Energy and Global Warming News for October 14: Cap and trade is best approach for economy — Exelon CEO; Developed nation oil demand peaked in 2005; China could cheaply control coal emissions — PNNL

Exelon CEO: Cap and trade is best approach for economy

Exelon Chairman and CEO John W. Rowe said yesterday that cap-and-trade is the best approach for addressing global warming while sustaining an economic recovery. In a keynote address at the PennFuture Southeast Global Warming Conference in Penn Valley, Pa., Rowe said reducing carbon emissions will cost money, but the alternatives to cap-and-trade will cost more.

“The best way to address the climate problem and protect our nation’s fragile economic recovery is through cap-and-trade, which is the least expensive solution,” Rowe said. “Prices will go up, just not as much as with cruder tools. Plus, the legislation has provisions that will help reduce the impact to consumers.”

Rowe said that options like new nuclear plants, wind and solar, while appealing to many, actually cost much more than commonplace solutions like energy efficiency.


“Choosing more expensive options over cheaper ones adds costs that are passed through to businesses and consumers,” Rowe said. “That`s why we need a climate bill that takes advantage of the power of appropriately regulated and monitored markets, which will drive competition, innovation and low-cost solutions.”

In the wake of Exelon`s decision to withdraw from the U.S. Chamber of Commerce due to a disagreement on the urgency of addressing global warming, Rowe urged the nation’s business community to come together in support of climate legislation.

“Companies and business groups must recognize the need for strong action-or they will be left behind,” said Rowe. “We have faith in the ability of American business to come together to develop innovative and cost-effective solutions to the climate challenge.”

Exelon is not waiting for climate legislation to undertake its own effort to address climate change through Exelon 2020, an environmental and business strategy to reduce, offset or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020. In April 2009, Exelon announced that it had reduced its greenhouse gas emissions by more than 35 percent from 2001 to 2008.

Rowe is the electricity industry`s longest-serving chief executive, with nearly 26 years as a utility CEO. Rowe was among the first CEOs in the industry to focus on climate change, first testifying before Congress on the potential effects of carbon emissions in 1992. He currently serves as co-chair of the bipartisan National Commission on Energy Policy, and previously chaired the Edison Electric Institute and the Nuclear Energy Institute.

Demand peaked in developed nations — never to return

Demand for oil in developed nations peaked in 2005, and changing demographics and improved motor-vehicle efficiency guarantee that it won’t hit those heights again, IHS Cambridge Energy Research Associates says in a new report.


Reduced petroleum demand in developed nations could make their economic growth less vulnerable to oil price shocks, the report states.

Nonetheless, global oil demand is still expected to grow, overall, driven by China and other developing nations as the world economy recovers.

But demand for oil that has fallen in recent years in Organisation for Economic Co-operation and Development, or OECD, nations won’t be made up, the analysts say.

“The economic downturn has been masking a larger trend in the oil demand of developed countries,” said Daniel Yergin, the company’s chairman. “The fact is that OECD oil demand has been falling since late 2005, well before the Great Recession began.”

The biggest reason, the group says, is that oil demand in the transportation sector — which is the United States’ dominant use of oil and accounts for 60 percent of OECD petroleum demand — is flattening.

The trend has been noticed elsewhere, as well. Exxon Mobil Corp. CEO Rex Tillerson said this month that U.S. gasoline demand peaked in 2007.


The Cambridge Energy Research Associates, or CERA, analysis cites several reasons why demand in developed nations — which accounts for slightly more than half the world’s total — won’t recover. Among them: Car ownership rates have reached “saturation,” while populations are aging and population growth ranges from low to negative.

Also, OECD governments, driven by global warming and energy security worries, have tightened fuel efficiency standards, while high prices in recent years have also pushed consumers away from gas guzzlers.

In the United States, the Obama administration plans to implement rules that push corporate average fuel economy, or CAFE, standards to a fleetwide average of 35.5 miles per gallon by 2016, four years ahead of the schedule Congress laid out in a 2007 energy law.

Use of alternative fuels like ethanol has also grown.

“New technologies such as plug-in hybrid electric vehicles and next-generation biofuels could also have a greater impact in the future,” the report states.

Global demand will nonetheless grow, fueled mostly by developing nations, CERA finds. The company forecasts world demand to increase from 83.8 million barrels per day this year to 89.1 mbd in 2014.

“Just 900,000 bpd [barrels per day] of growth is expected to come from OECD countries, just a fraction of the 3.7 million bpd of demand lost over the course of 2005 to 2009,” the report states.

But CERA cautions that developed nations will hardly be through with oil anytime soon. The demand reduction in OECD countries between the 2005 peak and 2030 is expected to be “fairly modest,” it states.

Report: China could cheaply control coal emissions

Getting China’s coal-plant emissions out of the atmosphere so they don’t worsen global warming may be cheaper, easier and longer-lasting than expected, a federal energy lab report finds.

The Pacific Northwest National Laboratory report, set for release today in London, says there are vast underground reserves in China that can be used for “carbon sequestration,” a carbon dioxide-trapping technology considered vital to cutting greenhouse gas emissions.

“Conventional thinking had been that China did not have a lot of storage for carbon. But it turns out China does,” says the lab’s Robert Dahowski, the report’s lead author. “Enough for many decades, perhaps hundreds of years.”

Carbon sequestration, which today is used only in a few oil fields and experimental projects, works by capturing carbon dioxide from smokestacks, compressing it and pumping it underground into deep saltwater reservoirs capped by layers of impermeable stone.

The report finds that the cost of transporting, injecting and monitoring carbon dioxide from China’s 1,623 largest sources “” coal, cement, ammonia plants and factories “” would average $5 to $7 a ton, about half of estimated costs in the USA.

Further, China’s deep geology features rock layers that are perfect for pumping carbon dioxide underground. The report maps at least 2,300 billion metric tons of potential underground storage for carbon in China, Dahowski says. China’s major plants emit about 3.8 billion metric tons a year.

Bush era document on climate change released

The Environmental Protection Agency on Tuesday released a long-suppressed report by George W. Bush administration officials who had concluded — based on science — that the government should begin regulating greenhouse gas emissions because global warming posed serious risks to the country.

The report, known as an “endangerment finding,” was done in 2007. The Bush White House refused to make it public because it opposed new government efforts to regulate the gases most scientists see as the major cause of global warming.

The existence of the finding — and the refusal of the Bush administration to make it public — were already known. But no copy of the document had been released until Tuesday.

The document “demonstrates that in 2007 the science was as clear as it is today,” said Adora Andy, EPA spokeswoman. “The conclusions reached then by EPA scientists should have been made public and should have been considered.”

The Bush administration EPA draft was released in response to a public records request under the Freedom of Information Act by the environmental trade publication Greenwire.

A finding that greenhouse gases and global warming pose serious risks to the nation is a necessary step in instituting government regulation. President Obama and congressional Democrats are seeking major climate legislation, but the administration has indicated that if Congress fails to act, it might use an EPA finding to move toward regulation on its own.

In April, the administration released its proposal for an endangerment finding. The newly released document from the Bush EPA shows that much of the Obama document embraces the earlier, suppressed finding word for word.

“Both reach the same conclusion — that the public is endangered and regulation is required,” said Jason Burnett, a former associate deputy administrator who resigned from the EPA in June 2008 amid frustration over the Bush administration’s inaction on climate change. “Science and the law transcend politics.”

The 2007 draft offers an unequivocal endorsement of the prevailing views among climate scientists. It includes a declaration that the “U.S. and the rest of the world are experiencing the effects of climate change now” and warns that in the U.S., those effects could lead to drought, more frequent hurricanes and other extreme weather events, increased respiratory disease and a rise in heat-related deaths.

The Obama version of the finding has gone through the necessary hearings and public comments. A final EPA version is expected to be released soon.

Boxer: Climate bill ready

A major Senate climate change bill is written and ready to be debated before the Environment and Public Works committee, the chairwoman of the panel said Tuesday.

Sen. Barbara Boxer’s legislation would distribution of tens of billions of dollars of pollution allowances to power plants, manufacturing, and other industries. It will mirror cap and trade legislation passed by the House in late June with, she noted, “a few tweaks.”

The legislation has been sent to the Environmental Protection Agency for analysis, which should be completed by the end of the month.

Boxer’s move is another piece of good news for climate advocates. On Sunday, Sen. Lindsey Graham co-authored an op-ed with Sen. John Kerry pushing for a climate bill — a signal, said environmentalist, that Democrats may attract bipartisan support for a carefully crafted bill.

“It’s happening,” said Boxer. “We’re making progress.”

Senate Finance Committee Chairman Max Baucus, however, also plans to draft legislation dealing with the pollution allowances.

“My position is that’s great, he should do that as well,” said Boxer. “At the end of the day this should be a collaborative process.”

Boxer is planning three days of hearings, kicking-off on October 27, with Energy Secretary Steven Chu, Transportation Secretary Ray LaHood, EPA administrator Lisa Jackson, and Interior Secretary Ken Salazar all expected to testify.

Boxer expects to mark-up the legislation in early November. A final bill will then be complied by Senate Majority Leader Harry Reid with input from five other committees.

“Our bill will reflect the priorities of our committee,” said Boxer. “Once it gets out of the committee it will be taken up by the whole body and people will be speaking to Senator Reid for what they want.”

DOE earmarks $5 million for smart grid

Last week the U.S. Department of Energy (DOE) announced that ComEd could receive up to $5 million in American Recovery and Reinvestment Act (ARRA) funding for the utility’s Smart Grid solar pilot. This one-year project would examine customer responses to pricing signals, the impact of renewable distributed energy system, and how they can best be integrated into a future Smart Grid system.

ComEd’s solar pilot would include approximately 200 customers, most of whom would be among the first 140,000 ComEd customers to receive a new smart meter through ComEd’s proposed Advanced Metering Infrastructure (AMI) pilot, which currently is under consideration by the Illinois Commerce Commission. A smart meter is a digital electric meter that collects usage information every 30 minutes and sends that information to ComEd through a secure telecommunications connection.

A group of customers in the pilot would receive solar photovoltaic systems, some with energy storage capability, and be placed on a real-time electricity price and net metering program which lets customers get credit for excess electricity generated by their solar energy systems that goes back to ComEd’s grid. Other customers in the pilot will receive only an energy monitoring display.

“ComEd’s solar pilot will be a sophisticated study of how renewable distributed energy systems can be integrated into the power grid,” said Anne Pramaggiore, president and chief operating officer, ComEd. “We are proud to be a pioneer in leveraging groundbreaking technologies and identifying ways to provide our customers a smarter and greener electric delivery system.”

IEA: World needs big drive for carbon capture

The world needs to build 100 major projects for capturing and burying greenhouse gases by 2020 and thousands more by 2050 to help combat climate change, International Energy Agency chief Nobuo Tanaka said on Tuesday.

Energy ministers meeting in London said the world must start building by next year at least 20 commercial-scale pilot projects to test a technology which U.S. energy secretary Steven Chu said could solve “20 percent of the problem” to curb carbon.

The drive, mostly to capture emissions from coal-fired power stations, would cost $56 billion by 2020 alone, said Tanaka. Carbon capture funding could be a key part of a new U.N. climate treaty due to be agreed in Copenhagen in December.

“We will need 100 large scale projects by 2020, 850 by 2030 and 3,400 in 2050,” Tanaka told the ministers at a carbon capture and storage (CCS) conference, adding that the rich world must take the lead but most projects must be in non-OECD countries by 2050.

A few industrial-scale projects are in operation, including in Norway, Canada and Algeria, but none tests all parts of the capture process. Heat-trapping carbon dioxide can be taken from the exhausts of a coal-fired power plant, for instance, then piped underground into porous rocks.

The IEA estimates that after the $56 billion investment in CCS globally from 2010–2020, a further $646 billion will be needed from 2021 to 2030, Tanaka told the Carbon Sequestration Leadership Forum.

U.N. studies have indicated that CCS could do more to limit greenhouse gas emissions this century than a shift to renewable energies such as wind or solar power. CCS has been limited by high costs.

A tale of two ways to save electricity

Recent developments in efficiency policies are playing out in two different stories about how the low-hanging fruit gets picked: with business’s blessing or its opposition.

In one story, there’s been a truce. Manufacturers have agreed to new standards making air conditioners more efficient in hot regions and making heaters more efficient in cold ones.

In the other, there’s a standoff. California state regulators will vote next month on a plan to drastically improve efficiency in energy-hungry televisions, but TV makers are protesting the policy as burdensome and unnecessary.

Both industries face a rising tide as more states begin to consider energy efficiency policies. States seek more than the direct benefits — reduced emissions and energy bills — they also want to prepare for federal legislation that could push efficiency even further.

The Air-Conditioning, Heating and Refrigeration Institute, which represents the main producers of furnaces and air conditioning systems, agreed to the deal after months of talks with pro-efficiency groups, including the Alliance to Save Energy and the American Council for an Energy-Efficient Economy.

The regulatory stage had been set: The Obama administration is about to review a furnace standard set by the George W. Bush administration, and air conditioners are about to face new efficiency guidelines. Upcoming talks for the Montreal Protocol will likely bring new controls on hydrofluorocarbons, a main refrigerant and potent greenhouse gas.

For decades, manufacturers preferred a system that made mass production easy: Washington would set the efficiency standards, and states couldn’t go above them. That gave manufacturers a large, uniform market.