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A Closer Look at the American Clean Energy and Security Act

John Larsen — Thu, 02 Jul 2009 16:11:38 -0400

WRI analyzes emissions caps, allowances, offsets, and other critical components of the American Clean Energy and Security Act.

What are the key elements of the climate bill approved by the House of Representatives on June 26?

The bill contains four major elements:

A clean energy requirement, designed both to set new standards for current types of power generation and to accelerate development and deployment of clean energy technologies such as renewables, energy efficiency and carbon capture and storage.
An efficiency requirement that provides funding for energy efficiency programs, and the setting of stronger building codes and product efficiency standards.
A cap and trade program that sets mandatory caps on 87 percent of U.S. greenhouse gas (GHG) emissions including the electric power and oil and gas sectors, and heavy industry.
Measures designed to ease the transition into a low carbon economy by providing assistance to those impacted by a cap - including industry, affected sectors of America’s workforce, and low income households; these also include support for international climate change programs.

What emission reductions would be achieved if this bill was implemented?

Implementation of the cap would reduce emissions from covered sources to 17% below 2005 levels by 2020 and 83 percent below 2005 levels by 2050. Total U.S. GHG emissions would be reduced, as a result, by 15% below 2005 levels by 2020. This exceeds President Obama’s goal of reducing emissions to 1990 levels by 2020 (approximately 14% below 2005 levels). In addition, implementing the American Clean Energy and Security Act (ACESA) would result in emissions reductions beyond those generated by the pollution cap.

The bill contains substantial complementary requirements, including emissions performance standards for uncapped sources and emission reductions from forest preservation in developing countries. When these are taken into account, GHG emissions could be reduced by 28 percent below 2005 levels by 2020 and 75 percent below 2005 levels by 2050. The bill also contains requirements related to international offsets - used for compliance with the federal cap and trade regime. Factoring these in would make potential emission reductions from the bill even greater, reaching up to 33 percent below 2005 levels by 2020 and up to 81 percent below 2005 levels by 2050, depending on the quantity of offsets used.

For more information, see WRI’s analysis of emission reductions under cap-and-trade proposals in the 111th Congress.

What assistance would industry and consumers receive to cushion the transition?

Title III of the bill provides details on the distribution of emission allowances to aid industries and consumers affected by the transition to a clean energy, low carbon economy. The vast majority of these allowances - 76 percent - are directed to consumer assistance and other public benefits between 2012 and 2025. (This is true regardless of whether they are distributed by allocation or auction.)

For example, the largest component of allowances devoted to public benefit – 39 percent between 2012 and 2025 - is awarded to electric power distributors, with the requirement that the benefit from these allowances must be passed on to consumers to cushion against potential increases in energy bills. Similarly, allowances are designated for consumers of natural gas, heating oil and propane. States would also receive some allowances, to be used for specific purposes such as deployment of clean energy technologies. Between 2012 and 2025, at least 18 percent of total allowances would be auctioned. The proceeds would be channeled into programs to assist low income energy consumers and support other federal programs on adaptation, worker assistance and deficit reduction. The bill also earmarks a small percentage of allowances to the automobile industry to help re-tool factories to manufacture new, clean vehicles such as plug in hybrids. Finally, between 2012 and 2025 up to 19 percent will be given away for free to petroleum refineries, certain electric power generators, and trade exposed industries to aid their adjustment to a carbon constrained economy.

For more information, see WRI’s analysis of allowance distribution.

Allowance Value Distribution (Click to enlarge)

What are the bill’s offset provisions?

The bill allows for up to 2 billion metric tons of offsets a year, split 50/50 between domestic and international activities. Domestic offsets would come from GHG emissions sources not covered by the carbon cap, such as carbon sequestration in forestry and agriculture. International offsets would be generated from activities that reduce forest loss, as well as sectoral crediting mechanisms and other programs in developing countries. Authority over almost all offsets will rest with the Administrator of the Environmental Protection Agency. However, the U.S. Department of Agriculture (USDA) will oversee the domestic forestry and agriculture component of the offsets program.

Once approved by the appropriate regulator, these offsets would be traded in domestic and international carbon markets, purchased by capped sources, and used toward their legal compliance with the emissions cap.

(If the Administrator finds that 1 billion metric tons domestic offsets are unavailable in any given year, the 50/50 split may be adjusted to increase the amount of international offsets - up to a 25/75 ratio.)

What aspects of the bill are causing concern?

Several areas of the bill raised concerns among different interests and constituencies, including environmental groups and carbon intensive industries. These included, but were not limited to, the following issues.

Role of USDA: The bill gives authority to the U.S. Department of Agriculture for the administration of domestic GHG emissions offsets generated by farms and forests in the U.S. While USDA has an important role to play supporting carbon sequestration, it has less expertise on regulating pollutants which is the province of the U.S. Environmental Protection Agency (EPA). The respective roles of the two agencies in ensuring robust carbon accounting for offsets under a U.S. cap and trade program remains to be satisfactorily resolved.
Trade Provisions: The final version of the bill introduced controversial new trade provisions which would enable the United States, from 2020, to use aggressive, unilateral border measures to impose duties on certain energy intensive foreign goods. President Obama publicly expressed concern about the provision which he described as “protectionism.”
Allowance Allocations: These remain an area of contention. Some constituencies - including various environmental groups - argue that industry received too much assistance. Others - including carbon intensive industrial corporations - argue that more assistance is needed to cushion the transition to cleaner technology. Some in the international community believe too few allowances are dedicated to assisting developing countries as they adapt to climate change impacts and adopt clean energy technologies.
Biomass Emissions: There are concerns that the bill’s provisions accounting for emissions from biomass may potentially include fuels that yield a net increase in GHG emissions.

What happens next?

The historic passage of the American Clean Energy and Security Act has generated substantial momentum for U.S. climate legislation to become law, possibly as early as the end of 2009.

Action now moves to the Senate, where the Environment and Public Works Committee will take up its own climate legislation in July. Other Senate committees including the Energy and Natural Resources Committee, Commerce Committee, Agricultural Committee, Finance Committee and the Senate Foreign Relations Committee all are likely to take actions on parts of the legislation that fall within their jurisdiction. Senate Majority Leader Harry Reid has requested that all of these committees complete their work on the legislation by September 18th. Then, the Senate leadership will need to pull these various parts together for a vote on the Senate floor. EPW Committee chair Barbara Boxer and the Senate leadership have made it clear that passage of climate legislation is a key priority.

If the Senate does pass a bill, it will need to be reconciled with the American Clean Energy and Security Act. To become law, the joint legislation would then receive a final vote in both chambers, before being sent to the president for signing. This entire process could conceivably be completed in 2009. In December, the U.S. will attend negotiations to conclude a post-2012 international climate change agreement in Copenhagen. A firm U.S. commitment to emissions reductions will be key to a successful outcome.

Living Up to Potential: India's Energy Savings Companies

Elaine Aglipay Delio — Tue, 30 Jun 2009 12:11:50 -0400

The market potential for energy savings companies (ESCOs) in India is great, yet barriers still stand in the way of the industry’s growth.

Listen to the full podcast interview:

In April 2009, WRI released “Powering Up: The Investment Potential of Energy Service Companies in India,” a study that examined the potential of India’s Energy Service Company (ESCO) industry. The authors found that with an investment of US$10 billion dollars in energy efficiency improvements, India’s economy would see benefits of up to 183.5 billion kilowatt hours in energy savings. The publication is part of ongoing research on Accelerating Clean Energy Markets in India.

In this interview, WRI Ella Delio gives some background on ESCOs in India, and describes how this industry can overcome its most significant barrier to growth–a lack of access to finance:

Full transcript:

Q: How big is the potential for energy savings through energy conservation efforts in India?

A: The potential for energy savings in India is tremendous. With an investment of $10 billion dollars, India can realize 183.5 billion kilowatt hours of savings annually. That is 36% of their annual electricity consumption. And a key element of realizing this potential is the Energy Services Company industry.

Q: What is an energy service company?

A: An Energy Service Company, or an ESCO, is a company that provides energy efficiency related services, and operates on an energy performance contract. Which means that their revenues are earned based on the amount of energy savings that they produce for the client. The majority of ESCO projects have payback periods of two years, and on average, the clients of ESCO’s save around 20-25 percent of their baseline energy costs.

Q: How big is the ESCO Industry in India?

A: In India, the ESCO industry has grown tremendously over the past five years. From 2002-2007, the compounded annual growth rate was 96%, and it is estimated that in 2008 the growth rate was 62%. This high growth rate is due to rising energy costs, to the desire of enterprises to increase their cost competitiveness, and due to the greater procurement of energy services from government agencies in India. Despite this high growth, though, in the past five years, India’s industry is still relatively small to other emerging economies such as Brazil and China. In India, in 2007, the annual revenues of the industry was $18 million US dollars, while in Brazil, for the same year, the industry revenue was $280 million US dollars – which is 15.5 times more than that of India’s.

Q: What are the barriers to growth of the ESCO industry?

A: One of the primary barriers to the growth of the ESCO industry is the lack of access to financing for the energy service companies. WRI’s analysis shows that there are attractive investment opportunities to fund ESCO’s, especially among debt investors such as commercial banks in India, and one of WRI’s recommendations is for these banks to pilot financial products targeted at ESCO’s and their energy efficiency projects. In fact, WRI is currently in talks with several national Indian banks to explore this option. And we hope that by the end of June 2009 we will have an agreement with at least one of these banks to pilot such a financial product.

There are other barriers to the growth of the ESCO industry, such as the lack of a strong national industry association for ESCOs, as well as the lack of confidence of the prospective clients in the ESCOs. And we provided recommendations to address these barriers in our new report called “Powering Up,” and we hope that all those who have listened to this video today, and are interested in learning more about the investment potential of the ESCO industry in India will download the report from the WRI website.

A Vote to Put the U.S. on a Low Carbon Path

Jonathan Lash — Sat, 27 Jun 2009 13:18:36 -0400

Yesterday, the U.S. House of Representatives passed a bill that, if it becomes law, will change the face of America’s factories, power sources, buildings, landscapes and working patterns.

I have been involved in a dozen pieces of landmark US environmental legislation over the last 30 years. None have been more important than this.

Let’s start with the fact that the US has never had a coherent, comprehensive energy policy, and that the American Clean Energy and Security Act (ACES) would provide one. The bill sets out a long-term road map to shift the world’s biggest economy on to a low carbon path. WRI’s analysis shows that it is the strongest climate bill ever to come before Congress, setting mandatory caps on sectors responsible for 87% of US greenhouse gas emissions including electric power, oil and gas, and heavy industry.

By putting a price on greenhouse gas emissions, ACES sends a vital message to businesses and investors that markets for low-carbon products and services are the future. The US is home to the most entrepreneurial and innovative private sector in the world. With this signal we can develop the technology to keep global warming within manageable limits.

Almost as important are the bill’s international implications. With the months to the UN Copenhagen summit counting down, the world urgently awaits US leadership. The concrete greenhouse gas targets and additional carbon-cutting measures in this bill, and its provisions to help finance developing country adaptation to climate change, send a strong signal that the US is serious about negotiating a new global deal in Denmark this December.

But despite yesterday’s victory, ACES still faces an uncertain future in the U.S. Senate. If the Senate defeats the bill, it may be years before Congress returns to the subject. Meanwhile, the Copenhagen negotiations would collapse. Other nations would take Congress’s failure to limit US emissions as a signal that the world economy will continue to pursue business-as-usual energy policies. And the planet continues to heat at an accelerating and dangerous rate.

Like many, I would like to see deeper cuts. But what is most important is to start changing the trajectory of the greenhouse gas-generating juggernaut that is the US economy. And the alternative is not a stronger bill, it is no bill.

An earlier version of this article originally appeared in The Guardian.

Whose Amazon Is It?

Ruth Nogueron — Thu, 25 Jun 2009 09:35:04 -0400

Following the recent violence over natural resource use, Peru has an opportunity to balance economic development with human rights protections.

The tension between natural resource development and the protection of human rights reached a breaking point in Peru this month. In early April, indigenous groups initiated nearly 50 days of protests as a public outcry for laws that violated their right to decide if and how large-scale development happens on their territory. Fatal violence erupted when police and the military attempted to break a road blockade near the city of Bagua, in the northern region of Amazonas and close to the border with Ecuador. The victim count remains controversial. The official death toll is 33, with 24 policemen and 9 civilians killed. Other estimates range from 40 to 250 indigenous people dead.

The government responded to the protests with heavy-handed tactics, calling a state of emergency and calling in the military and national police. (A move denounced by human rights organizations). Also, there has been a national and international outcry at the use of violence by both sides. Public demonstrations and strikes were held in Lima and other cities in Perú, with protests in other major cities around the world. The International Human Rights Commission, leaders of the Peruvian Catholic Church, as well as Peruvian and international NGOs, all made statements calling for investigations and a stop to the violence.

The ingredients for violent conflict have been simmering for several years. The Peruvian government’s aggressive economic development strategy centers on promoting private investment in the natural resources based sectors. Between 2004 and 2009, the oil and gas concessions in the Peruvian Amazon increased their coverage from 15% to 72%. The vast majority of these concessions overlap with indigenous people’s territories, including titled and demarcated communities, communities in process of being titled, territorial reserves and proposed reserves. However, the government did not consult with these indigenous communities before it drew the concession boundaries and awarded the concessions to oil and gas companies.

Adding fuel to the fire is the 2006 US-Perú Trade Promotion Agreement, the free trade agreement (FTA) signed by President George W. Bush and Peru’s President, Alan García. The FTA included a variety of groundbreaking provisions for labor, public participation and consultation, and forest management, which were included after the agreement was re-negotiated in 2007. These provisions were meant to improve forest sector governance and promote legal trade in timber products. The FTA also included language meant to prohibit the weakening of existing environmental laws in both countries.

To make sure the agreement could be certified before President Bush left office in January 2009, the Peruvian Congress granted Peru’s executive branch special powers to enact laws and regulations needed to be in compliance with the FTA. Between February and June 2008, the executive branch used these powers to pass a series of Legislative Decrees meant to attract and facilitate large-scale private investment in the extractive industries, forestry and agriculture in the Peruvian Amazon.

Much attention has been paid to two of the more contentious decrees–Legislative Decree 1064 and Legislative Decree 1020. Decree 1064 removes previous requirements for companies to negotiate with a community prior to moving in, and it reclassifies communal land rights as subordinate to individual and private ownerships, giving favor to individuals, companies, and settlers who invade indigenous territories. Decree 1020 outlines a plan to regulate investment in the Amazon, but protesters say it frees roughly 60 percent of Peru’s forests for potential development.

As with the oil and gas concession awarding process, indigenous communities were not consulted on the content of the decrees. This is despite the fact that Peru has signed onto several international conventions and declarations that commit the government to providing specific protections to indigenous peoples, including the right to free, prior and informed consent on development activities that would threaten their territory or way of life.

Community Engagement & Natural Resource Use

WRI’s 2009 report, Breaking Ground: Engaging Communities in Extractive and Infrastructure Projects recommends 7 principles to help companies adapt to the changing rules of natural resource extraction by more effectively involving communities in project decision-making:

Prepare communities before engaging.
Determine what level of engagement is needed.
Integrate community engagement into each phase of the project cycle.
Include traditionally excluded stakeholders.
Gain free, prior and informed consent.
Resolve community grievances through dialogue.
Promote participatory monitoring by local communities.

Read the full publication here.

Last year, after public protest and indigenous peoples’ demonstrations called the decrees into question, a special investigative Commission created by the Peruvian Congress found the decrees to be unconstitutional. When debate in the Congress on the Commission’s findings was blocked and formal spaces for dialogue appeared to be ineffective, indigenous communities took to the streets to protest.

Since the events in Bagua, the Congress has repealed the controversial decrees, and President Garcia has recognized the lack of consultation and declared that it is time to start over again.

The government has set up a national working group made up by members of the executive branch, the presidents of the regional governments of the Amazonian States, and 10 indigenous representatives. The working group is tasked to prepare a sustainable development plan for the Peruvian Amazon. While the Minister of Foreign Relations has said that Peru has the support of the U.S. Government and Congress to find negotiated solutions to improve the laws, the U.S. itself has said or done very little about the situation.

An unprecedented opportunity for Peru

The “new start” offers the government an unprecedented opportunity to put effective measures in place to protect all of its citizens from the unintended negative consequences of development, and make sure that they receive its full benefits through a participatory process.

At the national level, the government needs to make sure that laws and policies:

Provide information: Give citizens adequate access to clear and accurate information about planned development, and that citizens are given an opportunity to understand the full implications of development. The government should conduct analysis and provide maps that show the location of indigenous territories and the overlaps with possible conflicting land uses for example, oil and gas concessions or forest and mining concessions.
Allow citizen participation: Give citizens formal opportunities to participate in credible decision-making processes to ensure sure that their views and opinions are reflected in final decisions.
Provide access to justice: Give citizens access to effective forms of justice so that if they have a grievance, they don’t feel they need to take the law into their own hands.

Finally, companies operating on indigenous territory should also play their part. Since the majority of oil and gas concessions in the Peruvian Amazon overlap indigenous territories, those operating in these concessions should have a policy regarding indigenous peoples, and an effective policy on community engagement and free prior and informed consent.

Video: SmartBike DC Succeeds and Expands

Tue, 23 Jun 2009 11:30:31 -0400

A new video from EMBARQ shows the success of Washington’s bike sharing program, SmartBike DC.

SmartBike stations have been installed throughout downtown DC. However, it may be hard to notice them because for now, it’s just a pilot program (the first in the country, in fact) and there are currently only 10 stations and 120 bikes. It’s still a very small yet increasingly important piece of the District’s transportation network.

EMBARQ produced a short video outlining SmartBike’s success:

The program, which is about one year old, allows subscribing members to take bikes from any station around the city and return it to any other. The program currently costs $40 per year. This eliminates concerns about the storage, upkeep, and cost of using a bike to get around the city. As EMBARQ’s new video shows, SmartBike DC has been a major success. The 120 bikes have taken a total of over 11,000 trips in less than 10 months, showing that members are not only signing up but enthusiastically using the bike sharing program.

The District Department of Transportation is planning to expand the program dramatically. This is critical because the change will not only be quantitative, but qualitative. One of the SmartBike members interviewed in the video explains that the program appeals to her because there is a station right in front of both her apartment and her office. Currently, that isn’t true for most locations in the District. That’s about to change, with new kiosks both filling in the gaps between current SmartBike locations and expanding the program into new neighborhoods across the city. What’s more, the new kiosks will largely be placed near Metro stations, allowing for much better intermodal service.

All that should go a long way towards transforming SmartBike from a perk of living in D.C. to something that could fundamentally transform the transportation system of the city.

This video was produced by EMBARQ–The WRI Center for Sustainable Transport, as part of a series on sustainable transportation best practices around the world. The first video in that series, “Muévete En Bici (Get On Your Bike),” presents Mexico City’s initiative to shut down one of its busiest avenues in order to create a dedicated space for pedestrians and cyclists.

Updated: Carbon Capture and Storage and The American Clean Energy and Security Act

Sarah Forbes — Thu, 18 Jun 2009 09:55:37 -0400

The American Clean Energy and Security Act of 2009 (ACESA) provides a number of important provisions that will facilitate the demonstration and deployment of carbon dioxide capture and storage (CCS) technologies. Below is a brief overview of the most important of these provisions.

This summary is an update to a previous analysis.

Inquiries can be directed to Sarah Forbes.

For more information, visit the U.S. Federal Climate Policy home page.

Coal use is responsible for over 40 percent of global carbon dioxide emissions, and significant, deliberate action will be required to reduce these emissions. The ACESA lays a strong foundation for moving CCS technology to scale by reducing costs and providing funding for demonstrations.

The American Clean Energy and Security Act of 2009 has the following strengths:

Develops a comprehensive national strategy for deployment. The bill requires Federal agencies, with EPA leadership, to develop a comprehensive strategy for commercial deployment and deliver a report to Congress within one year. The report will identify barriers and regulatory challenges and will recommend regulation, legislation, and other actions to facilitate CCS deployment. (Sec. 111)
Establishes regulations for geologic storage. Amends the Clean Air Act and Safe Drinking Water Act to establish regulations for geologic storage. Requirese EPA to finalize the rules for carbon dioxide geologic sequestration wells, including financial responsibility requirements, within one year. The bill also requires EPA to identify a coordinated process for certifying and permitting geologic storage sites within two years. (Sec. 813)
Requires emissions reporting for geologic storage sites. Geologic storage sites are regulated sources under the cap and trade program. Mandatory emissions reporting is required beginning in 2011. (Sec. 700 and Sec. 722)
Requires a formal report and evaluation of regulatory framework every three years. The bill requires EPA to formally report data on geologic storage sites, evaluate the performance of the geologic storage sites, and reassess the regulatory framework for geologic storage sites to Congress once every three years. (Sec. 813)
Stablishes a task force to design legal frameworks. The bill establishes a task force to provide recommendations to Congress within two years that include a study of the ability of existing laws and insurance mechanisms to manage risks associated with CCS, the implications and considerations for different models for liability assumption, and subsurface property rights. (Sec. 113)
Promotes R&D and early deployment of CCS. The bill establishes a Carbon Storage Research Corporation to be run by the Electric Power Research Institute (as proposed in HR 1869, introduced by Rep. Boucher). The Corporation would use funds collected through a feed-in tariff to issue grants and financial assistance for commercial-scale CCS demonstrations. Funding is capped at $1.1B per year for no more than 10 years. The bill also includes provisions for governance, government oversight, information sharing and intellectual property for both the Corporation and projects it would undertake. (Sec.114)
Provides bonus allowances for stored carbon dioxide. The bill provides bonus allowances to the first facilities that implement capture and secure geologic storage that results in a 50 percent reduction in annual carbon dioxide emissions. Payment is available for electric generating units fired by coal or petroleum coke at least 50 percent of the time and with a nameplate capacity of 200MW or greater, and to industrial sources that emit more than 50,000 tonnes of carbon dioxide per year and do not produce liquid transportation fuel. Funds will be divided into tranches with the payment on sliding scales with higher payments for greater percentage capture. This program provides a mechanism for offsetting the technical risk assumed by early-adopters and a financial incentive to capture and store greater percentages of carbon dioxide than is required under the performance standards.

Specifics of the bonus allowance payments are outlined below (Sec. 786).

Phase I (first 6 GW of CCS equipped plants)

Units achieving capture and storage of 85% or more of the carbon dioxide that would have otherwise been emitted would receive $90 bonus allowance value for each tonne of CO2 captured and sequestered
Bonus allowance payment for lower percentage capture will be determined by the EPA administrator, with a minimum payment of $50 per tonne of CO2 captured and sequestered for a 50 percent reduction in carbon dioxide
An extra $10 per tonne bonus allowance is given for early-adopters, or those that begin operating at a 50% capture and storage rate before 2017
A lower but undefined bonus allowance will be given to projects that combine geologic storage with enhanced oil recovery

Phase II (6-72GW)

Allowances are distributed through an annual reverse auction (unless otherwise decided by the EPA) with bids based on the desired level of incentive for 10 years of geologic storage
Allowances will be divided into a series of 6 GW tranches
Value of allowances will be on a sliding scale with higher values for greater percentage capture. Precise values will be determined by the administrator and re-evaluated every 8 years
Sets performance standards for new coal-fired power plants. The bill amends the Clean Air Act to require new coal-fired power plants to meet performance standards. The EPA Administrator must review the standards and may tighten them depending on the performance of commercially-available technology. (Sec. 812)
- Standards apply to all plants permitted after January 1, 2009 where 30% or more of their fuel is coal and/or petroleum coke
- Plants permitted from 2009-2020 must achieve a 50 percent reduction in annual emissions by 2025 or earlier (depending on the level of commercial deployment of CCS technology)
- Plants permitted from 2020 onward must achieve a 65 percent reduction in annual emissions from the unit
Allows for retrofits of existing plants to apply for bonus allowances. The bill provides criteria for retrofit facilities and specifies that such facilities should apply CCS to at least 200 MW with a 50-65 percent annual reduction in carbon dioxide emissions from the portion of the unit that has been retrofitted (as proposed in the Space amendment).

Squeezing More Juice From Concentrating Solar Thermal

Britt Childs Staley — Thu, 18 Jun 2009 08:38:33 -0400

Australia and other nations rich in solar resources should invest in concentrating solar thermal (CST), a key low-carbon technology.

Australian Prime Minister Kevin Rudd recently announced plans to build the world’s largest solar energy project.

Previously, the Rudd Government announced it would invest nearly US $3.5 billion in a Clean Energy Initiative to support the growth of clean energy generation technologies, reduce CO2 emissions, and stimulate economic activity. Under this initiative, the Rudd Government is investing US $1.2 billion in solar technologies, including US $1.1 billion in the new Solar Flagships program. The tender specifications will be announced later in 2009 and the successful bids in 2010, but based on Rudd’s outline, the Program will develop up to four solar generation plants for 1GW of generating capacity—three times the capacity of the largest operating solar project in the world. The projects can use solar photovoltaic or concentrating solar thermal power (CST).

CST uses reflective material to concentrate the sun’s rays to power steam turbines or engines. When combined with thermal storage—which enables a plant to produce power under cloud cover and after the sun has set—CST can generate electricity on demand, not just when the sun is shining.

Given Australia’s solar resources, the announcement of the Flagships program is an important step toward meeting Australia’s 20% by 2020 renewable energy target. Australia, in fact, has some of the best resources globally for CST, as shown on this map:

Global Direct Normal Solar Radiation. Source: World Bank

According to a new WRI report, Juice from Concentrate: Reducing Emissions with Concentrating Solar Thermal Power, CST, a renewable energy resource that can be dispatched on demand, offers significant potential for reducing carbon dioxide emissions from the power sector and will be an important part of the energy solution.

Reviewing the economics of CST, WRI found that there is real scope for policy to accelerate widespread deployment of CST globally. Costs are currently high relative to coal-fired power. Initiatives such as the one in Australia provide important signals of public commitment that could improve investor confidence and ultimately bring down CST costs.

However, despite the technical viability of CST with thermal energy storage, there remain significant barriers of which policy-makers and investors need to be aware.

Most importantly, the regions with the best solar resources are often arid or water-scarce. Australia is no exception. The Australian government should consider additional incentives for plants that incorporate advanced technologies that can reduce water consumption, such as dry cooling and wet/dry hybrid cooling systems (although these technologies also increase project costs).

Second, the most abundant solar resources are not evenly spread globally and often do not coincide perfectly with large energy-consuming population centers. Australia’s solar resources are strong across the country, but less suitable in and around the major population centers in the southeast. Improved transmission systems will be needed to keep pace with the growth of CST and other renewable energy generation technologies.

Managing these challenges, Australia’s investments can help accelerate global deployment of CST by bringing down costs through learning, economies of scale, and building investor confidence. The Australian government anticipates that the learning from the Flagships Program can be shared internationally through the work of the new International Renewable Energy Agency (IRENA), which Australia recently joined.

As countries seek solutions to global climate change while meeting growing energy needs, CST will be an exciting part of the transformation of the power sector to low-carbon technologies.

Rules for Fuels: Biofuels and Climate Change Impacts

Liz Marshall — Thu, 18 Jun 2009 08:35:29 -0400

As biofuel production ramps up, counting all the associated greenhouse gas impacts is critical to good energy and climate policy.

Below is an interview with WRI economist and biofuels expert Liz Marshall.

Download as PDF (PDF, 2 pages, 129 Kb)

Q: Why has the greenhouse gas impact of biofuels become a hot button issue?

A: The rapid spread of biofuel production in the United States has been driven by generous federal support, including tax breaks and tariffs. The Renewable Fuel Standard in the Energy Independence and Security Act of 2007 also mandates that the volume of renewable fuels in the U.S. transportation fuel supply increases from 9 billion gallons in 2008 to 36 billion gallons by 2022. This support is often justified on the grounds that biofuel use reduces greenhouse gas (GHG) emissions from transport. As increasing amounts of land are used for biofuel crops such as corn and soybeans, however, concern is growing over whether the total net effect is to produce more, not fewer, greenhouse gas emissions worldwide.

Definitions

Direct land-use change in the context of biofuel production refers to the conversion of land directly into biofuel feedstock production. Measuring the greenhouse gas impacts of such conversion requires measuring the net changes in carbon storage capacity that result. For example, if Conservation Reserve Program acres are converted back into corn production, large quantities of carbon stored in the grassland may be released.

Indirect land-use change refers to the cascade of off-site conversions that can be triggered by moving acreage into biofuel feedstock production. For example, if increased corn production displaces soybean production, and soybean production then moves into carbon-rich forested areas or grasslands, such secondary conversions can result in significant “indirect” GHG emissions.

Feedstock refers to the raw materials used to generate biofuels to power vehicles. Feedstocks generally are crops rich in sugar, starch or oil. They include sugar cane and corn (for ethanol), and soybean, jatropha and oil palm (for biodiesel).

Answering this question requires measuring the total carbon impact of producing and consuming biofuels. Two separate regulatory processes are currently developing biofuel greenhouse gas (GHG) accounting protocols to do this. The U.S. Environmental Protection Agency is developing a carbon accounting protocol for the federal Renewable Fuel Standard and California’s Air Resources Board is doing the same for the state’s Low Carbon Fuel Standard. These imminent, groundbreaking standards have fueled a contentious debate about how to measure the greenhouse gas emissions associated with biofuel production, with disagreement centered on whether the impacts of “indirect” land-use changes (defined at right) should be included. The question has also arisen in the context of provisions included in climate legislation soon to be debated in Congress.

Q: Why should indirect impacts be included in GHG accounting for biofuels?

A: Fully accounting for the GHG impacts of biofuel use requires measuring emissions both from the land where biofuel crops are grown (direct impacts) and those that result from related land use changes triggered elsewhere (indirect impacts). If we only account for direct impacts, policy makers will only get part of the picture. Given that U.S. taxpayers are subsidizing biofuel production, it is critical that we understand whether using ethanol and biodiesel as transport fuels delivers global greenhouse gas benefits. While there are other reasons for supporting biofuel development, including domestic energy security and rural revitalization, these may not alone justify the current scale of public support.

The need for measuring indirect emissions and using the results to make sound policy judgments is urgent. As biofuel production spreads around the world, so do its cascading indirect impacts. Many feedstocks require a lot of land for growth. So an increased reliance on biofuels will increase global demand for land to meet both our existing food and fiber (e.g., timber, wood pulp) needs and the new demand for fuel. Such large-scale redistribution of land uses to accommodate biofuel production may result in substantial carbon emissions, particularly if uses such as agriculture or ranching are pushed into high-carbon forests and grasslands. Land-use changes such as these already contribute significantly to climate change, with deforestation and forest degradation accounting for approximately 12-17% of global GHG emissions, depending on calculation methodology used. Accelerating rates of deforestation could negate any greenhouse gas benefits associated with using biofuel rather than petroleum in our gas tanks.

Q: Can we measure indirect impacts precisely enough to include them in a GHG accounting framework?

A: The Environmental Protection Agency and the California Air Resources Board have invested significant resources in modeling and estimation tools that will allow them to quantify indirect impacts both within the United States and internationally. While the tools are new, and the current estimates vary according to assumptions made, our capacity to estimate these impacts is advancing rapidly.

We know that biofuels create indirect impacts, so we cannot refuse to try to measure them just because some constituencies have raised questions about current measurement techniques. We must design a system of measurement that incorporates existing estimates while allowing them to be updated frequently as measurement capacity improves.

Q: Is including indirect impacts in policy analysis unprecedented?

A: No. The resistance to expanding traditional environmental impact accounting methods to include indirect impacts is surprising, given that this same approach is commonly used in economic impact analysis. When decisions are made on promoting new industries in an area, for example, tools called multipliers are used to calculate expected economic impacts – on jobs, income and other parameters – not just in the relevant sector but throughout the local economy.

Including indirect impacts in environmental impact analysis is a similar process. Land and labor are both shared inputs that create interdependencies across sectors. If the increased use of labor in one sector means that other sectors have to adjust their labor use and management to accommodate the increased competition for labor, the impacts of that effect are accounted for in economic impact analysis. Similarly, if the increased use of land in one sector means that other sectors have to adjust their land-use practices to accommodate the original sector’s growth, and in doing so incur additional environmental costs, those costs must be included in an analysis of the net environmental impacts of that growth or of policies promoting that growth.

Q: Is including indirect impacts in policy analysis “unfair” to the biofuel industry?

A: No. The purpose of accounting for indirect impacts is not to blame farmers producing biofuel crops for ripple effects that they cannot control. The purpose is to measure the full environmental impacts of scaling up production. Applying this comprehensive measurement methodology ensures that only those fuels that generate environmental benefits enter the sustainable biofuel markets that are created by environmental policies such as the federal Renewable Fuel Standard. Excluding products that fail to satisfy environmental performance criteria from receiving public support is fair to taxpayers, not “unfair” to producers. They can continue to compete in the marketplace as producers of all other goods do; they simply cannot qualify for the preferential treatment awarded to products that demonstrate environmental benefits.

Q: What are the wider implications of this policy debate?

A: The resolution of this debate will decide whether or not the climate impacts of producing and consuming biofuels are fully accounted for in the federal Renewable Fuel Standard. Including indirect impacts is critical for a U.S. biofuel policy based on sound GHG criteria that account for full production impacts.

The outcome will also have significant long-term implications both within and beyond the biofuels sector. Federal policy cannot effectively address global issues such as climate change if it fails to acknowledge that actions taken within our borders have global repercussions. Including measurement of indirect impacts of biofuels in federal policy will send a strong signal that the United States is committed to fully accounting for the global environmental impacts of its domestic policies.

Working Towards Greater Forest Sector Transparency in Gabon

Matthew Steil — Thu, 11 Jun 2009 08:44:52 -0400

The first-ever Interactive Forest Atlas for Gabon offers data and tools to support the sustainable management of Gabon’s forests.

At the launch event in May, S.E. Emile Doumba, the Gabonese Minister of Forest Economy, Water, Fishing, and Aquaculture, said:

With this dynamic atlas, the government of Gabon affirms its commitment to transparency and good governance in forest management. The forest data produced by this partnership [with WRI] are now available for public use.

No more than a year ago, Mr. Doumba’s speech would have been impossible to give in the Republic of Gabon.

Covered 80% by lush tropical forest, Gabon contains some of the world’s most valuable, biodiverse forested regions. During past decades, however, forest data and maps were guarded from the public – creating dangerous confusion on the ground and forming a significant obstacle to sustainable forest management.

It was commonplace for citizens living within Gabon’s forests to witness logging operations crossing into their communities or customary lands unannounced, posing a serious threat to their livelihoods. Companies operating in logging concessions faced a similar predicament, unable to secure their concession borders and prevent neighboring companies from poaching trees.

In the absence of clearly defined, publicly available logging boundaries, forest communities and companies alike had no platform from which to defend their rights.

Acknowledging these problems, Gabon began to enact reforms during the 1990s to strengthen management of its forest resources and better address the access rights of its citizens. A new forest code, promulgated in 2001, mandated improvements in key areas, including:

sustainable forest management of production forests – including the necessary informational management infrastructure;
a multi-use approach to forest resources – away from a purely extractive focus;
decentralization of forest resource management through community forestry; and
explicit conservation and ecosystem protection objectives.

S.E. Emile Doumba (second from left) speaking during the launch of the first Interactive Forest Atlas of Gabon in Libreville. (May 13, 2009)In 2006, WRI signed an MOU with the Ministry of Forest Economy, Water, Fishing, and Aquaculture (MEFEPA) to collect data and create tools necessary to support sustainable management of Gabon’s forests. These efforts culminated in the creation of the first-ever Interactive Forest Atlas for Gabon, which WRI launched this May in Libreville.

Through an interactive collection of maps and data sets, the CD-ROM Atlas and accompanying report provide the government and – equally important – the public with an accurate presentation of activity occurring within Gabon’s forest sector.

Designed in an accessible, user-friendly format, the Atlas will serve as a standardized base of reference, transforming the way Gabon collects, manages, and distributes forest information. Above all, the Atlas gives all stakeholders, from government agencies and private companies to NGOs and forest communities, an avenue to access accurate forest information in pursuit of enforcing regulations and defending their rights.

Forest Management in Gabon: As the official poster for the Gabon Interactive Atlas project, this map provides an overview of current logging titles and protected areas in Gabon as of December 2008.

Gabon’s small population and the high revenues stemming from oil production have historically sheltered its forest resources from agricultural and industrial pressures. However, with global demand for wood and other forest resources on the rise - particularly from Asian markets – forests have become a central economic resource. Gabon’s forest sector currently accounts for 13 percent of national exports (2.5 percent of GDP) and employs 28,000 citizens – 28 percent of the working population.

The new Atlas will help ensure that forests continue to play a key role in Gabon’s economy, while at the same time helping the government make certain that forest operations are legal, sustainable, and respectful of local rights to resources. Moreover, the Atlas project is strengthening the technical expertise and capacity of the Gabonese government, ultimately allowing it to more effectively monitor and manage the nation’s forests.

WRI and MEFEPA are committed to regularly updating the information contained within the Interactive Forest Atlas, as well as to expanding its application through subsequent versions. A revised version of the Gabon Forestry Atlas is scheduled for release next year and will expand data in several key areas, notably small logging permits, annual harvestable areas, forest plantations, and production/export statistics.

As international attention turns towards the connection between deforestation and climate change, Gabon—along with its Central African neighbors—faces a novel suite of opportunities related to the future of forest resource use. Through the right set of policies, institutions and incentives Gabon may be able to move from the status quo of economic development versus environmental conservation and towards a future where these two objectives better converge.

Jean Sylvestre Makak is the Libreville-based National Coordinator for WRI’s Forest Information and Governance project in Gabon.

Governments Investing in CCS Demonstrations

Sarah Forbes — Mon, 08 Jun 2009 09:52:17 -0400

Recent global action to fund carbon capture and storage (CCS) technology is unprecedented. (Update: U.S. FutureGen Project revived.)

(The U.S. Department of Energy announced on Friday, June 12 that it is moving forward on the FutureGen Project in Mattoon, IL. Once built, FutureGen would be the country’s first commercial-scale integrated CCS project.)

New project funding announced last month in the European Union, Canada, Australia and the United States is building momentum for accelerating the use of CCS to reduce greenhouse gas emissions. The G8’s goal of 20 demonstrations announced by 2010–a goal that once seemed insurmountable–could be within reach.

In Australia, the federal government allocated USD$2 billion to build between two and four coal-fired power plants, each generating up to 1,000 MW, that have CCS capabilities. This funding action came shortly after Prime Minister Kevin Rudd announced the formation of the $70 million, investor-backed Global Carbon Capture and Storage Institute. (Note: All funding references in this article are in USD$.)

Canada, another coal-dependent country, announced a clean energy fund that offers nearly $600 million for CCS demonstration projects as part of its economic stimulus package.

The European Commission is also moving forward on CCS demonstrations. Last month, it submitted a call for proposals for large-scale plant demonstration. These plants would be the first in Europe to be equipped with CCS elements and would need to capture at least 250 MW of installed capacity. The proposal could cover newly built plants or existing plants, and nearly $1.5 billion will be allocated for this purpose.

The United States is also dedicating stimulus funding to CCS–$3.4 billion in total. $800 million will go to the Department of Energy’s Clean Coal Power Initiative to broaden its research on commercial-scale CCS deployment, and $1.52 billion will fund large-scale CCS from industrial sources (not coal-exclusive). While the scale of the projects are not as ambitious as those in Europe or Australia, $1 billion of remaining stimulus funding could be used to restart the cancelled FutureGen project. In addition, recent bills in Congress, including the American Clean Energy and Security Act and S. 1013, may also speed demonstration in the United States.

However, the size of the projects matter. CCS has already been demonstrated to work at small plants, but in order for CCS to contribute substantially to reducing greenhouse gases, the projects need to be demonstrated at a large power plant.

Recent global government action is a step in the right direction, but we need to move forward with implementation quickly.