Going Local with 'Home-Grown' Power

This article was originally published on 20 September 2010, in issue 104 of the IEMA journal 'the environmentalist'.


A shift from large-scale energy production overseas to smaller local energy supply and distribution is underway in the UK and US.  In the UK, one of the main drivers for this change has been the establishment of a set of five-year national ‘carbon budgets’ intended to achieve a 34 per cent reduction in greenhouse gas emissions by 2020.

In the US, meanwhile, the overarching driver has been a move towards more secure domestic energy sources, which tend to have more immediate financial benefits and fewer associated environmental and economic risks than imported fossil fuels.

Despite these differing rationales, households, businesses and communities adopting local renewables stand to  reap similar types of benefits:

• reduced fossil fuel consumption and therefore reduced dependence on imported resources;
• improved security of supply and consequently less vulnerability to price shocks;
• more local job creation than with large-scale power plants;
• cleaner energy from renewable sources and less environmental damage, and in particular a reduced carbon footprint; and
• financial benefits to households, companies and other adopters due to reduced electricity bills, government subsidies and feed-in tariffs.

Tipping point
More people are realising that the costs and benefits of renewable energy are not only financial. Indeed, recent events have highlighted the increasing costs of our continued reliance on non-renewable fossil fuels.

This past summer, extreme weather events have occurred across the planet. Temperatures in Moscow reached 40 degrees Celsius for the first time, resulting in thousands dead and widespread forest fires. The heatwave decimated wheat crops and sent global cereal prices soaring. Meanwhile, the Indus River reached its highest level in 110 years causing catastrophic flooding in Pakistan. The misery in Pakistan coincides with major flooding in China, North Korea, Niger, Sudan, Ethiopia and Guatemala.

While no single event can be directly attributed to climate, their occurrence is consistent with the predicted impacts of global warming. The World Bank estimates that developing countries will need between US $70-$100 billion each year to adapt to anticipated climate change impacts on agriculture, infrastructure and human health between now and 2050. When coupled with increasing international competition for limited global petroleum and gas reserves, it becomes abundantly clear that the model for economic development based on fossil fuel consumption is unsustainable.

Betting on renewables price stability
One of the main obstacles to increased use of renewables – high upfront costs despite low to zero cost for the fuel – is increasingly one of the technology’s main attractions. The economics of oil – uncertain and unpredictable – are making renewables a safer bet for many end users. OPEC spot prices spiked in July 2008 at $137.18 per barrel before plunging to $35.48 in January 2009, only to start creeping up to $76.91 by December 2009. This extreme volatility makes it difficult for households, companies and governments to set long-term budgets, and increases financial uncertainty in the midst of a severe economic downturn. For those who can afford the initial investment, renewables can offer the reassurance of long-term price stability needed to plan for the future.

Not only climate change, oil prices and the prospect of dwindling supplies dampened enthusiasm for fossil fuels, but also, in recent months, more immediate environmental and safety risks. The recent BP Deepwater Horizon oil spill was splashed across front pages around the world. This oil spill, surpassing the Exxon Valdez as the worst in US history, ensured increased attention to spills from the coast of Indonesia to the Niger Delta. This negative media attention has helped spur the search for local energy alternatives.

Local power generation – then and now
In the past, electricity generation at the household or building level has generally meant running a diesel or petrol (gasoline) generator. These generators tend to be noisy, polluting, and more expensive than simply buying electricity from an electric utility. As a result, they tend to be kept on standby and used only in emergencies. The recent growth in local generation comes from renewable energy technologies – especially wind, geothermal, biomass, solar thermal and solar photovoltaic (PV).

While small petrol and diesel generators tended to produce more pollution per unit of electricity than utility power plants, most renewable technologies are significantly cleaner, producing (with the exception of biomass) practically zero ambient air pollution at source.

Renewables and regional recovery
Local clean energy is seen as potential source of recovery from the current economic recession. Rebuilding the economy by creating a new energy system is widely predicted to create more jobs. A 2009 report found that renewable energy investments are estimated to generate roughly three times more jobs than an equivalent amount of money spent on fossil fuels.(2)

As Greg Barker, UK Climate Change Minister, commented last month, “Our homes, businesses and communities can become dynamic players in the new energy economy by producing their own green electricity and selling it back into the national grid. New feed-in tariffs – a system of financial incentives to encourage households and communities to produce their own electricity – are at the heart of our efforts to ‘green’ Britain and empower consumers and to create a more local, decentralised energy system.”(3)

While job creation tends to be a lagging economic indicator, the British and American governments have made financial incentives available directly to UK households, companies and other renewable energy adopters  through government subsidies and feed-in tariffs. In the UK, the feed-in-tariff system introduced in April 2010  guarantees a payment of up to £0.42 per kilowatt-hour for renewably generated electricity. A PV installation for a moderately-sized household in London might cost £15,000. Thanks to reduced utility bills and payments from the government feed-in tariff, this investment would produce over the next 20 years a guaranteed annualised return of approximately nine per cent. Few other investments available to households in this economic climate could do as well. Lured by the feed-in-tariff, a number of firms are now offering to provide and install solar panels for free; the firm claims the feed-in-tariff and the property occupant benefits from a lower electricity bill. And as electricity prices are predicted to rise in the near future, the financial benefits only increase.

Planning for renewables
While world leaders from India and China to the US have trumpeted the macroeconomic benefits of renewables, local issues regarding land-use planning can still be a concern. NIMBYism has not gone away, and residents continue to protest against large wind farms ‘in their backyards’. However, the smaller scale and partnership approach employed by local renewables projects can increase acceptance. Moreover, local companies (rather than distant multinationals) are more likely to get community buy-in with ‘home-grown’ and power projects that provide energy at the local level.

“Planning is the big unknown in renewable,” says Ryan Law, founder of Geothermal Engineering Ltd (GEL). “Communities object to mega-projects which supply the whole country, but if people realise they can have a direct stake in local schemes I think this is the key to it. Geothermal is Cornwall’s resource, not a project dumped on the county from outside,” said Law.(4)  After two years of planning with Cornwall County Council, GEL has been granted planning permission to develop the UK’s first commercial geothermal power plant at its Redruth site.

The challenge
The extent to which governments can continue to prop up their economies with large renewable energy  investments remains to be seen. The cost to governments will start to add up quickly as more and more companies and households take advantage of generous tax credits and feed-in tariffs. Most governments have anticipated this issue by gradually reducing the amount the feed-in-tariffs will pay to new adopters in subsequent years.

There are also technical challenges as large numbers of small generators are linked to the grid of electric utilities. While the overall generation from baseline power plants may go down as local power generation rises, utilities will have less control over when and how much electricity will be available, necessitating an investment in additional back-up generation capacity from more expensive power plants. On the positive side, a technical fault or downed power line in one location will not necessarily plunge an entire region into darkness. The more technologically and geographically diverse the local generation systems in place, the less the utilities should need to bring their back-up systems online.

On balance, the benefits appear to outweigh the challenges. There are synergies across the various benefits that extend from the local to the national level via job creation, diversification, and financial savings which could lead to greater spending and investment in the local economies instead of purchasing imported fossil fuels. As we noted in a previous 'Energy and Business' article (‘From credit crisis to carbon crisis’, Issue 68), governments were quick to step in when the global financial system was on the brink of meltdown.

All in all, these investments in renewables should lead to greater energy security and reduced climate change risks in an uncertain world. Given these benefits, local renewables need more – not less – support.

Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA, CEnv is Managing Director at carbon management company Carbon Clear Limited.

Don't Be Afraid to Think Big

Last month the World Meteorological Organization and the United Nations Environment Programme jointly announced that the ozone hole has stabilised.  More specifically, the thinning observed since the 1970s in the high altitude layer of ozone that protects us from ultraviolet radiation has stopped and the hole is beginning to recover.  The ozone layer outside of polar regions is expected to return to pre-1980 levels before 2050, with the polar regions recovering a few decades later.

The story earned a few newspaper headlines the day after it was announced, and then disappeared without a trace.

In reality, this is tremendous good news.  Policy makers and environmental advocates should be shouting from the rooftops.  After all, how often do we get to report that an environmental problem is getting better?

There's another encouraging story here.  It's that concerted global action to tackle environmental challenges works.

In 1987 the nations of the world came together to enact the Montreal Protocol. The Montreal Protocol  represented an historic attempt to phase out entire classes of industrial gases- chloroflourocarbons (CFCs), halons, and methyl bromide - used in everything  from refrigerators and fire extinguishers to hairspray and pesticides.

Wealthy industrialised nations agreed to strict targets for the phaseout, while developing countries were given more leeway before their cuts began.  At the time, industry lobbyists argued against the science of the thinning ozone and complained about the cost of compliance.

But we held firm.  All 196 nations ratified the treaty, and the Montreal Protocol came into force.  There was no economic catastrophe - the costs of transitioning to less harmful gases were much lower than anticipated.  And the ozone layer has begun to recover.  Without the Montreal Protocol unabated destruction of the ozone layer was projected to result, in the words of UNEP Executive Director Achim Steiner, "...up to 20 million more cases of skin cancer and 130 million more cases of eye cataracts, not to speak of damage to human immune systems, wildlife and agriculture."  Fortunately, that threat seems to be receding.

This isn't the first time that we've come together across boundaries to solve major environmental problems.  In the 1970s and 1980s, SO2 emissions from power plants and factories caused acid rain and damaged forests  and waterways in North America and Europe.  Regional trading progammes were launched with strict emissions caps - again over the protests of vested interests who argued that the rules would be unaffordable and cost  thousands of jobs.  The cap and trade programme designers argued that their scheme would achieve  environmental targets at the lowest possible cost to the environment.

And it worked.  Acid rain is largely a thing of the past in industrialised countries, and the cost of compliance was only a fraction of what industry has predicted.

The Montreal Protocol and the regional SO2 trading schemes show what can be accomplished when we're not afraid to think big.  The Kyoto Protocol, national cap and trade legislation in the United States and Australia, and the erstwhile Copenhagen conference last December represented similar efforts.

But we seem to have lost our courage.

The Kyoto Protocol expires in 2012, and prospects for its replacement seem uncertain.  Christiana Figueres, the UNFCC head with whom I worked back in the 1990s, says there won't be a single big agreement to replace Kyoto - the parties simply can't agree. Meanwhile, legislators admit that US climate change legislation is dead in the water, and the Australian government is rapidly backtracking on their climate change plans.  Opponents, sensing blood in the water, are now attacking regional and state-level climate change initiatives in the United States, arguing that fighting climate change will cost jobs.

Big problems call for ambitious solutions.  We took bold, concerted action when CFCs and other chemicals threatened the ozone layer.  We took similarly bold action when acid rain threatened our lakes and streams.  Climate change is an even bigger problem than either of these and yet we fret about the cost and struggle to come to agreement.

When did we become so timid?  How did we become afraid to think big?

We know the nature of the challenge facing us, and we know what needs to be done.  It's time to face our  fears, roll up our sleeves, and get started on the path on the road to a low carbon economy.

(Carbon Clear homepage)

Signs of the Times

According to the New York Times, this summer goes down in the record books as New York's hottest with the temperature hitting or exceeding 90 degrees Fahrenheit (32C) on 34 separate days.

Meanwhile, Pakistan's Indus River has reached its highest level in 110 years and caused devestating flooding, and the temperature in Moscow hit 104F (40C!) for the first time ever. Floods have also stricken Sudan, China, North Korea, Niger and other countries.

Hmm, increasing greenhouse gas concentrations, unprecedented extreme weather across the globe as predicted in the climate models.  I wonder if there's a link?

(Carbon Clear homepage)

"Geoengineering Lite"

Last month the US Environmental Protection Agency imposed stricter regulations on sulphur dioxide (SO2) emissions from power plants.  The rules require more frequent pollution monitoring and the installation of new SO2 monitors in regions considered most at risk from pollution exposure.

This announcement, the first revision to these rules in 40 years, is welcome and overdue.  SO2 emissions from industry and vehicles is a major ambient pollutant, contributing to asthma, bronchitis and premature deaths.  In many parts of the US, the communities downwind of the smokestacks tend to be composed disproportionately of poor people and people of color.  The EPA estimates that implementing the new rules will prevent between 2,900 and 5,900 premature deaths and 54,000 asthma attacks.

And of course, SO2 is a precursor to acid rain.

European countries have also been steadily tightening their air pollution laws to reduce the amount of SO2 entering the atmosphere.

This is good news for the environment and people, but why am I writing about it on Carbon Clear's climate change blog?

SO2 particles are just the right size to block certain wavelengths of light.  Scattered in the atmosphere, millions of tonnes of these particulates block a fraction of the sun's light and provide a planetary cooling effect.  These effects are so significant that the Intergovernmental Panel on Climate Change incorporates assumptions of industrial SO2 emissions in their long-range climate models.  More specifically, they assume that SO2 emissions will continue to diminish over time as more stingent pollution controls are enacted and we switch away from fossil fueled power generation.

And that means we will no longer be able to hide behind the cooling effects of industrial pollution.  It's ironic that cleaning up a pollutant that causes such misery on a local and regional level means we have to work even harder to prevent a warming climate.

This may not be the last we hear of SO2, however.  Given its strong cooling influence and relatively low cost of production, an increasing number of scientists believe SO2 may provide a last-ditch defense against catastrophic climate change.  Faced with abrupt and runaway warming, governments might choose to inject large volumes of SO2 into the stratosphere to simulate the cooling effects of a major volcanic eruption.

While these geoengineering measures might provide short term relief from warming, they are not without their own challenges.  First, the effects on regional climates have not been modelled thoroughly - changing rainfall and temperature patterns may create winners and losers.  Second is the fact that SO2 injection would mask the warming effects of climage change, but would not actually address the cause - greenhouse gases in the atmosphere, nor would it do anything to counter CO2's acidifying effects on the world's oceans.  What is more, SO2 only stays in the atmosphere for a few months or years, at most, while CO2 stays in the atmosphere for hundreds of years.  That means that, once we start injecting SO2 into the atmosphere, we have to keep doing it unless we want to see a dramatic and devastating rebound to higher temperatures.  And of course, geoengineering does not provide the benefits that accrue from decarbonising our energy and transportation infrastructure.

It is clear, then, that geoengineering with SO2 is not a measure to be undertaken lightly.  As countries around the world impose much needed regulation to continue reducing ambient air pollution levels, we will be running a mini-geoengineering experiment, in reverse.  I anticipate that climate scientists will be observing the resulting changes and incorporating them into their models.   It would be a tragedy if we were panicked into adopting geoengineering measures without fully understanding the likely impacts.

(Back to Carbon Clear main page)

Ash and Carbon: Reassessing the Risks of Air Travel

This article originally appeared in the 14 June 2010 (issue no. 100) edition of the IEMA journal "the environmentalist".

The eruption in April of a previously unremarkable volcano in Iceland disrupted air travel around the world. The blanket no-fly zone that resulted from the ash cloud over Europe brought chaos to travellers and companies who relied on air travel to get products and people to their destinations. During the initial travel crisis, at least 95,000 flights were cancelled . Even weeks after the event, sporadic restrictions continue to make air travel a guessing  game.

Companies that had contingency plans in place tended to fare better than those that  were solely dependent on travel through the airports. Dutch logistics company TNT was able to mobilise an existing plan to transfer air freight from its air hub at Liège, Belgium to its road hub in the southern Netherlands.

Not everyone was so lucky. Faced with the closure of airports across Europe, people and organisations  scrambled to find ways to get between points A and B. Families boarded ferries and long-distance coaches,
business people turned to trains and videoconferencing facilities, and more than a few intrepid travellers hired cars and taxis for 12-hour drives across the Continent.

Countless others whiled away the time in airports and hotels until flights resumed. Many organisations that commit to reduce their carbon footprint, pledge to address their business travel emissions but struggle to meet
their goals in the face of everyday business requirements. If there is a silver lining to the Eyjafjallajökull  eruption, it has been an increased awareness of travel alternatives on the part of individuals and organisations.
The prolonged transport disruptions and ensuing chaos gave many companies and travellers an opportunity to reassess their transport choices and test some of the alternatives. Now that the dust has started to settle, we can consider the extent to which these experiences will affect their future transport decisions.

How are transport decisions made?

According to a World Trade Organization report, over one-third of global trade by value is transported by air. How do organisations and individuals decide when to travel by air, sea, rail or road?

Transport decisions are usually made as a trade-off between speed, financial cost, and comfort or reliability. An increasing number of organisations are also weighing the environmental impacts of their transport decisions. One of the greatest apparent advantages of air travel over the alternatives is speed. With a cruising speed in excess of 500 miles per hour, aircraft make it possible to deliver products and people anywhere in the world within 24 hours.

This speed comes at a cost, both financially and to the environment. Air freight tends to be more expensive  than shipping products by rail, sea or road, which means that companies tend to use airplanes for lightweight, higher value products like flowers, pharmaceuticals and perishable foodstuffs. Meanwhile, the greenhouse gas emissions for air freight, at around 0.65 kg CO2e per tonne-kilometre, can be over 50 times higher than  surface-based alternatives.

Ships and barges are a popular means of transporting large volumes of cargo where rapid delivery times are not as critical, and ferries are an increasingly attractive option for passenger travel over small bodies of
water like the Irish Sea or the San Francisco Bay. With greenhouse gas emissions as low as 0.01 kg CO2e per tonne-kilometre, cargo freighters are a cost- and carbon-efficient means to transport non-perishable products long distances. With advanced planning, it is possible to transport many otherwise timesensitive
goods overseas by ship instead of by air, lowering air-related emissions and potentially reducing costs.

Rail and road transport occupy a middle ground between ships and aeroplanes. For passenger journeys of a few hundred miles, high-speed rail can be just as time-efficient as short-haul air travel – without the hassle
of airport security and often with greater amenities. For example, Eurostar sources local fresh foods and provides regional cuisine on its train journeys between London, Paris and Brussels. The company’s
offerings are even featured in a magazine for lovers of fine wines, restaurants, and travel. It’s hard to imagine such accolades for a short-haul flight of comparable distance and time.

While passenger rail travel is experiencing a resurgence – at least in Europe – rail freight continues to struggle.
In the US, goods are transported coast-tocoast by truck even though the rail network could carry greater volumes at a lower carbon cost. However, lack of investment in rail has resulted in an antiquated network
with very slow trains. In the UK, meanwhile, a congested rail network that prioritises passenger travel has led to surging road freight levels. Freight trucks have the added advantage of flexibility and convenience
compared to rail, despite generating roughly twice the greenhouse gas emissions per tonne-kilometre. Trucks can provide door-to-door delivery of a wide variety of products and services – a benefit that makes them
indispensable to many corporate customers.

For corporate travellers in the US, fast train travel is limited to the Boston to Washington, DC corridor – and with average speeds of 70 mph even these ‘high-speed’ Amtrak trains are not particularly fast. Beyond this northeast seaboard, passenger travel by train can take twice as long as driving. An investment in high-speed rail is included in pending climate change legislation in the US, where a shift from cars and airplanes is seen as a key element in reducing reliance on imported fossil fuels for transportation.

Alternatives to travel

The sudden closure of airspace in April meant many travellers had to use alternatives they would otherwise not have considered. Many stranded travellers turned to video-calling and other internet teleconferencing solutions. Companies such as Cisco and Hewlett-Packard experienced a surge in business bookings for their
teleconferencing and newer ‘telepresence’ technology and facilities for online meetings. Telepresence is essentially a virtual meeting using large screens and high definition images to simulate face-to-face meetings.

Long-standing habits of travelling for meetings and conferences quickly fell by the wayside, as technological alternatives such as teleconferencing were given a boost. “A market transition is very often marked by a big external event or disruption,” said Fredrik Halvorsen, the chief executive of Norway-based teleconferencing firm Tandberg (just acquired by Cisco). The disruption in air travel was clearly a market opportunity for Cisco which launched a Fly Free programme to provide businesses or governments with stranded key personnel with complimentary use of the company’s telepresence rooms. “As the world (has) seen earthquakes, H1N1 and other disasters, it has really made businesses pause to think how they can use technology to create a
sustainable business model,” Cisco senior vice president of emerging technologies Martin De Beer said.

In the UK, telecommunications company BT is championing the use of teleconferencing solutions as a way for
businesses to make progress on their carbonreduction commitments. With business travel often comprising a third or more of many organisations’ carbon footprints, technology that reduces the need to spend time, money and carbon travelling from place to place appears poised to experience a surge of interest.

Making informed decisions

Individuals and company representatives can use websites, travel agents and freight forwarding companies to get reliable and up-to-date pricing and scheduling information on travel alternatives. As the cost of carbon becomes an increasingly important consideration when choosing to use air, rail, road or sea transport, organisations are asking for tools that allow them to make informed decisions based on the environmental impacts of their transport modes.

For a simple point-to-point journey using one type of vehicle, this type of carbon calculation is relatively simple. Things become more challenging for intermodal transport decisions – for example comparing the cost and carbon emissions from a truck-barge-truck shipment against a rail-truck-air freight shipment. The same
challenges appear when organisations must decide whether to send staff by rail – when they will have to stay several nights in a hotel (with resultant financial and carbon costs) – versus a shorter stay because the journey can be made by plane (assuming no volcanic ash). In anticipation of this need, we have been trialling an online intermodal calculator to compare the emissions impact of complex, multi-mode transport decisions.

Conclusion
The UK Committee on Climate Change has projected that reaching the 80 per cent greenhouse gas emissions reduction target by 2050 will require decarbonising most of the economy and severely restricting any further growth in air transport emissions. If we are to reach these targets, the transition has to begin now. It is our hope that the volcanic ash cloud has spurred people and organisations to begin the process of identifying viable low-carbon alternatives to current travel practices.

Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA,CEnv is Managing Director at carbon management company Carbon Clear Limited.

Coalition Support for Carbon

After days of fraught negotiations and political wrangling, we finally have sight of the Tory/Lib Dem plans for a low-carbon economy in a coalition government. The signs look good. Particularly encouraging is a commitment to push the EU for full auctioning of Emission Trading Scheme (ETS) permits. Putting the jargon aside, this has great potential to make Europe’s efforts to fight climate change both more efficient and effective.

At the moment, the European Union simply gives away a large portion of its ETS permits to the big polluters. These permits authorise the holders to pollute the atmosphere, to agreed levels, at no cost. Yes – for free. This is absurd. The cost to the environment is clearly not zero. It’s mad that this forms the heart of an emission reduction scheme.

The current arrangements also have two very unwanted consequences: It encourages companies to grossly overstate their predicted emissions in order to sell those they don’t use to make a windfall profit, while at the same time removing any economic incentive for them improve their energy efficiency.

Auctioning the total quota of ETS permits would ensure that companies only receive the number they feel they will really use – and removes the incentive to be greedy in order to sell on excess permits at a profit. Equally important, it will make economic sense for companies to make efficiency changes that cost less than the equivalent amount of ETS permits. So if a new technology, like a boiler upgrade, costs £5 per tonne of carbon saved, versus a carbon price of £10 per tonne, making the technology investment becomes the sensible thing to do.

The other way of making ETS permits an effective stick (or carrot) for polluters to improve their energy efficiency is to put sufficiently few up for auction. This will push the price of the permits high enough to ensure that many companies take big action to pollute less – the whole point of the ETS in the first place.

Let’s hope the coalition will support these intentions with solid action, both at home and at the EU, where the ultimate decisions of the fate of the EU ETS will be made.

****

The Environmental Industries Commission have kindly provided a summary of the main issues in the coalition document:

General

• The two parties agree that cuts of £6bn to non-frontline services can be made within the financial year 2010-11. Other policies on which they agree include further support job creation and green investment, such as work programmes for the unemployed and a green deal for energy efficiency investment.
  
• The parties also agree to seek an agreement on taxing non-business capital gains at rates similar or close to those applied to income, with exemptions for entrepreneurial business activities.

Waste

• Measures to promote energy from waste through anaerobic digestion;

Environmental finance

• The creation of a green investment bank;

Sustainable buildings and energy efficiency

• Home energy improvement provisions paid for by savings from lower energy bills;
  
• Retention of energy performance certificates and the scrapping of Home Information Packs

Government Procurement

• A commitment to reduce central government carbon emissions by 10% within 12 months

Carbon management

• The provision of a floor price for carbon, as well as efforts to persuade the EU to move towards full auctioning of Emissions Trading Scheme permits

Transport

• Mandating a national recharging network for electric and plug-in hybrid vehicles;
  
• The establishment of a high-speed rail network;
  
• The cancellation of the third runway at Heathrow;
  
• The refusal of additional runways at Gatwick and Stansted;
  
• The replacement of the air passenger duty with a per-flight duty; a proportion of any increased revenues over time will be used to help fund increases in the personal allowance.

Energy generation

• The establishment of a smart grid and the roll-out of smart meters;
  
• The establishment of feed-in tariff systems in electricity, as well as the maintenance of banded Renewables Obligation Certificates;
  
• Measures to encourage marine energy;
  
• The establishment of an emissions performance standard that will prevent coal-fired power stations being built unless they are equipped with sufficient CCS to meet the emissions performance standard;
  
• Continuation of the Labour government's proposals for public sector investment in CCS technology for four coal-fired power stations;
  
• Increasing the target for energy from renewable sources, subject to the advice of the climate change committee.

The Liberal Democrats to maintain their opposition to nuclear power while permitting the government to bring forward a national planning statement for ratification by parliament so that new nuclear construction becomes possible. This process will involve the Government completing the drafting of a national planning statement and putting it before parliament, and a specific agreement that a Liberal Democrat spokesman will speak against the planning statement, but that Liberal Democrat MPs will abstain.

Managing the Climate Change Message

(The following article was originally published in the 19 April 2010 issue (Number 96)  of the Institute for  Environmental Management and Assessment journal 'the environmentalist'.)

For the first few months of 2010, people and organisations working to fight climate change have found themselves on the defensive. What happened? And how can we regain a sense of momentum in our efforts to reduce carbon emissions?

A few years ago, documentaries such as ‘An Inconvenient Truth’ increased public awareness and seemed to mark a turning point in efforts to fight climate change. At last, citizens, politicians, celebrities, and corporations were united in their desire to reduce greenhouse gas emissions. With only a few exceptions, climate change sceptics were a small quiet camp. The main question was how swiftly, not whether we would, reduce global emissions.

Economy, politics, and bad press

Times have changed. A severe economic downturn has forced corporate decisionmakers and households alike to focus on financial survival and cut investments that don’t produce an immediate return. With jobs on the line and household savings squeezed, individuals are less likely to pay extra for environmentally friendly products, and organisations often choose to reduce budgets for seemingly discretionary activities like carbon management.

However, economics alone cannot explain the recent shift in sentiment. Climate change politics also plays a large part. While the failure to reach a legally binding successor to the Kyoto Protocol did not mark the end of  coordinated global efforts, it was widely portrayed in the media as a major setback in efforts to enact tough
climate change legislation. It did not help that leading politicians in the US and UK, sensing the mood of their  constituents, have dropped all mention of climate change from their public statements. Environmental activists,  apparently exhausted after their preparation for Copenhagen, have also been quieter than usual.

Meanwhile, journalists and climate  sceptics have seized upon highly publicised errors and unfortunate mis-statements by a small number of climate scientists to cast doubt on the entire subject of global warming and climate change mitigation. It is no surprise that a key scientific report such as the IPCC’s 900+ page, Working Group II’s contribution to the Fourth Assessment Report based on over 8,000 peer-reviewed publications and reviewed by 1,181 experts from 92 countries would contain some errors, nor that people would make some statements in private email conversations that they would not wish to make in public1.

Unfortunately, after the first story about stolen climate change email messages broke, most of the attempts to  clarify the situation were taken out of context and exaggerated to generate sensational headlines. While few  members of the general public are equipped to evaluate the detailed scientific arguments, the belief that ‘there’s no smoke without fire’ means that a scandalous-sounding story can derail the main message – even when overwhelming evidence points in a different direction.

What is neither a story, nor a scientific controversy are the facts. The facts remain that humanity’s greenhouse gas emissions are warming the atmosphere and changing the chemistry of the oceans at an unprecedented rate.

Climatologists also agree that there are many short-term periods for  which the temperature and weather data will not fit their models. Where scientists disagree is on the precise nature of the complex feedback effects  between natural systems, and the rate at which climate change impacts will become apparent. This distinction  has been lost in the headlines, which imply that climate science is in disarray, or worse, that scientists are in a  conspiracy to mislead the public about global warming.

Shifting priorities
It is perhaps unsurprising in the context of economic recession, political torpor and confusing headlines that  climate change is seen as a lower priority than other issues amongst individuals and corporate leaders.  A recent MORI poll of UK adults taken in February 2010 shows that the economy remains the most important issue facing the country, as it has been since September 2008. Just under half of the public (48 per cent) place the economy among the most important issues facing Britain. Pollution and the environment ranks number 11 of most important issues listed by British adults behind the economy, race relations and immigration, law and order issues, unemployment, defence, the National Health Service, education and schools, morality and behaviour, inflation, and poverty and inequality.

More tellingly, only seven per cent of British adults listed pollution and the environment among the most important issues facing Britain.

Across the Atlantic, meanwhile, a recent study by the Pew Research Center found that the belief that global warming is occurring had dropped from 71 per cent in April 2008 to just 56 per cent in October 2009. As the report’s authors note, “When asked in open-ended formats to name the most serious problems facing the country, virtually no Americans volunteer global warming”.

A different message

The decisions we make today – about the vehicles we drive and the power stations we build – will have an  impact on the climate for years to come. It is clear that environmental managers, policy-makers and climate  change activists face an uphill battle if they wish to rely on concern about climate change to alter behaviour.  Scientific scenarios and statistical analyses alone are unlikely to sway public opinion and, as highlighted by  recent media coverage, may actually exacerbate the problem.

We believe that a shift may not occur until it is too late; that is, until we have passed a global tipping point and  the impacts from irreversible climate change have become a crisis – obvious for all to see.  How can environmental managers communicate with stakeholders and drive change in such an environment?

We can offer several suggestions:

• Don’t get bogged down in the science. The overall trends are clear; where uncertainty occurs, it is in the precise nature of the impacts of climate change – which range from modest to catastrophic. Action to reduce
• greenhouse gas emissions is akin to purchasing an insurance policy. Catastrophic events may be rare and
• hard to predict, but we can still take reasonable steps to protect against them, and few would argue we should have no insurance at all.
• Manage expectations. The policy-making process in most modern democracies is slow and incremental. Slow 
• progress does not mean nothing is happening, nor does it mean that we can afford to give up. While politicians 
• will eventually put in place more measures to reduce greenhouse gas emissions, companies and organisations 
• still have the power to go beyond regulation when it comes to cutting carbon.
• Link with ‘higher priority’ issues. As the MORI poll in the UK and the Pew study in the US indicate, people tend to focus on issues of immediate concern. The extent to which climate change can be linked to other pressing concerns like jobs and economics may determine how positively the message is received by stakeholders.
• Focus on the benefits. As we have noted in previous articles, organisations that manage their carbon emissions often realise benefits from reduced energy bills, better-optimised supply chains, greater staff engagement and happier customers. Decision-makers need not be strident environmentalists to support such results.

With the economy first and foremost in people’s minds, communication that focuses on the effects of climate change alone may not have much resonance with the majority of British people. The extent to which dealing with climate change and carbon reductions can be tied to other higher ranking concerns (ie jobs) will help
create a more pressing message.

Many organisations that have continued to embrace carbon reduction initiatives are communicating exactly these messages to their decision-makers and external stakeholders. Marks & Spencer, for example, launched their ‘Plan A’ environmental initiative in 2007 as an environmental and social improvement campaign. In its second year, the company found that those improvements were cost-neutral, but in year three they saved the company £50 million.  As one industry analyst notes, “If [new Chief Executive Marc] Bolland has to look for immediate cost savings, you can bet he’ll seek to accelerate Plan A”.

Unilever, meanwhile, recently received the top ranking for its sustainability initiatives and report, in its group of the largest food and beverage companies. The company saved over €10 million just from IT measures like data centre management and video conferencing, implemented under its environmental initiative. These  examples show that green initiatives are usually easier to sell to decision-makers and shareholders when they pay for themselves and deliver positive publicity.

Conclusion

Public opinion may wax and wane, but climate change will remain as a mid to long-term threat. As a result, environmental managers must use their persuasive skills to ensure that we continue to cut carbon.

Recognising that climate change can underscore other costs and benefits that people prioritise can help communicate the need to take action. By aligning climate change messages with financial and insurance (ie risk management) benefits, environmental managers can help to mainstream carbon management into organisational decision-making.

Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA, CEnv is Managing Director at carbon management company Carbon Clear Limited.

In BOB We Trust

One of the most common criticisms of renewable energy sources is that their electricity is intermittent.  Solar photovoltaic (PV) panels only produce electricity when the sun is shining, and wind turbines will only generate power when the wind is blowing at the right speeds - not too gently, and not too hard. This intermittency makes it more difficult for households, companies or electric utilities to precisely match supply and demand when using most renewable energy sources.

If we want to use electricity from renewables at other times, we need storage.  I've written in the past about different storage technologies, including "virtual storage on the electric grid".  It seems a town in Texas has taken things more literally.

Electric Transmission Texas recently announced completion of a 4 MW sodium-sulfur battery in Presidio, Texas.  The battery has been nicknamed "BOB" - short for "Big Old Battery" - by local residents.  And big it is.  BOB is the largest battery of its kind in the United States and the first in Texas.  It is designed to reinforce the local electricity supply while a replacement for the existing 60-year old long-distance transmission line is constructed between now and 2012.  In the event of a power outage, BOB can supply the city with continuous power for up to eight hours, until grid power is restored.

At a capital cost of around $25 million, BOB certainly isn't cheap, but neither is the $44 million cost of connecting Presidio to the regional electricity grid 60 miles away.  For that cost, the city could build around 10 MW of solar power generation, or around 20-30 MW of wind power - assuming local wind conditions were favourable.

ETT and the city of Presidio are clearly planning for the future.  BOB has a planned opertaional lifetime of 15 years, but ETT expects the upgraded transmission line to be complete by 2012.  After that date, BOB will be available as a facility for other utilities that need to store electricity (presumably from intermittent renewables) to match consumer demand.  Depending on the rates they charge for this service, BOB's owners could generate handsome profits from their giant battery system.

BOB is an example of the technological innovation that is making low-carbon renewable energy a realistic option for providing reliable power around the world.  At Carbon Clear, we're working to support innovations in the supply of sustainable energy.  We're eager for you to join us.

(Carbon Clear website)

Gold, Silver, Bronze…and Green? Just how carbon friendly were the 2010 Winter Olympic Games?

The Olympic caldron lighting up the city for 17 days straight has gone out, and the once crowded streets are quiet. The 2010 Vancouver Games are over. Much like the day after Christmas, when we wake up and confront the reality of our expanding waste-lines and dwindling bank accounts, over the next week VANOC should be doing the same, only from a carbon perspective. What was the reality of the games’ carbon impact? Did VANOC meet its goal of carbon neutrality?

There is no doubt that both VANOC and the games’ sponsors put forth great effort to roll out robust energy and waste management initiatives aimed directly at reducing carbon during the development, construction and operations phases of the games. Among many others, some of those efforts included a fleet of hydrogen vehicles transporting guests and participants in and around Whistler, energy efficient facilities powered by the province’s hydroelectric energy, the use of existing facilities rather than building new ones, and a LEED certified Olympic Village.

But alas, one cannot yet be carbon neutral without the purchase of offsets. Knowing this, prior to 2010 VANOC enlisted the David Suzuki Foundation to estimate the carbon footprint of the event. They did so charting the impact at approximately 390,000 tons; the games were directly responsible for 118,000 tons, for the building and operations of the venues, while another 268,000 tons were attributed to sponsors, spectators and partners. VANOC then did the uncharted for an Olympic committee, they purchased offsets from B.C. based projects to offset their 118,000 tons, and set up a fund for participants, sponsors and spectators to contribute to, so that the remaining 268,000 tons would be offset following the games’ conclusion.

Even with this pro-active approach, as we all know events never go as planned, and that ‘never going as planned’ has a carbon impact that should be counted. As it is now famously known, we saw snow trucked or flown into sites like Cypress and Grouse Mountains, just outside the city limits of Vancouver, to compensate for the spring-like weather in the Canadian city. Further, others have posed question to what will happen to so many of the materials and supplies used during the games? Some will be recycled and reused, but others? How is that carbon being attributed? And finally, that fund set up to offset travel and other carbon intensive activities of spectators, sponsors and the athletes? What happened to it? Did the fund meet its goal of offsetting the remaining 268,000 tons? How should we view these activities and circumstances such as these in light of VANOC’s carbon neutrality goal?

The fact is VANOC should be applauded for their efforts in trying to keep the games low carbon. But, just as we hold ourselves accountable after the holiday season, by reconciling our bank accounts and stepping on the scale on January 1^st, so too should VANOC. Get back on that carbon scale and see how you did Vancouver. Once you know (and offset any remaining emissions), then it’s time to boast your green medal.

What Now for Corporate Carbon Management?

The following article was originally published in the 15 February 2010 issue (Number 92) of the Institute for Environmental Management and Assessment journal 'the environmentalist'.

Much has been written about the lack of a comprehensive global treaty at the December 2009 Climate Change Summit in Copenhagen, but relatively less attention has been focused on some of the positive outcomes.

Government leaders agreed at the summit to work together to limit global average temperature rises to less than 2 degrees Centigrade.  They also agreed a framework for addressing the deforestation that accounts for at least twenty percent of global greenhouse gas emissions.  The Copenhagen Accord negotiated between the Brazil, China, India, South Africa and the United States calls on developed countries to set specific carbon reduction targets for the year 2020, to define specific actions for reaching the targets, and to report on each country’s emissions and actions at least every two years.  It also calls for the USA, United Kingdom and other developed countries to provide new and additional funding in order to help the developing world pay for climate change mitigation, adaptation, technological development, and capacity building.  Taken together, these are important positive steps that take us closer to a low-carbon future.

To date, however, the pledged commitments from the largest polluting nations do not add up to deliver the level of reductions scientists believe is required to forestall the worst climate change impacts.   Bolder action is required.  Faced with politicians’ unwillingness to commit to more ambitious goals, it is more important than ever for individuals, communities, and organizations to take voluntary action to reduce their own carbon footprints.

Copenhagen – a backdrop for leading companies
The writing is on the wall – the risks of ignoring climate change are high, and if companies wait for multi-lateral treaties before they act, they are likely to miss vast market opportunities for new products and processes designed for a low-carbon economy.

The private sector seems to be getting the message. As we discussed in “Beyond Compliance” (issue 84), leading multi-national companies are not waiting for global treaties to embark on carbon reduction initiatives.  The writing is on the wall – the risks of ignoring climate change are too high, and if companies hold out for multi-lateral treaties, they are likely to miss the vast market opportunities in designing new products and processes for a new low-carbon economy. A wide array of companies used the Copenhagen summit as a backdrop against which to reaffirm their commitment to greenhouse gas reductions and position themselves as low-carbon leaders.

For example, as an official vehicle supplier to the climate summit, the BMW Group provided locally emission-free hydrogen-powered models, models with extra-fuel-efficient diesel engines, and all-electric models vehicles for the talks. Since this past summer, users in Berlin and other cities have been field testing new BMW electric car models as part of a 600-car worldwide trial, evidence of the company’s commitment to remaining a transportation leader in a lower-carbon future.

Low carbon to zero carbon – companies race ahead of governments
Many leading companies not only have a low-carbon plan in place with targets exceeding those discussed at Copenhagen, but are already planning for a zero-carbon future. Northern Europe’s largest utility, Vattenfall AB, with CO2 emissions from electricity and heat production of 82.5 million tonnes in 2008  and 4.7 million retail customers in Denmark, Finland, Germany, the Netherlands, Norway, Poland, Sweden, and the UK, has projections to produce 100% zero-carbon energy by 2050.

Last month [January-ed.], Wal-Mart announced the completion of three more solar power projects in California, as part of its plan to nearly double its solar energy use in California. “The completion of these facilities marks another important step in our drive to become more sustainable and achieve our goal of being supplied 100 percent by renewable energy,” said Kimberly Sentovich, vice president and regional general manager for Wal-Mart.

British Telecom, having already reduced its carbon footprint by 58% in the UK through extensive use of renewable energy, has set a target to achieve an 80% reduction in its carbon intensity worldwide by 2020.  BT is one of the UK's largest purchasers, with an environmental influence that extends well beyond that of its own staff and workplaces.

A similar story is unfolding around the world, as firms realize that reducing their carbon footprint leads to improved financial performance, increased staff and customer satisfaction and a greater commitment to environmental stewardship.

One of the drivers for this emphasis is investor pressure.  The Carbon Disclosure Project (CDP), a not-for-profit organization funded by some of the world’s largest institutional investors, asks listed firms to disclose their carbon footprint, explain their exposure to climate change impacts, and detail the steps they are taking to reduce their greenhouse gas emissions.  Because much of the data submitted to the CDP is made public, companies often find themselves in a race to keep pace with other companies that have responded to the organisation’s queries.

Regulation as backstop
While many companies continue to take further strides in renewable energy and low-carbon initiatives, governments across the globe are not standing still, and the impact of their decisions cannot be ignored. The failure to reach a legally-binding agreement at Copenhagen means that government actions remain uncoordinated, but they still have the potential to impose material business risks for firms that have to date been slow to take action.  At the same time, they continue to raise the bar for firms that want to go beyond compliance.

The European Union’s Emissions Trading Scheme (EU ETS) has stimulated many European utilities and companies to embrace renewable energy technologies, while the associated carbon offset markets have helped fund technologies such as wind and solar in developing countries and emerging economies like China and India.  Since 2005, the EU ETS has served as a much-needed prod for companies, requiring large emitters to measure their footprint and consider the cost of carbon in their planning and investment decisions. 

The French Government, meanwhile, is planning to supplement the EU ETS with a carbon tax on transportation and industry to drive faster reductions.  Large U.S. polluters, anticipating the eventual emergence of a national cap and trade scheme in that country, are postponing or canceling plans for new coal fired power plants.

The UK continues to provide a leading policy framework for greenhouse gas reductions, with measures such as the Carbon Reduction Commitment (see our CRC article in issue 76).  The British Department for Energy and Climate Change estimates that by 2020, the CRC will increase competitiveness by reducing CO2 emissions by 4 millions tonnes each year and by achieving cost savings of about a billion pounds sterling each year. 

Belgian Climate Minister Paul Magnette believes that raising the EU's emissions reduction target from the current 20 percent cut in carbon emission to a 30 percent cut by 2020 could give European firms a "first mover advantage" in the change shift to a green economy – which could lead their peers in India, China and the United States to follow their example.   Not wanting to be left behind, U.S. companies are pushing for stronger government guidance.  On 21 January 2009, more than 80 leading U.S. companies released a letter calling on the government to enact legislation that “will unleash innovation, drive economic growth, boost energy independence and decrease...carbon emissions.”

Conclusion
In October 2009, British Prime Minister Gordon Brown referred to the importance of the Copenhagen Summit by announcing that "there is no Plan B".  Given the promising but limited outcomes, we must hope he was wrong.  We may not be able to rely on government action alone to deliver the emissions cuts we need to stave off the worst impacts of climate change.  Fortunately, companies, organizations and individuals are discovering the benefits of going beyond compliance and taking voluntary action to achieve ambitious greenhouse gas emission reductions.

As Tony Hayward, Chief Executive, BP noted, “It’s dangerous to promise too much too soon… [the Copenhagen meeting] was “just one step on what will be a long journey to a lower carbon world – and that journey will be hard and long.”

This new decade may well usher in a new level of corporate activity and government commitment in tackling climate change - whether this will be enough to deliver the deep carbon reductions that scientists say are required remains to be seen.

Suzy Hodgson, AIEMA is a Principal Consultant and Jamal Gore, MIEMA/ CEnv is Managing Director at carbon managemnet company Carbon Clear Limited.

Moral Hazard and the Need for "Plan B"

When UK retailer Marks & Spencer launched its flagship sustainability programme, it branded the initiative "Plan A - because there is no Plan B".  The idea behind the name is intuitive and compelling: our economy and society are dependent on the natural resources and services provided by the earth.  Depleting those natural assets puts everything else at risk.

Last year, government representatives and spokespeople from advocacy groups began using the phrase in a different context.

In the first half of 2009, a team from the University of East Anglia called on the British government to support an investigation of geoengineering options.  Geoengineering involves combatting the effects of climate change via large-scale changes to the earth's reflective albedo (injecting sulfur dioxide into the stratosphere or launching space mirrors to block sunlight) or artificially removing large quantities of carbon dioxide from the atmosphere.  The East Anglia researchers, like many climate scientists, were concerned that we are reaching one or more "tipping points" beyond which rapid and uncontrollable climate impacts become unavoidable.

Speaking on behalf of the Department for Energy and Climate Change, Minister Joan Ruddock stated that geo-engineering is a Plan B approach, and a diversion "when we should all be focused on Plan A."[1]

In October 2009, Prime Minister Gordon Brown gave a speech in the run-up to the climate change summit in Copenhagen.  Referring to the need for a legally binding international agreement to reduce emissions, he stated that "there is no Plan B".

Government insistence that there can be no discussion of a Plan B (or C, or D for that matter) reflects concern about moral hazard.  Moral hazard is a widely used concept in behavioural economics.  It holds that people and organisations behave differently when protected against risk than they would when fully exposed to that risk. For example, someone with homeowner's insurance might be less careful about protecting their property against theft or fire when they know the insurance company will reimburse their losses

Seen in this light, Minister Ruddock's unwillingness to entertain research on geoengineering reflects concern that the ability to "repair" the climate might cause us to forego efforts to prevent the damage in the first instance.  Likewise, Gordon Brown wanted to increase the pressure to secure a replacement to the Kyoto Protocol during the December 2009 climate summit.  Given the rancorous debates in the months and years prior to Copenhagen, telling people there are alternatives to Copenhagen would almost guarantee a continuation of the stalemate.

The problem, of course, is that fires and thefts sometimes happen despite our best efforts.  When they do, it helps to have insurance.  Despite a Herculean effort by the British government and other parties, Copenhagen did not result in a binding emissions reduction treaty to replace Kyoto.  If Brown was correct, we're doomed.

As it happens, there was a Plan B after all.  There is also a Plan C, a Plan D, etc.  On the last day of the summit, the US, China, Brazil, India and South Africa negotiated the Copenhagen Accord, which focuses on the largest polluting nations, and relies on public pledges and peer pressure instead of legal treaties to drive emissions reductions at the national level.  Governments around the world also agreed to reconvene in Mexico City in late 2010 after a series of preparatory meetings in order to try again to reach a legally binding agreement.  And meanwhile, carbon management companies like Carbon Clear, the Carbon Disclosure Project, the UNEP Climate Neutral Network and other initiatives continue to work with businesses, NGOs and governments around the world to achieve dramatic CO2 reductions.

Publicising the existence of "Plan B" raises the risk of moral hazard, but misleading the public when there is the very real possibility that Plan B will be needed breeds cynicism and distrust.  Imagine the response if the Prime Minister again went before an audience and declared that the Mexico summit is our last chance because "there is no Plan B".

We cannot predict the future.  Climate change is a complex phenomenon that involves the interaction of nearly two-hundred governments, tens of thousands of organisations, billions of people, and a bewildering array of natural environmental phenomena.  As I've said many times before, climate change is too big a problem to solve with one hand tied behind our collective backs.  We need to embrace as many possible solutions as we can, as swiftly as we can.

There is no single solution, no single Plan A that can be guaranteed to solve the problem.  If Plan A doesn't work out, we need to have Plan B ready.  Or as a medieval Arab scholar once noted, "Trust in God, but tie your camel."

(Image credit: Paolo Buggiani)

(Back to Carbon Clear website)

[1] - Presentation by Tim Lenton to the All-Party Parliamentary Group on Climate Change on 14 July 2009

Truth or Lies

Too many politicised blogs take positions on global warming, referring to scientific studies and purporting to be fair and unbiased, but clearly having an agenda. At Carbon Clear, we try to help companies make informed decisions about how to respond to climate change.  But that requires sound data.

I’ve been reminded of the classic book by Darrell Huff How to Lie with Statistics, first published in 1954 and now as relevant as ever.  

Sometimes intentional, sometimes inadvertent, it’s not hard to arrive at erroneous or misleading conclusions using data inappropriately and misrepresenting reality.  Moreover, depending on your inherent biases and interests, you can construct the world as you like it by picking and choosing data points to support your worldview.  Take global mean temps over the past 20 years based on NASA’s Global Land Ocean Temperature Index.  Using this table, and selectively choosing data points, I can make two conflicting statements about climate change, both of which are true.

• Annual global mean temps 1990 to 1996 dropped by almost 1%.
  
• Annual global mean temps rose from 1989 to 1998 by about 2%.
  

So a reality check for these statements is needed.  Are these time periods relevant? Are the data points (i.e. years chosen) representative of long-term trends?   The short answer to these questions is no and no.   Changes in global mean temps over short time periods are unlikely to reveal anything significant in climate change science given the temperature amplifying effects of El Nino or the countervailing cooling effects of volcanoes.   So let’s let the scientists do the science and interpret the data – we have a large enough role trying to communicate clearly climate change issues.  And while we ask questions, let’s try and ensure that the science is not misused or abused.

(Carbon Clear Website)

A Warning from Haiti

The earthquake in Haiti is a frightening omen of what could happen in the future with climate change disasters.

Numerous studies have shown how the world's poorest will suffer disproportionately from climate change.  The increased likelihood of storms, floods, and desertification with resulting damage and destruction to homes, farms and lives leads to even greater suffering through future food shortages, famine and disease.

Compare Haiti, a poor country to a rich earthquake-prone region like California.  In California an earthquake of a similar magnitude on the Richter scale led to fewer than 100 deaths.  Haiti by contrast may suffer up to 100,000 deaths.

Once the world helps the people of Haiti get back on their feet, let's not forget the other poor countries that are extremely vulnerable to  future climate change disasters.  We can make sure that resources are available to help the poorest people in the most vulnerable parts of the world.

Carbon Management Consultant Suzy Hodgson will be joining Carbon Clear's blog team.  This is her first post.

Carbon Taxes vs. Cap-and-Trade

In 2009, the promise of serious climate change legislation in the United States and the scheduled UN Climate Change summit in Copenhagen helped to focus attention on the tools governments can bring to bear to reduce greenhouse gas emissions. We've talked in the past about the potential for massive government subsidies to bring about a rapid transition to a lower-carbon economy. But with coffers emptied by bank bail-outs, few Western governments seem serious about this approach.

Instead, there has been a marked increase in discussion about the merits of cap-and-trade mechanisms versus carbon taxes. (See this post for a discussion of how cap-and-trade works). To be more accurate, there have been a lot of comments on blogs, news sites and NGO websites arguing that carbon taxes are a superior solution compared to setting a cap and letting polluters trade amongst themselves.

One argument claims that cap-and-trade will not lead to actual emission reductions. Another is that cap-and-trade has been subject to manipulation and lobbying by special interests that weaken its effectiveness. Yet another is thatinvestment bankers and speculators will use a cap-and-trade system to reap vast profits. A tax on carbon - preferably at the well-head, mine mouth or port would in theory avoid this turn of events.

My considered view is that these arguments are misinformed, at best. First, the theory.

Economists use a demand curve to illustrate the relationship between the price of a product and the quantity of that product customers are willing to purchase. An idealised demand curve might look like the figure below:



There is a finite pool of carbon that can be released into the atmosphere without triggering potentially catastrophic global impacts. However, the cost of emitting greenhouse gas emissions has historically been borne by society as a whole, not by polluters. Polluters, faced with a low or zero carbon cost, have been consuming far too much of the total allowance (Q1 on the illustrative demand curve).

There are two ways in which we can force polluters to move up this demand curve and reduce their consumption.

A cap sets a limit on the quantity of carbon (Q2) and watches the price rise to the appropriate point on the curve (P2) as polluters invest in emissions reduction technology and buy or sell their allowances. A tax, on the other hand sets the price (P2) and watches demand shift in response as polluters make investments to lower their tax bill. In theory, both achieve exactly the same result. So much for the first argument - in theory, a carbon tax and a carbon cap can achieve exactly the same emission reductions at exactly the same cost.

But what is the reality?

As America's attempts to pass climate change legislation illustrate, the theoretically elegant cap-and-trade model is unlikely to make it unscathed through the meat-grinder of special interest politics. No politician, after all, wants to alienate potential voters or donors. The House and Senate climate change bills have introduced a bevy of set-asides, subsidies, free allowances, and other measures to ease the sting that would be felt by politically influential constituencies.

Do these concessions make the resulting cap and trade legislation less effective?

Yes, but the legislation is still projected to drive significant emission reductions, and without some concessions to special interests, it is unlikely the legislation would pass at all. The same holds true in Europe. The first phase of the EU ETS gave away allowances for free and make a number of other concessions in order to ease passage. In both the EU and the US, the aim is to gradually tighten the provisions over time and close loopholes in order to drive greater emission reductions.

Would a carbon tax be preferable, as some critics of cap and trade argue? With a carbon tax, there are no allowances to give away for free, and you don't have commodities brokers making money trading carbon credits.

So is it better? France provides a useful case study, as the government there announced a carbon tax just last autumn.

Within weeks of the initial announcement a French magistrate struck down the plans. It seems the legislation exempted companies covered under the EU Emission Trading Scheme despite the fact that they are responsible for the lion's share of the country's emissions, and their EU allowances had been given away for free. In addition, other sectors, like transport, received subsidies or rebates that reduced the impact of the tax.

What is more, a report comissioned by the government recommended that the carbon tax be set at €32 per tonne CO2 equivalent in order to drive significant reductions, and increasing to €100 per tonne by 2030. The French government, however, decided to reduce the tax rate to €17 to make it more palatable politically. Faced with a setback in the courts, the French are already at work to close some of these loopholes. It is a safe bet, however, that the government will continue to make concessions to special interests.

There's another challenge with carbon taxes. As impossible as it may seen in the wake of a rancourous Copenhangen conference, using carbon taxes instead of national caps makes it more difficult to secure international consensus on climate change policy.

The main reason is that nations will disagree on the appropriate carbon tax rate to achieve their individual reduction targets. Imagine if instead of pledging to achieve a reduction target, each country pledged to impose a domestic carbon tax. The U.S. might argue that India's carbon tax is set too low to drive a low-carbon shift, while the Japanese might not believe, for example, that the Australia will keep its promise to raise carbon tax rates during an economic downturn. The EU, meanwhile, might argue that China is keeping its carbon tax rate low to benefit local industry, and impose a punitive import duty to reflect what it feels is a more accurate price for Chinese carbon in products.

As for bankers and speculators profiting from climate change legislation, someone is going to have to lend companies the money to invest in all the new technology that will lower their carbon tax bill. It is not a tremendous stretch to imagine those loans collateralised against the anticipated future tax savings, and then securitised and sold off to third parties.

It appears, then, that the critics are right. A theoretical carbon tax is indeed superior to a (real world) cap and trade system that has loopholes for special interests. In fact, a theoretical tax is perfect, except for one problem - it has to work in the real world. It is not clear that a real-world carbon tax would offer much improvement.

Scrapping all the work done to date on making cap and trade effective would, at best, delay progress and result in an equally compromise-riddled carbon tax. At worst, it could embolden opponents of rapid action to fight climate change, and cause governments to abandon both approaches in favour of much less effective piecemeal efforts.

We can't afford to make the perfect the enemy of the good.

(Carbon Clear Website)

"Wasting" Energy

Is there a downside to saving energy?

The New York Times reports that transport authorities in several U.S. cities are concerned about the safety implications of their rapid switch to low-energy traffic lights. These traffic lights, which uses LEDs instead of incandescent bulbs, consume only a fraction of the electricity of traditional lights. Incandescents, after all, lose about 90% of their energy as heat. When it comes to reducing emissions from the hundreds of thousands of traffic lights around the country, the switch to LEDs is good news.

But what happens when it snows? When snow falls on a traditional traffic light, the heat from the bulbs can usually melt the snow, keeping the light visible. LEDs, by contrast, are much cooler and much less snow melts away. As the Times reports, snow-covered LEDs can pose a safety hazard - last April, one person died and four others were injured when a pickup truck ran through a snow-obstructed LED traffic light and struck another vehicle.

Thousands of miles away in Nepal, households are confronting a related issue. Their new, energy efficient stoves waste less heat. This means householders can cook with less fuel and reduce costs and labour burdens. In the winter, however, their houses can get colder than normal - all that "waste" heat had been keeping the room warm.

There are many other examples where "waste" energy from appliances and equipment actually serves a useful purpose. Without careful planning, the more efficient alternative may neglect this service.

This does not mean that we shouldn't continue implementing energy efficiency programmes and cutting carbon wherever possible. However, it does highlight the importance of careful planning to anticipate these potential trade-offs and taking action to reduce their severity. This is already happening with LED traffic lights. Rather than reverting to incandescents, officials realised that the waste energy only provided an extra snow-clearing service for a handful of days each year, and that there were other alternatives available:

"Transportation officials have been dispatching workers with brooms to clear the lenses[...]They are also experimenting with a solution that is less labor-intensive and more permanent, outfitting some of the lenses with sloping snow shields to make it harder for snow to stick."

The transition to a low-carbon economy means we have to do things differently. Careful planning can help ensure a smooth shift and deliver maximum benefit.

(Carbon Clear website)

Mind the Gap

Apologies for light posting towards the end of 2009. Lots of people were speculating and pontificating, so better to wait for the din to fade.