Tag Archives: carbon footprint

Buy Carbon Stored in Trees and Leave it There

For much of human history, the way to make money from a tree was to chop it down. Now, with companies rushing to offset their carbon emissions, there is value in leaving them standing. The good news for trees is that the going rate for intact forests has become competitive with what mills pay for logs in corners of Alaska and Appalachia, the Adirondacks and up toward Acadia. That is spurring landowners to make century-long conservation deals with fossil-fuel companies, which help the latter comply with regulatory demands to reduce their carbon emissions.

For now, California is the only U.S. state with a so-called cap-and-trade system that aims to reduce greenhouse gasses by making it more expensive over time for firms operating in the state to pollute. Preserving trees is rewarded with carbon-offset credits, a climate-change currency that companies can purchase and apply toward a tiny portion of their tab. But lately, big energy companies, betting that the idea will spread, are looking to preserve vast tracts of forest beyond what they need for California, as part of a burgeoning, speculative market in so-called voluntary offsets.

One of the most enthusiastic, BP PLC, has already bought more than 40 million California offset credits since 2016 at a cost of hundreds of millions of dollars. In 2019, the energy giant invested $5 million in Pennsylvania’s Finite Carbon, a pioneer in the business of helping landowners create and sell credits. The investment is aimed at helping Finite hire more foresters, begin using satellites to measure biomass and drum up more credits for use in the voluntary market.  BP has asked Finite to produce voluntary credits ASAP so they can be available for its own carbon ledger and to trade among other companies eager to improve their emissions math. As part of its shift into non-fossil-fuel markets, BP expects to trade offset credits the way it presently does oil and gas.“The investment is to grow a new market,” said Nacho Gimenez, a managing director at the oil company’s venture-capital arm. “BP wants to live in this space.”

Skeptics contend the practice does little to reduce greenhouse gases: that the trees are already sequestering carbon and shouldn’t be counted to let companies off the hook for emissions. They argue that a lot of forest protected by offsets wasn’t at high risk of being clear-cut, because doing so isn’t the usual business of its owners, like land trusts, or because the timber was remote or otherwise not particularly valuable.

If other governments join California and institute cap-and-trade markets, voluntary offsets could shoot up in value. It could be like holding hot tech shares ahead of an overbought IPO. Like unlisted stock, voluntary credits trade infrequently and in a wide price range, lately averaging about $6 a ton, Mr. Carney said. California credits changed hands at an average of $14.15 in 2019 and were up to $15 before the coronavirus lockdown drove them lower. They have lately traded for about $13.

These days, voluntary offsets are mostly good for meeting companies’ self-set carbon-reduction goals. BP is targeting carbon neutrality by 2050. Between operations and the burning of its oil-and-gas output by motorists and power plants, the British company says it is annually responsible for 415 million metric tons of carbon emissions.

Excerpts from Emissions Rules Turn Saving Trees into Big Business, WSJ, Aug. 24, 2020

The Green Climate Fund and COVID-19

 The Green Climate Fund has promised developing nations it will ramp up efforts to help them tackle climate challenges as they strive to recover from the coronavirus pandemic, approving $879 million in backing for 15 new projects around the world…The Green Climate Fund (GCF) was set up under U.N. climate talks in 2010 to help developing nations tackle global warming, and started allocating money in 2015….

Small island states have criticised the pace and size of GCF assistance…Fiji’s U.N. Ambassador Satyendra Prasad said COVID-19 risked worsening the already high debt burden of small island nations, as tourism dived…The GCF  approved in August 2020 three new projects for island nations, including strengthening buildings to withstand hurricanes in Antigua and Barbuda, and installing solar power systems on farmland on Fiji’s Ovalau island.

It also gave the green light to payments rewarding reductions in deforestation in Colombia and Indonesia between 2014 and 2016. But more than 80 green groups opposed such funding. They said deforestation had since spiked and countries should not be rewarded for “paper reductions” in carbon emissions calculated from favourable baselines…. [T]he fund should take a hard look at whether the forest emission reductions it is paying for would be permanent.  It should also ensure the funding protects and benefits forest communities and indigenous people…

Other new projects included one for zero-deforestation cocoa production in Ivory Coast, providing rural villages in Senegal and Afghanistan with solar mini-grids, and conserving biodiversity on Indian Ocean islands.  The fund said initiatives like these would create jobs and support a green recovery from the coronavirus crisis.

Excerpts from Climate fund for poor nations vows to drive green COVID recovery, Reuters, Aug. 22, 2020

The Privilege of Polluting v. Decarbonization

The Paris climate agreement of 2015 calls for the Earth’s temperature to increase by no more than 2°C over pre-industrial levels, and ideally by as little as 1.5°C. Already, temperatures are 1°C above the pre-industrial, and they continue to climb, driven for the most part by CO2 emissions of 43bn tonnes a year. To stand a good chance of scraping under the 2°C target, let alone the 1.5°C target, just by curtailing greenhouse-gas emissions would require cuts far more stringent than the large emitting nations are currently offering.

Recognising this, the agreement envisages a future in which, as well as hugely reducing the amount of CO2 put into the atmosphere, nations also take a fair bit out. Scenarios looked at by the Intergovernmental Panel on Climate Change (IPCC) last year required between 100bn and 1trn tonnes of CO2 to be removed from the atmosphere by the end of the century if the Paris goals were to be reached; the median value was 730bn tonnes–that is, more than ten years of global emissions…

If you increase the amount of vegetation on the planet, you can suck down a certain amount of the excess CO2 from the atmosphere. Growing forests, or improving farmland, is often a good idea for other reasons, and can certainly store some carbon. But it is not a particularly reliable way of doing so. Forests can be cut back down, or burned—and they might also die off if, overall, mitigation efforts fail to keep the climate cool enough for their liking. …But the biggest problem with using new or restored forests as carbon stores is how big they have to be to make a serious difference. The area covered by new or restored forests in some of the ipcc scenarios was the size of Russia. And even such a heroic effort would only absorb on the order of 200bn tonnes of CO2 ; less than many consider necessary.

The world has about 2,500 coal-fired power stations, and thousands more gas-fired stations, steel plants, cement works and other installations that produce industrial amounts of CO2. Just 19 of them offer some level of Carbon Capture and Storage (CCS), according to the Global Carbon Capture and Storage Institute (GCSI), an advocacy group. All told, roughly 40m tonnes of CO2 are being captured from industrial sources every year—around 0.1% of emissions.

Why so little? There are no fundamental technological hurdles; but the heavy industrial kit needed to do CCS at scale costs a lot. If CO2 emitters had to pay for the privilege of emitting to the tune, say, of $100 a tonne, there would be a lot more interest in the technology, which would bring down its cost. In the absence of such a price, there are very few incentives or penalties to encourage such investment. The greens who lobby for action on the climate do not, for the most part, want to support CCS. They see it as a way for fossil-fuel companies to seem to be part of the solution while staying in business, a prospect they hate. Electricity generators have seen the remarkable drop in the price of wind and solar and invested accordingly.

Equinor, formerly Statoil, a Norwegian oil company, has long pumped CO2 into a spent field in the North Sea, both to prove the technology and to avoid the stiff carbon tax which Norway levies on emissions from the hydrocarbon industry. As a condition on its lease to develop the Gorgon natural-gas field off the coast of Australia, Chevron was required to strip the CO2 out of the gas and store it. The resultant project is, at 4m tonnes a year, bigger than any other not used for EOR. But at the same time, what the Gorgon project stores in a year, the world emits in an hour.

In Europe, the idea has caught on that the costs of operating big CO2 reservoirs like Gorgon’s will need to be shared between many carbon sources. This is prompting a trend towards clusters that could share the storage infrastructure. Equinor, Shell and Total, two more oil companies, are proposing to turn CCS into a service industry in Norway. For a fee they will collect CO2 from its producers and ship it to Bergen before pushing it out through a pipeline to offshore injection points. In September Equinor announced that it had seven potential customers, including Air Liquide, an industrial-gas provider, and ArcelorMittal, a steelmaker.

Similar projects for filling up the emptied gasfields of the North Sea are seeking government support in the Netherlands, where Rotterdam’s port authority is championing the idea, and in Britain, where the main movers are heavy industries in the north, including Drax.

The European Union has also recently announced financial support for CCS, in the form of a roughly €10bn innovation fund aimed at CC S, renewables and energy storage. The fund’s purpose is not to decarbonise fossil-fuel energy, but rather to focus on CCS development for the difficult-to-decarbonise industries such as steel and cement.

Excerpts from, The Chronic Complexity of Carbon Capture, Economist, Dec. 7, 2019

The Fight for the Remnant Trees of Europe

For 120 years RWE has been one of Europe’s biggest emitters of carbon dioxide. The German utility cleared almost all of Hambacher forest, a once-vast wood in western Germany, to mine lignite, an especially filthy fossil fuel, which it burned to generate electricity. What is left of “Hambi” has become a symbol of the anti-coal movement, occupied by activists camping in 80-odd tree houses.  RWE is under fire even where it does not operate. A Peruvian farmer has sued it in a German court for its contribution to climate change that led to the melting of an Andean glacier, which threatens to flood his home. He lost but is appealing.

Peruvian farmer who sued RWE

But  in September 2019, the EU agreed to a €43bn ($47.5bn) asset swap between RWE and its rival E.ON. It turns E.ON into Europe’s largest power-grid operator by assets and RWE into the world’s second-biggest producer of offshore wind power and Europe’s third-biggest producer of renewable energy. [RWE] has vowed to become carbon neutral by 2040

Of the eu’s 28 members, 18 have pledged to emit no net carbon by 2050. Germany says it will stop using coal by 2038 and stump up €40bn to ease the transition.   RWE is demanding a chunk of the transition pot. It still runs three lignite mines, which directly employ 9,900 people and indirectly support another 20,000 jobs in the Rhine region….  [To complicate matters further], in October 2019 a court ordered a halt to the clearing of its remaining 200 hectares of the forest…RWE says the forest could be left as it is—but at a price. It may cost the company €1.5bn or so to find an alternative to a planned expansion of an open-pit mine at Hambach.

Excerpts from  RWE: After Hambi, Economist, Nov. 23, at 59

Greening the Mining Industry

An Australian regulator recently told Peabody Energy Glencore they couldn’t export coal from a new mine to countries that haven’t signed the Paris climate agreement. Two other Australian coal projects were scuttled in 2019, partly out of concern about greenhouse-gas emissions overseas.  Investors, too, are growing inquisitive about miners’ records on their customer emissions—partly out of fear about potential liability. Miners are responding by increasing carbon-impact disclosure, forming alliances with buyers and investing in technology to cut emissions from steel mills and power plants.  BHP  has said its scope 3 emissions—pollution mostly created when customers transport and use the commodities it produces—are almost 40 times greater than those generated at its own operations.

In the oil industry, facing similar pressures, there is friction among large companies over whether to commit to reducing greenhouse-gas emissions from products such as gasoline—in big part because emissions vary hugely depending on the vehicle…

Threats to miners’ business go beyond pushback on new projects. Consumer brands could stop buying commodities they consider too dirty, experts say. Many are already innovating with recycled materials.

In July 2019, BHP pledged to spend $400 million over five years to develop technologies that can reduce emissions both from its operations and its customers’.  “We won’t stop at the mine gate,” BHP Chief Executive Andrew Mackenzie said. …Rio Tinto is also drawing up scenarios for decarbonizing the steel industry. Success could materially affect the value of its core iron-ore business, it said.  Meantime, miners are touting their role in the shift to a low-carbon economy by producing commodities such as copper and nickel for wind turbines and electric vehicles.

Excerpts from Rhiannon Hoyle, Miners’ New Worry: Other People’s Pollution, WSJ, Oct. 9, 2019

Climate Change: the Costs of Deep Decarbonization

Nuclear is already the largest source of low-carbon energy in the United States and Europe and the second-largest source worldwide (after hydropower). In the September 2018 report of the MIT Energy Initiative, The Future of Nuclear Energy in a Carbon-Constrained World shows that extending the life of the existing fleet of nuclear reactors worldwide is the least costly approach to avoiding an increase of carbon emissions in the power sector. Yet, some countries have prioritized closing nuclear plants, and other countries have policies that undermine the financial viability of their plants. Fortunately, there are signs that this situation is changing. In the United States, Illinois, New Jersey, and New York have taken steps to preserve their nuclear plants as part of a larger decarbonization strategy. In Taiwan, voters rejected a plan to end the use of nuclear energy. In France, decisions on nuclear plant closures must account for the impact on decarbonization commitments. In the United Kingdom, the government’s decarbonization policy entails replacing old nuclear plants with new ones. Strong actions are needed also in Belgium, Japan, South Korea, Spain, and Switzerland, where the existing nuclear fleet is seriously at risk of being phased out.

What about the existing electricity sector in developed countries—can it become fully decarbonized? In the United States, China, and Europe, the most effective and least costly path is a combination of variable renewable energy technologies—those that fluctuate with time of day or season (such as solar or wind energy), and low-carbon dispatchable sources (whose power output to the grid can be controlled on demand). Some options, such as hydropower and geothermal energy, are geographically limited. Other options, such as battery storage, are not affordable at the scale needed to balance variable energy demand through long periods of low wind and sun or through seasonal fluctuations, although that could change in the coming decades.

Nuclear energy is one low-carbon dispatchable option that is virtually unlimited and available now. Excluding nuclear power could double or triple the average cost of electricity for deep decarbonization scenarios because of the enormous overcapacity of solar energy, wind energy, and batteries that would be required to meet demand in the absence of a dispatchable low-carbon energy source.  One obstacle is that the cost of new nuclear plants has escalated, especially in the first-of-a-kind units currently being deployed in the United States and Western Europe. This may limit the role of nuclear power in a low-carbon portfolio and raise the cost of deep decarbonization. The good news is that the cost of new nuclear plants can be reduced through…modular construction shifting  labor from construction sites to productive factories and shipyards…and seismic isolation to protect the plant against earthquakes, which simplifies the structural design of the plant.

Excerpts from John Parsons, A fresh look at nuclear energy, Science, Jan. 2019

Cut or Pay up: Net Negative Carbon Emissions

Sweden’s parliament passed a law in June which obliges the country to have “no net emissions” of greenhouse gases into the atmosphere by 2045. The clue is in the wording. This does not mean that three decades from now Swedes must emit no planet-heating substances; even if all their electricity came from renewables and they only drove Teslas, they would presumably still want to fly in aeroplanes, or use cement and fertiliser, the making of which releases plenty of carbon dioxide. Indeed, the law only requires gross emissions to drop by 85% compared with 1990 levels. But it demands that remaining carbon sources are offset with new carbon sinks. In other words greenhouse gases will need to be extracted from the air

[I]f the global temperature is to have a good chance of not rising more than 2ºC above its pre-industrial level, as stipulated in the Paris climate agreement of 2015, worldwide emissions must similarly hit “net zero” no later than 2090. After that, emissions must go “net negative”, with more carbon removed from the stock than is emitted…

To keep the temperature below a certain level means keeping within a certain “carbon budget”—allowing only so much to accumulate, and no more. Once you have spent that budget, you have to balance all new emissions with removals. If you overspend it…you have a brief opportunity to put things right by taking out more than you are putting in…

Climate scientists like Mr Henderson have been discussing negative-emissions technologies (NETs) with economists and policy wonks since the 1990s. [But] NETs were conspicuous by their absence from the agenda of the annual UN climate jamboree which ended in Bonn on November 17th 2017.

 Reforesting logged areas or “afforesting” previously treeless ones presents no great technical challenges. More controversially, they also tend to invoke “bioenergy with carbon capture and storage” (BECCS). In BECCS, power stations fuelled by crops that can be burned to make energy have their carbon-dioxide emissions injected into deep geological strata, rather than released into the atmosphere….

The Carbon Capture and Storage (CCS)  technologies that exist today, under development by companies such as Global Thermostat in America, Carbon Engineering in Canada or Climeworks of Switzerland, remain pricey. In 2011 a review by the American Physical Society to which Ms Wilcox contributed put extraction costs above $600 per tonne, compared with an average estimate of $60-250 for BECCS…

Much of the gas captured by Climeworks and other pure NETs firms (as opposed to fossil-fuel CCS) is sold to makers of fizzy drinks or greenhouses to help plants grow. It is hard to imagine that market growing far beyond today’s total of 10m tonnes. And in neither case is the gas stored indefinitely. It is either burped out by consumers of carbonated drinks or otherwise exuded by eaters of greenhouse-grown produce…..

One way to create a market for NETs would be for governments to put a price on carbon. Where they have done so, the technologies have been adopted. Take Norway, which in 1991 told oil firms drilling in the North Sea to capture carbon dioxide from their operations or pay up. This cost is now around $50 per tonne emitted; in one field, called Sleipner, the firms have found ways to pump it back underground for less than that. A broader carbon price—either a tax or tradable emissions permits—would promote negative emissions elsewhere, too…

Another concern is the impact on politicians and the dangers of moral hazard. NETs allow politicians to go easy on emission cuts now in the hope that a quick fix will appear in the future.

Excerpt from Sucking up Carbon, Combating Climate Change, Economist,  Nov. 18, 2017

Don’t Cut that Tree!

A revolutionary new approach to measuring changes in forest carbon density has helped scientists determine that the tropics now emit more carbon than they capture, countering their role as a net carbon “sink.”*

“These findings provide the world with a wakeup call on forests,” said scientist Alessandro Baccini, the report’s lead author….Forests are the only carbon capture and storage ‘technology’ we have in our grasp that is safe, proven, inexpensive, immediately available at scale, and capable of providing beneficial ripple effects—from regulating rainfall patterns to providing livelihoods to indigenous communities.”

Using 12 years (2003-2014) of satellite imagery, laser remote sensing technology and field measurements, Baccini and his team were able to capture losses in forest carbon from wholesale deforestation as well as from more difficult-to-measure fine-scale degradation and disturbance …from smallholder farmers removing individual trees for fuel wood. These losses can be relatively small in any one place, but added up across large areas they become considerable.

[T] he researchers discovered that tropics represent a net source of carbon to the atmosphere — about 425 teragrams of carbon annually – which is more than the annual emissions from all cars and trucks in the United States.

Excerpts from New approach to measuring forest carbon density shows tropics now emit more carbon than they capture, Woods Hole Research Institute Press Release, Sept. 28, 2017

*Tropical forests are a net carbon source based on aboveground measurements of gain and loss by A. Baccini et al., Science, Sept. 28, 2017

Demand for Carbon Tax

“You can argue that Big Oil is becoming Big Gas,” says Occo Roelofsen of McKinsey, a consulting firm. Others are going in for renewables. Total of France has a majority stake in SunPower, one of the world’s biggest solar-power firms. Eldar Saetre, the boss of Statoil, Norway’s state-run oil company, says that in 15 years there may be more opportunities outside oil and gas than within.

Plenty of oil firms (Exxon among them) are also calling for governments to enact a “carbon tax” on emitters of greenhouse gases. Their critics argue that this is less altruistic than it appears. For one thing, such a tax would hurt the coal industry especially, thereby boosting the oil firms’ gas businesses. And governments, especially in the developing world, where fossil-fuel demand is still surging, may find such a tax politically impossible anyway; the oilmen are calling for it, opponents say, in the knowledge that such countries will never introduce it….

On November 4th New York’s attorney-general, Eric Schneiderman, subpoenaed documents from Exxon to investigate how much it has known since the 1970s about the effects of fossil fuels on the climate. Exxon is reportedly being investigated under the Martin Act, dating back to 1921, which gives prosecutors wide-ranging powers to investigate securities fraud. Exxon says it has long disclosed information about the risks to its business from climate change, and from action to prevent it, in reports to its shareholders. But the firm’s run-in with the New York justice department may be a portent of what is to come.

Another worry for oil executives is pressure from investors spooked by the financial risks of climate change. Policymakers, such as Mark Carney, governor of the Bank of England, talk about the possibility of many oilfields turning into “stranded assets”, or “unburnable carbon”, if governments get serious about climate-change action. Anthony Hobley of Carbon Tracker, a climate-advisory firm, says that if the Paris pledges are taken at all seriously, the oil and gas industry may become “ex-growth”. Oil executives dispute that. But shareholders, if motivated, could force the industry to shrink just by limiting the funds they provide for new oil discoveries.

Curiously, the present situation may provide a foretaste of this—though cyclically, because of falling oil prices, rather than structurally, because of rising temperatures. Faced with a world awash in crude, oil majors are abandoning high-cost reserves in the Arctic, Canada, North Sea and Gulf of Mexico. One oil executive ruefully calls it a “practice run” for the day in the distant future when fears of global warming, or the emergence of cheap, clean alternative technologies, mean that demand for fossil fuels starts to wane.

Excerpt from Oil Companies and Climate Change: Nodding Donkeys, Economist, Nov. 14, 2015, at 61