Energy Management

Caps and taxes and trades, oh my

Russ Kratowicz, P.E., CMRP, executive editor, says to take your environmental duties seriously, because we're in this together.

By Russ Kratowicz, P.E., CMRP, Executive Editor

In 2012, the Kyoto Protocol, which was designed to prevent climate change and global warming, will expire. If the world wants to continue that program, it will need a new climate protocol. The last opportunity for the signatories (at the government level) to do that occurs later this year.

That fact proved to be sufficient motivation for me to root around in the muck we call the Internet in search of some credible, practical, zero-cost, noncommercial, registration-free resources that I can lay at your feet. I hope I don’t get any of that muck on you. Remember, we search the Web so you don’t have to.

Longevity rules

The mass balance rule that says “input plus generation equals output plus accumulation” applies to greenhouse gases (GHG). Back in the pre-industrial days, we had the input quantity of GHG. Add to that what we’ve generated since. Then, subtract the output, which is the sum of what we’ve removed and sequestered plus what disappeared spontaneously, which happens at a rate determined by reaction kinetics. That leaves you with accumulation, the term that causes the ruckus that won Al Gore a Nobel Prize. Unfortunately, the accumulation term will remain high even if, from this day forward, we sequester everything that we generate. The reason is that Mother Nature’s kinetics governing the rate of spontaneous disappearance is well below what we need it to be. In short, once released, greenhouse gases, just like national deficits, last a really, really long time. And Lisa Moore, Ph.D., a scientist in the Climate and Air program at Environmental Defense, knows just how long. You can pick up these pearls of wisdom at http://green.yahoo.com if you enter the phrase “how long do greenhouse gases last” in the search box.

The world as one

If you step back a few paces to see the big picture, you’ll find that the world releases unbelievable amounts of what are recognized as greenhouse gases. According to the United Nations Framework Convention on Climate Change (UNFCCC), the appropriate units of measure for worldwide releases are teragrams (more than a million short tons) and gigagrams (more than 1,000 tons). And the UNFCCC and the signatories to the Kyoto Protocols sure are tallying lots of both. The details are captured for your inspection online. Pay a visit to http://unfccc.int and take a look at the enormous quantities of material lurking behind the “GHG Data” link. The resulting page, “Greenhouse Gas Inventory Data,” is a deceptively simple one until you click on one of the few links shown there. Then, the data spill forth in cornucopiatic fashion. This site is loaded with acronyms, some of which might even be comprehensible to us mere mortals. For example, a common acronym used in the tabulations is LULUCF, which stands for “land use, land-use change and forestry.” From there, you’re on your own. By the way, the United States isn’t a signatory to the Kyoto Protocol.

Flares and cement

The flares that a plant ignites to help burn excess hydrocarbons attracts attention in a big way, especially at night. Flares represent, to the assembled masses living around the plant, a conspicuous, intentional degradation of our environment. Then, the masses learn that cement plants are releasing enormous amounts of nasty gases. Next thing you know, we have protests and other activities that waste too much time. The truth is, however, that neither flaring nor cement plants are a truly significant source of greenhouse gas. This information comes from our hired hands at the Carbon Dioxide Information Analysis Center (CDIAC) at Oak Ridge National Laboratory. The CDIAC is the U.S. Department of Energy’s primary climate-change data and information analysis center. You can see the numbers if you’ll take the time to drop in at http://cdiac.ornl.gov and click on “Fossil-Fuel CO2 Emissions” at the far right. Next, click on “Global, Regional and National Annual Time Series,” which will let you click on the “National” icon. Now, scroll down to the entry for the good ol’ US of A and click on the “Graphics” icon at the top of the page. The two lowest lines on the graph represent releases from flares and cement plants. In the GHG issue, we have much bigger fish to fry.

Pay either way

Some folks would prefer to pay for the privilege of spewing out carbon dioxide or its equivalent by means of some per-ton tax. Others prefer that the country impose an ever-decreasing upper limit on the total carbon that it spews collectively year after year. Because involving the government in the mix introduces a certain element of politics, we turn to the Environmental Defense Fund, or EDF, a New York-based nonpartisan, nonprofit environmental advocacy group to help make sense of it all. The group’s Web site explains the difference between the two plans quite cogently with an article called “Cap Versus Tax” and another called “Cap and Trade 101.” These give you a basic idea of how the concepts work. Finally, if you want to explore some options for assuaging your guilt about emitting carbon into the atmosphere we share, you can use the link called “Carbon Offset List.” This shows where you can invest in projects that are supposed be countering any accusation of engaging in politically incorrect environmental profligacy. Get the full story at www.edf.org/home.cfm.

Carbon credit/offset

One result of a government placing a, perhaps arbitrary, cap on the total amount of greenhouse gases that it will permit its citizens and businesses entities to emit is an international market for carbon credits. The credits are supposed to be proportional to the amount of GHG reduction the originating country was able to implement. As you might expect, there are a few pieces of grit in what is supposed to be a relatively new but fluidly operating marketplace. Before your company jumps into the fray, you should let me direct your attention to Wikipedia and its broad-based intelligence. Go to http://en.wikipedia.org/wiki/Carbon_credit and scroll down to the section titled “Emission markets.”

Carbon credit/offset redux

The general idea behind carbon offsets is that any company that spends the money and effort needed to make a reduction in its greenhouse gas emissions can sell the rights to emit an amount of GHG equal to the reduction to another company that doesn’t reduce its GHG output. This transaction, in theory, can help pay for the original reduction effort. But, Joseph Romm, a senior fellow at the Washington, D.C.-based Center for American Progress, a liberal political policy research and advocacy organization, doesn’t think too highly of the concept. In Climate Progress, a blog that addresses carbon offsets and quite a bit of other relevant material, Romm makes it sound like the carbon offset trading mechanism as currently constituted is a scam. All I can suggest is caveat emptor and pay a visit to http://climateprogress.org where you should scroll down to click on the “Offsets” link listed under “Categories” in the left-hand column. Check out the entry titled “Is the Chicago Climate Exchange selling ‘rip-offsets’”?

Top and swap

Some people advocate the idea of establishing a maximum allowable GHG output for a geographic region and letting the free market determine who gets to pollute — the cap and trade concept. According to The Wall Street Journal, our regions aren’t going to be experiencing the same economic effects under the cap-and-trade proposals our hired hands in Washington are tossing around. At a fixed unit price of carbon emission, heavily industrialized regions will pay more. But, that’s not the only difference between regions. Walk down Wall Street and get the full story at http://online.wsj.com by entering the phrase “who pays for cap and trade” in the search box (top right). Look for the article of the same name. The original piece apparently caused quite a stir and WSJ published a follow-up piece, “Who Pays for Cap and Trade? — II,” just four days later. Read them in order. Be sure to review the reader comments, which are accessed by using the “Opinion Journal forum” link at the end of each article.

The free market

The Chicago Climate Exchange (CCX) claims to be “the only emissions-reduction and trading system for all six greenhouse gases and the only operational cap and trade system in North America.” To participate, an entity that emits GHGs makes a legally binding pledge to reduce emissions by at least 1% per year during the first four years, then an additional 2% during the next four years. Should one of the more than 110 participating members of the exchange fail to achieve the goal, it’s required to purchase carbon financial instruments (CFI), each of which represents 100 metric tons of CO2 equivalent. The seller of the CFI is either an emitting company that has exceeded its goals or one of the offset providers. The transactions are handled through an integrated registry, a carbon-exchange trading platform and a clearing and settlement platform. This site, www.chicagoclimatex.com has a lot of content densely presented in a relatively small font. Every greenie out there should have at least a passing acquaintance with the CCX.

Know the game

So, your business takes carbon that was in the ground and you put it into the air. You want to be a good corporate citizen and atone for that act of environmental degradation using the free market system. The next site raises a warning flag that indicates all carbon exchanges aren’t created equal. Some are more rigorous about ensuring the validity of the measures that are supposed to balance out the carbon that participants emit. Before your company gets too involved in carbon trading activities, you might want to consider the idea of reading the article titled “Study raises concerns over Chicago Climate Exchange offsets,” by James Murray, and appearing on businessgreen.com, a site owned by VNU Business Publications LTD, London. Just pop over to www.businessgreen.com and search on the phrase "buyers should avoid credits" (use the quote marks). Again, caveat emptor.

Tough sledding ahead

Robert Hetherington’s San Diego-based Altenergymag.com bills itself as an alternate energy e-magazine. In it, you’ll find an archive of previous e-magazines (each with freely accessible interesting articles); a three-segment learning library for consumers, those in the industry and industrial users; hundreds of links to newsgroups and mailing lists; organizations and associations; government resources; consultants and education sources. We came here for carbon credits and we learned that New Carbon Finance, London, a consulting firm that analyzes the world's carbon markets for its paying clients, believes that it’s going to be harder to cash in on carbon credits. The easy fixes that turn big money are disappearing. So, plants are going to have to scramble, and you might as well start by scrambling to www.earthtoys.com to click the search link at the upper right and enter the number 5079 in the space for the Google search of the site. Look for the entry titled “Easy carbon credits coming to an end.” In any case, this site is worth bookmarking if either your plant or domicile is contemplating a switch to any form of alternate energy.

Without comment

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Editor’s note: This column is intended to help you in some way to conquer the problems you face as a plant professional. What do you need to have us cover in this space? Let me know.

E-mail Executive Editor Russ Kratowicz, P.E., CMRP, at russk@putman.net.