Green Wombat

With little fanfare, the U.S. Environmental Protection Agency this week released its inventory of greenhouse gas emissions in the United States between 1990 and 2005. As Congress considers legislation to cap green gas emissions, the inventory is an important snapshot of which industries will face the biggest challenges in reducing their contribution to global warming. The report also contains some disturbing stats on the jump in extremely potent greenhouse gas emissions from synthetic chemicals used to make computer chips and other products (more on that below.) Total greenhouse gas emissions in the U.S. rose 16.3 percent between 1990 and 2005 while the economy grew 55 percent. Carbon dioxide accounted for 84 percent of the U.S.’s greenhouse gas emissions, with 94 percent of the CO2 produced by fossil fuels. With 5 percent of the planet’s population, the U.S. in 2005 was responsible for 22 percent of carbon dioxide emitted worldwide from burning fossil fuels. Power plants contribute the most spew, responsible for 41 percent of the nation’s C02 emissions in 2005. Cars, trucks and other transportation were the second-biggest emitters, accounting for 33 percent of CO2 that year. Emissions from cement production have grown 38 percent since 1990 – an indication that there will be plenty of opportunity to develop green building technologies in a carbon constrained world. And all that stuff we buy to fill our McMansions? Much of it ends up being burned in municipal waste plants. Rampant consumerism helped fuel a 91 percent increase in carbon emissions from waste combustion between 1990 and 2005.

Off most people’s radar screens are greenhouse gas emissions from of a group of synthetic chemicals used in industrial manufacturing – hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Although they account for only 2.2 percent of the U.S.’s greenhouse gas emissions, the chemicals are extremely potent. SF6, for instance, has a global warming potential 23,900 times that of carbon dioxide. Since 1990, emissions from these chemicals has spiked 83 percent. "SF6 and PFCs have extremely long
atmospheric lifetimes, resulting in their essentially irreversible accumulation in the
atmosphere once emitted," the EPA report states. "Sulfur hexafluoride is the most
potent greenhouse gas the [Intergovernmental Panel on Climate Change] has
evaluated."  Ironically, the chemicals were approved as substitutes for ozone-depleting chlorofluorocarbons used in air conditioners and refrigerants and the big jump in emissions comes from those uses. The chemicals are also used by companies like Intel (INTC) and Advanced Micro Devices (AMD) to make semiconductors, and in industrial manufacturing to produce aluminum. In addition, they play a role in the transmission and distribution of electricity. The good news is that aluminum makers like Alcoa (AA) have decreased emissions from HFCs, PFCs and SF6s by 84 percent, and other industrial uses of the chemicals have declined dramatically as well. Emissions from chip making, however, rose nearly 50 percent between 1990 and 2005, though they have remained fairly flat in recent years.   

Cow power – and pig power – entrepreneurs could play a key role in reducing methane emissions from manure by capturing the gas and using it to produce electricity.

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Australia today became the first nation to ban traditional light bulbs, requiring that consumers and businesses install high efficiency lighting to cut greenhouse gas emissions. A month ago a liberal Los Angeles state legislator was widely ridiculed for proposing a similar ban on incandescent bulbs in California. But in this case it’s the conservative government of Australian Prime Minister John Howard that is flipping the switch on a 125-year-old technology in a nation of 20 million people. Incandescent light bulbs will be phased out by 2010, eliminating an estimated 4 million metric tons of greenhouse gases annually by 2015, according to the government. "The most effective and immediate way we can reduce greenhouse gas emissions is by using
energy more efficiently,” said Australian Environment Minister Malcolm Turnbull in a statement. "The climate change challenge is a global one. I encourage other countries to follow Australia’s lead and make the switch to more energy efficient products like compact fluorescent light bulbs.” CFLs use 70 percent less electricity than traditional bulbs and last 10 times longer. Australia’s bulb ban is good news for General Electric (GE), Philips, Honeywell (HON) and other compact fluorescent light bulb manufacturers as well as retailers that sell their products. In the United States, Wal-Mart (WMT) has pledged to sell 100 million CFLs this year.

There’s no small irony in the Howard government seeing the light on energy conservation as a solution to global warming.

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A former Clinton administration commerce department official today released a report arguing that a global tax on companies’ greenhouse house gas emissions is a more efficient way to combat global warming than the carbon trading markets endorsed by a host of government officials and corporations like Alcoa (AA), BP, (BP), DuPont (DD), Duke Energy (DUK) and General Electric (GE). "A carbon tax would both directly reduce greenhouse gas emissions and provide powerful incentives for technological progress," wrote Robert  J. Shapiro, a Washington D.C. consultant, veteran think tanker and former under secretary of commerce for economic affairs. "Carbon taxes also should provide greater incentives for companies to develop new, environmentally-friendly technologies or abatement strategies than a cap-and-trade program." Shapiro’s study was released by the American Consumer Institute, a free-market oriented Washington group.

Corporations currently are not charged for the economic and environmental impacts of their greenhouse gas emissions, though those "externalities" affect everyone. Under a carbon tax, those consequences would be calculated and a tax imposed accordingly. "Since every government needs revenues, the challenge is to design taxes so they distort those relative prices as little as possible. Part of the answer is to make the base of the tax as broad as possible, so its rate can be low and most people and activities are affected equally," Shapiro wrote. "Carbon taxes generally meet this criterion, although not as well as broad income or consumption taxes. However, their economic drawback of raising the price of carbon-intensive products and operations, relative to those which are not carbon-intensive, is also their environmental purpose." Companies that do not emit greenhouse gases – such as solar and wind producers – or sell greener goods and services – would benefit. The government could use carbon tax revenue to support renewable energy technologies, cut corporate taxes or increase health spending, according to Shapiro.

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The mayor of Austin, Texas, today announced the nation’s most aggressive plan to cut greenhouse gas emissions, pledging that the Texas state capital and city of 720,000 will go carbon neutral by 2020.  The Austin Climate Protection Plan unveiled by Mayor Will Winn should create plenty of opportunities for green tech entrepreneurs, hybrid automakers like Toyota (TM) and Honda (HMC), and green building companies. The plan requires that all city facilities be powered with renewable energy by 2012 and that Austin’s municipal fleet go carbon neutral by 2020 by using electric and alternative fuel vehicles. All city departments will develop and implement climate protection plans to reduce their emissions of planet-warming gases.

Thirty percent of the electricity sold by Austin Energy, the city’s municipal-owned utility, must come from renewable sources by 2020. Austin Energy will be required to obtain 100 megawatts of solar power and all new power plants must be carbon neutral – effectively banning coal power in a state where Dallas-based utility TXU (TXU) has enraged environmentalists with its plan to build 11 coal-fired plants. Austin Energy will be required to save 700 megawatts by 2020 through energy efficiency and conservation programs.

Home builders will have to do their part. By 2015, all new homes must be "zero net-energy capable" and energy efficiency in other new construction must increase 75 percent. Austin’s climate plan also calls for community programs to allow individual citizens to offset their greenhouse gas emissions. "This isn’t just the strongest plan in Texas, it’s the strongest plan in the country," said Jim Marston, the regional director of green group Environmental Defense, in a statement. "This is the kind of leadership that makes us proud to live in Austin and hopeful that Texans will accept responsibility for the role we should play in solving this global crisis."

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A report prepared for institutional investors puts some cold hard figures on the cost of global warming to electric utility companies worldwide. No surprise that coal-dependent U.S. utilities will see a significant hit on their bottom line if they do not begin to cut their spew and a nationwide cap on greenhouse gas emissions is imposed, as proposed in legislation now before Congress. Utilities like PG&E (PCG) that resell power from cleaner-burning natural gas and renewable energy sources stand to profit while coal-using Southern Company (SO) and American Electric Power (AEP) could lose billions. The report was prepared for the Carbon Disclosure Project, an alliance of 225 institutional investors – managing $31 trillion in assets – that annually asks corporations to reveal their greenhouse gas emissions. This year the report focused on electric utilities, one of the largest sources of planet-warming gases. "No longer can fiduciaries claim to be unaware of what is at stake," the report’s authors warned. "Taking climate risks into account is now becoming part of smart financial management. Failure to do so may well be tantamount to an abdication of fiduciary responsibility and indicative of poor management."

About 42 percent of the world’s 265 biggest public utilities disclosed emissions data to the project. That information was used to calculate the cost of the utilities’ carbon emissions based on the $22 average trading price for a ton of carbon dioxide on the European carbon market, known as the European Trading Scheme. "Remarkably, by this measure few electric utility companies were adding value to the economy," the authors concluded. "The damages they imposed exceeded the surpluses they generated, often by a large margin." The report found that American Electric Power and Southern imposed net annual costs of $3.6 billion and $2.7 billion, respectively. American Electric plants, for instance, emit 146 million tons of greenhouse gases. "These companies must be regarded as quite exposed to future restrictions on greenhouse gas emissions," the report stated. PG&E, on the other hand, emitted 536,000 tons of greenhouse gases and reaped a net benefit of $404 million by the report’s methodology. Similarly, nuclear power producer Exelon (EXC) produced a net benefit of $225 million.

The report also calculated the cost to the utilities if a California-style global warming law – requiring a 25 percent reduction in greenhouse gas emissions – was adopted nationwide. At current emissions levels, such a cap would cost American Electric nearly 7 percent of its annual revenue. Texas utility TXU (TXU), under fire from environmentalists for its coal-power plant building binge, would lose 3 percent of its revenue. Such a cap would cost PG&E just .03 percent of its sales.

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In a boost for renewable energy companies, the California Public Utilities Commission today effectively banned long-term purchases of "dirty" electricity produced by coal-fired power plants as part of the state’s fight against global warming. Most California power plants operate on lower-polluting natural gas but utilities also import power from out-of-state coal-fired plants. To help fulfill California’s targets to reduce greenhouse gas emissions, utilities and other power providers will not be permitted to buy electricity from plants whose emissions are greater than those of a gas-fired plant – 1,100 pounds of carbon dioxide per megawatt hour. Most coal-fired plants exceed that limit, which is an interim standard until California regulators impose a greenhouse gas emissions cap. The standard applies to investment in new power plants and contracts of five years or more. "Today’s decision is an important step in our efforts to reduce greenhouse gas emissions,” utilities commissioner John Bohn said in a statement. “Our next task is to harness the power and creativity of the marketplace to address global warming.”
The move means that utilities like PG&E (PCG), Southern California Edison (EIX) and San Diego Gas & Electric (SRE) will need to replace their coal contracts. Given the cost of constructing new natural gas plants in California, the utilities are likely to step up purchases of renewable energy from wind farms and solar power plants. California’s investor-owned utilities are already scrambling to meet a state-mandated target that 20 percent of the electricity they sell come from renewable energy sources. The new greenhouse gas standard is also likely to discourage construction of coal-fired power plants in bordering states that were counting on California as a market or source of financing.

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A coalition of major industrial corporations and environmental groups today released a proposal for immediate and far-reaching Congressional action to stem global warming that, if adopted, would radically remake the United State’s energy system, creating huge new opportunities for green tech companies and investors. The policy recommendations from the United States Climate Action Partnership comes as the new Democratically controlled Congress considers several global warming bills. The coalition includes aluminum maker Alcoa (AA), oil company BP (BP), Caterpillar (CAT)
DuPont (DD) and General Electric (GE) and utilities  Duke Energy (DUK),
FPL (FPL), PG&E Corp. (PCG) and PNM Resources (PNM) along with
green groups Environmental Defense, the Natural Resources Defense
Council, the Pew Center on Global Climate Change and World Resources
Institute. "Failure is not an option," the CEOs state in their policy proposal. "The way we produce and use energy must fundamentally change, both nationally and globally."

The coalition calls for a mandatory climate action program that would set greenhouse gas emission limits on major sectors of the economy, establish a carbon trading market and signifcant investment in renewable energy technologies. The climate action group said the government should dedicate permanent
funding for renewable energy research and provide tax credits and loan
guarantees to stimulate investment in alternative energy technology.

"There are a number of technologies that are currently available that emit little or no GHGs, such as wind, solar, and nuclear power, hybrid vehicles, and numerous energy efficiency technologies," the coalition said in its policy recommendations. "Rapid advancement and deployment of new, breakthrough technologies are also core elements of any climate change solution. Thus, an effective climate change program must include policies to promote significant research, development and deployment of hyper-efficient end use technologies; low-or zero-GHG emitting technologies; and cost-effective carbon capture and storage, which will be particularly important in the deployment of advanced coal technologies."

ThinkEquity alternative energy analyst David Edwards told Green Wombat that the US-CAP agenda is a boost for green tech. "It’s actually quite momentous to have large corporations, especially the large corporations listed, to step up and ask for broad-reaching and aggressive federal legislation," he said. "It clearly provides good R&D support for the industry, which could help quicken the pace of innovation and cost reduction."

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Pressure on President Bush to take action on global warming grew Friday night as Wal-Mart (WMT) threw its support to a coalition of major U.S. corporations and environmental groups pressing for the quick implementation of national policies to reduce greenhouse gas emissions and establish a carbon trading market. The group – called the U.S. Climate Action Partnership – will unveil its climate change initiative on Monday in Washington, D.C. The coalition includes the CEOs of such old-line industrial behemoths as Alcoa (AA), Caterpillar (CAT) DuPont (DD) and General Electric (GE) as well as financial services firm Lehman Brothers (LEH). Other companies in the coalition are utilities PG&E Corp. (PCG), FPL (FPL) and Duke Energy (DUK). Joining them are the Natural Resources Defense Council, Environmental Defense, World Resources Institute and the Pew Center on Global Climate Change. Said Linda Dillman, Wal-Mart’s executive vice president for sustainability, in a statement: "We endorse the group’s call for strong national policies and market-based programs for greenhouse gas reductions."

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The CEO of the parent company of one of the nation’s largest utilities today urged the federal government to establish national limits on greenhouse gas emissions and require targeted reductions to combat global warming. In a speech at the National Press Club, PG&E Corp. (PCG) Chief Executive Peter Darbee also called for a national carbon trading market, an extension of tax credits for renewable energy investment, national energy efficiency
standards and the promotion of plug-in hybrids cars. "If you look at U.S. greenhouse gas emissions compared with other nations, the amount is vastly disproportionate to our
population.  Our emissions are higher than those of China and India combined, where the population is more than 2.5 billion people," Darbee said, according to his prepared remarks, in accepting an award from the Natural Resources Defense Council. "If you look at our wealth and prosperity relative to other nations, it’s clear that we can afford to make a difference. And, if you look at our tremendous capacity for innovation, it’s clear that we have the human capital to develop the solutions. By signaling to the market that we’re serious about progress on clean energy, we can stimulate investment and engage our best and brightest in this effort."

San Francisco-based PG&E is perhaps the nation’s greenest utility and Darbee also appeared on Capitol Hill today to throw his support behind Senate legislation that would cut greenhouse gas emissions from his own industry.  “As the single largest source of
emissions in the U.S., the utility sector must play a key role in meeting our national
emissions reductions goals," he said in a statement. "This bill will significantly reduce emissions from the utility sector and it will do so by leveraging the innovation and
efficiency of the market.” Darbee’s speech comes as a raft of global warming bills are being introduced into the new Democrat-controlled Congress. At the Press Club, he urged the government to
provide renewable energy investors with some certainty by extending tax credits for
more than one or two years at a time and to fund new research into alternative energy. "I’m particularly intrigued by solar thermal technology. PG&E is also exploring the possibility of tidal and wave power off the coast of San Francisco," said Darbee. "Our economy will lead the clean energy revolution, just as we’ve done in hi-tech and biotech."

Darbee’s call for national global warming laws is sure to further divide the utility industry. Unlike utitilies in coal-dependent regions, PG&E relies on cleaner natural gas plants to provide most of the electricity it sells. And because California regulates the utility’s revenues, PG&E isn’t dependent on increasing consumers’ power usage to boost profits.

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It’s that time again, when  editors everywhere trot out their end-of
year lists – The Most Beautiful People, the Top 10 Trends, etc. etc.
Frankly, the Green Wombat couldn’t be bothered coming up with a list of
his own but we will pass on the 2006 One Degree Hot List:
The Year’s Most Influential in Global Climate Change. One Degree is a
Web spinoff of the Weather Channel that focuses on climate issues.
Taking the No. 1 position is, no surprise, Al Gore. "If global climate
change reached a tipping point in the public consciousness in 2006,
former Vice President Al Gore may well have pushed it over the top,"
the list editors wrote. "With his unlikely hit film An Inconvenient
Truth, Gore became the official climate change spokesman for millions
across the globe, presenting possibly the most widely distributed (and
highest grossing) science lecture in history." British Prime Minister
Tony Blair gets props for making global warming a policy priority while
George W. Bush’s fierce opposition to such policies is credited with
inspiring California Governor Arnold Schwarzenegger and other Golden
State politicians (No. 4) to enact a landmark global warming law.
Others making the list include evangelist Richard Cizik for taking
climate change to the pulpit; NASA global warming expert James Hansen; and Wal-Mart for its conversion to the green agenda and efforts to
promote environmentally sustainable products and practices.

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