Climate 411

3 Keys for the American Petroleum Institute’s New Climate Task Force

By EDF Blogs / Published: July 21, 2016

AdobeStock_56840116By Ben Ratner, Director, EDF’s Corporate Partnerships Program

The climate change discussion is percolating even in surprising places. The latest sign: the American Petroleum Institute’s recent formation of an internal task force on climate change. Reportedly the new task force’s mandate is to revisit API’s approach to this crucial issue, going into an election year and with ever greater scrutiny on fossil fuels.

It is too soon to know whether the task force will rubber stamp a business-as-usual approach defined by glossing over climate concerns and attacking policy measures, or chart a new path instead.

But if the task force is serious about a fresh look at the issue, here are three keys for the task force to consider as it ponders the future of API on climate.

Face the Facts

The oil and gas industry must be responsive to growing pressures from its investors, corporate customers, and Americans affected by oil and gas operations – from local pollution to climate change.

The historic global climate agreement reached in Paris, supported by nearly 200 countries including powerhouses like the United States and China, was also supported by a wide cross-section of American businesses – including PG&E, which as a natural gas distribution company and power generator is a user of API members’ products and a face to climate-conscious consumers.

Last April, over 400 investors representing more than $24 trillion in assets under management urged stronger leadership and more ambitious policies to lessen risk to investment and retirement savings of millions of Americans. Since then, the 2016 investor shareholder resolution season yielded a record breaking number of resolutions – 94 – addressing climate change, many levied as challenges to large oil companies.

And American public concern on global warming is reaching an eight year high, with nearly two-thirds of adults saying they worry about global warming a “great deal” or “a fair amount”, according to Gallup.

Facing all the facts, not cherry-picking them, can ground the task force’s work in today’s dynamic environment and enable an effective response in a changing world.

Solve Methane

While understanding and concern on the methane challenge has snowballed, API’s response has severely lagged.

But it doesn’t have to.

The methane emissions from the U.S. oil and natural gas industry account for the climate damage over a 20-year timeframe equivalent to roughly 240 coal fired power plants. And yet, when the Environmental Protection Agency issued rules earlier this year requiring operators to implement basic safeguards to detect and prevent emissions, API’s public response was to decry new environmental rules as “unreasonable and burdensome”.

Months prior, API’s combative regulatory filing questioned the authority of EPA even to regulate methane emissions, resisted twice-a-year inspections for accidental leaks and urged inspection exemptions that ignore insights on leak unpredictability.

The next round of methane rules is around the corner, and better late than never for API to embrace the United States’ goal of a 45% reduction in methane emissions from the oil and gas sector and to support effective national methane rules grounded in science and economics. Supporting a level playing field to address the invisible but undeniable methane problem would increase investor confidence and keep more product in the pipelines working for the economy, not against the climate. And it just might help build public trust in an industry that according to Edelman lags only the pharmaceutical and financial services industries in that category.

Truth be told, new regulations and compliance are not cost-free, but neither are exploration and drilling. Investing in effective rules will provide climate and environmental safeguards – a needed advancement responsive to legitimate pressure that is only rising.

Support Carbon Pricing

Implementing a market based approach to reducing greenhouse gas emissions is widely thought to be the ultimate key to achieving U.S. climate goals including cutting emissions 80% by 2050. Geographies from northeastern states and California to South Africa and the EU have implemented various forms of carbon pricing. A number of mostly European API members have publicly supported pricing carbon, for example BP recognizing “that carbon pricing by governments is the most comprehensive and economically efficient policy to limit greenhouse gas emissions.”

And yet, some prominent API members have to date withheld support for carbon pricing, or provided lukewarm quasi-endorsements but not lobbying muscle.

The oil and gas industry has survived through evolving, and it’s time to evolve on carbon pricing. An economically rational policy can provide the investment clarity companies want, while delivering the greenhouse gas reductions that societies, supply chains, and ecosystems need.

API is a large organization with diverse views represented, and the climate task force’s job won’t be easy. But the time for change couldn’t be better.

This post first appeared on the EDF + Business Blog

Also posted in Energy, Greenhouse Gas Emissions, Jobs / Read 1 Response

Congress Backs Down from Harmful Environmental Rollbacks

By Jeremy Symons / Published: December 16, 2015

rp_US_Capitol_Building_at_night_Jan_2006-300x226.jpgCongress is on the verge of passing an omnibus spending bill for 2016, and the headlines will be that lawmakers — in a modest victory for common sense – are doing their job and avoiding another disastrous government shutdown.

What’s in the omnibus bill is important, of course. But just as important is what’s not in it.

Left on the cutting room floor were a host of objectionable rollbacks that were jammed into various pieces of appropriations bills. That’s a testament to both the courage of pro-environment negotiators in Congress and the White House, and to the growing political power of environmental issues.

The loudest threat against the environment was Senate Majority Leader Mitch McConnell’s campaign pledge to block the Environmental Protection Agency’s (EPA) Clean Power Plan. Never mind that this would mean unlimited carbon pollution from the nation’s power plants, more asthma attacks, more smog, and more climate change.

But McConnell’s threat was far from the only danger. Among the potential “riders” – rules in the bill meant to change or block policies – were ones designed to:

  • Block efforts to ensure that waters protected under the Clean Water Act are clearly and consistently defined
  • Stop EPA efforts to strengthen public health protections against ground-level ozone pollution (better known as “smog”)
  • Block efforts to ensure that the impacts of greenhouse gas emissions are calculated consistently, and are appropriately considered in federal environmental planning decisions
  • Require EPA to deem any biomass energy project as carbon neutral – even if the science didn’t support that decision
  • Block the Bureau of Land Management from improving environmental and safety standards for the use of hydraulic fracturing on federal lands
  • Bar the Administration from helping poor countries deal with drought, rising sea levels and other threats exacerbated by climate change
  • Stop EPA’s ability to require industry to phase out hydrofluorocarbons and other refrigerants that damage the ozone layer

This is a sampling of the proposals that would have represented serious setbacks for the work being done to responsibly clean our air and water and protect our environment for future generations.

The fact that these proposals didn’t make it into the final omnibus bill is a testament to everyone across America who has spoken up against these attacks. It’s also the latest piece of a remarkable recent winning streak for the environment, from the Clean Power Plan to the blocking of the Keystone XL pipeline to the breakthrough climate pact in Paris.

There is additional good news in that important tax incentives for wind and solar energy are extended in the omnibus bill into 2016 and beyond, as are vital funds for land and water conservation.

There’s no question that Congress is failing its larger responsibility to protect public health and the environment. But for now, we need to celebrate these victories that stop efforts to take us in the wrong direction. They are important wins for a cleaner future for our kids and grandkids.

 

Also posted in Clean Power Plan, Greenhouse Gas Emissions, News, Policy / Comments are closed

3 signs we’re entering a golden age for carbon markets

By Fred Krupp / Published: November 19, 2015

This is an adaptation of an essay by Fred Krupp and Nat Keohane for the International Emissions Trading Association’s Greenhouse Gas Market 2015/2016 report. This adaptation was originally posted on EDF Voices.

There was a time when market-based approaches seemed to fall off the radar in discussions of climate policy, but carbon markets are back.

Well-designed emission trading systems offer the combination of flexibility, incentives and guaranteed results that help polluters meet their targets – while leaving it up to the market to figure out the best way to meet them, driving costs down.

This is why so many companies are staunch supporters of emissions trading, and why national and international efforts are taking off.

Here are three indications  we may be entering a golden age for carbon markets and what it means for COP21, the international climate talks that begin in Paris later this month.

1. Carbon markets are going global

Climate progress in the United States and China is changing the global dynamic.

Gone are the days when the two largest emitters blame each other for inaction, and their bilateral progress is inspiring commitments around the world. All told, cap-and-trade programs are in place in more than 50 jurisdictions worldwide that are home to nearly a billion people.

Quebec and California have linked their carbon markets, creating North America’s largest cap-and-trade system, becoming the first example of subnational jurisdictions in different countries launching a joint market. And more programs are in the works.

Ontario, Canada’s most populous province and home to a significant manufacturing base, is developing a cap-and-trade program to launch by 2017 and link to California and Quebec’s market by 2018. Having the largest U.S. state and Canadian province in a formal, linked carbon market will help lay the foundation for further carbon market collaboration in North America and beyond.

China, meanwhile, is set to open a national carbon market in 2017, the world’s largest.

2. Next: International aviation and tropical forests

One of the most exciting opportunities is in international aviation.

The International Civil Aviation Organization (ICAO) is developing a market-based mechanism for consideration at its next Triennial Assembly in 2016 to help the sector meet its stated commitments to carbon-neutral growth from 2020 and a 50-percent cut by 2050.

That would cap emissions from a global sector that accounts for roughly 2 percent of carbon emissions, and growing fast, and would set a powerful precedent for international cooperation on climate change.

Another opening is in the forest sector.

Tropical forests are not only crucial to stabilizing the climate – they are critical to sustainable economic development for the communities and nations that rely on them. Carbon markets can play a key role in driving a new model of green growth in the tropics.

By allowing jurisdictional REDD+ credits (short for Reducing Emissions from Deforestation and forest Degradation) into their compliance markets, California – and, perhaps soon, the ICAO – have the opportunity to create positive economic incentives for forest protection at a landscape scale.

3. Existing markets are thriving

Since 2006, when California’s climate change program was signed into law, the state has received more clean tech venture capital investment than all other states combined. Bloomberg News recently ranked the Golden State the best place in the U.S. to do business, citing the state’s visionary leadership on climate change as one of the markers of its success.

A good illustration of how market-based policies can promote greater ambition is the landmark U.S. cap-and-trade program for sulphur dioxide. This program reduced national average concentrations of the pollutant by 76 percent since 1990 – taking an enormous step toward solving the problem of acid rain ahead of schedule and well below the estimated cost while creating hundreds of billions of dollars in annual benefits.

And despite well-publicized ups and downs – attributable in large part to the worst recession since the 1930s – the European Union’s emissions trading system is now performing well. It has over-achieved its goals, leading to more reductions at lower cost than expected.

To COP21 in Paris…and beyond

How can we capitalize on this political moment and build on the momentum we are seeing, to keep carbon markets growing around the globe?

A durable climate regime established by the Paris agreement will be one that harnesses market forces in the hunt for solutions, mobilizes private sector energies, enhances national self-interest and, through rigorous and transparent reporting, allows countries to demonstrate to each other that they are meeting their commitment.

A United Nations agreement is only one of many tools available to address climate change. It will take continuing strong action by leading emitters and leading carbon market jurisdictions to spur the technological, political and institutional transformations that will support more ambitious action in the years to come.

Also posted in News / Comments are closed

FERC, Grid Operator, Others File Supreme Court Briefs in Demand Response Case

By Michael Panfil / Published: July 10, 2015
Source: iStock

Source: iStock

The Federal Energy Regulatory Commission (FERC), a grid operator, states, and other parties just filed briefs with the U.S. Supreme Court in a case that could decide whether Americans have access to low-cost, clean and reliable electricity.

The case, EPSA v. FERC, revolves around demand response, a resource that helps keep prices low and the lights on – and does so while also being environmentally friendly.

In 2013, for example, demand response saved customers in the mid-Atlantic region close to 12 billion dollars. And during the polar vortex, which threatened the North-East with freezing cold in 2014, the resource helped prevent black-outs.

The clean energy rule at issue in this case is called FERC Order 745. EDF has been writing about this demand response case throughout the past year. We’ve been fighting for low-cost demand response and we’ll keep fighting in the Supreme Court.

History of the Case

The case involves a FERC rule that allows demand response – a low-cost, clean, and reliable energy conservation resource – the chance to compete fairly in our nation’s wholesale energy market.

EDF and a broad coalition of consumer advocates, environmental groups, companies, and industry organizations support it.

Demand Response – How It Works, Why It’s Popular

The broad support for demand response exists because of how the resource works.

Demand response reduces energy demand when power is needed most, rather than increasing supply from costly, carbon–emitting fuels. It relies on people and technology, not power plants, to affordably meet our country’s rising electricity needs. In so doing, it reduces costs for everyone by taking the place of very expensive generation.

Anyone in favor of cleaner, more reliable, lower-cost energy has a reason to support demand response.

What’s at Issue

FERC is the federal agency responsible for keeping our electricity rates “just and reasonable” (in other words, for making sure we get fairly priced electricity).

FERC created Order 745 to further that goal. Order 745 allows demand response access to the wholesale energy market, where electricity is bought and sold. It levels the playing field between demand response and traditional sources of electricity generation, like coal.

In doing so, demand response has been able to reduce our use of unneeded, costly electricity – the exact type of electricity that should be limited if one wants “just and reasonable” rates.

Electricity producers challenged FERC’s Order 745, arguing that the agency lacked jurisdiction to create it. A three-judge panel for the U.S. Court of Appeals for the D.C. Circuit Court, in a split 2-to-1 decision, ruled in favor of the challengers.

Now FERC — as well as states, demand response providers, grid operators, and others – have stated their case to the Supreme Court.

The Case Before the Court

In its just-filed brief, the Solicitor General said on behalf of FERC:

Given that demand-response programs unquestionably confer significant benefits on wholesale markets, including lower rates, there is no defensible justification for concluding that the [Federal Power Act] nevertheless altogether excludes the programs from wholesale markets or FERC regulation. (FERC brief page 34)

The FERC brief also says:

By exercising authority over wholesale demand-response programs, FERC can ensure that a practice that occurs in wholesale markets, and has been widely recognized as tremendously important to the efficient functioning of those markets, will continue to provide benefits to consumers and the economy and is deployed in a way that results in just and reasonable wholesale rates and a reliable electricity system. (FERC brief page 45)

Another party to the case, demand response company EnerNOC, said in its brief:

Without demand response participation, wholesale energy markets will not ‘function…effectively’: Competition will be constrained; and prices will be higher. (EnerNOC brief page 39)

What Happens Next

Next, attention will turn to the amicus briefs – briefs filed in support of the parties to the case. Those, including EDF’s amicus brief, will be filed by July 16.

The Supreme Court is expected to hear oral arguments in the case this fall.

You can find all the briefs in the case here. And EDF will keep you updated as the case moves forward.

Also posted in Energy, News, Policy / Comments are closed

Three Climate Leadership Openings Corporate America Can’t Afford to Miss

By EDF Blogs / Published: May 7, 2015

By Ben Ratner, Senior Manager, Corporate Partnerships Program

Too much ink has been spilled on the anti-climate furor of the Koch brothers. If we lose on climate, it won’t be because of the Koch brothers or those like them.

It will be because too many potential climate champions from the business community stood quietly on the sidelines at a time when America has attractive policy opportunities to drive down economy-endangering greenhouse gas emissions.

Corporate executives have the savvy to understand the climate change problem and opportunity. They have the incentive to tackle it through smart policy, and the clout to influence politicians and policy makers. Perhaps most importantly, they can inspire each other.

And today, they have a chance to do what they do best: lead. Corporate climate leadership has nothing to do with partisanship – it’s ultimately about business acumen.

For starters, here are three immediate opportunities smart companies won’t want to miss.

1. Clean Power Plan: Will spur new jobs and investments.

The Obama administration’s plan will cut emissions from coal plants by 30 percent by 2030. This is expected to trigger a wave of clean energy investment and job creation. It will also seize energy efficiency opportunities and take advantage of America’s abundant and economic supply of natural gas.

Every company with an energy-related greenhouse gas footprint has something to gain from a cleaner power mix. Each one of those companies therefore has a stake in theClean Power Plan.

Google and Starbucks – two large and profitable American companies by any standard – are among more than 200 businesses that have already stepped up to voice their support.

Who will follow them?

2. First-ever methane rules: Will make industry more efficient.

The U.S. Environmental Protection Agency’s upcoming methane emission rules are another opportunity for business leaders to weigh in.

The rules are part of a White House plan that seeks to reducemethane emissions – a major contributor to global warming and resource waste – by almost half in the oil and gas industry.

Globally, an estimated 3.6 billion cubic feet of natural gas leaks from the sector each year. This wasted resource would be worth about $30 billion in new revenue if sold on the energy market.

Some oil and gas companies that have already taken positive steps include Anadarko, Noble and Encana, which helped develop the nation’s first sensible methane rules in Colorado.

Engaging to support strong and sensible national standards isa good next step for companies in this space. And for others with a stake in cleaning up natural gas, such as chemical companies, and manufacturers and users of natural gas vehicles.

3. New truck standards: Can help companies cut expenses and emissions.

New clean truck standards are scheduled for release this summer. Consumer goods companies and other manufacturers stand to see significant dollar and emissionsavings as they move their goods to market.

Cummins, Wabash, Fed Ex, Con-Way, Eaton and Waste Management are among those that applauded the decision to move forward with new standards.

Putting capitalism to work

American business leadership is still the global standard and will remain so if it adds climate policy to its to-do list. While it will take time to build the bi-partisan momentum for comprehensive national climate legislation, there are immediate opportunities to move the needle.

Which companies will take the field?

Image source: Flickr/Don McCullough

This post originally appeared on our EDF Voices blog.

Also posted in Clean Power Plan, Energy, Greenhouse Gas Emissions / Comments are closed

Better Fuel Efficiency for Heavy Duty Trucks — A Target Worth Setting

By Jason Mathers / Published: April 30, 2015
1200px-Kenworth_truck

“Kenworth truck” by Lisa M. Macias, U.S. Air Force via Wikipedia

A pair of critical analyses were just released that, together, make clear the need for a strong second generation heavy truck fuel efficiency and greenhouse gas standard.

The first piece is the U.S. Energy Information Agency’s (EIA) preliminary Annual Energy Outlook for 2015. I went right to the projection of fuel efficiency for new heavy trucks in 2020, which is 7.0 miles per gallon, and compared that to the projection for 2030, which is 7.2 miles per gallon. A three percent increase in efficiency for a decade is not too impressive.

As a result of this lack of projected progress on fuel efficiency and other factors, EIA expects that greenhouse gas emissions from heavy trucks will increase more than any other single end-use source by 2040 – an additional 120 million metric tons a year.

The other recent analysis is from The International Council on Clean Transportation. It released two papers on heavy truck fuel efficiency: one reviewed the potential of current and emerging efficiency technology; the other examined the cost effectiveness of these technologies.

Among the group’s findings are:

  • Already available tractor-trailer technologies can achieve 9 miles per gallon, deliver payback periods of less than a year, and be widely deployed in the 2020 to 2025 time frame.
  • Advanced efficiency technologies, now emerging in the marketplace, can double fuel economy to 11 to 12 miles per gallon, with payback periods of 18 months or less in the 2025 to 2030 time frame.
  • Diverse technology approaches – meaning technology packages with differing contributions from aerodynamic, engine, and other technologies – can achieve similar efficiency results.
  • Even under very conservative assumptions — fuel prices remaining as low as $3.10 per gallon diesel, higher technology costs, and a high discount rate of 10 percent — the most advanced technology packages have payback periods of only 1.4 to 2.2 years.
  • Typical first owners of tractor-trailers with efficiency technology packages up to 9 miles per gallon would see fuel savings 3 to 9 times greater than the upfront technology cost over the period of ownership.

ICCT’s findings demonstrate that we have the technology to cost-effectively cut truck fuel consumption in half compared to 2010 levels. EIA’s projections demonstrate that, without well designed performance-based standards, truck manufacturers are unlikely to deploy these highly cost-effective solutions.

There is good news in EIA’s report, too. The 7.0 miles per gallon in 2020 is up from 6.0 miles per gallon in 2012. The increase can be attributed to the first round of Heavy Truck Fuel Efficiency and Greenhouse Gas Standards set by President Obama in 2011.

We know that well-designed fuel efficiency standards work because we are seeing it in the market today. For the second generation standards that will be announced this spring, we urge the administration to incentivize the full scale deployment of the advanced technologies highlighted in the ICCT analysis.

Also posted in Cars and Pollution, Greenhouse Gas Emissions / Read 1 Response