MORE STATES WANT WIND

EDP Says More U.S. States Are Now Attractive for Wind Energy
Joao Lima, June 25, 2009 (Bloomberg News)

SUMMARY
The message is finally getting through: Wind is Big Energy. More and more states are instituting policies inviting wind project development.

EDP-Energias de Portugal SA builds and owns wind installations across the U.S. and is finding more market opportunities in more places than ever before.

EDP is the 4th biggest wind energy producer in the world. It operates wind projects in New York, Illinois, Iowa, Minnesota, Oklahoma, Texas, Kansas and Oregon.

With a growing competition for wind power and wind manufacturing facilities across the U.S., EDP is making plans to channel as much as a third of its 3 billion-euro ($4.2 billion) 2009 development budget into U.S. projects. Other international wind developers are moving in the same direction.

Installed capacity is growing. (click to enlarge)

The single most important U.S. driver of wind development is the Renewable Electricity Standard (RES). More than half of the nation’s states have RESs requiring regulated utilities to obtain a portion of their power from New Energy by a designated year. The RES contained in the just passed Waxman-Markey legislation could require all states to obtain 15-to-20% of their power from New Energy sources by 2020 if the Senate ratifies the measure.

EDP’s commitment to wind is partially attributable to goals established by the European Union (EU), to which Portugal belongs. The EU’s “triple 20” calls for member nations to obtain 20% of the power from New Energy sources, become 20% more energy efficient and cut their greenhouse gas emissions (GhGs) 20% by 2020.

Manufacturing capacity is growing. (click to enlarge)

EDP's wind power development plans call for the installation of 1,200-to-1,300 megawatts worldwide. Its 2012 target is 10,500 megawatts across Europe and the U.S., moving wind to 38% of its energy portfolio. Wind was 19% of the EDP portfolio in 2007.

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COMMENTARY
Like so many other wind producers, EDP is especially interested in developing the U.S. Midwest in the short term. There are other regions with winds just as good, such as the Great Lakes, the Mid Atlantic offshore and the Pacific Northwest. But building in those regions entails significant challenges like environmental battles, regulatory complications and new technologies.

The Midwest has relatively fewer difficulties. Many of the Plains states are getting used to courting wind companies. There is some existing transmission – though not enough – and Midwestern ranchers and farmers are starting to like the money being offered for land leases.

The Cinderella story among wind-powered states in 2008 was Iowa, which leapt to 2nd place in installed capacity and became the U.S. leader in the proportion of its electricity obtained from wind.

The haves and the could-haves. (click to enlarge)

The top 3 U.S. wind-producing states: Texas, Iowa, California.

The 3 fastest-growing wind states: Indiana, Maine, Nebraska.

It became clear from 2008 statistics that the U.S. wind energy industry had turned from an adjunct, boutique energy supply into a mainstream power source. The U.S. added over 8,600 megawatts of new installed capacity last year and overtook Germany to become the world’s biggest producer of wind energy-generated electricity. The U.S. added 2,800+ megawatts more wind power in the first quarter of 2009, passing 28,200 megawatts of total capacity. Yet the U.S. wind potential has barely been tapped.

The leaders. (click to enlarge)

The U.S. is also just beginning to build a domestic manufacturing capability. Denmark's Vestas, the world’s biggest wind turbine manufacturer, is planning and developing $1 billion in U.S. manufacturing facilities.

Along with Vestas and EDP, Spain’s Iberdrola and the UK’s BP Alterantive Energy have shifted major emphasis to U.S. development. BP recently announced it would take much of its capital out of the booming UK offshore wind industry, where there are big expenses, significant resistance and many unknowns, to invest in the U.S. Midwestern market where the expense, resistance and unknowns remain manageable.

Last week, for the first time, the U.S. Department of the Interior granted permits to explore offshore development along the Atlantic coast.

A lot of states are getting a lot of their power from wind. (click to enlarge)

QUOTES
- Antonio Mexia, CEO, EDP: “We’re seeing today a bigger number of markets that are attractive than in the past…There has been an increase in the number of states that have standards and that give importance to renewable energy.”
- Mexia: “The more interesting states are the ones in the center that have a lot of wind…It’s the three variables of resources, regulation and volume of production that determines the greater or lesser interest in different zones.”
- Mexia: “We’re optimistic about the U.S. …”

A SCIENTIFIC LOOK AT “CLEAN” COAL

Can Captured Carbon Save Coal-Fired Power? Extracting carbon dioxide from power plant exhaust and storing it underground may be the only hope to avoid a climate change catastrophe caused by burning fossil fuels
David Biello, June 22, 2009 (Scientific American)

SUMMARY
It is no wonder the dream of “clean” coal is so seductive. The use of coal as a fuel causes 40% of all greenhouse gas emissions (GhGs) in the world. Yet coal is especially abundant in the world’s biggest GhG-generating nations, China and the U.S.

Many of the same scientists whose opinions form the foundation of the climate science validating global climate change, like the International Panel on Climate Change (IPCC), also believe the only way climate change can be stopped is by using carbon capture and sequestration (CCS) technology, or “clean” coal, to eliminate the GhG spew.

There are important and prominent exceptions. James Hansen, the NASA climate scientist who first called public attention to the significance of atmospheric GhG accumulations in the 1980s, staunchly opposes the use of coal in any form and has courageously committed acts of civil disobedience to stop it.

The seductiveness of "clean" coal's promise is irresistable to politicians. Leaders in the EU and Australia have directed big investments in its development. The Obama administration’s economic stimulus package allotted $3.4 billion for “clean” coal R&D and H.R. 2454, the landmark energy and climate bill just approved by the U.S. House of Representatives, allocated $60 billion more for “clean coal” test projects.

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Recognizing that the coal plants that began operating after 2000 will generate more GhGs in their 50-year lifetimes than all the human coal burning between the middle of the 18th Century and the turn of the millennium, even the Natural Resources Defense Council (NRDC), the Environmental Defense Fund (EDF) and the Clean Air Task Force back legislation that funds “clean” coal R&D. Their dream is of a technological breakthrough that will "solve the problem" of coal.

The Sierra Club and Greenpeace have their doubts. To bring the world’s GhG-concentration to 80% below 1990 levels by 2050 – the IPCC’s prescription – requires immediate action. “Clean” coal does not presently exist as a solution to rising GhGs and climate change. New Energy and a whole science of Energy Efficiency are available right now. Investing in them will build an emissions-free New Energy infrastructure immediately and grow technologies that actually exist right now instead of spending money on a seductive technology that may someday be of great service.

Why is there no “clean” coal? Because it is too expensive. The International Energy Agency (IEA) says bringing CCS technology up to speed will take at least $20 billion and 10 years. The American Coalition for Clean Coal Electricity (ACCCE), a coal industry mouthpiece, says it will take $17 billion and 15 years.

But the seductive promise of "clean" coal keeps the coal industry fired up.

There are 2 distinct parts to “clean” coal: (1) Capture and (2) Sequestration. Both have been shown to be possible - at a price.

Norway’s StatoilHydro, with experience working the North Sea oilfields since the 1980s, began taking the carbon dioxide (CO2) out of natural gas at its North Sea Sleipner field and pumping it back below the 250-meter-thick band of sandstone formations 1,000 meters under the ocean in 1996. About 12 million metric tons of CO2 has been pumped into the sandstone, which has a relatively impermeable 200-meter-thick layer of shale and mudstone over it. Statoil monitors it closely. There has been no leakage in over a decade.

The Sleipner experiment. (click to enlarge)

In 1986 at Lake Nyos in Cameroon, 2 million metric tons of naturally sequestered CO2 spontaneously vented, pushing away the oxygen in the air and suffocating 1,000 nearby villagers.

Sonogram monitoring shows the once liquid CO2 beneath Sleipner is now a thin layer on the sandstone using 0.0001% of the available sequestration area. Statoil recently began a similar sequestration project at the Snøhvit natural gas field in the Barents Sea, using a 150-kilometer pipeline to inject CO2 into the seabed.

In 2004, BP partnered with Statoil and others on the In Salah natural gas field in Algeria. They are pumping captured CO2 into the underlying saline aquifer to stabilize the fields. Where gas has been removed, there has been 6 millimeters of subsidence. Where CO2 has been pumped back in, the elevation rose 10 millimeters.

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For decades, the oil industry has used CO2 like this, pumping it back into wells to push up more oil. It is called Enhanced Oil Recovery (EOR). There have been cases of the CO2 venting, but it has always dispersed too quickly to do any harm.

The Lake Nyos incident was a dreadful conjunction of a lot of CO2 and a uniquely low-lying area where the CO2 pooled. Other sequestration sites have been demonstrated to be stable, even under the stress of earthquakes. But nothing is conclusively proven regarding sequestration over decades, or centuries, except that sites must be carefully chosen, closely monitored and not be considered absolutely safe.

Storage may be the simplest part of CCS.

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At Vattenfall’s 1,600-megawatt Schwarze Pumpe coal plant in Spremberg, Germany, uses the oxyfuel process of burning coal in pure oxygen to render the CO2 byproduct in a form that can be captured and channeled to other uses. The process successfully traps over 90% of the greenhouse gases - but of only 30 megawatts of the plant’s capacity. This suggests the possibilities of the process but proves nothing about doing it at utility scale. The cost of this operation makes coal-generated electricity about 5 times the market price.

There are 2 other proposed CO2 capture processes. One uses chemistry. Amines are special membranes or ionic liquids that act as ammonia scrubbers. They pull CO2 out of the gas plume coming off burning coal. The other is gasification. The coal (or oil) is turned into synthetic natural gas, from which CO2 can be more readily removed.

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None of the 3 methods solve the problem of cost. Trials have cost as little as $5 per metric ton (In Salah) to more than $90 per metric ton (gasification).

A new power plant burning pulverized coal and using amine scrubbers, according to a U.S. Department of Energy (DOE) May 2007 estimate, could capture 90% of its CO2 and generate $114 per megawatt-hour (MW-h) electricity. Plants without CCS generate $63 per MW-h electricity. DOE estimated that the gasification method would generate $103 per MW-h electricity. This would add about $0.04 per kilowatt-hour (KW-h) to a consumer’s utility bill, making coal as expensive or more expensive than wind- or natural gas-generated electricity.

At these high prices, there are small plants capturing their CO2 (the 180-MW Warrior Run power plant in Maryland, the Kingsport power plant in Tennessee). There are more such small-scale projects planned. Vattenfall will expand the Schwarze Pumpe operation and convert Janschwalde in Germany and Nordjylland in Denmark by 2015. Australia (ZeroGen) and China (GreenGen) are both building what they hope will be zero-emissions plants using gasification (IGCC) technology.

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The Obama administration plans to resurrect the FutureGen project, a 275-megawatt IGCC plant that would theoretically capture 90% of its GhGs. It was cancelled under President Bush because of the cost. But DOE now has stimulus money and energy/climate bill money and a loan guarantee program to foster CCS R&D projects like FutureGen, regardless of the cost.

Duke Energy will spend $2.35 billion on a 630-megawatt IGCC plant in Edwardsport, Ind., that could be the first utility-scale CCS project. But it will only capture 18% of its GhGs by 2013. It will likely cost a lot more to be more efficient.

American Electric Power will capture 3% of the GhGs from its 1,300-megawatt Mountaineer Power Plant in West Virginia later this year. It will inject the captured CO2 3 kilometers underground. (The locals, already organized to fight mountaintop removal mining processes, are not pleased.)

The Erora Group (Kentucky), Summit Power (West Texas), Tenaska (Taylorville, Ill., and Sweetwater, Tex.), BP and Southern Company also have projects in the works, though many previous planned projects were set aside when the planners confronted the real costs involved. Things may be different now, however. A lot of federal support is available and 2 federal policies, one requiring utilities to obtain emissions-free energy and another putting a price on emissions, make new projects potentially more economic.

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COMMENTARY
The U.S. is thought to have 100-years of storage capacity in its geologic reservoirs of permeable sandstone and deep saline aquifers. Much of that storage capacity is near where many of the 4,600 large industrial consumers burn coal in the U.S., in the Midwest, Southeast and West.

Sequestration of CO2 may be relatively safe, as advocates contend. The CO2 seems to dissolve into the substance of the sandstone and saline formations or, over longer spans, form carbonate minerals with the surrounding rock. Because of this chemistry, some attempts to pump out CO2 from trial sequestration sites failed completely.

But no commercial insurance company has yet volunteered to take long-term financial responsibility for sequestration sites. If only governments will insure sequestration, the question of the cost – like the question of insuring nuclear power plants - comes into play. Competing and much safer New Energies will appear more expensive if the value of "clean" coal's federally underwritten insurance is not included in cost calculations. This is one of the ways the nuclear energy industry has deceptively created the impression its electricity is cost-competitive.

The IPCC’s 2005 special report on CCS said a properly selected sequestration site should securely store at least 99 percent of the sequestered CO2 for more than 1,000 years. That’s going to be hard to validate, much less insure.

IGCC gasification. (click to enlarge)

There are many potential sequestration sites, but if the world intends to continue relying on “clean” coal indefinitely, it will surely run out of affordable storage. It can also count on running out of economically recoverable coal, probably by the middle of this century, if not sooner. Both of these limitations will make CCS coal-generated electricity more and more costly.

On the other hand, the New Energies that are now just barely competive with GhG-spewing sources will only get technologically more sophisticated and cheaper – at least until the world starts running out of sun and wind and waves.

In the near term, both Statoil and BP expect to offset the costs of CCS by selling their captured CO2 to the oil industry. Enhanced oil recovery (EOR) has been effective at increasing oil industry production over 10% a day for over 3 decades. There are 100+ oil fields using the technique, so BP and Statoil have a built in market (including their own oil operations).

Calculations show using captured CO2 to enhance oil recovery does reduce overall GhG emissions 24%. The extra captured oil, of course, generates GhGs when it is burned. But even though every recovered barrel of oil causes 0.42 metric tons of CO2, the recovery process requires 0.52-to-0.64 metric tons of CO2. EOR could cut U.S. GhGs 4%. Unless one of the sites leaks.

Another part of the CCS seduction is how much industry wants to be able to use it in the coming carbon-constrained economy. Cement production, steel making, aluminum smelting, glass plants, chemical industries and many other crucial business processes generate large volumes of GhGs. Finding a way to capture and resell their waste would be invaluable to such businesses and industries. They are no doubt very enthusiastic about governments' willingness to do R&D on their behalf. They might even be inclined to invest in the effort to perfect the technology if a cap&trade system imposed a penalty for not having it and a reward for having it.

Or they might decide it makes better business sense to invest in New Energy and Energy Efficiency than in a seductive promise 15-to-20 years away and prohibitively expensive.

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QUOTES
- Steve Caldwell, coordinator for regional climate change policy, Pew Center on Global Climate Change: “There is the potential for the U.S. and other countries to continue to rely on coal as a source of energy while at the same time protecting the climate from the massive greenhouse gas emissions associated with coal…”
- Staffan Görtz, CCS spokesperson,Vattenfall: “[The $100-million CCS demonstration boiler at Schwarze Pumpe] makes nine metric tons of CO2 per hour at full load…we don’t have a storage site yet.”
- Olav Kaarstad, CCS adviser, Statoil: “We aren’t really much worried about the integrity of the seal and whether the CO2 will stay down there over many hundreds of years…”
- Susan D. Hovorka, geologist, University of Texas: “We’re not going into a salt cavern; we’re not going into an underground river. We’re going into microscopic holes…Add it up, and it’s a large volume…”
- Sally Benson, hydrologist/director of the global climate and energy, Stanford University: “There are at least 100 years of CO2 sequestration capacity and probably significantly more…”
- James Dooley, senior research scientist, Pacific Northwest National Laboratory/ IPCC lead author: “If it took all that energy to shove [the CO2] into that sandstone, it’s going to take a lot of energy to get it out…Like an oil field, where we get out half or less of the original oil in place, a lot of the CO2 gets stuck in there. It’s immobilized in the rock.”
- Kaarstad, Statoil: “It costs a fraction of the tax…We are actually making money out of this.”
- Kurt Waltzer, carbon storage development coordinator, Clean Air Task Force: “The Dakota gasification project is creating synthetic gas and taking the CO2 from that process…[by piping it to the Weyburn oil field]… In effect, you have demonstrated all the components of doing a CCS project.”

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- Mark Brownstein, managing director in the climate and air program, Environmental Defense Fund (EDF): “Environmentalists are talking about coal not because we love coal…It’s because we have to deal with coal to achieve the kind of CO2 reductions we need to make in the timeframe we need to make them.…[T]he first CCS project that is done badly is the last CCS project that will be done…In this respect, it is very similar to nuclear power.”
- Kaarstad, Statoil: “…[P]ower plants are an order of magnitude more difficult with regard to capturing CO2.”
- Rajesh Pawar, CO2 sequestration project leader, Los Alamos National Laboratory: “In terms of total cost, they want to shoot for $10 per metric ton of CO2…We are closer to the $50 per ton range right now.”
- Greg Kunkel, vice president for environmental affairs, Tenaska: “…There are at least two billion tons of domestic emissions from pulverized coal power plants…You can’t tackle the larger problem [of climate change] unless you deal with those plants in some way.”
- George Peridas, engineer and scientist, NRDC: “The next 25 years of investment would produce 34 percent more emissions than all previous human use of coal…This is a massive legacy, and we cannot afford to let that happen.”
- John Thompson, coal transition project director, Clean Air Task Force: “If we don’t address the problem of coal, it’s game over for climate change…”
- Howard Herzog, research engineer, Massachusetts Institute of Technology: “We may have by 2020 a handful, maybe even close to 10 CCS-capable coal plants…If your goal is 80 percent cuts [in CO2 emissions] by 2050, then it’s not big enough.”
- Gardiner Hill, CCS manager of technology and engineering, BP Alternative Energy: “[But] every five years of inaction ... requires an extra gigaton of reductions…Unless we get started now, we don’t get the advantage of CCS and the emissions reductions we need.”
- Friedmann, Lawrence Livermore: “We’re going to have to do it, the same as adding wind, solar, nuclear power and conservation…It’s a climate imperative, so let’s get on with it.”

MORE NEWS, 6-30 (AND NOW THE SENATE; INTERIOR PICKS SOLAR SWEET SPOTS; SOME SUN STOCK TIPS FROM THE STREET)

AND NOW THE SENATE
Obama Is Confident Senate Will Pass Energy Bill
Judith Burns, June 29, 2009 (Wall Street Journal)

"President Barack Obama on Monday praised the House for passing a controversial energy bill and said he's certain the Senate will move its own version of the legislation.

"In remarks at the White House, Mr. Obama touted the measure that narrowly passed the House on Friday, saying it will create businesses and new, green jobs while reducing the nation's dependence on imported oil. He predicted the Senate would take up the legislation in coming months and said [he is confident the Sneate will move the legislation forward]…"

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"Mr. Obama also unveiled changes he said would improve U.S. energy efficiency, including new efficiency standards for fluorescent and incandescent light bulbs…
[Light bulbs do not seem sexy]… but, he said, the new standards might save consumers up to $4 billion a year starting in 2012, and significantly reduce energy demand. He announced the White House will take part in the shift, replacing light bulbs now in use with new, energy-efficient bulbs.

"The Democrat-backed energy bill, which squeaked through the House by a vote of 219-212, would impose limits on air pollution and permit trading in air-pollution credits…"

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"Supporters say the "cap and trade" approach will encourage the U.S. to shift to cleaner, alternative energy sources, reducing air pollution that some link to global climate change. Critics…say the approach amounts to a costly tax on energy usage that will act as a drag on the U.S. economy.

"Mr. Obama added that the House action will open the door to combating greenhouse gas emissions and help the U.S. do more [than it has in decades] to achieve clean energy…"


INTERIOR PICKS SOLAR SWEET SPOTS
U.S. Interior Dept designates solar energy zones
Ayesha Rascoe (w/Christian Wiessner), June 29, 2009 (Reuters)

"Hoping to speed up the development of renewable energy resources on federal lands, the U.S. Interior Department…designated about 670,000 acres of land as potential areas for solar energy production…

"The land is divided into 24 solar energy zones spread across six western states and could generate nearly 100,000 megawatts of solar electricity. The department will evaluate the possible environmental impacts of solar production in these areas as well as their energy resources…"

Click thru for all states mapped by DOI.

"U.S. President Barack Obama has made moving the United States away from reliance on fossil fuels a key priority of his administration. Obama has pledged to double renewable energy production in three years and supports setting a national renewable power mandate.

"The Interior Department created a special task force in March to identify the specific areas on public lands where the government could act rapidly to create large-scale renewable energy production."

Click thru for all states mapped by DOI.

"The department's Bureau of Land Management has received about 470 renewable energy project applications, including 158 active solar applications.

"Solar Energy Industries Association President Rhone Resch welcomed the department's announcement…"


SOME SUN STOCK TIPS FROM THE STREET
Harnessing the Power of Sun Stocks
Kevin Grewal, June 29, 2009 (Smart Stops via The Street)

"As global warming advocates continue to make their mark on the energy sector and energy firms refine and develop more efficient methods of producing clean energy, will solar power be the light at the end of the tunnel?

"As long as crude oil prices remain relatively high and the government pushes for cleaner energy alternatives, forms of renewable energy will continue to remain attractive. What makes solar energy so attractive is the massive push in investment in utility-scale solar projects, the amount of aid President Obama has allocated to solar energy and its use around the globe."

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"Investments in utility-scale solar projects are expected to help catapult the industry forward over the next three years…[A]nalysts are anticipating a twelvefold increase in the amount of solar energy in the U.S…President Obama's stimulus package, which includes renewable energy loan guarantees of nearly $18.6 billion, is expected to be delivered in July of 2009.

"From a global perspective, it appears that the trend has already emerged…China is expected to raise billions in private funding to develop more efficient methods of utilizing solar energy."

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"…[S]ome stocks to watch…Trina Solar…March low of $5.96 to $23.93 June 25…First Solar…$103.97 in March to $159.48 on June 25…Suntech Power…March low of $5.21 to $18.35 on June 25…Yingli Green Energy…March low of $3.37 to close at $13.24 on June 25…JA Solar…March low of $1.90 to $4.78 on June 25…

"…[T]he energy sector has its ups and downs and involves some risks. To moderate these risks, utilizing an exit strategy is vital…[T]he price levels where the uptrend of the [solar] stocks would be over [are]…Trina Solar at $20.25…First Solar at $152.13…Suntech at $16.27…Yingli at $10.99…JA Solar at $3.92…[L]evels change daily…[U]pdated data is free at SmartStops…"

THE ENERGY/CLIMATE BILL, LIKE POLITICS, IS THE ART OF THE POSSIBLE

Climate bill shaped by compromise; Facing a mood unfriendly to sweeping changes in energy policy, House Democratic leaders and Obama had one thing that made interest groups more receptive: They were willing to negotiate.
Jim Tankersley, June 28, 2009 (LA Times)
and
Dennis Kucinich Lays Out Why He Voted Against Clean Energy Act
June 27, 2009 (The Cleveland Leader)

SUMMARY
From the earliest days of the Obama presidency, there was 1 crucial fact and 1 crucial question about the administration’s ambitious plans to create a New Energy economy. Fact: To get anything through Congress, there would have to be big compromises with conservatives. Question: After the compromises, would there be anything worth legislating?

The question’s answer began to take shape with the passage by the House of Representatives of H.R. 2454, the Amercian Clean Energy and Security Act of 2009 (ACESA), last Friday before Congress left Washington for its July 4th recess.

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An effort to forge successful compromise was approved at a March Oval Office meeting between the President and one of ACESA’s chief architects, Representative Henry Waxman (D-Calif), Chair of the powerful House Energy and Commerce Committee. At the time, many considered the chance of such significant change being enacted highly unlikely. The President told Waxman to proceed.

ACESA, says veteran environmental warrior Representative Ed Markey (D-Mass), Chair of the House Energy Subcommittee and the bill’s co-author, could fundamentally change the way the U.S. uses energy by – finally – attaching a price to the generation of greenhouse gas emissions (GhGs).

Waxman and Markey have long been engaged in the fight for New Energy and championed efforts to make a better place for it in the 2005 and 2007 energy bills. With the Democrats’ victory in 2008, they began preparing to do something they hoped would be really important.

Before the inauguration, Waxman and Markey met with farm groups, oil and natural gas executives, coal producers, manufacturering industry leaders and CEOs of the big utilities. The discussions centered on the Holy Grail of New Energy: Putting a price on GhGs. They also covered the Holy Grail of climate change: Putting a cap on GhGs.

The Waxman-Markey plan was built on 3 cornerstones: (1) The plan advocated by President Obama during his presidential campaign that called for requiring U.S. utilities to obtain 10% of their power from New Energy by 2012 and 25% by 2025 and called for cutting U.S. GhGs 20% by 2020 and 80% by 2050; (2) the European Union ((EU) Emissions Trading Scheme (ETS), which capped EU member nations' GhGs and provided a market through which those nations' emitters could maximize returns for using New Energy, installing Energy Efficiency and reducing their emissions; and (3) the successful cap&trade system through which the U.S. and other nations successfully solved the acid rain problem of the 1980s.

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The problem: Waxman, Markey and the Obama administration officials who joined them in strategy talks came to understand the problem clearly. Business and industry saw their plan as extremely – threateningly – expensive.

The solution: Veterans of Washington, Waxman and Markey knew the solution. Deal making. Success in the political world is entirely based on the understanding of one and only one aphorism. Politics is the art of the possible.

Activists on the left clamored for stronger New Energy subsidies and tighter cuts in GhGs. Conservatives on the right recoiled in horror at the changes and complexities of the Renewable Electricity Standard (RES) requiring utilities to use New Energy and of the cap&trade system limiting GhGs and establishing a whole new trading system.

Spurred on by an administration it is now clear wants accomplishments more than it wants ideological absolutes, Waxman and Markey searched out the sweet spot of support, where big business, big agriculture, big industry and prominent environmentalists could come together behind legislative action.

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In early May, President Obama had anther meeting with Waxman and Markey, compared the issue of energy to the issue of emancipation for President Lincoln and told them to keep negotiating.

With the White House behind them, Waxman and Markey crafted H.R. 2454.

To bring agriculture on board, they gave concessions on biofuels.

To bring coal-burning utilities, oil refineries, automakers and manufacturing industries on board, they cut the auctioned emissions trading allowances from 100% to 15% and gave 85% away free, making the cost of cap&trade in its early years affordable enough so the businesses’ leaders believed it would not compromise their ability to compete China and India.

To bring coal on board, they provided big funding for the development of “clean” coal and – probably not coincidentally – a large number of coal mining operations were greenlighted by the Environmental Protection Administration (EPA) during May and early June.

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Many big business leaders bought in. Nike Inc., Starbucks Corp., Exelon Corp., Symantec Corp. and PG&E Corp. as well as the huge multinational corporations in the U.S. Climate Action Partnership (US CAP) like Alcoa, Caterpillar, Conoco Phillips, General Electric, Rio Tinto and Shell called for an RES and cap&trade. Environmentalists like The Center for American Progress, Sierra Club, the Environmental Defense Fund and the Natural Resources Defense Council also accepted the deal, as did New Energy industry adovcacy groups like the American Wind Energy Association and the Solar Energy Industries Association.

Opponents of H.R. 2454 included the U.S. Chamber of Commerce and the American Petroleum Institute as well as Greenpeace, Friends of the Earth and most of the anti-coal activists leading the movement to stop coal burning and mountaintop removal coal mining. One of the many historic aspects to the legislation was that it brought together the American Petroleum Institute and Greenpeace.

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Al Gore championed H.R. 2454 in a high profile appearance before Waxman’s committee and in behind-the-scenes phone persuasion with fence-sitting House members in the days leading up to the historic vote. James Hanson, the NASA climate scientist Gore made famous when he brought him to Washington in 1989 to testify to a Senate committee and become the prophet of climate change, staunchly opposed the bill. Hanson was arrested protesting mountaintop removal coal mining the day before the bill was passed.

The struggle to turn the H.R. 2454’s proposals into a first-ever U.S. New Energy standard and a landmark, game-changing U.S. mandatory GhG cap&trade system did not end with the House vote. ACESA's provisions only become law if the Senate approves them and the accompanying measures in its own bill and if a House and Senate conference committee can reach accommodation over whatever differences there might be in their bills.

In other words, look for more compromising.

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COMMENTARY
Putting a price on GhG generation has been the Holy Grail of New Energy since the fight began in earnest in the 1970s. Solar, wind and geothermal energies got a foothold when the price of oil and natural gas rose due to the Arab oil embargoes and other international tensions. The New Energies had a chance at getting a significant place in the U.S. energy mix until the Reagan administration cut off funding to New Energy R&D in the early 1980s.

Breakthroughs nevertheless came, albeit slowly. By the end of the 1980s, wind turbines had become more efficient and solar power plant technology had emerged. But the price of oil went down to $10 per barrel in the 1990s and the price of natural gas followed. New Energy could not compete but, with an incipient awareness of global climate change giving it far more credence, producers renewed the 1970s pioneers’ message: If the fossil fuel industries paid for the harms they do to health and the environment, they would be much more expensive, expensive enough to make the nearly consequenceless New Energies into a great bargain.

Now, in 2009, Democratic leaders have compromised audaciously to get ACESA through the House of Representatives and put a price on emissions. In the greatest test of her leadership she has yet faced, Speaker of the House Nancy Pelosi (D-Calif) promised she would get it done by the July 4th recess and she did.

Pricing emissions will raise fossil fuel costs but revenues from the auction of permits will be used to compensate ratepayers and overall energy costs will go up little. (click to enlarge)

Opponents question the real importance of this historic accomplishement. Does it have anything more than marquee value? An EPA analysis showed H.R. 2454 might not significantly alter U.S. oil imports. A Union of Concerned Scientists study showed there might be more New Energy without the weakened RES in the bill than with it.

Still, ACESA takes U.S. energy policy into new frontiers. It institutes a New Energy standard and a cap&trade system despite the incredible recalcitrance of House conservatives and the enormous lobbying monies spent on behalf of vested interests. Activists would have liked to see the Democratic leaders call the bluff of the conservatives by putting stronger measures in their bill but it is hard to believe veterans like Pelosi, Waxman and Markey would leave anything on the table that it was possible to take in the final pot.

In the wake of the House's passage of the Waxman-Markey bill, hailed by those with long memories as a landmark accomplishment, Progressive Representative Dennnis Kucinich (D-Ohio) published an op-ed explaining why he was against the legislation. He detailed the giveaways to coal and nuclear, the weakness of the New Energy standard and the potentially corruptible complexities of cap&trade.

Kucinich was quite right in almost every point he made. If the majority of his Democratic colleagues had agreed with him, there would be no energy and climate legislation on its way to the Senate. Maybe that's good and maybe that's bad, but that's certainly politics. Waxman, Markey, Pelosi and the President did what was possible.

In the fall, Senate Majority Leader Harry Reid (D-Nev) and Senate Chair of the Energy and Natural Resources Committee Jeff Bingaman (D-NM) will try to carry the ball further down the field. If Senators Reid and Bingaman are successful against the power of the filibuster weilded by the recalcitrant conservatives in the Senate, U.S. energy policy will never be the same. Mr. Kucinich, whose seat in Congress is secure, can come back next year and see if it is possible to make U.S. energy policy even better.

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QUOTES
- Henry A. Waxman (D-Calif), Chair, House Energy and Commerce Committee: "[The President] realized [in March] that this was a very tough bill to get through…"
- Elaine Kamarck, Harvard/Kennedy School of Government, former advisor to Al Gore: "There's a point at which you've got to ask yourself, what are we doing here? What's the point?"
- Emily Figdor, federal global warming policy director, Environment America: "We think there's a lot of problems in the bill…[but] we need to take that first step. We're so long overdue."
- Edward J. Markey (D-Mass.), Chair, House Energy Subcommittee: "[If it becomes law] we will have fundamentally changed our relationship with energy and how it's generated in this country.. There is a new political recombinant DNA…working with business and consumer interests to create a pathway that works for both. This bill demonstrates that."

The compromises rendered the final proposal as weak as the weakest of those studied by NREL. But is it stronger than no action? (click to enlarge)

- Waxman: "That was an essential compromise…It would be very disruptive to the economy had we not recognized that certain regions of the country were heavily dependent on coal."
- Representative Melissa Bean (D-Illinois), a “yes vote on the bill: "Many of the folks who are supporting the bill now from the private sector, that I know, said they didn't think they'd be here today…And they're surprised at . . . how their concerns were listened to."
- Dan Weiss, environmental advocate, Center for American Progress: "They know what price the political market will bear…"
- Greenpeace: "[Waxman-Markey is] a victory for coal industry lobbyists, oil industry lobbyists, agriculture industry lobbyists, steel and cement industry lobbyists."
- Carol Browner, director, White House Office of Energy and Climate Change: "It's a strong bill…It's a good bill. And it happened because everyone was able to keep their eyes on the prize while still making some concessions."

NEWEST SCIENCE ON CLIMATE CHANGE

Researchers present newest update on climate change scienceResearchers present newest update on climate change science
18 June 2009 (University of Copenhagen)

SUMMARY
The Synthesis Report from Climate Change: Global Risks, Challenges and Decisions at Copenhagen is based on the points of agreement from a scientific colloquium held in Copenhagen in March. It is the most current overview of relevant climate change research. It covers fundamental climate science, the impacts of a changing climate on society and environment, and the tools of and approaches to mitigation.

The report synthesizes 16 talks and 58 parallel sessions given at the colloquium that included 80+ chairs and a host of top scientific presenters. Because it includes new research data produced since the last IPCC report, it was peer-reviewed by 3 levels of scientists multiple times.

It is intentionally written and presented in a way that makes it accessible to the broadest possible audience in the hope of putting across its message to the citizens of the world. The message is simple: The question of global climate change and the human deleterious impact on it is beyond question and it is time to act.

Notice a trend? (click to enlarge)

The information is presented to expand understanding of how humans impact climate change, what the implications of failing to act are and what can and should be done to prevent them.

The report presents 6 key messages: (1) Climatic Trends; (2) Social and environmenta l disruption; (3) Long-term strategy: Global Targets and Timetables; (4) Equity Dimensions; (5) Inaction is inexcusable; (6) Meeting the Challenge.

(1) Climatic Trends. Greenhouse gas (GhG) accumulations and changes in climate are at the upper boundaries of all IPCC predictions. Key indicators (global mean surface temperature, sea-level rise, global ocean temperature, Arctic sea ice extent, ocean acidification, and extreme climatic events) are already moving beyond natural variability. If GhG spew is not reversed, the changes will accelerate. At some point, abrupt and irreversible shifts are increasingly likely.

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(2) Social and environmental disruption. Climate change will become dangerous when it causes disruptions in societies and ecosystems. Poor nations and communities, ecosystem services and biodiversity will go first. A global average temperature increase higher than 2 degrees C. will likely cause major societal and environmental disruptions indefinitely far into the future.

(3) Long-term strategy: Global Targets and Timetables. Coordinated worldwide action is now necessary to mitigate the severest impacts. Weak 2020 GhG-cut targets may bring on the tipping point where doing something substantive by mid-century will be very difficult. Coordinated worldwide action must include a significant long-term price on GhG spew and serious policies that grow New Energy and Energy Efficiency.

(4) Equity Dimensions. Impacts will differ. It is important for those who will not be severely, dangerously impacted to create a safety net for those who are. The poor and the most vulnerable must be protected or the potential for broader social disruption and heavier costs will grow. Acting to build a New Energy economy will, on the other hand, create a cascade of socioeconomic benefits and growth.

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(5) Inaction is inexcusable. The technology of mitigation is already available and will improve. Building New Energy and Energy Efficiency can transform society. The benefits will include (a) job growth in the sustainable energy sector, (b) reductions in the health, social, economic and environmental costs of climate change, (c) and the repair of ecosystems and ecosystem services.

(6) Meeting the Challenge. To act, the world community must (a) beat back the inertia that blocks social and economic systems from changing; (b) build on the rising public clamor for government action; (c) stop the things that generate GhG spew and institutional subsidies to them; and (d) enable shifts from ineffective policies produced by weak and compromised institutions to innovative political, business and social leadership. The way to do this is to link climate change with broader sustainability habits of consumption and production, with human rights issues, with the growth of democratic action to generate shifts toward sustainability in the broadest and most meaningful sense.

The report makes use of the concept of planetary boundaries developed through a 2008 Stockholm University symposium to (a) define what is sustainable, (b) characterize how close to the edge of unsustainability human society is at present and (3) to review how humans have acted in the past to transition to a more sustainable mode.

The paper’s conclusion points to the crucial upcoming conference in Copenhagen as pivotal: “While no single meeting can transform our society to one living within the climate change boundary, the United Nations Climate Change Conference, COP15, to be held in December 2009, offers a unique and timely opportunity to start such a transformative journey. Many are hoping that if society is successful in meeting the
climate change challenge, future generations will read in their history books that COP15 was where the journey really began.”

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COMMENTARY
It’s not just the overwhelming majority of the scientific community that accepts the evidence of global climate change and the causal relationship to human greenhouse gas-spewing activity, it’s the quality of the scientists with climate change-related expertise who accept the proposition that makes it so reasonably undeniable. Look at the authors of this report:

Professor Katherine Richardson (Chair), Vice Dean of the Faculty of Science, University of Copenhagen; Professor Will Steffen, Executive Director of the ANU Climate Change Institute, Australian National University; Professor Hans Joachim Schellnhuber, Director of the Potsdam Institute for Climate Impact Research and Visiting Professor at University of Oxford; Professor Joseph Alcamo, Chief Scientist (Designate) of the United Nations Environment Programme (UNEP); Dr. Terry Barker, Centre for Climate Change Mitigation Research, Department of Land Economy, University of Cambridge; Professor Daniel M. Kammen, Director, Renewable and Appropriate Energy Laboratory, Energy and Resources Group & Goldman School of Public Policy University of California – Berkeley; Professor Dr. Rik Leemans, Department of Environmental Sciences, Wageningen University; Professor Diana Liverman, Director of the Environmental Change Institute, University of Oxford; Professor Mohan Munasinghe, Munasinghe Institute for Development (MIND), Sri Lanka; Dr. Balgis Osman-Elasha, Higher Council for Environment & Natural Resources (HCENR), Sudan; Professor Lord Nicholas Stern, IG Patel Professor of Economics and Government, London School of Economics; Professor Ole Wæver, Political Science Department, University of Copenhagen

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Humans have inhabited Earth about 0.004% (200,000 years) of its 5 billion years. Only a fraction of the early human population endured the climate shifts in the first 188,000 years. Human population has only thrived since the climate stabilized about 12,000 years ago.

The first huge adaptive shift came when hunter-gatherers became farmers.

Thousands of years later, another shift occurred when humans formed societies to improve their lot. Government and trade evolved.

Humans transitioned to industrial society to improve their lot when agricultural habits were inadequate to sustain their agricultural societies.

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Industrialization had some built-in problems, the most significant of which is now becoming apparent. Industrial spew is making society – not for the first time – unsustainable.

It is time to transition again. It is time for a New Energy economy.

This is nothing new. As recently as 1987, when science prescribed a change of habits to protect the ozone, a shift in industrial activity was initiated. That’s what humans, at their best, always do: Transition.

The difference now is how truly huge, how imponderably huge, the risks, scales and uncertainties of global climate change are. It is not surprising that a big part of humanity, and far too many leaders, simply cannot grasp it.

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Given the enormity, the devastation, of failing to act, denial is a fairly reasonable response.

On the other hand, the potential of reward for vision and innovation are equally enormous.

The metal humans value above all others is gold. Gold’s most remarkable quality is its mutability, its ability to take many forms and yet always shine.

Humans are like that. It is time for them to demonstrate their ability to take a new shape and shine.

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QUOTES
- From the Synthesis Report for Copenhagen: Past societies have reacted when they understood that their own activities were causing deleterious environmental change by controlling or modifying the offending activities. The scientific evidence has now become overwhelming that human activities, especially the combustion of fossil fuels, are influencing the climate in ways that threaten the well-being and continued development of human society. If humanity is to learn from history and to limit these threats, the time has come for stronger control of the human activities that are changing the fundamental conditions for life on Earth.

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- From the Synthesis Report for Copenhagen: The Earth is approximately five billion years old. Humans, however, have been on the planet for only 0.004% of that history; modern Homosapiens evolved around 200,000 years ago. Dramatic climate changes have occurred in the Earth’s long history. Early humans experienced, and a fraction of them survived, some of these dramatic climate events. However, only during the last 12,000 years, a period in which the Earth’s climate has been comparatively warm and stable, have humans really thrived.
- From the Synthesis Report for Copenhagen: The scientific evidence today overwhelmingly indicates that allowing the emission of greenhouse gases from human activities to continue unchecked constitutes a significant threat to the well-being and continued development of contemporary society. The knowledge that human activities are influencing the climate gives contemporary society the responsibility to act. It necessitates redefinition of humanity’s relationship with the Earth and - for the sake of the well-being of society – it requires management of those human activities that interfere with the climate. To support development of effective responses, however, this knowledge should be widely disseminated outside of the scientific community. The purpose of this report is to communicate to a broad range of audiences the research community’s most up-to-date understanding of climate change, its implications, and the actions needed to deal with it effectively.

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- From the Synthesis Report for Copenhagen: Living within a challenging climate change boundary can often seem overwhelmingly difficult. There is no single treaty or technological “silver bullet” that will quickly and painlessly transform contemporary society. A transformation to a society living within the climate change boundary will take time and will require commitment from all levels and members of society. As a starting point, long-term targets for emission reductions are essential if society wishes to reduce the risk of dangerous climate change to acceptable levels. Trajectories provide guideposts along the way to meeting the targets, but there are many possible pathways that humanity could follow which would allow it to remain within the overall climate change boundary.

MORE NEWS, 6-29 (PRESIDENT ON ENERGY/CLIMATE BILL; NEW ENERGY MEANS GOOD JOBS IN THE MID-SOUTH; A CHALLENGE TO THE ENERGY/CLIMATE BILL)

PRESIDENT ON ENERGY/CLIMATE BILL
POTUS hails 'historic action'

[President Obama's remarks following passage by the House of Representatives of the climate change bill:]

"Today, the House of Representatives took historic action with the passage of the American Clean Energy and Security Act. It's a bold and necessary step that holds the promise of creating new industries and millions of new jobs; decreasing our dangerous dependence on foreign oil; and strictly limiting the release of pollutants that threaten the health of families and communities and the planet itself.

"Now it's up to the Senate to take the next step. And I'm confident that in the coming weeks and months the Senate will demonstrate the same commitment to addressing what is a tremendous challenge and an extraordinary opportunity.

"As always happens when we debate issues of this magnitude we see lines of demarcation. There are those who argue that the status quo is acceptable, those who would have us continue our dependence on foreign oil and our reliance on fossil fuels despite the risks to our security, our economy, and the planet."

From AssociatedPress via YouTube

"…[T]he American people know that the nation that leads in building a 21st century clean energy economy is the nation that will lead in creating a 21st century global economy. I want America to be that nation. And with this vote, the House has put America on the path to being that nation…[J]ust weeks ago, few in Washington believed that this day would come to pass. The best bet -- the safe bet -- was that after three decades of failure, we couldn't muster the political will to tackle the energy challenge despite the necessity and urgency of action. But although Washington may not see it yet, there is a spirit of change that's taken hold across this country.

"As has happened at every critical juncture in our history, the American people are demanding that we abandon the failed policies and politics of the past; we no longer accept inaction; that we face up to the challenges of our time…[T]oday, the House has done exactly that.

"I want to thank Speaker Pelosi for what was a prodigious effort…I also want to thank and recognize the chairs of the committees that worked so hard on this bill: Henry Waxman, Collin Peterson, Charlie Rangel. I want to acknowledge John Dingell, Ed Markey, Rick Boucher, and Mike Doyle -- as well as many others who worked long and hard to get to this day. They spent months carefully crafting a plan that's sensitive to vulnerable communities and industries, and that ushers in a critical transition to a clean energy economy without untenable new burdens on the American people.

"By creating a system of clean energy incentives, this bill complements our earlier actions to raise automobile fuel-efficiency standards, to double our capacity to generate electricity from sources like wind and sun, and to make significant new investments in the research and development of home-grown, renewable sources of energy…I look forward to continuing this work with the Senate so that Congress can send me a bill that I can sign into law -- and so that we can say, at long last, that this was the moment when we decided to confront America's energy challenge and reclaim America's future. That's what this vote was about. It was a victory of the future over the past. And that's what America is all about."


NEW ENERGY MEANS GOOD JOBS IN THE MID-SOUTH
Labor Secretary Touts Green Jobs During Visit
Bill Dries, June 26, 2009 (Memphis Daily News)

"U.S. Labor Secretary Hilda Solis toured Sharp Manufacturing Co. [in Memphis]…as she touted a green jobs movement across the country encouraged and supported by training programs.

"The plant on South Mendenhall Road works around the clock making solar modules, which it has been doing since 2003…Solis toured the assembly line…before announcing the Obama administration will use $500 million in stimulus money to start a series of five grant programs for worker training."

The panels on the Fed-Ex facility at the Oakland Int’l Airport were made in Memphis. (click to enlarge)

"There already are training programs undertaken by the International Brotherhood of Electrical Workers Local 474, which represents the workers at Sharp, that involve installing solar panels. The programs possible under the grant program could include training workers to make the panels as well as work in developing green businesses…Community colleges as well as individual work places also could be involved in the training efforts.

"One of the grant programs will award money to states to better collect and analyze work force information and direct citizens to jobs in green industries…The other four grant programs will direct workers to careers in targeted industries, including green energy companies and will help create larger energy sectors in state economies…The state energy sector partnerships and training grants are the largest share of the $500 million, with $190 million of those grants to be applied for by Oct. 20."

The panels on the Porsche operations facility in Ontario, Calif., were made in Memphis. (click to enlarge)

"The Sharp Memphis plant opened in 1978 and initially made color televisions, adding the production of microwave ovens two years later. The production of televisions was moved to Mexico nine years ago. Production of the solar modules began shortly after that as the Osaka, Japan-based corporation became one of the world’s leading manufacturers of solar cells.

"The 1 millionth solar module came off the production line at the Memphis plant last year. During her day in Memphis, Solis toured the National Civil Rights Museum…"


A CHALLENGE TO THE ENERGY/CLIMATE BILL
House Climate Bill Called "immoral" by Major Civil Rights Leader
24 June 2009 (Big Sky Business Journal)

"The Waxman-Markey climate bill is "an immoral assault on poor Americans" because it is designed to purposely raise the cost of energy in order to force the working poor to reduce their standard of living, according to one of the nation's leading civil rights champions.

"Roy Innis, Chairman of the Congress of Racial Equality -- one of America's oldest civil rights organizations -- made the allegation in a letter to all members of Congress…CORE has been heavily engaged in the national energy policy debate since the publication of Innis' 2007 book, "Energy Keepers, Energy Killers." The book was a Washington Post non-fiction best seller."

Innis is a climate change denier and doesn't understand the potential of New Energy but he raises an important question...(click to enlarge)

[Roy Innis, Chairman, Congress of Racial Equality:] "In my 40-plus years as the Chairman of CORE, I have seen few federal bills that would do more harm to America’s working class and low-income citizens and families than the Waxman-Markey climate tax bill…"

[Roy Innis, Chairman, Congress of Racial Equality:] "The Waxman-Markey bill is designed specifically to make the use of fossil fuels more costly…That will have a disproportionate and negative impact on those who now benefit most from the affordable and reliable power that fossil fuels provide: poor and working-class families."

...THIS is a very important question. (click to answer)

[Roy Innis, Chairman, Congress of Racial Equality:] "In fact, an underlying goal of this legislation is the morally repugnant concept that constricting sources of domestic energy and raising energy costs is a good thing because it will force conservation by consumers…That elitist view assumes that poor, working class families have the ability to bear that 'social cost.'"

[Roy Innis, Chairman, Congress of Racial Equality:] "The plain truth is this: the poor and working families we represent cannot bear that luxury…Americans don’t want 'energy welfare' payments from the government to help ease the sting of these government-driven cost increases…They want continued affordable and reliable energy, which this bill will constrict…This is an explicitly anti-consumer package that will have huge impacts – both direct and indirect – on the struggling families we represent."

"CORE said it plans to launch a national public education campaign against the Waxman-Markey legislation. CORE has more than 100,000 members nationwide."

COPENHAGEN WILL DECIDE IF MARKETS OR GOV’TS HANDLE GHG CUTS

China, Greenpeace Challenge Kyoto Carbon Trading
Matthew Carr, June 19, 2009 (Bloomberg News)

SUMMARY
Copenhagen. The city’s name has come to represent what could be the most pregnant moment of the 21st century. The world’s hardest-hitting diplomats, representing some 180 nations, will convene there in December. They hope to hammer out a successor agreement to the Kyoto Protocol.

One of the most contentious of the controversies diplomats hope settle in Copenhagen is the role of the Clean Development Mechanism (CDM) certified emissions reduction (CER) program administered by the United Nations Framework Convention on Climate Change (UNFCCC). Through the CDM, European Union (EU) nation emitters, whose emissions are mandatorily capped under the terms of the Kyoto Agreement, can purchase CERs to offset their emissions instead of purchasing allowances to emit via the Emissions Trading Scheme (ETS).

Each CER covers the cost of technology or infrastructure that eliminates (offsets) 1 tonne of carbon dioxide (CO2) or its equivalent in greenhouse gas (GhG) emissions (CO2-e).

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According to the World Bank, CDM CERs accounted for 26% of the $126 billion 2008 emissions trading market.

Example of CERs at work: French water and energy company GDF Suez funded 2 Chinese hydroelectric projects in 2008 through the purchase of 1.6 million CERs, enough to offset its emissions almost 5 months.

Both the governments of emerging economies and environmentalists are dissatisfied with the UNFCCC’s CDM program.

China and Mexico advocate direct subsidies to their New Energy and Energy Efficiency programs rather than making them subject to the vagaries and unpredictability of the trading market. Direct investment gives the governments of the emerging economies much more control over where and how money is directed.

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Greenpeace International advocates for more public investment in emerging economies’ New Energy and Energy Efficiency industries and infrastructure because it would speed development. They argue that markets have been ineffective and emissions trading, especially offset purchasing, allows the continued use of emissions-intensive energies through the purchase of "emissions indulgences."

Market advocates say effective UNFCCC regulation of the CDM program prevents compromised local governments from corrupting investments in New Energy. They say market mechanisms will cut emissions as hard GhG caps are ratcheted down and the markets mature.

Both emissions markets fluctuated with the overall economy in the last 6-to-9 months. CER volume fell 30%, partially because of the economy and partially because the UNFCCC slowed the program to review and improve the certification process. The total dollar value fell 12% to $6.5 billion.

Both the emerging governments and the environmentalists would reduce private sector investment in the emerging economies’ energy and infrastructure development. Eliminating this part of the EU’s emissions reduction scheme would likely reduce the market’s value by as much as a quarter (25%).

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A contingent of nearly 170 companies, including many of the biggest financial players in the world (Goldman Sachs Group Inc., Morgan Stanley, Barclays Plc, JPMorgan Chase & Co.), objects. They say that taking the profit motive out of the climate change fight will hamper or even defeat it.

In the absence of a market in CERs, the buying and selling of European Union Allowances (EUAs) would be the venue by which the companies could invest in the fight against global climate change. An EUA permits the generation of 1 tonne of CO2 or CO2-e.

The Kyoto agreement expires in 2012. Some of the value lost in the emissions trading markets has been due to doubts about what happens to EUAs and CERs after 2012. A Copenhagen agreement will need to resolve that issue.

Creating an agreement in which the U.S. and China, the world’s 2 biggest GhG-generators, can participate will mean success.

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COMMENTARY
The companies advocating on behalf of the emissions trading markets will not disclose the value of their market participation – but it clearly is enough to make it worth their while to fight (and pay) for the opportunity to play.

Suggestive of the untapped potential in emissions trading, the number of EUAs and CERs traded doubled in 2008 over the 2007 volume. Even more suggestive of the scope of the emissions trading market's potential is that its doubled 2008 market value is matched by 2 days of trading in the oil futures markets.

Emissions market expert New Carbon Finance predicts the value of emissions trading will grow to $3 trillion by 2020.

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Whether the emerging economies and the environmentalists get their way or the money players win, an investment in New Energy and Energy Efficiency of $4.2 trillion will be necessary by 2030, according to the International Energy Agency (IEA) to cut back GhGs enough to prevent the worst impacts of global climate change.

After House passage of the Waxman-Markey bill, mandatory U.S. participation in emissions trading looks possible, though passage by the Senate remains in serious doubt. Much depends on domestic political events but President Obama has called the EU ETS a model for the kind of U.S. cap&trade system he and his Democratic party’s leaders are attempting to introduce. The Waxman-Markey legislation was designed with input from Richard L. Sandor, chairman and chief executive officer of the London-based Climate Exchange Plc, the world’s biggest GhG exchange.

Sandor predicts emissions trading will eventually be global and valued at $10 trillion per year.

China has strongly objected to any program that would hamper its economic growth but has been largely non-specific beyond matters that would directly affect it. Among its most stringent declarations is the insistence on some direct investment by developed nations to assist emerging economies in controlling emissions. China, which is setting the worldwide pace for New Energy development but still generates 70% of its electricity with coal, is particularly forthcoming in its call for rich developed nations to invest 1% of their GDPs in carbon capture and sequestration (CCS) technology for Chinese coal plants.

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QUOTES
- Henry Derwent, President, International Emissions Trading Association & former climate advisor to UK Prime Minister Tony Blair: “There is a growing fear that the whole low-carbon investment scene is being positioned toward the public sector…The public sector has no more than a tiny percentage of the money needed to solve the climate problem…”
- Richard L. Sandor, chairman/chief executive officer, Climate Exchange Plc: “Market forces will be incredibly effective [in GhG reduction…We’re going to see a worldwide market, and carbon will unambiguously will be the largest non-financial commodity in the world…”

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- Antoine van Innis, emissions trader, GDF Suez: “We have no certainty…”
- Yvo de Boer, executive secretary, UNFCCC: “There’s a risk the market falls victim [to direct governmental investment in emerging economies]…”
- Joris Thijssen, climate campaigner, Greenpeace: “The world should not rely [only] on offsets…We need to stop building coal-fired power stations [and waiting for emissions trading to reverse climate change]…”
- Milo Sjardin, head of North American research, New Carbon Finance: “Developing nations want more direct control…”
- Dirk Forrister, managing director, Natsource LLC and former climate change advisor to U.S. President Bill Clinton: “[Emerging-market investment for emissions reductions] needs to be built on a private-sector model…”