EMISSIONS AND ENERGY: A CHANGING EQUATION

Important terms now:
(1) Externality: A term economists use. Emissions cause harm to the atmosphere and to health but the industries who make the fuels that generate emissions don’t pay those costs, those “externalities.” Legislation instituting a “carbon tax” or a “cap-and-trade” system would make emitters pay.
(2) Closet carbon: Many transportation fuels are made from “greener” products than petroleum but require enormous emissions for production. Policy-makers want to include the cost of such “closet carbon” in the price of the fuel.
(3) Carbon negative: A theory. If a plant-based fuel source consumes CO2 while growing and its emissions are captured as it is burned, it would be “carbon negative.”

Important carbon price points:
(1) Lawmakers are expected to price emissions at $10/ton of carbon dioxide equivalent or more.
(2) New nuclear energy plants would become price competitive at about that rate. (The 1st application for a new nuclear plant in 30 years was filed by NRG in anticipation of the change.)
(3) At $50/ton of CO2-equiv, coal goes from 5.7cents/k-Wh to 10cents/k-Wh. (1 kilowatt-hour (kW-h) of electricity is the amount of electricity to burn 10 100-watt bulbs for an hour.)
(4) Wind energy reaches price parity with coal at about $25/ton CO2-equiv.
(5) Solar energy gets closer to price parity with coal at about $30/ton CO2-equiv.

The Carbon Calculus
Matthew L. Wald, November 7, 2007 (NY Times)

WHO
D.C. decision makers, New Energy providers

Much of what happens in energy will soon be determined by the price of CO2 (click to enlarge)

WHAT
There is an emerging consensus that the harm done by fossil fuel emissions must be priced. Be it by a “carbon tax” or a “cap-and-trade system” the impact would likely open the marketplace to New Energy as no other single change could.

WHEN
- Although many individuals of conscience and businesses with vision are already going carbon neutral, getting into voluntary or foreign emissions-trading markets and investing in New Energy, the big changes are expected to come with legislation that is already in the D.C. pipeline but may not find its way to passage and presidential approval until after the 2008 presidential election.
- A Senate subcommittee approved a cap-and-trade measure November 1 and it may pass the Senate this year but there is doubt it will get through the House and it is not thought likely this President would sign it.

WHERE
The carbon cost impositions, tax or trade, would be national and would have national impacts. They would especially change the kinds and values of energies in the marketplace.

WHY
- If the carbon content of fuel (emissions per unit of energy) were considered, the costs of the various fuels would change.
- Petroleum-based fuels become more expensive when externalities are included in the cost.
- There are several types of ethanol and other kinds of biofuels. Corn ethanol has very high “closet carbon” costs. Sugar ethanol has less. Cellulosic ethanol has much lower such costs.
- Biofuels made from algae have very low “closet carbon” costs and, in fact, may be carbon negative in that they can be grown on captured CO2 emissions from coal- or gas-burning power plants.
- Syngas made from biomass in emissions capture plants might be carbon negative. If enough of the emissions can be captured and if they can be stored safely.
- The cost of emissions will eventually affect the use of all materials. Builders will design to consume less costly energy and position buildings to capture solar and wind energies.
Products and containers will be made from energy-consuming materials. Wine bottles have already become plastic bags and cardboard cartons.

Biofuels made from algae produce so much more per acre and may be carbon negative, considering they also consume coal plant emissions

QUOTES
- Revis James, economist, Electric Power Research Institute: “We’re definitely going to be paying a bill here for wanting to reduce these emissions.”
- Jennifer S. Holmgren, director of renewable energy and chemicals, UOP: “As carbon dioxide fees are imposed, these thing become more and more cost-competitive…Algae, because of its ability to capture carbon, has a bigger potential than anything else for being carbon neutral.”
- Michael H. Deane, operations manager, Turner Construction: “You can set a building into a hillside, so you can take advantage of the existing mass of the hillside…The ambient temperature of the dirt is 55 degrees, winter and summer, which can help with heating and cooling, he said. And sites are now evaluated for solar orientation and prevailing winds, both of which can heavily affect energy use…”