Carbon Price Already Part of Doing Business

A report issued yesterday by the Carbon Disclosure Project generated a number of news articles today, including in the New York Times.  The report identified 29 major US corporations’ inclusion of future carbon prices in their financial planning.  This is a significant and logical development.  It is financially responsible for companies with billions of annual revenue dollars to consider upcoming costs in their planning.  These companies aren’t partisan, they’re interested only in making money.  If they think there is a way to make more money with carbon pricing than without, they’ll plan and act accordingly.

The NYT article notes that many Republicans might not like this development.  That’s due to the hyper-partisan characteristic of today’s leading Republicans.  Their worldview demands that they yell loudly at developments like carbon prices.  And despite their to-date very successful campaign to prevent policymakers from establishing a national carbon tax (which economists agree is the most economically efficient method) or a cap-and-trade system, they can’t and don’t control global policymakers.  A larger economic body than the US established a carbon price: the European Union.  China has begun limited implementation of carbon pricing.  Regional cap-and-trade systems encompassing US states and Canadian provinces with large economies exist and will only expand in the future.  What this means is US corporations doing business in the EU and China (and soon high population US states) have to take their carbon pricing into account.

The NYT and Huffington Post articles’ authors seem more surprised that companies like ExxonMobil are among those who are planning for carbon pricing than anything.  As I stated above, this is really the only logical development left for Exxon and other companies.  They can either perform their fiduciary duties and protect their shareholders’ interests or they can lose market share or fail.

This is one of the reasons I’ve supported regional carbon pricing following the continued failure to price carbon at the national and international levels.  If the price exists in a large enough portion of the larger economy, companies have to respond.  They can more easily lobby national politicians than local people who are very supportive of carbon pricing and who can run for local offices.  This is an example of my larger point that we need to implement climate mitigation and adaptation policies at the local level first.  Efforts to do this at the international level have failed time and time again.  But if thousands of communities implement their own strategies nationally and internationally, then higher levels of government have examples with which to work and grow.  More importantly, thousands of communities’ influence establishes political and social inertia that lobbying can only blunt.  This is the fastest way toward widespread policy implementation.

Climate & Energy Links – Sep. 12, 2013

Here are some stories I found interesting this week:

California’s GHG emissions are already lower than the 2015 threshold established as part of California’s cap-and-trade policy.  The reasons emissions fell more than expected include the slow economy and relative widespread renewable energy deployment.  The problem with this is the lack of innovation.  We have seen what companies do with no incentive to innovate their operations: nothing that gets in the way of profit, which is the way companies should operate.  That’s why we need regulations – to incentivize companies to act in the public interest.  Should CA adjust future cap thresholds in light of this news?

No surprise here: Alter Net had a story detailing the US Department of Energy’s International Energy Outlook and the picture isn’t pretty (and I’m not talking about the stock photo they attached to the story – that’s not helpful).  Experts expect fossil fuels to dominate the world’s energy portfolio through 2040 – which I wrote about last month.  This projection will stand until people push their governments to change.

Scientific American’s latest microgrid article got to the point: “self-sufficient microgrids undermine utilities’ traditional economic model” and “utility rates for backup power [need to be] fair and equitable to microgrid customers.”  To the first point, current utility models will have to change in 21st century America.  Too much depends on reliable and safe energy systems.  The profit part of the equation will take a back seat.  Whatever form utilities take in the future, customers will demand equitable pricing schemes.  That said, there is currently widespread unfair pricing in today’s energy paradigm.  For example, utilities continue to build coal power plants that customers don’t want.  Customers go so far as to voluntarily pay extra for non-coal energy sources.  In the end, I support microgrids and distributed generation for many reasons.

A Science article (subs. req’d) shared results of an investigation into increasing amplitude of CO2 oscillations in the Northern Hemisphere in the past 50 years.  This increase is greater for higher latitudes than middle latitudes.  The increase’s reason could be longer annual times of decomposition due to a warming climate (which is occurring faster at higher latitudes).  Additional microbial decomposition generates additional CO2 and aids new plant growth at increasing latitudes (which scientists have observed).  New plant growth compounds the uptake and release of CO2 from microbes.  The biosphere is changing in ways that were not predicted, as I’ve written before.  These changes will interact and generate other changes that will impact human and ecosystems through the 21st century and beyond.

And the EPA has adjusted new power plant emissions rules: “The average U.S. natural gas plant emits 800 to 850 pounds of carbon dioxide per megawatt, and coal plants emit an average of 1,768 pounds. According to those familiar with the new EPA proposal, the agency will keep the carbon limit for large natural gas plants at 1,000 pounds but relax it slightly for smaller gas plants. The standard for coal plants will be as high as 1,300 or 1,400 pounds per megawatt-hour, the individuals said Wednesday, but that still means the utilities will have to capture some of the carbon dioxide they emit.”  This is but one climate policy that we need to revisit in the future.  This policy is good, but does not go far enough.  One way or another, we face increasing costs; some we can afford and others we can’t.  We can proactively increase regulations on fossil fuels which will result in an equitable cost comparison between energy sources.  Or we can continue to prevent an energy free market from working by keeping fossil fuel costs artificially lower than they really are and end up paying reactive climate costs, which will be orders of magnitude higher than energy costs.

California Air Resources Board Takes Further Steps Toward Cap-and-Trade

The news is mostly good out of California, where the Air Resources Board voted earlier this month to approve a resolution to initiate a statewide cap-and-trade system by the beginning of 2012.

I say “mostly good” because while a program of this type is finally being constructed so that more than just the energy sector is affected (as is the case in the northeast U.S.), there will initially be too many free allowances available to polluters.  That is the same complaint that I had about the climate legislation being considered by the U.S. Congress last year.

Ninety percent of the allowances would be free in the first years of the program to give industry time to upgrade to cleaner equipment or account for increased future costs as the cap tightens.

Over time, as the cap gets lower and fewer allowances are available, costs would rise.

I understand that systems like cap-and-trade have to spin up before they achieve useful levels of efficiency and actually affect larger systems like statewide or countrywide economies.  I understand that industry wants more time before being forced to clean up their act.

I also understand that the climate system doesn’t care about any of these things.  As a physical system, it responds only to real forces, not imaginary human markets.  Quite simply, we are out of time.  The time to phase things in nicely and neatly was the past 40 years and industry chose not to pay attention.

There will be nothing orderly about the effects of global warming becoming apparent.  In too many cases, those effects will take place too quickly for us to adapt to them in ways which we might prefer.

My criticisms aside, I am glad the CARB realizes that a price must be placed on carbon and that the federal government has largely failed at creating appropriate systems for doing so.  I fear that the true price of carbon on the globe is much higher than most people involved in climate activism are willing to admit.  The sooner carbon is honestly priced, the better for everybody.

I’ll finish with a little more good news:

California’s system, however, could end up being linked to ones being developed in other countries. State officials are talking with the European Union as well as provinces in China and Canada to link systems.

In the U.S., New Mexico narrowly approved its own cap-and-trade program last month and OK’d the state’s participation in a regional market.

h/t Itgetsbetter2012 @ dKos

Quick Hit: Colorado’s Energy Efficiency Stimulus Funding

As part of the stimulus spending championed by President Obama and passed by the Democratic-led Congress, Colorado will receive more than $128.7 Million for weatherization funding and energy efficiency grants.

According to the U.S. Department of Energy, Colorado will receive $128,753,213 in weatherization and energy efficiency funding – including $79,531,213 for the Weatherization Assistance Program and $49,222,000 for the State Energy Program.

Weatherization and energy efficiency are two methods of keeping energy costs down.  Here’s how the Obama administration is playing this: weatherization, energy efficiency and other programs go into effect as soon as possible, saving energy consumers money right away.  A carbon cap-and-trade program goes into effect in the next couple of years, which will have the effect of raising energy prices as the program spins up and a price for carbon is settled on.  As Americans continue to use energy efficient programs (power generation, appliances, etc.), the raising energy prices don’t impact their budgets severely enough to disrupt their lifestyles.  These kinds of things are being thought through by Obama and others.  The right-wing reactionaries are desperately trying to tie into populist anger – I don’t think it’s going to get them very far as people do the math at their kitchen tables.

Oh, and as this funding is spent in Colorado, programs are expanded, which requires more employees.  Thus, good paying jobs are created and the economy finds a bottom.  A lot of people win under Obama’s plan.

Cap and Trade Expenses Overblown

Critics (ideologically driven climate change deniers, mostly) have said that a carbon cap and trade program is too expensive (additional posts on this to follow).  One critical fact these short-sighted do-nothings are purposefully not talking about is that we have already spent billions on the effects of global warming, and it will only get worse.  Indeed, if the deniers have their way and we do nothing, the expenses on our society, what I will start terming the Cons’ Climate Tax, will get much, much worse.

I submit the following three examples for consideration:
– We have lost $1.3 billion as a result of crop loss from Georgia’s drought in 2007.
– It cost $300 million to repair rail transportation after Hurricane Katrina.
– We spent $272 million in 2007 as a result of increasing flood damage.

Those examples don’t include droughts in the rest of the country, wildfires, loss of viable timber, etc.

Is that not convincing enough? Okay, how about this: Four global warming impacts alone — hurricane damage, real estate losses, energy costs, and water costs — will come with a price tag of 1.8% U.S. GDP, or almost $1.9 trillion annually (in today’s dollars) by 2100.  The total cost will cost 3.6% of U.S. GDP.  Contrast that with the cost of a cap and trade program: The median projected impact of climate policy is less than one-half of one percent of U.S. GDP for the period 2010-2030, and under three-quarters of one percent through the middle of the century.

A growing body of studies are clearly demonstrating the damage the Cons’ Climate Tax would introduce to our society.  Unsurprisingly, their concern over deficit spending when it comes to American interests is as false as anything else they’re “concerned” about.  If they were concerned with the costs we’re passing along to future genertions, they would whole-heartedly embrace a carbon cap-and-trade program.  We can spend a few hundred billion dollars for a few years now and alleviate future climate change impacts.  Or we can push this problem off to the next generation and they can pay $4 trillion annually to deal with the effects.

But every time a Con gets to talk to the corporate media, they should be required to explain why taxing future generations for health care isn’t alright, but taxing them for climate change (or the occupation of Iraq or ever-increaing war budgets) is.  Either they’re fiscal hawks or they’re talking point recorders.  Talking point recorders don’t have any business deciding policy.

McCain on Climate and a Vet on McCain

John McCain, bastion of maverickness and good decision making has flip-flopped on dozens of issues over the years. He’ll say anything to anybody if he thinks it might help him. If Sen. Kerry had flip-flopped so much, the right-wing would have burst with joy. Interestingly, they just don’t care enough about McCain to say one something one way or the other, if you can get them to talk about him at all. Well, add the 21st century’s most critical issue to the list of issues McCain just can seem to talk straight about: climate change.

Recently, he was for a cap-and-trade carbon market. Quietly, he has taken such a proposal off materials from his campaign web site and hasn’t mentioned it in speeches recently. So McCain, like so many other staunch Republicans, has decided to show how little courage he really has for his convictions. If he doesn’t want a cap-and-trade system, he should be proud to bring that up and fight against it in debates. But hiding it away after he brought it up is cowardly.

More importantly in my mind, McCain continues to solidify himself as the most uncapable person available for the position of President of the United States. He wants to continue the failed approach of drilling in his energy “policy”. It’s been proven not to work in the past 30 years, but maybe four more would do the trick, right? McCain is running away from viable solutions to the most critical issue we face. He can keep doing so as a Senator and not the President next year.

***

I read an interesting piece written by a former classmate and POW of John McCain’s. It’s a well written expose regarding McCain’s capabilities as our chief executive. General Wesley Clark got slammed for saying something similar, but I want to continue pressing it:

I furthermore believe that having been a POW is no special qualification for being President of the United States. The two jobs are not the same, and POW experience is not, in my opinion, something I would look for in a presidential candidate.

I couldn’t agree more. John McCain is no more qualified to be president than Barack Obama just because he was a POW. He cheapens his service to our country by advocating as such.

“Think-tank” Parrot at Denver Post: David Harsanyi

The previous post dealt with the Denver Post’s editorial board’s take on the Climate Security Act, S.2191. One of their column writers, David Harsanyi, wrote a column today at the Denver Post about the same bill. David is one of many conservative columnists at the Post that gets space, both in print and in pixels, to share his views.

One of the pillars of his argument today is a familiar one to anybody who has heard right-wing talking points in the past 30 years: the government can’t govern. Which is exactly why Republicans lost control of Congress and a number of state governorships and state legislatures in 2006. And it’s exactly why they’ll lost even more seats this year as well as the White House. The American public is tired of hearing how government can’t do x, y or z. The public knows it can and wants to hear instead candidates’ plans to get government to work for them again.

Then, another big right-wing boogeyman talking point: “de facto taxes”. Interesting that Harsanyi brings up taxes in the climate change realm. I can’t remember seeing a piece by him written on the Iraq occupation taxes that are sucking the Social Security fund dry. Or how about all the de facto taxes that your phone company charges, or your bank, etc. Those are alright because they’re levied by corporations, not by the government. Guess which entity we the people have control over? Here is what it realistically boils down to: pay a little now to introduce a carbon market or pay everything you have and more in the future when the climate system shifts and we’re forced to deal with millions of people affected by them. Harsanyi mentions that the Wall Street Journal estimates the auctions of the credits will net $6.7 trillion for government coffers by 2050 before launching into his anti-investment talking point. Once again, it’s interesting that the $3 trillion the Iraq occupation is costing taxpayers doesn’t warrant the same level of attention, isn’t it?

Much more below the fold.

Climate Bill in Senate

There was a Denver Post editorial piece last week regarding the Climate Security Act, formally S.2191, introduced last year by Sen. Lieberman and Sen. Warner. The editorial called on Senators Salazar and Allard to support the bill. What would it do?

This bill, as currently written, would commit the U.S. to reducing carbon dioxide emissions by 4 percent below 2005 levels beginning in 2012 and by 71 percent by 2050. It would set out to achieve those goals by establishing what is called a cap-and-trade system. The government would establish a level of emissions that represents the cap: the maximum level allowable without penalties. Entities (such as corporations) that know they will or are likely to exceed that cap can purchase carbon credits on an exchange. Those credits are available on the exchange because other entities emit less than the cap. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those that can easily reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest possible cost to society.

So there are two things that I don’t like about this bill. The first is the baseline year: 2005. 2005 levels of carbon dioxide emissions were the highest verifiable value recorded. Values after 2005 might be available, but they’re not being discussed yet. In any event, I would much rather see 2000 or 1995 or 1990 as the baseline year. Those values would represent a more difficult target to hit, but I think they’re necessary given the seriousness of this situation. Part of me views 2005 values as alright. Another part, probably the more realistic part, views them as woefully inadequate. If we don’t get our emissions under control very, very soon, the biosphere as we knew it in the 20th century will be relegated to history books and old films. As a dynamic system, our climate can drastically shift given a small change in forcing. No one knows where we are in relation to any kind of potential tipping point.

The second thing I don’t like about this bill is the cap-and-trade system. To be more clear, I don’t think the way it looks like it will be set up will actually allow emissions targets to be met. I think there is too much wiggle room for the potential market to work effectively.

An emissions market was set up in the European Union (the largest economy in the world, btw) in January 2005 with all 15 (now 25 of the 27) member states of the EU participating. While the first phase (2005 – 2007) received criticism due to oversupply of allowances and the distribution method of allowances (via grandfathering rather than auctioning), Phase II links the Emission Trading Scheme to other countries participating in the Kyoto trading system. The European Commission has been tough on Member States’ Plans for Phase II, dismissing many of them as being too loose again.

I don’t expect the U.S. government, with its current makeup of denyers’ influence, to get tough on states or corporations or any other entities. Nobody should take a different make-up of government officials or attitudes for granted. The laws enacted need to be very tough. Technologies exist to achieve very aggressive goals. It’s the political will that’s been missing. This bill is one step down a long road of enacting solutions and possible recovery from the position we’ve put ourselves in.

I see the two problems mentioned above manifest themselves in different communities advocating for and against S.2191. And those positions are active in the pro-environmental segment of our society. For example, CREDO action is asking supporters to tell their Senators to either “fix it or ditch it”. I know both also exist in other segments, but won’t spend time addressing them in this post. The next post, however…

So it was interesting to see the Post editorial board call out both Colorado Senators regarding this legislation.

Global climate change deniers who insist we can continue to exponentially increase America’s dependence on imported oil and other fossil fuels are blindly promoting a policy of environmental and economic ruin.

That’s pretty strong words for a group I don’t consider progressive at all. They, like a quickly growing number of corporations, see what’s really going on. They’ve cut through the propaganda and spin and are ready to address the problem head on. If that doesn’t validate the significance of the climate change problem, not much else will. At least until we see, hear and read about significant physically visible changes.

The bill, as of Tuesday afternoon, is still in the midst of discussion and debate in the Senate. I’ll watch its progress moving forward.