On Tuesday, a lawyer hired by the world’s largest coal mining company told the House Energy and Commerce Subcommittee on Energy and Power that proposed requirements to reduce carbon dioxide emissions from power plants are reckless, and Senate majority leader Mitch McConnell of Kentucky, in an op-ed, said states should ignore them, but U.S. Environmental Protection Agency (EPA) administrator Gina McCarthy warned that the regulations will be enforced whether or not states chose to cooperate.
“The EPA is going to regulate. Mid-summer is when the Clean Power Plan is going to be finalized,” McCarthy said, noting that the EPA is developing a federal implementation plan that will apply to states that fail to submit their own compliance plans. “If folks think any of those pieces aren’t going to happen and [the Clean Power Plan] isn’t going to be implemented, I think they need to look at the history of the Clean Air Act more carefully. This isn’t how we do business.”
A new policy brief by Duke’s Nicholas Institute for Environmental Policy Solutions offers a compliance pathway for the EPA’s proposed Clean Power Plan that allows states to realize the advantages of multistate and market-based solutions without mandating either strategy. Under the common elements approach, states develop individual-state plans to achieve their unique emissions targets and give power plant owners the option to participate in cross-state emissions markets.
“States wouldn’t necessarily have to mandate market-based approaches or even endorse the approaches,” said Jonas Monast, lead author and director of the Climate and Energy Program at the Nicholas Institute. “What it would require is the states using a common definition of what a compliance instrument is and ensuring that somehow the credits are verified and tracked.”
The common elements approach would allow cross-state credit transfers without states’ negotiation of a formal regional trading scheme, leave compliance choices to power companies, build on existing state and federal trading programs and maintain traditional roles of state energy and environmental regulators.
Carbon Footprint of Crudes Varies Widely
A first-of-its-kind oil-climate index, produced by the Carnegie Endowment for International Peace’s Climate and Energy Program in collaboration with Stanford University and the University of Calgary, captures the huge spread between the most and least intensive greenhouse gas (GHG) oils. By calculating the carbon costs of various crudes and related petroleum products, the authors suggest that companies and policymakers can better prioritize their development.
The index reflects emissions from the entire oil supply chain—oil extraction, crude transport, refining, marketing, and product combustion and end use—and reveals an 80 percent spread between the lowest GHG-emitting oil and the highest in its sample of 30 crudes, representing some 5 percent of global oil production. That spread will likely grow when more types of crude oil, particularly oil from unconventional sources, are added to the index.
The lead emitter? China Bozhong crude, followed by several Canadian syncrudes derived from oil sands-extracted bitumen.
A blog post for the Union of Concerned Scientists suggested that the wide emissions spread should give rise to “more responsible practices like capturing rather than flaring gas” and that in some cases “the dirtiest extra-heavy resources are best left in the ground.”
The index, which highlights that attention to the entire lifecycle of a barrel of crude is critical to designing policies that reduce its climate impacts, was released days before the International Energy Agency reported that for the first time in 40 years of record keeping, carbon dioxide emissions from energy use remained steady in 2014. The halt, the report states, is particularly notable because it is not tied to an economic downturn.
More Renewables, Tougher Standards for Public Lands
Secretary of the Interior Sally Jewell previewed plans to make energy development safer on public and tribal lands and waters in a speech outlining priorities for the Obama administration’s final years.
“…our task by the end of this Administration is to put in place common-sense reforms that promote good government and help define the rules of the road for America’s energy future on our public lands,” Jewell said. “Those reforms should help businesses produce energy more safely and with more certainty. They should encourage technological innovation. They should ensure American taxpayers are getting maximum benefit from their resources. And they should apply our values and our science to better protect and sustain our planet for future generations.”
Among the measures to be unveiled in coming months: tightened spill prevention standards for offshore drilling, increased construction of solar and wind installations and a raise in royalties from coal mining.
Jewell also hinted at plans “in coming days” to propose rules governing hydraulic fracturing on public lands, which are believed to hold about 25 percent of the country’s shale reserves.
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.
The Environmental Protection Agency (EPA) is delaying the release of carbon emissions rules for all power plants and will publish them for new as well as existing plants at the same time mid-summer.
“It’s become clear to us … that there are cross-cutting topics that affect the standards for new sources, for modified sources and for existing sources, and we believe it’s essential to consider these overlapping issues in a coordinated fashion,” said Janet McCabe, the EPA’s acting administrator for air quality.
McCabe also announced that the EPA will begin drafting a “model rule” for states that do not submit individual plans to meet emissions reduction targets in the existing power plant regulations.
Under the proposed regulations for new sources, the EPA has functionally required new coal power plants to include carbon-capture technology, which critics of the emissions rules say lack proof of efficacy on a large scale and have a high cost to implement. In 2011, the American Electric Power Company reported that including carbon-storing processes at a West Virginia plant would cost an estimated $668 million.
California Cap-and-Trade System Includes Oil and Gas Sector
California’s cap-and-trade program—the country’s first multi-sector carbon emissions trading program—now requires gasoline and diesel producers to supply lower-carbon fuels or to buy carbon allowances—pollution permits—for the greenhouse gases emitted when those fuels are burned.
Key program stakeholders, industry leaders, public officials and environmental advocates agree that consumers will see a rise in gas prices, but the amount remains uncertain.
“There’s a very large universe of variables which could affect gas prices on a daily basis, and we don’t set fuel prices,” said California Air Resources Board spokesperson Dave Clegern. He added, “We don’t see them going up more than a dime, at the most, based on any current cap-and-trade compliance costs.”
It is estimated that 25 percent of secured funds from the emissions trading program will be allotted to the state’s high-speed rail project.
California’s program includes an allowance reserve initially proposed by Nicholas Institute and Duke University researchers that prevents carbon allowance prices from reaching levels beyond the scope of purchasers.
Congress Prepare to Vote on Keystone XL Pipeline
The Senate Energy and Natural Resources Committee has cleared legislation to approve the Keystone XL pipeline, which would deliver some 830,000 barrels of oil a day from Canada’s oil sands to Gulf Coast refineries. But White House press secretary Josh Earnest, citing the Obama administration’s “well-established” review process, said, “If this bill passes this Congress, the president wouldn’t sign it.”
The pipeline has become a flash point in the debate over climate change and economic growth.
In a December 19 press conference, the president said, “I want to make sure that if in fact this project goes forward, that it’s not adding to the problem of climate change, which I think is very serious and does impose serious costs on the American people, some of them long term, but significant costs nonetheless.”
Critics of Keystone have pointed to the carbon intensive production of the crude it will carry. In an op-ed in The Hill, the new president of the Natural Resources Defense Council, Rheh Suh, called production of oil from Canadian tar sands an “environmental disaster.”
Supporters argue that Keystone will be a source of economic stimulus. In a statement, Energy and Commerce Committee Chairman Fred Upton said, “After six years of foot-dragging, it’s time to finally say yes to jobs and yes to energy. It’s time to build [this pipeline].”
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.
In its Policy Assessment for the Review of the Ozone National Ambient Air Quality Standards report—released Friday—the U.S. Environmental Protection Agency (EPA) suggests revising the health-based national ambient air quality standard for ozone.
“Staff concludes that it is appropriate in this review to consider a revised primary [ozone] standard level within the range of 70 ppb [parts per billion] to 60 ppb,” the report said (subscription). “A standard set within this range would result in important improvements in public protection, compared to the current standard, and could reasonably be judged to provide an appropriate degree of public health protection, including for at-risk populations and life stages.”
The report is part of the normal EPA process to consider changing air quality standards. It recommends tightening current smog rules—now at 75 parts per billion—somewhere between 7 and 20 percent, echoing findings of the EPA’s science advisory committee in June. A final decision lies with EPA Administrator Gina McCarthy, who has a Dec. 1 deadline to issue a proposal on whether to retain or revise the existing standard.
Earlier in the week, McCarthy announced plans to issue a methane strategy emphasizing efficiency and reducing the need to flare gas—a strategy that could force oil and gas producers to cut emissions.
“We’re going to be putting out a strategy this fall and we hope everybody will pay attention to that effort,” McCarthy said at the Barclays Capital energy forum on Tuesday. “It will be addressing the challenges as well as the opportunities.”
Whether or not actual regulations for the industry will be issued is still being decided. McCarthy noted that the agency is “looking at what are the most cost-effective regulatory and-or voluntary efforts that can take a chunk out of methane in the system.”
This effort follows on the heels of an announcement by the White House that directed the EPA to develop an inter-agency strategy to combat methane emissions from oil and natural gas systems. If issued, rules to cut methane emissions would take effect in 2016.
China Eyes Carbon Market
Reuters reports that China will launch the world’s largest carbon market in 2016, although some provinces would be allowed to join later if they lacked the technical infrastructure needed to participate at the outset. “We will send over the national market regulations to the State Council for approval by the end of the year,” Sun Cuihua, a senior climate official with the National Development and Reform Commission (NDRC), told a conference in Bejing.
Confirming the earlier statement by Cuihua, Wang Shu, an official with the climate division of the NDRC said “We’ve brought forward this plan because it’s been prioritized in the central government’s economic reforms. The central government is pushing reforms, so everything is speeding up.” According to Reuters, as in other carbon markets, power plants and manufacturers would face a cap on the carbon dioxide they discharge. If an emitter needs to exceed its cap, it will have to purchase additional permits from the market to account for such emissions.
Court Finds BP Grossly Negligent in 2010 Gulf Spill
A U.S. District judge on Thursday ruled that BP was “grossly negligent” in the 2010 Deepwater Horizon explosion that killed 11 men and allowed millions of barrels of oil to flow out of the Macondo oil well into the Gulf of Mexico.
“The court concludes that the discharge of oil was the result of gross negligence or willful misconduct,” by BP, the ruling from U.S. District Court Judge Carl Barbier said. He found that BP was at fault for 67 percent of the spill. Two other companies involved—Transocean and Halliburton—were responsible for 30 and 3 percent, respectively.
“The law is clear that proving gross negligence is a very high bar that was not met in this case,” BP said in a statement. “BP believes that an impartial view of the record does not support the erroneous conclusion reached by the District Court. The court has not yet ruled on the number of barrels spilled and no penalty has been determined. The District Court will hold additional proceedings, which are currently scheduled to begin in January 2015, to consider the application of statutory penalty factors in assessing a per-barrel Clean Water Act penalty.”
Judge Barbier’s ruling could result in as much as $18 billion in fines under the Clean Water Act, according to The Hill.
Bacteria Used to Make Alternative Fuel
A study in the journal Nature Communications suggests that Escherichia coli, or E. coli bacteria, which is widely found in the human intestine, can be used to create propane gas that can power vehicles, central heating systems and camp stoves.
“Although this research is at a very early stage, our proof of concept study provides a method for renewable production of a fuel that previously was only accessible from fossil reserves,” said Patrik Jones, a study co-author. “Although we have only produced tiny amounts so far, the fuel we have produced is ready to be used in an engine straight away. This opens up possibilities for future sustainable production of renewable fuels that at first could complement, and thereafter replace fossil fuels like diesel, petrol, natural gas and jet fuel.”
Commercial production is still five to 10 years away—the level of propane produced by the team is 1,000 times less than that needed to make a commercial product. The process, which needs further refinement, uses E. coli to interrupt a biological process to create engine-ready propane rather than cell membranes.
“At the moment, we don’t have a full grasp of exactly how the fuel molecules are made, so we are now trying to find out exactly how this process unfolds,” Jones said.
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.
On the coattails of the U.S. Environmental Protection Agency’s proposed rule for regulating carbon dioxide emissions from existing power plants, the White House issued a report on the health effects of climate change. The seven-page report outlines six major risks linked to rising temperatures—asthma, lung and heart illnesses; infectious disease; allergies; flooding-related hazards and heat stroke.
But one week after release of the EPA rule, most conversation centered on how the states will undertake their role in executing it. States in the Regional Greenhouse Gas Initiative were hopeful their participation in the carbon trading program would help meet the requirements of the new rule. Lawmakers in at least eight states approved anti-EPA resolutions. Kentucky has enacted a new law that could block the state from complying with the rule, and West Virginia sent a letter to the EPA requesting the agency to withdraw the rule.
The proposal, which assigns each state interim and final emissions goals and asks the states to develop plans to reach them, accounts for the regional differences that affect how hard it will be to reduce emissions. The differences are both practical—how expensive one energy source is compared to another—and political. The proposal does say it “anticipates—and supports—states’ commitments to a wide range of policy preferences,” including decisions “to feature significant reliance on coal-based generation.”
States using a more traditional regulatory approach to execute their plans may be choosing a more costly approach than putting a price on carbon. New research from the Massachusetts Institute of Technology finds that a regulatory standards approach cut less carbon at a higher price than emissions reductions that could be achieved under a cap-and-trade system (subscription).
“With a broader policy, like cap-and-trade, the market can distribute the costs across sectors, technologies and time horizons, and find the cheapest solutions,” said a study author Valerie Karplus. “So the market encourages emissions reductions from sectors like electricity and agriculture, and requires reductions from vehicles and electricity at a level that makes economic sense given an emissions target. On the other hand, narrow regulations force cuts in ways that are potentially more costly and less effective in reducing emissions.”
According to a Bloomberg national poll, Americans—by nearly a two-to-one margin—are willing to pay more for energy if it helps combat climate change. A recent Rasmussen Reports poll had similar findings, showing that most voters approve of the EPA’s new regulations even if there is a rise in energy costs. Here at the Nicholas Institute for Environmental Policy Solutions, we looked ahead to the possibility of a further expansion of Clean Air Act standards limiting carbon dioxide emissions from other sectors. In particular, a new policy brief identifies key differences between the electric power and refining industries, highlighting their potential significance for regulating the refining industry. A companion working paper more deeply examines policy design as well as options for maximizing cost effectiveness while accounting for differences among refineries.
Study: Agricultural Emissions Can Be Curbed
Worldwide, agriculture accounts for about 80 percent of human-caused emissions of nitrous oxide, a greenhouse gas with 300 times as much heat-trapping power as carbon dioxide. Overuse of nitrogen fertilizer is increasing these emissions.
A study in the journal Proceedings of the National Academy of Sciences found that soil microbes were converting nitrogen fertilizer (subscription) into nitrous oxide faster than previously expected when fertilizer rates exceeded crop needs. In fact, the change was happening at a rate of about one kilogram of greenhouse gas for every 100 kilograms of fertilizer.
“Our specific motivation is to learn where to best target agricultural efforts to slow global warming,” said Phil Robertson, author of the study and director of Michigan State University’s Kellogg Biological Station. “Agriculture accounts for 8 to 14 percent of all greenhouse gas production globally. We’re showing how farmers can help to reduce this number by applying nitrogen fertilizer more precisely.”
The study offers proven ways to reduce nitrogen use—applying fertilizer in the spring instead of fall and placing it deeper in the soil for easier plant access. It also provides support for expanding the use of carbon credits to pay farmers for improved fertilizer management.
This week, the first agricultural greenhouse gas emissions offsets were issued to a Michigan farmer whose voluntary decrease of nitrogen fertilizer use on corn crops reduced nitrous oxide emissions.
Crude Oil Production to Increase
U.S. crude oil production will reach its highest level—9.3 million barrels per day—in 2015, according to the latest Energy Information Administration (EIA) forecast, issued Tuesday. The EIA estimates 8.4 million barrels per day for 2014—the United States averaged 7.4 million in 2013.
The increase will not have a dramatic effect on gas prices. The EIA reports that the U.S. average price for gasoline is expected to fall to $3.54 a gallon in September and to $3.38 a gallon in 2015.
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.
A new study by Canadian researchers finds the United States, Germany, the United Kingdom, China, Russia, and developing nations Brazil and India were responsible for more than 60 percent of global temperature changes between 1906 and 2005. The U.S. alone was responsible for 22 percent of the warning; China followed at 9 percent and Russia at 8 percent. Brazil and India each contributed 7 percent; the U.K. and Germany were each responsible for 5 percent. The findings, authors said, are particularly important for diplomats working toward a deal in 2015 to limit emissions.
“A clear understanding of national contributions to climate warming provides important information with which to determine national responsibility for global warming, and can therefore be used as a framework to allocate future emissions,” researchers said in their paper, published in the journal Environmental Research Letters.
To restrict warming to U.N. targets of 2 degrees Celsius, rising world emissions would need to drop 40 to 70 percent by 2050, Reuters reports. U.N. Framework Convention on Climate Change Executive Secretary Christiana Figueres said number two historic emitter China is taking the right steps to address global warming with its energy-efficiency standards for buildings and other renewable energy commitments. In the U.S. carbon emissions from energy fell 12 percent between 2005 and 2012, but the U.S. Energy Information Administration estimates a 2 percent increase in these emissions in 2013.
Global Energy Demand Growth, Renewable Investment Slowing
Global energy consumption continues to grow, but slowly. The fourth annual edition of the BP Energy Outlook 2035 pegged growth at 41 percent compared with 55 percent the last 23 years. Although demand from emerging economies is predicted to rise steadily, energy demand elsewhere will slow through 2035.
The U.S., the report said, will be able to provide for its own energy needs in the next two decades with the acceleration of shale oil and gas production. Natural gas, in particular, will overtake oil as the country’s most used fuel as early as 2027—accounting for 35 percent of U.S. consumption by 2035. Oil, however, will be the slowest growing of the major fuels with demand rising on average 0.8 percent annually. Still, U.S. oil imports are expected to drop 75 percent through 2035.
In Europe, the energy market is predicted to rise just 5 percent by 2030 and to become more dependent on imports of gas. China’s energy production will rise 61 percent with consumption growing 71 percent by 2035.
The release of BP’s Energy Outlook comes the same day Bloomberg New Energy Finance revealed that global investment in clean energy fell 12 percent last year.
“Global investment in clean energy was USD 254 billion last year, down from a revised USD 288.9 billion in 2012 and the record USD 317.9 billion of 2011,” a release from Bloomberg stated. In Japan, clean energy investment spiked as a result of small-scale solar installations.
RGGI States Reduce Emission Cap in 2014
States participating in the Regional Greenhouse Gas Initiative (RGGI) dropped their carbon dioxide emissions cap for power plants 45 percent for 2014 to 91 million tons. The initiative, which partners New York, Delaware, Maryland, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire and Maine, aims to reduce these states’ power plant pollution by half of 2005 levels.
“RGGI has once again proven that state leadership provides the laboratory for innovation,” said Kenneth Kimmell, commissioner of the Massachusetts Department of Environmental Protection and RGGI chair. “RGGI is a cost-effective and flexible program that can serve as a national model for dramatically reducing carbon pollution for other states throughout the nation.”
Within the program, each power plant is assigned an amount of carbon dioxide it can release, but the plants can buy and sell allowances to increase or decrease their emissions. At the first allowance auction under the new limits March 5, states will offer up 18.6 million carbon dioxide allowances.
Appellate court arguments surrounding New Jersey’s 2011 exit from the trading program began this week.
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.