Author Archives: Larissa Koehler

Major California Refineries Logging Big Pollution Reductions Under AB 32

By Larissa Koehler | Published: February 12, 2013

It is well-documented that petroleum refineries release large amount of pollutants that are harmful to the environment and make people sick. In California, these refineries are among the largest sources of carbon dioxide, accounting for 7 of the top 10 sources for climate pollution. According to data from the U.S. Environmental Protection Agency, refineries can also emit large amount of toxic compounds, including carcinogens and respiratory irritants.

California’s landmark global warming law (AB 32) offers a solution, placing nearly all refineries in the state within a cap-and-trade program that started January 1st of this year. One of the most innovative features of cap and trade was putting a price on carbon, forcing refinery business models to take a long look at the long term financial costs of releasing greenhouse gases.

As a result of the program, evidence shows that petroleum refineries in California are starting to change their ways. Recently, the California Air Resources Board (CARB) released 2011 emissions data showing that 11 of the state’s refineries logged significant reductions in their greenhouse gas (GHG) pollution, as compared to 2010. This represents over half of the refineries reporting emissions to the agency.

In addition to cutting climate pollution, many of California’s biggest and dirtiest refineries are also documenting major cuts in other pollutants. As reported to the US EPA’s Toxics Release Inventory (TRI) database, 2011 was a banner year for reductions of many compounds that are known to be harmful to human health, with many at record low levels – clear evidence that AB 32-inspired reductions can improve public health and help mitigate the effects of climate change.

Refinery – City	Reduction of GHGs in 2011 compared to 2010	Toxic Pollutants Reported in Record Low Amounts (5 or 10 year low) in 2011
Paramount – Paramount	22% (74,146 MT)	Ammonia, Benzene, Toluene
Ultramar – Wilmington	4% (75,621 MT)	Hydrochloric Acid
BP – Carson	1% (76,070 MT)	Diethanolamine, Ethylene, Tetrachloroethylene
Valero – Benicia	2% (95,225 MT)	1, 3 Butadiene, Ammonia, Benzene, Mercury Compounds, Methanol, Molybdenum Trioxide, Naphthalene, Propylene, Sulfuric Acid
ConocoPhillips– Rodeo	4% (137,212 MT)	Ammonia, Ethylene, Lead Compounds, Polycyclic Aromatic Compounds
Chevron – Richmond	2% (167,468 MT)	1,3 Butadiene, Ammonia, Benzene
Shell Oil – Martinez	2% (185,313 MT)	Cumene, Ethylbenzene, Methanol, Nickel Compounds, Sulfuric Acid
Chevron – El Segundo	7% (422,994 MT)	Benzo (G,H,I) Perylene, Chromium Compounds, Ethylbenzene, Lead Compounds, Mercury Compounds, Xylene

Pollutant	Commonly Referred to Health Effect from Chronic Exposure
1,3 Butadiene	Cardiovascular effects, leukemia, cancer
Ammonia	Skin irritant
Benzene	Blood disorders, neurological disorders, cancer
Chromium Compounds	Respiratory irritant
Ethylbenzene	Eye, skin, and throat irritant
Ethylene	Cancer, reproductive damage
Hydrochloric Acid	Skin, eye, respiratory irritant
Lead Compounds	Reproductive damage, neurological damage
Mercury Compounds	Dizziness, nausea, and vomiting
Methanol	Upper respiratory irritant, abdominal pain
Nickel Compounds	Asthma
Polycyclic Aromatic Compounds	Cancer
Sulfuric Acid	Respiratory irritant
Toluene	Respiratory irritant

What is the likely reason for the reduced GHGs at California Oil Refineries?

Evidence shows that reductions of GHGs and toxic pollutants are not a mere result of facilities suspending or cutting production through voluntary or involuntary action. Instead, evidence points to AB 32’s cap-and-trade program inspiring facilities to reduce emissions by investing in and upgrading equipment. A prime example is Valero’s refinery in Benicia, CA, which decreased covered GHG emissions by over 95,000 metric tons while also cutting ammonia emissions by 98%, sulfuric acid by 84%, and benzene by 49%.

As reported in the Benicia Herald, this decrease was the direct result of a new flue gas scrubber put into use at the refinery in 2011.

According to Sue Fisher Jones, public affairs manager for the Benicia refinery, the Valero installation.

“…will let the refinery retire existing furnaces, allowing new, energy-efficient furnaces to operate and reduce the refinery’s greenhouse gas footprint.”

Valero demonstrates that putting a dollar figure on emissions leads industries to change, yielding pollution reductions while saving energy and fuel use. Not only will the environment benefit from fewer emissions, human health will improve as well.

California should be proud of the progress it has achieved thus far with AB 32’s cap-and-trade program, but we shouldn’t rest on this success Environmental integrity and human health depend on a continuing decline in emissions. Thankfully, CARB has created a program, outlining strategies that monitor changes in pollution and adopts necessary measures to mitigate pollution if needed.

AB 32 policies that encourage petroleum refineries to cut pollution are a tremendous start to mitigating climate change. However, in order to meet the goals of AB 32, more refineries need to incorporate energy efficient solutions. Such steps will not only strengthen California’s economy, but will go a long way towards ensuring clean air and better health for present and future generations.

Posted in Climate, General | Comments closed

The Nuts and Bolts of California’s First Greenhouse Gas Auction

By Larissa Koehler | Published: October 18, 2012

By: Jonathan Camuzeaux, EDF Research Analyst

Following today’s California Air Resources Board’s (CARB) board meeting, the next major milestone in California’s efforts to reduce greenhouse gas (GHG) emissions is on November 14^th, when California will hold the first auction of carbon allowances for the Global Warming Solutions Act (AB 32) cap-and-trade program. EDF has closely followed the steps CARB has taken to prepare, including participating in their successful “practice auction” this past August. In order to shed some light on the nuts and bolts of how these auctions will work and the process going forward, we’ve put together an Auction FAQ factsheet to help answer some basic questions.

Why is CARB Auctioning CO2 Allowances?

In terms of allowance distribution, the AB32 program includes a combination of free allocation and auctioned allowances. While it is the cap that ensures that the targeted quantity of emission reductions are achieved – regardless of the choice of type of allowance distribution – there are important differences between auctioning and free allocation relating to issues such as transaction costs, market power, price certainty, and distribution of allowance value.

Perhaps most importantly, auctioning allowances creates proceeds that can be invested in a variety of ways to further the goals of AB32 – for example, financing emission reduction projects in either capped or uncapped sectors, keeping energy prices down, or preparing for the impacts of global warming. In addition, twenty-five percent of proceeds are actually required to be used in ways that benefit disadvantaged communities.

Another advantage of auctioning CO₂ allowances is that it guarantees that all regulated entities have access to allowances on an equal footing. By holding an auction, California ensures that both large and small companies have access to allowances under the same terms, thus reducing the risk that the market becomes dominated by a few big players.

How the Auction Works

The California auction will be using a single-round, sealed-bid, uniform-price format. Under this format, companies submit confidential bids for a specific amount of allowances at specific prices (also called a bid schedule). The highest bidder is allocated their requested quantity of allowances first, then the second highest bidder, etc., until there are no more allowances. Winning bidders receive the quantity of allowances they bid for at the uniform settlement price, which is determined as the value of the lowest winning bid – or more simply, the price at which the market clears. Regardless of their original bids, all winning bidders pay the same price. This auction format creates a clear market price, which is crucial for investors.

Using Auction Revenue to Further Emissions Reductions

There are abundant opportunities to invest the auction proceeds into sectors that deliver greenhouse gas reductions in California – from clean energy to clean transportation, energy storage and clean tech finance and investment. Not only do these investments further California’s greenhouse gas reduction goals, they can also provide considerable economic benefits, as well as substantial health co-benefits, while helping set California’s path towards sustainable economic growth. To learn more about investing AB32 auction proceeds to grow California’s clean economy, read the EDF Invest to Grow report.

Auctions will play an important role in California’s cap-and-trade program; they encourage a more stable market and create proceeds that can be used to make California’s efforts to cut climate change pollution even more effective. For more details about how the auctions are designed, how the bidding process works and what to expect on November 14th, see EDF’s Auction FAQ factsheet and the California Air Resources Board’s website (here).

Jonathan Camuzeaux is a Research Analyst in the Office of Economic Policy and Analysis at EDF. He provides economic analysis to support the development of market-based solutions to environmental issues with a focus on climate and energy economics.

Posted in Clean Energy, Climate, General | Comments closed

California’s record gas prices shows AB 32 will help both your wallet and your health

By Larissa Koehler | Published: October 10, 2012

Fuel prices in California hit historic highs this week, an unexpected price spike that has put the state’s dependence on oil and natural gas into sharp focus. Like many of the state’s former fuel price shocks caused by demonstrable events (i.e. foreign and domestic supply disruptions), oil companies are once again saying that refinery problems and pipeline issues were the root cause. However, most reports on the current price swing aren’t pinpointing the true reason – drivers en masse are too reliant on the current mix of gas and diesel, an energy source that pollutes our environment every time it is used.

The true cause of California’s fuel price spikes must be seen for what it is –an unhealthy dependence on fossil fuel (primarily imported), and lack of diversity in our transportation system. Furthermore, since over 50 percent of the oil used in the state is obtained from foreign sources, California consumers aren’t exactly benefitting the state’s economy as we send billions of dollars out-of-state but release combustion byproducts here – polluting our air and water. Over time, the impact of buying and burning all of that gas is going to get even worse: an increasing population and declining in-state oil production means we are going to import, and burn, more.

Growing fuel use and declining in-state production puts California on a path to spend between $112 and $182 billion per year by 2020 on imported energy, which translates to roughly $8,000 to $13,000 per household. Even worse, the American Lung Association, using EPA data, has included 9 cities and 16 counties in California on their list of most polluted areas in the country; more fuel burning will only exacerbate these problems, worsening air pollution and sickening people – leading to poorer public health, higher healthcare costs, and more missed work and school days.

California’s fuel and energy policies , if implemented as planned, have the ability to protect the economy and help lessen air pollution and human health impacts. By setting a cap on emissions and requiring a diversification of energy sources away from an over-reliance on fossil fuels, AB 32 will result in decreased dependence on foreign imports and will make California consumers less vulnerable to price shocks. Low carbon solutions such as advanced biofuels, ultra-efficient vehicles, and improved community planning are all part of the AB 32 solutions package, and all are aimed at breaking the grip that traditional fossil fuel companies have on our economy. Add to that the obvious environmental and health benefits from reducing fossil fuel use, and it is clear that the California Air Resources Board’s vision for AB 32 policies is the right choice for California.

For more information on how AB 32 saves California’s money during fuel price swings, see two articles co-authored by EDF economist Jamie Fine — Shockproofing Society: How California’s Global Warming Solutions Act (AB 32) Reduces the Economic Pain of Energy Price Shocks and The Upside Hedge Value of California’s Global Warming Policy Given Uncertain Future Oil Prices.