132 years later.

By then Europe had hit the tipping point of the industrial revolution. Harnessing vastly more energy from coal meant that complex behaviors performed by individuals, such as weaving, could be amplified, says Bar-Yam, producing much more complex collective behaviors.

End of nations: Is there an alternative to countries?

This demanded a different kind of government. In 1776 and 1789, revolutions in the US and France created the first nation states, defined by the national identity of their citizens rather than the bloodlines of their rulers. According to one landmark history of the period, says Breuilly, “in 1800 almost nobody in France thought of themselves as French. By 1900 they all did.” For various reasons, people in England had an earlier sense of “Englishness”, he says, but it was not expressed as a nationalist ideology.

Part of the reason was a pragmatic adaptation of the scale of political control required to run an industrial economy. Unlike farming, industry needs steel, coal and other resources which are not uniformly distributed, so many micro-states were no longer viable. Meanwhile, empires became unwieldy as they industrialised and needed more actual governing. So in 19th-century Europe, micro-states fused and empires split.

These new nation states were justified not merely as economically efficient, but as the fulfilment of their inhabitants’ national destiny. A succession of historians has nonetheless concluded that it was the states that defined their respective nations, and not the other way around.

France, for example, was not the natural expression of a pre-existing French nation. At the revolution in 1789, half its residents did not speak French. In 1860, when Italy unified, only 2.5% of residents regularly spoke standard Italian. Its leaders spoke French to each other. One famously said that, having created Italy, they now had to create Italians – a process many feel is still taking place.

Sociologist Siniša Maleševic of University College Dublin in Ireland believes that this “nation building” was a key step in the evolution of modern nation states. It required the creation of an ideology of nationalism that emotionally equated the nation with people’s Dunbar circle of family and friends.

That in turn relied heavily on mass communication technologies. In an influential analysis, Benedict Anderson of Cornell University in New York described nations as “imagined” communities: they far outnumber our immediate circle and we will never meet them all, yet people will die for their nation as they would for their family.

Such nationalist feelings, he argued, arose after mass-market books standardized vernaculars and created linguistic communities. Newspapers allowed people to learn about events of common concern, creating a large “horizontal” community that was previously impossible. National identity was also deliberately fostered by state-funded mass education.

The key factor driving this ideological process, Maleševic says, was an underlying structural one: the development of far-reaching bureaucracies needed to run complex industrialized societies. For example, says Breuilly, in the 1880s Prussia became the first government to pay unemployment benefits. At first they were paid only in a worker’s native village, where identification was not a problem. As people migrated for work, benefits were made available anywhere in Prussia. “It wasn’t until then that they had to establish who a Prussian was,” he says, and they needed bureaucracy to do it. Citizenship papers, censuses and policed borders followed.

That meant hierarchical control structures ballooned, with more layers of middle management. Such bureaucracy was what really brought people together in nation-sized units, argues Maleševic. But not by design: it emerged out of the behaviour of complex hierarchical systems. As people do more kinds of activities, says Bar-Yam, the control structure of their society inevitably becomes denser.

In the emerging nation state, that translates into more bureaucrats per head of population. Being tied into such close bureaucratic control also encouraged people to feel personal ties with the state, especially as ties to church and village declined. As governments exerted greater control, people got more rights, such as voting, in return. For the first time, people felt the state was theirs.
Natural state of affairs?

Once Europe had established the nation state model and prospered, says Breuilly, everyone wanted to follow suit. In fact it’s hard now to imagine that there could be another way. But is a structure that grew spontaneously out of the complexity of the industrial revolution really the best way to manage our affairs?

According to Brian Slattery of York University in Toronto, Canada, nation states still thrive on a widely held belief that “the world is naturally made of distinct, homogeneous national or tribal groups which occupy separate portions of the globe, and claim most people’s primary allegiance”. But anthropological research does not bear that out, he says. Even in tribal societies, ethnic and cultural pluralism has always been widespread. Multilingualism is common, cultures shade into each other, and language and cultural groups are not congruent.

Moreover, people always have a sense of belonging to numerous different groups based on region, culture, background and more. “The claim that a person’s identity and well-being is tied in a central way to the well-being of the national group is wrong as a simple matter of historical fact,” says Slattery.

Perhaps it is no wonder, then, that the nation-state model fails so often: since 1960 there have been more than 180 civil wars worldwide.

Such conflicts are often blamed on ethnic or sectarian tensions. Failed states, such as Syria right now, are typically riven by violence along such lines. According to the idea that nation states should contain only one nation, such failures have often been blamed on the colonial legacy of bundling together many peoples within unnatural boundaries.

But for every Syria or Iraq there is a Singapore, Malaysia or Tanzania, getting along okay despite having several “national” groups. Immigrant states in Australia and the Americas, meanwhile, forged single nations out of massive initial diversity.

What makes the difference? It turns out that while ethnicity and language are important, what really matters is bureaucracy. This is clear in the varying fates of the independent states that emerged as Europe’s overseas empires fell apart after the second world war.

According to the mythology of nationalism, all they needed was a territory, a flag, a national government and UN recognition. In fact what they really needed was complex bureaucracy.

Some former colonies that had one became stable democracies, notably India. Others did not, especially those such as the former Belgian Congo, whose colonial rulers had merely extracted resources. Many of these became dictatorships, which require a much simpler bureaucracy than democracies.

Dictatorships exacerbate ethnic strife because their institutions do not promote citizens’ identification with the nation. In such situations, people fall back on trusted alliances based on kinship, which readily elicit Dunbar-like loyalties. Insecure governments allied to ethnic groups favour their own, while grievances among the disfavored groups grow – and the resulting conflict can be fierce.

Recent research confirms that the problem is not ethnic diversity itself, but not enough official inclusiveness. Countries with little historic ethnic diversity are now having to learn that on the fly, as people migrate to find jobs within a globalized economy.

How that pans out may depend on whether people self-segregate. Humans like being around people like themselves, and ethnic enclaves can be the result. Jennifer Neal of Michigan State University in East Lansing has used agent-based modelling to look at the effect of this in city neighborhoods. Her work suggests that enclaves promote social cohesion, but at the cost of decreasing tolerance between groups. Small enclaves in close proximity may be the solution.

But at what scale? Bar-Yam says communities where people are well mixed – such as in peaceable Singapore, where enclaves are actively discouraged – tend not to have ethnic strife. Larger enclaves can also foster stability. Using mathematical models to correlate the size of enclaves with the incidences of ethnic strife in India, Switzerland and the former Yugoslavia, he found that enclaves 56 kilometers or more wide make for peaceful coexistence – especially if they are separated by natural geographical barriers,

Switzerland’s 26 cantons, for example, which have different languages and religions, meet Bar-Yam’s spatial stability test – except one. A French-speaking enclave in German-speaking Berne experienced the only major unrest in recent Swiss history. It was resolved by making it a separate canton, Jura, which meets the criteria.

Again, though, ethnicity and language are only part of the story. Lars-Erik Cederman of the Swiss Federal Institute of Technology in Zurich argues that Swiss cantons have achieved peace not by geographical adjustment of frontiers, but by political arrangements giving cantons considerable autonomy and a part in collective decisions.

Similarly, using a recently compiled database to analyze civil wars since 1960, Cederman finds that strife is indeed more likely in countries that are more ethnically diverse. But careful analysis confirms that trouble arises not from diversity alone, but when certain groups are systematically excluded from power.

Governments with ethnicity-based politics were especially vulnerable. The US set up just such a government in Iraq after the 2003 invasion. Exclusion of Sunni by Shiites led to insurgents declaring a Sunni state in occupied territory in Iraq and Syria. True to nation-state mythology, it rejects the colonial boundaries of Iraq and Syria, as they force dissimilar “nations” together.
Ethnic cleansing

Yet the solution cannot be imposing ethnic uniformity. Historically, so-called ethnic cleansing has been uniquely bloody, and “national” uniformity is no guarantee of harmony. In any case, there is no good definition of an ethnic group. Many people’s ethnicities are mixed and change with the political weather: the numbers who claimed to be German in the Czech Sudetenland territory annexed by Hitler changed dramatically before and after the war. Russian claims to Russian-speakers in eastern Ukraine now may be equally flimsy.

Both Bar-Yam’s and Cederman’s research suggests one answer to diversity within nation states: devolve power to local communities, as multicultural states such as Belgium and Canada have done.

“We need a conception of the state as a place where multiple affiliations and languages and religions may be safe and flourish,” says Slattery. “That is the ideal Tanzania has embraced and it seems to be working reasonably well.” Tanzania has more than 120 ethnic groups and about 100 languages.

In the end, what may matter more than ethnicity, language or religion is economic scale. The scale needed to prosper may have changed with technology – tiny Estonia is a high-tech winner – but a small state may still not pack enough economic power to compete.

That is one reason why Estonia is such an enthusiastic member of the European Union. After the devastating wars in the 20th century, European countries tried to prevent further war by integrating their basic industries. That project, which became the European Union, now primarily offers member states profitable economies of scale, through manufacturing and selling in the world’s largest single market.

End of nations: Is there an alternative to countries?

What the EU fails to inspire is nationalist-style allegiance – which Maleševic thinks nowadays relies on the “banal” nationalism of sport, anthems, TV news programs, even song contests. That means Europeans’ allegiances are no longer identified with the political unit that handles much of their government.

Ironically, says Jan Zielonka of the University of Oxford, the EU has saved Europe’s nation states, which are now too small to compete individually. The call by nationalist parties to “take back power from Brussels”, he argues, would lead to weaker countries, not stronger ones.

He sees a different problem. Nation states grew out of the complex hierarchies of the industrial revolution. The EU adds another layer of hierarchy – but without enough underlying integration to wield decisive power. It lacks both of Maleševic’s necessary conditions: nationalist ideology and pervasive integrating bureaucracy.

Even so, the EU may point the way to what a post-nation-state world will look like.

Zielonka agrees that further integration of Europe’s governing systems is needed as economies become more interdependent. But he says Europe’s often-paralyzed hierarchy cannot achieve this. Instead he sees the replacement of hierarchy by networks of cities, regions and even non-governmental organizations. Sound familiar? Proponents call it neo-medievalism.

End of nations: Is there an alternative to countries?

“The future structure and exercise of political power will resemble the medieval model more than the Westphalian one,” Zielonka says. “The latter is about concentration of power, sovereignty and clear-cut identity.” Neo-medievalism, on the other hand, means overlapping authorities, divided sovereignty, multiple identities and governing institutions, and fuzzy borders.

“The future exercise of power will resemble the medieval model”

Anne-Marie Slaughter of Princeton University, a former US assistant secretary of state, also sees hierarchies giving way to global networks primarily of experts and bureaucrats from nation states. For example, governments now work more through flexible networks such as the G7 (or 8, or 20) to manage global problems than through the UN hierarchy.

Ian Goldin, head of the Oxford Martin School at the University of Oxford, which analyses global problems, thinks such networks must emerge. He believes existing institutions such as UN agencies and the World Bank are structurally unable to deal with problems that emerge from global interrelatedness, such as economic instability, pandemics, climate change and cybersecurity – partly because they are hierarchies of member states which themselves cannot deal with these global problems. He quotes Slaughter: “Networked problems require a networked response.”

Again, the underlying behavior of systems and the limits of the human brain explain why. Bar-Yam notes that in any hierarchy, the person at the top has to be able to get their head around the whole system. When systems are too complex for one human mind to grasp, he argues that they must evolve from hierarchies into networks where no one person is in charge.

Where does this leave nation states? “They remain the main containers of power in the world,” says Breuilly. And we need their power to maintain the personal security that has permitted human violence to decline to all-time lows.

Moreover, says Dani Rodrik of Princeton’s Institute for Advanced Study, the very globalized economy that is allowing these networks to emerge needs something or somebody to write and enforce the rules. Nation states are currently the only entities powerful enough to do this.

Yet their limitations are clear, both in solving global problems and resolving local conflicts. One solution may be to pay more attention to the scale of government. Known as subsidiarity, this is a basic principle of the EU: the idea that government should act at the level where it is most effective, with local government for local problems and higher powers at higher scales. There is empirical evidence that it works: social and ecological systems can be better governed when their users self-organize than when they are run by outside leaders.

However, it is hard to see how our political system can evolve coherently in that direction. Nation states could get in the way of both devolution to local control and networking to achieve global goals. With climate change, it is arguable that they already have.

There is an alternative to evolving towards a globalized world of interlocking networks, neo-medieval or not, and that is collapse. “Most hierarchical systems tend to become top-heavy, expensive and incapable of responding to change,” says Marten Scheffer of Wageningen University in the Netherlands. “The resulting tension may be released through partial collapse.” For nation states, that could mean anything from the renewed pre-eminence of cities to Iraq-style anarchy. An uncertain prospect, but there is an upside. Collapse, say some, is the creative destruction that allows new structures to emerge.

Like it or not, our societies may already be undergoing this transition. We cannot yet imagine there are no countries. But recognizing that they were temporary solutions to specific historical situations can only help us manage a transition to whatever we need next. Whether or not our nations endure, the structures through which we govern our affairs are due for a change. Time to start imagining.


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Climate change effects on conflict, social unrest, health, mass migration, food, and national security

[ Since oil shortages from exponential decline rates of conventional oil will affect every aspect of civilization from farming to electricity to supply chains far harder and sooner than sea-level rise and other climate change problems, think “energy shortage” whenever climate change is mentioned below. Oil shortages can also arise suddenly from terrorism, war, blocking of oil tankers from key choke-points as well as declining imports as exporting nations keep more and more of their oil within their own country for their citizens. 

And when oil declines CO2 levels will begin to decline.  This is because oil is the master resource that makes all other resources available.  Conventional oil peaked in 2005, it’s highly unlikely unconventional deep ocean, tar sands, and fracked unconventional oil will be able to keep up with conventional oil rate decline (90% of our oil) and population growth, as soon as this year perhaps, and almost certainly by 2030. That means the dire predictions of CO2 increasing until 2100 are unfounded.  Anyhow, the one good thing about peak fossils now or soon is that we may be able to avoid a Permian-level extinction rate.  Though not, unfortunately, the ongoing 6th extinction as a still exponential birth rate forces human development to expand and pollute remaining (rain)forests, wild lands, wetlands, and other biodiverse habitat.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation, 2015, Springer]

National Research Council. 2013. Climate and Social Stress: Implications for Security Analysis. Committee on Assessing the Impacts of Climate Change on Social and Political Stresses, J.D. Steinbruner, P.C. Stern, and J.L. Husbands, Eds. Board on Environmental Change and Society, Division of Behavioral and Social Sciences and Education. Washington, DC: The National Academies Press. 253 pages.


How might climate change lead to new or increased risks to U.S. national security? Might it, for example, put new stresses on societies or on systems that support human well-being, such as supply chains for food or energy, and thus pose or alter security risks to the United States?

Unusually severe climate perturbations will be encountered in some parts of the world over the next decade with increasing frequency and severity thereafter. There is a compelling reason to presume that specific failures of adaptation will occur with consequences more severe than any yet experienced,

This report has been prepared at the request of the U.S. intelligence community with these circumstances in mind. The U.S. intelligence and security communities have begun to examine a variety of plausible scenarios through which climate change might pose or alter security risks.

First, we focused on social and political stresses outside the United States because such stresses are the main focus of the intelligence community. Second, we concentrated on security risks that might arise from situations in which climate events (e.g., droughts, heat waves, or storms) have consequences that exceed the capacity of affected countries or populations to cope and respond.

Growth in peer-reviewed literature on climate stress and armed political conflict1980–2012


FIGURE 5-4 Growth in peer-reviewed literature on climate stress and armed political conflict, 1980–2012.

Events within the United States and those outside the country affect each other, indirect links between climate and conflict can be related to direct ones, and the effects of climate change will not stop beyond a 10-year horizon and, in fact, can be expected to increase at an increasing rate.

Many of these events will stress communities, societies, governments, and the globally integrated systems that support human well-being.

Conclusion: Given the available scientific knowledge of the climate system, it is prudent for security analysts to expect climate surprises in the coming decade, including unexpected and potentially disruptive single events as well as conjunctions of events occurring simultaneously or in sequence, and for them to become progressively more serious and more frequent thereafter, most likely at an accelerating rate. The climate surprises may affect particular regions or globally integrated systems, such as grain markets, that provide for human well-being. The conjunctions of events will likely include clusters of apparently unrelated climate events occurring closely in time, although perhaps widely separated geographically, which actually do have common causes; sequences or cascades of events in which a climate event precipitates a series of other physical or biological consequences in unexpected ways; and disruptions of globally connected systems, such as food markets, supply chains for strategic commodities, or global public health systems. The surprises are likely to appear first as unusually severe extensions of familiar experience.

Events of a magnitude that has not been disruptive in the past can cause major social and political disruption if exposure and susceptibility are sufficiently great and response is inadequate or widely seen as such.

Conclusion: It is prudent to expect that over the course of a decade some climate events—including single events, conjunctions of events occurring simultaneously or in sequence in particular locations, and events affecting globally integrated systems that provide for human well-being—will produce consequences that exceed the capacity of the affected societies or global systems to manage and that have global security implications serious enough to compel international response. It is also prudent to expect that such consequences will become more common further in the future.

Available knowledge is consistent with a model in which the link of climate events to the potential for significant violence, conflict, or breakdown depends on these factors:

  • the nature, breadth or concentration, and depth of pre-existing social and political grievances and stresses;
  • the nature, breadth or concentration, and depth of the immediate impacts of the climate event;
  • the socioeconomic, geographic, racial, ethnic, and religious profiles of the most exposed groups or subpopulations, as well as their susceptibilities and coping capacities;
  • the ability and willingness of the incumbent government and its internal and external supporters to devise, publicize, and implement effective, transparent, and equitable short-term emergency response and then longer-term recovery plans;
  • the extent to which emergent or established anti-government or anti-regime movements or groups are able to take strategic or tactical advantage of grievances or problems related to responses to the event;
  • the type, breadth, and depth of legitimacy and support for authorities, the government, the regime, or the nation–state; and
  • the coercive and repressive capacities of the government and its willingness and ability to engage and carry out repression.

Within the U.S. government, the entity charged with developing fundamental knowledge about climate vulnerabilities is the U.S. Global Change Research Program (USGCRP).

Countries, regions, and systems of particular security interest should be prime targets for periodic stress testing.

No more than 12 to 15 countries will need to be monitored and subjected to periodic stress tests over the next decade, many of which are likely to be in critical, and often shared, watershed areas in South Asia, the Middle East, and Africa. If the criteria for importance to the United States are expanded to include foreign policy and humanitarian concerns, then the number of countries to be monitored and stress-tested regularly over the next decade may rise to between 50 and 60. Stress testing should also be applied periodically to global systems that meet critical needs, including food supply systems, global public health systems, supply chains for critical materials, and disaster relief systems.

This mission covers a broad range of risks. It includes possible military attacks on the United States, its allies and partners, and American facilities overseas, but it is much broader. The intelligence community is also responsible for assessing the likelihood of violent subnational conflicts in countries and regions with extremist groups, dangerous weapons, critical resources, or other conditions of security concern. It must also anticipate and assess various other risks to the stability of states and regions

How might climate change lead to new or increased risks to U.S. national security? Might it, for example, put new stresses on societies or on systems that support human well-being, such as supply chains for food or energy, and thus pose or alter security risks to the United States?

The assessment itself is still classified, but the methodology and principal conclusions of the report were presented in the statement for the record prepared in conjunction with testimony to the House Permanent Select Committee on Intelligence and the House Select Committee on Energy Independence and Global Warming.

The National Intelligence Council also sponsored an extensive set of unclassified reports and conferences on the potential effects of climate change on key regions and countries; the materials may be found at http://www. dni.gov/index.php/about/organization/national-intelligence-council-nic-publications

While climate change alone does not cause conflict, it may act as an accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world. In addition, extreme weather events may lead to increased demands for defense support to civil authorities for humanitarian assistance or disaster response both within the United States and overseas. The most frequently cited potential climate events include sea-level rise, the shrinking of glaciers and the Arctic icecap, an increase in extreme weather events, and increasingly intense droughts, floods, and heat waves. The scenarios and examples presented in the above reports address broad consequences for fundamental societal needs such as food, health, and water and also the likely implications for specific regions and countries. Although the reports generally agree that future climate events are likely to increase tensions and political instability within and between states and perhaps also increase internal conflicts, they do not forecast an increase in interstate conflict.

Statements About Climate and Security Connections from Previous Security Analysis

“Climate change acts as a threat multiplier for instability in some of the most volatile regions of the world.”

“[T]he United States can expect that climate change will exacerbate already existing north–south tensions, dramatically increase global migration both inside and between nations (including into the United States), spur more serious public health problems, heighten interstate tension and possibly conflict over resources, challenge the institutions of global governance, cause potentially destabilizing domestic political and social repercussions, and stir unpredictable shifts in the global balance of power, particularly where China is concerned. The state of humanity could be altered in ways that create strong moral dilemmas for those charged with wielding national power, and also in ways that may either erode or enhance America’s place in the world.” (Lennon et al., 2007:103)

“We assess that climate change alone is unlikely to trigger state failure in any state out to 2030, but the impacts will worsen existing problems—such as poverty, social tensions, environmental degradation, ineffectual leadership, and weak political institutions. Climate change could threaten domestic stability in some states, potentially contributing to intra- or, less likely, interstate conflict, particularly over access to increasingly scarce water resources.”

“Since climate change affects the distribution and availability of critical natural resources, it can act as a ‘threat multiplier’ by causing mass migrations and exacerbating conditions that can lead to social unrest and armed conflict.”

“While climate change alone does not cause conflict, it may act as an accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world. In addition, extreme weather events may lead to increased demands for defense support to civil authorities for humanitarian assistance or disaster response both within the United States and overseas.”

“Climate change is likely to have the greatest impact on security through its indirect effects on conflict and vulnerability.”

“Climate change is not happening in a vacuum: in many areas of the world it will be accompanied by rapid population growth, resource shortages, and energy price increases. Analytically, it is difficult to separate the effects of climate change from other factors, such as food shortages, migration, ethnic tensions and other issues that could drive violence. However, the potential impacts of climate change on water, energy, and agriculture will make it a central driver of conflict. The impacts of climate change combine to make it a clear threat to collective security and global order in the first half of the 21st Century.”

Declines in food and water security are among the most frequently cited kinds of harm, and sub-Saharan Africa is often singled out as the region most likely to experience the greatest effects on security. For example, Fingar (2008) wrote: We judge that sub-Saharan Africa will continue to be the most vulnerable region to climate change because of multiple environmental, economic, political, and social stresses. . . . Many African countries already challenged by persistent poverty, frequent natural disasters, weak governance, and high dependence on agriculture probably will face a significantly higher exposure to water stress owing to climate change.

In some of the scenarios increasing food and water insecurity interact to increase risks to health. In others health risks result from changes in weather patterns that shift the ranges for vector-borne diseases. Several scenarios see such declines in food or water security or disease outbreaks as likely drivers of population migrations, both within and across borders, that result in political or social stress, usually in the countries that receive the immigrant populations.

Two of the most-often cited scenarios are increased flooding or a rise in sea level forcing millions of Bangladeshis into India and an increasing desertification and drought forcing people from northern and sub-Saharan Africa into Europe. In both scenarios immigration issues are already a source of major tension.

Energy security also figures prominently in several projected climate–security scenarios, in which climate change is seen not only as yielding potential benefits for natural gas and perhaps biofuels producers but also as increasing the vulnerability of countries and industrial systems that rely on imported fuel.

The paths envisioned from climate events to specific security consequences are often complicated. For example, tensions could increase over access to increasingly scarce resources, and that escalation, especially if it led to overt conflict, could in turn further limit access to resources so that people who had not previously been affected would now face shortages. Some scenarios suggest that diminished national capacity or outright state failure would create increasing opportunities for extremism or terrorism. Again, sub-Saharan Africa is often cited as the most vulnerable region. In addition to these specific scenarios, many of the reports foresee increasingly frequent and increasingly severe natural disasters that will strain the capacity to cope with the resulting humanitarian emergencies, both in the United States and overseas.

These climate–security analyses raise concerns about several security issues beyond those of inadequate adaptation leading to humanitarian disasters, political instability, or violent conflict.

One class of scenarios involves direct threats of climate change to the ability of the U.S. military to conduct its missions. An example is the threat that sea level rise, possibly in combination with more intense coastal storms, poses to naval bases in low-lying coastal areas. More generally, analyses foresee climate change having broad negative effects on military organization, training, and operations—for example, by exacerbating operational difficulties for troops and equipment in already difficult locations. Other concerns include the vulnerability of U.S. Department of Defense (DOD) fuel supplies to severe weather that disrupts supply lines and the possibility of droughts restricting access to water for forces and facilities overseas. Perhaps the most frequently cited security risk from climate change is the possibility of melting Arctic sea ice leading to increased international tensions over newly accessible sea routes and natural resources in the Arctic. A recent NRC study, addresses these and other security issues of interest to the U.S. naval forces.


It is now clear from an accumulation of scientific evidence that the risks of potentially disruptive climate events are increasing.

The rate of carbon dioxide buildup in the atmosphere is now a factor of 10,000 greater than it was during any period on geological record prior to human civilization, and sea levels during prior interglacial periods with comparable average surface temperatures were substantially higher than they currently are. The unprecedented rate of carbon dioxide accumulation means that Earth’s climate system—and likely its ecological system as well—will continue to undergo a very large energy balance adjustment, possibly at an unprecedented rate. One can confidently expect that there will be significant consequences. Although we do not know the exact magnitude, timing, or character of all of these consequences, it is prudent to assume that some of them will appear as surprises in the form of unanticipated events that compel some reaction. National security decision makers do not like surprises and expect the intelligence community to provide sufficient warning to make it possible to avoid, ameliorate, or alter the undesired consequences of emerging developments.

Another factor limiting confidence in the projections of extreme climate events is that the fundamental attributes of Earth’s climate system have moved or very soon will move beyond the bounds of experience on which models are based. For example, the concentrations of greenhouse gases (GHGs) in the atmosphere are now greater than they have been for at least 800,000 year, and the current rate of carbon dioxide accumulation in the atmosphere is at least an order of magnitude greater than the natural rate that prevailed prior to the rise of human civilizations

As climate moves outside the range of experience, models of the effects of higher GHG concentrations cannot be validated against the kinds of high-resolution observational data that provide the most desirable basis for model testing.

Global average temperature already is or soon will be higher than it has been at any time in recorded human history, and it is increasing at an unprecedented rate

This does not mean that climate science has nothing to say about the future of extreme events that can be useful to the intelligence community. What it means is that there are multiple scenarios of the future of climate events that are each likely enough that they deserve consideration by the intelligence community. They should not be treated as predictions but rather as possibilities for evaluation in terms of the social and political scenarios they might set in motion, the security issues that might ensue, and the preparedness of the U.S. government to deal with the consequences.

In security policy the practice for deciding whether to take a hazard seriously is much different from the practice in making scientific claims. Security analysts are focused on risk, which is usually understood to be the likelihood of an event multiplied by the seriousness of the consequences if it should occur. Thus security analysts become seriously concerned about very high-consequence negative events even if scientists cannot estimate the probability of their occurrence with confidence and, indeed, sometimes even if they are fairly confident that the probability is quite low. During the Cold War, for example, most people thought that deterrence was robust, and few thought the likelihood that the Soviet Union would actually initiate a nuclear attack against the United States was anything but minuscule. But because the consequences would have been so dire, tremendous efforts were made by the intelligence and national security communities to monitor events that might provide early warning of the possibility of such a strike. The same is true of threats of terrorist attacks on the U.S. homeland today. Even though there have been few terrorist attacks altogether—and no major ones on the United States since 2001—substantial resources are allocated to identifying threats and reducing risks.

The kind of process that could lead to surprising and very extreme events can be drawn from evidence in the paleoclimate records combined with recognition of enhanced polar temperature variations due to changes in GHG concentrations. Citing an observation by Bintanja et al. (2005) that over the past 800,000 years a 1°C increase in global mean temperature was associated with increased equilibrium sea levels of about 20 meters, Hansen and Sato (2012) have suggested that the sea level rise in the next century may well be on the order of 5 meters. They argue that an increase of 3.6°F (2°C) over pre-industrial temperature levels, which is highly likely to occur in this century, would commit the planet to sea level rise of many meters. Given the considerable uncertainty in the science of glaciology about the stability of major ice sheets, it is unclear whether their contribution to sea level rise over the next century will be linear or will follow a nonlinear trajectory with an increasing rate of change over time. If nonlinear processes prevail, then the common projection of up to 1 meter by the end of the century may be a lower bound rather than an upper bound. The rate at which the sea level rise would occur is critically important, of course, in terms of the social and political consequences.

To better evaluate the import for U.S. national security of scenarios like this, which have some scientific plausibility but which extend beyond the current scientific consensus, the intelligence community might benefit from several types of knowledge that could be developed in the coming decade to help analysts anticipate security issues that might arise if such a scenario is realized.

These would include improved measures of rates of change in temperature and glacier ice cover in the polar regions; the use of existing climate models to project how this degree of ice melting would affect such outcomes as coastal inundation, extreme precipitation, and cyclonic storm severity; and assessments of the exposure, vulnerability, and response capacity of key countries and regions to these outcomes. Several other examples of potential rapid-onset extreme climate event scenarios can readily be found. For instance, models of changes in the Indian summer monsoon indicate that several sharply different but potentially dangerous shifts in the intensity of the monsoon are plausible, with the changes possibly occurring with a transition time of only a year or so. From a security perspective it may make sense to take each of the model-projected futures through a what-if scenario mode. Similarly, projections of the West African monsoon point to a Sahel (the east–west stretch of Africa south of the Sahara desert and north of the Sudanian savannahs) that is either wetter or drier or else has no average change in rainfall but has a doubling of the number of anomalously dry years—three scenarios that could be examined in terms of their social and political implications.

The expanded use of nuclear power in some countries to replace fossil fuels could increase risks of nuclear proliferation. Some policies to increase biofuel production could contribute to food price spikes and thus reduce effective food availability to low-income populations around the world. A single country’s decision to counter global warming by geoengineering, perhaps by fertilizing the ocean to grow photosynthetic organisms or by injecting sulfate particles into the stratosphere, could create conflict with other countries.

An upstream country might impound water from a river to guard against drought and thus reduce water supplies for its downstream neighbors. Or one country might purchase land in another country to produce food for its domestic consumption, creating conflict if a future food shortage hits the country where the food is being produced for export.

Our study focuses largely on developments and vulnerabilities external to the United States, a drought in U.S. agricultural areas that led to a spike in the global price of corn or wheat could lead indirectly to a humanitarian or political crisis elsewhere that could become a national security issue for the United States. Our study does examine such scenarios, but it does not examine the social and political consequences such events might have within the United States, nor does it examine the social and political consequences within the United States of climate events occurring elsewhere that disrupt global systems such as public health or the supply systems for critical commodities.

We emphasize, however, that such a separation between domestic and foreign impacts reflects only the division of missions among federal agencies, not the characteristics of climate phenomena or their consequences.

People and societies depend for their lives and well-being on a number of complex and interrelated systems that may be affected by climate variability and change. The most important systems are those that meet critical human needs by protecting health and providing water, food, energy, shelter, transportation, and essential commercial products. Each of these human life-supporting systems is affected by physical and biological systems, including climate, and by the socioeconomic and political conditions that

organize how people and societies interact with those systems to meet their needs. It is important to recognize that some human life-supporting systems, including international disaster assistance, protections against pathogens, and markets for key commodities such as grains and petroleum, are global. This means that climate-related events anywhere that affect these systems have the potential to create disruptions elsewhere on the planet.

Disputes about the proper attribution of the events can themselves contribute to social disruption. For example, between 2010 and 2012 Pakistan experienced a series of electrical blackouts and shortages of irrigation water, both attributable in part to decreased flows in the Indus River. The decreased flows occurred in the context of a long-term decline in per capita water availability, which by 2010 was less than a third of what it had been in the 1950s as a result of the increasing demands for irrigation water to feed a rapidly growing population, inefficient drainage practices, and possibly inequitable water allocation between regions and uses. Drought arrived on top of these stresses. Protest demonstrations and riots occurred with increasing frequency and intensity during 2010 and 2011, tied mainly to the power blackouts. The blackouts and water shortages themselves were disruptive enough, but, in addition, their cause became a contentious political issue with the potential to inflame Pakistan–India relations. The Pakistani foreign minister blamed the decreased flows on illegal water withdrawals upstream by India.

A simple example is the growing risk to human populations in coastal areas from storm surge and sea level rise. Climate and environmental change are exposing more land to these hazards, but in many regions rapid population growth and infrastructure development resulting from birth rates exceeding death rates, net migration, and economic development are putting people and property in harm’s way faster than climate and environmental change alone.

In many developing countries economic development and urbanization are making large populations less dependent on subsistence agriculture and local food supplies. This trend will decrease these populations’ vulnerability to extreme climate events affecting local crops and meat supplies. At the same time the dependence of low-income populations on imported food supplies provided by global markets may increase their vulnerability to climatic or economic events in other parts of the world that sharply increase the prices of the foods they have come to depend upon.

Disaster researchers point out that both “social capital” in the affected communities and formal emergency response institutions and infrastructure play important roles in mediating the net degree of loss, disruption, and stress that result from extreme environmental events, including climate events. Effective response also depends on the economic and other resources available to the governments of the affected populations and on the governments’ allocation of those resources. Whether or not climate events become social and political stresses serious enough to destabilize a government or generate violent conflict may depend on whether or not governments’ disaster response efforts are perceived to be under-resourced, poorly managed, or characterized by favoritism, corruption, and lack of compassion.

Thresholds or tipping points have received much attention in the literature of physical climate science. In Chapter 3 we discuss evidence on the likelihood, in the next decade, of crossing important physical thresholds that could lead to a sharply altered climate regime. Less commonly examined are the ways in which changes in human systems might sharply alter vulnerabilities and thus contribute to the potential of even small climate events to have major impacts. Such changes could contribute to social and political stresses.

Relatively slow climatic, ecological, or economic changes can shift the balance of supply and use of natural systems at a local or regional level to the point that adequate supply can be achieved only with favorable climate conditions. The effects may not be noticeable until an unusual climate event occurs,

Increasing Dependence on Global Markets

Economic development in most countries has generally been marked by a pattern in which livelihoods depend decreasingly on subsistence agriculture and the local manufacture of essential products and increasingly on wage labor and the purchase of necessities in global markets. This transition usually includes a rural–urban shift in national populations as well. Historically, these changes have tended to decrease vulnerability of food supplies to local climate events because when destructive climate events occur locally, necessities can be purchased from places where such events have not occurred. But while direct vulnerability to events that limit local food production has decreased, vulnerability, especially of the lowest-income groups, remains and may be increased with respect to events that limit distribution or that sharply increase prices in global markets for necessities that cannot be acquired locally. Economic globalization thus changes the nature of vulnerability to climate events as well as the degree of that vulnerability. With globalization, populations become increasingly interconnected via international trade so that it becomes possible, for example, for a climatic event that affects one of the world’s grain-producing regions to influence global commodities markets in ways that can seriously affect populations that do not directly experience the climate event. In this way the well-being of households in Lagos or Nairobi can be sharply affected by a drought in Ukraine or the United States.

Climate change can alter the ranges of certain species of pests or pathogens, increasing the exposure of human populations or economically important nonhuman species. The expansion of the pine bark beetle in North America is a familiar example. As average temperatures in the region increased, making additional areas suitable for beetle infestations, the beetle expanded its range northward and toward higher elevations (Carroll et al., 2003). The ecological change did not become seriously disruptive to human populations until the increased prevalence of dead trees combined with drought and hot weather to produce major wildfires that affected populated areas.

climate change wildfire usa












FIGURE 3-2 Map of increased risk of fire in the western United States as a result of rising temperatures and increased evaporation. The figure shows the percentage increase in burned areas in the West for a 1.8°F (1°C) increase in global average temperatures relative to the median area burned during 1950–2003. For example, fire damage in the northern Rocky Mountain forests, marked by region B, is expected to more than double annually for each 1.8°F (1°C) increase in global average temperatures. With the same temperature increase, fire damage in the Colorado Rockies (region J) is expected to be more than seven times what it was in the second half of the 20th century. SOURCE: National Research Council 2011a.

Slow climate change could potentially have similar effects on the evolution or distribution of human pathogens (influenza, yellow fever, etc.) or of pests of major crop or livestock species. When one of these pests or pathogens makes contact with a vulnerable population, epidemics, epizootics, or crop failures can spread rapidly, leading to major losses of human life and well-being. Slow processes of ecological change or slow changes in the resistance of host populations to disease organisms could lead to the crossing of a tipping point in vulnerability, at which point the meeting of pest and host populations can set off a highly disruptive chain of events.

Policy makers have limited cognitive bandwidth, so they can pay attention to only so many warnings.

Risk is typically defined as the severity of an undesired outcome multiplied by the likelihood of its occurrence. Climate change alters both the likelihood of occurrence and the likely severity of certain events that may degrade human life-supporting systems. Changes in these systems may in turn alter the likelihood and severity of social disruption, stress on political systems, and events of potential importance to U.S. national security—violent internal or international conflict, state failure, and so forth.

The security risks posed by climate change are multidimensional. The overall risk may depend on attributes of: Climate events: 1. Types of climate events (e.g., floods, crop failures, and disease outbreaks)

Earth’s climate provides the environment in which humanity has evolved and in which human societies have expanded and thrived. It also periodically generates events that disrupt those societies—in some historic cases, apparently causing the failure of entire civilizations, although in many of those cases considerable dispute exists about the precise cause.

The fundamental science of climate change suggests that continued global warming will increase the frequency or intensity (or both) of a great variety of events that could disrupt societies, including heat waves, extreme precipitation events, floods, droughts, sea level rise, wildfires, and the spread of infectious disease. Underpinning many of these extreme events is an acceleration of the global hydrological cycle. For each 1.8°F (1°C) increase in the global mean surface temperature, there is a corresponding 7 percent increase in atmospheric water vapor. Because warm air holds more water vapor than cool air, this leads to more intense precipitation. Essentially, warm air increases evaporation from the ocean and dries out the land surface, providing more moisture to the atmosphere that will rain out downwind. Water vapor is also a powerful naturally occurring greenhouse gas. As such it is the source of a very strong positive feedback to the coupled climate system that amplifies any external forcing by a factor of approximately 1.6.

Severely burned forest lands are also more prone to erosion in storms, indicating that forest fires increase the risks of soil degradation and of mudslides.

Climate change may thus be playing at least four different roles in this dynamic: It promotes bark beetle infestations, weakens trees, dries the environment, and creates weather conditions conducive to fire outbreak. These conditions, connected in sequence, increase the risks of major forest fires and their hydrological and human consequences.

Climate events occurring in one part of the world have the potential to affect other parts of the world through important, globally integrated systems other than climate itself. One example is the potential influence of climate events on the world supply—and therefore the prices—of international traded commodities, such as grains. By this mechanism an event such as the 2012 drought in the central United States, still developing as this is being written, could affect world corn or wheat prices in ways that make essential foods unaffordable for populations in Africa or Asia.

Constraints on the availability of humanitarian aid for a country because aid providers are responding to situations elsewhere in the world. Yet another would be a climate event that altered the distribution of a major pathogen affecting people or staple crops. These examples, which are discussed in greater detail in Chapter 4, indicate that there are numerous ways in which climate events could create shocks to integrated global social, economic, health, or technological systems and thus have effects far removed geographically from where the events occur.

A special focus should be on quantifying risks of events and event clusters that could disrupt vital supply chains, such as for food grains or fuels, and thus contribute to global system shocks.

Bread or flour are often subsidized, demonstrations and even riots frequently occur in response to efforts by governments to reduce subsidies, for example as part of structural adjustment policies. In general these disturbances are contained without an impact on the regime, even if there may be significant violence or property damage. The issue with regard to climate change is whether that pattern could change and that the countries most vulnerable to food price increases could become vulnerable to severe social and political unrest. Unfortunately, there is very little in the peer-reviewed literature concerning the links between food price increases and political unrest. One notable exception is a recent working paper that presented an econometric analysis of global data since 1990 and found that high food prices were significantly correlated with political unrest related to food prices, with the latter measured by counting the number of news stories with at least five mentions of terms related to food and riots (or their synonyms). Interest in the topic has increased in recent years, particularly within the community concerned with food security, spurred on by the question of whether rising food prices played a role in sparking the unrest of the “Arab Spring” of 2011. It is worth noting that the rapid food price increases in the MENA during this period were not driven by local weather conditions, but by events around the world including a severe heat wave in Russia. A report by Lagi et al. (2011) notes that clusters of unrest in the MENA region in 2008 and early 2011 both began immediately after the United Nations Food and Agriculture Organization food price index passed a value of 210. Although they do not identify a causal link between high food prices and riots, the authors argue that a food price index value of 210 represents a simple potential predictor of increased unrest in food-importing countries. Breisinger et al. (2011) find that the unrest was preceded by a drop in food security across the MENA, and Ciezadlo (2011) emphasizes the role that food subsidies have played in popular attitudes toward regimes throughout the region. Johnstone and Mazo (2011) draw connections between climate events (which reduced global food production in the years preceding 2011) and the uprisings, describing climate change as a potential “threat multiplier” in the case of already unstable situations. All of these analyses are careful to note that drawing direct causal links between food prices and political instability is not possible, but they argue that food prices must be considered along with political and cultural factors in explanations of the uprisings.

Possibilities for energy system shocks to have global impacts in the coming decade lie primarily in the petroleum sector. The integration of petroleum markets was stimulated by desires to safeguard the supply of oil from manipulation by political actors in the wake of Organization of Petroleum Exporting Countries embargoes in the 1970s. A consequence of this integration was that by the 2000s the petroleum system had become so complex and interconnected that, as one study concluded, “a disruption in one part of the infrastructure can easily cause severe discontinuities elsewhere in the system”.

Furthermore, the sensitivity of the system has increased because of a rapid growth in global petroleum consumption that has not been matched by a corresponding increase in production. The result has been an extremely tight market, with petroleum supplies not significantly greater than demand. This “demand shock”, led by the emerging economies in China and India, has left global markets volatile and very sensitive to disruptions in supply.

In this tight, sensitive market, climate events that disrupt the production or distribution of oil could lead to price spikes across the global energy market. Several types of climate events could cause such disruptions. Tropical storms and the increased storm surges that result from sea level rise and, in some cases, land subsidence, can disrupt production, refining, and transport of petroleum. One-third of U.S. petroleum refining and processing facilities are located in coastal areas vulnerable to storms and flooding. Similar infrastructure vulnerabilities exist in Europe and China as well. In addition, because offshore oil and gas platforms are generally not designed to accommodate a permanent rise in mean sea level, climate-related sea level rise would disrupt production. The effects of Hurricanes Katrina and Rita in 2005 illustrate this potential. The storms disrupted oil and gas production from offshore rigs, refining at facilities in the coastal zone, and transportation via port facilities and pipelines, causing a spike in global prices. The pattern repeated, although with a smaller magnitude, when Hurricanes Gustav and Ike hit the Gulf Coast region in 2008, destroying drilling rigs and disrupting refineries. Other climate events could also affect the global oil market. Oil refining requires large amounts of water for cooling purposes; hence, reduced water availability during a drought would reduce refining capacity. If drought is accompanied by increased temperatures, refineries will require more cooling water to operate, potentially exacerbating the situation. Also, Arctic energy infrastructure (pipelines and drilling operations) is vulnerable to damage from subsidence caused by melting permafrost.

There has been some analysis of their potential macroeconomic effects. Hamilton (2003, 2008), reviewing six decades of oil price and macroeconomic data, reported a very strong relationship between oil price shocks and recessions. To the extent that economic disruptions drive political instability, it is plausible that an oil price shock could increase instability, particularly in a situation that is already politically sensitive. However, little research to date has directly addressed the political impacts of energy price shocks, whether caused by climate-related supply disruptions or other factors. These possibilities deserve more careful empirical analysis, particularly as energy markets continue to tighten with increased consumption from Asian nations and as risks increase of climate events disrupting energy supplies.

Strategic Product Supply Chains

Over the past few decades the globalization of many industries has been accompanied by a streamlining of their supply chains in order to reduce costs. However, as a 2012 World Economic Forum publication noted, “the focus on cost optimization has highlighted the tension between cost elimination and network robustness—with the removal of traditional buffers such as safety stock and excess capacity” (p. 10). Climate events can thus be a source of major disruptions in world markets for critical non-food commodities. Such events are counted as one of the major risks to be addressed in the U.S. National Strategy for Global Supply Chain Security, released in January 2012 (White House, 2012).

The floods in Thailand in 2010–2011 illustrate how an extreme climate event that stresses a government’s ability to respond can have global consequences. Much of Thailand, including portions of the capital Bangkok and its surrounding manufacturing districts, was flooded for extended periods between July 2011 and January 2012. The flooding resulted in more than 800 deaths, affected 13.6 million people, damaged 7,700 square miles of farmland, and caused more than $45 billion in economic losses. Resistance appeared in some localities where flooding had increased due to barriers designed to protect neighboring communities. Some people ripped down the sandbags that they saw as unfairly diverting flood waters to their areas.

The floods also caused significant disruption to regional and global supply chains. Manufacturing parks located near Bangkok supply parts for the worldwide automobile and electronics industries. One-third of the world’s hard drives and high percentages of other key computer components are built there. Many of these Thai manufacturing areas were covered by up to 3 meters of water, causing parts shortages worldwide. Even the computer firms located elsewhere in Thailand that escaped the flooding found they could not get critical parts. Production is not expected to fully recover until 2013. In the meantime, component prices rose as suppliers attempted to stockpile what was available and manufacturers found they could not get the parts they needed. The flooding of automotive parts production facilities forced Honda and Toyota to slow production lines in many countries.

A study by Dell et al. (2012) found that a 1°C rise in temperature in a given year increased the probability of “irregular” leadership transitions (such as coups) in poor countries.

Traditionally, the primary security concerns of the United States and other nations have included the prevention of external assault, the prevention of insurrections and other large-scale domestic violence, and the maintenance of the political and economic stability of the state. U.S. national security concerns also extend to similar threats faced by our allies and by other states considered to be of critical importance for our national security. Other situations, such as major humanitarian crises, pandemics, or disruptive migration, which may threaten the stability of U.S. allies or other states and perhaps lead to a direct U.S. response, are also increasingly considered part of the landscape of potential security risks.

Water is essentially irreplaceable. With other resources, such as energy and food resources, there are a number of substitutes that can be used to meet the societal needs for these resources. Currently, however, water can only be replenished at costs that are beyond the reach of many of the most water-stressed countries. Conflict over water availability or caused by issues related to delivery of water resources to meet competing needs of energy, food, and health thus have the potential to define critical climate-related conflicts and relief challenges across the globe.

The agricultural sector is currently responsible for around 70% of freshwater consumption.

“There are 263 rivers around the world that cross the boundaries of two or more nations”. In total, these river basins account for just under half of Earth’s land area, are home to 40% of the world’s population, and make up some part of 145 countries. A number of these basins—the Indus, Nile, Tigris–Euphrates, Jordan, Brahmaputra, and Amu Darya river systems, for example—are in areas of strategic importance for the United States. “In addition, about 2 billion people worldwide depend on groundwater, which includes approximately 300 transboundary aquifer systems”.

In defining migration, a distinction is typically made between internal migration, which entails population movement within a country, and international migration, where population movement extends across international borders. It is also important to keep in mind other features of population movement, such as whether it is temporary or permanent and whether it is voluntary or forced. Even within these different categories, migration can take a variety of forms, including: temporary or permanent displacement of a population following some type of climate event or other disruptive event, such as a tsunami or nuclear accident; forced or voluntary migration out of an area of political or military conflict; temporary or permanent relocation of a population from an area threatened by flooding or inundation; and temporary or permanent movement from one region or country to another for economic opportunity.

Given the emphasis in this report on climate change and U.S. national security, we are particularly interested in a specific type of migration, which we term “disruptive migration.” Disruptive migration, which may be internal or international, generally involves large-scale movements of populations that are socially, economically, or politically disruptive, either in the area of origin, the area of destination, or in sensitive border regions that may be affected by population movements.

Climate change may constitute a direct environmental driver of either temporary or permanent migration via its effects on the availability of ecosystem services including, for example, the supply of freshwater, which may change under altered rainfall regimes; coastal flood protection, which may be lost as the result of sea level rise; and changes in the productivity of agricultural lands as a result of changes in temperature and precipitation regimes. Climate change may also affect the likelihood of droughts, coastal storms, and other types of hazardous climate events, which may temporarily or permanently displace susceptible households. Climate change may indirectly contribute to migration, whether temporary or permanent, via effects on economic, political, and social drivers. For example, climate change may influence agricultural and natural resource–related livelihood opportunities in a particular region, or it may contribute to political conflicts within a region over water or other resources.

Climate change–related threats to human security may be just as prominent in areas of migration destination, particularly urban ones that receive large numbers of immigrants, as in areas of emigration. Migrants into new areas may also place strains on governmental or other resources and may potentially contribute to new types of conflicts, particularly within receiving areas that are already under social stress

Migration typically requires a significant outlay of financial resources, yet actions needed to cope with environmental changes (e.g., selling land or livestock) can reduce a household’s assets to the point that family members who could adapt by migrating may not have the resources to do so. Those households or individuals who cannot migrate out of a region that is undergoing environmental change are among the most vulnerable (Black et al., 2011c). Regions with large concentrations of “trapped” populations that are unable to migrate may pose a new type of human security threat. When an extreme climate event occurs, these “poorest of the poor” may end up trapped in environmentally degraded areas.

The Political Instability Task Force (PITF) is an ongoing and unclassified research program funded by the Central Intelligence Agency that began work in 1994 as the Task Force on State Failure, a panel of academic scholars and methodologists. Its original task was to assess and explain the vulnerability of states around the world to political instability and state failure, focusing on events like the collapse of state authority in Somalia and the former Zaire and other onsets of disruptive regime change, civil war, genocide and mass killing, and onsets and terminations of democratic government.

Extreme political instability has generally not explored potential climate–security connections. As the Bates (2008) and Marten (2010) reviews make clear, most of the efforts to understand the origins of state failure focus primarily on economic factors, various forms of ethnic divisions, and the state of democratization in a particular country.

One literature that does provide a more detailed exploration of potential climate–security links is the literature on the potential political impacts of disasters. Its findings generally support the conclusion that climate events that trigger disasters of various types are associated with political instability, although not in a straightforward way. The relationships, including causes and effects, are highly complex and contingent. The overall analytic challenge was well captured in a recent review of detailed analyses of several major disasters of the past, including some that led to state failures (Butzer, 2012). The review found that in many, but not all, instances, states survived the calamities, and it cautioned against drawing too straight a line between disasters and state failures, noting that state breakdowns differ because of the “great tapestry of variables” involved.

The scenarios in which climate events are most likely to lead to risks to U.S. national security are in countries of security concern that have a significant likelihood of exposure to particular climate events combined with susceptible populations and life-supporting systems, weak response capacity, and underlying sources of potential political instability. Pakistan offers a case that illustrates these points particularly well, as described below.

Of the many places in the world where climate dynamics might induce globally consequential disruption within a decade, Egypt is a principal possibility. Egypt’s population of some 80 million people consumes 18 million tons of wheat annually as a dietary staple, half of which is imported, with virtually all the rest dependent on water from the Nile River. The Nile flows through Sudan and Ethiopia before entering Egypt and accumulates nearly all of its volume upstream. The production of wheat and other food crops supported by the river is being burdened by population increases in all three countries. The countries’ current combined total of 208 million people is projected to reach 272 million by 2025, presumably generating an increase in agricultural production demand on the order of 30% or more within the watershed. In addition South Korea and Saudi Arabia have purchased large tracts of land in the watershed to assure imports for their own populations, and that will also add to the demand for water.

Pakistan is at risk

Pakistan presents a clear example of a country where social dynamics and susceptibility to harm from climate events combine to create a potentially unstable situation. Pakistan’s economy depends heavily on water from the Indus River, and competition for this water is increasing. Therefore, Pakistan’s political and economic systems may be vulnerable to hydrological changes in the Indus system such as have been observed recently and which may be affected by climate change and variability at a subcontinental scale. Agriculture is a central component of the Pakistani economy. The sector accounts for 21% of annual gross domestic product (the second-largest fraction by sector) and is by far the largest source of employment, employing 45% of Pakistani workers.

These percentages do not capture the dependence of other sectors on agriculture. Much of the agricultural production feeds domestic industry, particularly the cotton grown for the country’s large textile industry. Textiles and clothing make up a very large portion of Pakistan’s exports—approximately 50% in recent years—thus representing the country’s most important source of foreign currency.

Given the low levels of rainfall in the agricultural areas of the country, Pakistan’s agricultural sector relies heavily on irrigation. The ratio of area of irrigated to rain-fed agricultural land is 4-to-1, the highest ratio worldwide. Water for irrigation is drawn primarily from three storage reservoirs on the Indus, making this crucial economic sector highly dependent on adequate flows in the Indus system. Further stressing the Pakistani water system, demands for water for agricultural, domestic, and industrial uses are increasing. Agricultural production is intensifying, shifting from subsistence crops to commodity crops (mostly cotton, sugarcane, and rice) that produce more output but require more water; manufacturing activity is increasing as a share of the economy; and population growth, especially in urban areas, is requiring more withdrawals of Indus water for domestic consumption. Also, hydroelectric power provides 37% of Pakistan’s electricity, mostly from reservoirs also used for irrigation-water storage, creating competition for water resources between agriculture and energy,

Protests over power outages, although not new in Pakistan, have led to increasing civil unrest over the past five years. With the onset of a sweltering summer, power shortfall hit a record high of 8,000 megawatts in 2012, or nearly 45% of national demand, leading to 18 to 20 hours per day of power outages and stoking riots and mass-scale protests. Reports from the ground recorded violent protests throughout the country. In a recent episode of escalating violence, rioters burned trains, damaged banks and gas stations, looted shops, blocked roads, and, in some instances, targeted homes of members of the National Assembly and provincial assemblies. According to a senior local police officer in the largest city, Karachi, on average there were at least six protests against power outages in the city per day in 2011. Competition between water uses is likely to increase if government plans are implemented to increase hydroelectric capacity as a cheaper alternative to imported fossil fuels. As a result of these demographic and economic changes, an already tight water supply is becoming increasingly stressed, to the point that

Beyond the short-term events, there is some evidence that the mass balance of the Karakoram glaciers in the headwaters of the Indus system— the source for the great majority of the river’s water (Archer and Fowler, 2004)—has been changing in ways that may reduce river flows. Glacial and snow melt are more important to water supplies in Pakistan than they are to countries farther east in the Himalayan region, where monsoons provide a much larger share of river flows (Bolch et al., 2012). Precipitation levels in winter, when most glacial accumulation occurs in the Karakoram area, have recently increased


Patterns of Violent Conflict

As background for the discussion of research about climate–conflict connections, it is useful to note several general trends in global patterns of internal and interstate conflict since the end of World War II. Traditionally researchers have used the threshold of 1,000 battle-related deaths in a year when defining a “war.” There are several large databases that track the incidence of conflicts, including different types of wars and armed conflicts around the world. In addition, there are projects to track other forms of political violence (e.g., armed attacks and political murders) or political conflict that may fall short of violence (e.g., riots).

The limitations imposed on forecasting by the relatively small number of interstate wars in recent decades are compounded by the continuing changes in the fundamental characteristics of the international system since the end of the Cold War. These circumstances make it extremely difficult to test competing hypotheses about risk factors for interstate conflict that would be relevant to current circumstances. In addition to these difficulties there is a lack of consensus among scholars about the causes of such wars and about how they compare with the sources of internal conflict. These are problems that affect any effort to understand the risks of a return to more frequent interstate conflict.

There has also been almost no effort to explore empirically whether climate factors might lead to or exacerbate tensions between states to a point short of outright war.

The core thesis for those arguing for a link between climate and violent conflict is that climate change–induced health problems and resource scarcity (in particular, the availabilities of water, food, and energy) will lead to interstate violence and intrastate unrest, instability, and armed conflict in the most directly affected nations or regions. Homer-Dixon (1991, 1994, 1999, 2007) and Swart (1996) were among the earlier articulators of this concern in the peer-reviewed literature, followed later by Sachs (2005, 2007), Kahl (2006), Stern (2007), and Lee (2009), among others.

Adverse climate change could lead to increasing natural disasters, rising sea levels, and worsening resource scarcities, all three of which are posited to lead directly to increased or forced migration and then, both directly and indirectly, to “loss of economic activity, food insecurity, and reduction in livelihoods” There are also pre-existing conditions as poor governance, societal inequalities, and “bad neighbors” (countries characterized by ongoing violence) as well as population pressure exacerbated by migration, and five “social effects of climate change [that] have been suggested as intermediating catalysts of organized violence”: political instability, social fragmentation, economic instability, inappropriate response (possibly meaning inappropriate adaptation), and additional migration, all of which act in a feedback loop. These five putative social effects of adverse climate change could lead to either increased opportunities to organize violence or increased motivation to instigate violence, with the end result being an increased risk of armed conflict.

Conclusion: It is prudent to expect that over the course of a decade some climate events—including single events, conjunctions of events occurring simultaneously or in sequence in particular locations, and events affecting globally integrated systems that provide for human well-being—will produce consequences that exceed the capacity of the affected societies or global systems to manage and that have global security implications serious enough to compel international response. It is also prudent to expect that such consequences will become more common further in the future.

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Climate change effects on hydropower in California

[ The main impact is on hydropower, the largest source of renewable electric power in California, and besides natural gas, the only other way to balance wind and solar power, (unless utility-scale energy storage batteries become available).  But hydropower is often unavailable (i.e. drought, low reservoirs, to provide months of agriculture and drinking water, protect fisheries, etc).

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”]

CEC. September 2014. Climate change impacts on generation of wind, solar, and hydropower in California. California Energy Commission Lawrence Livermore National Laboratory CEC-500-2014-111


The study findings for hydroelectric power generation show significant reductions that are a consequence of the large predicted reduction in annual mean precipitation in the global climate models used. Reduced precipitation and resulting reductions in runoff result in reduced hydropower generation in all months and elevation bands. These results indicate that a future that is both drier and warmer would have important impacts on the ability to generate electricity from hydropower.

Increased production of electricity from renewables, although desirable from environmental and other viewpoints, may create difficulties in consistently meeting demand for electricity and may complicate the job of operating the state’s transmission system. This would be true of any major change in electrical supply portfolio but is especially so when the proportion of weather-dependent renewables- which are subject to uncontrolled fluctuations-is increased.

Climate change may affect the ability to generate needed amounts of electricity from weather-dependent renewable resources. This could compromise California’s ability to meet renewable targets. For example, it is well documented that climate change is affecting the seasonal timing of river flows such that less hydropower is generated during months of peak demand and maximum electricity value. Generating solar and wind power may also be impacted by long-term changes in climate.

A changing climate may bring increases or decreases in mean wind speeds, as well as greater or lesser variation wind speeds. These changes could make long- term planning for wind energy purposes problematic. Some regions where continued wind development is occurring, such as California and the Great Plains, may be especially susceptible to climate change because the wind regimes of these regions are dominated by one particular atmospheric circulation pattern.

CHAPTER 4: Hydropower

Numerous modeling studies, starting with Gleick (1987), have predicted that anthropogenic climate change will have significant impacts on the natural hydrology of California, with implications for water scarcity, flood risk, and hydropower generation. The best-known of these impacts are straightforward consequences of increased temperatures: a reduced fraction of precipitation falling as snow, reduced snow extent and snow-water equivalent, and earlier melting of snow. An increased fraction of precipitation as rain in turn result s in increased wintertime runoff and river flow; earlier and reduced snow melt results in reduced late-season runoff and river flow. Despite the well-known lack of consensus among global climate models about future changes in annual California precipitation amounts, the effects just mentioned are robustly predicted because they result from warming, about which there is consensus. Confidence in these predictions is increased by observational studies that show these changes to be underway as well as by studies involving both observations and modeling that indicate that observed changes in western U.S. hydrology are too rapid to be explained entirely by natural causes.

One possible consequence of human-caused changes in mountain hydrology in the western United States is changes in hydropower production, especially from high-altitude facilities on watersheds that have historically been snow-dominated. This concern is especially acute, since a majority of the state’s hydropower is produced in facilities of this type. Furthermore, these high-elevation facilities have relatively little storage capacity, implying limited capability to adapt to changes in climate.

A shift toward earlier-in-the-year snowmelt and runoff would tend to produce similar changes in the timing of hydropower generation. In particular, in the absence of adequate storage capacity, it might become difficult to produce power at the end of the dry season, when demand for electricity can be very high.

On the other hand, a large enough reservoir could store enough water to effectively buffer this problem and allow power generation throughout the dry season. This means that the effects of climate change on hydropower generation will depend strongly on reservoir size. And of course on altitude, being greatest at intermediate altitudes where slight warming will raise the temperature above freezing. Watersheds that are already rain-dominated, or are well below freezing, will not exhibit the effects discussed here in the near future.

Of course, besides issues of seasonal timing, a significant increase or decrease in annual total precipitation would be an important benefit or detriment (respectively) to hydropower generation.

The published literature largely supports this picture.

Madani and Lund (2009) looked at hydropower generation in 137 high-elevation systems under three simple climate change scenarios: wet, dry, and warming only. It found that existing storage capacity is sufficient to largely compensate for expected changes in the seasonal timing of snowmelt, runoff, and river flow. A hypothetical decrease in annual total runoff, however, translates more directly into a corresponding reduction in energy generation. The predicted response to a hypothetical increase in annual runoff, however, is not symmetrical: this scenario results in increased spill and very little increase in energy production.


The research team’s results for optimized energy generation are driven primarily by large projected reductions in precipitation in the future climate scenario. In the study area, annual mean precipitation in the future period is reduced by as much as 30 percent compared to in the historical reference period. Because of the complex relationships among precipitation, evapotranspiration, and runoff, these already- large precipitation decreases produce proportionately larger reductions in run off and stream flow. In other words, the percentage reductions in runoff and river flow exceed those in precipitation.

This phenomenon is exaggerated by the tendency for warming to result in increased evaporation.

Disproportionate decreases in runoff in a dry future- climate scenario are seen in other modeling studies Jones et al. (2005) investigated changes in runoff in several surface hydrology models in response to a hypothetical 1% change in precipitation and found responses ranging from 1.8 to 4.1%; that is, the percentage response in runoff was anywhere from roughly double to roughly 4x the percentage change in precipitation.

Reduced precipitation and resulting reductions in runoff result in reduced hydropower generation in all months and elevation bands

These results indicate that a future that is both drier and warmer would have important impacts on the ability to generate electricity from hydropower.


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Climate change is already collapsing nations

Global frequency of heat wave events. Source : National Academy of Sciences, graph
derived from EM DAT, International Disaster Database, Universite Catholique de Louvain,


Ahmed, Nafeez. 2017. Failing States, Collapsing Systems BioPhysical Triggers of Political Violence. Springer.

“The last half century has seen a dramatic increase in the frequency and severity of extreme weather events in the form of droughts, wildfires, extreme rainfall, floods, hurricanes and tornadoes. The Met Office concludes that despite scientists’ reluctance to attribute specific extreme weather events to human-induced climate change, there is now no longer any doubt that climate change is making extreme weather increasingly likely all over the world (Stott 2016).

By far the most disturbing study led by the University of Hawaii argued that the pattern of escalating intensity and frequency indicates that anthropogenic climate change is rapidly pushing the climate system into a ‘new normal’, that breaks fundamentally with the preceding 150 years. The paper came up with the concept of “climate departure” to explain its prediction that in coming decades, the trajectory of escalating extreme weather signals that the climate is destined to ‘depart’ from the historical norm of weather as we have known it. On a business-as-usual trajectory, the initial locus of this “climate departure” will occur within the next decade in the tropics—that is, a vast region encompassing parts of the Middle East, Central Asia, South Asia and Africa. On a global scale, “climate departure”—the entry into a ‘new normal’ of extreme weather—will hit around 2047. Even under stringent carbon emission mitigation scenarios, this tendency to “climate departure” will not be halted—only postponed a few more decades, to around 2069 (Mora et al. 2013).

While the oceans are dying, above the oceans the atmosphere is already experiencing the direct impact of climate change in the form of intensifying heatwaves and extreme weather events. The increasing frequency—and increasing intensity—of heat waves is perhaps one of the most overt manifestations of the dangerous impacts of climate change. Since 1950, the number of heat waves worldwide has increased, heat waves have become longer, and the hottest days and nights are hotter than ever before. In recent years, the global area affected by summer heatwaves has increased 50-fold. Within the US, the direct impact of more frequent and intense heatwaves is an increasing frequency and duration in wildfires (Trendberth et al. 2012).

Heatwaves would likely occur 10 times more than they do now. Such intolerable conditions would endanger the lives of the regions’ 500 million inhabitants, and force people to migrate simply to survive (Lelieveld et al. 2016).

This means, very simply, that no matter what mitigation efforts look like on climate change, the coming decades will see increasing instability in the Middle East and North Africa, and an ever greater exodus from parts of the region into the Northern hemisphere. Intensifying climate-induced droughts and heatwaves will create conditions that no regional state will be able to cope with.

Food Production

Climate change is already dramatically affecting the global food system. Many of the extreme weather events in recent years have been concentrated in some of the world’s most critical food basket regions, contributing directly to prolonged crop failures that have been linked to global food price spikes and other phenomena. It is already known that anthropogenic climate change to date has had a debilitating impact on global food production, partly associated with the impact of more frequent extreme weather events on crop production. Total losses in national cereal production from 1964 to 2007 due to droughts and extreme heat likely caused or exacerbated by climate change have been estimated at 9–10% (Lesk et al. 2016).

Corresponding to the rising trends of increasing climate disruption and energy decline, recent decades have seen a marked increase in political violence worldwide. These outbreaks of political violence demonstrate that prevailing national state institutions and their domestic monopolies in the means of violence (which is the basic underpinning of state power as defined by the capacity to mobilize violence to control a defined national territory) are increasingly being challenged and undermined. In other words, what we are witnessing is a creeping acceleration of the forces of non-state political violence that directly weaken the very fundamentals of state power.

30 May 2012 by Michael Marshall. Extra heatwaves could kill 150,000 Americans by 2099. NewScientist.

[ My comment: Meanwhile, climate change will be causing blackouts and brownouts, so millions more won’t have air conditioning, which could lead to even higher death tolls].

By the end of the century, heatwaves caused by global warming could kill 150,000 people who would otherwise live.

A report by the US Natural Resources Defense Council (NRDC) estimates how many extreme heat events will hit the US this century, assuming greenhouse gas emissions continue on their current path according to the report – Killer Summer Heat: Projected death toll from rising temperatures in America due to climate change.

Climate models suggest that by 2099 the 40 most populous cities will have approximately eight times as many days of extreme heat per year as today.

The figure may actually be an underestimate, because the US population is ageing and older people are more vulnerable to heat. Louisville, Kentucky will be the worst affected city, with an extra 19,000 deaths by 2099.

The European heatwave of 2003 killed 35,000 people, so the report’s estimate is “not unrealistic”, says Andreas Sterl of the Royal Netherlands Meteorological Institute in De Bilt.


Lelieveld, J., Y. Proestos, P. Hadjinicolaou, M. Tanarhte, E. Tyrlis, and G. Zittis. 2016. Strongly Increasing Heat Extremes in the Middle East and North Africa (MENA) in the 21st Century. Climatic Change 137(1–2): 245–260.

Mora, Camilo, et al. 2013. The Projected Timing of Climate Departure from Recent Variability. Nature 502(7470): 183–187.

Stott, Peter. 2016. How Climate Change Affects Extreme Weather Events. Science 352(6293): 1517–1518.

Trendberth, Kevin, Jerry Meehl, Jeff Masters, and Richard Somerville. 2012. Heat Waves and Climate Change. https://www.climatecommunication.org/wp-content/uploads/2012/06/Heat_ Waves_and_Climate_Change.pdf

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