Supreme Court Revives EPA Rule Targeting Coal Power Plants

EPA's breakdown of power plant pollution

On Tuesday the U.S. Supreme Court ruled (6-2) that the U.S. Environmental Protection Agency (EPA) can reinstate the  Cross State Air Pollution Rule, CSAPR, which allows EPA’s "cost-effective allocation of emissionsreductions among upwind states”  by requiring some state to clean up more than their fair share of pollution. CSAPR dictates each State’s emissions reduction goals and the Federal Implementation Plans to obtain those goals at the State level. However, the EPA had used computer modeling to generate emissions “budgets” for each upwind State without regard for the amount of pollution each state was contributing to a downwind problem, but based instead on the cost of remediation. Now the Supreme Court has confirmed requiring the level of cleanup to be based on cost and requiring more work to be done where the cost of capturing a ton of sulfur-dioxide and nitrogen-oxide was the lowest creating a pollution trading system.

Back in  August 2012 the U.S. Court of Appeals for the District of Columbia ruled (2-1) that the Cross State Air Pollution Rule, CSAPR, exceeded the U.S. Environmental Protection Agency’s authority by requiring some state to clean up more than their fair share of pollution. The Supreme Court has overruled that decision. CASPR was intended to prevent pollution from one state from moving into other states and preventing them from meeting their air quality goals. CSAPR, when implemented will reduce SO2 emissions by 73% from 2005 levels and NOx emissions by 54% at the approximately 1,000 coal fired electrical generation plants in the eastern half of the country. The industry has indicated that many of these plants may be forced to close. This rule is intended to help downwind states unfairly impacted by upwind states attain their 24-Hour and/or Annual particulate pollution of 2.5 micrometers or less called PM2.5 National Ambient Air Quality Standards (NAAQS) and the 1997 8-Hour Ozone NAAQS. CSAPR will replace EPA's 2005 Clean Air Interstate Rule (CAIR). 

The earth’s atmosphere is interconnected. That is accepted when it comes to carbon dioxide, but it also applies to industrial pollutants and soot. The EPA has estimated that just one-quarter of U.S. measured pollution emissions from coal-burning power plants are deposited within the contiguous U.S. The remainder enters the global cycle. Conversely, current estimates are that less than half of all measured coal pollution emissions deposited within the United States comes from American sources. According to the Mount Bachelor Observatory, Chinese exports include acid rain that falls in China, Korea, and Japan, and pollutants that enter the air stream including sulfates, NOx, black carbon, soot produced by cars, stoves, factories, and crop burning. EPA can now address these pollutants based on the cost of remediation instead of based on contribution by a state.

However, as a president, CSAPR may do much more. In the next two months the EPA is expected to propose a new sweeping set of Clean Air Act regulations to cut emission of carbon dioxide to fight global warming. According to the EPA the largest source of carbon dioxide is coal fired power plants, this decision will mark the end of the era of using coal to generate electricity in power plants. This era began with the oil crisis in 1972 and will end with CSAPR. However, using this decision EPA can allocate carbon dioxide “budgets” based on costs to meet the budget and potentially creates a national carbon trading market for carbon dioxide. In addition, it could create interstate trade and tariff  issues when allocating carbon dioxide and methane “budgets” in a world of greenhouse gas caps and trade markets.

from EIA

Cap and Trade in California

Data from US EPA

Cap and Trade is officially lunched in California, the first auction of carbon allowances was yesterday.The state deemed the auction a success as 23.1 million carbon allowances for 2013 sold at $10.09- the lowest market clearing price.  Back in 2006 enabling legislation (AB 32) was passed to create California’s carbon cap and trade system that was launched Wednesday despite last minute appeals by business associations to the Governor. The California Air Quality Control Board has set an annual limit, the cap, on the carbon dioxide (CO2) emissions produced by large factories, power plants and oil refineries in the state. The cap is scheduled to decline 1% in the first two years and 3% each year after that so that CO2 emissions in the state will be reduced in a systematic fashion.

 

Though the requirement does not go into effect until January 1, 2013, yesterday, after 6 years of planning and program design, California had its first auction for 62.6 million metric tons of CO2 called carbon allowances (23.13 metric tons for 2013 and 39.45 metric tons for 2015) on  an electronic trading market. Sold were 23.1 million carbon allowances for 2013 in addition to 5.6 million allowances for 2015. The state will operate the market each quarter so that companies subject to the regulation can purchase carbon allowances.  Each business must hold the number of allowances determined by the state, based on the standard emissions from their type of business or facility, so while this program was developing there was no incentive to install technology to reduce CO2 and there was an incentive to maximize annual production. At first,  all the allowances are free for power plants and 90% of the allowances are free for businesses, but the number of allowance that  are free will decrease to 75%  in 2015 and go down from there. The total CO2 emissions for the state were only about 2% over 1990 levels in 2010 (though they had been considerably higher before the recession).

Regulators and the Legislature hope and believe that gains in energy efficiency spurred by the program will outweigh any higher costs. Certainly switching from coal power generation to natural gas fired power generation can reduce CO2 generation by utilities by 44% according to data from the US EPA.  The idea for a cap and trade program was modeled on the European Union’s Kyoto accord system. Though Europe has reduced the generation of CO2 within its borders, the consumption of carbon has not according to “The Carbon Crunch: How We’re Getting Climate Change Wrong-and How to Fix It” by Dieter Helm. In a world whose atmosphere is interconnected a cap and trade program appears to have the perverse incentive to drive energy intensive industries outside its borders.

With the Koyoto accord in place CO2 emission worldwide continued to grow. In 2011 the top four world generators of CO2 emission from fossil fuels were in descending order China, the United States, the European Union and India who edged out Russia to take the number four slot. This is a vastly different picture than existed in when the Koyoto Treaty was first contemplated and now China’s newly elected President Hu Jintao has vowed to double the country’s gross domestic product and per capita income by 2020 from 2010 levels during his term of Presidency. This means an increase in electricity production using predominately coal fired power plants in China.

From 2010 to 2011 China increased their emissions of CO2 the mostcontributing almost three quarters of the total global increase, with its emissions rising by 720 million metric tons, or 9.3% to 8.46 billion metric tons of CO2, primarily due to higher coal consumption. India’s emissions rose by 140 million metric tons or 8.7% to 1.75 billion metric tons. CO2 emissions in the United States in 2011 fell by 92 million metric tons of CO2, or 1.7% to an estimated 5.32 billion metric tons. California’s carbon market represents 342 million metric tons less the portion of transportation that are automobiles or about 4%-5% of the net CO2 emissions for the United States. Only commercial and industrial facilities that emit more than 25,000 tons of CO2 each year are subject to the cap.

Companies subject to the cap and trade regulations have four choices. The first is the intended goal; reduce CO2 emissions by improving energy efficiency, utilizing lower carbon fuels, carbon capture or other technologies. The second option is to buy carbon allowances from California at the market determined rate. California will profit under the program by selling the California carbon allowances that each company subject to the regulation will need to continue to operate in California.  The idea of the carbon allowance market is to both to price the carbon allowance and raise revenue for the state. The third option is known as "carbon offsets." Companies can pay other organizations to reduce greenhouse gases within the United States. The fourth option is to reduce CO2 producing operations within the state. California is hoping that the transfer of production to other locations will not occur, but the experience in Europe and the United Kingdom has not shown this. Taxing the carbon content of products might be a more direct method to control CO2 generation and more effective method of reducing CO2 production worldwide and would certainly generate badly needed revenue for California. 

California Implements Cap and Trade Program

On Thursday, October 20, 2011 after a long public hearing and meeting the California Air Resources Board unanimously voted to adopt the nation's first state-administered cap-and-trade regulations for greenhouse gases. Cap-and-trade is the centerpiece of AB 32, the Global Warming Solutions Act of 2006 a California law that establishes a wide reaching program of regulatory and market mechanisms to achieve quantifiable, reductions of greenhouse gases (GHG) that are intended to be cost effective. This law establishes a statewide GHG emissions cap for 2020, based on 1990 emissions. Though Cap and Trade was not part of the actual law, it was added by the California Air Resource Board in their Regulations. California sees itself as leading the way in cap and trade legislation and an example to the nation of the potential benefits and concerns and problems with this particular approach to attempt to prevent climate change by controlling CO2 emissions. A second phase of compliance begins in 2015 and is expected to include 85% of California's emissions sources.

Thought there were many other voices the prevailing view at the meeting was California is leading the way to the future. California intends to show by example to other states and the federal government that it is possible to regulate greenhouse gas emissions while protecting its economy and fostering a new green economy and industry. According to others, California is taking a very big risk with their economy for uncertain results. There is the strong feeling amongst journalists, regulators and NGOs that the vote was closely watched by other states and, if the program is deemed successful, it will serve as a model for future markets. If you recall the "American Clean Energy and Security Act” is HR 2454, also known as the Waxman-Markley energy bill, or simply as "ACES" was passed by the US House of Representatives in 2009 and died in the senate. The bill included a cap-and-trade global warming reduction plan designed to reduce carbon dioxide emissions in the U.S and also required “polluters” to buy permits to emit a certain amount of carbon dioxide.

Within California there is the strong belief that people watch what California does and emulate it. The California regulators believe that cap-and-trade programs are going to spread to other states and regions and the design features developed for the California program will be adopted in other states and regions with the federal government finally adopting the program. The California Air Resource Board sees their work in creating 262 pages of regulation as ground breaking and likely to change the country. These regulations imply a shift away from carbon based fuels. It is envisioned that this will support the creation of new green-tech jobs and financial certainty for the renewable energy industry even as there is a strong national push to further develop shale source natural gas to move power generation away from the coal fired utilities built in the mid 1900’s and for a reduction in the size of government. At least 15 states now produce shale gas and others may join them. The largest shale area, the still-emerging Marcellus, covers much of the Northeast and already supports 140,000 jobs in Pennsylvania alone. Many of the jobs created recently in Texas are related to the expansion of shale gas exploration and development.

United Nations Climate summit will be held November 28-December 9th 2011 in Durban South Africa. The Kyoto Protocol, which commits developed countries to cut their emissions, is set to expire in 2012. After both the Copenhagen (2009) and Cancun (2010) Climate summits failed to produce a legally binding climate treaty, delegates to the Durban talks are under immense pressure to produce some kind of deal that will be acceptable to both rich and developing nations. However, it is reported that cap-and-trade concept is losing support among the pervious signers of the Kyoto treaty and China and India who are now major producers of greenhouse gas because of concern about jobs, costs and bureaucratic complexity.

The “emerging nations,” including China and India want an extension of Kyoto, which required the industrialized nations to cut greenhouse gas emissions by 5.2% below 1990 levels from 2008-12. The world's two largest greenhouse gas emitters are China and the United States. The U.S. never ratified Kyoto, arguing it should contain 2012 goals for emerging economies and would cost U.S. jobs. China was exempted as an emerging economy, and though it is now the largest greenhouse gas emitter on earth, it wants to remain exempted from reducing or even stabilizing greenhouse gas emissions under any new agreement. In September India announced that it would not accept any legally binding limits on greenhouse gas emission, and Japan announced that they are reconsidering plans to cut carbon-dioxide emissions by 25% by 2020 due to closing of a significant portion of its nuclear power generation, and the costs of the carbon-credit programs that required the spending of almost $11 billion on carbon abatement programs in other countries. Overall, expectations for the future of the Kyoto Protocol are low and some doubt whether if a second commitment period is feasible with only support from EU which accounts only around 11% of the world’s greenhouse gas emissions and is itself reconsidering its nuclear power generation after the Fukushima Daiichi nuclear reactors were damaged after the quake. If nuclear reactors are going to be phased out as low greenhouse gas emission power generation there is no way to achieve carbon reductions without reducing the size of the economy, the standard of living or the size of the population.

The California Cap and Trade program requirements will help the current crop of California solar projects. If you will recall, the Department of Energy recently issued its final round of loan guarantees before the program ended and these final four loans included three generation project in California.
California Valley Solar Ranch Project a $1.237 billion loan guarantee to allow SunPower Corp to borrow the money to build a 250-megawatt photovoltaic electricity generating array in San Luis Obispo County, California using sun tracking technology to increase electricity output. The power will be sold to Pacific Gas and Electric Co. and will generate enough (very expensive) electricity to power 64,000 homes and will allow SunPower to increase demand for their panels and maintain or increase production. Construction employment will be significant, but permanent jobs will be few. The panels do not need much operation.

California Struggles with Implementing Their Cap and Trade Program

AB 32 the Global Warming Solutions Act of 2006 is a California law that establishes a wide reaching program of regulatory and market mechanisms to achieve quantifiable, reductions of greenhouse gases (GHG) that were intended to be cost effective. This law establishes a statewide GHG emissions cap for 2020, based on 1990 emissions. Though Cap and Trade was not part of the actual law, it was added by the California Air Resource Board in their Regulations. California sees itself as leading the way in cap and trade legislation and serves as an example to the nation of the concerns and problems with this particular approach to attempt to prevent climate change by controlling CO2 emissions.

The cap and trade program as outlined the Air Resource Board represents only about 20% of the greenhouse gas emissions reductions required by AB 32, and will go into effect in 2012. Almost 80 % of the decrease in carbon reductions in the state will be achieved through higher fuel-efficiency standards for vehicles, increased energy efficiency and conservation, renewable-energy mandates and other measures throughout the California economy.

The Air Resource Board had been sued by environmental justice groups concerned that poor communities located near California’s largest emitters could actually face increased exposure to pollution under cap and trade. The lawsuit contends that the air board failed to do an adequate analysis of possible alternatives to the cap-and trade program, as required by the California Environmental Quality Act.

The Judge in the case ruled that the Air Resource Board had only done a cursory consideration of alternative only giving serious consideration to cap and trade as part of the state’s plan to reduce greenhouse gas emissions. The Judge in the case ordered the Air Quality Control Board to stop work on the regulations and consider other options. The Air Resource Board appealed that decision to the appeals court and continued setting up cap and trade while they have whipped out an expanded more thorough analysis of the alternatives considered in the original report. The appeals court Judge has allowed them to continue implementing the cap and trade program.

Both Sierra Club California and the environmental justice organizations said they could support alternatives that include requiring large emitters to cut back on the amount of carbon dioxide at the site of their plants. The cap and trade outline creates credits for California emitters that exceed emission limits but fund emissions- reduction programs, even if they are in other states or countries. Instead some are pushing for consideration of alternatives to cap and trade could include increased energy efficiency in buildings, significantly increasing renewable- energy sources in the state, and a traditional tax that would be placed on carbon emissions.

A carbon tax is straight forward, honest, not subject to the same manipulation that can distort the allocation of carbon credits and finally it raises funds directly for the state of California that is so in need of revenue. The problem with a straight forward carbon tax which on the surface appears to have merit as a way to reduce carbon dioxide release while raising state revenue is California is essentially California can only create or raise a tax by a supermajority. In 1978 Proposition 13 the "People's Initiative to Limit Property Taxation" passed and became article 13A of the California state constitution. The California form of direct democracy allows initiatives that obtain enough signatures to be placed on the ballot and voted on directly by the residents. The proposition decreased property taxes by restricting annual increases of assessed value of real property to an inflation factor, not to exceed 2% per year while using either the 1975 value or the sale price which ever was later. It also prohibited reassessment of a new base year value except for a change in ownership. To protect themselves from increasing property taxes from rapidly increasing property values, the people essentially eliminated the most stable source of revenue and made the imposition of any tax all but impossible.

So as the California Air Resource Board points out, in the case of a carbon tax, the uses of the revenues are restricted by state law and thus could not be used to offset increases in energy costs to low income consumers or encourage approved industries. “The most challenging constraint for a tax approach owes to the requirement that taxes must be approved either by legislative supermajority or voter initiative. Such measures would require time and potentially substantial resources to pass, and may be politically infeasible.”

Cap and trade is an immensely controversial proposal that at the national level has split along the traditional lines of environmentalists versus industry. It was the centerpiece of a plan to reduce greenhouse gases that passed the House in 2009 but subsequently failed in the Senate. It was always reported that support of cap and trade was pro-environment and those apposing were polluters wanting to trash the world. There were always problems with cap and trade and similar programs and always environmentalist who supported a direct tax on carbon and various European Union members have used carbon taxes as part of their strategies. At this time supporters of AB 32’s cap-and trade program tend to be clean-energy businesses, investment firms and other business groups in California with a vested financial interest in profiting from the green economy and regulators. That pretty much tells you who will benefit most from such a program; however the alternatives are limited by Article 13A. Small business interests in California were very alarmed by a Center for Small Business at California State University report titled “Cost of AB 32 on California Small Business-Summary Report of Findings” that outlines the financial impacts of implementing AB 32 to the economy and people of California. The report concluded that when the program is fully implemented, the average annual loss in gross state output from small businesses would be $182.6 billion, approximately a 10% loss in total gross state output.

Even when fully implemented AB 32 is not going to stop climate change, though it may contribute to an amelioration of the increase in carbon dioxide. Even this modest reduction in CO2 emissions will not be met if the production of CO2 just moves out of state along with the economic activity that is producing the emissions. Greenhouse gases absorb the sun’s energy, allowing less heat to escape back to space, and 'trapping' it in the lower atmosphere. Many greenhouse gases occur naturally in the atmosphere, such as carbon dioxide, methane, water vapor, and nitrous oxide, while others are synthetic. Water vapor is the most pervasive of the greenhouse gasses and subject to weather and changes in temperature. The cap and trade program is probably not going to have any discernable impact on total greenhouse gas concentrations on earth. However, creating a cap and trade system does create a market where “clean-energy” businesses, investment firms and other business groups that can profit from the marketing of these credits and regulators can increase their authority and funding. Instead it would be much better to directly tax carbon and use that money to prepare for the earth of our future.

Cap and Trade in California and Unemployment

Based on sheer size and population, California produces a significant volume of greenhouse gas emissions. If California were a country, it would be the 19th largest producer of greenhouse gas emissions in the world. However, on a per capita basis, California ranks 46th among the 50 states in greenhouse gas emission rates. While per capita electricity consumption nationwide has increased almost 50 percent since the mid-1970s, due to successful conservation efforts, California’s per capita electricity consumption has been relatively flat. According to the U.S. Department of Energy, the average household in California uses only 587 kilowatt hours per month.

California has been at the forefront of legislation to prevent global warming by reducing greenhouse gas emissions. AB 32, California’s Global Warming Solutions Act of 2006, establishes a comprehensive program of regulatory and market mechanisms to achieve real, quantifiable, reductions of greenhouse gases that were intended to be cost effective. This law establishes a statewide greenhouse gas emissions cap for 2020, based on 1990 emissions (a year when California had entered a recession), and grants to regulators broad authority to regulate to achieve these goals.

Under an executive order from Governor Schwarzenegger, the California Air Resource Board, CARB, will require utilities to produce a third of their power from renewable sources within a decade. California already has a rule that utilities obtain 20% of their energy from renewable energy sources by this year’s end, though it is not anticipated that goal will be reached. If fully implemented, the 33% renewable energy standard will remove between 12 million and 13 million metric tons of carbon dioxide per year, along with other pollutants, according to CARB. It also will be a major step towards meeting the targets of California's greenhouse gas reduction law, AB32. CARB estimates cost of implementing this regulation to be $2.5 billion, which would increase energy costs by about one cent per kilowatt hour, but cost over $200 per metric ton of carbon removed.

AB 32 allows CARB great latitude in developing approaches and regulations. The first round of regulations have already been implemented. They include CARB’s low-carbon fuel standard, restrictions on some refrigerants, increased landfill methane capture, truck efficiency programs, tire pressure program, reduction of greenhouse gases in consumer products, ship electrification at ports, reduction of perfluorocarbon from the semiconductor industry, and sulfur hexafluoride (SF6) reductions in non-utility and non-semiconductor applications. CARB is, also, allowed and encouraged to create a market-based “cap-and-trade” program which would be implemented by 2012. The proposed cap-and-trade program would cover the 600 largest sources of greenhouse gas emissions in the state, and is well under way towards implementation.

If you recall, the "American Clean Energy and Security Act,” also know as the Waxman-Markley energy bill, which was passed by the House and then stalled, modeled itself on the California plan. AB 32 serves as an experimental laboratory to the nation of the concerns and problems and possibly the results from attempting to prevent climate change by controlling CO2 emissions in this way. Under AB 32, CARB must determine how to achieve these reductions, within the deadlines. In 2008, CARB released a scoping plan outlining the measures that it would take in order to meet the 2020 emissions reduction requirement. As California unemployment climbed past 12% a movement began to suspend the enactment of AB 32. This legislation passed during better economic times has costs and impacts on business and is vulnerable to this kind of action.

Proposition 23, on California’s November 2010 general election ballot, would suspend the implementation and operation of AB 32, California’s Global Warming Solutions Act of 2006, until state unemployment rates remain at or below 5.5 percent for four consecutive quarters. That level has been reached three times since the state began compiling these statistics in 1976. Proposition 23 would suspend regulations already adopted under AB 32 and would also prohibit state agencies from continuing their adoption of new implementing regulations and related directives. This would punish any business or person who had already implemented technology and/or procedures to reduce their greenhouse gas emissions and create confusion.

While Proposition 23 would suspend AB 32 and its existing regulations, it does not push back or otherwise delay the 2020 aggregate greenhouse gas reduction target contained in AB 32. If Proposition 23 were to pass, the binding target of achieving 1990 greenhouse gas emissions levels by 2020 would become effective again once the suspension is removed. So, the minute the economy booms, all the regulations would become effective immediately. The incentive would be for California businesses to keep unemployment above 5.5%. Both candidates for governor have come out against the proposition, but I believe for different reasons. Suspending the legislation in this way would create an untenable regulatory and compliance environment. Perhaps the more direct path of taxing oil and other sources of greenhouse gasses would have been simpler to moderate during times of economic duress by simply reducing the tax to stimulate the economy. Stay tuned to California for more adventures in the economic and political impacts of greenhouse gas regulation.

Will Unemployment Stop AB 32

Yesterday, it was announced that California voters will decide the fate of the state's global warming and cap and trade bill, AB 32. Under AB32, California must reduce greenhouse gas emissions by 25 percent by 2020, returning them to 1990 levels. AB32's proponents call it a vital step in efforts to curb greenhouse gases and create green jobs that will serve as a model for other states of what the costs and benefits of a cap and trade/ climate change bill. Many groups have weighed in on the projected costs and benefits, but now, in true California fashion, the variously funded political action groups are bringing it to the ballot. The measure expected to be on November's ballot would suspend AB32 until California's unemployment rate, currently at 12.5 percent, stays at 5.5 percent or below for four consecutive quarters, which is a very aggressive employment target. The unemployed, energy companies and economic fears will be pitted against global warming fears and environmental activists.

High unemployment in California which has been hard hit during the recent recession combined with a report by Sanjay Varshney and Dennis H. Tootelian, Ph.D. of California State University, Sacramento that concluded when the program is fully implemented, the average annual loss in gross state output from small businesses alone would be $182.6 billion, approximately a 10% loss in total gross state output. This will translate into nearly 1.1 million lost jobs in California. Lost labor income is estimated to be $76.8 billion, with nearly $5.8 billion lost in indirect taxes. The increased costs generated by the AB 32 program, would force cuts in discretionary spending by 26.2%. The study’s cost analysis was based on the California Air Resources Board’s (CARB) findings, which revealed significant cost increases. The study found that the California Resource Board had significantly underestimated these costs. Unemployment in California is now 12.5% which translates to 2,303,000 people before the implementation of AB 32. If another 1,100,000 people are added to that total unemployment would reach 3,403,000 or 18.6%.

Circulating on cable is the NOVA program on AB 32. In a well produced program NOVA conducts interviews with Governor Schwarzenegger, skeptics and supporters of the plan, and ordinary citizens and businesspeople whose lives will change significantly when the new regulations take effect. The sense of urgency expressed by the Governor is acute, because he fully believes in the Global Warming models that project that California is particularly susceptible to the effects of climate change. The recently ended drought touted as a harbinger of things to come resulted in devastating wildfires and chronic water shortages in large sections of the state and fueled those concerns. While high unemployment has fuels the concerns for economic devastation resulting from the law. So the lines are drawn and now we get science and facts by popular vote. Reality in California.

Copenhagen

The United Nations Climate Change Conference is taking place in Copenhagen, Denmark, between December 7th and 18th 2009. The conference in Copenhagen is the 15th conference of parties (COP15) in the Framework Convention on Climate Change. At the conference in Copenhagen the parties of the UNFCCC meet for the last time before the Kyoto Protocol expires in 2012 and intend to hammer out a new agreement to prevent or stop climate change by reducing carbon dioxide emissions. The Kyoto Protocol requires emissions cuts from developed countries that ratified it. The US did not ratify Kyoto. China, the world’s biggest greenhouse gas emitter, is exempt from the Kyoto because it is classified as a developing nation. India is also exempt.

Even if the stated goals of the conference are all met, emissions of carbon dioxide will continue rising rapidly beyond current level. Total atmospheric CO2 is currently 386 part per million. Most future carbon emissions will not come from the currently industrialized world, but from the emerging economies, especially China, which emits 30% MORE CO2 per year than the US. China, has not promised to cut actual emissions. China and the other developing nations have promised only to cut their carbon "intensity," meaning emissions per unit of GDP.

True, China's CO2 per capita is only a quarter of the U.S. emissions rate. But warming (if caused by CO2 emissions) doesn't come from emissions per capita, it comes from total emissions. With 10% annual growth in China's economy, a 4% cut in intensity is actually a 6% annual increase in emissions. China is framing the negotiations in Copenhagen as a referendum on the developed nation’s responsibility for past emissions.
At the heart of the disputes in Copenhagen is money and economic growth and strength. The poorest nations want a large pot of money to compensate them and pay for adaption to climate change. China and India want to agree to allow their emissions to continue to grow at 6% per year and have the developed nations cut emission by significant amounts while paying retribution. This will result in crippling of the western economies as demonstrated by the experience of California, a leader in cutting greenhouse gas emissions.

California which represents 20% of the US economy has demonstrated the costs to an economy of cutting emissions with their passage of AB 32 which established a comprehensive program of regulatory and market mechanisms to achieve real, quantifiable, reductions of greenhouse gases (GHG) that were intended to be cost effective. This law established a statewide GHG emissions cap for 2020, based on 1990 emissions. California has lead the way in cap and trade legislation and serves as an example to the nation of the concerns and problems with this particular approach to attempt to prevent climate change by controlling CO2 emissions.

In a recent report by Sanjay Varshney, of California State University, Sacramento and Dennis H. Tootelian, Ph.D., Director, Center for Small Business, California State University, Sacramento, titled “Cost of AB 32 on California Small Business-Summary Report of Findings,” the financial impacts to the economy and people of California to implement California’s greenhouse gas program was outlined.

The report concluded that result would be approximately a 10% loss in total gross state output. This will translate into nearly 1.1 million lost jobs in California which represents about 6% of the state labor force. The study also found that in order to cope with the increased costs generated by the AB 32 program, consumers will be forced to cut their discretionary spending by 26.2%, to cover the increased costs of necessary goods and services. The study’s cost analysis was based on the California Air Resources Board’s (CARB) findings, which revealed significant cost increases. The study’s findings are consistent with the Peer Review analysis that CARB commissioned, which also concluded that the cost of the AB 32 Scoping Plan would be significant, and that the California Resource Board had significantly underestimated these costs.

In a global economy having the developed nations agree to cut greenhouse gases while the developing nations are allowed to continue to grow their emission will not result in any amelioration of the increase in greenhouse gases. Unfortunately, the production of CO2 will just moves out of the country along with the economic activity that is producing the emissions making the developed nations poorer. The wealth will be transferred to the developing world. We as a nation are currently spending much more money than we have; there is not enough money to pay for our current programs let alone any future programs. Strangling our economy to drastically cut emissions of CO2 will not save the earth and will become increasingly irrelevant as the Chinese and other developing economies ellipse the US.

The Global Warming Data Scandal

A large number of emails from the Climate Research Unit (CRU) at the University of East Anglia webmail server were hacked recently from computers at the University of East Anglia's Climate Research Unit in the United Kingdom. The CRU is the data repository for much of the world's climate research and is a major source for the judgments reached by the U.N.'s climate reports.

Available now for anyone to read are hundreds of emails that give the appearance of a concerted and coordinated program by the leading climatologists to make the data fit their conclusions instead of modifying their models to accurately reflect the data. In addition, they engaged in attempts to silence and discredit their critics. This form of intimidation and manipulation is despicable and serves to silence true scientific inquiry. These scientists truly believed their conclusions and were operating in a world where the ends justify the means. In trying to rush forward, these scientists have now undermined their cause and damaged their own credibility.

In the June article by Michael J Economides PhD and Xina Xie PhD “Climate Change-What Does the Research Mean?” was a brief review of the scientific literature and research on the some of the postulated impacts that global warming might have on hurricane frequency and intensity, shrinking the ice field of Mount Kilimanjaro, melting the polar ice caps and rising sea levels. Both sides of each argument appear to be documented and supported by specific scientific measurements. Such contradictory conclusions indicated that the modeling of the earth’s climate and environment needed to be significantly reexamined and tested. Now we have some inkling of why the models were not predictive. Some research suggests that climate change may have some anthropogenic (human) causes. However, human cause is not the sole component in climate change. The consequences of climate change that have been cited as reasons for government action have not so far been born out by the facts.

The CRU e-mail scandal, changes the focus of the upcoming Copenhagen climate summit next month from attempting political action during a global downturn to discussing a potential fraud. Republicans are launching investigations, and the pressure is building on Democrats to hold hearings, since climate scientists were funded with U.S. taxpayer dollars. The office of Senator Jim Inhofe the ranking republican on the Senate’s Environment and Public Works Committee sent letters to federal agencies and outside scientists warning them not to delete their own CRU-related emails and documents, which may also be subject to Freedom of Information requests.

Carol Browner, the White House Environmental Czar in trying to downplay the controversy that the hacked e-mail has raised said “… we have 2,500 of the word’s foremost scientists who are in absolute agreement that this is a real problem and that we need to do something and we need to do something as soon as possible. What am I going to do, side with the couple of naysayers out there or the 2,500 scientists? I’m sticking with the 2,500 scientists.” The US EPA has stated repeatedly in the past that it based its findings on the UN science, which is now in question.

If you will recall at the end of June Alan Carlin and John Davidson of the US EPA’s National Center for Environmental Economics detailed their concerns about the science underpinning the agency's "endangerment finding" for carbon dioxide. The two said the US EPA accepted findings reached by outside groups, including the Intergovernmental Panel on Climate Change and the U.S. Climate Change Science Program, "without a careful and critical examination of their own conclusions and documentation." They raise questions about data that EPA used to develop the proposed finding. The Washington-based Competitive Enterprise Institute posted the document on its Web site and you can find it there. Can the US EPA move forward with their “endangerment finding” based on science that now needs to be reexamined?

Sustainable Living and Your Carbon Footprint

All resources are finite. As humans our resources consist of money, time, passion and energy. In the end, where, how and when we deploy these resources will determine our comfort and happiness with our lives. While there are some basic truths, the optimal allocation of your resources is based on your values and goals. Living within your means and your ecological means would be a sustainable life. The problem is how to determine what is or should be your ecological means. In the real world of finite resources, careful consideration must be given to how and when we expend our resources.

A very popular viewpoint right now is sustainability is tied to the individual and national carbon footprint. Carbon dioxide is a by product of combustion, all combustion. Human beings exhale it at over 3 pounds per day for the average sedentary adult. Carbon dioxide is also released when we burn fossil fuels such as gas, coal or oil. In a natural carbon cycle, carbon dioxide is used by plants and trees. However, the belief is that we are producing more carbon dioxide than can be absorbed by the plants and trees currently available to use it because we are burning too much fuel. The fuel represents carbon dioxide that was trapped under the earth's surface for millions of years. It is believed that the human population by breathing and burning fuels has caused the increase in the carbon dioxide content in the atmosphere from approximately 250 parts per million (0.025%) to 386 part per million (0.039%) in the past 100 years.

The popular belief is that this increase in carbon dioxide in the atmosphere has caused the under 1 degree Fahrenheit increase in average global temperature since 1900. (It is to be noted that that increase was 1.3 degrees Fahrenheit when measured in 1998 and 2005, but the average temperature has fallen somewhat since then.) This theory further postulates that the overall temperature of the planet is increasing (global warming) at a faster rate now and causing the earth’s climate to change in unpredictable ways (from floods and hurricanes to heat waves and droughts). The strongest adherents to this belief, hold that the burning of fossil fuels must be reduced immediately. The goal of Cap and Trade legislation is to reduce the amount of carbon dioxide released into the atmosphere by capping the amount of carbon dioxide that can be emitted by all industry, reducing that amount each year and allowing the industrial sector to reduce their releases off the base and sell each other release permits, thus reducing the burning of fuels. The belief is that if we could reduce our carbon dioxide emissions enough we could stop the climate of the earth from changing. The models predicting this are at the earliest stages of development because our knowledge of our environment is really limited, hard data points especially for the oceans has been limited in quantity and duration.

There is a price to reducing our emissions of carbon dioxide and we need to the costs and benefits in terms of comforts, services, possessions and environmental balance before we act. It is likely very important to reduce the burning or fossil fuels and increase the planting of trees; however, we should approach this in the most cost effective manner. It is not clear how regulations to limit point source carbon dioxide release, to reduce our carbon footprint (reduce our burning of fuels) will of its self make living more sustainable. Certainly, the current fuel usage in the United States will decrease and may make the climate of the earth more stable if carbon dioxide emissions do not increase else where in the world. In addition, as the previous review of global warming research showed some research suggests that climate change may have components that are other than of anthropogenic (human) causes. Certainly, anthropogenic activity has been a contributor to the 136 parts per million (0.014%) increase in carbon dioxide in the atmosphere over the past 109 years. The exact relationship of increases and decreases greenhouse gasses to climate change is unknown, if mankind were suddenly wiped off the face of the earth as in Alan Wisman’s February 2005 essay “Earth Without People”, climate change would not stop. The climate is neither static nor fixed, but without mankind it would certainly be different.

Building a bureaucracy to measure, control and tax carbon dioxide will have unintended consequences and consume resources and energy. There is real benefit to increasing the efficiency in energy use by selecting technologies, like hybrid or dimpled cars, ground source heat exchangers, solar panels or wind turbines. There is tremendous benefit to improving insulation in buildings and homes, passive use of solar and wind. Changes in how we live; urban dweller, rural dweller, suburban dweller; whether or not we commute or if we commute using public or private transportation, alone or in a groups, our purchasing and activity choices all will impact our “carbon footprint.” However, this approach only looks at one aspect of the carbon cycle and fails to identify what is a carbon budget if such a thing exists, it does not consider the other resources of the earth. Legislating the measurement of carbon dioxide release in all things will cost money and resources and of itself will not make our lives more sustainable. Limiting carbon dioxide emission by industry might reduce the use of energy in the United States by industry. Energy will become more expensive, a reduction in use will be achieved by a rationing of energy and products by price. A greater allocation of my resources to heating, electricity and food will make me poorer though not necessarily more sustainable in my living on this earth. Too many important aspects of sustainable life are missing from this viewpoint.

The Costs of Cap and Trade in California

In a recent report by Sanjay Varshney, Dean of the College of Business Administration, California State University, Sacramento and Dennis H. Tootelian, Ph.D., Professor of Marketing and Director, Center for Small Business, California State University, Sacramento titled “Cost of AB 32 on California Small Business-Summary Report of Findings," the financial impacts to the economy and people of California to implement California’s greenhouse gas program was outlined. AB 32 establishes a comprehensive program of regulatory and market mechanisms to achieve real, quantifiable, reductions of greenhouse gases (GHG) that were intended to be cost effective. This law establishes a statewide GHG emissions cap for 2020, based on 1990 emissions. California has lead the way in cap and trade legislation and serves as an example to the nation of the concerns and problems with this particular approach to attempt to prevent climate change by controlling CO2 emissions.

The report concluded that when the program is fully implemented, the average annual loss in gross state output from small businesses alone would be $182.6 billion, approximately a 10% loss in total gross state output. This will translate into nearly 1.1 million lost jobs in California. Lost labor income is estimated to be $76.8 billion, with nearly $5.8 billion lost in indirect taxes. The study also found that in order to cope with the increased costs generated by the AB 32 program, consumers will be forced to cut their discretionary spending by 26.2%. The study’s cost analysis was based on the California Air Resources Board’s (CARB) findings, which revealed significant cost increases. The study’s findings are consistent with the Peer Review analysis that CARB commissioned, which also concluded that the cost of the AB 32 Scoping Plan would be significant, and that the California Resource Board had significantly underestimated these costs. Unemployment in California was at 12.2% in August which translates to 2,248,000 people before the implementation of AB 32. If another 1,100,000 people are added to that total unemployment would reach 3,348,000 or 18.3%. In addition, there are both severe budget issues as well as water supply problems.

When fully implemented AB 32 is not going to stop climate change, though it may contribute to an amelioration of the increase in greenhouse gases. Even this modest reduction in CO2 emissions will not be met if the production of CO2 just moves out of state along with the economic activity that is producing the emissions. It is a fairly well known fact that greenhouse gas production is reduced in recessions, and I expect a wonderful report released from the EPA noting the recent reduction in greenhouse gas emissions. As the previous review of global warming research showed some research suggests that climate change may have some anthropogenic causes, but other research does not support that theory. Certainly, anthropogenic activity has contributed 4% of the 386 parts per million (0.039%) carbon dioxide in the atmosphere. If you recall, The "American Clean Energy and Security Act” is HR 2454, also know as the Waxman-Markley energy bill, or simply as "ACES" was passed by the House in June and models itself on the California plan. The bill includes a cap-and-trade global warming reduction plan designed to reduce carbon dioxide emissions in the U.S. No doubt Representative Waxman wishes to share the California economic experience of AB 32 with America and ensure we all reduce our greenhouse gas emissions, economic activity and discretionary spending all at the same time. Is this really how we want to spend the limited resource at our command?

Cap and Trade

The "American Clean Energy and Security Act” is HR 2454, also know as the Waxman-Markley energy bill, or simply as "ACES" was passed by the House on Friday (219-212). The bill includes a cap-and-trade global warming reduction plan designed to reduce carbon dioxide emissions in the U.S. The current goal is a reduction of 17% by 2020 and this will be accomplished by requiring “polluters” to buy permits to emit a certain amount of carbon dioxide. The bill sets an overall cap on such permits but allows them to be sold. The cap grows tighter over time reducing what can be emitted in total and hopefully pushing up emissions prices and prodding industry to release less carbon dioxide by utilizing cleaner energy sources or increasing efficiency of the existing ones. Other provisions include new renewable energy requirements for utilities, studies and incentives for carbon capture technologies, energy efficiency incentives and penalties for homes and buildings, and grants for green jobs.

A cap and trade system will cost the American consumer more for power, transportation and many goods. There will be profits to be made in a cap and trade system, which will hold the profits and who will bear the costs remains to be seen. It is anticipated that there would be a net cost of the program despite the creation of some green jobs and the creation of wealth for market makers. What are we willing to give up in terms of comforts, services, possessions and other goals to accommodate a targeted reduction in carbon dioxide release? There is a price to reduce our emissions of greenhouse gases. Hopefully, there will be benefits and the unintended consequences will not overwhelm the goals of the bill.

On Friday, June 25, 2009 in an opinion piece in the Wall Street Journal, Kimberley A. Strassel reported that Australia failed to pass their “Cap and Trade” bill and that the number of skeptics is swelling. It is unclear if they are skeptics on whether the earth is warming, the modeling of the earth’s climate and environment, or skeptics about the postulated impacts that global warming might have. As the previous review of global warming research showed some research suggests that climate change may have some anthropogenic (human) causes, but other research does not support that theory. Certainly, anthropogenic activity has contributed 4% of the 386 parts per million (0.039%) carbon dioxide in the atmosphere. However, the consequences of climate change that have been cited as reasons for government action are not born out by the facts.

Reducing the Carbon Footprint with Cap and Trade Legislation

The "American Clean Energy and Security Act" is HR 2454, it is also known as the Waxman-Markley energy bill, or simply as "ACES." The Bill includes a cap-and-trade global warming reduction plan designed to reduce greenhouse gas emissions in the U.S. The current goal is a reduction of 17% by 2020. Other provisions include new renewable energy requirements for utilities, studies and incentives for carbon capture technologies, energy efficiency incentives for home and buildings, and grants for green jobs. The bill is expected to be on the House floor in June.

The Congressional Budget Office analysis estimated that price increases associated with a 15% cut in carbon dioxide emissions would cost the average U.S. household $1,600.00 a year. This weekend the World Business Summit on Climate Change will meet in Copenhagen. Bjorn Lomborg, in his opinion piece in the WSJ discusses the cost of green jobs in Spain as well as his opinion of the "Climate-Industrial Complex." (A lovely turn of phrase.) It is difficult to determine the cost benefit analysis of ACES since the exact relationship of man made greenhouse gas reduction and climate change is not known. It is evident, however; that reducing greenhouse gas emissions or any other custodial care of our planet takes resources: money, time, energy and passion. Spend to care for the earth and its atmosphere and there will be less for other things. We as a whole will be poorer, but hopefully with a more sustainable earth. We need to spend wisely to get the most effect from our resources and efforts.

A cap and trade system will cost the American consumer more for power, transportation and many goods. There will be profits to be made in a cap and trade system, who will hold the profits and who will bear the costs remains to be seen. Hopefully, the unintended consequences will not overwhelm the goals of the bill.

I do see the first glimmers of green jobs. This month in CEP (Chemical Engineering Progress) was a very helpful and inspiring article by Jeffrey H. Siegell titled "Improve Your Air Emissions Estimates." With the apparent goal to properly estimate the baseline, Mr. Siegell identified several problem areas in typical reporting estimates. I love system mass balance, waste stream sampling, release modeling-all of it. Though I have not modeled a processing plant since my US EPA and DuPont days, I think there will be great opportunities in systems emissions modeling.