Climate Change Summary Newsletter and Commentary

Climate Change Summary Newsletter and Commentary

January 4, 2010

By: Steven L. Hoch

California Impact

Quebec to Become First Canadian Province to Implement California Vehicle Standard

Regulations that will take effect Jan. 14, 2010, will make Quebec the first Canadian province to implement vehicle greenhouse gas emissions standards equivalent to those in force in California. The regulations will apply to passenger automobiles and light-duty trucks in the 2010-2016 vehicle years that are sold, leased, or otherwise marketed in Quebec and are expected to will reduce overall vehicle emissions by about 35 percent. See:
http://green.yahoo.com/news/nm/20091229/wl_canada_nm/canada_us_environment.html

The important concept here is not that Quebec is adopting California standards, but that California remains the incubation laboratory for GHG standards. What happens here not only influences the United State, but the world as well. Being aware of the California’s actions will be critical in permitting you to understand and shape policy in other states and the federal level as well. It will also give you a window to what may happen to your business in the near future even if you are not in California.

Federal Agencies May Have to Consider Climate Before They Act

The White House is poised to order all federal agencies to evaluate any major actions they take, such as building highways or logging national forests, to determine how they would contribute to and be affected by climate change. The new order would expand the scope of the National Environmental Policy Act (NEPA) which already requires federal agencies to consider environmental impacts such as land use, species health and air and water quality when approving projects. Under the order, agencies would need to account for whether such factors as predicted rises in sea levels would affect proposed new roads along shorelines; or whether, because of temperature changes and species migration, clear-cutting a patch of forest would result in new types of trees replacing the originals. California lawmakers mandated in 2007 that state-level environmental assessments take climate change into account. See: 
http://www.latimes.com/news/nation-and-world/la-na-climate-nepa1-2010jan01,0,438175.story

Indeed, California was out front in attempting to deal with such consideration through the California Environmental Quality Act. (CEQA) In California, climate change and CEQA has been a focal point of litigation led by environmental groups and the California Attorney General. The CEQA guidelines which set forth the manner in which such impacts are to be evaluated are not yet finalized, so the preceding 3 years have been chaotic. Once the guidelines for CEQA are finalized there will no doubt be litigation over their meaning and applicability. The current drafts indicate a somewhat open-ended and vague requirement for review without much finality over precisely how one will mitigate a problem that is stated as being “global.” Further, the final rules and regulations under AB32 will not be final (absent the inevitable specter of litigation) until 2012, and so there will be no basis to reference any state law to assist in the determinations under CEQA. The Feds would do well to view California’s somewhat backwards methodology and seek to set the rules first, and then apply them to NEPA.

California’s New Green Energy Law’s Effective 1/1/2010

SB 32 - expands the existing feed-in-tariff (FIT) program by requiring investor owned utilities (IOUs) and local publicly owned electric utilities (POUs) with 75,000 or more retail customers[1] to purchase all electricity produced by eligible renewable electric generation facilities that are up to three (3) megawatts (MW) in size and located within the service area of the utility. Essentially, if you produce power at your home and you don’t need it all, the POU and IOU in your area have to buy it but they there are limits on the purchases.

AB 920 - focuses on residential and small-business wind and solar projects by expanding the existing net-metering programs to allow net-metered customers to sell any excess electricity they produce over the course of a year to their electric utility. In the past, any excess electricity was the property of the electric utility without any compensation provided to the net-metered residential or small-business customer. While AB 920 is sure to create additional interest in solar rooftops and the like, one key limitation that faces this bill is the two and one half percent of the electric utility's aggregate customer peak demand cap placed on the net-metering program.

AB 758 - focuses on meeting California’s energy needs by decreasing overall demand through cost-effective improvements in energy efficiency. Specifically, AB 758 requires the California Energy Commission, by March 1, 2010, to establish a regulatory proceeding to develop a comprehensive program to achieve great energy savings in California’s existing residential and nonresidential building stock.

The move on both creation of incentives for individual home and business owners to generate part of their electric load and conservation are a core element of California’s energy saving scheme. These two aspects provide for the possible broad based support and contribution to a solution. The question, of course, will be how effective this can be alone in stimulating action by the states citizens. Likely, there will have to be tax or other financial incentives included to get over the initial investment impact that such systems mandate. Of course, who will pay for it and how remains to be seen.

Novel Approaches

Push Clocks Forward to Cut Carbon

The Royal Society for the Prevention of Accidents (ROSPA) suggests that to cut carbon clocks should be set forward. ROSPA says it has been requesting for many years for the UK to move to a system called Single Double Summer Time (SDST), which would put the clocks one hour ahead of Greenwich Mean Time (GMT) in winter and two hours ahead of GMT in summer. According to a recent Cambridge University study, the move would cut carbon emissions by 450,000 tonnes each year, equivalent to 85 per cent of all the power generated by wind, wave and solar renewable energy in England and enough to power every household in Edinburgh. See: http://www.thegreencarwebsite.co.uk/blog/index.php/2009/12/17/push-clocks-forward-to-cut-carbon-says-charity/

The concept here may well make sense. It would be worthwhile to make sure it works in other latitudes, which may be a key factor. But the concept of dealing with the low hanging fruit first in such circumstances is appealing. Another bonus is we get more acronyms! You gotta love more acronyms.

Cash Cows Boost Carbon Trading; Cleaning up in California Greenhouse-Gas Emissions

The thousands of dairy cows in California's San Joaquin Valley can produce the daily equivalent of waste of a good size town.  Manure is cleaned out of the barns with high-pressure water and turned into liquid slurry, which is pumped into an outdoor lagoon. The solid waste separates from the liquid and falls to the bottom of the lagoon, where it becomes food for bacteria. As the bacteria digest this waste, they produce methane gas that rises to the surface of the putrid lake, releasing thousands of tonnes of methane. A Quebec Company - L2I Solutions, is turning this odorous, harmful sludge into millions for itself and the farmers in rural California by creating a carbon-offset program, handling the paperwork and the verification process and acting as a middleman between the farmers and the carbon brokers, who do the actual selling and trading. 28 San Joaquin Valley dairy farmers have signed up with them to use a waste-filtering technology before pumping the manure slurry into their lagoons. The waste that is filtered out in this two-step process is reused as bedding for the cows and as fertilizer. As a consequence, less manure enters the lagoon, eliminating a good deal of the food for bacteria and the corresponding methane. The methane that has been saved or "offset" from entering the atmosphere can be quantified. One tonne of carbon dioxide equals one carbon credit. Since methane, according to the U.S. Environmental Protection Agency, has a global warming potential 23 times that of CO2, each tonne of methane not released into the atmosphere is worth about 23 carbon credits. L2I Solutions estimates in the span of the offsetting program, which runs until 2015, the farmers, together, can create about 1.6 million carbon credits. The price of those credits is variable.   See

http://www.kelowna.com/2009/12/21/cash-cows-montreal-based-l2i-solutions-is-turning-dairy-farm-waste-into-cash-with-the-help-of-carbon-brokers-cleaning-up-in-california-greenhouse-gas-emissions/

California has a very large dairy population and its existence is both an environmental issue to some but a definite economic plus to the region. The industry has been a favored target of environmentalists who have made some unusual suggestions on how to avoid and handle gas production from cows. So this solution may be a good alternative, creating less methane and get some money for it. The price of milk is very low and has been that way for some time and farmers are losing money hand over fist. So if the income from this process will assist them in stabilizing their businesses, it may make enormous sense. What we don’t need is our cows leaving for another state; we have all those great cow commercials which would be useless.

Electric Cars

Plug-In Cars May Not Soon Cut Oil Use, CO2 Emissions

Sales of plug-in cars, touted by the Obama administration and automakers as a way to curb oil use and greenhouse gases, may be held back for decades by battery costs, a study for the U.S. government found. Rechargeable autos in 2010 may cost $18,000 more to build than conventional gasoline cars because of their lithium-ion batteries, the National Research Council of the National Academies said in a summary of the study today. Batteries probably won’t be cheap enough until 2030 to spur sales that would reduce oil use and carbon pollution. The study suggests conventional hybrids that don’t need to be plugged in, such as Toyota Motor Corp.’s Prius, may be a better near-term option for curbing oil use. President Barack Obama has set a goal of having as many as 1 million plug-in electric vehicles on U.S. roads by 2015. To meet that target, the Energy Department this year provided $11 billion in low-cost loans and grants to accelerate production of rechargeable vehicles. To entice consumers, there’s a $7,500 U.S. tax credit for plug-in car purchases. See:

http://www.bloomberg.com/apps/news?pid=20601209&sid=auIq_IVzAkDI

Here’s the problem. It would appear that the push for full electric autos is on getting added steam from the power utilities. But the NRC is a fairly conservative scientific group that is not often to far off the mark, and thus this report should be taken seriously. Let’s analyze this: 1. Electric cars will be too expensive and to have them built and sold economically will require government subsidies (not just rebates) to get them built profitably. 2. We need to get more power (presumably green) to “fuel” these vehicles and that is a long range problem that has many components that remain, as of yet, unresolved (like getting enough transmission capability). 3. A little known fact is that the world’s leading supplier of the material used in these batteries is China. It makes no real sense to put the car before the battery. Hybrids make a lot more sense, but they need to be bigger and come in all variants, trucks, SUVs, large sedans etc. We can dream of a green Hummer (now owned by the Chinese by the way).

Cap and Trade

Senate Rules Force Review Of Tax Incentives To Supplement Climate Bill

With Senate budgetary rules forcing a reduction in the number of allowances that could be distributed in a cap-and-trade program, proponents of pending legislation are looking for other mechanisms that could be used to provide incentives for key stakeholders and generate buy-in from wavering senators, and there is some talk of including modifications to the tax code to benefit manufacturers and clean energy companies in lieu of giving as many allowances to those industries as in the House bill, according to sources on and off Capitol Hill. Senate budget rules differ from the House by requiring a longer view on assessing deficit impacts from spending proposals. With the Obama administration focused heavily on job creation—and a yet-to-be-written Senate jobs bill seen as a higher immediate priority than climate legislation—there also is something of a tug-of-war emerging over what package will see more clean energy tax incentives attached to it. Some say those measures may be more likely to appear in a quick-moving jobs bill than climate legislation whose path to passage is much less clear, but there also is said to be push-back from Senate leadership against any effort to strip from a climate bill provisions that could be vital to garnering votes. See: http://carboncontrolnews.com/

Let’s face it, with unemployment at 10% anything that Congress does is going to be scrutinized by the public first as to its impact on jobs and the economy and likely a far second, the environment. Also, there is a real possibility that cap-and-trade will not succeed so that tax policy to induce “green jobs” may be necessary so that both the economy and the environment are positively impacted, or at least one is. Having both negatively impacted would be real dumb. This is a high stakes poker game that will be played out in Washington DC early in 2010 (or as soon as health care is passed, defeated or otherwise dealt with).

Rutger’s Scientists Oppose Cap-and-Trade

Several prominent Rutger’s scientists have come out strongly against cap and trade. Cap-and-trade is a pretty lousy idea," says Paul Falkowski, Ph.D., director of Rutgers University's Energy Institute. "It doesn't reduce emissions in the near term, and we have to reduce, not just keep emissions steady. If we put a cap on and start trading, we'll slowly get off a carbon diet, but it's not going to be a steep curve, and it's going to be painful." Karina Schäfer, Ph.D., a Rutgers ecosystem ecologist, is similarly skeptical about a carbon market: "Cap-and-trade will be the next bubble. We've seen how unstable the financial and housing markets are - we've watched them increase and crash. Do we want to have the earth's climate rely on those instruments?" Another problem some scientists see with the cap-and-trade scheme is the inclusion of carbon credits for areas that operate as "carbon sinks" such as forests and wetlands that sequester carbon in plant matter and soil, keeping it out of the atmosphere. Industries and utilities can buy credits as part of their obligation to reduce emissions, lessening the financial pressure to build renewable sources of energy. Falkowski opposes carbon credits on principle. He remarked, "Imagine this scenario. A burglar comes in and steals everything in your house. You're left with nothing. You go out and ask for $5 for dinner. The burglar gives you $5 and then wants a tax credit for being so generous. We have deforested the eastern lands, and we want a carbon credit now that we're letting a little bit of it grow back. It's a political game." See: http://www.newjerseynewsroom.com/science-updates/new-jersey-scientists-oppose-cap-and-trade-support-carbon-tax

They are not the only ones. Slowly, cap-and-trade appears to be losing its luster in the United States for many reasons, some real and some highly absurd. The uncertainty as to what the economic system will look like that drives climate change initiatives is now decreasing carbon trading prices and contracting the market, making it look less viable when it is just reacting to its environment. There are lots of good things to say about cap and trade though as a viable system that will not immediately fix the perceived problem, but will create a market based incentive to fix the problem over the medium and long range, which is likely where it is really needed. The complexity of the system, however, may prove to be its own worse enemy to get it passed into law and has to be simplified as much as possible to permit carbon to be traded appropriately with the goal of reduction of emissions in mind as opposed to merely making money on the trade. Brokers should have fun with new TV ads offering their carbon trading services by the ton! However, watch California. Our cap and trade system will be on the books by 2012!