Kenya’s president said Africa had a chance to “guide the globe” on climate action as he prepared to open a landmark climate summit in Nairobi on Monday aimed at reframing the continent as a budding renewable energy powerhouse.
The first Africa Climate Summit comes ahead of a flurry of diplomatic meetings leading to the November COP28 climate summit in the oil-rich United Arab Emirates, which will likely be dominated by clashing visions for the world’s energy future.
The Nairobi meeting is billed as bringing together leaders from the 54-nation continent to define a shared vision of Africa’s green development — an ambitious aim in a politically and economically diverse region whose communities are among the most vulnerable to climate change.
Kenyan President William Ruto said on Monday that an African position on climate action would be to “save lives and the planet from calamity”.
“We aspire to chart a new growth agenda that will deliver shared prosperity and sustainable development,” he said on X, formerly Twitter.
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“Africa is committed to taking advantage of this unique opportunity to guide the globe towards inclusive climate action.”
To meet those aspirations, Ruto has said that the international community must help unblock financing for the continent and ease the mounting debt burden on African countries.
Joseph Nganga, Ruto’s appointee to head the summit, said the conference would demonstrate that “Africa is not just a victim but a dynamic continent with solutions for the world”.
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Security has been tightened and roads closed around the summit venue in central Nairobi, where the government says 30,000 people have registered to attend the three-day event.
Civil society groups are expected to protest near the summit at its opening against what they call its “deeply compromised agenda” and focus on rich-nation interests.
A draft version of the final declaration seen by AFP puts the spotlight on Africa’s vast renewable energy potential, young workforce, and natural assets.
Those include 40 percent of global reserves of cobalt, manganese, and platinum crucial for batteries and hydrogen fuel-cells.
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But there are daunting challenges for a continent where hundreds of millions of people currently lack access to electricity.
Reminders of political instability in the region came last week, with a military takeover in Gabon little more than a month after a coup in Niger.
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Countries in Africa are also hamstrung by mounting debt costs and a dearth of finance.
Despite hosting 60 percent of the world’s best solar energy resources, Africa has roughly the same amount of installed capacity as Belgium, according to a commentary published last month by Ruto and the International Energy Agency chief Fatih Birol.
Currently, only about three percent of energy investments worldwide are made in Africa.
Charra Tesfaye Terfassa from the think tank E3G said the summit should balance optimism with a tough assessment of the challenges to “chart a new path for Africa to be a key part of the global conversation and benefit from the opportunities of the transition”.
The Nairobi meeting is expected to draw several African heads of state, UN head Antonio Guterres, EU chief Ursula von der Leyen and other leaders.
By Stephen Johnson, Economics Reporter For Daily Mail Australia
Updated: 03:39 30 Aug 2023
Michele Bullock delivered a climate change speech in Canberra on Tuesday night suggesting 7.5 per cent of Australian homes are in postcodes where climate change could cause property prices to fall by five per cent or more by 2050.
‘To capture the physical climate risks to residential housing, climate hazard data were used to measure the expected increase in insurance costs due to climate-related damage – such as more frequent flooding and more damaging cyclones – which were translated into housing price falls,’ she told her audience at Australian National University.
A colour-coded map illustrated the regions around the country that would be the worst affected with tomato red areas around the Gold Coast and Tweed Heads, suggesting price falls of five to 10 per cent in three decades because of flooding.
This area south of Brisbane is popular with people from Sydney and Melbourne, who move there for the warmer climate, making south-east Queensland by far Australia’s biggest destination for interstate migration.
Most of the New South Wales north coast was coloured pink, denoting house price falls of two to five per cent, with dots of tomato red at Byron Bay, Ballina and Lismore which have suffered from flood damage in recent years.
Tomato red dots were also placed on the NSW South Coast in national park areas and towns on the outskirts of Melbourne, Adelaide and the Tasmanian city of Devonport.
Mallacoota, in Victoria’s north-east corner, also featured, having been the scene of devastating summer bushfires in early 2020.
Areas of regional Western Australia were coloured maroon, suggesting price falls of more than 10 per cent.
This included Geraldton, 400km north-west of Perth, which is prone to cyclones.
Areas north including Carnarvon were coloured tomato red.
A Climate Vulnerability Assessment by the Australian Prudential Regulation Authority, the banking regulator, showed losses on bank lending ‘would increase in the medium-to-long term’ but Ms Bullock said ‘this would not cause severe stress’.
Ms Bullock, who replaces Philip Lowe as Reserve Bank of Australia governor on September 18, suggested climate change could push up unemployment in pockets of Australia.
‘Unemployment could be persistently higher if people are unable or unwilling to leave a region that has suffered from extreme weather and related job losses,’ she said.
‘Climate impacts vary significantly across regions – an impact may be small in aggregate, but extreme for a local community.’
But Ms Bullock has recently suggested the jobless rate will need to rise from a recent 48-year low of 3.5 per cent to 4.5 per cent for inflation to fall back within the 2 to 3 per cent target, down from 6 per cent now.
‘If unemployment remains too low for too long, inflation expectations will rise, which will make it harder for the monetary policy authorities to bring inflation back down,’ she told the Australian Industry Group forum in Newcastle in June.
Based on June’s figure, that would see 149,309 Australians would lose their job by mid-2025, with unemployment in July rising to 3.7 per cent.
Protesters stormed her Sir Leslie Melville Lecture, attempting to hand her a giant JobSeeker cheque.
‘Hey Michele, you say 140,000 people should lose their jobs, how do you justify that?’ the protesters yelled out.
‘The cost of living crisis is driven by corporate greed.’
A Climate Council report released last year predicted 90 per cent of homes in the Victorian city of Shepparton would be uninsurable by 2030 – and now they are severely flooded.
In October, five months after that report was released, Shepparton in Victoria’s north was bracing for a 12.2 metre flood peak, surpassing the levels of 1974.
ATLANTA (AP) — The first new U.S. nuclear reactor to be built from scratch in decades is sending electricity reliably to the grid, but the cost of the Georgia power plant could make it a dead end instead of a path to a carbon-free future.
Georgia Power Co. announced Monday that Unit 3 at Plant Vogtle, southeast of Augusta, has completed testing and is now in commercial operation, seven years late and $17 billion over budget.
At its full output of 1,100 megawatts of electricity, Unit 3 can power 500,000 homes and businesses. A number of other utilities in Georgia, Florida and Alabama are receiving the electricity, in addition to the 2.7 million customers of Southern Co. subsidiary Georgia Power.
“This hadn’t been done in this country from start to finish in some 30-plus years,” Chris Womack, CEO of Atlanta-based Southern Co. said Monday in a telephone interview. “So to do this, to get this done, to get this done right, is a wonderful accomplishment for our company, for the state and for the customers here in Georgia.”
A fourth reactor is also nearing completion at the site, where two earlier reactors have been generating electricity for decades. The Nuclear Regulatory Commission on Friday said radioactive fuel could be loaded into Unit 4, a step expected to take place before the end of September. Unit 4 is scheduled to enter commercial operation by March.
The third and fourth reactors were originally supposed to cost $14 billion, but are now on track to cost their owners $31 billion. That doesn’t include $3.7 billion that original contractor Westinghouse paid to the owners to walk away from the project. That brings total spending to almost $35 billion.
The third reactor was supposed to start generating power in 2016 when construction began in 2009.
Vogtle is important because government officials and some utilities are again looking to nuclear power to alleviate climate change by generating electricity without burning natural gas, coal and oil. But most focus in the U.S. currently is on smaller nuclear reactors, which advocates hope can be built without the cost and schedule overruns that have plagued Vogtle. For its part, Womack said Southern Co. isn’t looking to add any more reactors to its fleet.
“In terms of us making additional investments, at this time is not something that we’re going to do, but I do think others in this country should move in that direction,” Womack said.
In Georgia, almost every electric customer will pay for Vogtle. Georgia Power currently owns 45.7% of the reactors. Smaller shares are owned by Oglethorpe Power Corp., which provides electricity to member-owned cooperatives, the Municipal Electric Authority of Georgia and the city of Dalton. Oglethorpe and MEAG plan to sell power to cooperatives and municipal utilities across Georgia, as well in Jacksonville, Florida, and parts of Alabama and the Florida Panhandle.
Georgia Power’s residential customers are projected to pay more than $926 apiece as part of an ongoing finance charge and elected public service commissioners have approved a rate increase. Residential customers will pay $4 more per month as soon as the third unit begins generating power. That could hit bills in August, two months after residential customers saw a $16-a-month increase to pay for higher fuel costs.
The high construction costs have wiped out any future benefit from low nuclear fuel costs in the future, experts have repeatedly testified before commissioners.
“The cost increases and schedule delays have completely eliminated any benefit on a life-cycle cost basis,” Tom Newsome, director of utility finance for the commission, testified Thursday in a Georgia Public Service Commission hearing examining spending.
The utility will face a fight from longtime opponents of the plant, many of whom note that power generated from solar and wind would be cheaper. They say letting Georgia Power make ratepayers pay for mistakes will unfairly bolster the utility’s profits.
“While capital-intensive and expensive projects may benefit Georgia Power’s shareholders who have enjoyed record profits throughout Vogtle’s beleaguered construction, they are not the least-cost option for Georgians who are feeling the sting of repeated bill increases,” Southern Environmental Law Center staff attorney Bob Sherrier said in a statement.
Commissioners will decide later who pays for the remainder of the costs of Vogtle, including the fourth reactor. Customers will pay for the share of spending that commissioners determine was prudent, while the company and its shareholders will have to pay for spending commissioners decide was wasteful.
Georgia Power CEO Kim Greene said the company hasn’t decided how much it will ask customers to pay.
“That will be determined as we move closer and closer to our prudence filing, but we have not made a final determination,” Greene said.
- Dave Burt, CEO of investment research firm DeltaTerra Capital, was one of the few skeptics who recognized the housing market was on the brink of collapse in 2007.
- Now, he believes an overlooked and unpriced climate risk could see history repeating itself.
- “We think of this repricing issue as maybe a quarter of the size and magnitude of the [global financial crisis] in aggregate, but of course very, very damaging within those exposed communities,” Burt said.
An aerial view shows a flooded neighborhood in the unincorporated community of Pajaro in Watsonville, California, on March 11, 2023.
Josh Edelson | Afp | Getty Images
More than a decade after a U.S. mortgage meltdown threatened to destroy the international financial system, a “Big Short” investor once again sees financial disaster brewing in the real estate market.
Dave Burt, CEO of investment research firm DeltaTerra Capital which aims to help clients manage climate risk, was one of the few skeptics who recognized the housing market was on the brink of collapse in 2007.
He helped two of the protagonists of Michael Lewis’ best-selling book “The Big Short” bet against the mortgage market in the lead-up to the 2008 global financial crash. As it turned out, they were right and made billions.
Now, Burt believes an overlooked climate risk could see history repeating itself.
“I’m always on the lookout for these big systemic issues and there’s a few of reasons for that,” Burt told CNBC via videoconference.
“Professionally, if something is mispriced, then as an investor, which has been my job for most of my career, your main opportunity to add value is to identify something that is either too cheap to purchase for your clients or something that it is too expensive to sell for your client,” he said.
“From a personal perspective, and this is partly based on that professional perspective, I’ve seen when that goes wrong, how impactful that can be on economies and society and our most vulnerable. And I’m really thinking through the post-global financial crisis period here in the U.S. from 2008 to 2012 where there was a huge amount of human suffering.”
Eventually, you are going to hit either a local or national tipping point where there is going to be some type of bubble that bursts.
Head of climate implications at First Street Foundation
Burt said DeltaTerra Capital’s research suggests that 20% of U.S. homes have “meaningful exposure” to a mispricing issue because of flood risk. If realized, he warned the fallout could resemble the extraordinary correction seen during the global financial crisis.
“We think of this repricing issue as maybe a quarter of the size and magnitude of the [global financial crisis] in aggregate, but of course very, very damaging within those exposed communities,” Burt said.
His comments come at a time when the housing market is currently experiencing a major fundamental shift because of higher mortgage rates and as global central banks keep up the fight against inflation by hiking interest rates.
In turn, Burt says some cracks are starting to appear in the terms of the cost of insurance. He noted the recovery in Florida from Hurricane Ian was an issue he’s watching closely, particularly because this storm surge exposed a flood insurance nightmare for homeowners.
“Will they become chasms this year? I’m not sure,” Burt said. “But an observation of the highest frequency fundamental data on home sales and home inventories indicates that things are definitely going south for these exposed properties.”
While most investors remain skeptical of the impact of climate risks on their portfolios, a recent study warned the U.S. housing market could be overvalued by around $200 billion due to unpriced flood risks.
The analysis was published in mid-February in the journal Nature Climate Change. Authored by researchers from Environmental Defense Fund, First Street Foundation and the U.S. Federal Reserve, among others, the study modeled property-level changes in flood risk across the U.S. over the next three decades and warned that low-income households were particularly vulnerable to home value devaluation.
“The biggest reason why it matters from our perspective is that climate risk isn’t being priced into the housing market,” Jeremy Porter, head of climate implications at First Street Foundation, told CNBC.
“The costs now or the valuations of homes don’t take into account the realization of that actual flood risk, and that’s not taking into account that we have a tremendous amount of overvaluation attached to properties across the country.”
Porter warned that as people continue to lack sufficient climate risk information when purchasing their homes, a danger persists that households could come to lose a significant proportion of their property value overnight.
“It is not that farfetched to say that you hit a tipping point,” Porter said. “It may be community by community. It may be a larger tipping point that you hit across the country in the real estate market. But eventually, you are going to hit either a local or national tipping point where there is going to be some type of bubble that bursts.”
Aerial photos show damage on Fort Myers Beach on March 1, 2023, caused by Hurricane Ian, which made landfall in late September 2022.
Orlando Sentinel | Tribune News Service | Getty Images
At present, the study said nearly 15 million U.S. properties face a 1% annual likelihood of flooding, with expected annual damages to residential properties forecast to exceed $32 billion.
It also warned the increasing frequency and severity of flooding amid the deepening climate emergency could see the number of U.S. properties exposed to flooding increase by 11% and average annual losses jump by at least 26% by 2050.
“When you buy a home, one of the most important considerations is the cost of maintaining that home and I think so many important decisions are made based on that,” Burt said.
“Ultimately, until people have good information about what these climate-related costs are going to look like, we’re creating new problems every day. I think that’s really the crux of the matter.”
Reflecting on the study’s findings, Jesse Gourevitch, a postdoctoral fellow at Environmental Defense Fund, told CNBC that the overvaluation was more widespread among lower-income property owners.
He added that “if price deflation were to occur, this very much has the potential to widen wealth gaps in the U.S. and exacerbate inequality.”
Another significant risk, Gourevitch said, was likely to be the potentially detrimental effects on local government tax revenues because the total revenue for municipalities typically relies heavily on property tax revenues. “And having that tied to a physical asset that is exposed to climate change I think introduces a lot of risks to the stability of that revenue stream,” Gourevitch said.
Far from a domestic issue, Burt stressed the climate risks associated with the U.S. housing market posed a major problem for countries worldwide.
“I think when you start thinking about these issues globally, you start thinking about the bigger implications that really the most exposed countries often happen to be the most impoverished as well,” Burt said.
“It is more of a humanitarian crisis when you start looking at this through the global lens.”
TOPSHOT – Aerial view shows an area completely destroyed by the floods in the Blessem district of Erftstadt, western Germany, on July 16, 2021.
SEBASTIEN BOZON | AFP | Getty Images
Munich Re, the world’s largest reinsurance company, observed steep economic losses in 2022 as the climate crisis drove more extreme weather events, such as Hurricane Ian in the U.S. and apocalyptic flooding in Pakistan. Reinsurance refers to insurance for insurance companies.
It estimated that these losses amounted to $270 billion last year, of which around $120 billion were covered by insurance. The insured loss total continues a trend of high losses in recent years.
“At the end of the day, someone has to pay for these increasing losses,” Ernst Rauch, chief climate and geo scientist at Munich Re, told CNBC. “No matter whether it is insured or not, it is an increasing economic burden.”
One area of particular concern, Rauch said, was flash flooding. This refers to a specific type of flooding in which rain falls so quickly that the underlying ground cannot drain it away fast enough.
He cited the excessive flooding seen in Germany in 2021 which caused overflowing rivers to devastate towns across western Germany, Belgium, Austria and parts of the Netherlands, Switzerland and Luxembourg.
“This type of extreme local and regional rainfall events is on the rise in many regions — and they are underestimated. It is no matter whether we talk about a typical homeowner in Germany or in other parts of the world,” Rauch said.
Zurich Resilience Solutions (ZRS), the commercial risk advisory and services unit of Zurich Insurance Group, has partnered with climate services provider and carbon project developer South Pole to launch a new climate change-related offering to companies.
According to Zurich, the joint offering will be initially available in the US, Germany and Switzerland. It will help businesses tackle both sides of the climate challenge at the same time, by helping them to define and execute their short- and long-term climate resilience objectives, as well as their net-zero goals. It will focus on measuring physical climate risk and emissions, helping establish a strategy to reduce each, and overseeing implementation of actions that will meet local regulatory and sustainability reporting requirements.
“Defining and deploying effective climate adaptation and mitigation strategies requires special knowhow and can be extremely complex and time-consuming, even more so for multinationals,” said Hanno Mijer, global head of Zurich Resilience Solutions. “Demand for climate resilience services has grown exponentially in recent years. Collaborating with South Pole will allow us to address climate-related risks holistically by supporting customers on their net-zero journey as well as resilience.”
Zurich said that companies must intensify their efforts to collectively reduce emissions to successfully transition to net zero and mitigate the environmental impacts. At the same time, companies have to prepare and adapt to the consequences of global warming and consider the current and future impacts of climate change on their business. According to the Climate Disclosure Project, the financial benefits of climate action are at least 15 times higher than the cost of risks.
Companies are also increasingly understanding that taking climate action is not only critical to managing their operational risks, but more stakeholders are expecting companies to transparently demonstrate how they are actively reducing their environmental impact and building resilience along their value chain, and, more importantly, to regularly report on the effectiveness of these measures.
“Companies that fail to demonstrate their progress in building resilience and reducing emissions will likely pay the price both reputationally and financially,” said Renat Heuberger, CEO of South Pole. “But knowing where to start can be difficult. We are pleased to combine South Pole’s best-in-class climate advisory with Zurich Resilience Solutions’ expertise in resilience to steer corporate leaders toward effective mitigation and adaptation efforts – both for commercial success and for climate protection.”
The Federal Reserve building is seen before the Federal Reserve board is expected to signal plans to raise interest rates in March as it focuses on fighting inflation in Washington, January 26, 2022.
Joshua Roberts | Reuters
The six largest banks in the U.S. have until the end of July to show the impact that climate change could have on their operations, according to details of a pilot program the Federal Reserve unveiled Tuesday.
Under the review, the institutions are to show the anticipated impact that events such as floods, wildfires, hurricanes, heat waves and droughts could have on their loan portfolios and commercial real estate holdings. A hypothetical scenario focuses on events in the Northeastern U.S.
Though the two exercises bear similarities, the climate scenario tests are considered separate from mandated bank stress tests that examine readiness in the case of financial and economic crises.
“The Fed has narrow, but important, responsibilities regarding climate-related financial risks – to ensure that banks understand and manage their material risks, including the financial risks from climate change,” Fed Vice Chair for Supervision Michael S. Barr said. “The exercise we are launching today will advance the ability of supervisors and banks to analyze and manage emerging climate-related financial risks.”
The analysis is at least three years in the making.
A financial stability report in late 2020 first discussed the possibility of the Fed examining how prepared the institutions it oversees are for economic impacts from climate change. That came a year after Fed Vice Chair Lael Brainard first brought up the issue.
However, Chairman Jerome Powell recently vowed the central bank would not become a “climate policymaker” despite the new program’s efforts.
The analysis takes a two-pronged approach, looking at a “physical risk” perspective, or the harm to people and property from unexpected climate-related events, and “transitions risks” associated with the costs of moving to a zero-emissions economy by 2050.
Participating banks include Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo. The deadline for submissions is July 31, with a summary expected to be released publicly by the end of the year but will not include information about specific banks’ responses.
The report released Wednesday didn’t outline a more specific scenario that the banks should address. However, it did say it would entail examining the impact on residential and commercial real estate portfolios of “risk scenarios with different levels of severity” impacting the northeast.
In addition, banks are being asked to “consider the impact of additional physical risk shocks for their real estate portfolios in another region of the country.”
The transition risk portion is to focus on how corporate loans and commercial real estate would be hit by the move to hit net-zero greenhouse gas emissions by 2050.
The final report will focus on aggregate information provided by the banks about how they are incorporating climate risks into their financial plans. There won’t be estimates on total potential losses from the hypothetical events.
By: Jennifer Oldham for ProPublica (AP Storyshare)
Sheriff’s deputies driving 45 mph couldn’t outpace the flames. Dense smoke, swirling dust and flying plywood obscured the firestorm’s growth and direction, delaying evacuations.
Within minutes, landscaped islands in a Costco parking lot in Superior, Colorado, caught fire as structures became the inferno’s primary fuel. It consumed the Element Hotel, as well as part of a Tesla service center, a Target and the entire Sagamore neighborhood. Across a six-lane freeway, in the town of Louisville, flames rocketed through parks and climbed wooden fences, setting homes ablaze. They spread from one residence to the next in a mere eight minutes, reaching temperatures as high as 1,650 degrees.
On Dec. 30, 2021, more than 35,000 people in Superior and Louisville, as well as unincorporated Boulder County, fled the fire — some so quickly they left barefoot and without their pets. Firefighters abandoned miles of hose in neighborhood driveways to escape.
The blaze showed that Colorado and much of the West face a fire threat unlike anything they have seen. No longer is the danger limited to homes adjacent to forests. Urban areas are threatened, too.
Yet despite previous warnings of this new threat, ProPublica found Colorado’s response hasn’t kept pace. Legislative efforts to make homes safer by requiring fire-resistant materials in their construction have been repeatedly stymied by developers and municipalities, while taxpayers shoulder the growing cost to put out the fires and rebuild in their aftermath.
Many residents are unaware they are now at risk because federal and state wildfire forecasts and maps also haven’t kept pace with the growing danger to their communities. Indeed, some wildland fire forecasts model urban areas as “non-burnable,” even though the Marshall Fire proved otherwise.
The disaster put an exclamation point on what scientists, planners and federal officials warned for years: Communities outside the traditional wildland-urban interface, or WUI, are now vulnerable as a changing climate, overgrown forests and explosive development across the West fuel ever-unpredictable fire behavior. Fire experts define the WU zzz I, pronounced woo-ee, as areas where plants such as trees, shrubs and grasses are near, or mixed with, homes, power lines, businesses and other human development.
They now agree that instead of a threat confined to the WUI, the entire state, including areas far from forests, may be at risk of a conflagration.
“The Marshall Fire was a horrible, tragic event that served as a wake-up call for the rest of our state,” said state Rep. Lisa Cutter, a Democrat who represents mountain and foothill areas. “I don’t think we realized how much wildfire could impact communities that aren’t deep in the forest — it’s not something any of us are immune to.”
An early warning of the growing danger to suburban communities arrived in 2001. That year, the U.S. Department of Agriculture and other federal agencies identified scores of Colorado municipalities adjacent to public lands as being at high risk of a wildland blaze-turned-urban conflagration. Some of these areas burned in the Marshall Fire.
A decade later, in 2012, another warning came, as an unprecedented weather-driven inferno, the Waldo Canyon Fire, destroyed several Colorado Springs neighborhoods.
Afterward, fire experts urged state lawmakers to adopt a model building code that communities in high-risk areas could enact. Such codes have been scientifically proven to reduce risk for residents and rescuers and to increase the odds structures will withstand a blaze by requiring fire-resistant materials on siding, roofs, decks and fences, along with mesh-covered vents that prevent embers from entering.
But lawmakers bowed to pressure from building and real estate lobbyists as well as municipal officials who demanded local control over private property.
Meanwhile, the number of new homes built in Colorado’s WUI — as defined by researchers several years ago — more than doubled between 1990 and 2020. And nationwide, the WUI is growing by 2 million acres a year. Homes in 70,000 communities worth $1.3 trillion are now within the path of a firestorm, according to a June report from the U.S. Fire Administration that featured photos of the Marshall Fire’s destruction.
Over 40,000 Residential Structures Were Built in the Areas Now Considered Wildland-Urban Interface in Boulder County Between 1990 and 2022. Credit: Data Source: Boulder County Assessor’s Office. Graphic by Lucas Waldron/ProPublica.
In the months that followed the Marshall Fire, there were again calls to consider a statewide building code. A last-minute amendment to a fire mitigation bill in May would have created a board to develop statewide building rules, but it was pulled after builders, real estate agents, municipalities and others opposed it.
It wasn’t the first time the state’s powerful building industry asserted its influence over policy. Whenever a wildfire bill comes to the state legislature, well-heeled lobbyists routinely represent the industry, records kept by the Colorado secretary of state show. The state’s culture of local control and the construction industry’s $25 billion annual contribution to the economy hampered lawmakers’ ability to find middle ground on a minimum statewide building code.
ProPublica’s review of legislation introduced from 2014 to 2022 found only 15 out of 77 wildfire-related bills focused primarily on helping homeowners mitigate their risk from fires. Most of the 15 proposals offered incentives to homeowners and communities through income tax deductions or grants — some of which required municipalities to raise matching funds — to clear vegetation around structures.
None called for mandatory building requirements in wildfire-prone areas, even as 15 of the 20 largest wildfires in state history have occurred since 2012.
The lack of uniform regulations has cost the Centennial State millions in federal grant money: The Federal Emergency Management Agency denied the state grants from the agency’s resilient infrastructure funds, which from fiscal 2020 to 2022 totaled $101 million.
Colorado remains one of only eight states without a minimum construction standard for homes.
Developers have also influenced municipalities’ recent decisions, as homes decimated by the Marshall Fire are rebuilt in Boulder County, and the cities of Superior and Louisville located within it. The debate has reflected difficult tradeoffs between the cost of making homes more fire-resistant — particularly in an era of high inflation and unpredictable supply chains — and residents’ tolerance for risk.
Lawmakers in Louisville, where 550 homes and businesses burned, voted to remove a fire sprinkler requirement for homes, citing cost, despite evidence such systems reduce the risk of dying in a home fire by 80%. The City Council also voted to allow residents to choose whether to follow new energy efficiency requirements estimated to add $5,000 to $100,000 to the cost of a new home.
By contrast, in unincorporated Boulder County, which lost 157 homes to the Marshall Fire, commissioners in June voted to require fire-resistant materials on all new and renovated homes. Before the inferno, the eastern grasslands were exempt. (Mountain residents, who since 1989 have been required to follow mitigation practices, have seen the effectiveness of such codes: Eight out of 10 of their homes survived the Fourmile Canyon Fire in 2010.)
In Superior, which lost 378 structures, the Board of Trustees voted down a proposed citywide WUI building code in May. After residents of the leveled Sagamore neighborhood requested they revisit their decision, trustees reconsidered in July.
The financial pressures facing Superior officials and their constituents were evident as they considered whether to require fire-resistant materials solely for homes destroyed by the Marshall Fire or for the entire city.
“This is all a huge cost we cannot bear,” said Robert Lousberg, a resident who wants to rebuild several homes. “I understood this is a once-in-a-lifetime fire.”
Some neighbors disagreed.
“Sagamore burned down in less than an hour — one of my neighbors ended up in the hospital after trying to escape the fire on foot — that’s the main reason we need these codes, to slow the spread of fire,” Dan Cole said. “We have an opportunity to build a more fire-resistant neighborhood right now, and it would be foolish and short sighted not to take it.”
Builders estimated that costs for tempered-glass windows, fire-resistant siding and other materials could reach $5,500 to $30,000 per home. Procuring the materials and labor to install them could delay rebuilding.
Like residents, town trustees were divided about whether the cost outweighed safety benefits to residents and first responders should there be another conflagration.
“To me, it’s unconscionable to have people rebuilding in an unsafe manner,” said Trustee Laura Skladzinski, who did not seek reelection last month. “I would rather have residents pay $20,000 now. If they cannot afford it, how are they going to be able to afford it when their house burns down?”
Some noted that most residents didn’t have enough insurance to cover the cost of rebuilding their homes.
Trustee Neal Shah said the city should have adopted tougher codes after the 2012 Waldo Canyon Fire in Colorado Springs, which prompted calls for a voluntary statewide building code that communities could institute requiring fire-resistant materials in homes.
“I fundamentally believe in WUI standards,” Shah said, “what I can’t solve is the math.”
The body voted 5-1 to institute the code, then added an opt-out clause for those rebuilding their residences.
A decade before the Marshall Fire, a blaze was burning in the mountains above Colorado Springs on a 101-degree June day. That afternoon a thunderstorm caused a sudden shift in the wind, pushing a wall of burning debris out of the Rocky Mountain foothills into the state’s second-largest city.
Firefighters fled the 750-foot-high fire front — as tall as a 53-floor building — as it chewed through pine, pinyon and juniper dried by a record-hot spring. Sixty-mile-per-hour gusts peeled back the door on a fire truck. Fist-sized embers rained down on the city’s Mountain Shadows community. The fire incinerated 79 homes per hour, or 1.3 per minute, over 5 ½ hours, a report found.
In the aftermath of the Waldo Canyon Fire, which destroyed 347 homes and killed two people, Colorado Springs drew lessons from which residences had survived and capitalized on fresh memories of burned neighborhoods to institute tougher building requirements.
Standing recently in the shade of a still-scorched tree behind her home, Patty Johnson described how her house was relatively unscathed, even as eight of her neighbors lost their residences. She credited ignition-resistant materials, including stucco walls, siding, a composite deck and a concrete tile roof. Drought-resistant landscaping also helped. Her family sold the home in September to move into a smaller place in the city.
After-action reports found neighbors’ work clearing vegetation around homes helped firefighters save 82% of residences in the 28-square-mile burn area.
FEMA estimated that minimal expenditures to protect Colorado Springs neighborhoods had paid off. In Cedar Heights, $300,000 in mitigation had prevented about $77 million in losses.
“The Waldo Canyon Fire was shocking, but it could have been so much worse if the city of Colorado Springs had not spent decades getting ready,” said Molly Mowery, co-founder of the Community Wildfire Planning Center.
Even so, the fire reached 2,000 degrees and moved so fast it incinerated some homes with fire-resistant material and fire-proof safes inside.
Nevertheless, the city followed a 30-year pattern and took its lessons to heart to institute additional building requirements to fortify homes in wildfire-prone areas. Timing was everything, Mowery’s nonprofit concluded in a recently released analysis.
The city had done the same in 2002. With smoke still in the air following the Hayman Fire — which started about 35 miles northwest of the city and destroyed 600 structures — a coalition of fire officials, homeowners’ associations and local builders and roofing contractors devised rules that banned wood roofs on all new homes and repairs greater than 25% of the total roof area.
Similarly, after the Waldo Canyon Fire, as heavy machinery cleared charred neighborhoods, the city updated its code to increase the distance trees had to be from homes and require fire protection systems, ignition-resistant siding and decks, and double-paned windows for all new or reconstructed homes in hillside areas.
Fire officials used spatial technology to hone the city’s definition of the WUI. The tool identified a 32,655-acre area — one of the largest high-risk regions in the United States. The city recruited homeowners to educate neighbors in the threatened area about fire-resistant practices.
Peer pressure worked, said Ashley Whitworth, wildfire mitigation program administrator at the Colorado Springs Fire Department. If a homeowner’s property is flagged red on the city’s online risk assessment map (denoting it needs work), neighbors reach out to learn why they haven’t completed mitigation.
Colorado Springs’ voters overwhelmingly approved the allocation of $20 million in city funds toward incentives to gird wildfire-prone properties.
Days after the vote in November 2021, the Marshall Fire unfolded 90 miles to the north across communities with little history of wildfire mitigation.
Scientists, some of whom lived in Boulder County and were evacuated, proclaimed it a “climate fire.” They cited the extreme weather that preceded it: Abnormally high levels of snow and rain in spring and summer had nurtured abundant 4-foot grasses that baked to a crisp during a historically dry fall. Chinook winds blasted the region for an unusual nine-hour period and propelled the firestorm. And even though there’s growing understanding that fire season is now year-round, no one believed a December blaze could ravage entire cities.
While it began as a wildfire in grassland, once it reached nearby communities it transformed into an urban conflagration — the type of fire that destroyed Chicago in 1871 and San Francisco in 1906 and that until the early 20th century consumed more property than any other type of natural disaster.
“Was this a wildland fire or an urban fire?” Sterling Folden, deputy chief of the Mountain View Fire Protection District, asked during a July legislative committee meeting. “I had five fire trucks in the entire downtown of Superior — I had 20 blocks on fire — I usually have that many for one house on fire.”
Whitworth, of the Colorado Springs Fire Department, said there were more lessons to learn about the threat of wildfire.
“The Marshall Fire was a really big hit for people here because it happened in December and it happened just like that,” Whitworth said. “Everyone said to me, ‘It could happen here,’ and I said, ‘You’re absolutely right.’”
With the 2023 legislative session days away, fire chiefs, county commissioners, scientists and planners are once again calling on Colorado lawmakers to institute statewide rules that mandate fire-resistant materials in high-risk areas.
Cutter, who will be sworn in as a state senator in January, is developing a bill that would require the state to create a WUI code board to write minimum fire-resistant building requirements. It’s patterned in part after the amendment that failed at the Capitol this spring.
Such laws save lives, said Mike Morgan, director of the Colorado Division of Fire Prevention and Control. The 36-year fire service veteran cited studies from the nonprofit Fire Safety Research Institute and the federal National Institute of Standards and Technology showing that building codes work.
“Firefighters take extraordinary risk to protect lives and property,” he added. “If we start building communities and structures out of materials more resistive to fire, we are upping our odds of success — we’ve got to do something different and do it better.”
The insurance industry is also warning that if Colorado lawmakers and communities don’t reinforce homes against wildfire, mounting claims from blazes could put premiums out of reach for many. The industry supports a statewide building code.
“Unlike other disasters, wildfire is one of those risks there is much we can do from a mitigation standpoint to put odds at least in favor of that home surviving,” said Carole Walker, executive director of the Rocky Mountain Insurance Information Association.
“We’ve got to get it done,” she added. “Colorado right now is at … a tipping point with concerns about keeping insurance here and keeping insurance available.”
But such rules won’t be adopted without a compromise among local control advocates, builders and fire officials.
Construction industry representatives who met with Cutter and Morgan recently said builders are wary of one-size-fits-all requirements imposed by the state. Together with the insurance industry and municipal governments, they have met the past few months seeking to influence the bill’s language.
“It’s important to make sure we match codes with risk,” said Ted Leighty, chief executive of the Colorado Association of Home Builders. His members “are not opposed to talking about what a code board might look like — if we were to adopt a model code that local governments could adopt to match their communities’ needs.”
The idea for such a board emerged after the Colorado Fire Commission received a letter from Gov. Jared Polis in July 2021.
The first-term Democrat, who was reelected in November, sent the missive following conflagrations in 2020 that exhibited unimaginable fire behavior: The 193,812-acre East Troublesome Fire traveled 25 miles overnight and incinerated 366 homes; and the 208,913-acre Cameron Peak Fire, which torched 461 structures, burned for four months despite firefighters’ efforts.
Polis wrote that legislators in 2021 had failed to “address a critical piece of the wildfire puzzle in Colorado: land use planning, development and building resiliency in the wildland-urban interface.”
Instead, lawmakers focused on fire response, restoration of burned lands and voluntary mitigation by communities.
In answer to Polis’ missive, a little-known subcommittee, which included state, county and city fire officials, met between August 2021 and April. The 51-member group agreed it’s time to rethink which communities are prone to wildfire, offering a new definition of the WUI: The group concluded “almost the entire state of Colorado falls within the WUI,” according to minutes from a Feb. 10 meeting, “which could make a strong argument for adopting a minimum code.”
Fire officials also countered the long-held belief that communities favor local control over building requirements. They pointed to a 2019 law that established a minimum energy code that local jurisdictions must adopt when they update local building codes. About 86% of the state’s 5 million residents now live in a community that mandates such measures.
“There is minimal evidence that people voluntarily regulate themselves,” committee members concluded, according to minutes of their Feb. 28 meeting.
A report on the Marshall Fire released in October by the Colorado Division of Fire Prevention and Control noted how wooden fences abuting grasslands had accelerated the blaze’s spread, leading flames from the grass directly to homes. Firefighters also described fence pickets flying past at 80 mph and landing to start new fires.
This month, as homes were being rebuilt on Cherrywood Lane in Louisville, in one of the hardest-hit neighborhoods, evidence remained of first responders’ frantic efforts to cut down fences to prevent them from spreading flames to neighboring homes.
New homes are going up across the 9-square-mile burn zone. A recent drive through the area revealed many are being rebuilt with the same kinds of fences. With no building code dictating that the fences be made of fire-resistant materials, homeowners are using flammable materials that have been standard in the past, unaware it will again put them at risk in the next blaze.
Wooden fences such as these touch homes and grasslands in communities up and down the eastern edge of the Rocky Mountains.
Rebuilding without ignition-resistant barriers leaves the homes vulnerable to the next climate-driven wildfire, said Morgan, the state fire chief.
This month, with snow on the ground and temperatures in the 40s, another blaze ignited not far from where the Marshall Fire burned. Thirty-five-mile-per-hour winds spread the flames and forced evacuations before the threat subsided.
“I’ve heard people say the Marshall Fire was just a fluke,” he said. “I would disagree — there are literally thousands of communities along the Front Range of the Rockies from Canada to New Mexico subject to these Chinook winds multiple times a year, and when the conditions are right this can happen.”
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Solar panels create electricity on the roof of a house in Rockport, Massachusetts, U.S., June 6, 2022. Picture taken with a drone.
Brian Snyder | Reuters
When Josh Hurwitz decided to put solar power on his Connecticut house, he had three big reasons: To cut his carbon footprint, to eventually store electricity in a solar-powered battery in case of blackouts, and – crucially – to save money.
Now he’s on track to pay for his system in six years, then save tens of thousands of dollars in the 15 years after that, while giving himself a hedge against utility-rate inflation. It’s working so well, he’s preparing to add a Tesla-made battery to let him store the power he makes. Central to the deal: Tax credits and other benefits from both the state of Connecticut and from Washington, D.C., he says.
“You have to make the money work,” Hurwitz said. “You can have the best of intentions, but if the numbers don’t work it doesn’t make sense to do it.”
Hurwitz’s experience points up one benefit of the Inflation Reduction Act that passed in August: Its extension and expansion of tax credits to promote the spread of home-based solar power systems. Adoption is expected to grow 26 percent faster because of the law, which extends tax credits that had been set to expire by 2024 through 2035, says a report by Wood Mackenzie and the Solar Energy Industry Association.
Those credits will cover 30 percent of the cost of the system – and, for the first time, there’s a 30 percent credit for batteries that can store newly-produced power for use when it’s needed.
“The main thing the law does is give the industry, and consumers, assurance that the tax credits will be there today, tomorrow and for the next 10 years,” said Warren Leon, executive director of the Clean Energy States Alliance, a bipartisan coalition of state government energy agencies. “Rooftop solar is still expensive enough to require some subsidies.”
California’s solar energy net metering decision
Certainty has been the thing that’s hard to come by in solar, where frequent policy changes make the market a “solar coaster,” as one industry executive put it. Just as the expanded federal tax credits were taking effect, California on Dec. 15 slashed another big incentive allowing homeowners to sell excess solar energy generated by their systems back to the grid at attractive rates, scrambling the math anew in the largest U.S. state and its biggest solar-power market — though the changes do not take effect until next April.
Put the state and federal changes together, and Wood Mackenzie thinks the California solar market will actually shrink sharply in 2024, down by as much as 39%. Before the Inflation Reduction Act incentives were factored in, the consulting firm forecast a 50% drop with the California policy shift. Residential solar is coming off a historic quarter, with 1.57 GW installed, a 43% increase year over year, and California a little over one-third of the total, according to Wood Mackenzie.
For potential switchers, tax credits can quickly recover part of the up-front cost of going green. Hurwitz took the federal tax credit for his system when he installed it in 2020, and is preparing to add a battery now that it, too, comes with tax credits. Some contractors offer deals where they absorb the upfront cost – and claim the credit – in exchange for agreements to lease back the system.
Combined with savings on power homeowners don’t buy from utilities, the tax credits can make rooftop solar systems pay for themselves within as little as five years – and save $25,000 or more, after recovering the initial investment, within two decades.
“Will this growth have legs? Absolutely,” said Veronica Zhang, portfolio manager of the Van Eck Environmental Sustainability Fund, a green fund not exclusively focused on solar. “With utility rates going up, it’s a good time to move if you were thinking about it in the first place.”
How to calculate installation costs and benefits
Here is how the numbers work.
Nationally, the cost for solar in 2022 ranges from $16,870 to $23,170, after the tax credit, for a 10-kilowatt system, the size for which quotes are sought most often on EnergySage, a Boston-based quote-comparison site for solar panels and batteries. Most households can use a system of six or seven kilowatts, EnergySage spokesman Nick Liberati said. A 10-12 kilowatt battery costs about $13,000 more, he added.
There’s a significant variation in those numbers by region, and by the size and other factors specific to the house, EnergySage CEO Vikram Aggarwal said. In New Jersey, for example, a 7-kilowatt system costs on average $20,510 before the credit and $15,177 after it. In Houston, it’s about $1,000 less. In Chicago, that system is close to $2,000 more than in New Jersey. A more robust 10-kilowatt system costs more than $31,000 before the credit around Chicago, but $26,500 in Tampa, Fla. All of these average prices are as quoted by EnergySage.
The effectiveness of the system may also vary because of things specific to the house, including the placement of trees on or near the property, as we found out when we asked EnergySage’s online bid-solicitation system to look at specific homes.
The bids for one suburban Chicago house ranged as low as $19,096 after the federal credit and as high as $30,676.
Offsetting those costs are electricity savings and state tax breaks that recover the cost of the system in as little as 4.5 years, according to the bids. Contractors claimed that power savings and state incentives could save as much as another $27,625 over 20 years, on top of the capital cost.
Alternatively, consumers can finance the system but still own it themselves – we were quoted interest rates of 2.99 to 8.99 percent. That eliminates consumers’ up-front cost, but cuts into the savings as some of the avoided utility costs go to pay off interest, Aggarwal said.
The key to maximizing savings is to know the specific regulations in your state – and get help understanding often-complex contracts, said Hurwitz, who is a physician.
Energy storage and excess power
Some states have more generous subsidies than others, and more pro-consumer rules mandating that utilities pay higher prices for excess power that home solar systems create during peak production hours, or even extract from homeowners’ batteries.
California had among the most generous rules of all until this week. But state utility regulators agreed to let utilities pay much less for excess power they are required to buy, after power companies argued that the rates were too high, and raised power prices for other customers.
Wood Mackenzie said the details of California’s decision made it look less onerous than the firm had expected. EnergySage says the payback period for California systems without a battery will be 10 years instead of six after the new rules take effect in April. Savings in the years afterward will be about 60 percent less, the company estimates. Systems with a battery, which pay for themselves after 10 years, will be little affected because their owners keep most of their excess power instead of selling it to the utility, according to EnergySage.
“The new [California rules] certainly elongate current payback periods for solar and solar-plus-storage, but not by as much as the previous proposal,” Wood Mackenzie said in the Dec. 16 report. “By 2024, the real impacts of the IRA will begin to come to fruition.”
The more expensive power is from a local utility, the more sense home solar will make. And some contractors will back claims about power savings with agreements to pay part of your utility bill if the systems don’t produce as much energy as promised.
“You have to do your homework before you sign,” Hurwitz said. “But energy costs always go up. That’s another hidden incentive.”
Those concerns led California to become the first state to eliminate the subsidies earlier this year, citing a statewide effort to shift buildings away from fossil fuels. The state’s ratepayers will also save $164 million per year, according to the California Public Utilities Commission.
Colorado appeared poised to follow California’s lead. Utility regulators proposed eliminating the subsidies last year as they followed through on legislation to reduce the greenhouse gas emissions of natural gas utilities.
The plan became a focal point over 14 months of heated and complex deliberations before governor-appointed utility commissioners. Homebuilders and Colorado’s largest natural gas companies fought to preserve the subsidies. Meanwhile, environmental groups and ratepayer advocates pushed the state to stick to its original proposal.
The commission ended up opting for a middle path. Instead of eliminating the subsidies, it created a new equation to determine the size of the subsidy going forward.
Parks Barroso, an attorney for the environmental group Western Resource Advocates, said the calculation is based on the principle that developers and new customers — not ratepayers — should pay to add buildings to the natural gas system. The equation includes the cost to lay new lines to homes and expand existing pipelines to handle any new demand. In addition, it factors in the social cost of carbon, a term that describes the estimated financial damage caused by adding greenhouse gases to the atmosphere.
“The decision does not eliminate line extensions, but it recognizes we can’t continue to expand the gas system if we want to meet our decarbonization targets,” Barroso said.
Consumer advocates were generally pleased with the decision. Cindy Schonhaut, the director of the Office of the Utility Consumer Advocate, said it makes sense to require gas companies to prove the benefits of their plans exceed the cost to ratepayers.
“That’s what we wanted for consumers, so it’s a good outcome,” Schonhaut said.
Colorado gas utilities must submit plans for new allowances by the end of 2024, but companies tend to include the subsidies in separate proposals to increase gas rates and build new infrastructure. Any plan asking for an allowance must follow the new rules by May 2023.
In a filing before the commission, the Home Builders Association of Colorado argued eliminating the subsidies would increase housing prices. It did not immediately respond to CPR News’ request for comment.
The recent decision also codifies climate targets the legislature set for gas utilities, requiring a 4 percent reduction in greenhouse gas emissions by 2025 and a 22 percent cut by 2030 compared to a 2015 baseline.
To hit the benchmarks, companies must submit so-called “Clean Heat Plans” by the end of next year. Those proposals can include projects to increase energy efficiency, switch buildings to electric heating systems and mix zero-carbon hydrogen into the natural gas supply.