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Cap and Trade or Carbon Tax?

In his address before Congress last night President Obama called on â''Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.â'' The question is, will a cap and trade system deliver the desired result better than a straight carbon tax?

A debate held last October at Columbia University between Yvo de Boer, the executive secretary of the United Nations Framework Convention on Climate Change and Jeffrey Sachs, director of Columbiaâ''s Earth Institute, sheds some light on the subject.

De Boer argues the merits of the Kyoto Protocol, which set limits on greenhouse gas emissions for signatory developing countries and led to the European Unionâ''s carbon emission trading system. Central to this cap and trade scheme is the Clean Development Mechanism. The CDM allows companies in developing countries that exceed their carbon caps to purchase offsetting CDM certificates. These certificates finance clean technology projects in developing countries.

De Boer reports that there are now 1170 registered clean development mechanism projects in 49 developing countries. He notes, however, that he is not â''blindâ'' to the challenges that the CDM faces, including the sometimes-questionable â''additionalityâ'' of CDM projects. Many argue that these projects would have gone ahead without outside investment and that the CDM is no more than a cheap way for developing countries to buy their way out of carbon compliance.

De Boer believes that carbon cap and trade and the CDM, though imperfect, are worthy works in progress. And he does not oppose a complementary set of carbon taxes. "We need a set of tools to spur both private and public money flows," he says. "Climate change is a global problem and we will need all the tools at our disposal."

Sachs argues that market-based mechanisms like cap and trade have not demonstrated that they can turn the trajectory of carbon emissions as â''sharply and dramatically as we need to do it.â'' The CDM, says Sachs, â''is unfortunately a very small marginal tool that isnâ''t going to really change the broad framework of how energy is produced and technology distributed.â'' He also fundamentally dislikes cap and trade because he believes it encourages the continued deployment of questionable, risky financial instruments. â''I am not so keen on sending our best and brightest off to do more financial market engineeringâ'' for the carbon markets, he says. â''I think the meltdown shows how we took a generation of brilliant young people and put them to tasks that donâ''t solve problems.â''

Sachs believes that a carbon tax is much easier to administer than a cap and trade scheme. â''There are just a few places we get carbon from and by taxing upstreamâ''at the refinery or the wellheadâ''you reach a carbon price for the whole economy,â'' he says. Cap and trade systems on the other hand, require monitoring the compliance of hundreds of thousands of enterprises, which, Sachs suggests, keeps a lot of regulators, attorneys, and auditors busy but has questionable impact on carbon emissions.

Unlike a cap and trade system that thrives on price volatility, a carbon tax will put a floor on the price of carbon. A more certain price for carbon encourages long-term investment in clean technologies, says Sachs. While Wall Streetâ''s financial engineers make money from cap and trade, a carbon tax allows real engineers to figure out ways to get CO2 under control. But Sachs isnâ''t holding his breath waiting for Congress to act on his suggestion. â''The US is neurotic when it comes to taxes,â'' he says.

Indonesian Biomass Burning Rivals Amazon

Itâ''s no secret that Amazonian forest burning is a significant cause of global warming, both because the size of a huge carbon sink is reduced and because of direct emissions from the burning itself. Whatâ''s much less appreciated is that Indonesiaâ''s emissions from biomass burning are of the same order, though somewhat smaller than Africaâ''s. Indonesiaâ''s annual rate of deforestation, at an alarming 3.4 percent, is only slightly smaller than Brazilâ''s.

An article published this weekend by Nature Geoscience takes a shot at better specifying Indonesiaâ''s record of biomass burning since the 1960s. It explains the spikes in the record in terms of rainfall fluctuation, demographic and social-economic trends on the countryâ''s biggest islands, and policy. It suggests some significant policy implications.

Because satellite data were lacking before the mid-1990s, the authors rely on visibility records from regional airports to construct an index of biomass combustion. They identify two major fire episodes, in 1997-98 and 2006, and two minors ones, in 2002 and 2004. A unique element in Indonesian fires is that the bulk of the emissions result from burning of peat soils for as long as four months at a time. But the ignition of fires has been closely associated with patterns of human migration and agricultural expansion, and with related policy initiatives. For example, the rate of deforestation has climbed sharply in recent decades on Kalimantan, as industrial agriculture and forestry displaced subsistence farming, creating vulnerabilities: â''Peatlands drained under Mega Rice Project of the 1990sâ'¿were the single biggest contributor to emissions across all of Indonesia during the 1997 fire event.â''

Regional workings of the ocean and atmosphere are almost equally important. Not only the famed El Nino-Southern Oscillation (ENSO), whereby the western Pacific dries when Peru floods, but also the Indian Ocean Dipole play an important role. (The dipole involves unusual cooling of sea surface temperatures in the southeastern equatorial Indian Ocean and warming of temperatures in the western equatorial Indian Ocean.) In the relatively severe 2006 and 1994 events both ENSO and the dipole were operative, but in the less severe 2002 event only ENSO.

â''It is therefore important,â'' the authors conclude, â''that sea surface temperature anomalies over both the Pacific and Indian Oceans be monitored in preventing and mitigating future fire eventsâ'¿Such mitigation measures are particularly important under a changing climate, given the possibility of more persistent El Nino-like conditions, reduced rainfall over Indonesiaâ''s main burning regions and a positive feedback between reduced soil moisture and reduced precipitation in Indonesia.â''

PV Watch 2

T-Solar Global, a leading Spanish manufacturer, will soon mass-produce the worldâ''s largest PV modules, using the trademarked SunFab thin film supplied by Applied Materials, the nanotech company in Santa Clara, Calif. T-Solar says it expects to produce the equivalent of 45 MW of the 5.7-square-meter modules per year. The company already has 28 power stations in Spain with a combined peak capacity of 143 MW, enough to generate 200 GWh/year and power about 60,000 homes.

On the other side of the pond, Konarka Technolgoies has secured $5 million to help finance a production facility in New Bedford, Mass., where it will produce Konarka Power Plastic. Konarka has been a recognized leader in organic PV since early in this decade; the efficiency claims itâ''s made for its materials have stood up relatively well to critical scrutiny. Its New Bedford factory is being housed in a building once occupied by Polaroidâ''s flagship manufacturing facility.

A Green Lining in Economic Clouds

With the latest alarming reports of drastic economic downturns in Japan and Europe, perhaps we may take some comfort in the fact that carbon emissions are dropping sharply too, which may make it possible to achieve medium-term targets that would have been considered unreachable a year or two ago. According to reports by Point Carbon and New Energy Finance, the prices of carbon emission permits have dropped to the lowest levels seen in the second phase of the European trading scheme; total European emissions were down about 3 percent from the year before. Emissions from steel and cement production were down 9 percent, and those from electricity generation dropped 2 percent.

Climate Denial Crock of the Week

Opponents of the theory of anthropogenic climate change are hard at work via Internet forums making a last stand against the present societal momentum to address our impact on global climate and, specifically, to reduce the carbon footprint of our energy systems. They tend to repackage a dozen or so arguments, each of which takes a factual nugget, strips it of its scientific context, and twists it into a proof that climate change is either a natural process or a figment of the IPCC's imagination. Midland, MI-based multimedia producer, cartoonist, and alternative energy enthusiast Peter Sinclair is returning fire, nugget-for-nugget, with his new YouTube-distributed video series, Climate Denial Crock of the Week.

Each episode of Crock answers one of the climate denial "hobby-horse arguments" with five minutes of science-based, semi-professionally produced video. The Vikings help tell the story in this week's episode, Medieval Warming?, which explodes the notion that Earth was warmer during the Middle Ages than it is today:

Previous episodes tackle, among others, the role of solar cycles, sea ice volume versus area, and the meaning of cold snaps.

Sinclair's message to the deniers is: "Please. Please debate me. I'll rent the room... Come on down." Sinclair received training to do just that via Al Goreâ''s Climate Project, but I'm betting he'll have far greater impact via YouTube. For a sense of his motivation from the horse's mouth see this video interview of Sinclair at Regeneration, a 3-day gathering of university students in Grand Rapids last month organized by the Michigan Student Sustainability Coalition.

NYC Museum of Natural History Climate Exhibit

To judge from recent reactions to some of our climate posts in Energwise, there are a lot of people out there who could use some basic instruction in the science and implications of climate change. And so it was to be heartily welcomed, in principle, when the worldâ''s most famous and probably its greatest museum of natural history opened an exhibit about global warming, to run almost a year from Oct. 18, 2008 to Aug. 16, 2009. Mounted in collaboration with a handful of other major museums and foundations, with financial support from the Bank of America and the Rockefeller Foundation, how could it not be great?

For some months, Iâ''ve been puzzled by the absence of attention in the media given the American Museum of Natural Historyâ''s climate change exhibit. So I went to check it out yesterday, taking my spouse along to act the part of â''woman in the street.â'' It didnâ''t take us long to find the answer to my question: What I hoped would be a great exhibit is a great disappointment. There is so little good to be said about it, if indeed anything at all, one is tempted to pass over it in silenceâ''which evidently is exactly what most critics have been doing.

First, some words about the crying need for general climate education, as evidence by a sampling of comments appearing here. A recent post on the Energy Secretaryâ''s warning about the impact of global warming on California agriculture prompted this reaction from a reader who evidently doesnâ''t know that students of climate are called climatologists, not climatists or cosmologists: â''Why are the climatists so worried about the environment? They are the same ones that say the universe just magically appeared from nothing. Can't have it both ways.â''

A post about a recent PNAS paper on long-term climate impacts got this response from a reader who appears to have not quite grasped the distinction between weather and climate: â''There is NO scientific data based climate change model that can predict even next year's global temperature, let alone 10 years for now.â'' Actually, though we canâ''t accurately predict what the weather will be a week or two from now, we can and do accurately predict what the climate will be a year and ten years from now. (And we also can accurately predict, and have done so, what the long-term impact of a major volcanic eruption will be.)

In reaction to the same readerâ''s disbelief â''that the IEEE has fallen for the psuedo science of Global Warming/Climate Change,â'' a reader in Australia wondered why he wasnâ''t falling off the bottom of the Earth, since itâ''s flat.

Then there is this comment, which is just flat wrong: â''The fact that respected scientists disputing human causes for climate change now far outnumber respected scientists blaming humans for it, has been completely ignored by the liberal media.â'' The fact is, about 99 out of 100 climatologists fully subscribe to the claim that the worldâ''s climate is being adversely affected by human activity.

The American Museum of Natural History had an opportunity to describe and explain how climatologists have arrived at that conclusion, to explore its implications, and to do so taking advantage of all the best in interactive, engaging display technology that museums have to offer. It has completely botched that job. It doesnâ''t even do a good job of explaining the rudiments of climate change--the greenhouse effect, the relative irradiation of the poles and the equator, the difference between weather and climate--let alone offer viewers opportunities to interact and engage.

To take one very random example, one panel tells us how in upstate New York a peeper frogâ''s peeping signals the beginning of spring, and that this frog now starts peeping two weeks earlier than decades ago. But do we hear the sound of the frog peeping? Do we see an actual frog, or at least a video of the frog? No we donâ''t.

In the next to last major exhibition area (the seventh of eight), which is called Changing Land,we see panels about more intense storms, more droughts, and more wildfire. But we see nothing about the land effect that is by far the most serious and alarming, the impact on the worldâ''s major agricultural regions. (This is such a stunning oversight, I have to say, one wonders if some corporate sponsor somehow sabotaged the exhibit.)

At the end of that next to last room on land--a point where you can assume that everybodyâ''s attention is flagging--thereâ''s a small panel listing the sources of knowledge about the Earthâ''s climate history: tree rings, lake sediments, corals, cave deposits, ice cores. WHY ISNâ''T THAT PANEL A WHOLE ROOM, AND WHY ISNâ''T IT THE FIRST ROOM IN THE EXHIBIT? The first thing the skeptical visitor needs to understand is how scientists have arrived at the knowledge we have about climate. It is here, right at the beginning, to take a very important example, that viewers should be told how climatologists have teased a history of world temperatures out of ice cores--a fundamental that is never explaining anywhere in the exhibit, and to the extent itâ''s mentioned at all, is explained misleadingly.

The last room in the exhibit, A New Energy Future, describes some promising renewable and carbon-free energy sources in development. It comes as no surprise, after the previous seven rooms, that no mention is made of their relative costs or the technical maturity (or immaturity) of the various green energy contenders.

The Museum of Natural History is not cheap. In fact, it's one of the worldâ''s museums thatâ''s gone the furthest in turning itself into an all-round money machine, with many unappealing dimensions. Itâ''s still well worth visiting, to see the fabulously redesigned dinosaur and marine exhibits, the famous Roosevelt-era dioramas of wildlife and human cultures, and much else besides. But the combined cost of general admission and the special climate exhibit, at $24 per adult, is not worth it. Skip the climate part, which is not worth a dime.

Victory for Mountaintop Strip Mining May be Pyrrhic

In a decision hailed by the coal industry and condemned by critics of Appalachian mountain strip mining, a U.S. Appeals Court found on Friday the 13th of this month that the U.S. Army Corps of Engineers should not be required to do more strict environmental reviews of applications to lop mountain tops. The Richmond, Virginia, appeals court ruled that a district court judge had erred in not deferring sufficiently to the Corpsâ'' technical expertise and in asking it to take into account indirect environmental effects that are more properly left to state regulatory authorities. Though the National Mining Association hailed the decision, its real impact may be to hasten the advent of tougher Federal supervision of mountaintop stripping.

The Bush Administration was friendly to the coal industry in every possible wayâ''even friendlier than it was to oil and gasâ''as documented in many newspaper articles and books, including the third chapter of my Kicking the Carbon Habit. President Obama promised during his campaign to crack down on the Appalachian coal industry, a risky stand given the prevalence of the practice in politically decisive states like Pennsylvania, Kentucky, and West Virginia. With courts taking a step back from tighter regulation of coal, Obamaâ''s super-environmentalist team seems sure to step in.

New Jersey Solar Initiative Illuminates PV Costs

Public Service Electric and Gas announced a five-year plan this week to outfit utility poles, subsidized housing, schools, and sundry other public buildings with solar cells. The total amount of photovoltaic cells will come to 120 megawatts and cost an estimated $773 million. That's equivalent to about 6.5 dollars per watt, which is in line with recent historical costs, worldwide, and consistent with a statement Secretary of Energy Chu made yesterday. The generally accepted breakeven point for photovoltaics is $1/W. Chu said that PV needed to improve by a factor of five.

Energy Secretary Chu Calls for Three Breakthroughs

In an interview with the New York Times today, Steven Chu said that major breakthroughs are required in biofuels, batteries and solar. He said that solar needs to get â''five times better,â'' which I interpret roughly as follows: Industry sources say that photovoltaics have cost between $3 and $4 per Watt in recent years, which is three or four times higher than the breakeven level with coal-generated electricity. One company, First Solar, claims that it will be able to get PV module production costs down to $1/W in five years. But historical data for recent yearsâ''the dollars spent on new PV installations, divided by their total megawattageâ''suggest that real-world PV costs are still in the vicinity of $6 or $7 per Watt.

So if you take an average of industry claims and historic data, you get a current cost for photovoltaics of about $5/W. Improving on that by Chuâ''s â''factor fiveâ'' would give you breakeven.

Sweden Ends Nuclear Ban

This is big. The Swedish government, it was reported today, is ending the countryâ''s multi-decade ban on new nuclear construction and is dropping its plan to phase out all operating reactors. Though it relies on atomic energy for half its electricity, the Swedes have been committed since the 1980s to shutting down all their nuclear power plants, though they have not in fact made much progress doing so. Now the center-right governmentâ''s stated intention is to build new reactors to gradually replace the 10 currently operating. The decision is bound to have wide impact on opinion, especially in Germany, which also has been committed in principle since the 1980s to phasing out nuclear energy.

Sweden is one of those little countries, like South Korea and Holland, that wields an influence in technology--not to mention culture and world politics--that is all out of proportion with its size. It now joins other Europeans countries--notably the United Kingdom, France, and Italy--that have decided in the last year to expand reliance on nuclear energy. Its national utility Vattenfall, a world leader in developing and demonstrating clean energy technology, is expressing interest in entering the British nuclear market as a competitor to Franceâ''s national utility EDF. Vattenfall owns and operates nuclear reactors in Germany, as well as a large fleet of coal-fired plants, and often is in the news there.

Germanyâ''s Chancellor Angela Merkel, who appears to be on a political upswing, has long sought â''an exit from the nuclear exit.â'' Commenting on Swedenâ''s â''buried exit,â'' Germanyâ''s leading business newspaper, the Frankfurter Allgemeine, said the decision has aroused agitation among German environmentalists.

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