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Tag Archives: carbon emissions

Emission Reduction Plan

By Dave Elliott

Between 1990 and 2015, UK greenhouse gas emissions fell by 38% and should fall by 48% by 2020 on current policies, within the framework of carbon budgets established by the Climate Change Act. Looking further ahead, the UK has committed to a 5th carbon budget (for 2028-32) which requires greenhouse gas emissions to be reduced by 57% by 2030 (against 1990 levels), on the way to at least 80% by 2050. But there is still a way to go.

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Texas: the US leading CO2 emitter has significantly decreased emissions, but not by design

On January 29, of this year the Environmental Defense Fund, together with the UK Consulate, hosted a climate conference at the capitol: “Texas’ Changing Economic Climate.” At the beginning of the conference, we heard a personal message from Prince Charles of Wales to the State of Texas imploring Texans to lead the US, and hence the world in climate mitigation. At the end of the conference, one of our elected officials suggested Texas may in fact already be a leader in carbon emissions mitigation while at the same time increasing the gross state product. And if Texas has been taking this leadership role by promoting things like a business-friendly environment and a deregulated electricity market, then perhaps other states, and countries, should look to Texas for how to mitigate carbon emissions.

Are those claims true? Is Texas a leader in reducing carbon emissions while increasing economic productivity?

On the surface, it seems plausible. From 2000 to 2005, total CO2 emissions in the state decreased 4.4 percent while economic output increased 16.5 percent. But dig deeper, and claims of real leadership on climate mitigation evaporate. It turns out that global energy prices were the main drivers of those changes, not the state’s regulatory environment or business initiatives. Much of the CO2 reduction came from decreased natural gas use by the chemical industry as a result of the rising cost of natural gas. Electricity deregulation in Texas fostered the increased use of natural gas combined cycle technology for electricity generation – helping to maintain relatively steady electric sector CO2 emissions since 2000. Much of the rise in the state’s economic output is attributable to the oil and gas industry, buoyed by the same rise in global energy prices.

It is a mistake to think that significant steady and long term CO2 emissions reductions, together with increased gross state product, can be achieved by simply continuing actions of the past five to ten years.

This report examines the data behind claims that Texas has been a leader in reducing carbon emissions while increasing economic productivity. The data shows that the external economic factor of higher energy prices was the main driver in decreasing emissions in Texas from 2000 to 2005, not our pro-business or deregulatory policies. Furthermore, Texas must prepare for the future. Federal climate legislation is on the horizon. This legislation is likely to impose constraints on the Texas economy that will demand even greater reductions in emissions. Texas and the rest of the US states should work to understand how specific industries and consumers will be affected by a federal CO2 constraint. By promoting those businesses that are well-positioned and facilitating restructuring for those ill-positioned, Texas can successfully transition to and maintain leadership within the new carbon-constrained energy economy.

Texas CO2 emissions data

In looking at aggregated data from the Energy Information Administration of the Department of Energy, from 2000 to 2005, the CO2 emissions of Texas went from 654 million metric tons (MtCO2 ) to 625 MtCO2 – a decrease of 4.4% F F. By looking at the data in Figure 1, one can see that the peak year for Texas CO2 emissions was 2002 at 672 MtCO2. Emissions in both 1999 and 2001 were less than in 2000 with the decrease from 1999 to 2005 being only 0.2%, as Texas’ CO2 emissions in 1999 are listed at 626 MtCO2. Thus, in thinking about a specific baseline year for CO2 emissions, the choice can have a large impact. This fact provides reasoning for using a running average that can level out short-term fluctuations in the economy and energy prices.

The evidence for the emissions decrease is revealed by looking one level deep into the data – emissions from the industrial sector (see Figure 2). In 2005, the Texas industrial sector was responsible for 179 MtCO2 compared to 218 in 2000 – a 17.6% decrease. As a comparison, the drop in the overall US industrial sector emissions was only 6.4%. No other major sector, transportation or electric power, decreased in emissions in Texas during the 2000–2005 span. Furthermore, the Texas industrial sector is dominated by the consumption of natural gas as they are correlated very closely: Texas total consumption of natural gas dropped 21% from 2000 to 2005.

Figure1_TXCO2.JPG
Figure1_TXCO2.JPG

Figure 1. Texas’ CO2 emissions by fuel.

Figure2_TXCO2.jpg
Figure2_TXCO2.jpg

Figure 2. Texas’ CO2 emissions by sector.

Table1_TXCO2.jpg
Table1_TXCO2.jpg

Table 1. Comparison of US and Texas CO2 emissions from 2000 to 2005. Emissions in Texas and the US (MtCO2).

Interpreting Texas CO2 emissions data

There is an important question to ask in terms of interpreting the data showing a drop in industrial natural gas usage and subsequent emissions: Did the industries in Texas quit making as many goods or find a way to make the same amount, or even more, goods while consuming less natural gas?

From 2000 to 2005, the Texas Comptroller of Public AccountsF F shows that the gross state product increased from $850 billion to $989 billion in constant 2005 dollars. This is a 16.5% increase in economic output. During that same 2000-2005 span, Texas’ total industrial output dropped a few percent before coming back to 2000 levels (see Figure 3). The only industries with substantial economic growth were oil and gas extraction, refining, and primary metals (not shown). The real price of oil and natural gas rose 40% from 2000 to 2005 – and roughly doubled from 1999 to 2005, providing substantial income and revenue to the Texas oil and gas sector, as well as the state budget. However, the chemical sector, which uses substantial quantities of natural gas as a feedstock was down 11%, perhaps tied to the increase in cost of natural gas. Additionally, a 13% drop in employment in the chemical industry from 2000 to 2005 provides some evidence to a drop in the number of chemical goods produced.

Figure3_TXCO2.jpg
Figure3_TXCO2.jpg

Figure 3. Industrial productions indices for Texas.

One can still ask what industrial energy efficiency improvements occurred early this decade in Texas. At the beginning of 2000, approximately 10.3 MW of cogeneration was installed in Texas. By the end of 2005, this was 17.5 MW – a 71% increase in capacity in six years F F. This is important because cogeneration, also commonly known as combined heat and power facilities, get more useful energy out of the same amount of fuel. Generating electricity and heat from more efficient systems decreases fuel consumption and emissions when it displaces less efficient systems.

However, electricity generation within the industrial sector was relatively constant from 2000 to 2005. Electricity generation from combined heat and power (CHP) facilities increased from 70 to 97 million MWh from 2000 to 2002, and then decreased to 85 million MWh by 2005. Overall, CHP generation increased 21% from 2000 to 2005, practically all outside of the industrial sector. Thus, many CHP facilities were installed, but the demand for their services did not seem to hold up.

The signing of SB 7 in 1999 began the deregulated electricity market in Texas. This change in policy ended up launching a tremendous increase in the installation and use of natural gas combined cycle units (NGCC) for electricity generation (see Figure 4). However, the move to NGCC generation technology had already begun in the early 1980s. The NGCC units use the excess heat from a combustion turbine to generate steam for a steam turbine. This combination makes NGCC power generation much more efficient than generating electricity from either the steam or combustion turbine alone. Amazingly, Figure 4 shows the clear impact that deregulation policy had on the strategy in the electric power sector. From 2000 to 2005 the installations of NGCC units increased by 400%.

Figure4_TXCO2.jpg
Figure4_TXCO2.jpg

Figure 4. The cumulative installed capacity of natural gas plants in Texas shows that installation of combined cycle plants increased significantly starting in 2000F F. ST = steam turbine operating stand-alone, CT = combustion turbine of an NGCC plant, CA = steam turbine of a NGCC plant, GT = gas combustion turbine operating stand-alone, and CS = an NGCC plant where the combustion turbine and steam turbine are connected mechanically.

The employment situation in the industrial manufacturing sector shows a marked contraction (see Figure 5). Employment in the chemical and plastics industry was representative of the overall Texas manufacturing employment trend from 2000 to 2005. Employment in the oil and gas extraction industry was slightly up from 2000 to 2005, and followed the continually climbing energy prices through 2007. Interestingly, even in some industries that saw economic growth during the time span of interest due to an increase in prices for the manufactured good, employment went down (e.g. primary metals). Also, industries that experienced decreasing employment are many of those that are energy and natural gas intensive.

Figure5_TXCO2.jpg
Figure5_TXCO2.jpg

Figure 5. Employment indices for the overall Texas manufacturing sector as well as selected industries.

Conclusions

What this analysis shows are a few major points regarding Texas gross state product and CO2 emissions from 2000 to 2005: (1) the major growth of the Texas gross state product increased during the first half of this decade due to a rise in global energy prices and increased value of chemical products, (2) the boom in natural gas cogeneration installations does not nearly account for the 32% drop in natural gas consumption in the industrial sector as the generation from these facilities only slightly increased from 2000 to 2005, and (3) a drop in cogeneration systems from 2002–2005 together with a drop in output from the chemical industry accounts for a large portion of the decrease in natural gas consumption, and subsequently Texas’ CO2 emissions. Texas’ emissions may have even slightly decreased since 2005 with continued increases in natural gas and oil prices.

It is a mistake to think that significant steady and long term CO2 emissions reductions, together with increased gross state product, can be achieved by simply continuing actions of the past five to ten years. High energy prices benefit some Texas industries while hurting others, and there is evidence to suggest that higher energy prices have been influential in decreasing emissions from 2000 to 2005. Impending federal climate legislation will impose constraints on the economy that go beyond the reductions in emissions that have occurred in Texas as a consequence of external factors rather than by directed policy. Texas and the rest of the US states should work to understand how specific industries and consumers will be affected by a CO2 constraint. By promoting those businesses that are well-positioned and facilitating restructuring for those ill-positioned, Texas can successfully transition to and maintain leadership within the new carbon-constrained energy economy.

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The Meaning of “Government Motors” in Energy and Economic Policy – Example of a larger tale

As of last week, the United States government will own just nearly 72% of General Motors (GM) after going through a bankruptcy procedure. Additionally, new Corporate Average Fuel Economy (CAFE) standards will be targeting nearly 35.5 miles per gallon (MPG) of gasoline, or approximately 15 kilometers per liter. The 35.5 MPG by 2016 is broken down as 39 MPG for cars and 30 MPG for trucks. Taken together, free market capitalists are appalled at these actions early in President Obama’s tenure. People discuss how political motives, mostly those pushing environmental agendas, are unduly forcing consumers to “buy cars that they don’t want”. They say the profit motive of a car company will best guide the decisions. Environmentalists say we are simply incorporating external costs, such as greenhouse gas emissions (global scale) or emissions of particulate matter and smog-forming gases (local scale).

First of all, GM had been losing money and market share for the last couple of years. The typical capitalist will tell you that private industry will make better decisions about making cars than the government, and I agree. Unfortunately in this case, GM made enough incorrect decisions over the last decade that they are now a failed company. GM was out-marketed and out-designed by Japanese and German automakers that focused broadly on the overall world market and were not over-committed to the US consumer who wanted to buy light trucks and sport utility vehicles. This is not to say that Toyota does not have top-selling full size pickups and SUVs that supported the sales of their flagship hybrid Prius.

Secondly, GM suffered from general short-sidedness of mainstream economics. There is a major disconnect between the time frames of interest in economics and the time frame of energy resource development. The lure of making large margins when selling more light trucks and SUVs in the short term (think of quarters to years) was just too great. When global forces significantly increased the operating cost of these vehicles – interpret that as high oil and gasoline prices – people “wanted” more fuel efficient cars. Then when US gasoline prices dropped from over $4/gallon in the summer of 2008 to near $2/gallon by the end of 2008 (a tremendously quick change) people were again considering relatively low fuel-efficient cars, and now one can buy a hybrid vehicle off a car lot instead of needing to pre-order a Prius months in advance.

I believe we are crossing into a new era of less prosperity governed by increasingly expensive energy resources, and most politicians and economists do not comprehend the situation. The prerequisite of available energy for economic growth is simply not universally understood well enough. For instance, the usual reason cited for the tremendously quick increase and drop of oil prices in 2008 was that “speculators” were pushing up the price. Well, speculators are part of the market system, so you can’t say that the system was being “gamed” by part of the system itself. For the first time in the history of oil, the world market found out what price of oil was so high that consumers would legitimately begin to alter their lifestyles … and that means a lower lifestyle in the form of lower purchasing power. Because this oil price increase (and subsequent crash) was not politically driven, as during the 1973 OPEC oil embargo, it is a much more important data point. What most people neglect to discuss is that world oil production was essentially level from 2005 to 2008 hovering in the range of 85 million barrels per day. This is after world oil production experienced an annual increase of 1-1.5 million barrels per day from 1990 to 2005. This literally means that the demand continued to increase, as evidenced by increases in consumption in China and the US, as oil production did not. The price of oil had to go up.

So we have a market system that can cause the price of oil to rise and fall over 300% within the span of 1 year. The oil resource and the technologies for extracting oil cannot possibly change that quickly and at that magnitude. It takes up to a decade for investments in the oil and most other energy industries to come to fruition. In making investments, or incentives for investments, in energy production and generation infrastructure or energy consumption infrastructure – such as automobiles and buildings – governments and businesses cannot judge success or failure based upon time frames of only a few years. It takes approximately a decade to see the benefits of changes in energy investment. This time frame is much longer than quarterly financial reports and election time scales. There is much evidence that suggests US presidents lost reelection (e.g. Carter) or lost much popularity (Nixon) made good energy policies for the long term, but that caused pain in the short term.

Elected officials in the United States, the European Union, and around the world, must focus energy policy on time scales longer than fiscal and election cycles because the market is not set up to perform this necessary function. Putting a price on greenhouse gas emissions, or carbon, is the major option to connect long time scales (centuries) of energy and the environment with short time scales (years) of economic markets. A price on carbon will be the most influential change to the economic system since banking began. It combines externalities of energy resources and environmental impacts to economics in a way that has never been done. Some detractors say it will destroy the economy to have such a “tax” on carbon, but what it really does is redefine what the economy is.

The economic influence of a price on carbon will be more of an artifact of the abundance and quality of current and future energy resources. In other words, the abundance of energy resources will dictate economic prosperity many times more than a tax/price on carbon. After all, if there were limitless fossil fuel supplies, we could (1) capture 90% of the CO2 emissions from all fossil fuel combustion at centralized power plants and (2) use the electricity to power industrial machinery and run homes and businesses as well as electrolyze water to create hydrogen as a stored fuel for transportation. In this case, the price on carbon wouldn’t matter because we could use our limitless energy supply to take prevent the carbon from being emitted. Unfortunately, we know that do not have easily accessible and limitless supplies of fossil fuels.

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Climate Change Congress: Can you help cut carbon emissions from aviation and shipping?

By Liz Kalaugher

Are you an expert in the carbon emissions of the transport industries? If so the University of Cambridge, UK, would like to hear from you. Terry Barker of the Cambridge Centre for Climate Change Mitigation Research (4CMR) is looking to put together two proposals for schemes to decarbonise the aviation and shipping industries in time for the climate change
negotiations in December.

Speaking at a lunchtime workshop at the Climate Change Congress in Copenhagen, Barker explained how he’s keen to bring as many different modelling approaches to bear on the problem as possible. And he’s looking to bring together representatives from each of the industries to work together with the relevant scientists, as well as representatives from government and NGOs.
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