Tag Archives: global
EU’s Carbon Pricing Strategy Takes A Potentially Fatal Hit
Posted by Anthony Harrington , July 29, 2013 If you believe that global warming is the biggest catastrophe and economic disaster coming our way, then attempts to retrofit measures to contain CO2 emissions onto a global industrial base that has evolved largely without regard to emissions (other than as pollution) is a hugely important task. Finding a way of putting a price on carbon is the obvious route to go. The EU set itself up to be the global leader in creating mechanisms for carbon pricing but its emissions trading scheme, which has been copied by a number of countries, including Australia, South Korea and some Chinese provinces, is now in disarray. A vote by the European Parliament in April effectively holed the EU’s carbon pricing scheme below the waterline, to quote a recent article in The Economist . There are basically two ways to get industry to reduce its carbon emissions . You can mandate it by law, in a command-and-control manner, using the power of the state to force compliance, with massive fines and even prison as the ultimate sanctions for non compliance. Or you can set a cap-and-trade policy and leave it to the market, which is what the EU has done. Under a cap-and-trade approach you set limits to the emissions of the heaviest producers and then allocates or auctions carbon credits to cover production up to the limit. Firms that manage to reduce their emissions below the limit will have surplus credits that they can sell to other companies. By lowering the limit over time, the government can bear down on emissions, gradually reducing them over time, while trading in carbon credits creates a true, market based per-tonne price for carbon. That, at least, is the theory. What the EU did not count on when it set up the scheme back in 2005 was that advanced markets would suffer a global financial crash which would lead to years of no-to-very-low growth. This resulted naturally in falling emissions and so to surplus numbers of credits washing about in what was supposed to be a limited-supply market. It is now obvious that the EU handed out far too many carbon allowances from day one, back in 2005, and every year since, to the point where, according to The Economist , there is now a surplus of about 1.5 to 2 billion tonnes of carbon allowances in the system, causing the price per tonne to drop from twenty euros in 2011 to just five euros a tonne in 2013. The EU’s solution to this was a plan to withdraw some 900 million tonnes of carbon allowances off the market, with the idea of reintroducing them at some unspecified point in the future when the price per tonne of carbon had firmed up. The idea was dubbed “backloading” by the EU. Constraining supply has always been a good way of driving up price and since the whole market is artificially created there is probably no logical reason why the EU shouldn’t be able to tinker with the scheme to firm up prices. But the EU needed the European Parliament’s approval to put this scheme into action and on 13 April 2013 the European Parliament rejected the idea. The price of carbon sank like a stone, bottoming at under 3 euros. Since the International Energy Agency is warning that the price of carbon needs to be at least fifty euros to be effective in moving power generation companies away from coal to gas and renewable sources, this does not look hopeful for the EU’s best lever against global warming. There is now a serious question mark over the future of emissions trading schemes generally, which is not particularly helpful for California, which introduced its cap-and-trade scheme in January 2013 . The Californian scheme raised far less, by way of auctioning of carbon credits, than State authorities had anticipated and the tribulations of the EU scheme will not go unnoticed. Australia had been planning to link its cap-and-trade scheme to the EU’s scheme, creating an international trading market in carbon allowances, but that too, now looks rather unappealing. Right now the EU’s ETS scheme looks like no more than a rather useless additional “green” tax which the power companies simply pass on to the consumer. As a behaviour changing mechanism, it is dead in the water until and unless the EU finds a way of shoring up the price. Unfortunately for the EU no one actually wants carbon in the way that they want gold. The market is entirely artificial and carbon allowances, as a tradable asset class have just given a graphic illustration of what is meant by “political risk”. Continue reading
Global Warming Might Be Reversed Using New Method
According to experts, a combination of tree and crop burning for energy and capturing and storing carbon dioxide underground (CCS) might just be the way to reverse global warming. However, Professor Christian Azar, the lead author of the study, maintains that to achieve temperature reversal, CCS and bioenergy must be combined with a large-scale expansion of nuclear power and renewable energy in order to reduce emissions to zero. In general, lowering emissions has been painfully slow. In fact, from 1990 to 2010 the International Energy Agency said the average amount of carbon dioxide produced for each unit of energy generated has not changed. Continue reading
Bioenergy With CCS Can ‘Reverse’ Global Warming
11 July 2013 By Edd Gent Global warming could be reversed by using bioenergy with carbon capture and storage, according to Swedish researchers Researchers have claimed bioenergy with carbon capture and storage (BECCS) could allow the world to reverse global warming. The team, from Chalmers University of Technology in Sweden, say the technology can reverse the global warming trend and push temperatures back below the global target of 2°C above pre-industrial levels, even if current policies fail and the world initially overshoots this target. In a paper published in journal Environmental Research Letters today, the researchers show that if BECCS is implemented on a large-scale along with other renewable energy sources, temperature increases can be as low as 1.5°C by 2150. Co-author of the study, Professor Christian Azar, said: “What we demonstrate in our paper is that even if we fail to keep temperature increases below 2°C, then we can reverse the warming trend and push temperatures back below the 2°C target by 2150. “To do so requires both large-scale use of BECCS and reducing other emissions to near-zero levels using other renewables, mainly solar energy, or nuclear power.” BECCS is a greenhouse gas mitigation technology based on bioenergy that produces fuel for power plants or transportation while simultaneously removing carbon dioxide from the atmosphere. Trees and crops give off carbon dioxide when they are burnt as fuel, but also act as a carbon sink as they grow beforehand, absorbing carbon dioxide from the atmosphere. These two processes cancel each other out, resulting in net zero emissions of carbon dioxide. When combined with carbon capture and storage – techniques that aim to pull carbon dioxide out of the flue gases from power plants and redirect it into geological storage locations – the overall carbon dioxide emissions are negative. If applied on a global scale, this could help to reverse global warming. In their study, the researchers developed an integrated global energy system and climate model that enabled them to assess the most cost-effective way forward for a given energy demand scenario and temperature target. They found that stringent temperature targets can be met at significantly lower costs if BECCS is implemented 30 to 50 years from now, although this may cause a temporary overshoot of the 2°C target. “The most policy relevant implication of our study is that even if current political gridlock causes global warming in excess of 2°C, we can reverse the temperature trend and reach targets later. This means that 2°C targets or even more ambitious targets can remain on the table in international climate negotiations,” Azar said. But, the authors caution against interpreting their study as an argument for delaying emission reductions in the near-term. Azar said: “BECCS can only reverse global warming if we have net negative emissions from the entire global energy system. This means that all other CO2 emissions need to be reduced to nearly zero. “Also, temperatures can only be reduced by about 0.6°C per century, which is too slow to act as an ’emergency brake’ if climate damages turn out to be too high. The more we reduce emissions now, the more ambitious targets we can achieve in the long term, even with BECCS. ” Continue reading
