The politicizing of the carbon management debate by monied interests has prevented thoughtful debate

by Jon Phillips

A critical topic for us, our children, their children and so forth for generations.

US carbon emissions in the energy sector have dropped since 2007 and will remain under the 2007 peak for the next few decades if projections on natural gas hold and exports fail to materialize. Historically cheap natural gas, enabled by hydro fracture drilling technology has granted a temporary reprieve through the economic destruction of the US coal generation industry.

The politicizing of the carbon management debate by monied interests has prevented thoughtful debate over optimal economic approaches to manage carbon such as tax and dividend with tariffs on trade. Instead, in a surprising SCOTUS decision, the Clean Air Act will be used to manage carbon through emission cap regulation. The problem is that it's a rather blunt instrument. With any luck, the new regulation proposed by the Administration will engage shortly. New coal plants will be constrained to operate with emissions comparable to small natural gas turbine plants. This implies that to build a new coal plant, you'll have to put ~40% effective carbon capture and sequestration on the plant or you can't get a license.

Declining power generation from coal, January 2007 to January 2012 (EIA)

There's really no more thermal efficiency that can be pulled out of new super-critical coal plants except by going to co-generation. Usually, the capital risk economics don't work out on that. The short answer is that this will likely block most new coal generation. Meanwhile, old coal plants are struggling to meet new emission limits on mercury and the cost of upgrades is not competitive against decommissioning and building a combined cycle natural gas plant. Old plants are retiring at a steady clip and new plants will be blocked. If this continues, in a couple decades, the coal era will end in the US. You can imagine the angst in the coal States.

Unfortunately, this won't solve our most serious threat. It won't even touch it. Non-OECD carbon emissions have doubled since 2005 and global emissions have gone up 50% in the same decade! Global emissions are set to rise another 40 to 50% by 2025 while OECD emissions remain essentially flat since 2007 (the US among them).

 If we can't drastically bend down the curve in the developing world, it's game over. They're now producing twice the carbon of the developed world and there's nothing suggesting that their explosion in emissions will retrench. The real question is how to get the developing world's house in order.

Meanwhile, 'Mericans scrabble with each other about how to go to lower numbers domestically, but the globe's pants are being pulled down in the developing world. The only solution is to quickly get serious, put our own house in order and launch a climate change "Marshall Plan." We have to go all in against coal. Otherwise it's the future until the climate is truly toast. But what does that mean? 

Renewables? Yes! Nuclear? Yes and lots of it! Natural gas? Yes! But to execute a Marshall Plan we need to disconnect the advantage of cheap coal in the developing world. In the first instance that means carbon tariffs on trade (perhaps the most important mechanism of all since we're the dumping ground of cheap products based on coal electricity). It also means getting our natural gas glut into the international market to get the price of electricity up high enough to convert the infrastructure.

Hopefully President Obama's big push on new LNG terminals will move forward quickly because of the Ukraine geopolitics. Monied interests, fat and lazy sucking down cheap US natural gas, and a few odd confused environmentalists lacking a global perspective, have battled the Administration all the way. We need low carbon technology. All of it at massive scale right away.
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Jon Phillips, PhD, is a Senior Technology Expert at the International Atomic Energy Agency in Vienna, Austria, and is the Director of the Sustainable Nuclear Power Initiative at Pacific Northwest National Laboratory, in Richland, Washington. The opinions expressed are his own and do not necessarily reflect those of the IAEA or PNNL.

Now is the time to go to low-carbon energy

Tri-City Herald "In-focus"

By Jim Amonette and Steve Ghan

May 16, 2014 

Read more here: http://www.tri-cityherald.com/2014/05/16/2976048/in-focus-now-is-the-time-to-go.html#storylink=cpy

Many people respond to Intergovernmental Panel on Climate Change and National Climate Assessment warnings of dire consequences from human-caused global warming with either despair or dismissal. Perhaps they assume that replacing fossil fuel, as the world’s primary energy source will be economically, technically or politically impractical. While such assumptions had some validity a decade or two ago, recent developments in low-carbon energy sources have expanded the world’s energy options. This change is highlighted in the most recent IPCC report, with its focus on mitigating climate change. In that report, the IPCC concludes that “many renewable energy technologies have demonstrated substantial performance improvements and cost reductions, and a growing number of renewable energy technologies have achieved a level of maturity to enable deployment at significant scale ... renewable energy accounted for over half of the new electricity-generating capacity added globally in 2012.” Similar optimism from The Solutions Project, a renewable energy nonprofit, outlines how the energy infrastructure of each state in the U.S. could be completely transformed to renewable energy by 2050.

Nevertheless, to avoid catastrophic climate change, we need to quickly transition to low-carbon energy. Further delay narrows our options and significantly boosts the eventual economic and social costs of mitigation. How to begin? Economists across the political spectrum agree that putting a price on fossil-carbon emissions is the best first step.

The most promising proposals involve a revenue-neutral fee that is collected at the mine, well-head, or port-of-entry, and then returned to households as dividends. For example, the Citizens’ Climate Lobby proposed that revenue collected be returned in a uniform monthly dividend payment. Initially, the fee would be a modest $15 per ton of carbon. The fee would increase annually by a fixed amount ($10 per ton) until the necessary drop in CO2 emissions is observed.

Another revenue-neutral proposal returns the carbon fee collected by reducing taxes. Recent studies for the states of California and Washington show that this approach stimulates slightly more economic growth overall than the fee and dividend approach, while still giving the poorest families reasonable protection. The gradual increase in the fee gives businesses the opportunity to adjust their business models and stimulates investment in energy efficiency, renewable energy, nuclear energy and emissions mitigating technology, such as carbon capture and sequestration. At the border, carbon-fee-equivalent tariffs and rebates ensure U.S. goods remain competitive at home and abroad.

Initially, the dividend would be about $650 per household per year, and grow to as much as $8,700 a year after 23 years. As with businesses, this gradual increase allows families to pay for increased food and fuel costs, home insulation, alternative energy sources (such as solar panels), or a highly fuel-efficient or entirely electric vehicle, for example.

The home construction and energy retrofit industries will lead the way in new job creation and economic growth. Regardless of which approach is adopted, our CO2 emissions will drop. In so doing, we will have shifted to a path that reduces the risks outlined in the IPCC and NCA reports and avoids the worst effects of climate change, while stimulating economic growth and innovation.

Our congressman, U.S. Rep. Doc Hastings, could propose legislation to accomplish this before he leaves office. So long as we act soon, there is no need for despair or dismissal.

Jim Amonette is a geochemist working on climate-change mitigation technologies. Steve Ghan is a highly published climate scientist and contributing author to three different IPCC reports. Both volunteer with Citizens’ Climate Lobby.

Read more here: http://www.tri-cityherald.com/2014/05/16/2976048/in-focus-now-is-the-time-to-go.html#storylink=cpy

Greenland is Not a Museum

Global warming, due to our burning of fossil fuel, is causing the Greenland ice sheet to shed massive amounts of ice. In effect, Greenland is melting. As it does so, the white ice that reflected sunlight is being replaced by blue water that absorbs it, thus accelerating warming and further melting. This is what's called "positive feedback," and it's one of the most alarming aspects of global warming.

Northeast Greenland ice was considered stable until 2003, when summer temperatures spiked. Within a few years, the main outlet glacier draining the region -- Zachariae Isstrom -- retreated about 20 kilometers, and regional ice mass loss jumped from zero to roughly 10 metric gigatons a year. Today, ice mass loss from northeast Greenland into the Fram Strait abutting the Arctic Ocean is now closer to 15 to 20 metric gigatons a year and is still increasing.

A cubic meter of water weighs one metric ton (2,200 lbs). "Giga" is the prefix for billion.

We also learned recently that the West Antarctic Ice Sheet is collapsing and its disintegration is unstoppable. Combined with what we've discovered about the Greenland Ice Sheet, the estimates of sea level rise in the latest (5th) Intergovernmental Panel on Climate Change (IPCC) report -- between one and three feet this century -- appear extremely conservative.

If we don't reduce CO2 emissions immediately to near zero -- that's right, ZERO -- sea level rise between now and say 2200 could result in this (visualizations by Nickolay Lamm. Data: Climate Central).

AT&T Park, San Francisco

or this

Back Bay, Boston

 or this

Jefferson Memorial

So, how are we addressing the devastating impact of anthropogenic global warming (AGW) on the Greenland Ice Sheet? The government of Greenland has opened up oil exploration in the Greenland Sea, and already awarded leases to a conglomeration of companies from around the world. When questioned about the decision by environmental organizations concerned with AGW, Greenland officials, who are already planning on how to dole out the proceeds from the leases, stated, "Greenland is not a museum."

For more on the opening up of Greenland to exploration/exploitation, see: The Grab for Greenland, by Phillip Stephens.

Pricing carbon-based products will help reduce emissions

Guest Commentary in the Cheney Free Press
May 15, 2014 | Vol. 118 -- No. 4
Richard Badalamente

Washington Gov. Jay Inslee recently signed an executive order creating a task force to design a “carbon emission limits and market mechanisms program” that establishes a cap on emissions, and includes “measures to help offset any cost impacts to consumers and workers, protect low-income households and assist energy intensive, trade-exposed businesses in their transition from carbon-based fuels.” Inslee’s “emissions limits and markets” program is, like a rose by any other name, a cap and trade program.

The Western Climate Initiative, of which Washington is a member, has established a regional target for reducing heat-trapping emissions of 15 percent below 2005 levels by 2020. WCI’s main focus is developing a regional cap-and-trade program, so Inslee’s executive order is congruent with this goal and focus. Inslee is doing all he can at the state level. Unfortunately, cap and trade won’t do enough to reduce emissions. It’s a little like dusting your house with a feather duster. It just moves the dust from one place to another.

The best way to reduce greenhouse gas emissions is to price carbon-based products, like coal, such that the price reflects the damage those products cause to the environment and, in turn, our quality of life (the so-called "Social Cost of Carbon"). To do this we must put a surcharge, or fee on carbon to be assessed at its source. This fee must be imposed at the national level in order to avoid a patchwork of policies that confuses markets and pits one state against another.

The fee on carbon would start low and increase annually in a predictable manner until emissions goals were reached. Now, there’s no getting around semantics on this —conservatives will call the fee a “tax” and will oppose it on principle, shouting slogans about, “tax and spend liberals!” But here’s the kicker; 100 percent of revenues collected from the carbon fee world be returned to households as a monthly dividend. This is what’s termed a “revenue-neutral carbon tax,” or in economic terms, a Pigouvian Tax, and it is considered by most economists to be the most effective way of reducing emissions, while minimizing the impact on the economy.

Under cap and trade, bankers and market traders get rich, and administrators go nuts. A carbon fee and dividend system is far more effective in reducing emissions, and it is immensely simpler to administer. And because the fee (and in turn, the price of fossil fuel) goes up predictably over time, it sends a clear price signal to industry. That predictability allows intelligent investments in low/no emissions technologies. Carbon fee and dividend proponents, such as the Citizens’ Climate Lobby, also propose placing a border adjustment levy on all imports from countries that do not price carbon similarly, leveling the playing field for U.S. companies.

For consumers, the rising cost of fossil fuels increases the demand for low/no emissions products, making them even less expensive as they reach mass production. Research and development of emissions mitigation technologies, and production of clean energy alternatives also creates jobs, and drives our nation’s economy into a clean energy future — a future in which we have stabilized our climate and ensured a livable planet for our children, and their children after them.

Cap-and-Trade Programs to Cut Global Warming Emissions

From the Union of Concerned Scientists, Center for Science and Democracy

1. European Union's Trading Scheme
2. The Northeast Regional Greenhouse Gas Initiative
3. The Western Climate Initiative
4. Midwestern Regional Greenhouse Gas Reduction Accord

Existing cap-and-trade programs provide important lessons about the need for robust design features. A brief review of real-world experience will illustrate two of these lessons. First, a cap must be tight enough to achieve significant cuts in emissions. Second, the method regulators select for distributing emission allowances to firms is critical, and auctioning is gaining favor as the preferred approach.

Cap and Trade in Practice. The European Union’s Emission Trading Scheme (EU ETS) is the first cap-and-trade program for reducing heat-trapping emissions, and is designed to help European nations meet their commitments to the Kyoto Protocol. This program includes 27 countries and all large industrial facilities, including those that generate electricity, refine petroleum, and produce iron, steel, cement, glass, and paper.

The first phase of the EU ETS—from 2005 to 2007—drew criticism for not achieving substantial cuts in emissions, and for giving firms windfall profits by distributing carbon allowances for free. These criticisms are valid. However, the EU viewed Phase 1 as a trial learning period. The extent to which Phase 2—which runs from 2008 to 2012—helps Europe fulfill its Kyoto commitments will be a better test of the program.

Phase 1 allowed countries to auction up to only 5 percent of allowances—and only Denmark chose to auction that amount. The result was billions of dollars in windfall profits for electricity producers. Phase 2 allows slightly more auctioning, which is expected to occur.

The rules for Phase 3—which extends from 2012 to 2020—were published in December 2008, and unfortunately they are not as ambitious as expected, given the EU’s stated commitment to tackling global warming. This phase targets a 20 percent reduction in emissions from 1990 levels by 2020; climate experts had hoped for 30 percent. Even this target is considerably watered down because of the large amount of offsets allowed from outside the capped region. Auctioning of allowances is still not likely to play a major role. This experience reinforces the fact that the United States would be much more likely to win stronger commitments from the EU and elsewhere if it fulfilled its responsibility to lead on climate policy.

The Regional Greenhouse Gas Initiative (RGGI) is a cap-and-trade program that covers a single sector—electricity generation—in 10 northeastern and mid-Atlantic states. The program aims to achieve a 10 percent reduction in emissions from power plants by 2018.

The program’s most notable aspect is that states unanimously chose auctioning to distribute the vast majority of emission allowances. Six of the ten states will auction nearly 100 percent of their allowances. The auctions of the other four states include fairly small portions of fixed-price sales or direct allocations.

The program's initial three-year compliance period begins in 2009, but the first multistate auctions occurred on September 25 and December 17, 2008. The first auction, which included allowances from only six states, raised $38.5 million, while the second raised $106.5 million. States and electric utilities will invest the vast majority of those funds in energy efficiency and renewable technologies, with an emphasis on reducing demand for fossil fuel–based electricity and saving consumers money.
The RGGI auction includes a reserve price, to ensure that CO2 emissions will always carry a minimum cost, and that the auctions will yield a minimum amount of revenue for these important programs. Some analysts fear that the states may have set the cap too high, because emissions have not grown at the rate expected when the cap was set in 2005. However, there is a possibility that the states could revisit the cap.

Cap and Trade on the Horizon

The Western Climate Initiative (WCI)—which includes seven western states and four Canadian provinces—has established a regional target for reducing heat-trapping emissions of 15 percent below 2005 levels by 2020. WCI’s main focus is developing a regional cap-and-trade program. The WCI also requires participants to implement California’s Clean Car Standard, and recommends other policies and best practices that states and provinces can adopt to achieve regional goals for cutting emissions.

The first phase of WCI development culminated on September 23, 2008, with the release of its Design Recommendations. These sketch out a very broad cap-and-trade program that would cover 85–90 percent of all heat-trapping emissions from participating states and provinces. The only parts of the economy that would remain uncapped are agriculture, forestry, and waste management. However, some sectors, such as transportation fuels, would be brought in at the start of the second compliance period, in 2015.

California is the largest single entity in the WCI, and it has the most detailed action plan of any state in the nation. In 2006 the legislature passed, and Governor Schwarzenegger signed, a law to reduce emissions economy-wide. The California Air Resources Board has created a blueprint for achieving the required reductions. The plan includes a strong set of sector-specific policies forecast to provide about 80 percent of the needed reductions, as well as a broad cap-and-trade program linking to the WCI. The California and WCI cap-and-trade programs are scheduled to go into effect in 2012.

Another nascent regional effort is occurring in the Midwest. On November 15, 2007, the governors of Illinois, Iowa, Kansas, Michigan, Minnesota, and Wisconsin, as well as the premier of the Canadian province of Manitoba, signed the Midwestern Regional Greenhouse Gas Reduction Accord. Participants agreed to establish regional targets for reducing global warming emissions, including a long-term target of 60–80 percent below today’s levels, and to develop a multisector cap-and-trade system to help meet the targets.

Participants will also establish a system for tracking global warming emissions, and implement other policies to help reduce them. The governors of Indiana, Ohio, and South Dakota joined the agreement as observers. The regional accord for reducing such emissions is the first in the Midwest.

The governors and premier assembled an Advisory Group of more than 40 stakeholders to advise them, and their final recommendations are due in May 2009. As now conceived, the cap would take effect January 1, 2012.

Last Revised: 11/09/07