The New Carbon Cycle

Could Thin Film Solar Make Solar Electricity Cheaper Than Coal Produced Power?

New technology breakthroughs have been the hope of governments and the public for everything from climate change and global warming, energy security, domestic versus foreign production and jobs, to distributed power production that need not be purchased from large utilities.  Solar energy one of the hoped for solutions has been hampered by manufacturing costs.  The solar panels we have all seen are large and costly to produce because they rely on silicon that is also used for computer chips.

With the development of thin film solar, the ability to reduce the cost may be solved.  A story from Celsias describes how a company called Nanosolar is producing a solar film that is printed much like documents on your inkjet printer at home.  The new technology may reduce solar electricity costs from $3 a wat to 33  cents a watt--competitive with electricity from coal-fired power plants. The Nanosolar plant in San Jose, once in full production in 2008, will be capable of producing 430 megawatts per year. This is more than the combined total of every other solar manufacturer in the U.S.

This breakthrough technology has the ability to revolutionize power production. Keep an eye on Nanosolar and other companies in the thin film space.

An Economist with CIBC in Canada Predicts Carbon Tariffs Will Bring Jobs Back to North America from China and Other Developing Countries

An economist with CIBC World Markets Jeff Rubin has issued a report predicting that Canada will impose carbon taxes or carbon tariffs on imported goods from China and other developing countries that do not have restrictions on greenhouse gas emissions. He also predicts that this will cause jobs and manufacturing to come back to North America, because emissions and energy efficiency will be more important than labor costs. He states that non-metallic mineral products - cement, glass and lime - with energy intensity 130 per cent higher than the Chinese industrial average, are likely to return to North America, as well as the printing, primary metal manufacturing, and machinery industries.

Rubin believes the tariff, based on $45 per tonne of carbon dioxide or equivalent, would raise roughly $55 billion a year from Chinese exports to the United States, and raise U.S. consumer price inflation by more than 0.6 percentage points.

“What I'm suggesting is that the minute that we start putting a price on our own domestic emissions, then our tolerance of those who do not is going to fade very quickly," Rubin said. "What we're going to say is that if you don't play by the same carbon rules, that's an unfair trade subsidy that we're gong to countervail against."

This is an interesting prediction that may ignore the post-Kyoto treaty negotiations and the potential challenges that such carbon taxes or carbon tariffs may face in the World Trade Organization.  It is a continuing issue that I have posted on several times on this blog, and not one that will go away if China, India, and other developing countries with significant greenhouse gas emissions do not agree to some form of cap and then reductions in their emissions.

Professor Joshua Busby Issues Report Through Council on Foreign Relations on Climate Change and National Security

Joshua Busby, a professor at the LBJ School at the University of Texas has issued a report entitled Climate Change and National Security: An Agenda for Action through the Council on Foreign Relations.  In this report, Professor Busby moves beyond diagnosis of the threat to recommendations for action. Recognizing that some climate change is inevitable, he proposes a portfolio of feasible and affordable policy options to reduce the vulnerability of the United States and other countries to the predictable effects of climate change. He also draws attention to the strategic dimensions of reducing greenhouse gas emissions, arguing that sharp reductions in the long run are essential to avoid unmanageable security problems. He goes on to argue that participation in reducing emissions can help integrate China and India into the global rules–based order, as well as to help stabilize important countries such as Indonesia. He suggests bureaucratic reforms that would increase the likelihood that the  U.S. government will formulate effective domestic and foreign policies in this increasingly important realm.

Environmental Justice Groups in California Issue Declaration Against Carbon Trading

It appears that most left and right wing groups oppose carbon trading and emissions markets.  The left because they want government making the decisions through a pure command and control system of regulation, and the right because they oppose regulation and believe the environmentalists are exaggerating environmental effects.  One is a command and control view, the other a laissez-faire view.  Both political extremes ignore the lessons learned from the US sulfur dioxide program that achieved the needed reductions in sulfur dioxide emissions from coal-fired power plants at costs well below what industry or even the EPA estimated.  They also ignore the mobilization of capital and greenhouse gas reductions achieved by the Kyoto Protocol and the EU Emissions Trading Scheme.  Neither side considers the issues from a scientific or economic view, but denies the objective facts, and argues from a perspective of pure ideology.  Let us hope the governments of the world look beyond these views and understand how emisisons trading bridges the gap between economics and ecology, markets and climate, and mobilizes capital investment to contribute substantially to achieving environmental protection and reduction in climate change.

A recent example of the left wing view is a group of environmental groups in California who have issued a declaration against carbon trading.  The California Environmental Justice Movement’s Declaration on Use of Carbon Trading Schemes to Address Climate Change decries the use of emissions markets to achieve emissions reductions, but seeks to have the government make these decisions.

Quotes from the California Environmental Justice Movement's Declaration demonstrate this view:

Carbon trading is undemocratic because it allows entrenched polluters, market designers, and commodity traders to determine whether and where to reduce greenhouse gases and co-pollutant emissions without allowing impacted communities or governments to participate in those decisions.

The California Environmental Justice Movement DECLARES that the EU-ETS, including the CDM, is a step in the wrong direction; and

The California Environmental Justice Movement FURTHER DECLARES that we will fight at every turn all efforts to establish a system of carbon trading and offset use in California; and

The California Environmental Justice Movement FURTHER DECLARES that our demands for real changes in the way we make and use energy will not be silenced by promises of money or token adjustments to the fundamentally flawed trading and offsets approach; so

BE IT THEREFORE, RESOLVED, that the California Environmental Justice Movement stands with communities around the world in opposition to carbon trading and offset use and the continued over reliance on fossil fuels; and

BE IT FURTHER RESOLVED, that the California Environmental Justice Movement will support conservation, regulatory, and other measures to address greenhouse gases only if they directly and significantly reduce emissions, require the shift away from use of fossil fuels and nuclear power, and do not cause or exacerbate the pollution burden of poor communities of color in the United States and developing nations around the world; and

BE IT FURTHER RESOLVED, that the California Environmental Justice Movement will oppose efforts by our state government to create a carbon trading and offset program, because such a program will not reduce greenhouse gas emissions at the pace called for by the international scientific community, it will not result in a shift to clean sustainable energy sources, it will support and enrich the state's worst polluters, it will fail to address the existing and future inequitable burden of pollution, it will deprive communities of the ability to protect and enhance their communities, and because if our state joins regional or international trading schemes it will further create incentives for carbon offset programs that harm communities in California, the region, the country, and developing nations around the world.

Unfortunately, the environmental movement and environmentalists will for the most part continue to oppose carbon trading and emissions markets seeing private capital and markets as inconsistent with achieving environmental protection or protection of people from industrial and private capital interests.  The return to a government-based system of collecting taxes and investing in pollution reduction activities would be largely ineffective, inefficient, and take a very long time to implement, too long to contribute to reductions in greenhouse gases that this group so vehemently argues is necessary in a very short time.

Basin Electric Power Cooperative and Powerspan Corp. Announced a Carbon Capture and Storage Demonstration Project

The press release for this project is found below.

Basin Electric Power Cooperative - March 13, 2008

Bismarck, ND and Portsmouth, NH - Basin Electric Power Cooperative and Powerspan Corp. today announced the selection of Powerspan’s carbon dioxide (CO2) capture technology for a commercial demonstration at Basin Electric’s coal-based electrical generation facility, the Antelope Valley Station located near Beulah, North Dakota.

Approximately one million tons of CO2 will be captured annually from the 120 megawatt slipstream project, making this demonstration among the largest in the world. The captured CO2 will be fed into an existing CO2 compression and pipeline system owned by Basin Electric’s wholly owned subsidiary, Dakota Gasification Company.

Today’s announcement is the result of the first competitive solicitation process for a CO2 capture demonstration at a coal-based power plant in the U.S. Six companies responded to the request for proposal issued by Basin Electric in June 2007. Powerspan’s CO2 capture process was selected as the most promising low cost option for commercial deployment and for its ability to best integrate with Basin Electric’s operations.

The project is scheduled to move forward in 2009, subject to successful completion of engineering studies and obtaining of necessary permits and government incentives for early demonstrations of CO2 capture and sequestration.

The facility is expected to be operational in 2012. Powerspan’s CO2 capture process, called "ECO2™" is a post-combustion, regenerative process, which uses an ammonia-based solution to capture CO2 from the flue gas of a power plant and release it in a form that is ready for further compression, safe transportation, and geological storage.

"Basin Electric has a diverse energy portfolio and runs extremely clean coal-based plants. However, we’re ready to move to the next level. That’s why we are exploring a project that could lead to commercialization of carbon capture technology for existing coal-based generation facilities," says Ron Harper, Basin Electric CEO and general manager. "The greatest reductions in CO2 emissions from the power sector can be achieved by developing and proving a technology that can be retrofitted to the hundreds of existing coal-based power plants in the U.S. This is an important first step to achieving that goal."

"Successful commercial demonstration of our post-combustion ECO2 process represents the fastest, and lowest cost route to meaningful CO2 emission reductions from our existing power plant infrastructure," said Powerspan CEO Frank Alix. "The commercial-scale demonstration at the Antelope Valley Station will provide sufficient information to design, build, and guarantee performance for full-scale ECO2 systems. We are honored to be selected by Basin Electric given their environmental leadership and extensive experience in capturing and sequestering CO2."

Basin Electric’s wholly owned subsidiary, Dakota Gasification Company, is the only company in the U.S. that captures CO2 from coal and delivers it for enhanced oil recovery operations.

In 2000 Dakota Gasification began delivering carbon dioxide from its coal gasification facility, the Great Plains Synfuels Plant, to oil producers in Saskatchewan, Canada. With over seven years experience in capturing and sequestering CO2, Basin Electric is well prepared to move this demonstration project forward.

The Antelope Valley Station consists of two coal-based electric generating units, each rated at 450 megawatts. The ECO2 commercial demonstration will draw the equivalent of a 120 megawatt slipstream from one of the two units and will be designed to capture 90 percent of the incoming CO2. The captured CO2 would then be delivered by pipe to the existing compressor station at Dakota Gasification’s adjacent Synfuels Plant and injected into Dakota Gasification’s 205-mile pipeline system.

Approximately one million tons of CO2 will be captured and sequestered annually. The ECO2 process is a post-combustion CO2 capture process for conventional power plants that is differentiated from other approaches by its simpler capital equipment design and significantly lower energy consumption.

The technology is suitable for retrofit to the existing coal-based, electric generating fleet as well as for new coal-based plants. The CO2 capture takes place after the nitrogen oxides (NOx), sulfur dioxide (SO2), mercury and fine particulate matter are captured. Once the CO2 is captured, the ammonia-based solution is regenerated to release CO2 and ammonia. The ammonia is recovered and sent back to the scrubbing process, and the CO2 is in a form that is ready for geological storage.

Ammonia is not consumed in the scrubbing process, and no separate by-product is created.

Carbon Credit Conferences Draw Huge Numbers

Carbon credit conferences have been drawing huge crowds.  At a conference I attended in Cologne, Germany, Carbon Expo, over 2,000 people attended, from private equity funds, banks, investment firms, and governments from all over the world. Recently at the Carbon Forum American at the Moscone Center in San Francisco, there were over 1,400 attendees from over 50 countries.  There were 20 sessions and 18 side events as well as several press conferences and briefings.  More than 80 companies presented information on the exhibit floor.

I continue to be amazed at the growth of this industry and the interest these conferences are drawing.

EPA Issues Analysis of Lieberman-Warner Concluding Carbon Credits Will Skyrocket If International Trading Is Not Opened Up

The US EPA at the request of Senator Joe Lieberman and Senator John Warner evaluated S. 2191 the Climate Security Act authored by the two senators.  The agency reached various conclusions about the bill and the greenhouse gases that would be reduced and the economic impact.  Other studies may reach different conclusions, but here are some of the conclusions regarding the use of offsets, the cost of carbon, and how the bill's limit on international credits would drive up the cost of carbon credits.

• If the use of domestic offsets and international credits is unlimited, then allowance prices fall by 71% compared to the bill as written.
• In this scenario 52% of abatement comes from international credits in 2030, and 45% of abatement comes from international credits in 2050.  In terms of compliance obligation (which is limited to15% for international credits in the bill as written) 65% comes from international credits in 2030, and 169% comes from international credits in 2050.
• If the use of domestic offsets is unlimited, and international credits are still limited to 15% of compliance obligation, then allowance prices fall by 26% compared to the bill as written.
• In this scenario 26% of abatement comes from domestic offsets in 2030 and 15% of abatement comes from domestic offsets in 2050. In terms of compliance obligation (which is limited to 15%for domestic offsets in the bill as written) 33% comes from domestic offsets in 2030, and 41% comes from domestic offsets in 2050.
• If international credits are not allowed (or are more expensive than U.S. GHG allowances), and domestic offsets are still limited to 15%, then allowance prices increase by 34% compared to the bill as written.
• If domestic offsets and international credits are not allowed, and the caps must be met solely through emissions reductions in covered sectors, then allowance price increases by93% compared to the bill as written.

Carbon Tarriffs again Threatened by the EU against China and the US

Once again the call for “carbon tariffs” has risen as European Union leaders according to an Associated Press article threatened the United States and China with trade sanctions if the two largest emitters of greenhouse gases do not join in an international treaty in 2009 to reduce their emissions.  Carbon tariffs have been the subject of a prior post on this blog.  The problem is that the economy is weakening, and the potential the impact on industry from the EU’s pledge to reduce greenhouse gas emissions by 20 percent from 1990 levels by 2020 is raising strong concerns from industry that the US and China will not be facing economic impacts from taking similar steps—what the Europeans see as an competitive disadvantage.

Next year is important because the United Nations is set for a global conference in Copenhagen, Denmark to negotiate the treaty that will follow the Kyoto Protocol and how to reduce and adapt to global warming.  The  US has previously been unwilling under the current President to agree to a cap on US emissions.  The twenty-seven EU leaders after a two-day summit reportedly warned: "If international negotiations fail, appropriate measures can be taken" to protect European industry.  French President Nicolas Sarkozy was reported to have stated, "Our main concern is to set up a mechanism that would allow us to strike against the imports of countries that don't play by the rules of the game on environmental protection.” German Chancellor Angela Merkel stated, "Industry, faced with global competition could be exposed to a real disadvantage if no international climate accord is struck, but we in Europe have very strict rules."

China continues to argue against any cap on its emissions.  It does not appear likely an international treaty can be effective unless these two countries pledge to reduce their emissions.

British Prime Minister Gordon Brown appeared concerned about too much trade saber rattling, "I don't think we should allow things to stand in the way of getting the best possible international agreement.”

Other suggested steps to reduce the impact on EU industry have included a German proposal to reduce emission limits on steel and cement under the EU climate change legislation.  This brought on serious objections from environmentalists in the EU who are striving to keep the 20 by 20 reductions in place.

One proposal from Prime Minister Brown was a reduction in sales taxes on environmentally friendly products.  This would tip an advantage to those products made through low carbon processes.

In any event, it appears the battle is being set between the US, China, and the EU over greenhouse gas emission cuts.  The question is whether the US will go to the side of the EU, its traditional ally, or move toward China, its traditional competitor.  With the presidential elections in November with three pro-climate change candidates, most experts are betting the US will move toward its historic ally. However, the politics of climate change may be hard to predict.

Leading Representative Predicts Climate Legislation Will Be Offered in House by Mid April

Representative John Dingell (D-Mich.) reportedly told steel industry officials recently that he intends to introduce a climate change legislation with a cap-and-trade system by mid April of this year.   Dingell and Representative Rick Boucher (D-Va.), the chairman of the Energy and Air Quality Subcommittee, reportedly stated that they want to offer a bill for President Bush to sign that would be an economy-wide regulatory system.  To meet this deadline would be incredibly ambitious to address the wide-ranging interest groups and their concerns with the costs such legislation would impose on their industries.

In the other house of Congress, the Senate has already passed the Lieberman-Warner Climate Security Act out of the Senate Environment and Public Works Committee.  This bill may be debated in the Senate soon as well.

Richard Sandodr Called "Carbon King" in Wall Street Journal Article

The Wall Street Journal calls Richard Sandor the head of the Climate Exchange "Carbon King."  Sandor was an economics professor at Berkely, but left to found the Climate Exchange in Longon as the Kyoto Protocol was going into effect and the European Union was setting up its Emissions Trading Scheme, or its cap-and-trade system for carbon offsets or credits.

Sandor's company that manages exchanges for trading carbon credits is reportedly worth about $1.31 billion based on market capitalization.  A tremendous amount for a market that did not even exist a few years ago. 

Sandor apparently saw the opportunity back 15 or more years ago when the first climate change treaty was being negotiated in Rio.  He certainly was a far-sighted individual.  His share in the Climate Exchange is said to be about $260 million.

In the US, his company owns the Chicago Climate Exchange.  The CCX, as it is known, serves as a trading system for voluntary credits as the states have been only just recently establishing emissions markets for greenhouse gas offsets or carbon credits.  The first trade of the Regional Greenhouse Gas Initiative adopted by several Northeastern states occurred only recently.  The federal government have been working on climate change legislation in Congress.

The value of his exchanges will only increase if the United States creates a cap-and-trade system and carbon market and the United Nations negotiations in Bali ultimately lead to a new international treaty to follow the Kyoto Protocol.