Last week, California’s Cap-and-Trade Program to reduce carbon emissions was handed a victory when a state appeals court ruled that program’s auction of emissions permits does not constitute an illegal tax because the program is voluntary and the emissions permits have value. In a 2–1 vote, the Court of Appeal for the Third Appellate District upheld the cornerstone piece of California’s climate change policy, siding with the program’s operator, the California Air Resources Board (CARB), by finding that the auction revenues are more akin to regulatory fees than a tax. The court ruled against the California Chamber of Commerce, a tomato processor, and the National Association of Manufacturers, all of whom alleged that CARB lacked legislative authority to create the auctions and that the emissions allowances amounted to a tax that would have required a two-thirds vote of the legislature.
California created the Cap-and-Trade Program as part of its program to meet its targets of reducing carbon emissions to 1990 levels by 2020 and to 40 percent below 1990 levels by 2030. The program requires factories, power plants, and other companies to buy permits to emit greenhouse gases. By putting a cap on carbon emissions and by creating a market for emissions permits, which covered entities can bank and sell if they don’t need them, the program aims to encourage pollution reduction at the least possible cost. Specifically, it allows businesses to determine whether their most cost-effective compliance option is to reduce their emissions or to pay to pollute, a flexibility that figured in the appeals court decision.
“Reducing emissions reduces air pollution, and no entity has a vested right to pollute,” the court wrote. “The purchase of allowances is a voluntary decision driven by business judgments as to whether it is more beneficial to the company to make the purchase than to reduce emissions.”
The court decision frees California to continue holding auctions through 2020 but does not eliminate all the uncertainty that has dampened demand for permits and reduced state revenues that have been used for programs linked to emissions reductions. Although the decision immediately gave carbon markets a boost, an oversupply of permits has kept them inexpensive at roughly $12.50 or $13.50 a metric ton. Experts say that price needs to reach $30 to $40 to properly incentivize new pollution control investments.
Whether emissions permits in a cap-and-trade system should be given away or sold by the government has long been debated by scholars, reports Inside Climate News. California companies had wanted permits to be handed out for free, but California chose to auction them and to use the revenue to help finance spending on energy efficiency and other parts of its climate agenda.
State lawmakers are presently debating whether to extend the Cap-and-Trade Program past 2020 to eliminate any additional uncertainty about the program.
U.S. Power Sector Shrinks Carbon Footprint in Record-Breaking Way
A continuing drop in coal use, along with relatively mild winter temperatures, drove a second consecutive year of reductions in U.S. power sector carbon dioxide emissions, according to figures released by the Energy Information Administration (EIA) on Monday. The EIA reported that those emissions dropped 1.7 percent, compared with the previous year. That reduction was largely attributed to an 8.6 percent drop in coal-related emissions, which was offset by increases in emissions from oil (1.1 percent) and natural gas (0.9 percent). Those figures added up to a record-breaking decrease in the power sector’s carbon intensity, a measure that relates carbon emissions to economic output.
“Overall, the data indicate about a 5 percent decline in the carbon intensity of the power sector, a rate that was also realized in 2015,” the EIA said. “Since 1973, no two consecutive years have seen a decline of this magnitude, and only one other year (2009) has seen a similar decline.”
“These recent decreases are consistent with a decade-long trend, with energy-related CO2 emissions 14 percent below the 2005 level in 2016,” the EIA added.
Whether the trend will continue will depend on several factors. Climate Central reports that utilities’ increasing switch from coal to less carbon-intensive natural gas is not a panacea for climate change, because extraction processes for natural gas emit methane, a greenhouse gas 34 times stronger than carbon dioxide over 100 years. Moreover, it’s unclear how the Trump administration’s push for fossil fuels development will play out. It may only delay the closure of coal-fired power plants slated for retirement if natural gas prices remain low. But carbon emissions could begin to rise again in the United States if demand for electricity and gasoline increases and if the average fuel economy of new vehicles does not increase.
The EIA reported that the only U.S. sector in which carbon emissions increased last year was transportation. Emissions directly from motor gasoline increased 1.8 percent. Notably, overall transportation sector emissions were higher than power sector emissions, a trend the EIA expects to continue until at least 2040.
Gorsuch Sworn in as Supreme Court Justice
After being confirmed Friday by a 54-to-45 vote—following Republicans’ invocation of the so-called nuclear option, which lowered the threshold on Supreme Court nominations to a simple majority vote—Colorado appeals court judge Neil M. Gorsuch took his oaths to be the Supreme Court’s 113th justice Monday. Gorsuch breaks the court’s perceived 4-4 ideological split since the February 2016 death of conservative stalwart Justice Antonin Scalia.
During his federal appeal court tenure, Gorsuch mirrored Scalia’s originalist approach to the law, interpreting the Constitution according to the meaning understood by its drafters. But he could envision his job in more “muscular” terms than his predecessor, according to The Economist. Of particular importance to climate policy is Gorsuch’s evident skepticism of the Chevron deference, whereby judges defer to an agency’s reasonable interpretation of federal laws when the law is ambiguous. The Chevron deference, as a principle, stems from a decision in a 1984 case that Chevron brought against the Environmental Protection Agency regarding its reading of the Clean Air Act. In last year’s Gutierrez-Brizuela v Lynch, notes The Economist, Gorsuch called into question the Chevron principle, writing that it allows agencies to “swallow huge amounts of core judicial and legislative power” and that it “concentrate[s] federal power in a way that seems more than a little difficult to square with the constitution of the framers’ design.” He suggested that it might be time to fundamentally rethink the Chevron principle.
The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.
Two laws signed by Gov. Jerry Brown will ratchet up California’s fight against climate change by launching efforts to reduce emissions 40 percent below 1990 levels by 2030. SB-32 calls for increased renewable energy use, more electric cars, improved energy efficiency, and emissions cuts from key industries. AB-197 provides aid to low-income or minority communities located near polluting facilities and creates a legislative committee to oversee regulators, giving lawmakers a greater voice in how climate goals are met.
“What we are doing is farsighted and far-reaching,” said Brown at the bill’s signing. “I hope it sends a message across the country.”
The new legislation extends the state’s 2006 climate change law, which imposed limits on the carbon content of gasoline and diesel fuel and introduced a cap-and-trade program for polluters. It does not address the cap-and-trade program, which provides economic incentives to companies that achieve reductions in the emission of greenhouse gases. For each ton of greenhouse gases emitted, companies covered by the cap-and-trade program must purchase a permit. The state issues a limited number of permits through quarterly auctions.
Permit sales fizzled during the last two quarterly permit auctions, reports ABC News, but state officials say they are still on track to meet emissions goals. Brown has said the new legislation could provide leverage to convince businesses to support extension of the cap-and-trade program after 2020. If lawmakers don’t act to reauthorize the program soon, Brown said he might try putting the matter before voters in 2018.
Studies: Air Pollution Causes Premature Deaths, Lingers in Brain
Some 87 percent of the world’s population lives in areas affected by air pollution, which a joint study by the World Bank and the Institute for Health Metrics and Evaluation (IHME) finds is the fourth-leading risk factor for deaths worldwide. In 2013, the most recent year for which relevant estimates are available, indoor and outdoor air pollution caused 5.5 million premature deaths globally and imposed an economic cost in lost wages alone of $225 billion.
“Air pollution is a challenge that threatens basic human welfare, damages natural and physical capital and constrains economic growth,” said Laura Tuck, vice president for sustainable development at the World Bank. “We hope this study will translate the cost of premature deaths into an economic language that resonates with policymakers so that more resources will be devoted to improving air quality.”
GDP losses due to air pollution are significant, according to the World Bank-IHME report. It estimates that in 2013 China lost nearly 10 percent of its GDP, India, 7.69 percent, and Sri Lanka and Cambodia, roughly 8 percent. Welfare costs to developed countries were also high—about $45 billion to the United States. China suffered the highest welfare losses—about $1.5 trillion—followed by India at about $505.
And a separate study published in the Proceedings of the National Academy of Sciences suggests that industrial air pollution leaves magnetic particles in the brain. Because unusually high concentrations of these “magnetite” are found in the brains of people with Alzheimer’s disease, the findings raise the specter of an alarming new environmental risk factor for this and other neurodegenerative diseases.
“The particles we found are strikingly similar to the magnetite nanospheres that are abundant in the airborne pollution found in urban settings, especially next to busy roads, and which are formed by combustion or frictional heating from vehicle engines or brakes,” said the Lancaster Environment Center’s Barbara Maher, who led the new research.
Research Examines Increase in Methane Emissions
Scientists around the world have been trying to figure out whether oil and gas production, particularly a boom in that production in the United States, could be responsible for the global rise in methane since 2007. A new study in the Proceedings of the National Academy of Sciences adds to the debate (subscription).
“What’s going on in the gas and oil sector has been the big question with methane,” said lead author Andrew Rice, a researcher at Portland State University. “It’s not settled, but we give some new pieces to the puzzle.”
The study suggests that since the 1980s leaks by the fossil fuel industry have been increasing—by an average of 24 megatons per year. The increase went up in 2000 when methane emissions from biomass burning and rice cultivation decreased.
“We were kind of surprised by these results, to be completely honest,” Rice said. “I’d say up until our work, the evidence was showing that [fugitive] fossil fuel emissions were decreasing, based on ethane data.”
The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.
“We are now able to put a number on the deaths caused by climate change in a heat wave,” said lead author Daniel Mitchell of the University of Oxford. “This has never been done before. Previous studies have attributed changes in heat waves to climate change, or related increased heat stress to human deaths, but none have combined the two.”
The study’s U.S. and U.K researchers calculated that, during a Europe-wide heat wave in summer 2003, 506 of 735 deaths in Paris and 64 of 315 deaths in London were due to a heat wave worsened by anthropogenic climate change. They reached that conclusion after putting the results of several thousand runs of two climate model simulations of the 2003 heat wave into a health impact assessment of death rates.
By comparing two scenarios—one reflecting the climate of 2003 without human influences and one reflecting all known climatic forces contributing to the 2003 heat wave—the researchers determined how climate change had affected that summer’s temperatures.
The study, reports Carbon Brief, analyzes a direct impact measure—mortality—rather than an indirect one—temperature. It links mortalities to climate and introduces another level of uncertainty, especially when long and reliable health datasets are not available for use in analyses.
Nevertheless, reports ClimateWire, the study demonstrates that losses can be directly linked to climate change and thus its framework can be used to assign costs of “loss and damage” and to improve planning and adaptation (subscription).
“It is often difficult to understand the implications of a planet that is one degree warmer than preindustrial levels in the global average, but we are now at the stage where we can identify the cost to our health of man-made global warming,” Mitchell said. “This research reveals that in two cities alone hundreds of deaths can be attributed to much higher temperatures resulting from human-induced climate change.”
Last week at a meeting held by the French government to study Paris Agreement-related actions to reduce health risks linked to climate change, the World Health Organization said that change is likely to kill 250,000 additional people each year by 2030—primarily through malaria, diarrhea, heat stress, and malnutrition. Children, women, older people, and the poor will be most affected.
Climate Change and Cloud Cover
A new study in the journal Nature suggests there’s evidence of climate change in satellite cloud records. By comparing satellite data from 1983 to 2009 to climate models, the authors found that the clouds forming most often are not low-lying reflective ones that cool the planet. Instead, cloud patterns were in line with what scientists would expect to see in climate models—an increase in greenhouse gases associated with human activity over the study period.
“Cloud changes most consistently predicted by global climate models are currently occurring in nature,” the authors write. “As cloud tops rise, their greenhouse effect becomes stronger.”
Clouds have both an Earth-cooling effect by reflecting solar radiation back to space and an Earth-warming effect by restricting the planet’s thermal infrared radiation.
“Even if there is no change in the overall coverage of clouds on the earth, clouds closer to the pole reflect less solar radiation because there is less solar radiation coming in closer to the pole,” said lead author Joel Norris of the Scripps Institution of Oceanography.
In Science magazine, Norris noted one caveat: during the study period, two major volcanic eruptions cooled and then warmed the climate, producing cloud patterns similar to those produced by greenhouse gas-related warming.
Draft Proposes Extension of California Cap-and-Trade Program
The California Air Resources Board released a draft plan to extend the state’s cap-and-trade program beyond 2020, when it is set to expire. The program—one of the first economy-wide programs put in place—aims to reduce greenhouse gas emissions by creating a fixed number of permits, called allowances, to emit a single ton; compliance entities and other market participants can buy and sell allowances, thereby enabling the market to determine the lowest-cost compliance path.
The draft plan calls to extend the program another decade and to reach emissions levels 40 percent below 1990 levels. It would include preliminary caps through 2050 “to signal the long-term trajectory of the program to inform investment decisions.”
No board vote is scheduled on the proposal until March 2017. A state appeals court is considering a challenge from the California Chamber of Commerce, which contends that the pollution-credit program is an illegal tax, not a fee.
Editor’s Note: This is the third in a series of special issues, this week, of The Climate Post that focus on the climate talks in Paris.
Climate negotiators at the United Nations Climate Change Conference (COP 21) in Paris have until Friday to reach a global deal to curb greenhouse gas emissions to avoid the most serious climate change impacts. Negotiators released a new, shorter draft of that deal. The 29-page document leaves some major sticking points unresolved, including whether to reduce overall global temperatures 1.5 degrees Celsius above pre-industrial levels or 2 degrees Celsius, who shoulders the cost of moving to a low-carbon economy and how often nations should review their emissions reduction plans.
“On these issues I ask you to scale up your consultations to speedily come to compromise solutions,” French Foreign Minister Laurent Fabius told conference delegates. “We’ve made progress but still a lot of work remains to be done. Nothing is agreed until everything is agreed.”
Many of the countries supporting a 1.5 degree Celsius target are arguing that rich but still developing economies—among them, Bahrain, Qatar, Saudi Arabia, Singapore, and South Korea—provide funds to help the poorest countries adapt to climate change—a move that would upend the Kyoto Protocol’s funding structure, which demands that only those countries designated as industrialized in 1992 pay up (subscription). It may be best, Mexico’s former president Felipe Calderon tells The Guardian, if developing countries were not treated as a single negotiating bloc.
“Sub-Saharan Africa is not the same as China,” Calderon said. “The G77 [comprising most of the biggest developing economies] is not the same as the Alliance of Small Island States. Arabian countries have different interests.”
On Tuesday, the European Union (EU) forged an alliance with 79 poor African and small-island countries that could, reports the Wall Street Journal, help eliminate the 20-year division between developed countries and developing countries on climate issues. It comes with $517 million in EU funding to help reduce greenhouse gas emissions. The announcement focuses on some of the highly debated points at the conference so far—including calling for a mechanism to review emissions targets every five years.
Linking Carbon Markets Explored in Paris
As negotiators continue to stew on the details of the agreement’s level of ambition and funding for developing nations, an interesting undercurrent has permeated the talks—whether national commitments could be linked to create a “bottom-up” carbon market. With many nations now looking to carbon markets to execute their national programs—including the top emitter, China—many stakeholders are expressing a desire for collaborative language that would empower nations to bring their programs together.
In a COP 21 side event co-sponsored by the Nicholas Institute, the International Emissions Trading Association (IETA) and the Electric Power Research Institute (EPRI), stakeholders expressed the logic of such an approach and discussed the language necessary to enable it. According to my Nicholas Institute colleague Brian Murray, the gains from trade increase with the number of participants—the more participants, the lower the cost of compliance.
Steven Rose of EPRI took the concept even further, describing considerations suggested by his modeling of trading among the United States, China and the European Union.
“Expanding the partnership can be welfare improving in total,” he said, “but it can have distributional effects so there will be some strategic incentives and strategic thinking required in terms of the composition of those partnerships.”
These concepts were encouraged by industry representatives from Statoil and the Italian power company Enel. Discussion also focused on what would be required to achieve linkage. In a clear parallel to the “common elements” approach that allows U.S. states to permit linked systems under the U.S. Environmental Protection Agency’s Clean Power Plan, Brian Murray pointed out that only minimal common policies are required to permit jurisdictions to link.
The linkage could be accomplished fairly easily, he said, as long as each jurisdiction adopts a common unit to trade, allows units from other jurisdictions to be used in their own market and participates in a registry that ensures that each unit is counted only once.
There’s been some talk of reflecting the market linkage concept in the eventual climate agreement. A joint proposal from Brazil and the European Union has garnered interest. But the concept does not appear to be in the new draft text released today, and the United States is notably not pursuing it.
“I am speaking for a country that has no intention to use them (carbon markets) in an international concept,” said Christo Artusio, director of the U.S. State Department’s Office of Global Change. And without the U.S.’s support, it is unclear how far the enabling language will proceed.
On his visit to Washington last week, Chinese president Xi Jinping announced that his country, the world’s biggest carbon polluter, will launch a national cap-and-trade scheme in 2017. The move would make China the world’s biggest carbon market and could strengthen global efforts to put a price on carbon.
The planned emissions trading program will consolidate China’s seven existing regional carbon markets and cover industries not currently regulated for carbon in the United States: iron and steel, chemicals, building materials, and paper manufacturing.
China has yet to announce specifics of its cap-and-trade plan, which will face political and technical challenges. “The devil of course is in the details,” said Timmons Roberts, a professor of environmental studies at Brown University. “It really does matter what the actual cap is.” He added that limits leading to a pre-2030 emissions peak would be a huge move.
Frank Jotzo, the director of the Center for Climate Economics and Policy at the Australian National University in Canberra and a close tracker of developments in China said the national emissions trading scheme will have a major signaling effect. “The world’s second-largest economy puts in place a price on carbon emissions, and this will be noted the world over,” he said. “If successful, it can grow into playing a major role in facilitating China’s objectives for a cleaner energy and industrial system.”
Jinping’s announcement occasioned this ironic observation in The Atlantic in reference to Republicans’ rejection of a cap-and-trade proposal in Obama’s first term, which led to enactment of climate control policy through regulation of the electric power industry in the form of the Clean Power Plan: “China, the largest self-avowedly communist nation in the world, has created a market to reduce its carbon emissions. And the U.S., the anchor of global capitalism, will limit them through government command-and-control.”
China also made a substantial financial commitment to help poor countries fight climate change—$3.1 billion.
U.N. Sustainable Development Goals Adopted
The United Nations General Assembly agreed to 17 new sustainable development goals, which expand on the eight Millennium Development Goals. The new goals are broken down into 169 specific targets each country has committed to achieve over the next 15 years. They focus on everything from eradicating extreme poverty and climate change to providing energy access for all.
Goal 7 is to ensure access to affordable, reliable, sustainable and modern energy for all. Two targets to put the world on this path are to increase the share of renewable energy in the global energy mix and to double the rate of improvement of energy efficiency by 2030.
World Energy Council Secretary General Christoph Frei welcomed the agreement on the goals. “The adoption of energy among sustainable development goals is timely, critical, and historic,” he said. “Timely because we need to master the energy transition at a time of greatest uncertainty in the energy sector. Critical because we will not solve energy access or achieve energy efficiency objectives without moving the agenda from those who want to those who can. Historic because the development community for the first time recognizes the fundamental role energy is playing in the achievement of most of the other sustainable development goals.”
Goal 13 is to take urgent action to combat climate change and its impacts. A few targets to get there—integrate climate change measure into national policies, strategies and planning as well as advance the Green Climate Fund—requiring developed countries to follow through on commitments to provide $100 billion by 2020 to aid developing nations’ efforts to adapt and mitigate climate-related disasters.
With the adoption of the 17 goals, attention now turns to the U.N. climate negotiations in Paris—where member states hope to adopt a global climate agreement. In a CNN editorial, U.N. Secretary General Ban Ki-Moon, said all could take a lesson from Pope Francis’s message on climate change.
“Pope Francis, in his recent encyclical, clearly articulated that climate change is a moral issue, and one of the principal challenges facing humanity,” said Ban Ki-Moon, mentioning the Pope’s recent visit to the U.S. where he address the U.N. and Congress. “He rightly cited the solid scientific consensus showing significant warming of the climate system, with the most global warming in recent decades mainly a result of human activity.”
Shell Suspends Arctic Drilling
Royal Dutch Shell suspended its search for oil and gas off the coast of Alaska for the “foreseeable future,” saying that Arctic oil reserves were insufficient and that the regulatory environment was too unpredictable to continue.
“Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the U.S.,” said Marvin Odum, president of Shell USA. “However, this is a clearly disappointing exploration outcome for this part of the basin.”
Although the decision was celebrated by some environmental activists who had protested Shell’s decision to drill offshore, it should give people on both sides pause, Mike LeVine of Oceana told U.S. News and World Report.
“Meaningful action to address climate change is almost certainly going to mean we can’t keep looking for oil in remote and expensive places,” he said. “Rather than investing in programs like this, we need to figure out how to transition away from fossil fuels and toward sustainable energy.”
Alaska House of Representatives member Ben Nageak told the Associated Press that the state must act quickly to find another source to fill its 800-mile trans-Alaska oil pipeline.
“We stood on the cusp of another economic boom that could have propelled our young people and their children to better futures,” Nageak said. But “a draconian and poisoned federal government” shut it down.
Last week’s Republican debate drew opinions of several candidates on climate change, namely on how government action to address the problem will hurt the economy. During the four-minute exchange, Florida Sen. Marco Rubio and New Jersey Gov. Chris Christie dismissed the idea of enacting former Secretary of State George Schultz’s proposed “insurance policy” to guard against global warming risks such as sea-level rise.
When debate moderator Mark Tapper asked about the insurance policy, Rubio responded, “Because we’re not going to destroy our economy the way the left-wing government that we are under now wants to do,” and Christie said, “I agree with Marco. We shouldn’t be destroying our economy in order to chase some wild left-wing idea that somehow us by ourselves is going to fix the climate.”
Rubio said he’s not a climate skeptic but that he opposes policies to reduce emissions that he believes will hurt the U.S. economy and fail to affect global temperatures. He suggested that there is little point in the United States reducing its emissions because “America is not a planet.”
Wisconsin Gov. Scott Walker, who suspended his campaign on Monday, concurred with Rubio and referenced the U.S. Environmental Protection Agency’s Clean Power Plan to reduce carbon dioxide emissions from power plants, although not by name.
“I’m going to echo what Senator Rubio just said,” the governor said. “This is an issue where, we’re talking about my state, it’s thousands of manufacturing jobs. Thousands of manufacturing jobs for a rule the Obama administration, its own EPA has said will have a marginal impact on climate change.”
Christie went on to say that “massive government intervention” to deal with climate change is unnecessary, and that New Jersey had already reached its clean air goals for 2020. But ArsTechnica noted that he did not mention that state’s renewable energy standards, net metering, and solar renewable energy credits all required government intervention.
Christie did note that he’d taken New Jersey out of the Regional Greenhouse Gas Initiative, a now nine-state emissions trading arrangement recently shown to have generated both emissions reductions and economic benefits. Carbon allowances sold by the initiative have just set a new record high. Participating states will use the revenues for energy conservation, renewable energy, and direct bill assistance programs.
Pope Visits United States; Talks Climate Change
The day after arriving in the United States for a six-day visit, Pope Francis acknowledged, in a brief speech at the White House, efforts by the Obama Administration to curb carbon emissions.
“Mr. President,” Francis said in English, “I find it encouraging that you are proposing an initiative for reducing air pollution. Accepting the urgency, it seems clear to me also that climate change is a problem which can no longer be left to a future generation.” He added “To use a telling phrase of the Reverend Martin Luther King, we can say that we have defaulted on a promissory note and now is the time to honor it.”
The papal visit follows the release of his encyclical on the environment, and Francis’s talks about climate change during the visit may very well touch on the concept of carbon markets. The encyclical says markets are “not good” for rationing natural resource use. “This is where many economists who study environmental markets and carbon markets might take exception to the pope,” the Nicholas Institute’s Brian Murray told American Public Media’s Marketplace. He said markets to limit carbon emissions do curb those emissions, and he attributed the Vatican’s negative view of markets to a failed attempt to use them to go carbon neutral, which used carbon offsets from a voluntary action that did not materialize. A market driven by an enforced cap on emissions, however, would not produce the same risk of failed reductions.
Today, Francis became the first pope to address a joint session of Congress. On the topic of climate change, Pope Francis addressed the divided Congress: “We need a conversation which includes everyone, since the environmental change we are undergoing, and its human roots, concerns and affects us all.”
He echoed words in his June encyclical, calling for “courageous and responsible effort to ‘redirect our steps’ and to avert the most serious effects of the environmental deterioration caused by human activity,” Francis said. “I am convinced that we can make a difference and I have no doubt that the United States—and this Congress—have an important role to play … Now is the time for courageous actions and strategies, aimed at implementing a culture of care and an integrated approach to combating poverty, restoring dignity to the excluded, and at the same time protecting nature.”
Reports: Carbon Pricing Schemes Gain Momentum
The World Bank reports that around the world carbon pricing schemes have nearly doubled (from 20 to 38) since 2012, and the Carbon Disclosure Project (CDP), a non-profit that gathers environmental data for investors, reports that the number of companies putting a price on their greenhouse gas emissions for internal planning in 2015 almost tripled (from 150 to 437), with the biggest increase in Asia, where China is slated to launch a national carbon market and South Korea has just introduced one.
According to the CDP report, companies said that carbon prices create incentives for energy efficiency projects and switches to less-polluting fuels. In the United States, utilities cited expected emissions costs as motivation for low- or no-carbon generation investments
The World Bank study estimates that carbon pricing instruments cover about 12 percent of all greenhouse gas emissions and that the combined value of those instruments in some 40 nations and 23 cities, states, and regions is $50 billion a year—$34 billion from markets and $16 billion in taxes. It showed that carbon prices, ranging from less than a dollar a ton of carbon dioxide in Mexico to $130 a ton in Sweden, are for the most part “considerably lower” than needed to help limit temperature rises to a United Nations goal of 2 degrees Celsius above pre-industrial times to avoid the most devastating effects of climate change. Nations gather for international climate negotiations Nov. 30 to Dec. 11 in Paris—a meeting intended to produce a deal that would commit all nations to reducing greenhouse gas emissions in the hopes of meeting this goal.
The study notes that ex-post analysis of the European Union Emissions Trading System, presently the world’s largest cap-and-trade system by traded volume, has not led industries to move to jurisdictions with comparatively low emissions costs on any significant scale but that the risk of carbon leakage remains as long as carbon price signals are strong and differ significantly among jurisdictions. According to the study, this risk, affecting a limited number of exposed sectors, can be effectively mitigated through policy design.
A parallel report by the World Bank and the Organisation for Economic Co-operation and Development, with input from the International Monetary Fund, identified new principles for carbon pricing that it called FASTER: Fairness, Alignment of policies and objectives, Stability and predictability, Transparency, Efficiency and cost effectiveness and Reliability and environmental integrity.
Last week, the European Union urged UN envoys to adopt international carbon market rules and emissions accounting systems by 2017. Negotiations on such systems are not expected to progress far at this year’s climate summit in Paris.
On Tuesday, a lawyer hired by the world’s largest coal mining company told the House Energy and Commerce Subcommittee on Energy and Power that proposed requirements to reduce carbon dioxide emissions from power plants are reckless, and Senate majority leader Mitch McConnell of Kentucky, in an op-ed, said states should ignore them, but U.S. Environmental Protection Agency (EPA) administrator Gina McCarthy warned that the regulations will be enforced whether or not states chose to cooperate.
“The EPA is going to regulate. Mid-summer is when the Clean Power Plan is going to be finalized,” McCarthy said, noting that the EPA is developing a federal implementation plan that will apply to states that fail to submit their own compliance plans. “If folks think any of those pieces aren’t going to happen and [the Clean Power Plan] isn’t going to be implemented, I think they need to look at the history of the Clean Air Act more carefully. This isn’t how we do business.”
A new policy brief by Duke’s Nicholas Institute for Environmental Policy Solutions offers a compliance pathway for the EPA’s proposed Clean Power Plan that allows states to realize the advantages of multistate and market-based solutions without mandating either strategy. Under the common elements approach, states develop individual-state plans to achieve their unique emissions targets and give power plant owners the option to participate in cross-state emissions markets.
“States wouldn’t necessarily have to mandate market-based approaches or even endorse the approaches,” said Jonas Monast, lead author and director of the Climate and Energy Program at the Nicholas Institute. “What it would require is the states using a common definition of what a compliance instrument is and ensuring that somehow the credits are verified and tracked.”
The common elements approach would allow cross-state credit transfers without states’ negotiation of a formal regional trading scheme, leave compliance choices to power companies, build on existing state and federal trading programs and maintain traditional roles of state energy and environmental regulators.
Carbon Footprint of Crudes Varies Widely
A first-of-its-kind oil-climate index, produced by the Carnegie Endowment for International Peace’s Climate and Energy Program in collaboration with Stanford University and the University of Calgary, captures the huge spread between the most and least intensive greenhouse gas (GHG) oils. By calculating the carbon costs of various crudes and related petroleum products, the authors suggest that companies and policymakers can better prioritize their development.
The index reflects emissions from the entire oil supply chain—oil extraction, crude transport, refining, marketing, and product combustion and end use—and reveals an 80 percent spread between the lowest GHG-emitting oil and the highest in its sample of 30 crudes, representing some 5 percent of global oil production. That spread will likely grow when more types of crude oil, particularly oil from unconventional sources, are added to the index.
The lead emitter? China Bozhong crude, followed by several Canadian syncrudes derived from oil sands-extracted bitumen.
A blog post for the Union of Concerned Scientists suggested that the wide emissions spread should give rise to “more responsible practices like capturing rather than flaring gas” and that in some cases “the dirtiest extra-heavy resources are best left in the ground.”
The index, which highlights that attention to the entire lifecycle of a barrel of crude is critical to designing policies that reduce its climate impacts, was released days before the International Energy Agency reported that for the first time in 40 years of record keeping, carbon dioxide emissions from energy use remained steady in 2014. The halt, the report states, is particularly notable because it is not tied to an economic downturn.
More Renewables, Tougher Standards for Public Lands
Secretary of the Interior Sally Jewell previewed plans to make energy development safer on public and tribal lands and waters in a speech outlining priorities for the Obama administration’s final years.
“…our task by the end of this Administration is to put in place common-sense reforms that promote good government and help define the rules of the road for America’s energy future on our public lands,” Jewell said. “Those reforms should help businesses produce energy more safely and with more certainty. They should encourage technological innovation. They should ensure American taxpayers are getting maximum benefit from their resources. And they should apply our values and our science to better protect and sustain our planet for future generations.”
Among the measures to be unveiled in coming months: tightened spill prevention standards for offshore drilling, increased construction of solar and wind installations and a raise in royalties from coal mining.
Jewell also hinted at plans “in coming days” to propose rules governing hydraulic fracturing on public lands, which are believed to hold about 25 percent of the country’s shale reserves.
The Environmental Protection Agency (EPA) is delaying the release of carbon emissions rules for all power plants and will publish them for new as well as existing plants at the same time mid-summer.
“It’s become clear to us … that there are cross-cutting topics that affect the standards for new sources, for modified sources and for existing sources, and we believe it’s essential to consider these overlapping issues in a coordinated fashion,” said Janet McCabe, the EPA’s acting administrator for air quality.
McCabe also announced that the EPA will begin drafting a “model rule” for states that do not submit individual plans to meet emissions reduction targets in the existing power plant regulations.
Under the proposed regulations for new sources, the EPA has functionally required new coal power plants to include carbon-capture technology, which critics of the emissions rules say lack proof of efficacy on a large scale and have a high cost to implement. In 2011, the American Electric Power Company reported that including carbon-storing processes at a West Virginia plant would cost an estimated $668 million.
California Cap-and-Trade System Includes Oil and Gas Sector
California’s cap-and-trade program—the country’s first multi-sector carbon emissions trading program—now requires gasoline and diesel producers to supply lower-carbon fuels or to buy carbon allowances—pollution permits—for the greenhouse gases emitted when those fuels are burned.
Key program stakeholders, industry leaders, public officials and environmental advocates agree that consumers will see a rise in gas prices, but the amount remains uncertain.
“There’s a very large universe of variables which could affect gas prices on a daily basis, and we don’t set fuel prices,” said California Air Resources Board spokesperson Dave Clegern. He added, “We don’t see them going up more than a dime, at the most, based on any current cap-and-trade compliance costs.”
It is estimated that 25 percent of secured funds from the emissions trading program will be allotted to the state’s high-speed rail project.
California’s program includes an allowance reserve initially proposed by Nicholas Institute and Duke University researchers that prevents carbon allowance prices from reaching levels beyond the scope of purchasers.
Congress Prepare to Vote on Keystone XL Pipeline
The Senate Energy and Natural Resources Committee has cleared legislation to approve the Keystone XL pipeline, which would deliver some 830,000 barrels of oil a day from Canada’s oil sands to Gulf Coast refineries. But White House press secretary Josh Earnest, citing the Obama administration’s “well-established” review process, said, “If this bill passes this Congress, the president wouldn’t sign it.”
The pipeline has become a flash point in the debate over climate change and economic growth.
In a December 19 press conference, the president said, “I want to make sure that if in fact this project goes forward, that it’s not adding to the problem of climate change, which I think is very serious and does impose serious costs on the American people, some of them long term, but significant costs nonetheless.”
Critics of Keystone have pointed to the carbon intensive production of the crude it will carry. In an op-ed in The Hill, the new president of the Natural Resources Defense Council, Rheh Suh, called production of oil from Canadian tar sands an “environmental disaster.”
Supporters argue that Keystone will be a source of economic stimulus. In a statement, Energy and Commerce Committee Chairman Fred Upton said, “After six years of foot-dragging, it’s time to finally say yes to jobs and yes to energy. It’s time to build [this pipeline].”
World leaders gathered in New York this week for the United Nations Climate Summit, a meeting aimed at raising carbon reduction ambitions and mobilizing progress toward a global climate deal. In speeches at the summit, President Obama and other leaders recognized that countries across the world are feeling climate change effects, particularly extreme weather.
“In America, the past decade has been our hottest on record,” said Obama, who also announced the launch of new scientific and technological tools to increase global climate resilience and extend extreme weather risk outlooks. “Along our eastern coast, the city of Miami now floods at high tide. In our west, wildfire season now stretches most of year. In our heartland, farms have been parched by the worst drought in generations, and drenched by the wettest spring in our history. A hurricane left parts of this great city dark and underwater. And some nations already live with far worse.”
Like Obama, representatives of other major nations had their own news. The European Union unveiled a commitment to reduce greenhouse gas emissions 40 percent from 1990 levels by 2030, and China shared plans to set aside $6 million for U.N. efforts to boost South-South cooperation on global warming.
Other summit outcomes included a commitment by several countries and nearly 40 companies to support alternatives to deforestation, ending the loss of forests—which accounts for 12 percent of all global greenhouse gas emissions—by 2030.
“Forests represent one of the largest, most cost-effective climate solutions available today,” the declaration said. “Action to conserve, sustainably manage and restore forests can contribute to economic growth, poverty alleviation, rule of law, food security, climate resilience and biodiversity conservation.”
More than $1 billion in new financial pledges were made to the Green Climate Fund, which was established at the 2009 Copenhagen Summit to help developing countries ease their transition away from fossil fuels and fight climate change.
The climate summit came on the heels of news that many countries are missing their emissions targets and that avoidance of runaway climate warming is slipping out of reach. A report by the U.N.’s Intergovernmental Panel on Climate Change that says the world is dangerously close to no longer being able to limit global warming to 2 degrees Celsius above pre-industrial levels—the threshold the U.N. declared as necessary to avoid dangerous consequences of climate change. Another study published Sunday in the journal Nature Geoscience put 2014 world carbon emissions at 65 percent above 1990 levels and further suggested that the U.N.’s two-degree Celsius goal was becoming unobtainable.
Obama Announces New Solar Efficiency Measures
The White House announced new steps intended to increase deployment of solar and other energy efficiency measures to cut carbon pollution by nearly 300 million metric tons through 2030. The efforts are predicted to save $10 billion in energy costs.
Among the measures:
- The U.S. Department of Energy (DOE) is launching the Solar Powering America website, providing access to a wide range of federal resources to drive solar deployment.
- The U.S. Department of Agriculture will award $68 million in loans and grants for 540 renewable energy and energy efficiency projects, 240 of which will be solar projects.
- DOE and Lawrence Berkeley National Laboratory are releasingthree new studies showing that the cost of solar energy continues to fall across all sectors, which indicates that initiatives targeting soft costs are starting to work.
- DOE is updating itsGuide to Federal Financing for Energy Efficiency and Clean Energy Deployment. The guide will highlight financing programs located in various federal agencies, such as the Treasury, Housing and Urban Development, and the U.S. Department of Agriculture, which can be used for energy efficiency and clean energy projects.
- A new program will train veterans to install solar panels.
The Transition to Clean Energy
Despite these clean energy plans, data from the U.S. Energy Information Administration shows just how far the United States is behind Europe in its pursuit of non-carbon electricity.
“While most of the countries that produce at least half of their power from zero-carbon sources rely heavily on nuclear and hydroelectric power, the U.S. has been slow to convert its power sources to renewables like wind, solar, or biomass,” Slate reports.
“While other economics have made clean-energy industries and services a trade priority, some of us cling to the notion that our carbon-based fuels constitute our only competitive advantage,” the report says.
In the U.S., states like New York have plans to grow their clean energy contributions. New York State Energy and Research Development Authority submitted its plan for a new Clean Energy Fund—roughly $5 billion to grow clean energy programs in the next decade by continuing a utility bill surcharge.
In its Policy Assessment for the Review of the Ozone National Ambient Air Quality Standards report—released Friday—the U.S. Environmental Protection Agency (EPA) suggests revising the health-based national ambient air quality standard for ozone.
“Staff concludes that it is appropriate in this review to consider a revised primary [ozone] standard level within the range of 70 ppb [parts per billion] to 60 ppb,” the report said (subscription). “A standard set within this range would result in important improvements in public protection, compared to the current standard, and could reasonably be judged to provide an appropriate degree of public health protection, including for at-risk populations and life stages.”
The report is part of the normal EPA process to consider changing air quality standards. It recommends tightening current smog rules—now at 75 parts per billion—somewhere between 7 and 20 percent, echoing findings of the EPA’s science advisory committee in June. A final decision lies with EPA Administrator Gina McCarthy, who has a Dec. 1 deadline to issue a proposal on whether to retain or revise the existing standard.
Earlier in the week, McCarthy announced plans to issue a methane strategy emphasizing efficiency and reducing the need to flare gas—a strategy that could force oil and gas producers to cut emissions.
“We’re going to be putting out a strategy this fall and we hope everybody will pay attention to that effort,” McCarthy said at the Barclays Capital energy forum on Tuesday. “It will be addressing the challenges as well as the opportunities.”
Whether or not actual regulations for the industry will be issued is still being decided. McCarthy noted that the agency is “looking at what are the most cost-effective regulatory and-or voluntary efforts that can take a chunk out of methane in the system.”
This effort follows on the heels of an announcement by the White House that directed the EPA to develop an inter-agency strategy to combat methane emissions from oil and natural gas systems. If issued, rules to cut methane emissions would take effect in 2016.
China Eyes Carbon Market
Reuters reports that China will launch the world’s largest carbon market in 2016, although some provinces would be allowed to join later if they lacked the technical infrastructure needed to participate at the outset. “We will send over the national market regulations to the State Council for approval by the end of the year,” Sun Cuihua, a senior climate official with the National Development and Reform Commission (NDRC), told a conference in Bejing.
Confirming the earlier statement by Cuihua, Wang Shu, an official with the climate division of the NDRC said “We’ve brought forward this plan because it’s been prioritized in the central government’s economic reforms. The central government is pushing reforms, so everything is speeding up.” According to Reuters, as in other carbon markets, power plants and manufacturers would face a cap on the carbon dioxide they discharge. If an emitter needs to exceed its cap, it will have to purchase additional permits from the market to account for such emissions.
Court Finds BP Grossly Negligent in 2010 Gulf Spill
A U.S. District judge on Thursday ruled that BP was “grossly negligent” in the 2010 Deepwater Horizon explosion that killed 11 men and allowed millions of barrels of oil to flow out of the Macondo oil well into the Gulf of Mexico.
“The court concludes that the discharge of oil was the result of gross negligence or willful misconduct,” by BP, the ruling from U.S. District Court Judge Carl Barbier said. He found that BP was at fault for 67 percent of the spill. Two other companies involved—Transocean and Halliburton—were responsible for 30 and 3 percent, respectively.
“The law is clear that proving gross negligence is a very high bar that was not met in this case,” BP said in a statement. “BP believes that an impartial view of the record does not support the erroneous conclusion reached by the District Court. The court has not yet ruled on the number of barrels spilled and no penalty has been determined. The District Court will hold additional proceedings, which are currently scheduled to begin in January 2015, to consider the application of statutory penalty factors in assessing a per-barrel Clean Water Act penalty.”
Judge Barbier’s ruling could result in as much as $18 billion in fines under the Clean Water Act, according to The Hill.
Bacteria Used to Make Alternative Fuel
A study in the journal Nature Communications suggests that Escherichia coli, or E. coli bacteria, which is widely found in the human intestine, can be used to create propane gas that can power vehicles, central heating systems and camp stoves.
“Although this research is at a very early stage, our proof of concept study provides a method for renewable production of a fuel that previously was only accessible from fossil reserves,” said Patrik Jones, a study co-author. “Although we have only produced tiny amounts so far, the fuel we have produced is ready to be used in an engine straight away. This opens up possibilities for future sustainable production of renewable fuels that at first could complement, and thereafter replace fossil fuels like diesel, petrol, natural gas and jet fuel.”
Commercial production is still five to 10 years away—the level of propane produced by the team is 1,000 times less than that needed to make a commercial product. The process, which needs further refinement, uses E. coli to interrupt a biological process to create engine-ready propane rather than cell membranes.
“At the moment, we don’t have a full grasp of exactly how the fuel molecules are made, so we are now trying to find out exactly how this process unfolds,” Jones said.