NEW NOTE: Read comment below by Keith Stewart from Greenpeace who says the subsidies identified in the IEA report are based on consumption subsidies, not production subsidies, which are somewhere around $100 billion on top of consumption subsidies and are estimated at nearly $3 billion in Canada annually just for oil alone.

NOTE: To get some perspective on the breakdown of fossil-fuel subsidies, it would be worth it to visit this site. The IEA says that coal only represents $6 billion of global fossil-fuel subsidies, and about half of the total $312 billion in subsidies are in half a dozen developing countries, not in the U.S., not in Canada. Yes, we need to be eliminating subsidies for fossil fuels, but we need to avoid exaggerating the situation in North America for the sake of making a case for renewables. That said, the case for renewables can and should still be made. Fact is, the fossil-fuel industry is benefitting from decades of subsidies that allowed it to get an infrastructure foothold in our economies. There’s no reason to deny renewables the same boost.

The International Energy Agency put out its annual World Energy Outlook today and urges strong and sustained government support for the deployment of renewable energy. The agency pegs 2009 subsidies for renewables at $57 billion and calls for that to increase to $205 billion by 2035. “The share of modern renewable energy sources, including sustainable hydro, wind, solar, geothermal, modern biomass and marine energy, in global primary energy use triples between 2008 and 2035 and their combined share of total primary energy demand increases from 7 per cent to 14 per cent,” according to the agency. Fossil fuel subsidies stood at $312 billion in 2009 and the agency urged that they be eliminated to accelerate the transition to renewables.

But even this won’t hold global temperature increases to below 2 degrees C, it concedes. It expects that CO2 emissions will grow to about 650 parts per million before stabilizing, resulting in a temperature increase of more than 3.5 degrees C. Not good, as we need to keep emissions to 450 PPM or below to keep temperature increases manageable. That means a far more rapid phase-out of fossil-fuel subsidies and more aggressive support of renewables. Ideally, oil demand would peak just before 2020 and decline by 10 per cent by 2035. Coal and, yes, natural gas demand would also peak before 2020 under this scenario. Unlikely, sure, but it’s what it will take. Meanwhile, we need to see renewables and nuclear climb to a combined share of 38 per cent of primary energy supply by 2035.

“The message here is clear,” said Nobuo Tanaka, executive director of the IEA during a London press conference. “We must act now to ensure that climate commitments are interpreted in the strongest way possible and that much stronger commitments are adopted and taken up after 2020, if not before. Otherwise, the 2 degrees C goal could be out of reach for good.”

You can read an overview of the report here, and get a lengthier executive summary here. Bloomberg News has a report here.

Environmental groups such as Greenpeace generally applauded the IEA for recognizing the rising importance of renewables, but they were still critical of the IEA for, among other things, putting too much hope in carbon capture and nuclear technologies. “The IEA´s assumption, that after 2020 98 per cent of new coal power plants will be built with CCS capability, is light years away from reality. Increasing amounts of CCS projects have been cancelled due to run-away costs and the lack of public support,” according to Sven Teske, renewable energy director of Greenpeace International.

I would agree that CCS is a dog, and subsidizing such technologies is akin to subsidizing fossil fuels. I’m in less agreement with Greenpeace on the role that nuclear can and should play. I don’t like nuclear, but at the same time I recognize that in high-growth developing countries such as China it may be crucial to keeping global emissions under control. In other words, if building a nuke plant means eliminating the need to build a few coal plants, then that’s a good thing. It’s a bitter pill we may have to swallow, at least until we get mature and competitive energy storage technologies that can give renewables a baseload profile. That said, I don’t believe we can achieve the kind of nuclear buildout envisioned by the IEA, which is akin to building a new reactor every month until 2035, according to Greenpeace. Fat chance of that happening. Renewables, on the other hand, can be deployed much more rapidly and strategically than nuclear.

If you want a comprehensive snapshot of the state of algae biofuel development you may want to read a 178-report put out by the Energy Biosciences Institute in California. RenewableEnergyWorld.com hits the key findings in this article, but the general observation is that the market is in “early gestation” and there’s at least a decade to go before algae biofuels — specifically, those based on algae oils — achieve the production economics that make them competitive with conventional fuels. “It is clear from this report that algae oil production will be neither quick nor plentiful — 10 years is a reasonable projection for the R&D to allow the conclusion about the ability to achieve relatively low-cost algae biomass and oil production, at least for specific locations,” according to the report, which also goes far in separating hype from reality. “Despite the scores, if not over 100, companies in the U.S., and more abroad, now in this field, there are as yet (mid-2010) no pilot plants (> 100 mt algae biomass/yr) for autotrophic algae biofuels production operating in the U.S. or elsewhere… The total output from all experimental facilities over the past year was only a few tons of biomass and less than 100 gallons of actual algae oil, if that much.”

I should point out that the report specifically excludes analysis of algae-to-ethanol production, such as that being pursued by Algenol, which says it is only a few years away from commercial-scale deployment.

Overall, I found the report to be a bit of a downer. “The availability of the resources required for microalgae production — land, climate, water, and, perhaps most critically, carbon dioxide — at the same site, will likely limit the U.S. potential for algae oil production to less than a few billion gallons annually. While minor compared to total U.S. transportation fuels consumption (about 200 billion gallons per year), renewable algae oil could be a major contributor to biofuel resources, particularly in specific markets, such as aviation fuel.” I agree on the last part with regards to jet fuel, but I’m a bit more optimistic on the overall market impact. The good news is that 10 years isn’t such a long time to wait, unless you’re a VC firm waiting to cash out.

William Roach, until recently the chief executive of Calgary-based oil sands investor UTS Energy, has joined Khosla-funded cleantech hopeful Calera, which has developed a way to turn CO2 and other industrial emissions into cement and other building products. Specifically, it takes CO2 and seawater and turns it into calcium carbonate, or limestone, which is used as a feedstock for cement. Calera claims its process is carbon negative, because it not only uses CO2 as a cement-making feedstock, it also offsets the CO2 that would otherwise be used during conventional cement-making.

It’s an interesting move for Roach, who led UTS until its major oil-sands asset — its 20-per-cent stake in the Fort Hills oil-sands mining project in northern Alberta — was sold to France’s Total SA for $1.5 billion.

I’m in Vancouver today, off to L.A. tomorrow as part of the research effort for my upcoming book on clean energy innovation. Sorry I haven’t posted for a while, but will get back on track when I return to Toronto later this week. I did, however, want to draw attention to my latest Clean Break column in the Toronto Star that calls for serious carbon tax talks in Canada. Yes, yes, I know — controversial, taboo, don’t go there. But we must. I’m not convinced cap-and-trade is the way to go, given the enormous potential and likelihood of abuse. Besides, we’re not anywhere close to implementing a comprehensive cap-and-trade regime in North America. A carbon tax is simpler, more transparent, sends the right signals to consumers and is easier to implement. Most of the folks in industry, government, the financial sector and academia that I talk to privately tell me they favour a carbon tax, but few seem willing to stand up and champion the issue. That’s a shame, because I’m convinced that without this price on carbon — and a meaningful one, I might add — Canada will become less productive over time and will suffer from an innovation deficit. Ultimately, this will harm our global competitiveness while doing nothing to play our part in reducing global CO2 emissions.

And what of the Alberta problem? The feeling from our western cousins is that a federal carbon tax would be a transfer of wealth in disguise, flowing from west to east. But I don’t see why a federally set carbon tax need impose a transfer of wealth. The provinces, charged with collecting this tax, could also be permitted to spend it as they see fit within their own borders. Under the condition, of course, that it be spent on serious carbon-reduction initiatives, and hopefully not just carbon capture and storage. Because such initiatives would be in-province, this would add to economic growth and diversity — it would benefit, not harm Alberta, though I’m under no illusions there will be some transitionary pains and lots of complaining. In any event, it’s doable if we’re willing to talk about it and get creative with how to implement it.

Another day, another cunning PR move by the federal Conservative government. Just days before the G20 summit in Toronto, and after much criticism about being inactive on the environment and climate-change policy in particular, Canada’s Environment Minister Jim Prentice announced plans to regulate coal-fired power generation in the country with new rules that won’t take effect until 2015. “The proposed regulations will apply a stringent performance standard to new coal-fired electricity generation units and those coal-fired units that have reached the end of their economic life,” according to a government press release, which was short on actual details, saying only that draft regulations will be public early next year and final rules published at the end of 2011. “Canada’s fleet of coal burning electricity plants consists of 51 units, with 33 coming to the end of their economic life by 2025. The gradual phase-out of traditional coal-fired electricity generation is expected to have a significant impact on reducing emissions. This policy, coupled with the commitments of the provinces, and companies who have committed to coal closures, will reduce emissions by about 15 megatonnes (Mt). This is equivalent to taking about 3.2 million vehicles off our roads.”

Here are the many problems I have with this greenwash: 1) The government says after 2015, so the signal this does send to the market is that industry should build as many coal-fired power plants as possible within the next five years, after which they will be grandfathered until a plant reaches the end of its life sometime after 2050; 2) The government’s claim that this policy will result in a 15-megatonne reduction in greenhouse gas emissions is based strictly on reductions directly related to coal and doesn’t take into account increased emissions likely to result from increased natural gas power generation; 3) This announcement was timed so that the government had something to point to during the G20 Summit when asked about their commitment to reducing greenhouse gas emissions; 4) The government says 33 of 51 existing coal plants (excluding new ones that will be built between now and 2015) will reach end of life by 2025. That means two-thirds of plants will continue to burn coal without any applied standards for up to 10 years after the introduction of regulations and one third after 2025. We simply don’t have time to wait for these things to wind down; we need decisive action now.

If this government was truly serious about eliminating the impact of coal, it would announce an immediate moratorium on new coal plants in advance of the 2015 regulations. If, after 2015, a company wants to use coal it would have to meet the same emissions profile of a high-efficiency natural gas generating station, which basically means it would have to have some sort of carbon capture and storage. For existing coal plants, a carbon tax or — less preferable — cap-and-trade system should be implemented and the monies collected should go toward cleaning up the grid.

I repeat: We need to call for a moratorium on new-build coal plants TODAY.

Fact: While 75 per cent of electricity generation in Canada is virtually emission-free, 13 per cent of our national greenhouse-gas emissions still come from coal, and by 2015 most of that will come from Alberta. In fact, if Alberta were to get off coal it could offset all GHG emissions resulting today from the oil sands industry. This would be REAL progress if we were serious about achieving it.

Prentice said this week that it’s a shame the rest of the world doesn’t recognize that Canada has a very low-carbon electricity system. We do have a low-carbon electricity system, but we can’t simply refer to that as an excuse for inaction. It’s not like any government in the last 30 years did anything to help achieve this low-carbon status. Simply put, we’re lucky to have it and lucky that generations before us had the foresight to develop it. Still, isn’t it disturbing that we’re among the highest per capita emitters of greenhouse gases in the OECD even though 75 per cent of our electricity system is emission free? We’ve got a long way to go before we can start bragging about our electricity mix.