Recent Studies Provide Examples of Emissions Trading Successes, Failures

The Nicholas Institute for Environmental Policy Solutions at Duke University
The Nicholas Institute for Environmental Policy Solutions at Duke University

The emissions trading program in the northeastern United States—the Regional Greenhouse Gas Initiative (RGGI)—is responsible for about half the region’s emissions reductions—an amount far greater than reductions achieved in the rest of the country.

The study in the journal Energy Economics determined that even when controlling for other factors—the natural gas boom, the recession, and environmental regulations—emissions would have been 24 percent higher in participating states without RGGI (subscription). RGGI, the first market-based regulatory program in the United States, is a cooperative effort among states to create a “cap” that sets limits on carbon dioxide emissions from the power sector—a cap lowered over time to reduce emissions. Power plants that can’t stay under the cap must purchase credits or “emissions allowances” from others that can.

“While the study focused on the northeastern states and the RGGI program specifically, the findings suggest that emissions trading could be a cost-effective strategy for states now considering how to comply with EPA’s recently issued regulations aimed at reducing carbon dioxide from power plants,” said Brian Murray, lead author and director of the Environmental Economics Program at Duke University’s Nicholas Institute for Environmental Policy Solutions.

A separate study in the journal Nature Climate Change found significant misuse of a key carbon offsetting scheme after several factories increased their production of industrial waste products—spiking emissions. It suggests that a loophole in the United Nation’s carbon market may have led to “perverse incentives” for some industrial plants to increase emissions so they could then make money by reducing them.

A companion study indicates that the majority of credits from Russia and Ukraine were a sham and that no emissions were reduced. In fact, the study estimates use of the sham offsets actually enabled greenhouse gas emissions to increase by some 600 million tons of carbon dioxide equivalent.

“We were surprised ourselves by the extent, we didn’t expect such a large number,” said study co-author Anja Kollmuss. “What went on was that these countries could approve these projects by themselves there was no international oversight, in particular Russia and Ukraine didn’t have any incentive to guarantee the quality of these credits.”

Study Quantifies Global Warming’s Contribution to California’s Drought

How much of California’s drought is due to climate change? A study published in Geophysical Research Letters has an answer: up to 27 percent. The study also indicates that climate change has made the odds of severe droughts twice as likely.

Global warming has worsened the drought through increased evapotranspiration, the contribution of which was quantified in detail for the first time by researchers at the Lamont-Doherty Earth Observatory, the National Aeronautics and Space Administration, and the University of Idaho who analyzed 432 combinations of precipitation, temperature, wind, and radiation data gathered between 1901 and 2014 to simulate monthly changes in soil moisture across California. When they modeled these combinations against various greenhouse gas emissions scenarios, they concluded that the state’s lack of rainfall is due to natural variability—a finding that accords with most other studies—but that California’s drought is 8 to 27 percent drier because of human-cause climate change (subscription).

“By knowing how much global warming has contributed to the trend in California drought conditions over the past century, we can reliably predict how the future will play out,” said A. Park Williams, a bioclimatologist at Lamont-Doherty who led the study. By the 2060s, Williams said, drought conditions will be more or less permanent, and evaporation will overpower bursts of intense rainfall.

Williams likened climate change to a “bully” that every year “demands more of your money than the year before. Every year, the bully—or atmosphere—is demanding more resources—or water—than ever before.”

He also said that California should more aggressively police groundwater withdrawals by agricultural operations, increasing use fees and fines for overuse. California is one of the few states that does not regulate such withdrawals, which after three years of drought have led to precipitous drops in groundwater tables and land subsidence.

Obama Announces Renewable Energy Initiatives

In the first stop on an 11-day climate and energy tour, President Obama announced a number of initiatives aimed at making it easier for homeowners and businesses to invest in clean energy technology.

“We are here today because we believe that no challenge poses a greater threat to our future than climate change,” said President Obama at the National Clean Energy Summit in Las Vegas. “But we’re also here because we hold another belief, and that is, we are deeply optimistic about American ingenuity.”

According to a White House fact sheet, these measures include:

  • $24 million for 11 projects in seven states to develop innovative solar technologies that double the amount of energy each solar panel can produce.
  • Approval of a transmission line for a 485-megawatt photovoltaic facility planed for Riverside County.
  • An additional $1 billion in federal loan guarantees available through a federal program for innovative versions of residential solar systems.
  • Creation of the Interagency Task Force to Promote a Clean Energy Future for All Americans.
  • Provision of residential Property-Assessed Clean Energy financing that facilitates investment in clean energy technologies for single-family homes.
  • Creation of a new HUD and DOE program to provide home owners with a simple way to measure and improve their homes’ energy efficiency.

Energy Secretary Ernest Moniz said federal support is critical as the clean-energy industry seeks to become further established, noting “The playing field is not always as level and that’s where investors and developers can have risks. That’s where things like our loan program come in.”

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

EPA Targets Methane Emissions from Oil and Gas Operations

The Nicholas Institute for Environmental Policy Solutions at Duke University
The Nicholas Institute for Environmental Policy Solutions at Duke University

On Tuesday the U.S. Environmental Protection Agency (EPA) took another step to make good on the Obama administration’s pledge to limit U.S. greenhouse gas emissions 26–28 percent by 2025 by proposing the first methane emissions rules for the nation’s oil and gas industry.

Reducing emissions of methane, which have 25 times the heat-trapping capacity of carbon dioxide, is a central component of the administration’s overall climate strategy. The administration’s goal is to cut methane emissions 40 to 45 percent from 2012 levels by 2025. The EPA expects to release its final methane rules next year, after it hears public comments.

“Today, through our cost-effective proposed standards, we are underscoring our commitment to reducing the pollution fueling climate change and protecting public health while supporting responsible energy development, transparency and accountability,” EPA Administrator Gina McCarthy said in a statement. “Cleaner-burning energy sources like natural gas are key compliance options for our Clean Power Plan and we are committed to ensuring safe and responsible production that supports a robust clean energy economy.”

The rules target new and modified oil and natural gas operations, but as Greenwire reports, they could eventually trigger regulation of methane leakage from the entire sector (subscription). The proposed rules call for oil and gas processing and transmission facilities to locate and repair methane leaks, capture natural gas from hydraulically fractured oil wells, and limit emissions from equipment—actions netting climate benefits of $120 to $150 million in 2025, according to the EPA.

As they are now, the proposed rules could achieve a cut of 25 to 30 percent by 2025, according to Janet McCabe, acting assistant EPA administrator for air and radiation. To meet the full 40–45 percent goal, the administration expects to rely on voluntary efforts, state regulations and a Department of the Interior rule covering drilling on public lands.

The rules supplement recently announced voluntary initiatives to address methane emissions at existing wells—emissions that may be greater than the EPA estimates according to new research.

A study conducted by scientists at Colorado State University and published in Environmental Science & Technology, quantifies emissions from thousands of gathering facilities, which consolidate gas from wells and feed it into processing plants or pipelines. These emissions have been largely unreflected in federal statistics, the report says, but may be the largest methane source in the oil and gas supply chain. These newly identified emissions would increase total emissions from that chain in EPA’s current Greenhouse Gas Inventory by approximately 25 percent.

Climate Action Declaration

Muslim scholars from 20 countries issued an “Islamic Declaration on Climate Change” on Tuesday, calling on the world’s 1.6 billion Muslims to work to eliminate greenhouse gas emissions by 2050 and to commit to renewable energy sources.

The declaration drawing on Islamic teachings and to be presented at the global climate summit in Paris was finalized at the International Islamic Climate Change Symposium in Istanbul this week.

“The pace of global climate change today is of a different order of magnitude from the gradual changes that previously occurred throughout the most recent era, the Cenozoic,” the declaration reads. “Moreover, it is human-induced: we have now become a force dominating nature. Our species, though selected to be a caretaker or steward on the earth, has been the cause of such corruption and devastation on it that we are in danger [of] ending life as we know it on our planet.”

The declaration asks Muslim countries, particularly those that are “well-off” and “oil-producing,” to lead the greenhouse gas phase out and to provide financial and technical support for climate change efforts by less-affluent states.

Alaska and Climate Change

Climate change could exacerbate one of Alaska’s worst wildfire seasons—one that has burned some 5 million acres of tundra and forests and ignited fears that large stores of carbon are being emitted into the atmosphere.

“We really need to start considering the long-term implications of big fires that are being predicted,” said Nicky Sundt, a climate change expert for the World Wildlife Fund. “In the Arctic, you have a lot of carbon locked up, and the fires will release that. We need to start thinking seriously about the carbon emissions from these fires.”

A recent Climate Central analysis shows that in the last 60 years large wildfires in Alaska have essentially doubled and that the wildfire season is 40 percent (35 days) longer than it was in the 1950s, mainly due to rapid warming in the globe’s northern reaches.

“The primary driver is temperature. The warmer we get, the more fires we seem to get,” Mike Flannigan, a wildland fire expert at the University of Alberta, said. “We need a 15 percent increase in precipitation to account for the warming. Very few climate models suggest there will be an increase in precipitation to compensate for the increase in temperature. The fuels will be drier in the future and it will be easy to start the spread of fire.”

Of particular concern—drying of peat, which then becomes susceptible to burning and release of centuries’ worth of carbon in the span of a few hours of intense fire. Teresa Hollingsworth, a researcher and ecology professor with the University of Alaska Fairbanks, told NPR that many of the state’s fires burned seven feet deep, where vast amounts of carbon are stored.

“The carbon released from fire emissions during a large fire year in Alaska is roughly equivalent to 1 percent of the global fossil fuel and land use emissions,” said Dave McGuire, a research scientist and leader of the U.S. Geological Survey’s Alaska Cooperative Wildlife Research Unit, in a recent press release.

Obama is visiting the state at the end of this month to highlight climate change impacts that go beyond fires.

“In Alaska, glaciers are melting,” Obama said in a video released last week. “The hunting and fishing upon which generations have depended for their way of life and for their jobs are being threatened. Storm surges once held at bay now endanger entire villages. As Alaskan permafrost melts, some homes are even sinking into the ground. The state’s God-given natural treasures are all at risk.”

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

Challenges Ahead for Clean Power Plan, Another EPA Rule

The Nicholas Institute for Environmental Policy Solutions at Duke University
The Nicholas Institute for Environmental Policy Solutions at Duke University

Less than two weeks after President Obama announced the U.S. Environmental Protection Agency’s (EPA) final Clean Power Plan rule, aimed at cutting carbon emissions from existing power plants 32 percent from 2005 levels by 2030, EPA Administrator Gina McCarthy has encouraged states to comply with the plan through emissions trading opportunities—emphasized far more in the final rule than the draft proposal.

It appears that some states may be examining whether they have trade-ready elements in common with other states. If so, they will be able to swap emissions credits with those states in order to comply with the rule.

“There’s been a lot of discussion, particularly in the West, where states are more loosely connected across the electricity grid, about an arrangement where states could adopt some common elements, and thereby allow the compliance entities in that state to trade among states that might not have submitted a joint plan but still have common elements in their plans,” said Colin McConnaha, a greenhouse gas specialist with the Oregon Department of Environmental Quality.

Despite the final rule’s flexibility, legal challenges are expected (subscription). Bill Bumpers, a partner at a law firm representing power companies, estimates 22–26 states are considering such challenges, a decision he called “more political than practical.”

The focus of many of these legal challenges, in my opinion, may very well be section 111(d) of the Clean Air Act. I spoke with MetroNews Talkline on this issue Wednesday, noting:

“The way the Clean Air Act is set up is that the traditional pollutants like ozone and particulates are regulated under one provision, what they call the hazardous air pollutants like mercury are regulated in a second provision and then there is this third provision, 111 that says if it is not covered under one of the first two then you regulate under 111(d) … Section 111 (d) has been rarely used over history because there hasn’t been a pollutant like CO2 in the mix. So that gives the EPA a lot of flexibility in how it executes because there are not years of precedent, but it also gives them some uncertainty in how the courts are going to interpret it.”

That flexibility may not be so clear for another EPA rule that a group of 16 states and the North Carolina Department of Environment and Natural Resources are challenging.

At issue—whether states can provide exemptions from emissions limits during periods of startup, shutdown, and malfunction. The court filing states “specifically, EPA erroneously concluded that the following State’s EPA-approved State Implementation Plans are ‘substantially inadequate’ with respect to periods of startup, shutdown and malfunction and must be revised.”

Carbon Emissions from Electric Power Plants Hit 27-Year Low

The U.S. Energy Information Administration (EIA) said those same emissions that the Clean Power Plan is trying to diminish hit a 27-year low in April (subscription). Figures released Wednesday show that electric power plants emitted 141 million tons of carbon dioxide in April 2015, the lowest since April 1988.

A big factor in the drop is the long-term shift from coal to cleaner and cheaper natural gas, according to EIA Economist Allen McFarland, who downplayed the role of, economic sluggishness. “You don’t have a 27-year low because of an economic blip. There are more things happening than that,” McFarland said, noting that the price of natural gas has dropped 39 percent in the past year.

Increased renewable fuel use and energy efficiency are additional factors, say other experts, including Princeton University Professor Michael Oppenheimer, who also highlighted the role of regulation.

“A factor behind all these trends is that the writing is on the wall about the future of coal and thus the future of U.S. carbon dioxide emissions,” said Oppenheimer. “The regulatory noose is tightening and companies are anticipating a future with lower and lower dependence on fossil fuels and lower and lower carbon dioxide emissions.”

Federal analysts predict that this year the amount of electricity from natural gas will increase 3 percent compared to 2014 while power from coal will go down 10 percent.

Significant changes in the electric power sector fuel mix since April 1988 have made electricity generation less energy and carbon intensive. Some analysts point out that power plant emissions have already fallen by about 15 percent since 2005, putting the country halfway to the Obama administration’s goal before the Clean Power Plan goes into effect.

Spring Release for Changes to MATS Rule

Court-mandated changes to the Mercury and Air Toxics Standard (MATS) rule, which requires coal-burning power plants to reduce emissions of toxic pollutants by installing control technologies, are expected by the EPA in 2016.

The EPA wrote in a filing with the U.S. Court of Appeals for the District of Columbia Circuit that it “intends to submit a declaration establishing the agency’s plan to complete the required consideration of costs for the ‘appropriate and necessary’ finding by spring of next year.” The Supreme Court ruled this summer that the Clean Air Act required the EPA to consider the costs of MATS when determining whether it was “appropriate and necessary” to regulate mercury emissions from the power sector.

In the filing, EPA lawyers note that there is “extensive documentation” of the cost of MATS. The rule will remain in effect while the lower court determines whether to vacate it as the EPA works on the cost issue, Detroit News reports.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

Final Clean Power Plan More Ambitious, Flexible

The Nicholas Institute for Environmental Policy Solutions at Duke University
The Nicholas Institute for Environmental Policy Solutions at Duke University

On Monday, President Obama announced the release of the final Clean Power Plan (CPP), which sets mandatory limits on the amount of carbon dioxide emissions the nation’s fleet of existing power plants may emit. The rule is projected to reduce emissions 32 percent below 2005 levels by 2030.

“We’re the first generation to feel the impact of climate change. We’re the last generation that can do something about it,” Obama said, noting that power plants are the single largest source of carbon pollution, a key contributor to climate change. “Until now, there have been no federal limits to the amount of carbon pollution plants dump in the air.”

Some Plan Particulars

The complicated and controversial 1561-page rule was developed by the Obama administration using existing authority under the Clean Air Act—specifically, section 111(d). The plan, according to a Washington Post op-ed, “is about as flexible as possible,” because it allows each state to come up with its own compliance program to meet the federal standards.

In broad strokes, the plan is designed to accelerate an already-underway shift from coal-fired electricity to cleaner natural gas and renewables, along with increased energy efficiency, by requiring existing power plants to meet specific carbon dioxide emissions reduction guidelines. The U.S. Environmental Protection Agency (EPA) calculated the targets based on a “best system of emissions reduction” comprised of three building blocks: making existing coal plants more efficient; shifting generation from coal to gas plants; and increasing generation from renewables.

Once the targets are set, however, states do not have to use the building blocks as a framework for their plans, and have been given a range of market-based, flexible mechanisms to reach their state targets.  In fact, emulating the flexibility afforded power plants under the market-based program devised in 1990 to reduce sulfur dioxide emissions, the CPP allows states to create “trading-ready” plans that will allow affected plants to sell emissions credits or to buy credits, if that’s a less expensive option than taking other actions. Parallel compliance approaches remove the need for formal interstate trading agreements, an approach described in one of Duke University’s Nicholas Institute for Environmental Policy Solutions’ recent policy briefs. Also facilitating trading are new state goals reflecting uniform national emissions rate standards for fossil steam (coal and oil) and natural gas power plants, respectively, reports ClimateWire (subscription).

The centerpiece of the Obama administration’s push to slash U.S. carbon emissions 17 percent below 2005 levels by 2020 and 26–28 percent below 2005 levels by 2025, the final CPP was timed to build momentum toward the start of international climate talks in Paris in November. Lord Nicholas Stern, a prominent economist in the U.K., said the rule’s release will “set a powerful example for the rest of the world,” and will reinforce the credibility of the U.S. commitment to greenhouse gas emissions reductions as a new international agreement on climate change is being finalized.

Significant Changes from the Proposal

Changes to the final plan were expected, given some 4 million comments on the proposed plan, and the plan did not disappoint. One big change, according to Acting Assistant Administrator for the Office of Air and Radiation Janet McCabe, is based on the assumption that renewable energy and regional approaches have even greater capacity for helping the power sector reduce emissions than reflected in the draft proposal (subscription). Consequently, the final plan will cut power plant carbon emissions 32 percent below 2005 levels by 2030, rather than the 30 percent target in the proposed rule.

The final rule also axed what the draft proposal referred to as Building Block 4, a criterion for achieving emissions reductions through programs that improve electricity consumers’ energy efficiency, as a means of calculating the state targets. Although these efficiency standards and under-construction nuclear plants were left out of the criteria for setting state goals under the plan, both are still available as compliance options.

The plan also includes a Clean Energy Incentive Program that rewards states for investing early (2020–2021) in renewable energy, specifically solar and wind power as well as demand side energy efficiency in low-income communities. Details of the incentive scheme are yet to be worked out, but the final rule goals do now expect renewable energy sources to account for 28 percent of the nation’s capacity by 2030—up from 22 percent in the proposal (subscription). The aim, said EPA Administrator Gina McCarthy is to incentivize renewable energy, which will lessen the reliance on natural gas as a replacement for coal power as the dominant compliance strategy.

Many other changes were anticipated in the Nicholas Institute’s most recent policy brief, including:

  • Additional time—an two extra years (to 2022)—for states to submit plans and begin cutting emissions;
  • Easing of the interim goals “glide path,” which states can now craft for themselves; and
  • New state mass emissions targets. These targets, based on states’ energy mixes and a uniform emissions rate for plants that use the same technology but no longer on demand-side energy efficiency, are less disparate than and also vastly different from those in the proposal. They also allow states to choose whether to use one target that includes the emissions from new natural gas units or another target that excludes these units (but still provides mechanisms to ensure that emissions cannot increase through new units).

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.