Understanding Greenhouse Gases

Transcription

1 Understanding Greenhouse Gases Reduction and Trading Strategies for Municipalities Presented to: The League of Wisconsin Municipalities 110 th th Annual Conference Stevens Point, Wisconsin October 22, 2008 Doug Bach, PE Short Elliott Hendrickson, Inc.

2 Presentation Overview Background Science, Policy Goals, Strategies Municipal Initiatives and Resources Fundamentals of Cap-and-Trade Current and Emerging Trading Systems Opportunities and Implications for Municipalities What Can You Do Now?

3 The Driver? Global Warming

4 The Six Greenhouse Gases Carbon Dioxide (CO 2 ) = 1 equiv Methane (CH 4 ) = 21 equiv Nitrous Oxide (N 2 O) = 310 equiv Sulfur Hexafluoride (SF 6 ) = 23,900 equiv Hydrofluorocarbons (HFC) = ,700 equiv Perfluorocarbons (PFC) = 6,500-9,200 equiv

5 Greenhouse Gas Emissions by Gas 8% 5% 2% 85% CO2 CH4 N2O Other Source: USEPA - INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: (April 2008)

6 CO2 Emissions by Sector Tg CO2 Equ Series Electricity Generation Transportation Industrial Source: USEPA - INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: (April 2008)

7 The Greenhouse Gas Challenge: Policy Goals Kyoto Goal: 1990 level by 2012 UN IPCC: 50% global reduction by 2050 Various U.S. proposals: 1990 level by 2020; 80% below 1990 level by 2050 Lieberman-Warner goal was 2% per year to 2050

8 Strategies to Address GHGs Reduce Energy efficiency (buildings, pumps, operations) Transportation efficiency (fleet changes, etc) Avoid Alternative fuels Operational changes Capture / Sequester Increase/manage greenspace Methane capture Agricultural practices Geologic (future)

9 Municipal Initiatives and Resources: US Conference of Mayors Climate Protection Agreement 2005 Includes 884 cities nationwide, 17 in Wisconsin Urges federal and state governments to enact climate protection laws, including cap-and-trade Commits to inventory GHGs, promote efficiency, educate citizens Best Practices Guide provides case-histories

10 U.S. Conference of Mayors Agreement: Wisconsin Signatories Ashland Bayfield Greenfield Kenosha La Crosse Madison Milwaukee New Berlin Oshkosh Racine River Falls Stevens Point Superior Washburn Waukesha Wauwatosa West Allis

11 Municipal Initiatives and Resources: ICLEI Started in International Council on Local Environmental Initiatives Now called ICLEI Local Governments for Sustainability ( Provides GHG inventory software, planning tools, training

12 Cap and Trade

13 Why Cap and Trade? If you accept need for reduction, the question becomes one of efficiency Options: regulation cap and trade carbon tax Free market approach has political appeal Cap and Trade has previous successes

14 Fundamentals of Cap and Trade Uses the invisible hand of the market to achieve societal goals most efficiently Government establishes target reduction, applies a schedule for ratcheting to level Polluters buy and sell emissions allowances to achieve reductions most efficiently

15 Example: Regulation vs. Cap and Trade Plant A Emits 600 tons/yr Cost to reduce = $50/ton Plant B Emits 400 tons/yr Cost to reduce = $25/ton Starting Total Emissions = 1000 tons/yr Goal is to Reduce Emissions by 30% to 700 tons/yr

16 Example: Regulation vs. Cap and Trade Source: Union of Concerned Scientists

17 Cap and Trade vs. Carbon Tax No question: Cap-and-trade increases cost to the public has effect of a tax Another alternative is straight Carbon Tax Many economists tout as simplest, most efficient A version of carbon tax is a price floor Often dismissed as politically infeasible

18 Acid Rain: Cap and Trade Success Story

19 Acid Rain Success Story: Summary Sulfur Dioxide (SO 2 ) is source of acid rain SO 2 trading proposed in 1990 Clean Air Act Reduced SO 2 emissions to a level 22% below the mandated goal at fraction of projected cost Note that SO 2 market is simple involves one industry

20 Cap and Trade: Other Applications Phosphorus (eutrophication reduction) Attempts to trade among POTWs within a watershed Unsuccessful attempt for Rock River in Wisconsin Mercury emissions Proposed several years ago Rejected as poor application

21 Existing/Emerging GHG Cap and Trade Systems EU, Australia driven by Kyoto Current US Voluntary Markets Chicago Climate Exchange California Climate Action Registry NYMEX (new) U.S. Regional Accords include C&T Proposed U.S. National Legislation Lieberman-Warner Bill came close Dingell-Boucher Discussion Draft Introduced

22 Regional Cap and Trade Systems Source: pewclimate.org

23 The Nuts and Bolts of Cap and Trade: Terminology & Issues What Sectors Are Covered? Allowances and Offsets Auctioned vs. Allocated Allowances Percent of Portfolio Allowable as Offsets Foreign vs. Domestic Offsets (Kyoto CDM experience) Types of Offsets Reduction Avoidance Sequestration Early Credits? Accounting and Reporting Protocol WRI Climate Registry ICLEI

24 Cap and Trade The Pitfalls

25 Pitfalls Measurement/Standards Inconsistencies Applying the Principle of Additionality Would the project have happened anyway? Types of Additionality Environmental/Technological (is it real?) Financial (does status as offset tilt balance?) Regulatory (are you already required to do it?) Government Inconsistencies Markets can bubble and crash

26 Will it Happen and When? Businesses and policy experts are preparing, assuming national cap and trade Mandatory caps several years in future Will start modestly (limited sectors) and expand Offsets likely to focus domestically Everything is fluid election & financial market meltdown could affect approach to the issue

27 Implications / Opportunities for Public Works Reduction/Avoidance Offsets Fuel Sources (biofuels, LFG, POTWs) Transportation Projects (multi-modal facilities?) Methane from Landfills and POTWs Alternatives to Cement? Sequestration Offsets Preservation Eco-restoration Geological Storage? Governments and Additionality Can government entities play in this game? May be separate programs/incentives for gov ts Opportunities for NGO partnerships?

28 Reducing Greenhouse Gases What can you do now? The roadmap for any organization, starting today: Inventory GHG emissions Establish goals and metrics eg. - Reduce emissions xx % by 2020 Prepare and implement reduction plan Specific measures, eg. vehicle fleet changes, insulation, car pooling Measure, track and document success Look at all projects with an eye toward GHGs

29 Comments? Discussion?

30 "The challenge is either to build an economy that is sustainable or to stay with our unsustainable economy until it declines the choice will be made by our generation, but it will affect life on earth for all generations to come." Lester Brown, Worldwatch Institute

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32 Chicago Climate Exchange Categories of Trading Agricultural Methane and Combustion Agricultural Soil Carbon Sequestration Coal Mine Methane Energy Efficiency Forestry Landfill Methane Ozone Depleting Substance Destruction Renewable Energy

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