The New Carbon Cycle

Should Trees Be Industry's Best Friends in a New Climate Change Regime?

The suggestion that trees should be industry's best friends under a new climate change or cap and trade program being considered by Congress, seems absurd at first.  Forests do not initially appear to most people to be a source of the problem when it comes to anthropogenic greenhouse gas emissions.  We generally think of planting trees as a local, individualized step to attempt to remove emissions from the atmosphere.  Often we think of tree planting as a symbolic rather than a substantive or significant action to reduce climate change.  Forests, however, are in fact a significant storing house for carbon and when burned, release a large amount of carbon dioxide and other greenhouse gases into the atmosphere. 

Forests provide the low-cost approach for the first tranche in anthropogenic greenhouse gas reductions as we seek the "low hanging fruit" of these reductions.  Forest preservation and regrowth provide the potential for the larger-volume and lower-cost source of greenhouse gas reductions and offsets for greenhouse gas emissions.  As carbon capture and storage by which CO2 from coal-fired power plants and other sources is injected underground for long-term storage takes several years to bring on line, Reduced Emission from Deforestation and Degradation (REDD) can serve to make a significant step toward emissions to be achieved by 2020 being discussed in Congress for a US climate change and cap and trade program, and in terms of international negotiations for a tray to follow the Kyoto Protocol.

The size of the emissions from forest destruction usually is startling.  It is in gross and relative terms rather astounding.  The destruction of forests actually accounts for somewhere between 17 and 22 percent of human greenhouse gas emissions.    Thus, controlling the greenhouse gas emissions from deforestation is critical to any global plan to reduce climate change, particularly in the first few years as costlier reductions can be developed over the next decade, and perhaps ways to reduce those costs.

A second aspect of deforestation relates to the areas that have already been lost or significantly degraded.  For example, farmland that was previously what we call “primary forest” or forest that existed in its natural state prior to being deforested or degraded.   In these areas, opportunities exist for reforesting the land through tree planting.  Two types of reforestation are possible.  First, the forest can be replanted with native species that would have been present prior to the destruction of the forests.  The second involves the planting of non-native species or otherwise planting for the purpose of harvesting some or all of the trees.  The second approach has the goal of using trees to absorb or sequester CO2 , and then using the harvested wood in ways that maintain the carbon in building or other products for a long time.

In understanding the challenges of private development of forest carbon projects, it is important to comprehend the issues of these projects.  First let us consider avoided deforestation projects.  One of the first issues is simply measuring the amount of carbon in the forests that would be released if destroyed.  There are certain protocols that can be used now developed by the Voluntary Carbon Standard (VCS), which has become the main standard setting organization for forest-related offset projects. 

Another issue is the question of permanence.  For growing forests a significant risk is permanence, that is, to what extent will the forest will be preserved over a very long period, as opposed to short term preservation with destruction to follow.  If the forest is logged or it burns or dies from disease, then the carbon sequestered in the trees, plant life, and soil, will be largely emitted to the atmosphere and future sequestration of carbon dioxide will not occur.  The carbon credits that are generated would be without substance if after five years the forest is destroyed.  Forestry projects are largely long-term projects, lasting 20 to 100 years in most cases.  Parties must show the registration entity and the verifiers that review the Project Design Document that the forest will not be cut down, burned, or harvested within the relevant project period.  One approach used by the VCS to address permanence concerns is to hold back a percentage of the verified credits and to release them back over time, say the 30-year life of the project, to the project developer.

One of the other major concern for forest projects is leakage.  For forest projects, leakage involves the question of whether the reduction in deforestation or degradation in one are simply moves that activity to a nearby property or a significant distance away.  As an illustration, burning forests for soy bean farming, which is such a significant problem in Brazil, moves from one part of a state in a country where actions have been taken to stop such burning to another area in that state or to an altogether different state.  Measuring and addressing these issues is required by the VCS.

Though the real game right now for REDD and reforestation projects lies with the VCS and voluntary carbon credits, it appears fairly clear that forest carbon projects will play a role and be large part of future US federal legislation and already has been accepted as an offset mechanisms in the California climate change regulatory system and will likely be part of the three multi-state climate change regulatory programs that are evolving and will go into effect even if Congress does not act to pass climate change legislation.  The discussions at the international level appear to be moving toward accepting forest-based offset credits.

The greenhouse gas emissions from forest destruction are so massive, that we cannot avoid taking on the need to reduce this destruction dramatically.  More and more major greenhouse gas emitters in the United States are beginning to review this opportunity and to look at investing in project-based REDD opportunities.  The thinking is that investment in a project or entering into emission reduction purchase agreements that allow a company to have a right to purchase REDD credits once approved and verified, provides a good hedging mechanism for future offset prices.  More and more of our clients are looking at both domestic and international forest carbon projects either as project developers or as investors to ensure that they take advantage of the opportunities that forest carbon projects provide.  Ironically, utilities and oil and gas companies may find that trees are truly their best friends when it comes to addressing the first few years of a cap and trade system in the United States.

Article Published in Fuel Magazine Discusses How Carbon Credits Can Finance Use of Flared Gas

In the July 2008 edition of FUEL magazine I published an article discussing how carbon credits can serve to help finance local uses of natural gas that is otherwise flared or vented.  The article is entitled “Carbon Credits: New Uses for Financing Natural Gas.” 

In the article, it is explained that “The World Bank has formed a group that is working to reduce natural gas venting or flaring, based in part on its recent report estimating global vented or flared natural gas reaches about 14 billion cubic feet per day (Bcf/d). The burning of the natural gas reportedly produces 400 million tons a year of carbon dioxide, which GHG [greenhouse gases] scientists blame for contributing to climate change.”

The article also discusses the fact that  “one of the means by which natural gas is captured and moved to markets such as the United States is through liquid natural gas (LNG) projects.”  However, “often there is no perceived market for this gas, and no known way of financing the transport of it to market if identified.” The article explains how GHG emission reductions can produce carbon credits, which can then be sold and serve as a basis for helping finance more local markets for flared natural gas.  Deatherage discusses carbon trading, “pollution rights,” cap-and-trade systems, and other market aspects of climate change. I conclude that “emission markets encourage capital to reduce GHGs and provide economic benefit to developing countries to be invested in these projects as they find substantial return on their investments.  Carbon trading may prove to be a key element to many of these projects, including those to reduce the venting and flaring of natural gas.”

To view the full article, please visit www.hartfuel.com.

Programs at Upcoming World Petroleum Conference Show Importance of Climate Change, Carbon Trading, and Sustainable Development for Global Oil and Gas Industry

The World Petroleum Congress will get underway next week in Madrid, and will include many panels on climate change, carbon trading, and sustainable development. The official theme for the upcoming WPC is “A World in Transition: Delivering Energy for Sustainable Growth,” reflecting the ongoing concerns of the global industry.

I am fortunate to be speaking at the WPC with a distinguished panel on carbon trading issues. I will be speaking on Monetizing Reductions in Greenhouse Gas Emissions:  Opportunities in Carbon Credit Markets.  The other panelists and their topics are as follows:  Ignacio Bachiller, CDM Projects Portfolios: the Economics; Pat Concessi, The Benefits and Challenges of Linking GHG Emissions Trading Schemes; Paula Coussy, Implications on the European Union Emission Trading Scheme (EU-ETS) of Capture Transport and Geological Storage Projects: Dr. Jagdish P. N. Giri, Economic Modeling to identify Emissions? Reduction Opportunities at Carbon Energy Business During Fossil Energy Lead Time? Aligning the Value Chain of CDM & JI on Long Term Emissions' Trading and Carbon Energy Management in the Asian Context.

The potential for the generation and trading of carbon credits to become a significant part of certain oil and gas development projects is developing and will only increase as the opportunities for reducing greenhouse gas emissions from oil and gas exploration and production as well as transportation are identified and pursued. 

Carbon capture and sequestration or storage present significant opportunities.  A specific panel on carbon capture and storage will explore these issues at the WPC. 

A variety of other projects will address sustainable development and the role of this concept in international oil and gas development.

The trends of ever-growing expectations on oil and gas companies to address climate change, sustainable development , ecosystem and habitat preservations, and other environmental issues presents challenges to these companies.  Greenhouse gas reductions and monetizing those reductions in the form of carbon credits may actually prove to be a significant opportunity in the changing global market that is tending to evolve toward a carbon-constrained economy.

Dupont and Honeywell Projects Demonstrate Sustainable Biofuels Are Possible

Despite the controversy reflected in press reports, the biofuels industry is not going away and is not the root of all food price increases.  In demonstration of the future of the industry, two significant biofuels development projects were announced by major corporations.  First, DuPont and Danish group Danisco announced the creation of a global company to produce cellulosic ethanol, which is derived from non-food sources.  Second, Honeywell announced a partnership with Airbus, JetBlue Airways, and International Aero Engines to develop biofuels for commercial aircraft use.  Thus, the biofuels industry will continue to be a significant business based on development of new technologies and processes to develop biofuels with far more energy potential than is used to produce them and without using food crops as a raw material.

DuPont and Danisco division Genecor are forming a joint venture to create ethanol from corn stalks and sugarcane waste. Future sources may include wheat straw and other non-food crops or biomass. The new entity will receive an initial three-year investment of $140 million. The companies estimate the global market for the product at $75 billion. The new company, DuPont Danisco Cellulosic Ethanol, plans to construct and begin operating its first plant in the United States by 2009.

The Honeywell, Airbus, Jet Blue, and International Aero Engines venture will focus on developing commercial aviation fuels from algae and jatropha.  The venture aims to capitalize on existing technology being developed by Honeywell's subsidiary UOP that converts natural oils and greases into military jet fuel as part of a project funded by the U.S. Defense Advanced Research Projects Agency.

These ventures demonstrate that biofuels will likely produce a significant global industry.  The key to the business is developing a sustainable means of producing biofuels by focusing on use of raw material that is not used for food and processes that are able to generate fuels with sufficient net energy and environmental benefits.

Norway Gets Saudi Arabia and Seeks Other Countries Support of Carbon Capture and Storage as a Carbon Credit Project

Saudi Arabia and Norway have agreed to work together to obtain the approval of the Clean Development Mechanism(CDM) Executive Board for carbon capture and storage (CCS).   CCS is a process by which carbon dioxide (CO2) I captured from industrial processes, such as coal-fired powered plants or natural gas processing plants, and then injecting it far below the ground in oil and gas formations or in deep saline aquifers.  The technology for injecting CO2 in the ground has been used for 30 or more years for enhance oil and gas recovery.  The capture of CO2 from industrial processes requires technology still being developed.

Norway's goal is to have a baseline and monitoring methodology approved for CCS so that projects can be approved under the CDM of the Kyoto Protocol.  By allowing for these projects reduce greenhouse gas emissions in developing countries and to have carbon credits or Certified Emission Reductions to be issued by the Executive Board, capital could be mobilized to reduce greenhouse gas emissions.

A U.N. climate conference in Bali, Indonesia, in December postponed a decision on inclusion in the CDM scheme pending further talks this year to clarify safety, legal and commercial viability issues. 

Norway is trying to convince as many countries as possible to lobby for this effort.   Norway's oil and gas company StatoilHydro has been injecting CO2  from the natural gas stream below the seabed at its Sleipner field in the North Sea since 1996.  The Norwegian government is promoting CCS projects at gas-fired power plants at the Mongstad refinery and the Kaarstoe gas-processing and export plant on Norway's west coast.

If CCS were approved under the CDM, it would provide a means of contributing to the capital needed to implement this technology, but it would the sale of carbon credits probably would not be sufficient to meet the costs per ton of CO2 sequestered to pay for construction and operating CCS projects. 

Norwegian company Aker ASA and engineering group Aker Kvaerner believe that CCS projects could be a $1.5 trillion to $2.0 trillion per year business as important globally as the construction of oil platforms. 

The Aker prediction may be overly bullish, but the capture and storage of  CO2 will be a necessary part of any climate change solution.  Approving CCS as a technology or process that may generate carbon credits under the CDM would be a significant step to creating incentives to finance CCS.  The Lieberman-Warner Climate Security Act, that was voted out of the Senate Environment and Public Works Committee, contains provisions that would allow CCS projects to generate carbon credits under that bill’s proposed greenhouse gas cap-and-trade system.  In a prior blog, I had suggested the sale of  government “Carbon Bonds” to provide low interest loans to finance CCS projects to allow the use of coal to produce low polluting energy in the United States.  As we look to the future, finding ways to create sufficient incentives to generate sufficient capital to finance CCS will be critical as this process will be a necessary part of any future US climate change legislation and international program to significantly reduce greenhouse gas emissions.

New Carbon Finance Study Predicts One Trillion Dollar US Carbon Market

Various stories have arisen on the Internet regarding a study released on February 14, 2008 by New Carbon Finance, a division of New Energy Finance, a provider of information and analysis on renewable energy and low-carbon industries.  The study reportedly predicts that the USlegislation now being considered that limits carbon trading to the US market, would create a $1 trillion US carbon market by 2020. However, the exact nature of such market is not clear.  It is not clear whether the study predicts an annual market, which would seem overstated, or a cumulative market over 10 years, or on average $100 billion per year, which seems very possible.  The study predicts the US market would be twice the size of the EU market.

Major investments in the US would occur in clean technology, accoding to the study. These projects would include renewable energy, energy efficiency, and greenhouse gas mitigation projects.

At present there are about thirteen bills that have been filed in the Congress, in both the House of Representatives and the Senate.  Almost all are based on a cap-and-trade program.  Thus, it appears if any bill is actually passed, a market-based program to cap greenhouse gas emissions and to allow the selling of carbon allowances and offsets will be the system that is implemented in the US to reduce greenhouse gas emissions and to address climate change.

The study by New Carbon Finance reportedly concludes that an economy-wide cap-and-trade system will be implemented within four to five years.  An economy-wide greenhouse gas emissions reporting system has already been passed in the December Omnibus Spending bill and the President has signed it into law.  The US Environmental Protection Agency is already working on the implementing regulations.  The law requires EPA to propose draft reporting regulations by September 2008 and final regulations by September 2009.  The reporting regulations form the foundation of any future greenhouse gas emission law.

The three currently viable presidential candidates from both parties have committed to controlling greenhouse gases and to passing climate change legislation.  John McCain, the Republican candidate, co-authored a bill with Joe Lieberman restricting greenhouse gas emissions and creating a cap-and-trade system.

"Even if the current Bush administration rejects all of these bills, the next president will be less inclined to use a veto. All leading 2008 presidential candidates have endorsed the need for action and some have already supported significant emissions reductions," said Michael Liebreich, CEO of New Energy Finance.

The US legislation that has made it the farthest in the legislative process, the Lieberman-Warner Climate Security Act, which was passed out of the Senate Environment and Public Works Committee, would impose restrictions on the use of international credits under any post-Kyoto agreement, such as the Certified Emission Reductions generated through the Clean Development Mechanism.  The CDM program allows the use of cheaper offset credits generated through less expensive greenhouse gas reduction projects in developing countries.

"This will have two important consequences. For the US market, it will rule out a significant source of inexpensive abatement, pushing the carbon price to unnecessarily high levels. It will also remove most US demand for international credits, hampering the growth of projects and technology transfer to developing countries," said Milo Sjardin, who heads the North American division of New Carbon Finance.

The press release on New Carbon Finance’s website also states that the study predicts that, if US legislation does not allow domestic companies to purchase cheaper international carbon credits from projects in developing countries, the price of carbon will rise to $35 to $40 per metric tonne of carbon dioxide equivalent by 2015. At this price for carbon, the study predicts that the prices of electricity would rise by 20%, gasoline by 12%, and natural gas by 10%.  Other prices for goods in the economy would also increase as a result of power and fuel price increases. 

On the other hand, if the legislation allows the purchase of offsets from projects in the developing world, the price of carbon would be around $15 to $20.  At a $15 per ton of CO2 equivalent, the effect on the economy would be reduced.  The study predicts the price of electricity would rise by 7%, the price of gasoline 4% or about 13 cents a gallon, and natural gas would rise by 5%.  The resulting economy-wide price increases would be less as well.

The real focus of the study appears to be on the differential in the price of carbon and the impact on the economy if greenhouse gas emitters are not allowed to purchase international carbon credits to offset their emissions. Under this analysis, any US legislation should permit international carbon trading to offset US greenhouse emissions to lessen the impact of greenhouse gas limitations on the US economy.

The Interstate Natural Gas Association of America Position on Greenhouse Gas Emission Regulation

The Interstate Natural Gas Association of America (INGAA) is a non-profit trade association representing virtually all interstate natural gas transmission pipeline companies operating in the United States and interprovincial pipelines operating in Canada. INGAA’s U.S. members operate over 200,000 miles of pipeline and related facilities that account for over 90 percent of all natural gas transported and sold in interstate commerce.  The INGAA has issued its view on the US adopting climate change legislation and caps on greenhouse gas emissions.  Although this position is several months old, I thought it would be of interest to consider their position.

Highlights of INGAA’s response to the House Energy and Commerce Committee’s questions follow

INGAA supports an economy-wide program that recognizes and accommodates the unique features of different sectors in the U.S. energy economy (i.e. differences in fuels and their end-use applications). An appropriate policy approach may involve different thresholds, regulatory mechanisms and possibly schedules for each sector based on its unique attributes.

• Given the global nature of the climate issue, and interstate commerce considerations, INGAA – which represents companies with linear, interstate pipeline assets – strongly prefers a consistent national greenhouse gas (GHG) reduction program over competing, potentially conflicting and inefficient state and regional initiatives currently taking form.
• INGAA urges lawmakers to design a program that will slow, stop, and then reduce GHG emissions gradually.  This would allow time for the economy to develop and deploy efficient, cost-effective climate change mitigation technologies and replace capital intensive energy infrastructure and equipment in an orderly manner.
• CO2 from fossil fuel combustion accounts for approximately 81 percent of total U.S. GHG emissions.  INGAA advocates, as a starting point, the regulation of CO2 from fossil fuels at the point of combustion.  The reduction of emissions from other greenhouse gases should be managed through an offset program.  Other sectors and gases could be brought into the program as it matures.
• The need for a safety valve will be determined by the key program design features, most notably timing, targets, banking and borrowing of allowances and the availability of low-cost offsets.
• Congress should determine the need and basis for allowance allocation in a cap and trade program.  INGAA supports 100 percent free allocation to sectors that are subject to comprehensive economic regulation.  Still, if such regulated sectors must pay for allowances, they also must have a guaranteed ability to pass through costs to the end user (consumer).
• Offsets are an important tool to encourage emission reductions not otherwise covered under a conventional cap and trade system.  Such reductions would provide immediate, low-cost options that would help control program compliance costs.  There should be no limit to the amount of offsets one can generate so long as they are real, quantified, verified, surplus, and have clear ownership.
• Early reduction credits should be available to industries, like the natural gas pipeline industry, that have already made significant GHG reductions.
• The U.S. can promote international participation in GHG reductions by taking a leadership role in the development of an efficient, achievable and cost-effective GHG reduction program.  U.S. innovation and the development of advanced technologies will not only contribute to global emissions reduction but will also help to create business opportunities for U.S. firms.
• A cap-and-trade program alone will not lead to new technology development.  Funds raised through a regulatory GHG program should support R&D for a variety of new and advanced technologies to provide low carbon energy services, increase efficiency of end-use consumption and sequester CO2.  Such a program should not pick winners based on current expectations but should fund the development of all feasible approaches to low carbon infrastructure, including: natural gas supply and production technologies, efficient natural gas-fired electric generation, mechanical drive and gas compression technologies, and efficient end-use gas technologies.

Based on this position statement and many others from industrial groups, most potentially regulated industries appear to favor carbon trading or the ability to offset emissions using greenhouse gas emission reductions accomplished other facilities.   It is thus not surprising that almost all bills filed in Congress and the programs developed at the state level have largely included a cap-and-trade system.

One of the key issues in this system, as identified by the INGAA, is the allocation scheme.  The INGAA favors a free allocation of the credits to regulated industries.  Unfortunately, some of the states in the northeast that are part of the Regional Greenhouse Gas Initiative are planning a 100 percent auction.  This may create a significant initial burden on the regulated industry, and detract from the carbon market.  Companies that have already paid for their allocations, may be less likely to invest in emission reductions to sell credits or offsets that would be created if they fall below their allocation of emission rights.

These and other issues will be hashed out in Congress, assuming legislation is ultimately adopted.  Care should be taken in working out the regulatory and economic impact of the various aspects of a cap and trade program.

Canadian Premiers and New England Governors Met and Discussed Forming a Regional Carbon Cap-and-Trade System

According to an article in the Globe and Mail, the Eastern Canadian premiers and the New England governors have met and agreed to consider developing a regional cap-and-trade system to control the emission of greenhouse gases.  The premiers and governors said that they are moving toward a common market in energy and will have to find ways to share emission targets as well as power and transmission costs.

New Brunswick Premier Shawn Graham says he will host a workshop on the potential for developing a regional cap-and-trade program.  It is something of an about-face for the New Brunswick premier who indicated earlier he wasn't interested in such an approach.  Quebec Premier Jean Charest says a cap-and-trade program is inevitable, so the premiers and governors should take the lead on developing a system.

Several northeastern states are already well along in developing a regional carbon cap-and-trade system.  In time, the national governments will likely enact climate change regulation.  Until then, the provinces and states will be working on developing a cap-and-trade system for North America.

Carbon Bonds: How Government Can Help Finance Clean Coal and Carbon Capture and Storage

The following is an article similar to one I published in Energy Law 360.

As climate change legislation is debated in Washington and numerous states pass their own programs designed to reduce greenhouse gas emissions in the United States, and as international debate continues over what should follow the Kyoto Protocol, the issue of how to achieve global reductions in emission of green gases seems ever more difficult and complex. As in every policy debate, in many ways it comes down to how to finance solutions. Funding clean coal technology and infrastructure

suggests a new conceptual approach to address the challenge of foreign sources of hydrocarbons and emissions of carbon dioxide.

The new concept that should be considered is government funding in whole or in part of an infrastructure to capture carbon emissions from coal-fired power plants. I propose the use of “carbon bonds,” government bonds sold to the public and backed by the federal government to raise capital to at least jump start the construction of the carbon capture and storage infrastructure necessary to have a significant impact on greenhouse gas emissions and to allow the use of an energy source that is abundant and available in the United States.

                  

The main culprit for predicted climate change has been identified as carbon dioxide. One of the major sources of carbon dioxide is coal-burning power plants. While coal-fired plants may be a major source of carbon dioxide emissions, coal is an abundant source of energy in the United States, and incidentally China as well.  As a result, numerous coal-fired power plants have been proposed across the United States and China. Coal use may help reduce the importation of oil and natural gas. As our country looks for ways to reduce our dependence on foreign oil, coal seems, from an importation and abundance perspective, to be a desirable alternate energy source.

Finding a solution to the coal-climate conundrum would appear to be a major issue for government and private industry. Climate change and dependence on foreign oil are converging as a unified concern.  To solve this technology challenge, President Bush in 2003 announced FutureGen, which is a project for developing a zero-emissions coal-fired power plant. The project will employ coal gasification technology integrated with combined cycle electricity generation and the capture and sequestration

of carbon dioxide emissions.

Carbon capture and sequestration is a process that would capture the emissions from coal-fired power plants, or other large emission sources such as natural-gas-powered plants or refineries, and inject the emissions far below the ground surface, perhaps miles down. The oil industry has injected carbon dioxide into oil fields to increase production for decades. Thus, much of the technology for injection is

well-developed. The capture side is what may prove more challenging. While promising, this project will not be completed for another seven to ten years. With the political instability in the oil and natural gas states combined with the need to address global warming, it would seem prudent for the federal and state governments to make significant financial contributions to the development of technology to CCS reduce carbon emissions from power plants. The infrastructure to collect and transport carbon to appropriate points of injection and storage will require significant capital.

The federal commitment to developing the technologies to capture emissions from power plants and to inject them should be greatly increased.  Government funding or low interest loans could be used to develop regional CCS facilities and the construction of pipelines to bring the emissions to the CCS facilities from power plants, refineries, and other major CO2 emitters. This could be done by contributing to the funding private efforts and entities, or creation of a government entity that would construct and operate these facilities.

Congress should consider the funding of such a program, perhaps by the selling of what I referred to above as “carbon bonds.”  The sale of these bonds could be one funding source to complete the construction of the facilities. Other funding sources, such as a carbon tax on electricity generated from burning of fossil fuels, could make a major contribution to such projects. Government low-interest, long-term financing for private projects may be another approach to development carbon capture

and sequestration facilities across the country.

The use of government-issued bonds would enable the government to raise funds and loan them to entities investing in the CCS infrastructure. The interest rates could be set at a lower rate than market rates and thereby both create a capital pool for CCS projects and a market incentive to initiate and promote private industry to begin construction of the CCS infrastructure.

The establishment of such a program could be a model for other countries and could serve as a significant part of any negotiations over post-Kyoto climate change agreements.  Since China is building numerous coal-fired power plants the technology and funding approach could potentially be exported to China. Hopefully, Congress and the White House will include carbon capture and sequestration in the debate over how to reduce greenhouse gas emissions and dependence on foreign sources of oil and natural gas.

Canadian Government Funds Task Force to Study Carbon Capture and Sequestration

An article from Reuters reported that the Canadian government and the Alberta government are funding a task force to review carbon capture and sequestration as a means of addressing the greenhouse gas emissions from power plants, the oil sands that are such a promising source of oil for Canada and by extension the United States, and other sources of carbon dioxide in Canada.  Carbon capture and sequestration offers a significant potential as a tool to address climate change concerns and the mounting political pressure on governments to institute limits on carbon dioxide and other greenhouse gas emissions and to institute a trading system for carbon emission reduction credits.  As the carbon sands can address many of the energy security issues of the United States, the Department of Energy should be involved in research to address the carbon emissions from the oil sands.  Hopefully, we will see a joint effort by the Canadian and US governments to fund research into carbon capture and sequestration for the oil sands in Alberta.

CALGARY, Alberta (Reuters) - A new task force funded by the Canadian government and the province of Alberta will study ways to capture and store greenhouse gases emitted by the province's massive oil sands projects, Prime Minister Stephen Harper said on Thursday.

The task force will look at methods of capturing carbon dioxide emitted by the oil sands and other big industries, then pumping it underground into aging oil fields, where it can help increase output.

"We may be able to collect (carbon dioxide) from our oil sands, our coal-fired electrical plants and other industrial emitters and pump it deep underground, where it will remain for eternity," Harper said at a news conference in the provincial capital, Edmonton.

Some media reports had said the two governments were considering funding for a multimillion-dollar pipeline to carry the carbon dioxide to oil fields in the south. However Harper said that is just one of the plans the group will look at.

The task force will be headed by Steven Snyder, chief executive of TransAlta Corp., a Calgary-based power company that operates coal-fired plants in Alberta and elsewhere.

Harper said the group will look at the "economic, technical and regulatory hurdles that lie in the road of large-scale implementation of carbon capture and storage."

Alberta's oil sands projects are considered one of the country's largest sources of carbon dioxide emissions, and production from the region is expected to triple over the next decade.

The Alberta government introduced a bill on Thursday that would force large scale carbon dioxide emitters to cut their emissions intensity -- the amount of the gas created per barrel of output -- by 12 percent beginning this year.

The task force is being asked to issue a report by November.