The New Carbon Cycle

Global Food Transportation May Be Pulled Into EU Emissions Trading System

In a New York Times article entitled The Environmenta Costs of Shipping Groceries Around the World, the issue of the greenhouse gas emissions from shipping fruit, vegetables, fish, and other food products is discussed.  The article describes the move by the European Union to add air transportation to the EU Emissions Trading System (ETS) would put a cost on air transportation of food and manufactured items.  The EU is reviewing the addition of shipping emissions to the ETS as well.  Many of the countries that produce these food items complain that the charging of a carbon tariff or requiring the purchase of offsets or allowances for these food items is a form of trade protectionism.  As the debate over the transportation in this article, and production (including use of electricity from coal-fired power plants) continues, countries will find themselves debating over the emissions and costs to compensate for the potential impact on climate change and global warming. 

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.

Utility Chairman, CEO, and President Testifies for Climate Change Legislation

As climate change legislation begins to take on more debate on both sides of the isle and the provisions of potential legislation that may be passed takes form, it is interesting to note how many US companies are taking a leadership role in promoting passage of legislation, but also commenting on the specific parameters of this legislation.

The testimony on November 8, 2007 on the Lieberman-Warner climate change bill by Peter A Darbee, Chairman, CEO, and President of PG&E Corporation, a utility holding company, is particularly interesting as he sets out the criteria he believes to be important in climate change legislation.

• Mandatory greenhouse gas reductions are necessary;
• Market-based programs minimize cost and maximize innovation;
• Long-term greenhouse gas targets provide a rational basis for action;
• Broad-based participation leads to better, more cost-effective results;
• Energy efficiency must be a top priority;
• Investment in low- and zero-emission electric generation and other technologies is critical;
• Early action deserves to be rewarded--not penalized;
• Any climate change program must be economically sustainable, achieve the ultimate environmental objectives of the program, and begin to address physical impact and adaptation issues;
• Near-term opportunities for cost-effective, verifiable greenhouse gas reductions should be pursued;
• Standardized emissions reporting is an essential first step and must form the basis of any mandatory program.

Mr. Darbee's testimony provides one business approach to addressing climate change and developing an effective, economically sustainable program to reduce greenhouse gases.  I recommend reading the entire testimony.

British Columbia Premier Announces Goal for Aggressive Greenhouse Gas Reductions

The Premier of British Columbia Gordon Campbell laid out more details of his green plan Friday, including the promise of legislation to reduce greenhouse-gas emissions by 33 per cent below current levels by 2020.   During a highly anticipated speech at the Union of British Columbia Municipalities annual meeting in Vancouver, Campbell said a specially appointed climate action team will look at how that target will be reached.  A variety of other aggressive goals were announced:

• Further legislation will be passed to make B.C. the first province in Canada to legally cap greenhouse gas emissions, using an undisclosed carbon trading system, said Campbell.
• All energy produced in the province will have to have a net balance of zero greenhouse gas emissions by 2016, promised the premier.
• His government would introduce legislation this fall requiring all public sector organizations, including schools and Crown corporations, to be carbon neutral by 2010.
• B.C. will become the first province to adopt California's tailpipe emission standards for vehicles and the state's low-carbon fuel standards, he said.
• All government travel would be greenhouse-gas neutral starting this year. Twenty-five dollars for every tonne of greenhouse gas generated by government travel will be invested in projects to offset the impact of greenhouse gases.
• The premier said the provincial power company, BC Hydro, will be required to install "smart meters" that will allow all customers to better track energy use and put power they generate themselves back into the system for credit.

To what extent the B.C. Premier will be able to pass this legislation remains to be seen, but reflects one of the most aggressive climate change agendas in any Canadian province or US state.  Like the US States, many of the Canadian provinces have begun to plan climate change legislation in the absence of a national government plan, despite the fact that Canada signed the Kyoto Protocol.

California Utility Commission Evaluating Incentive Payments to Utilities for Meeting Energy Efficiency Goals

Energy efficiency has been touted as a means of reducing energy use, avoiding construction of additional power plants, and reducing local air pollution as well as greenhouse gas emissions.  As part of the state’s attempts to increase energy efficiency and to reduce greenhouse gas or carbon emissions, the California Public Utilities Commission proposed a plan to pay private utility companies if they meet energy savings goals.  Called a “win-win” plan, the state could pay up to $323 million to utilities and save ratepayers up to $2.4 billion, according to a 207-page proposed order, submitted on August 9, 2007 by Commissioner Dian Grueneich and Administrative Law Judge Meg Gottstein.

“By aligning shareholder and consumer interests through today's adopted incentive mechanism, we create a 'win-win' regulatory framework for energy efficiency—one that provides both a meaningful level of shareholder earnings and an estimated return of over 100% on ratepayers' investment in energy efficiency as the utilities reach towards and exceed our 2006-2008 energy savings goals,” stated Grueneich and Gottstein in the order.

According to the plan, the energy reduction targets for 2006 to 2008 would reduce California’s energy use by about three 500-megawatt power plants over those three years.  Such a reduction would avoid carbon dioxide emissions by about 3.4 million tons in 2008, which is equal to the emissions of about 650,000 cars.

The utilities would be paid if they meet 85% percent of the efficiency goals and be penalized if they fall below 65%.  Caps would be placed on what the utilities could earn. 

It will remain to be seen, if this plan is adopted, and if it can achieve reductions in energy use, pollution locally, and carbon reductions that may have a global effect.  As states and Congress consider how to address energy efficiency, energy security, and pollution prevention and reduction, market mechanisms like these should be evaluated and experimented with to see if the economic markets can be adapted to allow private profit to be consistent with other public goals such as energy security, energy efficiency, and pollution reduction.

Mining Company BHP Billiton Plans Investment of Hundreds of Millions in Climate Change Research

Austalian multi-national mining company BHP Billiton is preparing to launch a green research fund expected to be worth hundreds of millions of dollars as part of a new policy on climate change. The company is also stepping up its work on energy efficiency, implementing a new program across its Australian sites to cut fuel costs and bring down carbon emissions.

The move comes as the government prepares to launch a national carbon trading scheme linked to the Australian Securities Exchange. The new trading regime, expected to be announced within weeks, could add hundreds of million to the running costs of carbon-intensive operations like mines.

BHP's supports the development of a national emissions trading system and is believed to have looked at the benefits its new programs might deliver under such a regime. BHP already audits 48 sites with emissions greater than 100,000 tonnes a year of CO2 equivalent, which combined account for 98 per cent of the group's greenhouse gas emissions.  

The new push to cut energy consumption could save the company millions of dollars when carbon trading is introduced, as well as reducing its $US2.3 billion annual fuel bill. BHP's green research fund is expected to be launched next month when the company releases its new policy on climate change.

It is believed the majority of money will be spent on clean coal initiatives, but the company could also look at new technologies such as geothermal power. It is unlikely to look at renewables such as wind and solar power.

Reported in news.com.au.

Many Corporations Have Set and Met Significant Greenhouse Gas Emission Reduction Targets

As a follow up to the post on the Porter and Kramer article published in the Harvard Business Review, I wanted to point out some of the companies who have taken on climate change issues.  While greenhouse gas emissions are debated in Congress and in public discourse, the media, and the Internet, the Pew Center has listed numerous carbon reduction goals set by various corporations, many of which have already been met. These companies are climate change leaders, and will be well ahead of the game when a cap-and-trade system is eventually implemented in the United States.

Alcan

• Completed--Reduce GHG emissions by 575,000 tons CO2e between 2001 and 2005.
            (To date, emissions have been reduced by more than 2.9 million tons CO2e.)
      
• Completed--Reduce GHG emissions by 35% from 1990 until 2005.

BP

• Completed--Reduce GHG emissions by 10 percent from 1990 levels by 2010.
• Maintain net emissions at or below 2001 levels over the next decade.

Deutsche Telekom

• Completed--Reduce energy use by 15 percent from 1995 levels by 2000.
• Reduce energy use by 3 percent from 2001 levels by 2004.

DuPont

• Completed--Reduce GHG emissions by 65 percent from 1990 levels by 2010.
            (Actual reduction by 2002 is 67 percent.)
           

• Hold total energy use flat at 1990 levels through 2010. (Actual use in 2002 was 9 percent below 1990 levels while production has increased by almost 30 percent.)

• Source 10 percent of global energy use from renewable resources by 2010.

IBM

• Conserve annually 4 percent of the energy that would otherwise have been consumed;
• Reduce CO₂ emissions associated with IBM’s fuel use and electricity consumption by an average annual 4 percent of what would otherwise have been emitted.
• Have 100 percent of the new product models introduced during each year meet Energy Star® criteria.

• Completed--Reduce PFC emissions from semiconductor manufacturing worldwide by 40
            percent from 1995 levels by 2002 (indexed to production); and
• Completed--Achieve an absolute 10 percent reduction in PFC emissions from IBM's
            semiconductor manufacturing processes by year-end 2005, using 2000 as a
            base year.

PG&E Corporation

• Completed--Reduce annual sulfur hexafluoride (SF₆ – a greenhouse gas) emissions by 50
           percent, compared with the 1998 baseline. 
• Reduce SF₆ emissions by 60 percent by year-end 2007, compared with the 1998 baseline.
• Completed--Reduced overall energy use at 88 facilities by 24 percent compared with the
            1998 baseline.
         

Rio Tinto

• Completed--Reduce on-site GHG emissions per unit of production by 4.8 percent from
            1990 levels by 2001.
• Reduce on-site GHG emissions per unit of production by 4 percent from 2003 levels by 2008.
• Group-wide energy efficiency target that seeks to reduce energy use per ton of product by 5 percent by 2008 from a 2003 base.

Rohm and Hass

• Completed--Reduce energy consumption by 5 percent per pound of product from
            mid-1999 levels by year end 2001.
• Completed--Implemented a corporate wide energy metrics program in 2001 and achieved
            targeted year on year energy utilization reductions in 2002, 2003, and 2004.
• Reduce energy consumption by at least 1 percent per pound of product each year as compared to the year before.
• Establishing business-level energy management programs with individual targets.

Royal Dutch/Shell

• Completed--Reduce GHG emissions by 10 percent from 1990 levels by 2002.
• Meet 5-year (2002-2007) energy efficiency targets for global oil products and chemicals business units. For refining, this target is to improve its Refining Energy Index (REI) from 135 in 2002 to 128 by 2007 (or a 5 percent improvement in its REI). For chemicals, the target is to improve its Chemical Energy Index (CEI) from 100 in 2002 to 92 in 2007 (or an 8 percent improvement in its CEI).

• Actively manage GHG emissions such that by 2010 emissions are still 5% or more below 1990 levels, even while they grow their business.

SC Johnson

• Completed--Achieve an absolute GHG reduction of 8 percent for all U.S. operations from
            2000 levels by 2005 (or reduce GHG emissions intensity by 23 percent (per
            kilograms of product manufactured) from 2000-2005.)
• Completed--Reduce GHG emissions from the top five factories worldwide by 5% per year
            from 2000 to 2005.

Toyota

• Reduce CO₂ emissions by 5 percent from 1990 levels by 2005, and by 10 percent from 1990 levels by 2010.
• Completed--Reduce energy consumption per unit of production by 15 percent from 2000
            levels by 2005.

TransAlta Corporation

• Completed--Return GHG emissions to 1990 levels by 2000.
• Achieve zero net GHG emissions from the company’s Canadian operations by 2024.

United Technologies Corporation

• Completed--In 2003, successfully achieved goal of reducing energy consumption
            as percent of sales by 25 percent from 1997 levels by 2007 (target
            reached in 2003 resulted in a 15 percent reduction in absolute GHG
            emissions since 1997).
• Completed--In 1997, UTC resolved to reduce its global energy consumption by 25
            percent (normalized for revenues) from 1997 levels by 2007.  The
            company has already exceeded that target and has increased the goal
            to a 40 percent reduction in energy use worldwide by 2007.
• UTC is accomplishing its climate change goals directly by reducing greenhouse gas emissions produced by UTC operations and indirectly by developing and manufacturing products that use less energy and emit smaller amounts of greenhouse gases.

Michael Porter and Mark Kramer Publish a Watershed Article in the Harvard Business Review on Corporate Social Responsibility Strategy and Practice

In a post on my companion Law and the Environment blog, I discussed the article published by Michael Porter, the famous business management guru and Harvard Business School professor, an associate Mark Kramer, on Corporate Social Responsibility (CSR) that has recently been published in the Harvard Business Review.  Porter and Kramer believe that the current CSR efforts of companies often reflect merely public relations campaigns.  They argue that the exercise of good corporate citizenship is an important part of corporate activity and the conduct of business.  However, they advocate a strategic approach to CSR that aligns the actual business of the company to social issues that the company can actually significantly affect and incorporate into day-to-day operations.  The article suggests a significant change in corporate governance to address corporate social responsibility.

I would recommend the post on the Porter and Kramer article that suggests the need for a new approach to Corporate Social Responsibility for all companies.  I proposed that this is particularly true for those companies that are significant emitters of greenhouse gases or consume large amounts of electricity that requires significant burning of fossil fuels.

Utility-Environmental Groups Deal in Kansas Reflects Changing Times in Terms of Deals That May Be Necesary to Obtain Permits for New Power Plants

Another green energy deal between environmental groups and a utility appears to reflect a new trend in the deals utilities must enter to allow permtting of new power plants.  After the TXU deal, which may fall through based on the actions of the Texas Legislature, the idea of making deals with national and local environmental groups may portend a trend in negotiating power plant deals.  The Sierra Club, Kansas City Power and Light and Concerned Citizens of Platte County entered into an agreement to reduce greenhouse gas emissions and spur clean energy development.   The article below details this agreement.

(CSRwire) KANSAS CITY, Mo.--(BUSINESS WIRE)--March 20, 2007--In a groundbreaking agreement that can serve as a model for environmental groups and utilities working together, the Sierra Club, Kansas City Power & Light (KCP&L), and the Concerned Citizens of Platte County (CCPC) have agreed on a set of initiatives to offset carbon dioxide (CO2) and reduce other emissions for the Kansas City-based utility. Under the agreement announced today, KCP&L agrees to pursue offsets for all of the global warming emissions associated with its new plant through significant investments in energy efficiency and renewable energy, and cut pollution from its existing plants in order to improve air quality in the Greater Kansas City metro area. The agreement proposes other investments in clean energy, significant decreases in emissions and resolves four appeals pending between the Sierra Club, CCPC, and KCP&L. Full implementation of the terms of the agreement will necessitate approval from the appropriate authorities, as some of the initiatives in this agreement require either enabling legislative policy or regulatory approval.

"We believe there is significant potential through new energy technology and innovative approaches to improve the environment and offer additional value to our customers across the Kansas City region. This is especially true with energy efficiency and wind generation, which we have been implementing already through our Comprehensive Energy Plan developed in 2005," said Mike Chesser, Chairman and CEO of Great Plains Energy. "We look forward to collaborating with the Sierra Club and other stakeholders as we pursue these exciting new opportunities."

"This agreement is a win for our climate, for the environment, and for the residents of the Kansas City area," said Carl Pope, Sierra Club Executive Director. "It is the latest sign that smart energy solutions like wind power and energy efficiency are gathering steam. We look forward to working with KCP&L to help the Midwest realize its full potential as a leader in the clean energy technologies that will fuel the economy of tomorrow."

The most significant element of the agreement is the unprecedented commitment by KCP&L to pursue the offset of carbon emissions from its proposed Iatan 2 generating station, located near Weston, Missouri. The estimated 6,000,000 tons of annual carbon dioxide emissions are targeted to be offset by adding 400 megawatts (MW) of wind power; 300 MW of energy efficiency; and a yet to be determined combination of wind, efficiency, or the closing, altering, re-powering or efficiency improvements at any of its generating units. These proposed offsets will be partially implemented by 2010 and fully implemented by 2012. The parties are also agreeing to work together on a series of regulatory and legislative initiatives to achieve an overall reduction in KCP&L's carbon dioxide emissions of 20 percent by 2020.

"This agreement shows that we can work together to curb air pollution, combat global warming, and protect our local communities," said Susan Brown, chairperson for Concerned Citizens of Platte County. "The renewable energy investments in this agreement can revitalize the region's manufacturing economy and offer rural landowners a new source of steady income from wind turbines located on their property. The large investment in energy efficiency will also help everyone use less energy -- reducing emissions and saving consumers and businesses money each month."

In addition to offsetting its global warming emissions, residents of the Kansas City area will benefit from reduced emissions of criteria pollutants at KCP&L's existing Iatan 1 and La Cygne plants. The agreement calls for annual reductions in nitrogen oxides, sulfur dioxide and particulate matter estimated to total some 9,100 tons. Within the next year, KCP&L will also work with the Sierra Club to study options, including retiring, re-powering or upgrading its Montrose power plant. Finally, KCP&L will fund several community projects including: recommendations of the Kansas City Climate Protection Committee targeting global warming reduction measures; additional monitoring of soot and smog pollution in the metro area; and an upgrade to the drinking water infrastructure in Weston, a community near the Iatan station.

In another important step for clean energy, KCP&L will also file for approval of a net metering program within six months. Net metering allows a utility's customers to generate small amounts of renewable energy on-site, such as from rooftop solar panels or a small wind turbine, and sell any excess energy back to the utility.

KCP&L's Comprehensive Energy Plan was collaboratively constructed with a broad group of stakeholders and includes investments in new generation (including renewable wind energy); innovative efficiency, affordability and demand response programs; infrastructure improvements; and proactive environmental investments. This balanced approach will enable KCP&L to satisfy growing energy demands across the region for years to come while improving environmental stewardship.

"KCP&L's current Comprehensive Energy Plan addresses the energy needs and emissions reductions for the Kansas City region with actions into the year 2010. This Agreement is the start of the next set of discussions with stakeholders as we develop our plans for the 2010-2015 timeframe," said Bill Downey, President and CEO of KCP&L. "It reflects the ongoing atmosphere of collaboration we established in developing the CEP, and proactively resolves differences. We look forward to working with all stakeholders to secure a long-term energy supply for Kansas City while improving air quality."

This agreement builds on the success of a 2006 agreement that Sierra Club brokered with City Water Light and Power of Springfield, IL. That agreement stipulated that the municipal utility retire one of the dirtiest coal plants in the nation, purchase 120 MW of wind, invest four million dollars in energy efficiency, and significantly decrease emissions of soot, smog and mercury pollution. In addition, all of the government buildings owned by the state of Illinois are to be powered with green electricity. Last week, CWLP announced that it stands to at least break even and may reap significant profits from its purchase and resale the wind power investments required in their agreement.

"We were and continue to be very pleased with the agreement we reached in Springfield," commented Pope. "Our exciting new agreement with KCP&L raises the bar even further and demonstrates just how much we can achieve when utilities and groups like the Sierra Club work together."

About the Sierra Club

Sierra Club, founded in 1892, is the nation's oldest and largest grassroots environmental organization with over 1.3 million members and supporters. For the past two years the Great Rivers Environmental Law Center has represented Sierra Club and CCPC in their appeal of the Missouri PSC approval of the Iatan 2 power plant. For the past year
Washington University Interdisciplinary Law Clinic has represented Sierra Club in its appeal of the air permit Missouri DNR issued for
Iatan 2.

About the Concerned Citizens of Platte County

Concerned Citizens of Platte County, Inc. (CCPC) is a group concerned about quality of life, children's health and property values in Platte County, Missouri and the surrounding region. The organization was incorporated in the early 1990's.

About Kansas City Power & Light

Headquartered in Kansas City, Mo., KCP&L (www.kcpl.com) is a leading regulated provider of electricity in the Midwest. KCP&L is a wholly owned subsidiary of Great Plains Energy Incorporated (NYSE: GXP), the holding company for KCP&L and Strategic Energy L.L.C., a competitive electricity supplier.

Information Concerning Forward-Looking Statements

Statements made in this release that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, statements regarding projected delivered volumes and margins, the outcome of regulatory proceedings, cost estimates of the comprehensive energy plan and other matters affecting future operations. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Great Plains Energy is providing a number of important factors that could cause actual results to differ materially from the provided forward-looking information. These important factors include: future economic conditions in the regional, national and international markets, including but not limited to regional and national wholesale electricity markets; market perception of the energy industry and Great Plains Energy; changes in business strategy, operations or development plans; effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not limited to, deregulation, re-regulation and restructuring of the electric utility industry; decisions of regulators regarding rates its subsidiaries can charge for electricity; adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental matters including, but not limited to, air and water quality; financial market conditions and performance including, but not limited to, changes in interest rates and in availability and cost of capital and the effects on pension plan assets and costs; credit ratings; inflation rates; effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments; impact of terrorist acts; increased competition including, but not limited to, retail choice in the electric utility industry and the entry of new competitors; ability to carry out marketing and sales plans; weather conditions including weather-related damage; cost, availability, quality and deliverability of fuel; ability to achieve generation planning goals and the occurrence and duration of unplanned generation outages; delays in the anticipated in-service dates and cost increases of additional generating capacity; nuclear operations; ability to enter new markets successfully and capitalize on growth opportunities in non-regulated businesses and the effects of competition; application of critical accounting policies, including, but not limited to, those related to derivatives and pension liabilities; workforce risks including compensation and benefits costs; performance of projects undertaken by non-regulated businesses and the success of efforts to invest in and develop new opportunities; the ability to successfully complete merger, acquisitions or divestiture plans (including the acquisition of Aquila, Inc., and the sale of assets to Black Hills Corporation); and other risks and uncertainties. Other risk factors are detailed from time to time in Great Plains Energy's most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities and Exchange Commission. This list of factors is not all-inclusive because it is not possible to predict all factors.