Sunday, November 15, 2009

Compromise at Copenhagen

It is now clear that the Copenhagen summit of world governments, due to meet in less than twenty days, will not reach a binding agreement on climate change as was originally intended.

China, the USA, Britain and Canada working closely with host country Denmark, have agreed to a two step process. Step one, to be completed at the Copenhagen summit, is a global political commitment to combat climate change – reinforcing the key messages from Rio, Kyoto, Bali and the recent G20 meetings. This political manifesto will contain nothing new, though Obama is subtly seeking to shift the message so that it focuses on clean energy and not embrace the entire gambit of economic activity.

The second step, much more difficult given the failure to reach agreement over the last twenty four months, will be for the world leaders to agree on a timetable for a binding agreement that will dramatically reduce CO2 emissions, creating a technology and resource transfer funds for developing nations and commit the world to sustainable development. The UN have suggested that a conference in the spring of 2010 will seek to narrow the basis of such an agreement.

Time is running out. The Kyoto Accord, the last binding agreement, is due to expire in 2012. As it does so, legally binding treaty obligations which include the purchase of offsets, expire and nations can legally cease to spend billions in support of reforestation and other projects around the world said to be “green”. Despite the fact that the Kyoto Accord is a remarkable failure – global CO2 emissions continue to rise, even in countries which are signatories to the accord – many nations are seeking an agreement which is much more aggressive than Kyoto ever was. It is worth noting, however, that the EU stands as a group of nations which will likely meet its Kyoto obligations, with several countries (France, Germany, Britain, Greece and Sweden) doing so without the need to purchase offsets.

In this lies the problem. The drastic measures sought by the green lobby – an 80% reduction in CO2 emissions based on a 1990 baselines to be achieved by 2050 – coupled with the recommendations for a new global government agency for climate change are simply too much for many nations to take. The split between the developed world, especially the EU, and the developing world over the economic impacts and the growing distaste for global government agencies which flout democracy, each conspire to make a binding agreement more difficult to take. The new phenomena of a growing popular backlash against climate change policies, especially in the US, are causing politicians to be cautious. President Obama, for example, is downplaying cap and trade and focusing upon clean energy and energy security and rarely speaks of climate change as the focus for his agenda.

There are a few devices which will make the agreement in 2010 easier to reach. The first is to change the baseline date for calculating how deep to reduce CO2 emissions. Canada has already done this, having moved the baseline date for its policies from 1990 to 2006 – it is seeking a 20% reduction on the 2006 figure by 2020 and 60-70% by 2050. Doing so significantly reduces the amount of CO2 to be taken out of industrial processes, transportation and other economic sectors. The second is to focus on energy and see this as the centre of attention – narrowing targets to the energy sector, fixing a portion of a nations energy supply to come from renewable sources and demanding clean coal, carbon sequestration and carbon taxes on energy. The third big shift will be away from notions of global government and a strong focus on using existing mechanisms, such as the G20, as a basis for coordinating efforts.

Most interestingly, there is a move away from market mechanisms as a basis for carbon reduction. While the EU still favours a cap and trade mechanism, the US is quietly moving away from this and is looking systematically at a simple carbon tax. The White House continues to develop plans for an aggressive global warming bill early in 2010 that will be loaded with new spending on green technology and jobs paid for with tax increases. Democratic lobbyist Steve Elmendorf says the White House focus on deficit reduction could easily kill the cap-and-trade effort. “I think this means cap-and-trade has to go to the backburner,” he said. He also notes that, given the growing unpopularity of climate change talk – Al Gore’s speech was disrupted by chants and protests when he spoke to a small audience of some eight hundred in Florida about the need for strong and decisive action last Saturday - and the fact that 2010 is the year of mid-term elections, he expects modest rather than bold proposals.

The communications industry will go into overdrive to “spin” the Copenhagen political agreement as an important milestone in the work of governments to “stop” climate change. Don’t be fooled. It is really a spin on failure. At three summits this year – the G8, the G20 and the APEC summit – climate change agreements have been weak and nebulous. So will this one. Green lobby groups, funded largely by governments themselves, will rightly see Copenhagen as a failure. When Canadian Prime Minister muses that he may or may not go to Copenhagen, he is right to do so. Since nothing new will emerge, he would be better to spend his time looking at climate change data – he may be very surprised to see the difference between the rhetoric and the facts.


Jem said...

We cannot agree because the proposals on the table are flawed. I have the solution.

We should oblige fossil fuel producers and importers to contract for the capture and sequestration of a quantity of carbon dioxide equivalent to a proportion of that produced from the fuel they supply. The proportion could start at a few percent and gradually build up. This would increase fuel price encouraging energy saving, nuclear, renewables, electric cars etc. and provide immediate funding for carbon capture and storage (CCS).

Why give special treatment to CCS? Because energy saving, nuclear, renewables, electric cars etc. are merely ways of filling the energy gap that cutting carbon dioxide emissions will create and mankind has been very effectively filling energy gaps for centuries without the aid of agreed national or global strategies, taxes or caps. CCS is different. It is a way of stopping pollution. You can legislate to stop pollution (economically inefficient) or you can use market forces by giving credits in a cap and trade system, credits against a carbon tax or by paying directly as in my proposal.

The contract might permit capture to be delayed for a year if the quantity captured were increased by 10%, and for another year for another 10% etc. This would not only help with plant problems, but would also allow contracts to be placed today, providing a huge incentive to get plants up and running as soon as possible.

We must soon stop carbon emissions from power generation, cement manufacture etc. and substitute electricity for fuel use in many domestic, industrial and transport applications. Taxing carbon, capping emissions or contracting for CCS when fuel is produced could all provide the economic incentive but unless applied globally will not be sufficient.

I prefer the CCS contract. It is guaranteed to reduce carbon dioxide emissions to whatever annual target is set and is easy to apply globally because:

 It will appeal to rapidly growing and mature countries alike. There are no national caps to restrict relative growth.
 It will allow all industries in all countries to compete on a level playing field. There are no tax or carbon credit differentials and no allowances for governments to give out or auction.
 Because there is only one number to agree, the global annual target, extensive international negotiations will be unnecessary. There will be no national targets to haggle over and perhaps never meet and no issue about who gets the revenue from a carbon tax, consumer or producer nation, or what the tax rate should be.
 Enforcement is straightforward and does not rely on the co-operation of every country. The contracts would be traded and recorded centrally, mostly placed and paid for by the international energy companies. If countries were uncooperative and used their own fuel internally without contracting for carbon capture, a central monitoring organisation could impose an increased capture proportion on imports or exports of fuel for that country to compensate.

So what will it cost? The simple answer is that CCS could cost up to 50 euros per tonne of carbon dioxide emission avoided. This translates to $32/barrel.

The complicated answer is that it is only practical to capture carbon dioxide from large point sources like power stations. Forcing a 75% recovery on the global market through my proposal would drive fuel price up and electricity price down until we switched from fuel to electricity for sufficient other industrial, domestic and transport applications.

The simple cost is modest compared to recent price changes so why are we waiting? Perhaps within as little as twenty years we could be defining the proportion of carbon to be captured, based on fossil fuel production at the time, such that global emissions were contained at the level that the oceans absorb annually, i.e. about 2.2 billion tonnes of carbon per year. Atmospheric carbon dioxide concentration would then stop rising.

But how do I convince the world?

Stephen Murgatroyd said...

An interesting proposal. I understand that the UK are saying that any new coal fired power station must have CCS. Alberta has a $2b CCS fund which companies are accessing to build CCS capacity. None of the oil sands projects are planning on using this as yet unproven technology.

Jem said...

It is misleading to say that carbon capture and underground storage is unproven technology. In the chemical industry we have been capturing carbon dioxide from partial oxidation of coal, oil and gas on an industrial scale for many years. We have been reinjecting carbon dioxide down the well to enhance oil recovery for many years. The Intergovernmental Panel on Climate Change reported the same, refer
This is reiterated by the organisation to which many of the big industrial players belong, refer
I speak as a chemical engineer with many years experience. To be sure the capture and storage technology have not yet been put together and used on a large power generation plant. Process selection, cost estimates and performance will no doubt improve as we gain design, construction and operational experience, but that does not mean there is any likelihood of the technology not working. What is lacking is not the know-how but the economic incentive to apply it, and that is precisely what my proposal is guaranteed to provide.

Stephen Murgatroyd said...

Many thanks for your interest and deep commitment here. I will share your perspectives with this in authority here in Alberta who can influence this thinking, though Canada appears most beholden to the US in terms of climate change mitigation strategies.

Jem said...

Thanks and good luck. Let me know how they react.