California Braces for the Complex World of Carbon Markets

In which Air Board chief Mary Nichols performs a dramatic reading of a vintage Jerry Brown speech

As chair of the California Air Resources Board, Mary Nichols is presiding over the nation's first comprehensive cap-and-trade program.

When its nascent cap-and-trade program ramps up later this year, California will be the first state in the nation to reduce greenhouse gases by making a broad spectrum of big polluters buy permits to exceed their allotted emissions.

Other governments, industry and scientists will be watching, but there’s still a lot to sort out. That much has been evident at this week’s carbon market and policy conference in San Francisco, “Navigating the American Carbon World.”

The long and winding road to carbon trading was highlighted by Mary Nichols, chair of the California Air Resources Board, in a little prank she played on the gathering. Obviously reading from a script, she stumbled over words, looked up at the audience, then back down at the page, plodding through her replies to moderator Diane Wittenberg. Continue reading

A Source of CO2 That Might Surprise You

That babbling brook out back has been holding out on you

A satellite view of the Mississippi River shows a mosaic of riverbank land-use patterns.

Rivers and streams in the United States are releasing a lot more CO2 into the atmosphere than scientists previously thought, according to a new study by scientists at Yale. In fact, American waterways are discharging the gas into the atmosphere at a rate of 100 million metric tons per year, an amount equal to a car burning 40 billion gallons of gas, researchers say.

The study, conducted by David Butman and Peter Raymond of the Yale School of Forestry and Environmental Studies, looked at water chemistry data from more than 4,000 rivers and streams. The authors say identifying this significant source of CO2 could change the way scientists model the movement of carbon through ecosystems and the atmosphere.

“These rivers breathe a lot of carbon,” said Butman in a press release from the National Science Foundation, one of the study’s funders. “They are a source of carbon dioxide, just like we breathe out carbon dioxide and like smokestacks emit carbon dioxide.”

The study is published in the current issue of Nature Geoscience.

Capturing Carbon in California

CoalPlantLauren Sommer’s two-part radio series on carbon capture in California airs this week on The California Report. You can also view her slide show at the end of this post.

The idea seems simple enough: In order to get energy, we burn carbon. In most cases, that carbon comes out of the ground in the form of natural gas or coal. So instead of releasing the resulting carbon dioxide emissions into the atmosphere, why not put it back into the ground?

Of course, carbon capture and storage/sequestration (CCS) is much more complicated than that. Nonetheless it’s a strategy that’s being pursued aggressively by both international leaders and US Energy Secretary Steven Chu, who would like to see it deployed in ten years.

There are obstacles on both the “capture” and “storage” side of the equation. In terms of technology, however, “storage” is much further along, thanks to the oil and gas industry, which is already using CO2 in oil recovery. Injecting compressed CO2 into oil fields forces more oil to the surface in a process known as enhanced oil recovery. As many in the industry will remind you, they have three decades of experience doing this.

Keeping it underground is another matter. In the western US, the West Coast Regional Carbon Sequestration Partnership (WestCarb) is setting up a number of pilot projects to study how CO2 can be safely stored underground. As Technical Director Larry Myer explained to me, one of the primary goals is to simply work out the regulatory, siting, and liability issues.

As with any waste issue, choosing the site is the most important–and often most difficult–issue. California’s Central Valley has plenty of underground saline aquifers and depleted oil and gas fields that could hold CO2. But the trick is finding a site where the geology can securely store it and where there’s little risk of groundwater contamination. On the plus side, scientists know that CO2 is slowly immobilized underground, which lessens the risk over time. But how long that takes is still under study.

As for the “capture” issue, there are three ways to separate CO2 from power plant emissions.

  • In today’s Climate Watch story, I describe Oxyfuel technology, in which natural gas is burned in pure oxygen. Since the outputs are steam and carbon dioxide, the CO2 can be easily siphoned off. But that requires building new power plants from scratch.
  • The second option seeks to deal with the carbon dioxide before the fuel is burned; a “pre-combustion” approach. Or for all you wonks out there: Integrated Gasification Combined Cycle (IGCC). The downside to this process is that it requires gobs of energy, which makes it expensive.
  • Finally, there’s the “post-combustion” approach. That’s where the CO2 is “scrubbed” from flue gas after the fuel is burned. Existing plants can be retrofitted with this technology, but it also comes with large energy penalty, just like IGCC.

A price on carbon, through either a cap-and-trade system or carbon tax, would change the economic case for CCS, but there are a lot of strikes against the technology. So why pursue it?

The argument goes like this: In order to achieve steep emissions cuts–say an 80% reduction worldwide by 2050–it may be an important tool (or stabilization wedge).  The world will continue to use fossil fuels in the near term and despite the enormous growth of renewable energy, it’s still a drop in the bucket. That’s why many believe that CCS is a crutch the world needs to wean ourselves from fossil fuels.

Sketchy First Look at California Cap & Trade

On Tuesday the California Air Resources Board put out a sneak preview of the carbon cap & trade system mandated by the Global Warming Solutions Act of 2006 (AB 32). Couched as a “preliminary draft,” the 132-page plan is intended as a broad outline for a final Cap-and-Trade regulation scheduled to go before the board late next year.

As such, the draft lacks a few key components, such as how many allowances the state plans to auction off to industry, versus give away. Air Board chief Mary Nichols says her agency is still waiting on recommendations from an expert committee on how to best handle allowances.

Environmentalists have been pushing for polluters to pay for allowances up front. In an email to me on Tuesday, in anticipation of the draft, Bernadette del Chiaro of Environment California wrote that her group is “slightly disappointed that ARB staff are punting on the issue of auctions. ARB in the scoping plan said they are committed to getting to 100% auctions. I hope the draft rules at least repeat this commitment.”

The draft appears to stop short of an outright commitment, reiterating that “transition to a 100 percent auction was a worthwhile goal.” In a conference call with reporters, Nichols said she anticipates at least a partial auction. Also undetermined is how to deploy the funds that emitters may pay for allowances. Nichols said a $10 per ton price for carbon could produce a two-to-four-billion-dollar pool of money, which could be used for such things as “buying down” utility costs for low-income families or creating incentives for development of renewable energy technology. Nichols declined to project what a cap & trade system would end up costing households in California.

You can download a PDF file of the complete report at the CARB website (under “What’s New). A public meeting is scheduled for December 14 in Sacramento, to get feedback on the Preliminary Draft Regulation released this week.

Also on Tuesday, the Governor’s Office announced that Quebec, one of California’s partners in the Western Climate Initiative for regional carbon trading, has set a target “to reduce its greenhouse gas emissions 20 percent below 1990 levels by 2020 and the introduction of a clean-car emissions standard equivalent to California’s Vehicle Tailpipe Emissions Standards.”

The WCI includes seven western states and four Canadian provinces. Any progress from the state’s WCI partners is welcome at this point, as most have been reluctant to set their intentions into law.

Check out our interactive map of California’s largest industrial emitters of greenhouse gases.