Carbon Taxes on the Move: A U.S. Step Back and Canadian Leaps Forward

Up this morning atop MIT Technology Review:

The victory of climate change-denying Republican candidate Donald Trump was one of two big setbacks for U.S. climate policy earlier this month. The other was the resounding defeat of Washington State’s Initiative 732, which sought to prove that using fees on carbon emissions to cut existing taxes could provide bipartisan appeal for what economists consider to be the most efficient mechanism to cut greenhouse gas emissions: carbon taxes.

Washington State rejected the idea of a carbon tax by 59 percent to 41. In sharp contrast, just across the world’s longest border, carbon taxes are attracting politically diverse support. Four-fifths of Canadians will live in provinces with such taxes in 2017, and in 2018 all Canadians could be paying a carbon tax…

For the story see “Canada Moves Ahead on Carbon Taxes, Leaving the U.S. Behind

A few caveats and details left on the cutting room floor:

  • The carbon trading scheme operated by California, Quebec and Ontario has a rising floor price for credits, currently set at roughly C$15, that makes it act like a carbon tax at times (like now) of soft demand for tradable credits.
  • These states and provinces are — like carbon tax innovator British Columbia — coupling their carbon pricing schemes with regulations such as restrictions on coal-fired power that drive more reductions and do so at lower political risk. For more on this (and more) see my carbon pricing explainer in Ensia from this summer.
  • Canada’s promised emissions reduction for 2030 fails, like most national commitments made at last year’s Paris climate talks, to put global emissions on a trajectory to meet the Paris Agreement’s fundamental goal: holding global warming to well below 2 degrees C.

Carbon Polluters Fund XPrize to Repurpose Their Emissions

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Unique plant in San Antonio converts CO2 to minerals and chemicals. Photo: Skyonic

XPRIZE—the organization behind grand technology challenges such as the race to space won in 2004 by SpaceShipOne and current contests to land a Lunar rover and a Star Trek-style medical tricorder—unveiled a competition today that tackles a more mundane yet critical challenge: transforming carbon dioxide emissions from power plants into saleable products to help slow or reverse climate change. The competition’s $20 million kitty has been raised from major carbon emitters: a coalition of oil and gas producers producing high-carbon oil from Alberta’s oilsands, and New Jersey-based electric utility NRG Energy. Continue reading

Obama and Xi Breathe New Qi into Global Climate Talks

Context is everything in understanding the U.S.-China climate deal struck in Beijing by U.S. President Barack Obama and Chinese President Xi Jinping last week. The deal’s ambitions may fall short of what climate scientists called for in the latest entreaty from the Intergovernmental Panel on Climate Change, but its realpolitik is important.

Obama and Xi’s accord sets a new target for reductions in U.S. greenhouse gas emissions: 26-28 percent below 2005 levels by 2025. And for the first time sets a deadline for China’s rising GHGs to peak: 2030. This is potentially strong medicine for cooperation, when seen in the context of recent disappointments for global climate policy. Continue reading

How Canada Should Return Obama’s Oil Pipeline Punt

Late last week President Barack Obama deferred consideration of the Keystone XL oil pipeline, designed to ship Alberta petroleum to the Gulf Coast, until after next year’s U.S. elections. Obama’s move immediately sparked vows in Canada to redirect crude exports to Asian markets less angst-ridden by the environmental impacts associated with tapping Alberta’s tough, tarry petroleum. A smarter strategy would be to reduce those impacts, starting with the black mark that brought Keystone XL to national attention: oil sands crude’s bloated carbon footprint. Continue reading

Cap and Trade Hopefulness @ Kiplinger Energy Confab

Pragmatism has been a nearly unanimous message at the McCormick Energy Conference, a gathering for working reporters this week organized by Ohio State University’s Kiplinger Program in Public Affairs Journalism (and largely funded by the McCormick Foundation). We need a price on carbon to drive the rethinking of energy in the U.S., and the cap-and-trade system built into energy legislation under consideration in Congress is the best hope to get that price in place.

At least that’s what the speakers argued. I remain concerned by the threat of enduring low carbon prices. Continue reading

The Sahara Reveals its Carbon Capture Success

The market’s blasé reaction to the oil production cut ordered by OPEC ministers meeting in Algeria this week–bad news for greentech investors–topped the Wall Street Journal’s green business blog this week. The more lasting news from the meeting, however, may be the conference sideshow that took journalists to one of the world’s largest carbon capture and storage operations: Algeria’s In Salah natural gas operation, which stores about 800,000 tons of carbon dioxide per year, 1.2 miles below ground.

In Salah, hidden deep in the Sahara desert some 700 miles south of Algiers, is operated by oil and gas giant BP, Norway’s Statoil, and Algerian state oil and gas firm Sonatrach. The field’s gas is about 7% CO2, which must be cut to 2% or less before it can be shipped on to European markets. In Salah cuts the CO2 to 0.3% and, instead of simply venting the removed CO2 as many gas operations do, pumps it into an aquifer below the gas reservoir. Given the scale of the gas flow, it’s the environmental equivalent of taking 200,000 cars off the road.

The reporters visiting In Salah this week reported that the CO2 seems to be staying put, as is the case with the other two large-scale CCS operations in operation — the natural gas-stripping operation at Statoil’s Sleipner field in the North Sea, and the Dakota Gasification coal-to-synthetic natural gas operation. The Associated Press quoted Mohamed Keddan, the station manager, expressing confidence that the layer of thick shale sealing the In Salah reservoir would hold the CO2 for good: “If it contained gas for millions of years without leakage, why would it start leaking now?” said Keddan, according to the AP.

Better still, the cost of storing the CO2 is relatively low. Business Week reported that the $100 million CCS operation was just 2.5% of the overall $4 billion cost of the In Salah gas production complex. That puts the cost of sequestering the CO2 at about $14/ton.

At that price BP, Statoil and Sonatrach could eventually make money on the stored CO2 by selling carbon credits earned at In Salah to other polluters, such as coal-fired utilities, facing steeper CCS costs. That is, if future treaties governing greenhouse gas emissions enable CCS operations in developing countries such as Algeria to earn carbon credits — a concept rejected for the time being by international climate negotiators meeting in Poland last week — which could be revived by the time a follow-on to the Kyoto protocol is to be hammered out in Copenhagen twelve months from now.

So, given its success and low cost, why do we hear so little about In Salah, whereas the Dakota Gasification and Sleipner CCS operations enjoy pinup status? Business Week’s correspondent may have hit on the answer, noting that about 2,000 people work at In Salah if one includes the “military units intended to deter attacks by Islamic militants, who are still a serious threat in Algeria.”

Sometimes, and some places, it pays to keep your head down.

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Should Carbon Capture Capture Carbon Credits?

Click image to see IEA's Nobuo Tanaka zeroing in on CCS at Poznan

Click image to see IEA's Tanaka on CCS at Poznan

International climate change negotiators gathered in Poznan, Poland to draft a follow-on to the Kyoto protocol appear to have rejected the talks’ most controversial proposal: giving a big boost to carbon capture and storage (CCS), whereby carbon dioxide produced by coal-fired power plants is trapped deep underground. The proposal was to award carbon credits to developing countries that installed CCS equipment — credits that they could then sell to industrialized nations or companies — but this morning opponents successfully tabled the proposal until next June, according to climate policy blog Climatico.

Countries pushing the credits-for-CCS proposal included Japan, Norway, Australia and Canada. All are major coal consumers eyeing CCS to meet their own greenhouse gas reduction targets and/or oil and gas producers that could dual-purpose captured CO2 for enhanced oil recovery. Japan and Canada also figure among the nations furthest behind in meeting emissions cuts mandated by the Kyoto protocol, and could be big buyers of CCS-generated carbon credits.

International Energy Agency executive director Nobuo Tanaka had also added his support (see video). Tanaka calls credits a means of accelerating development of capture and sequestration technologies, which the IEA sees as crucial to control emissions in countries such as China that will remain heavily dependent on coal for decades to come. “These technologies need all the financial help they can get,” says Tanaka.

But the idea remained red-hot among the climate activists swarming Poznan this week as it unites a controversial technology with an already controversial program. They see carbon sequestration as a potentially risky technology that could delay the transition from coal to solar, wind and other forms of renewable energy. Meanwhile the UN’s Clean Development Mechanism (CDM), which manages the awarding of carbon credits to developing nations, attracts scorn from those who see carbon trading as a numbers game by which countries will avoid making real emissions cuts.

Many question whether emissions cuts certified for millions of dollars worth of credits under the CDM wouldn’t have occurred anyway — whether they offer ‘additionality’ in the UN lingo flowing in Poland this week.

The UN acknowledged possible problems after spot-checking a leading CDM certification firm and identifying a series of “non-conformities” in its auditing practices. The firm, DNV Certification AS, was suspended but insists it is addressing the concerns identified to regain its accreditation.

Poznan’s ministerial-level talks start tomorrow and should wrap up Friday. Unless they pop CCS back onto the agenda the credits proposal will be stalled until next June’s followup meeting in Bonn. That meeting is a prelude to the big game that will define global energy policy: final negotiations and, if all goes as planned, the signing of a ‘Kyoto II’ treaty in Copenhagen next December.

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