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  • Changing Climate: Carbon tax Gaining Momentum over Cap-and-trade?

     

    And herein lies the big “hairy” problem for proponents of cap-and-trade. If people can’t easily understand or trust something, they aren’t likely to buy into it. That’s been one of my chief complaints against carbon cap-and-trade.  It’s simply too complicated for most people, even many experts, to understand.

    That’s why I prefer a carbon tax — it’s transparent and simple.  And I’m hardly alone. Democrat Al Gore, who put climate change on the social and political map with his book and movie “An Inconvenient Truth,” was an early proponent for a carbon tax. “Democrat turned Republican turned independent” New York Mayor Michael Bloomberg has called for a tax instead of cap-and-trade. Others on both sides of the political spectrum and in between who have voiced support for a carbon tax include New York Times columnist Thomas Friedman; South Carolina Republican Congressman Bob Inglis; NASA Goddard Institute for Space Studies director James Hansen; Exxon Mobil CEO Rex Tillerson; and economist  Jeffrey Sachs.

    I have good friends who are ardent supporters of cap-and-trade — and they probably won’t like this column. But here’s the rub — in private many of them will admit that in an ideal world a carbon tax would be an easier, efficient and more streamlined mechanism. They just don’t believe it’s politically viable, whereas they think cap and trade is. So they support cap and trade not because it’s better but because they view it as possible.

    I was speaking recently with Gregg Small, executive director of non-profit Climate Solutions (our partner in the Carbon Free Prosperity report). He stressed something to me in our conversation that I found very interesting. “Even though we prefer cap and trade, the issue that we’re talking about most is the need for an enforceable cap on emissions. We’re open to many different mechanisms for making the cap work as long as it is fair, well-designed, and achieves the desired emission reductions.”

    He’s absolutely right on that point. Setting caps is a great way to guarantee that governments and industries meet critical greenhouse gas reduction goals. Part of the issue of the carbon tax vs. cap-and-trade debate is that it obscures a critical point. You can have a tax and a cap — they’re not mutually exclusive. Connecticut Rep. John B. Larson, chair of the House Democratic Caucus, has introduced a bill that could provide both. The bill, as currently written, would require an annual carbon reduction target (based on meeting an 80 percent reduction from 2005 carbon emission levels by 2050) and a price on carbon to help achieve the reduction targets. The bill proposes starting with a price on carbon of $15/ton, and increases annually at varying rates, depending on if emission reduction targets are met or not.

    At the end of the day, I think we need three things in any effective carbon policy: 1) A stable and increasing price on carbon that will account for fossil fuel-based externalities in a transparent and simple way; 2) a cap on emissions that meets critical reduction targets;  and 3) a distribution of the tax revenues that reduces other taxes (keeping the plan near revenue-neutral) and distributes a small portion of the revenues (I’d recommend around $15 billion a year for a decade) to clean-tech development and deployment. By making sure a portion of these dollars is spent on technology build out, we can help keep America at the forefront of the emerging global clean-tech economy.

    As more and more people speak out in favor of a carbon tax, and momentum builds, I think that a carbon tax could be just as much a political reality as cap-and-trade.  The Obama team is clearly serious about advancing clean energy, low-carbon transportation, conservation/efficiency, green buildings, and the smart grid. But as we move forward — I hope the Administration, House, and Senate take another look at the policy toolkit — and don’t dismiss or abandon the concept of a carbon tax. A price on carbon is the signal that will ultimately guarantee a true shift in our economy away from polluting and extractive industries to low carbon, renewable ones. Let’s be sure to design a carbon pricing system that’s fair; that will result in real and measurable greenhouse gas emission reductions; that can be explained readily and easily; and that is transparent to all stakeholders. The way to do that, I believe, is a carbon tax with a set emissions cap.

    Ron Pernick is cofounder and managing director of Clean Edge, Inc.; coauthor of The Clean Tech Revolution; and sustainability fellow at Portland State University’s School of Business.

  • Solar shootout in the San Joaquin Valley

     

    The Phase Two tracking system, which went active in late March, uses cadmium telluride (CdTe) modules from First Solar, chosen because they are expected to perform at a lower cost/watt than crystalline modules, according to David Vincent, Western U.S. project director for Conergy. They add 419 kW to the project, and it is believed to be the first commercial thin-film solar tracking system in the U.S.

    Thin-film modules “can outperform monocrystalline in areas prone to hazy, overcast conditions or in industries that generate dust or high degrees of air particulates,” according to Vincent. They are also superior when there is frequent fog, such as in coastal areas. The reason, he says, is the sensitivity of the thin-film cells to a broader span of the solar spectrum, including infrared and ultraviolet regions.

    Thin-film cells also should perform better when dust covers the surface, he added. Another advantage of thin-film modules is that less interconnect is needed between cells, so that there is less rise in resistivity and heat loss on hot days, he explained.

    Early indications, Vincent says, are that the output/DC kW of the thin-film modules is about 10% higher that of the monocrystalline.

    The project, known as the Robert O. Schultz Solar Farm, will handle almost all of the power needs for a water treatment plant that provides 40 million gallons/day for 155,000 residents and businesses of four nearby communities, as well as irrigation water for 55,000 farm acres. The main goal of the project is to stabilize electrical costs, which can spike in summer months because of time-of-use metering, according to Don Battles, utility systems director for SSJID. Also, these are times when solar output is at a maximum.

    To reduce long-term maintenance requirements for the thin-film tracking system, the number of drive motors had to be minimized. The challenge was to effectively drive more than 30 tons of modules and steel following the sun’s trajectory with each 2hp motor. This was done by means of a 30-ton screw jack and engineered counter-balance.

    Power generation data for the crystalline and thin-film modules will be fed from equipment that Conergy installed on inverters to Fat Spaniel Technologies, a nearby monitoring and reporting company. The analysis is put online so that it can be tracked by SSJID’s Battles and his team from offices located more than 20 miles from the solar arrays.

    The data on the Fat Spaniel Web site also allows the group to compare the 1-MW Phase One solar-tracking system with a number of fixed installations, such as a 1-MW fixed-axis rooftop system at a fruit packing firm in Hanford, CA, a system that Conergy also installed. Battles indicates that the output at the water treatment tracking facility is typically 15%-18% ahead, even though he believes the sun is better at the Hanford location.

    The irrigation district expects to save nearly $400,000 a year in utility costs due to the solar system, while getting millions of dollars in state incentives.

    Conergy’s Vincent says that the side-by-side face-off between monocrystalline and thin-film systems is attracting worldwide attention, particularly in Europe where solar has advanced much further than in the U.S.

    The performance of thin-film modules under the hazy, often foggy conditions is attracting considerable interest in the California valley region, according to Vincent. For example, a 188-kW thin-film fixed solar array is being installed by Conergy in Hanford, CA, for Verdegaal Brothers, a fertilizer, warehousing and soil and water amendment supplier.

    Vincent said that the First Solar CdTe thin-film installation takes about 10%-15% more ground space, but provides more energy and is expected to cost 10%-15% less than a monocrystalline array. The facility is expected to offset Verdegaal’s utility bills by 99%, cutting some $60,000 a year, while providing for 82% of the company’s energy needs. Over the 25-year life of the system, which is scheduled to start up in July, emissions are expected to be reduced by 6,145 tons of CO2.

    This article was originally published by Photovoltaics World and was reprinted with permission.

  • Consumer confidence hit by Kevin Rudd’s budget: survey

    The grim response to the budget, which forecast a record deficit of $57.6 billion (4.9 per cent of national output) and a contraction of 0.5 per cent in the fiscal year starting July 1, may also dash any hopes Prime Minister Kevin Rudd has of calling an early election.

    Mounting constraints on the budget and the dour mood of consumers raises the potential for another interest rate cut by the Reserve Bank of Australia.

    RBA governor Glenn Stevens told a business group yesterday confidence measures would feature largely in month-to-month “tactical” decision making by its policy making board.

    It was a clear signal the RBA still intends to cut rates if confidence dives again. Economists expect optimism to be tested as unemployment climbs over the next year.

    Mr Evans said the RBA has policy firepower left, possibly as much as 100 basis points of more cuts if needed, taking the official cash rate target to 2 per cent.

    “I’m pretty sure we’ll be seeing some of those bullets being fired in the second half of this year,” mr Evans said.

    Treasury Secretary Ken Henry is also feeling some pressure after three major fiscal stimulus efforts have strained the budget. He also said this week that Australia needs to guard against further erosion of its balance sheet.

    Mr Rudd dodged direct questions about the extent of the Government’s remaining fiscal flexibility in an interview on Adelaide radio early today, saying only that spending so far had successfully buoyed retail sales.

    Annette Beacher, senior strategist at TD Securities, described the consumer confidence retreat as a disaster given that it followed the release of direct payments of $900 each to a large chunk of the population to boost demand.

    Australian financial markets were not fully pricing in the potential for interest rates being “lower for longer,” Ms Beacher said.

    Also today, wages growth in Australia showed further signs of moderation in the face of the global economic slowdown.

    Australian wages excluding bonuses rose 0.8 per cent in the first quarter of 2009 from the fourth quarter 2008 and rose 4.2 per cent from a year earlier, Australian Bureau of Statistics labour price data issued today showed.

    Economists surveyed ahead of the announcement on average forecast a rise of 0.85 per cent over the quarter and 4.2 per cent from a year earlier.

    “The recent easing (and expected continued deterioration) in employment conditions suggests that wage inflation should remain on a downtrend,” said Besa Deda, chief economist at St George Bank.

  • Poltical stupidity and hydrocommerce madness

    If it’s good enough for international marketeers like Summit Global Management to see water as a “stable, non-cyclical, low-risk investment”, why isn’t it good enough for the NSW State Government?
    Premier Nathan Rees was quick off the mark to announce that Sydney’s water supply is secure for the next 50 years with Veolia Water – a private company – being granted a licence to draw from the Fairfield Sewage Treatment Plant, recycle the waste and sell it. On top of the desalination plant – which coincidentally is also being built by Veolia Water and John Holland Group Pty Ltd – this will, we’re told, have a positive effect on dam levels.
    Media reports confirmed that the 4.3 billion litres of treated water produced by the plant annually will be transported through a 20-kilometre network of retrofitted gas pipes and used at places like Rosehill Racecourse and the Shell refinery at Clyde. What they didn’t mention is that another State Government licence permits Jemena Limited – formed when Singapore Power acquired assets and asset management business from the sale of Alinta Ltd in 2007 – to build, own, manage and operate a recycled water network that will initially transport up to 4.3 billion litres of recycled water a year from Veolia Water’s recycled water plant to industrial and irrigation customers in Western Sydney. They also fail to mention the involvement of AquaNet Sydney Pty Limited, which also is part of the Jemena group.
    All good in terms of our water future? Not if you look more carefully. At the April 2009 Australian Water Summit Maude Barlow, senior adviser on water to the President of the United Nations General Assembly, said:
    “…governments at all levels have bought into the notion that water is a commodity, best allocated by the market, and now increasingly in the hands of largely unregulated private water brokers. This development dates back to the 1994 decision to establish an open water market in Australia … there is no vision and no overall plan to save Australia’s water heritage other than a vague belief in the magic of markets and kneeling to the throne of big technology … The steady slide to a market system of water allocation will have dire consequences: the rich will have preferable access; there will be no incentive to protect source water as it is not profitable to do so; and nature will have to fend for itself … Australia must declare its water to be a public trust … Governments simply do not have the power or right to afford water ownership rights to corporations or private interests, or tradable rights without a mandate from the Australian people who are the rightful owners along with the environment, of Australia’s water resources … privately owned municipal water service providers should be replaced by not-for-profit public systems delivering clean safe water as a public service … corporations should not determine the allocation of water; that is the role of government…”
    During the same summit Ms Barlow noted that:
    “Building big desalination plants, weirs, and pipelines such as the Victoria Government’s North-South pipeline, (being done without an environmental assessment) also gives control over Australia’s water to foreign water corporations. It is ironic that the two big French companies bidding on the Wonthaggi plant – Suez and Veolia – are about to lose their Paris water licenses when they come up for renewal in a few months.”
    Has Mr Rees bothered to investigate why that might be so?
    What Mr Rees doesn’t make any statement about is how these recent allotments tie in with the Water Industry Competition Act 2006. It commenced on 8 August 2008, with the backing of the Opposition, opening the doors for private players – including foreign companies – to control, among other things, drinking water for retail consumers.
    Where was the Government’s mandate to introduce this legislation, which seems to me to be a critical part of the process of privatising by stealth a critical public resource? The NSW Government is only too well aware what voters think about privatising public resources, like electricity: ask former NSW premier Morris Iemma. In a country where water is becoming more scarce, has the Government properly explained the effect of its water legislation to the people of New South Wales, let alone sought or obtained their approval?
    The Act was designed to “encourage competition in the water industry and to promote innovative solutions to the water supply-and-demand balance, particularly in so far as the development of infrastructure for the production and distribution of recycled water is concerned”. Experts like former CSIRO chief research scientist Mike Young are of the view that Australians don’t pay enough for their water, especially during times of shortages, so I assume no water-consuming citizen of New South Wales raised concerns about “industry competition” with the State Government? Where did the impetus for these changes really come from?
    I don’t have a problem with the involvement of the private sector in water recycling, but I do have a problem with the private management of water without very tight government regulation. Water is a commodity like no other. Perhaps Mr Rees should be reminded that the private sector can’t always be trusted to do what’s in the best interests of all people.
    This view I apparently share with the Public Interest Advocacy Centre, the Council of Social Service of New South Wales and the Nature Conservation Council of NSW who accepted that there may be benefits from competition for the supply of non-potable and recycled water to the business and industrial sectors, but who do not believe that the potential benefits of retail competition for residential users (in this case, consumers currently serviced by Hunter Water and Sydney Water) outweigh the potential costs of market failure in this area.
    Anyone who follows water developments internationally knows that locking in residential consumers is precisely what international corporations are interested in.
    I suspect the Water Industry Competition legislation has not been widely reported because people don’t yet appreciate the likelihood that recycled water may soon be a necessary source of drinking water, and that the ownership of recycled water supplies and the infrastructure that creates it or which it passes through will then be a very valuable asset.
    While the Government may say it is not really privatising water, but rather delegating the management of utilities or operating them in partnership, the fundamental and very real issue is access to water. The key to access is control, and who ultimately controls the tap, Mr Rees?
    Under the Water Industry Competition Act 2006 a licensed network operator is the owner of its water industry infrastructure, whether or not the land in, on or over which it is situated is owned by the network operator, and that infrastructure is not to be taken in execution of any judgment against a person other than the network operator under any process of a court. Where exactly does this leave the current and any future State Government if it becomes necessary to cancel a licence in the interests of the public?
    Does the State Government propose to call on God as a supplier of last resort if it doesn’t own and can’t get hold of the water infrastructure?
    The Act defines “water industry infrastructure” as water infrastructure or sewerage infrastructure, and “water infrastructure” essentially means any infrastructure that is, or is to be, used for the production, treatment, filtration, storage, conveyance or reticulation of water.
    The Government makes assurances about water quality and public health, the construction and maintenance of water industry infrastructure and consumer protection, but we have received assurances like that before which have ended up ringing hollow, especially where Ministers have the ultimate power to grant and cancel licences.
    One would have thought that before bringing the legislation into operation a Government that was serious about protecting the interests of people and the environment would have actually put in place a water industry code of conduct, a marketing code of conduct and a transfer code of conduct for the transfer of water supplies or sewerage services to, from or between licensed retail suppliers before it handed over to “private” players the keys to our most importance resource.
    To date we have been told that:
    around 30 per cent of the total cash that is generated by the allegedly better performing water utilities will end up in the Treasury (which arguably creates conflicts in terms of government introducing water saving measures);
    Sydney Services Pty Ltd was blocked when it wanted to connect to the Sydney sewage system with a proposal to clean and deliver water to any quality standard, a program which would be financed from water rates from customers choosing its sewage services rather than Sydney Water’s. Why?
    in 2007 Lend Lease Corporation Limited’s subsidiary, Bovis Lend Lease Limited, as part of Connect Alliance, was awarded the contract for the design and construction of the water delivery pipeline for Sydney’s desalination plant. That alliance includes McConnell Dowell, Kellogg Brown and Root (after Halliburton acquired Dresser Industries in 1998, Dresser’s engineering subsidiary, The M W Kellogg Co, was merged with Halliburton’s construction subsidiary, Brown and Root, to form Kellogg Brown and Root); and
    a network alliance formed between Sydney Water, Bovis Lend Lease, Veolia Water Network Services and CLM infrastructure to deliver a program aimed at reducing leaks and main breaks from Sydney Water’s 21,000-kilometre supply network. Where have you heard those names before?
    At the end of the day has the Premier honestly satisfied himself that the legislation in its current form is tight enough to avoid the circumstances previously raised by the Centre for Public Integrity and by the senior advisor on water to the President of the United Nations General Assembly?
    No, I bet he hasn’t. And I bet he won’t, because he can’t.
    Kellie Tranter is a lawyer, writer and immediate past chairperson of the standing committee on legislation for BPW International. Since establishing her own legal practice seven years ago she has dedicated much of her time to promoting social, environmental and political responsibility.

  • WWF justifies pollution rewards

    WWF did not take the decision to support the Australian Government’s new Carbon Pollution Reduction Scheme lightly. Our decision to support the announced changes including a 25% was taken because our key objective is to get an effective international agreement at the UN Climate Change Meeting in Copenhagen.
    This will require developed countries as a group to reduce emissions between 25% and 40% below 1990 levels by 2020.
    At present the UK, EU, Norway and Australia are the only developed countries which have adopted targets in this range and only Norway and Australia are members of the “Umbrella Group” – a loose group of non-EU developed countries (generally including Australia, Canada, Iceland, Japan, New
    Zealand, Norway, the Russian Federation, Ukraine and the US) – which are key blocks to an effective agreement.
    Breaking the lack of big emission reduction targets by members of the Umbrella Group was a key objective of WWF. I believe that this has been achieved by Australia by announcing a large target relatively to their present-day emissions.
    Another issue that has arisen is the “comparability of effort” (i.e. the relative effort of different countries). There is no formula for measuring comparability of effort (one of the key problems in the negotiations) but some of those being discussed include emission cuts from Kyoto targets, relative economic impact in 2020 and per capita emissions in 2020.
    Using these forms of measurement, Australia’s 25% compares well with those of the climate champions (namely the EU). For example, the Australian Government’s economic modeling indicates that a 14% cut by Australia would have a greater economic impact than a 41% cut on the
    EU or 6% cut on the USA.
    I am not suggesting that Australia should measure its effort by the standards of others but merely pointing out that a 25% will represent a real contribution to clean development. Indeed the key role that Australia can really play in the international response to climate change is to show that a very polluting economy can make a relatively rapid transition and affordable transition to a clean one.
    The other great advantage of the Government’s announcement is that it succinctly states a national view of the key elements of an effective international agreement. This includes a goal of 450 ppm greenhouse gases in the atmosphere or less; an agreed (credible) global emission reduction trajectory; a 25% or greater cut for developed countries; a 20% or greater derivation from Business As Usual (BAU) for major developing countries with nomination of a peaking date.
    This has not been done with the same precision by any countries outside the UK/EU and so it (hopefully) represents a significant step forward in the process of developing an international agreement in Copenhagen.
    Irrespective of your decision to discontinue supporting WWF, thank you so much for your support in the past, it really is appreciated.

  • China and US held secret talks on climate change deal

     

    “My sense is that we are now working towards something in the fall,” said Bill Chandler, director of the energy and climate programme at the Carnegie Endowment for International Peace, and the driving force behind the talks. “It will be serious. It will be substantive, and it will happen.”

    The secret missions suggest that advisers to Obama came to power firmly focused on getting a US-China understanding in the run-up to the crucial UN meeting in Copenhagen this December, which is aimed at sealing a global deal to slash greenhouse gas emissions. In her first policy address the secretary of state, Hillary Clinton, said she wanted to recast the broad US-China relationship around the central issue of climate change. She also stopped in Beijing on her first foreign tour.

    The dialogue also challenges the conventional wisdom that George Bush’s decision to pull America out of the Kyoto climate change treaty had led to paralysis in the administration on global warming, and that China was unwilling to contemplate emissions cuts at a time of rapid economic growth.

    “There are these two countries that the world blames for doing nothing, and they have a better story to tell,” said Terry Tamminen, who took part in the talks and is an environmental adviser to the governor of California, Arnold Schwarzenegger. The nations are the top two polluters on Earth.

    The first communications, in the autumn of 2007, were initiated by the Chinese. Xie Zhenhua, the vice-chairman of the National Development and Reform Commission, the country’s central economic planning body, made the first move by expressing interest in a co-operative effort on carbon capture and storage and other technologies with the US.

    The first face-to-face meeting, held over two days at a luxury hotel at the Great Wall of China in July 2008, got off to a tentative start with Xie falling back on China’s stated policy positions. “It was sort of like pushing a tape recorder,” said Chandler, “[but after a short while] he just cut it off and said we need to get beyond this.”

    The two sides began discussing ways to break through the impasse, including the possibility that China would agree to voluntary – but verifiable – reductions of greenhouse gas emissions. China has rejected the possibility of cuts as it sees that as a risk to its continued economic growth, deemed essential to lift millions out of poverty and advance national status.

    Taiya Smith, an adviser on China to Bush’s treasury secretary, Hank Paulson, who was at the first of the two sessions, said: “The thing that came out of it that was priceless was the recognition on both sides that what China was doing to [reduce] the effects of climate change were not very well known,” she said. “After these discussions was a real public campaign by the Chinese government to try to make people aware of what they were doing. We started to see the Chinese take a different tone which was that ‘we are active and engaged in trying to solve the problem’.”

    During the second trip to China by the Americans, Xie suggested a memorandum of understanding between the two countries on joint action on climate change.

    Chandler said he and Holdren drew up a three-point memo which envisaged:

    •Using existing technologies to produce a 20% cut in carbon emissions by 2010.

    • Co-operating on new technology including carbon capture and storage and fuel efficiency for cars.

    • The US and China signing up to a global climate change deal in Copenhagen.

    “We sent it to Xie and he said he agreed,” said Chandler.

    The ties were further cemented when Gao Guangsheng, the leading climate official, attended Schwarzenegger’s global meeting on climate in November last year. Obama, who had been elected president two weeks earlier, addressed the gathering by video.

    By the time Xie visited the US in March, the state department’s new climate change envoy, Todd Stern, and his deputy, Jonathan Pershing, were also involved in the dialogue. But the trip by Xie did not produce the hoped-for agreement. Both Stern and Holdren declined to comment when asked by the Guardian.

    Those involved agree it was premature to expect the Obama administration to enter into a formal agreement so soon in its tenure. Additional members of the US team included Terry Tamminen; Jim Green, adviser to Joe Biden, now the vice-president who then headed the Senate foreign relations committee; Mark Helmke, adviser to Richard Lugar, the ranking Republican on the committee; and Frank Loy, a former state department negotiator on climate. Both Green and Loy have been nominated to jobs in the Obama administration.

    Chandler and Smith believe the effort will pay off in a more comprehensive deal between the two governments.  “Xie came to visit the US when the administration was still trying to figure out its standing on climate issues and it was without very much staff,” said Smith. “I don’t see this as a dead issue at all. I think it’s something you would consider still in process.”