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Cost of carbon avoided

Arizona's main power supplier, Arizona Public Service, unveiled plans to build the world's largest solar plant outside Phoenix.

The plant will provide electricity to 70,000 homes using solar heat, as opposed to panels, and help the utility to meet required goals for renewable sources of supply.

APS will pay $4 billion over 30 years for the supply, or $133 million annually for 280 megawatts.
Alexis Madrigal makes some extrapolations about the price and finds this a striking deal for solar power, priced below the generally assumed minimal cost of using the sun for electricity.

Madrigal puts the price at about 15 cents per kilowatt, or about 50 percent higher than the average U.S. rate, although Arizona rates are lower.

A different way to look at this is the cost of carbon dioxide emissions avoided. This calculator from the National Renewable Energy Laboratory suggests about 400,000 tons of carbon will be avoided. Figuring that the annual payment of $133 million is a 50 percent increase over alternative carbon-intensive power, that works out to a little over $100 per ton of carbon avoided.

Carbon taxes and cap-and-trade plans being kicked around in Washington put the cost of carbon anywhere from $12 to as much as $40, so in those terms this type of plant still isn't competitive. However, its close to a carbon capture project in the U.S. Midwest aims to sequester 1 million tons for about $86 each and its well below a UK parliamentary estimate that the social cost of carbon is about 70 pounds per tonne, or something around $125/ton.

Will Enron kill climate change legislation?

Is it possible that Enron and the late Ken Lay (that's him in cuffs) will come from beyond the grave to doom a relatively tough climate change law?

The environmental lobby cried foul this week over attempts by Senate staffers who want to add a friendly sounding "safety valve" to the climate change law that is most likely to be brought up for a vote. Some are saying they'd rather have no bill at all.

Promoters of agricultural carbon offsets also screamed, fearing their investments will be dead on arrival.

The Lieberman-Warner bill establishes a cap-and-trade system to control greenhouse gas emissions, and is considered the most aggressive bill in the current Congress. But a recent report from the Congressional Budget Office made a case for the safety valve which sparked the green lobby outcry.

The bill aims to cut carbon-related emissions by more 70 percent by 2050 by requiring polluters to purchase allowances to pollute, which are capped in number. Over time, the number of allowances will drop, forcing businesses to cut carbon emissions or buy permits to pollute from a business that has some to spare. Obviously, the price of those permits could soar if it becomes more difficult to meet reduction targets.

Enter the CBO report's safety valve.

This feature would set a price cap on permits. Environmentalists hate it because it removes an incentive to cut carbon pollution. Business claims it will promote long-term investment by creating certainty in future prices.

But what exactly did the CBO report say?

It looked at current cap-and-trade markets, and praises the one launched in the 1990s in the United States that cut sulfur dioxide emissions:

The Acid Rain Program is run by the Environmental Protection Agency (EPA) and is widely viewed as being very successful, bringing about large reductions in SO2 emissions for lower-than-expected costs.

So far, so good.

Later in the report it cites the need for a safety valve to avoid a repeat of the volatility in the sulfur dioxide market -- that's the successful market it praised earlier in the report. It even included a graph from an academic paper (free registration required) on the subject by William D. Nordhaus.

But it did so selectively..

Nordhaus's graph included more information than the reprint in the CBO report, and Nordhaus's showed that sulphur dioxide permits were less volatile than crude oil futures..

Nordhaus doesn't say it, but one can imagine a scenario in which pollution permits trade inversely to fossil fuel prices (as it happening in Europe). So while they may be volatile, overall energy costs including the allowances will be far less so, undermining some of the argument for the safety valve.

The CBO report cites another piece of selective evidence in support of a safety valve: the volatility of California's nitrous oxide market in 2000 and 2001.

And here's the Ken Lay connection.

As California experienced rolling power blackouts, moth-balled power plants that lacked nitrous oxide controls were brought back online, and their owners scrambled for nitrous emission permits for those plants and paid up to 10-fold increases for allowances.

What the CBO fails to make clear is the context for that market volatility.

We now know that Enron was gaming California's power market to drive power prices sky high and in turn prices for emissions permits.

Without mentioning this, is CBO providing support for a safety valve by pretending the havoc brought about by the work of Ken Lay and his Enron cronies is a normally functioning market.

Not really, but their selective use of data is a little odd.

A little pin money

To create and be credited for a voluntary carbon offsets, the developer must show that the offset meets the required "additionality," meaning the emissions reduction must not be required by law. It should also face hurdles in terms of financing, technology and institutional barriers such as cultural hurdles that can only be overcome with the funding that comes from selling a carbon credit.

There is also a final barrier. The practice that results in reduced emissions, creating the offset, shall not be common practice.

That what makes the news stories streaming out of the U.S. Midwest so curious. Farmers are selling offsets for practicing no-till agriculture, which leaves roots and therefore sequestered carbon in the soil. In Iowa, a state agency helps roll up the various farmers' credits into manageable contracts for offsets that are sold on the Chicago Climate Exchange. The Quad City Times described it this way:

For 30 years, Steve Berger has been a no-till farmer of corn and soybeans on his 2,200 acres in Wellman, Iowa, as a way to protect his soil from erosion and keep organic matter in the ground to aid the growth of his crops. Berger also qualifies to sell carbon credits — credits that businesses and others buy to offset their own self-imposed emission caps from those who trap or keep carbon in the ground. That is secondary to the benefits the no-till method offers to his land, he said.

“Last year, I made almost $3,000 from selling them, a little extra spending money for when my wife goes to Chicago,” Berger said. “But I’m not really sold on the whole thing. This is something I would do anyway, and some company is using me so it doesn’t have to clean up its own act.”

It's hardly surprising Berger isn't convinced. Does this really qualify as an exceptional practice?

Iowa expects to have 1.5 million acres generating about offsets for about 1 million tons of carbon emissions.

Walking the plank

Planktos has suspended operations. This was the company that was going to reverse global warming by dumping iron in the ocean, creating enormous blooms of carbon-devouring plankton. The management intended to fund operations by selling millions of dollars of carbon offsets from the greenhouse gas that was sequestered under the sea, until some scientists and environmentalists urged more research.

As The Carbon Monitor noted, the company is one among many (it's hard to see what's preventing anyone with a boat and some iron from entering the business), but Planktos was most dependent on carbon offsets for funding. When opponents spoke out and targeted the use of carbon offset as funding, it stood little chance.

Planktos received pretty favorable press coverage for its efforts. The company's demise probably doesn't say much about the science of using iron to encourage plankton which gobble up carbon. Rather, it probably tells us something about carbon offsets, and that this market may have peaked. A look at Planktos history, from its financial filings, shows they have a knack for identifying trendy businesses.

Diatom Corporation (“the Company”) was incorporated as eWorld Travel Corp on December 10, 1998 under the laws of the state of Nevada. On September 23, 2002, the Company changed its name to GYK Ventures, Inc. and on July 8, 2005, the Company changed its name again to Diatom Corporation. The Company originally was organized to provide internet-based travel services. On March 8, 2007, the Company effected a 1:1.5 forward split of its common stock and amended its articles of incorporation to reflect a name change from “Diatom Corporation” to “Planktos Corp.”

Internet-based travel services sort of says it all.

What are we waiting for?

It is our task in our time and in our generation to hand down undiminished to those who come after us, as was handed down to us by those who went before, the natural wealth and beauty which is ours.

John F. Kennedy (1917-1963) Thirty-fifth President of the USA.

The USA has long led the industrialized world and been the bastion of democracy during bitter struggles with totalitarian ideologies. Yet as the world's biggest consumer of energy very little is spent on finding alternatives to the burning of fossil fuels that are the biggest contributor to gren houses gases. Maybe it's because there is not enough pain to the average consumer yet. Or maybe the torch has yet to pass to a new generation of Americans.

How many trees does it take to green a championship?

How many trees does it take to green a football championship? It depends. If you're organizing a the largest sporting event for a country, but that country is rather thinly populated, you might decide 25,000.

What if you're organizing an extravaganza for a large country heavily populated with energy intensive fans? How many? About 100,000? Your event will attract 300 times as many veiwers as the other country's. Maybe you should plant more than 7 million trees. Well, the NFL settled on 9,000.

Why does the Canadian Football League need so many trees to offset an estimated 300 tonnes of carbon generated during the Grey Cup, and the Super Bowl need so few trees for its 350 tonnes of emissions? (Better yet: why is the Grey Cup generating almost as many emissions as the Super Bowl?)

Are the NFL's trees, which it is planting in Arizona (see map), more efficient? To be honest, the NFL's ponderosa pines are probably less up to the task of capturing carbon than the CFL's spruces. So shouldn't the NFL need more trees, not fewer?

The truth is, generating carbon offsets from forestry projects is pretty complicated stuff. Take the following equation, for example. It comes from the Guidelines for National Greenhouse Gas Inventories from the United Nation's Intergovernmental Panel on Climate Change. It's really quite a simple formula for determing the amount of carbon captured by a tree (apologies if this isn't aligned. I actually can't tell):

IPCC For the hypothetical country,
GW = 4.0 tonnes d.m.
ha-1 yr-1 (Table 4.12); and
R = 0.40 tonne d.m. (tonne d.m.)-1 for
above-ground biomass <50 gtotal =" 4.0" cf =" 0.47">● 5.6 tonnes d.m. ha-1 yr-1 ● 0.47 tonne C (tonne d.m.)-1
= 2,632 tonnes C
yr-1

Complicating things, the NFL plans for most of its trees to die -- they're being planted in an area that was burned recently, after all.

The CFL isn't actually planting 25,000 trees. It's buying offsets from zerofootprint.net, which bought them from a reforestation project in Maple Ridge, British Columbia. Judging from the

voluntary carbon standards

, which recommends long lag times to determine if trees actually grow to maturity, neither of these plantations should be generating offsets for some time.

No one doubts forests can store carbon in vast quanities. Only a crank would suggest otherwise.

In recent decades, the researchers say the area burned each year by wildfire has doubled, annual harvest rates have increased somewhat, and rates of carbon uptake by aging (Canadian) forests have slowed. In extreme fire years, such as 1995, 1998, 2002, 2003, and 2004, the carbon dioxide released as the forests burned accounted for up to 45% of Canada's total greenhouse gas emissions, dwarfing emissions from big industrial sources. In other years the forest still absorbs more carbon than it releases.

Who were these tree-hating researchers?

The Canadian Forest Service. Sigh.