May 31, 2006
New York, NY [RenewableEnergyAccess.com] The Renewable Fuels Association (RFA) opened trading on the NASDAQ stock exchange this week on Wall Street, in recognition of the growing importance of the U.S. ethanol industry to our nation's energy and economic future. RFA President and CEO Bob Dinneen represented the U.S. ethanol industry during the opening bell ceremony.
"Ethanol's growing importance is being felt on Main Streets and more increasingly on Wall Street, and that is a good thing," said RFA President Bob Dinneen. "While farmers have been and will continue to be the foundation of this industry, teachers, truck drivers, police officers and all Americans should have the opportunity to invest in our nation's energy future."
Currently, the U.S. ethanol industry has 101 biorefineries in production with an annual capacity of more than 4.7 billion gallons. An additional 32 biorefineries are currently being built and 8 are expanding, with a capacity of more than 2 billion gallons.
Last year, a nearly 4 billion gallon U.S. ethanol industry created 153,000 new jobs, added more than $32 billion to gross domestic product and put more than $5 billion in additional income in the pockets of American households. This year, the industry will produce some 5 billion gallons of ethanol, resulting in even greater economic benefits.
"There is no question that America's ethanol industry is expanding to meet growing consumer demand, and the country is better off for it," said Dinneen. "Not only does domestic ethanol production create jobs and raise incomes in this country, it reduces our trade deficit by eliminating the need to import millions of dollars of oil from overseas. Ethanol's unique ability to help ensure our energy security, improve our environment, and stimulate our economy makes it a win-win for all Americans."
Wednesday, May 31, 2006
The Greener Guys
By JAD MOUAWAD
Published: May 30, 2006
When Timberland, the outdoor clothing company, studied ways to reduce its carbon emissions four years ago, it weighed several options: building a wind farm in the Dominican Republic, buying power generated by renewable resources and setting up a vast bank of solar panels at one of its distribution centers in Ontario, Calif.
It chose to do all those things, but that was the easy part. When Jeffrey B. Swartz, Timberland's president and chief executive, considered how much carbon dioxide was produced in making leather for the company's famous boots, the answer came as a surprise.
"As it turns out, the vast majority of the greenhouse gases associated with manufacturing leather comes from cows in the field," Mr. Swartz said. "Yes, methane."
While Timberland figures out how to reduce these emissions — it is examining ways to change the feed for cows — the company has already cut its greenhouse gases by 17 percent from their 2002 level and aims to become carbon-neutral by 2010 by offsetting its emissions through renewable or alternative energy sources.
Americans are increasingly recognizing that the effects of carbon emissions on global warming are a serious problem, but there are no rules in the United States regulating heat-trapping gases comparable to those that most other developed countries have adopted under the Kyoto Protocol. Some United States businesses, though, are responding for a variety of reasons anyway: to satisfy customers or shareholders who worry about the environment, to improve their public image or to drive down their energy costs. In addition, some states and local authorities have stepped in to try to curb their contributions to global warming.
For Timberland, while it shares the concerns over global warming, it's mostly a matter of dollars and cents. As Mr. Swartz put it: "What idiot will leave costs on the table? I hope it's our competitors. I get paid to create value."
But reducing carbon emissions is no easy task.
Scientists, economists, environmentalists and a growing rank of business leaders warn that corporate America needs to move more quickly or it will face the consequences: higher energy prices, a potential cost for carbon pollution and, eventually, products that will have trouble competing globally because other countries are reducing emissions.
The United States is responsible for a quarter of all the carbon dioxide sent into the atmosphere each year. It has not ratified the Kyoto Protocol, the treaty on climate change that went into effect last year for more than three dozen countries in Europe and elsewhere, that set targets and timetables for cutting emissions.
If consumption of fossil fuels continues at today's pace, the Energy Department predicts that carbon emissions in the United States could rise to more than eight billion tons by 2030 — 38 percent above current levels — as energy use keeps growing.
"This is a huge challenge for American businesses, particularly those trying to compete internationally," said Adam Markham, executive director of Clean Air-Cool Planet, an advocacy group in Portsmouth, N.H. "Most of the rest of the developing world has a legislative mandate to curb emissions, but in the United States, in many cases, there is no real reason for companies to act."
Many analysts predict that the United States will eventually set rules limiting greenhouse emissions. Then, carbon pollution will turn into a cost of doing business.
In Europe, for example, companies that go over their emission limits must buy carbon credits to comply. Under the continent-wide trading system, the cost of a carbon credit reached a high of 30.5 euros for each metric ton, or about $39, last month. (In the last month, prices have dropped by half as many power plants reported much lower emissions than expected.)
But only 86 companies in the United States, accounting for 8 percent of domestic carbon emissions, have enrolled in Climate Leaders, the Environmental Protection Agency's voluntary program to cut emissions. Emissions in the United States have risen 16 percent since 1990, the agency said.
"There is certainly a lot of inertia in the economy, and many companies have their heads in the sand, wishing and hoping that somehow the overwhelming consensus among scientists is going to go away," said Alan Nogee, director of the clean energy program at the Union of Concerned Scientists, based in Cambridge, Mass. But it's not. And ultimately their shareholders and customers are likely to pay a price. The reality is that carbon regulation is coming inevitably to the United States, as it has to the rest of the world."
Freezing emissions at today's levels will not solve global warming. Experts say that large reductions in global emissions — 50 percent or more by 2050 — are needed to stop carbon concentrations from rising. But reaching that goal requires a major transformation of how economies and businesses operate.
"It's going to change everything we do," said Joseph J. Romm, an analyst at the Center for Energy and Climate Solutions, a group that helps businesses lower emissions.
Environmental regulations and energy saving are not new. Since the 1970's and 1980's, when energy saving policies became popular in reaction to high fuel prices, the global economy has made huge strides in efficiency.
But economic activity has grown at the same time, and carbon emissions along with it.
"There is a lot that companies can do, especially in the area of energy efficiency," said Ashok Gupta, an economist at the Natural Resources Defense Council, an environmental group in New York.
Not surprisingly, the biggest strides have been achieved by corporations with operations outside the United States. I.B.M. and DuPont, for example, have long had programs to curb their energy use. In doing so, they have managed to cut manufacturing costs while decreasing their emissions.
At DuPont, the savings from energy projects has totaled $2 billion over the last decade and a half. I.B.M. saved $115 million since 1998 by avoiding 1.3 million tons of carbon emissions, or the equivalent of taking 51,600 cars off the road, according to the climate change program at the World Wildlife Fund.
Other companies, like 3M, Advanced Micro Devices and the Gap, have pledged voluntary reductions in their emissions. Wal-Mart, the world's biggest retailer, announced a sweeping set of environmental goals last October, including doubling its truck fleet's efficiency and improving energy efficiency at its stores.
Johnson & Johnson decided in the late 1990's to meet the Kyoto requirements globally. From 1990 to 2005, the company reduced carbon emissions by 11.5 percent. Meanwhile, sales grew by 350 percent.
"We have not sacrificed business growth to meet our carbon emissions," said Dennis Canavan, the executive director for worldwide energy management at Johnson & Johnson. "As Kyoto has recognized, the environment only sees the absolute amount of carbon you reduce. Allowing emissions to grow will take us to a bad place."
But some business areas remain averse to change. The transportation sector and utilities account for more than 55 percent of all emissions; they are mainly reluctant to commit to reductions without a federal mandate.
Last month, the Senate Committee on Energy and Natural Resources held hearings on climate change that led to a few surprises. Some utilities, breaking with their trade group, asked Congress to set mandatory limits on carbon emissions.
Exelon and Duke Energy, the nation's largest utility owners, said they favored a mandatory cap on emissions. As big users of nuclear power, they stand to benefit more than competitors that burn coal. But they also note that firm rules would level the playing field for everyone.
"Customers and shareholders need greater certainty," Ruth G. Shaw, a senior executive at Duke Energy, told the Senate committee. But Senator Pete V. Domenici, Republican of New Mexico, said it would be impossible to adopt any law this year because of election-year gridlock.
David G. Hawkins, who ran the air pollution program at the Environmental Protection Agency in the Carter administration, said that many utilities were not happy with the current lack of policy.
"At a minimum, the absence of a controlled program creates uncertainty," said Mr. Hawkins, now the director of the Climate Center at the Natural Resources Defense Council.
Local and regional governments have stepped in to fill the gap. California and nine Northeastern states have drawn up plans to limit carbon emissions, and so have many cities.
Automakers have also resisted changing. David Friedman, an auto specialist with the Union of Concerned Scientists, said the average fuel economy of vehicles in the United States today — about 25 miles a gallon — had dropped by about one mile a gallon in the last 20 years. Most of the improvements in engine efficiency, however, have been lost because Detroit carmakers built larger cars and trucks.
"The automobile industry always feels it is difficult to make changes, whether on safety regulation, on seat belts, on emission standards, on smog and on global warming," Mr. Friedman said. "They always had to be forced to make progress."
Bill McKibben, a resident scholar at Middlebury College in Vermont and the author of "The End of Nature," a book about global warming, said there was no single answer.
"What people don't get is the scale of what needs to be done," he said. "Anybody whose solution includes the phrase 'in 20 years,' hasn't quite caught on to where we are."
Published: May 30, 2006
When Timberland, the outdoor clothing company, studied ways to reduce its carbon emissions four years ago, it weighed several options: building a wind farm in the Dominican Republic, buying power generated by renewable resources and setting up a vast bank of solar panels at one of its distribution centers in Ontario, Calif.
It chose to do all those things, but that was the easy part. When Jeffrey B. Swartz, Timberland's president and chief executive, considered how much carbon dioxide was produced in making leather for the company's famous boots, the answer came as a surprise.
"As it turns out, the vast majority of the greenhouse gases associated with manufacturing leather comes from cows in the field," Mr. Swartz said. "Yes, methane."
While Timberland figures out how to reduce these emissions — it is examining ways to change the feed for cows — the company has already cut its greenhouse gases by 17 percent from their 2002 level and aims to become carbon-neutral by 2010 by offsetting its emissions through renewable or alternative energy sources.
Americans are increasingly recognizing that the effects of carbon emissions on global warming are a serious problem, but there are no rules in the United States regulating heat-trapping gases comparable to those that most other developed countries have adopted under the Kyoto Protocol. Some United States businesses, though, are responding for a variety of reasons anyway: to satisfy customers or shareholders who worry about the environment, to improve their public image or to drive down their energy costs. In addition, some states and local authorities have stepped in to try to curb their contributions to global warming.
For Timberland, while it shares the concerns over global warming, it's mostly a matter of dollars and cents. As Mr. Swartz put it: "What idiot will leave costs on the table? I hope it's our competitors. I get paid to create value."
But reducing carbon emissions is no easy task.
Scientists, economists, environmentalists and a growing rank of business leaders warn that corporate America needs to move more quickly or it will face the consequences: higher energy prices, a potential cost for carbon pollution and, eventually, products that will have trouble competing globally because other countries are reducing emissions.
The United States is responsible for a quarter of all the carbon dioxide sent into the atmosphere each year. It has not ratified the Kyoto Protocol, the treaty on climate change that went into effect last year for more than three dozen countries in Europe and elsewhere, that set targets and timetables for cutting emissions.
If consumption of fossil fuels continues at today's pace, the Energy Department predicts that carbon emissions in the United States could rise to more than eight billion tons by 2030 — 38 percent above current levels — as energy use keeps growing.
"This is a huge challenge for American businesses, particularly those trying to compete internationally," said Adam Markham, executive director of Clean Air-Cool Planet, an advocacy group in Portsmouth, N.H. "Most of the rest of the developing world has a legislative mandate to curb emissions, but in the United States, in many cases, there is no real reason for companies to act."
Many analysts predict that the United States will eventually set rules limiting greenhouse emissions. Then, carbon pollution will turn into a cost of doing business.
In Europe, for example, companies that go over their emission limits must buy carbon credits to comply. Under the continent-wide trading system, the cost of a carbon credit reached a high of 30.5 euros for each metric ton, or about $39, last month. (In the last month, prices have dropped by half as many power plants reported much lower emissions than expected.)
But only 86 companies in the United States, accounting for 8 percent of domestic carbon emissions, have enrolled in Climate Leaders, the Environmental Protection Agency's voluntary program to cut emissions. Emissions in the United States have risen 16 percent since 1990, the agency said.
"There is certainly a lot of inertia in the economy, and many companies have their heads in the sand, wishing and hoping that somehow the overwhelming consensus among scientists is going to go away," said Alan Nogee, director of the clean energy program at the Union of Concerned Scientists, based in Cambridge, Mass. But it's not. And ultimately their shareholders and customers are likely to pay a price. The reality is that carbon regulation is coming inevitably to the United States, as it has to the rest of the world."
Freezing emissions at today's levels will not solve global warming. Experts say that large reductions in global emissions — 50 percent or more by 2050 — are needed to stop carbon concentrations from rising. But reaching that goal requires a major transformation of how economies and businesses operate.
"It's going to change everything we do," said Joseph J. Romm, an analyst at the Center for Energy and Climate Solutions, a group that helps businesses lower emissions.
Environmental regulations and energy saving are not new. Since the 1970's and 1980's, when energy saving policies became popular in reaction to high fuel prices, the global economy has made huge strides in efficiency.
But economic activity has grown at the same time, and carbon emissions along with it.
"There is a lot that companies can do, especially in the area of energy efficiency," said Ashok Gupta, an economist at the Natural Resources Defense Council, an environmental group in New York.
Not surprisingly, the biggest strides have been achieved by corporations with operations outside the United States. I.B.M. and DuPont, for example, have long had programs to curb their energy use. In doing so, they have managed to cut manufacturing costs while decreasing their emissions.
At DuPont, the savings from energy projects has totaled $2 billion over the last decade and a half. I.B.M. saved $115 million since 1998 by avoiding 1.3 million tons of carbon emissions, or the equivalent of taking 51,600 cars off the road, according to the climate change program at the World Wildlife Fund.
Other companies, like 3M, Advanced Micro Devices and the Gap, have pledged voluntary reductions in their emissions. Wal-Mart, the world's biggest retailer, announced a sweeping set of environmental goals last October, including doubling its truck fleet's efficiency and improving energy efficiency at its stores.
Johnson & Johnson decided in the late 1990's to meet the Kyoto requirements globally. From 1990 to 2005, the company reduced carbon emissions by 11.5 percent. Meanwhile, sales grew by 350 percent.
"We have not sacrificed business growth to meet our carbon emissions," said Dennis Canavan, the executive director for worldwide energy management at Johnson & Johnson. "As Kyoto has recognized, the environment only sees the absolute amount of carbon you reduce. Allowing emissions to grow will take us to a bad place."
But some business areas remain averse to change. The transportation sector and utilities account for more than 55 percent of all emissions; they are mainly reluctant to commit to reductions without a federal mandate.
Last month, the Senate Committee on Energy and Natural Resources held hearings on climate change that led to a few surprises. Some utilities, breaking with their trade group, asked Congress to set mandatory limits on carbon emissions.
Exelon and Duke Energy, the nation's largest utility owners, said they favored a mandatory cap on emissions. As big users of nuclear power, they stand to benefit more than competitors that burn coal. But they also note that firm rules would level the playing field for everyone.
"Customers and shareholders need greater certainty," Ruth G. Shaw, a senior executive at Duke Energy, told the Senate committee. But Senator Pete V. Domenici, Republican of New Mexico, said it would be impossible to adopt any law this year because of election-year gridlock.
David G. Hawkins, who ran the air pollution program at the Environmental Protection Agency in the Carter administration, said that many utilities were not happy with the current lack of policy.
"At a minimum, the absence of a controlled program creates uncertainty," said Mr. Hawkins, now the director of the Climate Center at the Natural Resources Defense Council.
Local and regional governments have stepped in to fill the gap. California and nine Northeastern states have drawn up plans to limit carbon emissions, and so have many cities.
Automakers have also resisted changing. David Friedman, an auto specialist with the Union of Concerned Scientists, said the average fuel economy of vehicles in the United States today — about 25 miles a gallon — had dropped by about one mile a gallon in the last 20 years. Most of the improvements in engine efficiency, however, have been lost because Detroit carmakers built larger cars and trucks.
"The automobile industry always feels it is difficult to make changes, whether on safety regulation, on seat belts, on emission standards, on smog and on global warming," Mr. Friedman said. "They always had to be forced to make progress."
Bill McKibben, a resident scholar at Middlebury College in Vermont and the author of "The End of Nature," a book about global warming, said there was no single answer.
"What people don't get is the scale of what needs to be done," he said. "Anybody whose solution includes the phrase 'in 20 years,' hasn't quite caught on to where we are."
MU Professor Refutes National Television Ads Downplaying Global Warming
Christian Basi
University of Missouri-Columbia
May 19, 2006
COLUMBIA, Mo. - Recently, the Competitive Enterprise Institute (CEI), a non-profit public policy organization based in Washington, D.C. and partially funded by large oil companies, announced a national television campaign claiming that global warming is not causing ice sheets to shrink. Curt Davis, director of the Center for Geospatial Intelligence at the University of Missouri-Columbia, says CEI is misrepresenting his previous research to back their claims.
"These television ads are a deliberate effort to confuse and mislead the public about the global warming debate," Davis said. "They are selectively using only parts of my previous research to support their claims. They are not telling the entire story to the public."
"The text of the CEI ad misrepresents the conclusions of the two cited Science papers and our current state of knowledge by selective referencing,"said Dr. Brooks Hanson, deputy editor, physical sciences, Science.
Prior to Davis' 2005 Science study, the U.N. Intergovernmental Panel on Climate Change said that if global warming were occurring, increased precipitation in Antarctica's interior would likely result. In his study, Davis reported growth in interior East Antarctica. He said this growth was probably caused by an increase in precipitation.
Davis said that three points in his study unequivocally demonstrate the misleading aspect of the CEI ads.
- His study only reported growth for the East Antarctic ice sheet, not the entire Antarctic ice sheet.
- Growth of the ice sheet was only noted on the interior of the ice sheet and did not include coastal areas. Coastal areas are known to be losing mass, and these losses could offset or even outweigh the gains in the interior areas.
- The fact that the interior ice sheet is growing is a predicted consequence of global climate warming.
"It has been predicted that global warming might increase the growth of the interior ice sheet due to increased precipitation," Davis said. "All three of these points were noted in our study and ignored by CEI in a deliberate effort to confuse and mislead the public."
University of Missouri-Columbia
May 19, 2006
COLUMBIA, Mo. - Recently, the Competitive Enterprise Institute (CEI), a non-profit public policy organization based in Washington, D.C. and partially funded by large oil companies, announced a national television campaign claiming that global warming is not causing ice sheets to shrink. Curt Davis, director of the Center for Geospatial Intelligence at the University of Missouri-Columbia, says CEI is misrepresenting his previous research to back their claims.
"These television ads are a deliberate effort to confuse and mislead the public about the global warming debate," Davis said. "They are selectively using only parts of my previous research to support their claims. They are not telling the entire story to the public."
"The text of the CEI ad misrepresents the conclusions of the two cited Science papers and our current state of knowledge by selective referencing,"said Dr. Brooks Hanson, deputy editor, physical sciences, Science.
Prior to Davis' 2005 Science study, the U.N. Intergovernmental Panel on Climate Change said that if global warming were occurring, increased precipitation in Antarctica's interior would likely result. In his study, Davis reported growth in interior East Antarctica. He said this growth was probably caused by an increase in precipitation.
Davis said that three points in his study unequivocally demonstrate the misleading aspect of the CEI ads.
- His study only reported growth for the East Antarctic ice sheet, not the entire Antarctic ice sheet.
- Growth of the ice sheet was only noted on the interior of the ice sheet and did not include coastal areas. Coastal areas are known to be losing mass, and these losses could offset or even outweigh the gains in the interior areas.
- The fact that the interior ice sheet is growing is a predicted consequence of global climate warming.
"It has been predicted that global warming might increase the growth of the interior ice sheet due to increased precipitation," Davis said. "All three of these points were noted in our study and ignored by CEI in a deliberate effort to confuse and mislead the public."
Pollution Market Collapses -- But Without Triggering Concern Among Experts
May 30, 2006 — By Arthur Max, Associated Press
BONN, Germany — A new commodity burst onto trading markets a year ago, heralded as a key ingredient in the effort to curtail climate-changing greenhouse gases. That item was carbon permits -- the right to pollute -- and it soared from zero to a US$10 billion business.
Then the market crashed.
Carbon prices lost 70 percent of their value in a few days late last month. If it had happened to gold, copper or sugar futures, it might have triggered a world panic.
But no one -- neither the traders nor the people who invented the trading system -- seemed overly concerned. If anything, they were pleased.
"It is evidence that the market forces are working," said Edwin Aalders, of the International Emissions Trading Association, which speaks for more than 100 European companies.
"This is a blessing in disguise," said Stephen Singer, of the Worldwide Fund for Nature, or WWF. It showed that the market is a "sound, economic and effective way to deal with environmental problems."
The collapse came when it was discovered that the European Commission had miscalculated the amount of carbon permits that industry would use or trade. Supply outstripped demand, and when year-end figures of emissions allowances released this month showed a leftover surplus, prices went into free-fall.
By coincidence, the crash happened days before the United Nations convened a session in Bonn of the Framework Convention on Climate Change, where carbon trading was created and enshrined in the landmark Kyoto Protocol that came into force in February 2005.
But it barely caused a stir among the delegates of 189 countries attending, said Janos Pasztor, of the U.N.'s Climate Change Secretariat.
"There's nothing wrong with the system, but obviously there's still some work to do in the EU countries," he said on the sidelines of the conference.
The convention ended Friday with an agreement to continue the Kyoto model for reducing greenhouse gases after the protocol expires in 2012.
The Kyoto Protocol is an agreement among 36 industrial countries to reduce emissions of carbon dioxide and five other gases that scientists say trap the earth's heat. Many climatologists believe global warming may already be responsible for the growing frequency of hurricanes and floods, and for a variety of natural events like melting glaciers and the bleaching of the oceans' corals.
The Kyoto accord, which the United States rejected, set mandatory targets to cut emissions, with an overall goal of pumping 5 percent less carbon into the atmosphere by 2012 than in 1990. The European Union accepted an 8 percent cut.
In Europe, 10,500 factories were told how many tons of carbon dioxide they could emit, setting limits that -- ideally -- would require them to install new technology or use energy more efficiently.
Since not all industries could adapt quickly, those that couldn't meet their target were allowed to buy permits from those that cut emissions more than required and had a surplus to sell.
A freewheeling market developed, with trading exchanges to facilitate deals among industries with too many or too few units. Companies factored the permits into planning their energy costs.
The system appeared to collapse as the European Commission's first-year figures showed it had allocated too many credits -- 44.1 million metric tons went unused of the allocated 1.83 billion tons, or about 2.4 percent.
"The verified emissions were much lower than expected, and therefore there was this reaction," said Artur Runge-Metzger, chief of the commission's climate unit.
Peter Koster, a trader on the Amsterdam-based European Climate Exchange, said the price of a metric ton of CO2 emissions fell from euro30 (US$38.40) on April 24 to about euro10 (US$12.80) three days later, and hit a low of euro9.30 (US$11.90) on May 12. "There was huge volume and huge volatility," he said.
Prices have since recovered to euro19.10 (US$24.40).
The commission says it not entirely to blame.
As a startup project, the allocations were largely guesswork. The amount of actual emissions also were affected by favorable variables -- a mild winter, good rains in the north that boosted hydroelectricity and the rise in oil prices that were an incentive to save fuel, said Runge-Metzger.
Singer, the environmentalist from WWF, faulted the overallocation of units on the companies, which inflated emissions estimates. The allocations in each country were parceled out by its government, which came under heavy lobbying from the industries to set high ceilings.
"Governments were cheated by the industries. They were given the wrong numbers," Singer said in an interview.
But 2005 is being seen as a pilot phase, and there's time to make corrections, he said. The allocations will be more firmly based on experience when they are apportioned for the crucial period of 2008 to 2012.
The question remains whether the system is helping industry reduce greenhouse gas emissions, or whether companies are just shuffling around money and carbon permits.
Germany claims to have cut emissions by 4 percent, and some progress was made in the Netherlands, Britain, Sweden and France.
"It would be unfair to say nothing has happened," said Singer. But the gains "are dwarfed by the overall business-as-usual emissions" in most of Europe.
BONN, Germany — A new commodity burst onto trading markets a year ago, heralded as a key ingredient in the effort to curtail climate-changing greenhouse gases. That item was carbon permits -- the right to pollute -- and it soared from zero to a US$10 billion business.
Then the market crashed.
Carbon prices lost 70 percent of their value in a few days late last month. If it had happened to gold, copper or sugar futures, it might have triggered a world panic.
But no one -- neither the traders nor the people who invented the trading system -- seemed overly concerned. If anything, they were pleased.
"It is evidence that the market forces are working," said Edwin Aalders, of the International Emissions Trading Association, which speaks for more than 100 European companies.
"This is a blessing in disguise," said Stephen Singer, of the Worldwide Fund for Nature, or WWF. It showed that the market is a "sound, economic and effective way to deal with environmental problems."
The collapse came when it was discovered that the European Commission had miscalculated the amount of carbon permits that industry would use or trade. Supply outstripped demand, and when year-end figures of emissions allowances released this month showed a leftover surplus, prices went into free-fall.
By coincidence, the crash happened days before the United Nations convened a session in Bonn of the Framework Convention on Climate Change, where carbon trading was created and enshrined in the landmark Kyoto Protocol that came into force in February 2005.
But it barely caused a stir among the delegates of 189 countries attending, said Janos Pasztor, of the U.N.'s Climate Change Secretariat.
"There's nothing wrong with the system, but obviously there's still some work to do in the EU countries," he said on the sidelines of the conference.
The convention ended Friday with an agreement to continue the Kyoto model for reducing greenhouse gases after the protocol expires in 2012.
The Kyoto Protocol is an agreement among 36 industrial countries to reduce emissions of carbon dioxide and five other gases that scientists say trap the earth's heat. Many climatologists believe global warming may already be responsible for the growing frequency of hurricanes and floods, and for a variety of natural events like melting glaciers and the bleaching of the oceans' corals.
The Kyoto accord, which the United States rejected, set mandatory targets to cut emissions, with an overall goal of pumping 5 percent less carbon into the atmosphere by 2012 than in 1990. The European Union accepted an 8 percent cut.
In Europe, 10,500 factories were told how many tons of carbon dioxide they could emit, setting limits that -- ideally -- would require them to install new technology or use energy more efficiently.
Since not all industries could adapt quickly, those that couldn't meet their target were allowed to buy permits from those that cut emissions more than required and had a surplus to sell.
A freewheeling market developed, with trading exchanges to facilitate deals among industries with too many or too few units. Companies factored the permits into planning their energy costs.
The system appeared to collapse as the European Commission's first-year figures showed it had allocated too many credits -- 44.1 million metric tons went unused of the allocated 1.83 billion tons, or about 2.4 percent.
"The verified emissions were much lower than expected, and therefore there was this reaction," said Artur Runge-Metzger, chief of the commission's climate unit.
Peter Koster, a trader on the Amsterdam-based European Climate Exchange, said the price of a metric ton of CO2 emissions fell from euro30 (US$38.40) on April 24 to about euro10 (US$12.80) three days later, and hit a low of euro9.30 (US$11.90) on May 12. "There was huge volume and huge volatility," he said.
Prices have since recovered to euro19.10 (US$24.40).
The commission says it not entirely to blame.
As a startup project, the allocations were largely guesswork. The amount of actual emissions also were affected by favorable variables -- a mild winter, good rains in the north that boosted hydroelectricity and the rise in oil prices that were an incentive to save fuel, said Runge-Metzger.
Singer, the environmentalist from WWF, faulted the overallocation of units on the companies, which inflated emissions estimates. The allocations in each country were parceled out by its government, which came under heavy lobbying from the industries to set high ceilings.
"Governments were cheated by the industries. They were given the wrong numbers," Singer said in an interview.
But 2005 is being seen as a pilot phase, and there's time to make corrections, he said. The allocations will be more firmly based on experience when they are apportioned for the crucial period of 2008 to 2012.
The question remains whether the system is helping industry reduce greenhouse gas emissions, or whether companies are just shuffling around money and carbon permits.
Germany claims to have cut emissions by 4 percent, and some progress was made in the Netherlands, Britain, Sweden and France.
"It would be unfair to say nothing has happened," said Singer. But the gains "are dwarfed by the overall business-as-usual emissions" in most of Europe.
New Study Finds Vast Potential for Cutting Energy Waste in China, India, Brazil
BRUSSELS, Belgium, May 31, 2006 - With world energy prices and climate-altering greenhouse gas emissions ballooning in tandem with a surge in energy demand from the hot economies of China, India and Brazil, the world has a major stake in the success of energy reduction efforts, particularly in those three countries, warn experts concluding a four-year international project.
Without significant gains from energy efficiency efforts, China, India and Brazil within a single human generation (by 2030) will more than double their energy use and greenhouse gas emissions, resulting in major impacts on global energy markets and climate. However, experts estimate that cost-effective retrofits could reduce those countries' energy use today by at least 25% and advanced technologies could reduce their energy use growth projected through 2030 by at least 10% (and reduce projected CO2 emission growth by 16%).
Unlocking today's potential savings requires simple, highly cost-effective renovation projects to identify and eliminate energy waste. The keys are fostering corporate awareness, supporting catalyst energy efficiency practitioners and enlightening commercial banks to ease access to local financing for such projects.
"Improving energy efficiency for existing buildings and other infrastructure could cut current energy consumption by 25% or more in India, China and Brazil, amounting to millions of metric tons in reduced greenhouse gas emissions and hundreds of millions of dollars in energy savings," says Robert Taylor, a World Bank Lead Energy Specialist and leader of the 3 Country Energy Efficiency Project (3CEE).
Conclusions from the project were captured at a conference in Paris May 19-20 involving the project's public and private sector partners. An executive summary of those conclusions will be published online May 29.
Despite the huge potential, it has been difficult to achieve investments on the ground so far, the project summary concludes.
"Many energy efficiency projects quickly pay for themselves, with typical returns on investment of 20 40%," says Chandra Govindarajalu, a senior World Bank environmental specialist. "Despite the demonstrated benefits, though, companies often cite other, more immediate investment and borrowing priorities. Meanwhile, commercial banks in these countries are generally unfamiliar with financing projects designed to achieve cost savings, rather than develop new product lines or other tangible assets."
Other roadblocks within companies include:
* Lack of awareness/experience with newer efficient technologies;
* High transaction costs for smaller sized projects that inhibit implementation;
* High perceived risk by decision makers; and
* A lack of combined technical and financial skills at finance institutions, preventing accurate appraisal and structuring of potential efficiency projects.
Energy Saved: Cheapest, Easiest to Produce
"Cutting energy waste is the cheapest, easiest, fastest way to solve many energy problems, improve the environment and enhance both energy security and economic development," says Mr. Taylor. "What we must develop further are systems to tap huge potential energy savings through thousands of small projects scattered across China, India, Brazil, as well as smaller developing country economies,"
He says the reluctance of companies to undertake energy retrofits is akin to that of countless millions worldwide who fail to buy energy efficient light bulbs for homes, despite proof that they save enough in utility bills to more than pay for themselves.
"Even people who know the financial and environmental benefits of the bulbs may not buy and install them -- it seems like such a small thing, why take the trouble? But from a national or global point of view, the potential savings add up to the electricity and pollution produced by many large power plants.
"Imagine, however," Taylor says, "if I offered to install the efficient bulbs and guaranteed they would pay for themselves in six months or your money refunded. Perhaps then you might then buy a package.
"Rapidly developing countries such as China, India and Brazil need many people and consulting firms to do that same thing at the level of an industrial facility or apartment building, for example, to identify energy efficiencies across the board and exploit large-scale energy use reduction opportunities, and enlightened banks to finance them."
Such retrofits involve installing, for example, high efficiency lighting, air conditioners, boilers and waste heat recovery systems for commercial and public buildings, industrial plants and other facilities. Project costs (and profits) can be provided to energy service companies (ESCOs), which design and implement energy conservation projects, or participating banks, from a share of utility bill savings.
"Money is available in these countries but can't be accessed easily by energy conservation promoters and ESCOs. This is a big area for work in the future" says Mark Radka, head of the UNEP Energy Branch, based in Paris. "It takes time and effort for local businesses, banks, governments and aid organizations to develop energy conservation delivery systems which work and which can be supported by the financial community."
While energy efficiency projects need to be customized to local circumstances and business practices, the project makes a host of recommendations, including:
* Foster the growth of ESCOs;
* Promote energy efficiency investments by local utilities; and
* Develop special local bank lending arrangements to provide energy conservation financing.
Initiated in 2001, the 3CEE Project has worked creatively to promote energy efficiency projects in China, India, Brazil by easing typical investment requirements of financial institutions. The project is a joint initiative of the World Bank, the U.N. Environment Program's Denmark-based Risoe Center (URC), and partners in Brazil, China and India. The U.N. Foundation and the World Bank Energy Sector Management Assistance Program provided financial support, with complementary activities supported by the Asia Alternative Energy Program and the U.K. Department for International Development.
"People worldwide have a vital interest in the success of this initiative to harness the power of the private sector to minimize the energy required for these three countries to realize their economic goals," says Jyoti Painuly, senior energy planner at the UNEP Risoe Center on Energy, Climate and Sustainable Development.
Adds Juan Zak, a project team member at the UNEP RISOE Center: "Accelerated polar ice melting is the latest indication that severe climate change may be upon us. The current 380 parts per million of carbon dioxide in the atmosphere seem already too high. Roughly half of the global consumption of fossil fuels should be avoided if climate is to be stabilized. Using energy much more wisely is one of the very few feasible ways that, combined, would move the world towards this goal without economic disruption."
The importance of improving energy efficiency in China, India and Brazil (with a combined 2.6 billion people, or almost 40% of world population) is hard to overestimate.
China, India and Brazil, already rank among the world's top ten energy consumers with astonishing economic growth rates nearing 10 % per year; they are on track to becoming the world's major greenhouse gas emitters. Although today they emit just 10% as much greenhouse gas per capita as North America, their national emissions are rising far faster. China's emissions, for instance, are expected to double by 2020, in which case China will surpass the US as the leading source of climate-altering gases. By one estimate, the China power market will require an average 48 gigawatts of new capacity every year, equal to two-thirds of the U.K.'s total installed capacity.
Global GDP is projected to more than double by 2030, 80% of that growth accounted for by non-OECD countries, where current energy intensity of GDP (expressed as barrels of oil equivalent--BOE--per $1,000 of GDP) was approximately three times that of the OECD countries in 2005. Without gains in energy efficiency, such global GDP growth would raise daily global energy demand from 205 million BOE today to more than 500 million BOE by 2030.
Much of that energy in India and China will be supplied by coal. China is both the world's largest coal consumer and producer. While coal in China's overall energy mix is projected to decline from 66% in 2002 to 41% in 2030, its total CO2 emissions are still projected to increase from 3307 Mt to 7144 Mt.
India's installed capacity for power generation has tripled over the last 20 years and now exceeds 101,000 MW. However, the total demand is expected to increase by another 3.5 times in the next two decades, even under a best-case scenario that envisions intensified efforts to modernize power plants, improve transmission and distribution efficiency, and adopt more efficient generation technologies. The soaring power demand will necessitate tripling installed generation capacity from 101,000 to 292,000 MW over the next two decades, much of it derived from poor quality coal. Similar demand increases are forecast for all fuels, and CO2 emissions are projected to increase from 1016 Mt to 2254 Mt by 2030.
The 3CEE report notes that improvements in energy efficiency will bring China, India and other coal-dependent countries the important additional benefits of cleaner air, better health and other environmental improvements.
Brazil is the world's tenth largest energy consumer, yet its fossil fuel CO2 intensity per unit of energy consumed is low due to widespread use of renewable energy from hydro electricity, ethanol and other biomass. However, Brazil's overall energy intensity (measured as energy consumption per dollar of GDP) has been increasing. Fossil fuel intensity increased 18% between 1990 and 2004, while electricity increased by 29%. Brazil's economic growth has been much slower than India's or China's over the past decade and projections are also much lower, hence projected energy supply increases are less dramatic -- electricity consumption would increase 65% (244 trillion kw/h) by 2015, assuming annual GDP growth of 4%. The International Energy Agency projects an increase in Brazil CO2 emissions of 302 Mt to 665 Mt by 2030.
"Energy efficiency in these three countries is a win-win strategy. It is one of the cleanest, cheapest and fastest ways to reduce carbon emissions," says Timothy E. Wirth, president of the U.N. Foundation, which provided the project's core funding.
ESCOs Gain Traction in China
Three pilot ESCOs in China were given support and access to loans and grants from the World Bank and the Global Environment Facility in 1998. Their success inspired many more companies to copy the business model. In 2005 alone China's new ESCO industry put into place over 300 energy efficiency projects representing an investment of over $200 million, saving the energy equivalent of 2.46 million metric tons of standard coal and an annual decrease in CO2 emissions of nearly 7.0 million metric tons.
"We were told many times this would never work in China because the concept was too novel," says Taylor. "However, Chinese entrepreneurs have proved very nimble in adapting the concepts to the Chinese market to both make profits and save energy."
The World Bank and the Global Environment Facility set up a bank loan guarantee mechanism to help ESCOs (there are now 52 of them and an ESCO association in China) finance for these unique ventures. It also invested efforts in training ESCOs, educating potential clients, showing senior bank officials how to evaluate ESCOs; and working with state tax officials and auditors.
"We were creating a new way of doing things and it could have easily died if not for the strong support of the central Chinese government," says Taylor.
The 3 CEE project now has moved on to help China develop lending programs in a local banks for large-scale energy efficiency projects, to be financed in part by a $200 million World Bank loan.
China has called for a "conservation society" and its commitment to a further 20% improvement in energy intensity over 2005 levels by 2010 and the project initiatives fit well with that objective. The topic of energy efficiency is now granted special attention (along with "energy development") in all of China's energy-related planning. The project report highlights potential savings as well in the industrial, construction and transportation sectors.
"Our hope is that we can generate some successes in new energy efficiency delivery systems in these three countries, which can work by themselves to generate big energy savings over the coming decade," says Taylor.
Hopefully other countries will see that success and create a similar programs to meet their needs and apply it to other natural resource areas such as water where inefficiencies are equally high he says.
New Approaches for Energy Efficiency in Indian Banks
India's potential energy efficiency market is estimated at more than $3.1 billion, which would produce a savings of 54 terawatt hours per year. To help realize this impressive potential, the Indian Government established a Bureau of Energy Efficiency (BEE) under its Energy Conservation Act to institutionalize energy efficiency services, enable delivery mechanisms in the country and provide leadership to key players in the energy conservation movement. A variety of commercial interests are beginning to pick up the energy efficiency business, but more support and financial backing is required.
Introduced to the energy efficiency business through the 3CEE Project, five of India's largest banks --holding 35% of the country's total bank assets -- have developed new energy efficiency lending programs. Though small, the programs are growing and attracting increasing attention. Indian banks have targeted small and medium enterprises (SMEs), where energy waste is often particularly high, but knowledge about more efficient options and the financing to implement them is scarce.
"The Indian banks developed a particularly innovative 'cluster' approach for their energy efficiency lending businesses," says Jeremy Levin, a World Bank consultant and project team member. "A series of template-type loans are being developed quickly for batches of projects using the same types of technical innovations in targeted small industries."
The banks have slotted energy efficiency lending schemes into existing SME lending practices. Bank managers point out that the program helps improve cost competitiveness and profitability of SME clients, which can lead to further client growth and bank lending opportunities.
The 3CEE project organized several meetings between Indian, Chinese and Brazilian ESCOs, to exchange ideas, business strategies and ways to help each other. Benefiting from the experiences of ESCOs in China and Brazil, India's young ESCO companies are creating an association to increase awareness of their business and its potential.
"There is much work to be done before the ESCO concept is widely accepted and practiced in India," says Levin. "One promising idea to help drive the market in India is to develop ESCOs specialized in reducing energy waste in government buildings, including hospitals and schools."
Energy Efficiency in Brazil
Brazil's annual untapped energy savings potential is estimated at 2.25 billion and many projects would enjoy an average payback of less than 30 months.
Brazil's ESCO industry is the oldest among the three countries, with a vibrant national ESCO association (ABESCO).
It is also among the few developing countries to have established a "wire charge," which streams a small portion of power companies' revenues into energy conservation and other public energy benefits.
The utilities spend 0.25% of annual revenues on energy saving projects in customer facilities and general conservation education efforts. The wire charge fund provided about $250 million to efficiency initiatives between 1998 and 2004 and many utilities work with ESCOs to fulfill these requirements, helping the ESCO industry grow.
The 3 EEC project has worked with the energy efficiency and banking communities, to develop new ideas to ease and accelerate the financing of energy efficiency projects.
Via workshops, training and other initiatives, including an international roundtable on energy efficiency financing in Rio de Janeiro April 2, attracting scores of banking, energy efficiency and government experts, the 3CEE project helped clarify roadblocks to progress and potential solutions.
At the Paris meeting, the Brazilian Development Bank (BDNES) announced a new guarantee program to assist ESCOs and accept 80% of loan risks on accepted energy reduction projects.
"Mutual understanding of the requirements and opportunities of each agent in the market had been minimal prior to the 3CEE project," says Taylor. "The project put forward several proposals for Brazil, the most important of these being the proposed loan guarantee mechanism for EE initiatives and the Brazilian Development Bank has earned sincere congratulations for having accepted the challenge."
Without significant gains from energy efficiency efforts, China, India and Brazil within a single human generation (by 2030) will more than double their energy use and greenhouse gas emissions, resulting in major impacts on global energy markets and climate. However, experts estimate that cost-effective retrofits could reduce those countries' energy use today by at least 25% and advanced technologies could reduce their energy use growth projected through 2030 by at least 10% (and reduce projected CO2 emission growth by 16%).
Unlocking today's potential savings requires simple, highly cost-effective renovation projects to identify and eliminate energy waste. The keys are fostering corporate awareness, supporting catalyst energy efficiency practitioners and enlightening commercial banks to ease access to local financing for such projects.
"Improving energy efficiency for existing buildings and other infrastructure could cut current energy consumption by 25% or more in India, China and Brazil, amounting to millions of metric tons in reduced greenhouse gas emissions and hundreds of millions of dollars in energy savings," says Robert Taylor, a World Bank Lead Energy Specialist and leader of the 3 Country Energy Efficiency Project (3CEE).
Conclusions from the project were captured at a conference in Paris May 19-20 involving the project's public and private sector partners. An executive summary of those conclusions will be published online May 29.
Despite the huge potential, it has been difficult to achieve investments on the ground so far, the project summary concludes.
"Many energy efficiency projects quickly pay for themselves, with typical returns on investment of 20 40%," says Chandra Govindarajalu, a senior World Bank environmental specialist. "Despite the demonstrated benefits, though, companies often cite other, more immediate investment and borrowing priorities. Meanwhile, commercial banks in these countries are generally unfamiliar with financing projects designed to achieve cost savings, rather than develop new product lines or other tangible assets."
Other roadblocks within companies include:
* Lack of awareness/experience with newer efficient technologies;
* High transaction costs for smaller sized projects that inhibit implementation;
* High perceived risk by decision makers; and
* A lack of combined technical and financial skills at finance institutions, preventing accurate appraisal and structuring of potential efficiency projects.
Energy Saved: Cheapest, Easiest to Produce
"Cutting energy waste is the cheapest, easiest, fastest way to solve many energy problems, improve the environment and enhance both energy security and economic development," says Mr. Taylor. "What we must develop further are systems to tap huge potential energy savings through thousands of small projects scattered across China, India, Brazil, as well as smaller developing country economies,"
He says the reluctance of companies to undertake energy retrofits is akin to that of countless millions worldwide who fail to buy energy efficient light bulbs for homes, despite proof that they save enough in utility bills to more than pay for themselves.
"Even people who know the financial and environmental benefits of the bulbs may not buy and install them -- it seems like such a small thing, why take the trouble? But from a national or global point of view, the potential savings add up to the electricity and pollution produced by many large power plants.
"Imagine, however," Taylor says, "if I offered to install the efficient bulbs and guaranteed they would pay for themselves in six months or your money refunded. Perhaps then you might then buy a package.
"Rapidly developing countries such as China, India and Brazil need many people and consulting firms to do that same thing at the level of an industrial facility or apartment building, for example, to identify energy efficiencies across the board and exploit large-scale energy use reduction opportunities, and enlightened banks to finance them."
Such retrofits involve installing, for example, high efficiency lighting, air conditioners, boilers and waste heat recovery systems for commercial and public buildings, industrial plants and other facilities. Project costs (and profits) can be provided to energy service companies (ESCOs), which design and implement energy conservation projects, or participating banks, from a share of utility bill savings.
"Money is available in these countries but can't be accessed easily by energy conservation promoters and ESCOs. This is a big area for work in the future" says Mark Radka, head of the UNEP Energy Branch, based in Paris. "It takes time and effort for local businesses, banks, governments and aid organizations to develop energy conservation delivery systems which work and which can be supported by the financial community."
While energy efficiency projects need to be customized to local circumstances and business practices, the project makes a host of recommendations, including:
* Foster the growth of ESCOs;
* Promote energy efficiency investments by local utilities; and
* Develop special local bank lending arrangements to provide energy conservation financing.
Initiated in 2001, the 3CEE Project has worked creatively to promote energy efficiency projects in China, India, Brazil by easing typical investment requirements of financial institutions. The project is a joint initiative of the World Bank, the U.N. Environment Program's Denmark-based Risoe Center (URC), and partners in Brazil, China and India. The U.N. Foundation and the World Bank Energy Sector Management Assistance Program provided financial support, with complementary activities supported by the Asia Alternative Energy Program and the U.K. Department for International Development.
"People worldwide have a vital interest in the success of this initiative to harness the power of the private sector to minimize the energy required for these three countries to realize their economic goals," says Jyoti Painuly, senior energy planner at the UNEP Risoe Center on Energy, Climate and Sustainable Development.
Adds Juan Zak, a project team member at the UNEP RISOE Center: "Accelerated polar ice melting is the latest indication that severe climate change may be upon us. The current 380 parts per million of carbon dioxide in the atmosphere seem already too high. Roughly half of the global consumption of fossil fuels should be avoided if climate is to be stabilized. Using energy much more wisely is one of the very few feasible ways that, combined, would move the world towards this goal without economic disruption."
The importance of improving energy efficiency in China, India and Brazil (with a combined 2.6 billion people, or almost 40% of world population) is hard to overestimate.
China, India and Brazil, already rank among the world's top ten energy consumers with astonishing economic growth rates nearing 10 % per year; they are on track to becoming the world's major greenhouse gas emitters. Although today they emit just 10% as much greenhouse gas per capita as North America, their national emissions are rising far faster. China's emissions, for instance, are expected to double by 2020, in which case China will surpass the US as the leading source of climate-altering gases. By one estimate, the China power market will require an average 48 gigawatts of new capacity every year, equal to two-thirds of the U.K.'s total installed capacity.
Global GDP is projected to more than double by 2030, 80% of that growth accounted for by non-OECD countries, where current energy intensity of GDP (expressed as barrels of oil equivalent--BOE--per $1,000 of GDP) was approximately three times that of the OECD countries in 2005. Without gains in energy efficiency, such global GDP growth would raise daily global energy demand from 205 million BOE today to more than 500 million BOE by 2030.
Much of that energy in India and China will be supplied by coal. China is both the world's largest coal consumer and producer. While coal in China's overall energy mix is projected to decline from 66% in 2002 to 41% in 2030, its total CO2 emissions are still projected to increase from 3307 Mt to 7144 Mt.
India's installed capacity for power generation has tripled over the last 20 years and now exceeds 101,000 MW. However, the total demand is expected to increase by another 3.5 times in the next two decades, even under a best-case scenario that envisions intensified efforts to modernize power plants, improve transmission and distribution efficiency, and adopt more efficient generation technologies. The soaring power demand will necessitate tripling installed generation capacity from 101,000 to 292,000 MW over the next two decades, much of it derived from poor quality coal. Similar demand increases are forecast for all fuels, and CO2 emissions are projected to increase from 1016 Mt to 2254 Mt by 2030.
The 3CEE report notes that improvements in energy efficiency will bring China, India and other coal-dependent countries the important additional benefits of cleaner air, better health and other environmental improvements.
Brazil is the world's tenth largest energy consumer, yet its fossil fuel CO2 intensity per unit of energy consumed is low due to widespread use of renewable energy from hydro electricity, ethanol and other biomass. However, Brazil's overall energy intensity (measured as energy consumption per dollar of GDP) has been increasing. Fossil fuel intensity increased 18% between 1990 and 2004, while electricity increased by 29%. Brazil's economic growth has been much slower than India's or China's over the past decade and projections are also much lower, hence projected energy supply increases are less dramatic -- electricity consumption would increase 65% (244 trillion kw/h) by 2015, assuming annual GDP growth of 4%. The International Energy Agency projects an increase in Brazil CO2 emissions of 302 Mt to 665 Mt by 2030.
"Energy efficiency in these three countries is a win-win strategy. It is one of the cleanest, cheapest and fastest ways to reduce carbon emissions," says Timothy E. Wirth, president of the U.N. Foundation, which provided the project's core funding.
ESCOs Gain Traction in China
Three pilot ESCOs in China were given support and access to loans and grants from the World Bank and the Global Environment Facility in 1998. Their success inspired many more companies to copy the business model. In 2005 alone China's new ESCO industry put into place over 300 energy efficiency projects representing an investment of over $200 million, saving the energy equivalent of 2.46 million metric tons of standard coal and an annual decrease in CO2 emissions of nearly 7.0 million metric tons.
"We were told many times this would never work in China because the concept was too novel," says Taylor. "However, Chinese entrepreneurs have proved very nimble in adapting the concepts to the Chinese market to both make profits and save energy."
The World Bank and the Global Environment Facility set up a bank loan guarantee mechanism to help ESCOs (there are now 52 of them and an ESCO association in China) finance for these unique ventures. It also invested efforts in training ESCOs, educating potential clients, showing senior bank officials how to evaluate ESCOs; and working with state tax officials and auditors.
"We were creating a new way of doing things and it could have easily died if not for the strong support of the central Chinese government," says Taylor.
The 3 CEE project now has moved on to help China develop lending programs in a local banks for large-scale energy efficiency projects, to be financed in part by a $200 million World Bank loan.
China has called for a "conservation society" and its commitment to a further 20% improvement in energy intensity over 2005 levels by 2010 and the project initiatives fit well with that objective. The topic of energy efficiency is now granted special attention (along with "energy development") in all of China's energy-related planning. The project report highlights potential savings as well in the industrial, construction and transportation sectors.
"Our hope is that we can generate some successes in new energy efficiency delivery systems in these three countries, which can work by themselves to generate big energy savings over the coming decade," says Taylor.
Hopefully other countries will see that success and create a similar programs to meet their needs and apply it to other natural resource areas such as water where inefficiencies are equally high he says.
New Approaches for Energy Efficiency in Indian Banks
India's potential energy efficiency market is estimated at more than $3.1 billion, which would produce a savings of 54 terawatt hours per year. To help realize this impressive potential, the Indian Government established a Bureau of Energy Efficiency (BEE) under its Energy Conservation Act to institutionalize energy efficiency services, enable delivery mechanisms in the country and provide leadership to key players in the energy conservation movement. A variety of commercial interests are beginning to pick up the energy efficiency business, but more support and financial backing is required.
Introduced to the energy efficiency business through the 3CEE Project, five of India's largest banks --holding 35% of the country's total bank assets -- have developed new energy efficiency lending programs. Though small, the programs are growing and attracting increasing attention. Indian banks have targeted small and medium enterprises (SMEs), where energy waste is often particularly high, but knowledge about more efficient options and the financing to implement them is scarce.
"The Indian banks developed a particularly innovative 'cluster' approach for their energy efficiency lending businesses," says Jeremy Levin, a World Bank consultant and project team member. "A series of template-type loans are being developed quickly for batches of projects using the same types of technical innovations in targeted small industries."
The banks have slotted energy efficiency lending schemes into existing SME lending practices. Bank managers point out that the program helps improve cost competitiveness and profitability of SME clients, which can lead to further client growth and bank lending opportunities.
The 3CEE project organized several meetings between Indian, Chinese and Brazilian ESCOs, to exchange ideas, business strategies and ways to help each other. Benefiting from the experiences of ESCOs in China and Brazil, India's young ESCO companies are creating an association to increase awareness of their business and its potential.
"There is much work to be done before the ESCO concept is widely accepted and practiced in India," says Levin. "One promising idea to help drive the market in India is to develop ESCOs specialized in reducing energy waste in government buildings, including hospitals and schools."
Energy Efficiency in Brazil
Brazil's annual untapped energy savings potential is estimated at 2.25 billion and many projects would enjoy an average payback of less than 30 months.
Brazil's ESCO industry is the oldest among the three countries, with a vibrant national ESCO association (ABESCO).
It is also among the few developing countries to have established a "wire charge," which streams a small portion of power companies' revenues into energy conservation and other public energy benefits.
The utilities spend 0.25% of annual revenues on energy saving projects in customer facilities and general conservation education efforts. The wire charge fund provided about $250 million to efficiency initiatives between 1998 and 2004 and many utilities work with ESCOs to fulfill these requirements, helping the ESCO industry grow.
The 3 EEC project has worked with the energy efficiency and banking communities, to develop new ideas to ease and accelerate the financing of energy efficiency projects.
Via workshops, training and other initiatives, including an international roundtable on energy efficiency financing in Rio de Janeiro April 2, attracting scores of banking, energy efficiency and government experts, the 3CEE project helped clarify roadblocks to progress and potential solutions.
At the Paris meeting, the Brazilian Development Bank (BDNES) announced a new guarantee program to assist ESCOs and accept 80% of loan risks on accepted energy reduction projects.
"Mutual understanding of the requirements and opportunities of each agent in the market had been minimal prior to the 3CEE project," says Taylor. "The project put forward several proposals for Brazil, the most important of these being the proposed loan guarantee mechanism for EE initiatives and the Brazilian Development Bank has earned sincere congratulations for having accepted the challenge."
Anti-Idling and Pure Waste
I am always shocked and get quite agitated to see cars idling at gas stations and in front of stores. My internal anger was especially bad this morning as I counted over a dozen cars, mostly SUVs, idling outside one store and two gas stations I passed on my way into work. I know some people leave their cars running during the cold weather so their cabin stays toasty, but doing the same thing on a cloudy and otherwise moderately cool day. Geez.
As a side note, there has been a lot of chatter concerning velomobiles (bikes) versus cars on the International Human Powered Vehicle Association sponsored Velomobile Mailing List. Check it out.
As a side note, there has been a lot of chatter concerning velomobiles (bikes) versus cars on the International Human Powered Vehicle Association sponsored Velomobile Mailing List. Check it out.
A Quick Fix for the Gas Addicts
The New York Times May 31, 2006
Op-Ed Columnist Thomas L. Friedman
Is there a company more dangerous to America's
future than General Motors? Surely, the sooner
this company gets taken over by Toyota, the better off our country will be.
Why? Like a crack dealer looking to keep his
addicts on a tight leash, G.M. announced its
"fuel price protection program" on May 23. If you
live in Florida or California and buy certain
G.M. vehicles by July 5, the company will
guarantee you gasoline at a cap price of $1.99 a
gallon for one year — with no limit on mileage. Guzzle away.
As The Associated Press explained the program,
each month for one year, G.M. will give customers
who buy these cars "a credit on a prepaid card
based on their estimated fuel usage. Fuel usage
will be calculated by the miles they drive, as
recorded by OnStar, and the vehicle's fuel
economy rating. G.M. will credit drivers the
difference between the average price per gallon
in their state and the $1.99 cap." Consumers
won't get any credits if gas prices fall below $1.99.
"This program gives consumers an opportunity to
experience the highly fuel-efficient vehicles
G.M. has to offer in the mid-size segment," Dave
Borchelt, G.M.'s Southeast general manager, said
in the company's official statement. Oh, really?
Eligible vehicles in California include the 2006
and 2007 Chevrolet Tahoe and Suburban (half-ton
models only), Impala and Monte Carlo sedans,
G.M.C. Yukon and Yukon XL S.U.V.'s (half-ton
models only), Hummer H2 and H3 S.U.V.'s, the
Cadillac SRX S.U.V., and the Pontiac Grand Prix
and Buick Lucerne sedans. Eligible vehicles in
Florida include the 2006 and 2007 Chevrolet
Impala and Monte Carlo, Pontiac Grand Prix and Buick LaCrosse.
Let's see, the 6,400-pound Hummer H2 averages
around nine miles per gallon. It really is great
that G.M. is giving more Americans the
opportunity to experience nine-miles-per-gallon
driving. And the hulking Chevy Suburban gets
around 15 miles per gallon. It will be wonderful
if more Americans can experience that too — with G.M.-subsidized gas.
Our military is in a war on terrorism in Iraq and
Afghanistan with an enemy who is fueled by our
gasoline purchases. So we are financing both
sides in the war on terror. And what are we doing
about that? Not only is GM subsidizing its
gas-guzzlers, but not a single member of
Congress, liberal or conservative, will stand up
and demand what most of them know: that we must
have some kind of gasoline tax to compel
Americans to buy more fuel-efficient vehicles and
to compel Detroit to make them.
Where are the presidential aspirants on this
issue? I have yet to hear John McCain, Mitt
Romney, George Allen, Al Gore or Hillary Clinton
support at least a $3.50 floor price for
gasoline, so that it will never fall below that
level and the alternatives can really flower and spread.
But if you go to G.M.'s Web site, here's what you
will see: an ad with a young African-American boy
saluting an American flag, above the following
offer for U.S. military personnel: "In
appreciation of your commitment to our country,
G.M. extends a $500 exclusive offer to active
duty military and reserves when you purchase or
lease select 2005, 2006 or 2007 G.M. cars, trucks
and S.U.V.'s — just show your military ID!"
That's really touching. First G.M. offers a
gasoline subsidy so more Americans can get hooked
on nine-mile-per-gallon Hummers, and then it
offers a discount to the soldiers who have to
protect the oil lines to keep G.M.'s gas guzzlers
guzzling. Here's a rule of thumb: The more
Hummers we have on the road in America, the more
military Humvees we will need in the Middle East.
You want to do something patriotic, G.M., Ford
and Daimler-Chrysler? Why don't you stop using
your diminishing pools of cash to buy votes so
Congress will never impose improved mileage
standards? That kind of strategy is why Toyota
today is worth $198.9 billion and G.M. $15.8
billion. G.M. is worth just slightly more than
Harley-Davidson, the motorcycle company ($13.6 billion).
President Bush remarked the other day how
agonizingly tough it is for a president to send
young Americans to war. Yet, he's ready to do
that, but he's not ready to look Detroit or
Congress in the eye and demand that we put in
place the fuel-efficiency legislation that will
weaken the forces of theocracy and autocracy that
are killing our soldiers in Iraq and Afghanistan
— because it might cost Republicans votes or campaign contributions.
This whole thing is a travesty. We can't keep
asking young Americans to make the ultimate
sacrifice in Iraq and Afghanistan if we as a
society are not ready to make even the most minimal sacrifice to help them.
Op-Ed Columnist Thomas L. Friedman
Is there a company more dangerous to America's
future than General Motors? Surely, the sooner
this company gets taken over by Toyota, the better off our country will be.
Why? Like a crack dealer looking to keep his
addicts on a tight leash, G.M. announced its
"fuel price protection program" on May 23. If you
live in Florida or California and buy certain
G.M. vehicles by July 5, the company will
guarantee you gasoline at a cap price of $1.99 a
gallon for one year — with no limit on mileage. Guzzle away.
As The Associated Press explained the program,
each month for one year, G.M. will give customers
who buy these cars "a credit on a prepaid card
based on their estimated fuel usage. Fuel usage
will be calculated by the miles they drive, as
recorded by OnStar, and the vehicle's fuel
economy rating. G.M. will credit drivers the
difference between the average price per gallon
in their state and the $1.99 cap." Consumers
won't get any credits if gas prices fall below $1.99.
"This program gives consumers an opportunity to
experience the highly fuel-efficient vehicles
G.M. has to offer in the mid-size segment," Dave
Borchelt, G.M.'s Southeast general manager, said
in the company's official statement. Oh, really?
Eligible vehicles in California include the 2006
and 2007 Chevrolet Tahoe and Suburban (half-ton
models only), Impala and Monte Carlo sedans,
G.M.C. Yukon and Yukon XL S.U.V.'s (half-ton
models only), Hummer H2 and H3 S.U.V.'s, the
Cadillac SRX S.U.V., and the Pontiac Grand Prix
and Buick Lucerne sedans. Eligible vehicles in
Florida include the 2006 and 2007 Chevrolet
Impala and Monte Carlo, Pontiac Grand Prix and Buick LaCrosse.
Let's see, the 6,400-pound Hummer H2 averages
around nine miles per gallon. It really is great
that G.M. is giving more Americans the
opportunity to experience nine-miles-per-gallon
driving. And the hulking Chevy Suburban gets
around 15 miles per gallon. It will be wonderful
if more Americans can experience that too — with G.M.-subsidized gas.
Our military is in a war on terrorism in Iraq and
Afghanistan with an enemy who is fueled by our
gasoline purchases. So we are financing both
sides in the war on terror. And what are we doing
about that? Not only is GM subsidizing its
gas-guzzlers, but not a single member of
Congress, liberal or conservative, will stand up
and demand what most of them know: that we must
have some kind of gasoline tax to compel
Americans to buy more fuel-efficient vehicles and
to compel Detroit to make them.
Where are the presidential aspirants on this
issue? I have yet to hear John McCain, Mitt
Romney, George Allen, Al Gore or Hillary Clinton
support at least a $3.50 floor price for
gasoline, so that it will never fall below that
level and the alternatives can really flower and spread.
But if you go to G.M.'s Web site, here's what you
will see: an ad with a young African-American boy
saluting an American flag, above the following
offer for U.S. military personnel: "In
appreciation of your commitment to our country,
G.M. extends a $500 exclusive offer to active
duty military and reserves when you purchase or
lease select 2005, 2006 or 2007 G.M. cars, trucks
and S.U.V.'s — just show your military ID!"
That's really touching. First G.M. offers a
gasoline subsidy so more Americans can get hooked
on nine-mile-per-gallon Hummers, and then it
offers a discount to the soldiers who have to
protect the oil lines to keep G.M.'s gas guzzlers
guzzling. Here's a rule of thumb: The more
Hummers we have on the road in America, the more
military Humvees we will need in the Middle East.
You want to do something patriotic, G.M., Ford
and Daimler-Chrysler? Why don't you stop using
your diminishing pools of cash to buy votes so
Congress will never impose improved mileage
standards? That kind of strategy is why Toyota
today is worth $198.9 billion and G.M. $15.8
billion. G.M. is worth just slightly more than
Harley-Davidson, the motorcycle company ($13.6 billion).
President Bush remarked the other day how
agonizingly tough it is for a president to send
young Americans to war. Yet, he's ready to do
that, but he's not ready to look Detroit or
Congress in the eye and demand that we put in
place the fuel-efficiency legislation that will
weaken the forces of theocracy and autocracy that
are killing our soldiers in Iraq and Afghanistan
— because it might cost Republicans votes or campaign contributions.
This whole thing is a travesty. We can't keep
asking young Americans to make the ultimate
sacrifice in Iraq and Afghanistan if we as a
society are not ready to make even the most minimal sacrifice to help them.
As Toyota Goes ...
June 17, 2005
By THOMAS L. FRIEDMAN
So I have a question: If I am rooting for General Motors to go bankrupt and
be bought out by Toyota, does that make me a bad person?
It is not that I want any autoworker to lose his or her job, but I
certainly would not put on a black tie if the entire management team at
G.M. got sacked and was replaced by executives from Toyota. Indeed, I think
the only hope for G.M.'s autoworkers, and maybe even our country, is with
Toyota. Because let's face it, as Toyota goes, so goes America.
Having Toyota take over General Motors - which based its business strategy
on building gas-guzzling cars, including the idiot Hummer, scoffing at
hybrid technology and fighting Congressional efforts to impose higher
mileage standards on U.S. automakers - would not only be in America's
economic interest, it would also be in America's geopolitical interest.
Because Toyota has pioneered the very hybrid engine technology that can
help rescue not only our economy from its oil addiction (how about 500
miles per gallon of gasoline?), but also our foreign policy from dependence
on Middle Eastern oil autocrats.
Diffusing Toyota's hybrid technology is one of the keys to what I call
"geo-green." Geo-greens seek to combine into a single political movement
environmentalists who want to reduce fossil fuels that cause climate
change, evangelicals who want to protect God's green earth and all his
creations, and geo-strategists who want to reduce our dependence on crude
oil because it fuels some of the worst regimes in the world.
The Bush team has been M.I.A. on energy since 9/11. Indeed, the utter
indifference of the Bush team to developing a geo-green strategy - which
would also strengthen the dollar, reduce our trade deficit, make America
the world leader in combating climate change and stimulate U.S. companies
to take the lead in producing the green technologies that the world will
desperately need as China and India industrialize - is so irresponsible
that it takes your breath away. This is especially true when you realize
that the solutions to our problems are already here.
As Gal Luft, co-chairman of the Set America Free coalition, a bipartisan
alliance of national security, labor, environmental and religious groups
that believe reducing oil consumption is a national priority, points out:
the majority of U.S. oil imports go to fueling the transport sector -
primarily cars and trucks. Therefore, the key to reducing our dependence on
foreign oil is powering our cars and trucks with less petroleum.
There are two ways we can do that. One is electricity. We don't import
electricity. We generate all of our needs with coal, hydropower, nuclear
power and natural gas. Toyota's hybrid cars, like the Prius, run on both
gasoline and electricity that is generated by braking and then stored in a
small battery. But, says Luft, if you had a hybrid that you could plug in
at night, the battery could store up 20 miles of driving per day. So your
first 20 miles would be covered by the battery. The gasoline would only
kick in after that. Since 50 percent of Americans do not drive more than 20
miles a day, the battery power would cover all their driving. Even if they
drove more than that, combining the battery power and the gasoline could
give them 100 miles per gallon of gasoline used, Luft notes.
Right now Toyota does not sell plug-in hybrids. Some enthusiasts, though,
are using kits to convert their hybrids to plug-ins, but that adds several
thousand dollars - and you lose your Toyota warranty. Imagine, though, if
the government encouraged, through tax policy and other incentives, every
automaker to offer plug-in hybrids? We would quickly move down the
innovation curve and end up with better and cheaper plug-ins for all.
Then add to that flexible-fuel cars, which have a special chip and fuel
line that enable them to burn alcohol (ethanol or methanol), gasoline or
any mixture of the two. Some four million U.S. cars already come equipped
this way, including from G.M. It costs only about $100 a car to make it
flex-fuel ready. Brazil hopes to have all its new cars flex-fuel ready by
2008. As Luft notes, if you combined a plug-in hybrid system with a
flex-fuel system that burns 80 percent alcohol and 20 percent gasoline, you
could end up stretching each gallon of gasoline up to 500 miles.
In short, we don't need to reinvent the wheel or wait for sci-fi hydrogen
fuel cells. The technologies we need for a stronger, more energy
independent America are already here. The only thing we have a shortage of
now are leaders with the imagination and will to move the country onto a
geo-green path.
By THOMAS L. FRIEDMAN
So I have a question: If I am rooting for General Motors to go bankrupt and
be bought out by Toyota, does that make me a bad person?
It is not that I want any autoworker to lose his or her job, but I
certainly would not put on a black tie if the entire management team at
G.M. got sacked and was replaced by executives from Toyota. Indeed, I think
the only hope for G.M.'s autoworkers, and maybe even our country, is with
Toyota. Because let's face it, as Toyota goes, so goes America.
Having Toyota take over General Motors - which based its business strategy
on building gas-guzzling cars, including the idiot Hummer, scoffing at
hybrid technology and fighting Congressional efforts to impose higher
mileage standards on U.S. automakers - would not only be in America's
economic interest, it would also be in America's geopolitical interest.
Because Toyota has pioneered the very hybrid engine technology that can
help rescue not only our economy from its oil addiction (how about 500
miles per gallon of gasoline?), but also our foreign policy from dependence
on Middle Eastern oil autocrats.
Diffusing Toyota's hybrid technology is one of the keys to what I call
"geo-green." Geo-greens seek to combine into a single political movement
environmentalists who want to reduce fossil fuels that cause climate
change, evangelicals who want to protect God's green earth and all his
creations, and geo-strategists who want to reduce our dependence on crude
oil because it fuels some of the worst regimes in the world.
The Bush team has been M.I.A. on energy since 9/11. Indeed, the utter
indifference of the Bush team to developing a geo-green strategy - which
would also strengthen the dollar, reduce our trade deficit, make America
the world leader in combating climate change and stimulate U.S. companies
to take the lead in producing the green technologies that the world will
desperately need as China and India industrialize - is so irresponsible
that it takes your breath away. This is especially true when you realize
that the solutions to our problems are already here.
As Gal Luft, co-chairman of the Set America Free coalition, a bipartisan
alliance of national security, labor, environmental and religious groups
that believe reducing oil consumption is a national priority, points out:
the majority of U.S. oil imports go to fueling the transport sector -
primarily cars and trucks. Therefore, the key to reducing our dependence on
foreign oil is powering our cars and trucks with less petroleum.
There are two ways we can do that. One is electricity. We don't import
electricity. We generate all of our needs with coal, hydropower, nuclear
power and natural gas. Toyota's hybrid cars, like the Prius, run on both
gasoline and electricity that is generated by braking and then stored in a
small battery. But, says Luft, if you had a hybrid that you could plug in
at night, the battery could store up 20 miles of driving per day. So your
first 20 miles would be covered by the battery. The gasoline would only
kick in after that. Since 50 percent of Americans do not drive more than 20
miles a day, the battery power would cover all their driving. Even if they
drove more than that, combining the battery power and the gasoline could
give them 100 miles per gallon of gasoline used, Luft notes.
Right now Toyota does not sell plug-in hybrids. Some enthusiasts, though,
are using kits to convert their hybrids to plug-ins, but that adds several
thousand dollars - and you lose your Toyota warranty. Imagine, though, if
the government encouraged, through tax policy and other incentives, every
automaker to offer plug-in hybrids? We would quickly move down the
innovation curve and end up with better and cheaper plug-ins for all.
Then add to that flexible-fuel cars, which have a special chip and fuel
line that enable them to burn alcohol (ethanol or methanol), gasoline or
any mixture of the two. Some four million U.S. cars already come equipped
this way, including from G.M. It costs only about $100 a car to make it
flex-fuel ready. Brazil hopes to have all its new cars flex-fuel ready by
2008. As Luft notes, if you combined a plug-in hybrid system with a
flex-fuel system that burns 80 percent alcohol and 20 percent gasoline, you
could end up stretching each gallon of gasoline up to 500 miles.
In short, we don't need to reinvent the wheel or wait for sci-fi hydrogen
fuel cells. The technologies we need for a stronger, more energy
independent America are already here. The only thing we have a shortage of
now are leaders with the imagination and will to move the country onto a
geo-green path.
Tuesday, May 30, 2006
Corporate Sustainability and Responsibility Lists Drive Improved Performance
Source SocialFunds.com
URL: http://www.greenbiz.com/news/news_third.cfm?NewsID=31182&CFID=9620436&CFTOKEN=20514809
NEW YORK, May 30, 2006 - Lists are playing an increasing role in defining and driving corporate sustainability and responsibility (CSR) -- and the list of CSR-related lists is growing. For example, Business Ethics magazine recently released its eighth annual list of the "100 Best Corporate Citizens," based on rankings by KLD Research & Analytics. Canada-based Corporate Knights magazine teamed up with Innovest Strategic Value Advisors to produce the ">Global 100 Most Sustainable Corporations in the World" starting last year. Even Fortune magazine assesses social responsibility in its annual "Most Admired Companies" as well as in the "100 Best Companies to Work For."
On the other side of the coin, the Political Economy Research Institute (PERI) of the University of Massachusetts launched the "Toxic 100" last year based on data from the Environmental Protection Agency (EPA) Toxics Release Inventory (TRI). Instead of applauding best practice, as the other lists do, this list identifies the companies with the greatest environmental impact. Yet all of these lists tap into the innate human yearning to order and rank, thereby leveraging "listmania" to advance understanding and practice of corporate sustainability and responsibility.
"People love lists -- when I was a kid growing up, we used to sit around the radio waiting for the Top 40 to get announced and write them down," said Michael Connor, executive editor of Business Ethics. "A list is a wonderful device for focusing people's attention, particularly on abstract concepts and ideas -- it helps crystallize them."
"Corporate citizenship is a complicated and fairly abstract notion -- by applying metrics and ranking companies and putting names to the concept of corporate citizenship, we help create a framework for what corporate citizenship is about, not just in theory but in particulars," Connor told SocialFunds.com. "Lists help people look at how a particular company (whether they're number one on the list or number 50) is doing in certain categories and how they're doing relative to their peers -- lists give fact-based experience to discuss, and so it's open for discussion as to whether the best on the list is the ideal."
Business Ethics Founding Editor Marjorie Kelly and KLD chose not to rate companies on a scale with the top score being the ideal. Rather, they chose to rank by standard deviation from the mean (compared to the universe of companies under consideration -- the Russell 1000, S&P 500, and Domini 400 Social Index.) This methodology avoids setting a ceiling for the ideal and instead rates companies relative to each other, thus not defining the ideal nor placing a cap on progress toward sustainability and responsibility.
For example, list-topper Green Mountain Coffee Roasters earned an average score of 1.775 (about one and three-quarters points above the mean) across eight stakeholder categories, including human rights, environment, corporate governance, and total return. The Global 100 list takes a different approach -- it simply lists 100 leaders and refrains from assigning any ranking to companies in recognition that sustainability issues impacting corporate performance vary widely from sector-to-sector.
Companies now take much more notice of their presence or absence -- and position -- on CSR lists than they did eight years ago, according to Connor. High-rankers trumpet their achievements, and those spurned seek ways to improve their CSR performance.
"Many of the companies work on these issues with an eye to the fact that we and others are going publicize their performance in these areas, so the lists become a way of spotlighting their performance so it doesn't happen in secret," said Connor. "They're an annual report cards of sorts -- as much as we all hate report cards, they've always played a healthy role in keeping you accountable, and that's what these lists are all about: accountability."
Just as companies seek to move "up" the laudatory lists, they are actively engaging on how to move "down" the more damning lists. For example, the Business & Human Rights Resource Center, a U.K.-based Web site that seeks to represent critical accounts of corporate human rights practices as well as company perspectives, invited the top 10 of the Toxic 100 to respond to their ranking. GE, Fortune's Most Admired Company and a constituent of the Global 100 but not the Business Ethics or Fortune Best Companies to Work For lists, was one of seven companies to respond (ConocoPhillips and ExxonMobil declined.)
"Since 1987, GE has reduced its emissions by more than 85% despite greatly expanding its production," GE responded. "The U.S. Environmental Protection Agency has stated that the model used by PERI is properly used for screening purposes only and it is not a quantitative risk assessment model and thus not independently meaningful."
Despite GE's assertion, its aggregate toxic emissions (based on the data the company itself submits to the TRI) are very meaningful to those who assess corporate sustainability and responsibility by these lists. In the Citizenship Report it released this week, GE crowed that its vast size positions it well to help solve global social and environmental problems -- the Toxic 100 simply exposes that its hugeness also translates into a heck of a lot of toxic emissions. To descend on this list, GE will have to reduce its emissions even further.
The fact that the lists measure different metrics and use different standards makes apples-to-apples comparisons difficult if not impossible. However, this also drives more comprehensive improvement in CSR performance, because companies need to attend to a broad spectrum of different sustainability issues and metrics.
"I don't think these lists compete with one another -- we reinforce one another," explained Connor. "As with any kind of information, readers or investors need to put all these lists in context by comparing and contrasting them to each other and drawing their own conclusions about what are the best companies from their own personal points of view."
URL: http://www.greenbiz.com/news/news_third.cfm?NewsID=31182&CFID=9620436&CFTOKEN=20514809
NEW YORK, May 30, 2006 - Lists are playing an increasing role in defining and driving corporate sustainability and responsibility (CSR) -- and the list of CSR-related lists is growing. For example, Business Ethics magazine recently released its eighth annual list of the "100 Best Corporate Citizens," based on rankings by KLD Research & Analytics. Canada-based Corporate Knights magazine teamed up with Innovest Strategic Value Advisors to produce the ">Global 100 Most Sustainable Corporations in the World" starting last year. Even Fortune magazine assesses social responsibility in its annual "Most Admired Companies" as well as in the "100 Best Companies to Work For."
On the other side of the coin, the Political Economy Research Institute (PERI) of the University of Massachusetts launched the "Toxic 100" last year based on data from the Environmental Protection Agency (EPA) Toxics Release Inventory (TRI). Instead of applauding best practice, as the other lists do, this list identifies the companies with the greatest environmental impact. Yet all of these lists tap into the innate human yearning to order and rank, thereby leveraging "listmania" to advance understanding and practice of corporate sustainability and responsibility.
"People love lists -- when I was a kid growing up, we used to sit around the radio waiting for the Top 40 to get announced and write them down," said Michael Connor, executive editor of Business Ethics. "A list is a wonderful device for focusing people's attention, particularly on abstract concepts and ideas -- it helps crystallize them."
"Corporate citizenship is a complicated and fairly abstract notion -- by applying metrics and ranking companies and putting names to the concept of corporate citizenship, we help create a framework for what corporate citizenship is about, not just in theory but in particulars," Connor told SocialFunds.com. "Lists help people look at how a particular company (whether they're number one on the list or number 50) is doing in certain categories and how they're doing relative to their peers -- lists give fact-based experience to discuss, and so it's open for discussion as to whether the best on the list is the ideal."
Business Ethics Founding Editor Marjorie Kelly and KLD chose not to rate companies on a scale with the top score being the ideal. Rather, they chose to rank by standard deviation from the mean (compared to the universe of companies under consideration -- the Russell 1000, S&P 500, and Domini 400 Social Index.) This methodology avoids setting a ceiling for the ideal and instead rates companies relative to each other, thus not defining the ideal nor placing a cap on progress toward sustainability and responsibility.
For example, list-topper Green Mountain Coffee Roasters earned an average score of 1.775 (about one and three-quarters points above the mean) across eight stakeholder categories, including human rights, environment, corporate governance, and total return. The Global 100 list takes a different approach -- it simply lists 100 leaders and refrains from assigning any ranking to companies in recognition that sustainability issues impacting corporate performance vary widely from sector-to-sector.
Companies now take much more notice of their presence or absence -- and position -- on CSR lists than they did eight years ago, according to Connor. High-rankers trumpet their achievements, and those spurned seek ways to improve their CSR performance.
"Many of the companies work on these issues with an eye to the fact that we and others are going publicize their performance in these areas, so the lists become a way of spotlighting their performance so it doesn't happen in secret," said Connor. "They're an annual report cards of sorts -- as much as we all hate report cards, they've always played a healthy role in keeping you accountable, and that's what these lists are all about: accountability."
Just as companies seek to move "up" the laudatory lists, they are actively engaging on how to move "down" the more damning lists. For example, the Business & Human Rights Resource Center, a U.K.-based Web site that seeks to represent critical accounts of corporate human rights practices as well as company perspectives, invited the top 10 of the Toxic 100 to respond to their ranking. GE, Fortune's Most Admired Company and a constituent of the Global 100 but not the Business Ethics or Fortune Best Companies to Work For lists, was one of seven companies to respond (ConocoPhillips and ExxonMobil declined.)
"Since 1987, GE has reduced its emissions by more than 85% despite greatly expanding its production," GE responded. "The U.S. Environmental Protection Agency has stated that the model used by PERI is properly used for screening purposes only and it is not a quantitative risk assessment model and thus not independently meaningful."
Despite GE's assertion, its aggregate toxic emissions (based on the data the company itself submits to the TRI) are very meaningful to those who assess corporate sustainability and responsibility by these lists. In the Citizenship Report it released this week, GE crowed that its vast size positions it well to help solve global social and environmental problems -- the Toxic 100 simply exposes that its hugeness also translates into a heck of a lot of toxic emissions. To descend on this list, GE will have to reduce its emissions even further.
The fact that the lists measure different metrics and use different standards makes apples-to-apples comparisons difficult if not impossible. However, this also drives more comprehensive improvement in CSR performance, because companies need to attend to a broad spectrum of different sustainability issues and metrics.
"I don't think these lists compete with one another -- we reinforce one another," explained Connor. "As with any kind of information, readers or investors need to put all these lists in context by comparing and contrasting them to each other and drawing their own conclusions about what are the best companies from their own personal points of view."
Wall Street Develops Investment Tools for Climate Change
Source: Wilmington Star
[May 30, 2006]
Socially conscious investors long ago hopped on the climate-change bandwagon, putting their money into companies that control greenhouse gases and shunning those that do not.
But now, the pure profit-and-loss players are moving in, potentially raising the level of the game. They are betting that Washington will someday clamp down on emitters of carbon dioxide and other gases that are believed to contribute to global warming. And they are certain that there is money to be made in holding the shares of low emitters and shorting the shares of big ones.
New carbon-tilted rating scales could come in handy, and investment research houses like Sanford Bernstein and Innovest Strategic Value Advisers are busily setting them up.
Innovest, in partnership with UBS, has created a "carbon beta" basket, a fund that will hold 50 stocks in five industries. The fund managers would monitor global warming regulations and would buy and sell the stocks on the basis of how the companies would be affected by those rules.
Each industry grouping of stocks would include an equal number of carbon leaders and carbon dogs, as Doug Morrow, an Innovest analyst, calls them. In the electric utilities industry, the FPL Group, a major player in renewable energy sources like wind, is on the list of leaders; American Electric Power, one of the country's largest generators of power from coal, tops the list of dogs.
Innovest does not know how many investors have bought into the carbon beta basket. UBS, which is selling the basket, refused to discuss it, citing regulatory concerns, and would not explain further.
But Morrow seems certain it will be popular.
"Upside and downside exposure to climate change is not yet priced into the fixed-income or equity markets," he said, "so there is out-performance potential in a product that uses specialized research to address these factors."
Innovest and Sanford Bernstein are both betting that Washington will fully endorse a system for trading carbon credits.
The system would enable companies to avoid fines for releasing illegal amounts of carbon by purchasing carbon credits from companies that are emitting less than the rules would allow.
Such a system plays to the basic math of the carbon beta basket. The companies selling the credits would receive an added source of income and therefore would be deemed "carbon leaders" while the companies buying them will incur a new cost and will be deemed "carbon dogs." Even companies that decide to reduce their emissions could wind up as dogs, from the view of the carbon basket's fund manager, because they must incur costs to switch fuels or buy pollution control equipment.
The idea of grading companies on their carbon emissions is not new, of course. Numerous environmental groups have publicly castigated companies for contributing to global warming.
Innovest itself has for the last three years put together an annual Climate Leadership Index that ranks companies on how well they are controlling greenhouse gases. And this year Ceres, a coalition of environmentalists and investors, ranked 100 companies on the way top management is addressing climate change.
But until now, such reports were meant as guides to socially conscious investors who want to punish companies that pollute and reward those that do not. The latest research puts the question in pure dollars-and-cents terms.
In that amoral calculation, environmentally progressive companies can be on the dog list. And nuclear power plants and other types of companies that raise the hackles of environmentalists can be listed as stars.
The dichotomy is particularly apparent among electric utilities, the industry that most of the carbon-risk researchers are focusing on because it burns so much coal.
"We give a lot of credit to how well companies disclose to shareholders what they are doing, and how they are structured to manage risk, but that doesn't capture emissions exposure the way a financial analyst would want to," acknowledged Dan Bakal, director of electric power programs at Ceres.
Similarly, many environmentalists have fought against nuclear power, saying the risks of accidents and leaks outweigh the benefits. But nuclear plants do not emit greenhouse gases, and in deregulated states, where utilities compete for customers, carbon regulations could give nuclear plants a huge edge over their coal-burning competitors.
Moreover, the continued societal aversion to nuclear plants means that the existing nuclear players would not face added competition and therefore would remain good investments long after any carbon emissions rules are passed.
"Society's antipathy to nuclear plants is hunky-dory with the folks who have them, because they will remain the lowest-cost competitors," said Hugh N. Wynne, a senior research analyst at Bernstein.
That is why Wynne, who issued a report in April looking at potential winners and losers from carbon regulation, listed Exelon, the largest owner of nuclear plants in the country, as a top beneficiary of carbon rules, and thus a good stock to buy.
[May 30, 2006]
Socially conscious investors long ago hopped on the climate-change bandwagon, putting their money into companies that control greenhouse gases and shunning those that do not.
But now, the pure profit-and-loss players are moving in, potentially raising the level of the game. They are betting that Washington will someday clamp down on emitters of carbon dioxide and other gases that are believed to contribute to global warming. And they are certain that there is money to be made in holding the shares of low emitters and shorting the shares of big ones.
New carbon-tilted rating scales could come in handy, and investment research houses like Sanford Bernstein and Innovest Strategic Value Advisers are busily setting them up.
Innovest, in partnership with UBS, has created a "carbon beta" basket, a fund that will hold 50 stocks in five industries. The fund managers would monitor global warming regulations and would buy and sell the stocks on the basis of how the companies would be affected by those rules.
Each industry grouping of stocks would include an equal number of carbon leaders and carbon dogs, as Doug Morrow, an Innovest analyst, calls them. In the electric utilities industry, the FPL Group, a major player in renewable energy sources like wind, is on the list of leaders; American Electric Power, one of the country's largest generators of power from coal, tops the list of dogs.
Innovest does not know how many investors have bought into the carbon beta basket. UBS, which is selling the basket, refused to discuss it, citing regulatory concerns, and would not explain further.
But Morrow seems certain it will be popular.
"Upside and downside exposure to climate change is not yet priced into the fixed-income or equity markets," he said, "so there is out-performance potential in a product that uses specialized research to address these factors."
Innovest and Sanford Bernstein are both betting that Washington will fully endorse a system for trading carbon credits.
The system would enable companies to avoid fines for releasing illegal amounts of carbon by purchasing carbon credits from companies that are emitting less than the rules would allow.
Such a system plays to the basic math of the carbon beta basket. The companies selling the credits would receive an added source of income and therefore would be deemed "carbon leaders" while the companies buying them will incur a new cost and will be deemed "carbon dogs." Even companies that decide to reduce their emissions could wind up as dogs, from the view of the carbon basket's fund manager, because they must incur costs to switch fuels or buy pollution control equipment.
The idea of grading companies on their carbon emissions is not new, of course. Numerous environmental groups have publicly castigated companies for contributing to global warming.
Innovest itself has for the last three years put together an annual Climate Leadership Index that ranks companies on how well they are controlling greenhouse gases. And this year Ceres, a coalition of environmentalists and investors, ranked 100 companies on the way top management is addressing climate change.
But until now, such reports were meant as guides to socially conscious investors who want to punish companies that pollute and reward those that do not. The latest research puts the question in pure dollars-and-cents terms.
In that amoral calculation, environmentally progressive companies can be on the dog list. And nuclear power plants and other types of companies that raise the hackles of environmentalists can be listed as stars.
The dichotomy is particularly apparent among electric utilities, the industry that most of the carbon-risk researchers are focusing on because it burns so much coal.
"We give a lot of credit to how well companies disclose to shareholders what they are doing, and how they are structured to manage risk, but that doesn't capture emissions exposure the way a financial analyst would want to," acknowledged Dan Bakal, director of electric power programs at Ceres.
Similarly, many environmentalists have fought against nuclear power, saying the risks of accidents and leaks outweigh the benefits. But nuclear plants do not emit greenhouse gases, and in deregulated states, where utilities compete for customers, carbon regulations could give nuclear plants a huge edge over their coal-burning competitors.
Moreover, the continued societal aversion to nuclear plants means that the existing nuclear players would not face added competition and therefore would remain good investments long after any carbon emissions rules are passed.
"Society's antipathy to nuclear plants is hunky-dory with the folks who have them, because they will remain the lowest-cost competitors," said Hugh N. Wynne, a senior research analyst at Bernstein.
That is why Wynne, who issued a report in April looking at potential winners and losers from carbon regulation, listed Exelon, the largest owner of nuclear plants in the country, as a top beneficiary of carbon rules, and thus a good stock to buy.
Ship It Good: How Companies Are Driving Down the Impacts of Shipping
We all know that planes, trains, and automobiles use gobs of fuel and spew mega-gobs of greenhouse gases and other pollutants into the atmosphere -- and that makes freight transport a particularly dirty business.
The environmental impacts of shipping goods hither and yon are significant but relatively obscure, the true costs hidden amid complex shipping tariffs and product price tags. Businesses that rely on products being moved from one place to another have been able to do little to change the performance of truck, rail, and marine cargo companies. Moreover, cargo companies haven't been on most environmental activists' radar screens.
But that's changing. The growing focus on climate and energy -- along with such evergreen issues as biodiversity and air and water pollution -- have brought shipping's environmental impacts into the fast lane. Activists are starting to wage campaigns against dirty shippers. And a handful of companies, including some of the world's largest freight haulers, are beginning to take action.
Ships Happen
The environmental cost of moving goods can be significant. Take cargo ships, for example -- the means by which two-thirds of the goods purchased by U.S. consumers arrive on American shores. While oceangoing vessels worldwide account for just 2% to 3% of global fossil-fuel consumption, they are responsible for 14% of the nitrogen emissions from fossil fuels and 16% of all sulfur emissions from petroleum, according to a study by Carnegie Mellon University.
One reason: cargo ships run on "bunker fuel," the dirtiest, cheapest product that remains after gas and other high-grade fuels are refined from crude oil. Bunker fuel contains up to 5,000 times more sulfur than diesel. As a result, according to Bluewater Network, a division of Friends of the Earth, a single container ship emits more pollution than 2,000 diesel trucks.
Ballast is another issue. Modern cargo ships hold within their hulls millions of gallons of water, which is moved around to ensure the ship is properly trimmed, improving safety and speed. Ships routinely exchange ballast water while in port as cargo is loaded or unloaded. The water pumped out of the ship is alive with organisms from ports previously visited. One analysis of ballast water from foreign ships entering Canada found as many as 12,392 marine creatures per cubic meter. The survivors often invade their adopted homes, sometimes wreaking havoc; the zebra mussel fouling the Great Lakes is just one example.
Of course, ground and air freight have impacts, too. Truck and rail represent about 17% of all transport-related climate emissions. Over the past four decades, freight-truck vehicle-miles have increased more than 50%, while fuel efficiency has grown only about 12%. Overall, the 35 billion gallons of diesel fuel used by truck and rail companies each year produce more than 350 million metric tons of carbon dioxide. Meanwhile, aircraft transport boasts greater fuel consumption and greenhouse-gas emissions per ton-mile than any other mode of transport. And their emissions' negative impacts are amplified due to the high altitude where they occur.
All of which is getting activists moving. In recent years, for example, Bluewater Network successfully sued the U.S. EPA over regulation of emissions from large, oceangoing vessels. In April, a delegation of environmental and public-health organizations from the E.U. and the U.S. pressed the International Maritime Organization to reduce ship smokestack emissions by 70% to 90%, saying the cuts would protect those who live and work near ports from cancer, respiratory ailments, and premature deaths.
The Union of Concerned Scientists has also weighed in, issuing a report that points out that although trucks account for just under 6% of highway miles driven in the U.S., they account for a tenth of all domestic oil consumption. They're also responsible for a quarter of smog-causing pollution and the majority of the cancer threat posed by air pollution in some urban areas. According to the EPA, idling trucks and locomotives use 1.2 billion gallons of diesel fuel a year and emit more than 200,000 tons of nitrogen oxides. Talk about idle indulgences.
Freight Expectations
What's going on to reduce such impacts? A boatload. A couple of years ago, the nonprofit Business for Social Responsibility convened a Clean Cargo Working Group to help retailers and manufacturers reduce the impacts of oceangoing transport. They developed a set of standards for measuring the climate impacts of shipping, along with a questionnaire to give ship operators.
This wasn't easy. Calculating the climate impact of, say, a pair of shoes being shipped from China involves understanding the type of ship, the kind of fuel it burns, the shipping lane it traveled, and other factors. Companies like Chiquita, Hewlett-Packard, Mattel, and Nike have been involved with the effort to work with vessel operators including K Line, Maersk Sealand, and NYK Line to implement the new standards.
Meanwhile, back on dry land, trucking companies -- driven by such mega-shippers as Dell, Home Depot, IKEA, J.C. Penney, and Lowe's -- are gearing up a new generation of vehicles that significantly improve fuel economy and reduce emissions. FedEx has been working with Environmental Defense to produce a low-emission, hybrid-electric delivery vehicle that could become a medium-duty truck for the company's fleet. Wal-Mart, with one of the world's largest fleets, has pledged to increase its trucks' efficiency by 25% over the next three years and double it (from 6.5 to 13 miles per gallon) within a decade. Efficiency comes from improving engines, of course, but also from such steps as installing "side skirts" on trailers to reduce wind resistance.
What can you do to reduce shipping's impact? Four things:
* Avoid air freight whenever possible. Aside from being expensive, it consumes far more fuel per mile traveled. Patagonia calculated that the energy costs associated with a product rose from 6% to 28% when the mode of transport shifted from ground to air.
* Consolidate shipments. This reduces overall packaging and fuel use, and can lead to lower shipping costs.
* Press shippers on their environmental practices. Encourage them to use hybrid vehicles, idle-reduction devices, and other cleaner technologies.
* Buy local whenever possible to reduce the need for shipping altogether.
In the end, keep in mind that the environmental impacts of the products you buy may pale compared to the impacts of shipping them across oceans and continents.
Getting there, as they say, is half the fumes.
------
Joel Makower, a writer and consultant on corporate sustainability practices, is the founder of Green Business Network, producer of GreenBiz.com, ClimateBiz.com, and GreenerBuildings.com.
This article was first printed on May 23, 2006, as part of Makower's "Toiling Point" series on Grist.org. It has been reprinted with kind permission from that publication.
The environmental impacts of shipping goods hither and yon are significant but relatively obscure, the true costs hidden amid complex shipping tariffs and product price tags. Businesses that rely on products being moved from one place to another have been able to do little to change the performance of truck, rail, and marine cargo companies. Moreover, cargo companies haven't been on most environmental activists' radar screens.
But that's changing. The growing focus on climate and energy -- along with such evergreen issues as biodiversity and air and water pollution -- have brought shipping's environmental impacts into the fast lane. Activists are starting to wage campaigns against dirty shippers. And a handful of companies, including some of the world's largest freight haulers, are beginning to take action.
Ships Happen
The environmental cost of moving goods can be significant. Take cargo ships, for example -- the means by which two-thirds of the goods purchased by U.S. consumers arrive on American shores. While oceangoing vessels worldwide account for just 2% to 3% of global fossil-fuel consumption, they are responsible for 14% of the nitrogen emissions from fossil fuels and 16% of all sulfur emissions from petroleum, according to a study by Carnegie Mellon University.
One reason: cargo ships run on "bunker fuel," the dirtiest, cheapest product that remains after gas and other high-grade fuels are refined from crude oil. Bunker fuel contains up to 5,000 times more sulfur than diesel. As a result, according to Bluewater Network, a division of Friends of the Earth, a single container ship emits more pollution than 2,000 diesel trucks.
Ballast is another issue. Modern cargo ships hold within their hulls millions of gallons of water, which is moved around to ensure the ship is properly trimmed, improving safety and speed. Ships routinely exchange ballast water while in port as cargo is loaded or unloaded. The water pumped out of the ship is alive with organisms from ports previously visited. One analysis of ballast water from foreign ships entering Canada found as many as 12,392 marine creatures per cubic meter. The survivors often invade their adopted homes, sometimes wreaking havoc; the zebra mussel fouling the Great Lakes is just one example.
Of course, ground and air freight have impacts, too. Truck and rail represent about 17% of all transport-related climate emissions. Over the past four decades, freight-truck vehicle-miles have increased more than 50%, while fuel efficiency has grown only about 12%. Overall, the 35 billion gallons of diesel fuel used by truck and rail companies each year produce more than 350 million metric tons of carbon dioxide. Meanwhile, aircraft transport boasts greater fuel consumption and greenhouse-gas emissions per ton-mile than any other mode of transport. And their emissions' negative impacts are amplified due to the high altitude where they occur.
All of which is getting activists moving. In recent years, for example, Bluewater Network successfully sued the U.S. EPA over regulation of emissions from large, oceangoing vessels. In April, a delegation of environmental and public-health organizations from the E.U. and the U.S. pressed the International Maritime Organization to reduce ship smokestack emissions by 70% to 90%, saying the cuts would protect those who live and work near ports from cancer, respiratory ailments, and premature deaths.
The Union of Concerned Scientists has also weighed in, issuing a report that points out that although trucks account for just under 6% of highway miles driven in the U.S., they account for a tenth of all domestic oil consumption. They're also responsible for a quarter of smog-causing pollution and the majority of the cancer threat posed by air pollution in some urban areas. According to the EPA, idling trucks and locomotives use 1.2 billion gallons of diesel fuel a year and emit more than 200,000 tons of nitrogen oxides. Talk about idle indulgences.
Freight Expectations
What's going on to reduce such impacts? A boatload. A couple of years ago, the nonprofit Business for Social Responsibility convened a Clean Cargo Working Group to help retailers and manufacturers reduce the impacts of oceangoing transport. They developed a set of standards for measuring the climate impacts of shipping, along with a questionnaire to give ship operators.
This wasn't easy. Calculating the climate impact of, say, a pair of shoes being shipped from China involves understanding the type of ship, the kind of fuel it burns, the shipping lane it traveled, and other factors. Companies like Chiquita, Hewlett-Packard, Mattel, and Nike have been involved with the effort to work with vessel operators including K Line, Maersk Sealand, and NYK Line to implement the new standards.
Meanwhile, back on dry land, trucking companies -- driven by such mega-shippers as Dell, Home Depot, IKEA, J.C. Penney, and Lowe's -- are gearing up a new generation of vehicles that significantly improve fuel economy and reduce emissions. FedEx has been working with Environmental Defense to produce a low-emission, hybrid-electric delivery vehicle that could become a medium-duty truck for the company's fleet. Wal-Mart, with one of the world's largest fleets, has pledged to increase its trucks' efficiency by 25% over the next three years and double it (from 6.5 to 13 miles per gallon) within a decade. Efficiency comes from improving engines, of course, but also from such steps as installing "side skirts" on trailers to reduce wind resistance.
What can you do to reduce shipping's impact? Four things:
* Avoid air freight whenever possible. Aside from being expensive, it consumes far more fuel per mile traveled. Patagonia calculated that the energy costs associated with a product rose from 6% to 28% when the mode of transport shifted from ground to air.
* Consolidate shipments. This reduces overall packaging and fuel use, and can lead to lower shipping costs.
* Press shippers on their environmental practices. Encourage them to use hybrid vehicles, idle-reduction devices, and other cleaner technologies.
* Buy local whenever possible to reduce the need for shipping altogether.
In the end, keep in mind that the environmental impacts of the products you buy may pale compared to the impacts of shipping them across oceans and continents.
Getting there, as they say, is half the fumes.
------
Joel Makower, a writer and consultant on corporate sustainability practices, is the founder of Green Business Network, producer of GreenBiz.com, ClimateBiz.com, and GreenerBuildings.com.
This article was first printed on May 23, 2006, as part of Makower's "Toiling Point" series on Grist.org. It has been reprinted with kind permission from that publication.
Gas price pain? Take another tax, call in the morning
By Erik N. Nelson, STAFF WRITER
Inside Bay Area
It is often said that pain and improvement go hand-in-hand. The athlete must endure it to build strength. Negotiators must sometimes make painful compromises to reach a deal. The dental patient must bear the sharp pain of treatment to end the long-running toothache.
Managing transportation in the Bay Area and beyond also involves a kind of benevolent pain, a hurt that is supposed to help, and in the end, make us all feel better.
That could mean paying more for a gallon of gasoline, sitting in line 30 minutes longer to pay bridge tolls or paying for the privilege of driving in downtown San Francisco.
To some, it is unnecessary, it is misguided social engineering and even un-American. To others, it is a way to cure traffic jams, pollution and make the nation stronger in the face of terror.
"There's this addiction to oil that we have in this country. The reality is, we have to find ways to move people away from foreign oil," says Assemblyman Joe Nation, D-San Rafael.
His way? Charge Californians — already hurting from record gas prices — another 25 cents a gallon in gasoline sales tax. The pain would be blunted by phasing in the increase at a nickel a pop over five years and offering a tax credit for the lowest 20 percent of income-earners.
There is some pleasure in Nation's bill in Sacramento, from the $2.6 billion a year it would raise for improving traffic flow and the $1.3 billion for alternative-fuel transportation research to the $1.3 billion in rebates for those who buy alternative-fuel vehicles. Besides raising the money, "it would change people's behavior," the assemblyman says.
"Typically, gas prices shoot up, andthey'll probably come back down," says Nation, who is an economist by trade. "People say, 'It's just Memorial Day, I'm going to keep the big car because I know prices are going to fall again.'"
"What evidence shows is if those prices stay high for a year or more, people start to change their behavior," says Nation, who would see to it that prices don't come back down.
And Nation has a point, considering how unflinching Americans' demand for fuel can be, says Rod Diridon, executive director of the Mineta Transportation Institute in San Jose.
While most product sales are subject to normal pressures of price, supply and demand, "when you have a product that everybody wants to use, no matter what the price, that's called inelastic demand."
Consumers won't snap to their senses until they reach a point of "elasticity conversion," when they hurt enough to change their habits, ride BART or trade in the SUV for a hybrid. Or so the theory goes.
Americans are so enamored of their cars that the point of unbearable pain may have already exceeded $3.50 a gallon, Diridon says.
While the prospects of Nation's bill surviving an election-year legislature are dubious, the Bay Area's Metropolitan Transportation Commission is more certain of using the pain principle to fix the problem of lines at toll booths and the high cost of collecting cash tolls.
The solution: Longer lines and more pain in the seat-cushion.
The idea, expected to be approved at the MTC's June 14 meeting, converts 10 cash-only lanes to FasTrak-only lanes on most Bay Area bridges, which require a radio transponder that identifies motorists and allows the Bay Area Toll Authority to deduct the amount of the toll from the motorist's pre-paid account.
The switch, planned for April, is expected to cause 30- to 35-minute delays on the Dumbarton and Carquinez bridges, but those delays are the bitter pill that will make people sign up for FasTrak accounts, says MTC spokesman Randy Rentschler.
And in the end, delays will be reduced as a result of this prodding. "You kind of focus the pain in one small segment, rather than stringing it out for a long period of time," Rentschler says.
There is also the pleasure principle, the one that comes from receiving a discount for using a transponder — offered by other toll agencies around the country — but the MTC does not have enough legal or financial leeway to do more than provide random $100 prizes and one-time bonuses to new members, Rentschler says.
If certain members of the San Francisco Board of Supervisors have their way, the city will follow London's example of needling motorists to lead them in a new direction. London charges nearly $15 a day, excluding nights, weekends and holidays, for driving downtown, paid by a transponder.
San Francisco Supervisor Jake McGoldrick, pointing to London's 30-percent congestion reduction, has convinced the city to study the idea under a $1 million Federal Highway Administration grant.
The Bay Area's well-intentioned pain fixation has its detractors, as one might expect.
Republican state controller candidate Tony Strickland is particularly peeved with Nation's gas tax proposal.
"Social engineering is not working. People are still driving their cars, and they feel even more of a severe pain at the pump now." Like many Republicans, he is proposing to eliminate California's sales tax on gasoline, and ease that pain.
Strickland is into the pleasure principle to such an extent that he recently handed out 21 cents per gallon to motorists at gas stations to show just how good his proposal would make them feel.
"With an average price at $3, you would think at that price, citizens would get out of their cars right now, but most of California is built around the automobile," Strickland says.
But with demand going up and supplies lagging, Nation says the status quo simply can't be preserved.
As many nurses have warned while holding a syringe, you can take the pain now, or live with it later.
Contact Erik Nelson at enelson
@angnewspapers.com and read his Capricious Commuter blog at http://www.
ibabuzz.com/transportation.
Inside Bay Area
It is often said that pain and improvement go hand-in-hand. The athlete must endure it to build strength. Negotiators must sometimes make painful compromises to reach a deal. The dental patient must bear the sharp pain of treatment to end the long-running toothache.
Managing transportation in the Bay Area and beyond also involves a kind of benevolent pain, a hurt that is supposed to help, and in the end, make us all feel better.
That could mean paying more for a gallon of gasoline, sitting in line 30 minutes longer to pay bridge tolls or paying for the privilege of driving in downtown San Francisco.
To some, it is unnecessary, it is misguided social engineering and even un-American. To others, it is a way to cure traffic jams, pollution and make the nation stronger in the face of terror.
"There's this addiction to oil that we have in this country. The reality is, we have to find ways to move people away from foreign oil," says Assemblyman Joe Nation, D-San Rafael.
His way? Charge Californians — already hurting from record gas prices — another 25 cents a gallon in gasoline sales tax. The pain would be blunted by phasing in the increase at a nickel a pop over five years and offering a tax credit for the lowest 20 percent of income-earners.
There is some pleasure in Nation's bill in Sacramento, from the $2.6 billion a year it would raise for improving traffic flow and the $1.3 billion for alternative-fuel transportation research to the $1.3 billion in rebates for those who buy alternative-fuel vehicles. Besides raising the money, "it would change people's behavior," the assemblyman says.
"Typically, gas prices shoot up, andthey'll probably come back down," says Nation, who is an economist by trade. "People say, 'It's just Memorial Day, I'm going to keep the big car because I know prices are going to fall again.'"
"What evidence shows is if those prices stay high for a year or more, people start to change their behavior," says Nation, who would see to it that prices don't come back down.
And Nation has a point, considering how unflinching Americans' demand for fuel can be, says Rod Diridon, executive director of the Mineta Transportation Institute in San Jose.
While most product sales are subject to normal pressures of price, supply and demand, "when you have a product that everybody wants to use, no matter what the price, that's called inelastic demand."
Consumers won't snap to their senses until they reach a point of "elasticity conversion," when they hurt enough to change their habits, ride BART or trade in the SUV for a hybrid. Or so the theory goes.
Americans are so enamored of their cars that the point of unbearable pain may have already exceeded $3.50 a gallon, Diridon says.
While the prospects of Nation's bill surviving an election-year legislature are dubious, the Bay Area's Metropolitan Transportation Commission is more certain of using the pain principle to fix the problem of lines at toll booths and the high cost of collecting cash tolls.
The solution: Longer lines and more pain in the seat-cushion.
The idea, expected to be approved at the MTC's June 14 meeting, converts 10 cash-only lanes to FasTrak-only lanes on most Bay Area bridges, which require a radio transponder that identifies motorists and allows the Bay Area Toll Authority to deduct the amount of the toll from the motorist's pre-paid account.
The switch, planned for April, is expected to cause 30- to 35-minute delays on the Dumbarton and Carquinez bridges, but those delays are the bitter pill that will make people sign up for FasTrak accounts, says MTC spokesman Randy Rentschler.
And in the end, delays will be reduced as a result of this prodding. "You kind of focus the pain in one small segment, rather than stringing it out for a long period of time," Rentschler says.
There is also the pleasure principle, the one that comes from receiving a discount for using a transponder — offered by other toll agencies around the country — but the MTC does not have enough legal or financial leeway to do more than provide random $100 prizes and one-time bonuses to new members, Rentschler says.
If certain members of the San Francisco Board of Supervisors have their way, the city will follow London's example of needling motorists to lead them in a new direction. London charges nearly $15 a day, excluding nights, weekends and holidays, for driving downtown, paid by a transponder.
San Francisco Supervisor Jake McGoldrick, pointing to London's 30-percent congestion reduction, has convinced the city to study the idea under a $1 million Federal Highway Administration grant.
The Bay Area's well-intentioned pain fixation has its detractors, as one might expect.
Republican state controller candidate Tony Strickland is particularly peeved with Nation's gas tax proposal.
"Social engineering is not working. People are still driving their cars, and they feel even more of a severe pain at the pump now." Like many Republicans, he is proposing to eliminate California's sales tax on gasoline, and ease that pain.
Strickland is into the pleasure principle to such an extent that he recently handed out 21 cents per gallon to motorists at gas stations to show just how good his proposal would make them feel.
"With an average price at $3, you would think at that price, citizens would get out of their cars right now, but most of California is built around the automobile," Strickland says.
But with demand going up and supplies lagging, Nation says the status quo simply can't be preserved.
As many nurses have warned while holding a syringe, you can take the pain now, or live with it later.
Contact Erik Nelson at enelson
@angnewspapers.com and read his Capricious Commuter blog at http://www.
ibabuzz.com/transportation.
Sunday, May 28, 2006
The Alt Fuel Distraction
Source: Tom Paine
[May 27, 2006]
In the next 50 years, give or take, those of us in the United States will face two challenges. We must wean ourselves off of oil and we must cut our carbon-dioxide emissions by around 60 percent. Either would be difficult in isolation; together, well ... imagine patting your head and rubbing your belly at the same time, only with trillions of dollars and millions of lives at stake. And with one arm tied behind your back.
What's the best way to meet these challenges? If you were the proverbial Martian, visiting our planet to dispassionately assess our options, what would you find most promising?
Would it be nuclear power? "Clean coal"? Ethanol? You'd only decide on those options if you happen to be an uncommonly gullible Martian (or one in the pay of big industry—but more on that later).
Substantially increasing the amount of electricity we get from nuclear power would mean building dozens of expensive new plants, none of which would be completed for at least 10 years. Each would be a huge risk for investors and virtually uninsurable without government assistance—and once it had run its course, would cost a fortune to decommission. Each would produce tons of waste—when we don't even know what to do with the waste we already have—and each would produce fissile material that could fall into the wrong hands. By some estimates, the CO2 emitted in the full lifecycle of a nuclear plant—taking into account the oil burned mining, transporting and processing uranium, not to mention constructing the plants themselves—would be only a third less than that released by a coal-fired plant.
Burning coal releases CO2. To avoid climate catastrophe, "clean coal" plants would have to sequester their CO2 emissions underground. This technology is speculative, untested and at least 10 years out.
Corn-based ethanol is the result of an extremely energy-intensive, CO2-emitting, polluting process. Corn is grown in massive monocultures with petroleum-based herbicides, pesticides and fertilizers, which are busy accumulating in an enormous "dead zone" in the Gulf of Mexico. Ethanol refining plants consume enormous amounts of natural gas or coal; their product is distributed across the country in oil-burning vehicles. In the end, grain-based ethanol produces little more energy than what's required to make it, and does virtually nothing to reduce CO2 emissions.
What about cellulosic ethanol, the oft-cited, eco-friendlier cousin of grain-based ethanol? Well, it's—wait for it—largely speculative, untested and at least 10 years out.
Would a smart Martian choose these uneconomical and/or inefficient and/or unproven fuel sources as its primary means of addressing America's immediate energy challenges? Would he be willing to wait 10 years to ramp up supply, in a quixotic attempt to keep up with burgeoning demand? Not unless he'd been paid off by big energy companies. (Which, let's face it, would inevitably happen.)
Our Martian would probably suggest we focus first on reducing our energy use—and might be delighted to discover several simple, at-hand ways to do so. Some low-hanging fruit: boost energy efficiency standards for cars, appliances, industrial equipment and buildings. Institute "feebates," which would tax the purchase of fuel-inefficient vehicles and apply the revenue to rebates on fuel-efficient vehicles. Mandate that all government purchases—of vehicles, buildings, appliances, or anything else—be tied to strict energy-efficiency requirements. Pass a federal renewable portfolio standard, mandating that the feds get a certain percentage of their energy from renewable sources.
And if our Martian wanted to get a little bit more ambitious, he might emphasize these broader policy and technological initiatives:
• Quit subsidizing fossil-fuel industries. Period.
• Impose a gas or carbon tax. It would put uniform pressure on the market to reduce oil consumption, without favoring any particular alternative. (The impact on low-income Americans could be offset with reduced payroll taxes.)
• Encourage density by reversing land-use policies at all levels of government that subsidize road-building and sprawl at the expense of compact, walkable, mixed-use communities served by effective public transportation.
• Drop perverse agricultural subsidies that overwhelmingly favor petro-heavy industrial agriculture and long-distance food transport at the expense of organic farms and local food systems.
• Scrap electricity-market regulations that virtually mandate centralized power production at large, inefficient plants (by some estimates, up to two-thirds of energy is wasted en route to end users); instead, encourage decentralized production from small-scale, site-appropriate sources.
Given the panoply of readily available demand-reduction measures, our befuddled Martian might wonder, why is debate over America's energy future dominated by supply-side options like nuclear, "clean coal," and ethanol? If he hung out for a while and studied the socio-economic scene, our Martian might propose the following explanations:
• Policymakers are terrified to tell constituents that big upheavals are coming and big changes are needed. They prefer to propagate the illusion that one set of fuels can simply be swapped out for another, with no disturbance in the hyperconsuming, big-box retailing, suburb-expanding American way of life.
• Many of the most effective energy strategies would mean less fossil-fuel power and more people power—i.e., labor. Site-situated power plants and small organic farms, for instance, require more human labor than their centralized, mechanized, super-sized counterparts. The economic consensus of the American power elites (in both parties) has it that labor costs must be held to a minimum by any means necessary—union-busting, federal rate hikes, outsourcing, or liberal use of illegal immigrants.
• Finally and most significantly: it's the money, stupid. Scratch the surface of each of the elite's favored alternatives and you'll find an industry with political connections and the financial clout to shape public dialogue. The Nuclear Energy Institute, an industry front group, has openly established an organization designed to push pro-nuclear talking points into the public sphere—it's already paid off in the form of an influential op-ed in The Washington Post . Ethanol has even more friends. Legislators from agricultural states love it; corn brokers like Archer Daniels Midland love it; automakers who want their products to look greener love it; the oil companies that will eventually own and run ethanol refineries and stations love it. And coal—well, even kids love coal!
Alternative fuels backed by big industry bucks aren't necessarily without merit. But those concerned about America's—and the world's—energy future need not accept the debate as it is currently configured, with its skewed focus on supply increase over demand reduction and big-industry products over decentralized, human-scale solutions.
Public dialogue is influenced by big money, but it is also, at least for now, influenced by the public. And we, the public, should approach the energy problem with fresh, unbiased eyes.
Like Martians.
[May 27, 2006]
In the next 50 years, give or take, those of us in the United States will face two challenges. We must wean ourselves off of oil and we must cut our carbon-dioxide emissions by around 60 percent. Either would be difficult in isolation; together, well ... imagine patting your head and rubbing your belly at the same time, only with trillions of dollars and millions of lives at stake. And with one arm tied behind your back.
What's the best way to meet these challenges? If you were the proverbial Martian, visiting our planet to dispassionately assess our options, what would you find most promising?
Would it be nuclear power? "Clean coal"? Ethanol? You'd only decide on those options if you happen to be an uncommonly gullible Martian (or one in the pay of big industry—but more on that later).
Substantially increasing the amount of electricity we get from nuclear power would mean building dozens of expensive new plants, none of which would be completed for at least 10 years. Each would be a huge risk for investors and virtually uninsurable without government assistance—and once it had run its course, would cost a fortune to decommission. Each would produce tons of waste—when we don't even know what to do with the waste we already have—and each would produce fissile material that could fall into the wrong hands. By some estimates, the CO2 emitted in the full lifecycle of a nuclear plant—taking into account the oil burned mining, transporting and processing uranium, not to mention constructing the plants themselves—would be only a third less than that released by a coal-fired plant.
Burning coal releases CO2. To avoid climate catastrophe, "clean coal" plants would have to sequester their CO2 emissions underground. This technology is speculative, untested and at least 10 years out.
Corn-based ethanol is the result of an extremely energy-intensive, CO2-emitting, polluting process. Corn is grown in massive monocultures with petroleum-based herbicides, pesticides and fertilizers, which are busy accumulating in an enormous "dead zone" in the Gulf of Mexico. Ethanol refining plants consume enormous amounts of natural gas or coal; their product is distributed across the country in oil-burning vehicles. In the end, grain-based ethanol produces little more energy than what's required to make it, and does virtually nothing to reduce CO2 emissions.
What about cellulosic ethanol, the oft-cited, eco-friendlier cousin of grain-based ethanol? Well, it's—wait for it—largely speculative, untested and at least 10 years out.
Would a smart Martian choose these uneconomical and/or inefficient and/or unproven fuel sources as its primary means of addressing America's immediate energy challenges? Would he be willing to wait 10 years to ramp up supply, in a quixotic attempt to keep up with burgeoning demand? Not unless he'd been paid off by big energy companies. (Which, let's face it, would inevitably happen.)
Our Martian would probably suggest we focus first on reducing our energy use—and might be delighted to discover several simple, at-hand ways to do so. Some low-hanging fruit: boost energy efficiency standards for cars, appliances, industrial equipment and buildings. Institute "feebates," which would tax the purchase of fuel-inefficient vehicles and apply the revenue to rebates on fuel-efficient vehicles. Mandate that all government purchases—of vehicles, buildings, appliances, or anything else—be tied to strict energy-efficiency requirements. Pass a federal renewable portfolio standard, mandating that the feds get a certain percentage of their energy from renewable sources.
And if our Martian wanted to get a little bit more ambitious, he might emphasize these broader policy and technological initiatives:
• Quit subsidizing fossil-fuel industries. Period.
• Impose a gas or carbon tax. It would put uniform pressure on the market to reduce oil consumption, without favoring any particular alternative. (The impact on low-income Americans could be offset with reduced payroll taxes.)
• Encourage density by reversing land-use policies at all levels of government that subsidize road-building and sprawl at the expense of compact, walkable, mixed-use communities served by effective public transportation.
• Drop perverse agricultural subsidies that overwhelmingly favor petro-heavy industrial agriculture and long-distance food transport at the expense of organic farms and local food systems.
• Scrap electricity-market regulations that virtually mandate centralized power production at large, inefficient plants (by some estimates, up to two-thirds of energy is wasted en route to end users); instead, encourage decentralized production from small-scale, site-appropriate sources.
Given the panoply of readily available demand-reduction measures, our befuddled Martian might wonder, why is debate over America's energy future dominated by supply-side options like nuclear, "clean coal," and ethanol? If he hung out for a while and studied the socio-economic scene, our Martian might propose the following explanations:
• Policymakers are terrified to tell constituents that big upheavals are coming and big changes are needed. They prefer to propagate the illusion that one set of fuels can simply be swapped out for another, with no disturbance in the hyperconsuming, big-box retailing, suburb-expanding American way of life.
• Many of the most effective energy strategies would mean less fossil-fuel power and more people power—i.e., labor. Site-situated power plants and small organic farms, for instance, require more human labor than their centralized, mechanized, super-sized counterparts. The economic consensus of the American power elites (in both parties) has it that labor costs must be held to a minimum by any means necessary—union-busting, federal rate hikes, outsourcing, or liberal use of illegal immigrants.
• Finally and most significantly: it's the money, stupid. Scratch the surface of each of the elite's favored alternatives and you'll find an industry with political connections and the financial clout to shape public dialogue. The Nuclear Energy Institute, an industry front group, has openly established an organization designed to push pro-nuclear talking points into the public sphere—it's already paid off in the form of an influential op-ed in The Washington Post . Ethanol has even more friends. Legislators from agricultural states love it; corn brokers like Archer Daniels Midland love it; automakers who want their products to look greener love it; the oil companies that will eventually own and run ethanol refineries and stations love it. And coal—well, even kids love coal!
Alternative fuels backed by big industry bucks aren't necessarily without merit. But those concerned about America's—and the world's—energy future need not accept the debate as it is currently configured, with its skewed focus on supply increase over demand reduction and big-industry products over decentralized, human-scale solutions.
Public dialogue is influenced by big money, but it is also, at least for now, influenced by the public. And we, the public, should approach the energy problem with fresh, unbiased eyes.
Like Martians.
Will We Run Out of Oil?
Source: St. Louis Post Dispatch
May 27, 2006
Getting bogged down in the peak oil argument misses the point. Regardless of whether we're in the peak oil period or not, we ought to act the same way.
It was on a 2003 trip to Saudi Arabia and tour of the country's oil fields that curiosity got the best of energy investment banker Matthew Simmons.
For several years after writing a white paper on the world's largest oil fields, Simmons, of Houston, held doubts about OPEC's ability to continually pump more crude, and questions raised on the weeklong trip compelled him to dig deeper.
Over the next year, he pored over more than 200 technical papers from the files of the Society of Petroleum Engineers, all leading him to a startling conclusion: Saudi Arabia may not be able to squeeze more crude from its giant, aging oil fields as the kingdom claims it will. In fact, the country's oil output -- indeed, the world's -- soon may be in decline. And the consequences could be dire.
"For 50 years we just assumed that the Middle East has unlimited supplies of oil," he said in an interview Wednesday in Clayton, where he gave a speech to the St. Louis Society of CFAs. "If we basically blow by this one and say it's not going to happen, we could have the shock of our lives."
Simmons' argument is detailed in his book published last year, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy." The book has thrust Simmons into the role as de facto champion of the so-called peak oil movement and subjected him to criticism, even ridicule, from some of the oil industry's biggest players, who portray him as a provocateur.
There's been no bigger critic than Daniel Yergin, the author of a Pulitzer-prize winning book on the history of the oil industry and head of energy consulting firm Cambridge Energy Research Associates. Earlier this month, appearing before the U.S. House Energy and Commerce Committee, Yergin told members of Congress that the biggest risk to world oil supplies isn't dwindling reserves underground, but geopolitics and a rebirth of oil nationalism in places such as Bolivia or Venezuela.
"This is the fifth time that we've run out of oil," Yergin told the committee, taking a swipe at Simmons and other peak oil theorists. "The first time was in the 1880s. The last time before this time was in the 1970s. And since then, world oil production has increased by 60 percent."
CERA, in fact, says global oil production capacity could rise as much as 15 million barrels a day by 2010. Other research backs forecasts that the era of plentiful oil isn't ending. The U.S. Geological Survey said there's 3 billion barrels of conventional oil in the ground, of which only 1 billion has been produced. The group puts the peak of production at 2025, even later if Canada's tar sands are included.
The idea that the world's oil production would crest during the first decade of the 21st century isn't new, but it has gained a wider acceptance over the last two years as oil prices have more than doubled to more than $70 a barrel, driving up prices for everything from gasoline to airline tickets to plastic wrap.
The peak oil theory traces its roots to Shell Oil geophysicist M. King Hubbert, who in 1956 predicted that U.S. oil output would reach a maximum in 1970 and worldwide output would peak in 2000. The energy industry was skeptical, but Hubbert was remarkably accurate about America's oil output, which has been falling since 1971 despite a 13-billion barrel discovery at Prudhoe Bay in Alaska.
Geophysicists and analysts in recent years have applied Hubbert's methodology to the world's oil production and predicted that it will peak sometime this decade. And while Saudi Arabia says it can continue to ramp up production from a current level of about 9.5 million barrels a day to 12.5 million barrels in 2009, data on the kingdom's oil resources is a closely held secret, so no one is certain.
Exactly when the world's oil production reaches a peak
isn't really relevant. And even if it peaks, it doesn't mean the world's oil wells are running dry, Simmons said. What is important is that demand will outstrip supply. And there's an immediate need to reduce energy intensity so that the shock isn't so severe, as well as to explore for oil and natural gas in areas that currently are off limits, such as the Arctic National Wildlife Refuge and the outer continental shelf.
"We've got to reduce intensity of how we transport things, goods, people," he said. "And if we don't, then we ought to get our uniforms on and get in the trenches for a really nasty energy war."
Simmons and his critics can agree on some points. Oil is a finite resource, and a surge in demand has resulted in little, if any, spare production capacity.
The International Energy Agency, based in London, predicts global oil demand will reach 120 million barrels by 2030, led by rapid industrialization in China and India, where millions of new cars are being added to the road and dozens of new factories are being built. An important part of meeting that demand is the Middle East and, in particular, Saudi Arabia, which is thought to hold 22 percent of the world's oil reserves.
It's improbable that Saudi Arabia's oil production will grow from its current 9.5 million barrels a day to 15 million barrels by the middle of the next decade as the country's state-owned oil company has predicted, Simmons said. Further, he suggests that the risk of a drop-off is real. More than 90 percent of the kingdom's oil supply comes from five giant oil fields.
Many energy analysts are reluctant to challenge Simmons outright, but generally they believe that higher prices will help provide the answer to increasingly tight supplies. In short, they have faith that the market will work.
Higher oil prices, for instance, make it profitable to develop unconventional oil resources such as Canada's tar sands or oil shale found in the Rocky Mountains, and provide incentives to develop technology to find new oil fields and squeeze more out of existing ones. For instance, 30 years ago, oil producers couldn't drill in seas deeper than 600 feet. Today, companies are drilling in 10,000 feet of water.
Expensive oil will prompt the government and automakers to improve fuel efficiency and develop renewable fuels such as ethanol and biodiesel.
"We're all economic animals," said Kenneth Crawford, a portfolio manager at Argent Capital Management LLC in Clayton who follows the energy industry. "When we see gasoline prices go up dramatically, we see fewer people buying SUVs."
More important than when the world's oil production peaks is how consumers and policymakers will respond to the current energy crisis, said Bill O'Grady of A.G. Edwards & Sons brokerage in St. Louis.
"I tend to think there's plenty of oil," O'Grady said. "I just think it's in geopolitically hostile areas. But getting bogged down in the peak oil argument misses the point. Regardless of whether we're in the peak oil period or not, we ought to act the same way."
May 27, 2006
Getting bogged down in the peak oil argument misses the point. Regardless of whether we're in the peak oil period or not, we ought to act the same way.
It was on a 2003 trip to Saudi Arabia and tour of the country's oil fields that curiosity got the best of energy investment banker Matthew Simmons.
For several years after writing a white paper on the world's largest oil fields, Simmons, of Houston, held doubts about OPEC's ability to continually pump more crude, and questions raised on the weeklong trip compelled him to dig deeper.
Over the next year, he pored over more than 200 technical papers from the files of the Society of Petroleum Engineers, all leading him to a startling conclusion: Saudi Arabia may not be able to squeeze more crude from its giant, aging oil fields as the kingdom claims it will. In fact, the country's oil output -- indeed, the world's -- soon may be in decline. And the consequences could be dire.
"For 50 years we just assumed that the Middle East has unlimited supplies of oil," he said in an interview Wednesday in Clayton, where he gave a speech to the St. Louis Society of CFAs. "If we basically blow by this one and say it's not going to happen, we could have the shock of our lives."
Simmons' argument is detailed in his book published last year, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy." The book has thrust Simmons into the role as de facto champion of the so-called peak oil movement and subjected him to criticism, even ridicule, from some of the oil industry's biggest players, who portray him as a provocateur.
There's been no bigger critic than Daniel Yergin, the author of a Pulitzer-prize winning book on the history of the oil industry and head of energy consulting firm Cambridge Energy Research Associates. Earlier this month, appearing before the U.S. House Energy and Commerce Committee, Yergin told members of Congress that the biggest risk to world oil supplies isn't dwindling reserves underground, but geopolitics and a rebirth of oil nationalism in places such as Bolivia or Venezuela.
"This is the fifth time that we've run out of oil," Yergin told the committee, taking a swipe at Simmons and other peak oil theorists. "The first time was in the 1880s. The last time before this time was in the 1970s. And since then, world oil production has increased by 60 percent."
CERA, in fact, says global oil production capacity could rise as much as 15 million barrels a day by 2010. Other research backs forecasts that the era of plentiful oil isn't ending. The U.S. Geological Survey said there's 3 billion barrels of conventional oil in the ground, of which only 1 billion has been produced. The group puts the peak of production at 2025, even later if Canada's tar sands are included.
The idea that the world's oil production would crest during the first decade of the 21st century isn't new, but it has gained a wider acceptance over the last two years as oil prices have more than doubled to more than $70 a barrel, driving up prices for everything from gasoline to airline tickets to plastic wrap.
The peak oil theory traces its roots to Shell Oil geophysicist M. King Hubbert, who in 1956 predicted that U.S. oil output would reach a maximum in 1970 and worldwide output would peak in 2000. The energy industry was skeptical, but Hubbert was remarkably accurate about America's oil output, which has been falling since 1971 despite a 13-billion barrel discovery at Prudhoe Bay in Alaska.
Geophysicists and analysts in recent years have applied Hubbert's methodology to the world's oil production and predicted that it will peak sometime this decade. And while Saudi Arabia says it can continue to ramp up production from a current level of about 9.5 million barrels a day to 12.5 million barrels in 2009, data on the kingdom's oil resources is a closely held secret, so no one is certain.
Exactly when the world's oil production reaches a peak
isn't really relevant. And even if it peaks, it doesn't mean the world's oil wells are running dry, Simmons said. What is important is that demand will outstrip supply. And there's an immediate need to reduce energy intensity so that the shock isn't so severe, as well as to explore for oil and natural gas in areas that currently are off limits, such as the Arctic National Wildlife Refuge and the outer continental shelf.
"We've got to reduce intensity of how we transport things, goods, people," he said. "And if we don't, then we ought to get our uniforms on and get in the trenches for a really nasty energy war."
Simmons and his critics can agree on some points. Oil is a finite resource, and a surge in demand has resulted in little, if any, spare production capacity.
The International Energy Agency, based in London, predicts global oil demand will reach 120 million barrels by 2030, led by rapid industrialization in China and India, where millions of new cars are being added to the road and dozens of new factories are being built. An important part of meeting that demand is the Middle East and, in particular, Saudi Arabia, which is thought to hold 22 percent of the world's oil reserves.
It's improbable that Saudi Arabia's oil production will grow from its current 9.5 million barrels a day to 15 million barrels by the middle of the next decade as the country's state-owned oil company has predicted, Simmons said. Further, he suggests that the risk of a drop-off is real. More than 90 percent of the kingdom's oil supply comes from five giant oil fields.
Many energy analysts are reluctant to challenge Simmons outright, but generally they believe that higher prices will help provide the answer to increasingly tight supplies. In short, they have faith that the market will work.
Higher oil prices, for instance, make it profitable to develop unconventional oil resources such as Canada's tar sands or oil shale found in the Rocky Mountains, and provide incentives to develop technology to find new oil fields and squeeze more out of existing ones. For instance, 30 years ago, oil producers couldn't drill in seas deeper than 600 feet. Today, companies are drilling in 10,000 feet of water.
Expensive oil will prompt the government and automakers to improve fuel efficiency and develop renewable fuels such as ethanol and biodiesel.
"We're all economic animals," said Kenneth Crawford, a portfolio manager at Argent Capital Management LLC in Clayton who follows the energy industry. "When we see gasoline prices go up dramatically, we see fewer people buying SUVs."
More important than when the world's oil production peaks is how consumers and policymakers will respond to the current energy crisis, said Bill O'Grady of A.G. Edwards & Sons brokerage in St. Louis.
"I tend to think there's plenty of oil," O'Grady said. "I just think it's in geopolitically hostile areas. But getting bogged down in the peak oil argument misses the point. Regardless of whether we're in the peak oil period or not, we ought to act the same way."
Saturday, May 27, 2006
China is world's leading investor in renewable energy
BEIJING, May 16, 2006 (Xinhua via COMTEX) --
China has become the top investor in renewable energy in the world, experts said Tuesday at the ongoing forum for decentralized sustainable energy solutions in China.
Dr. Eric Martinot, a senior research fellow with the U.S.-based Worldwatch Institute and senior visiting scholar of Tsinghua University, said that excluding large hydropower, China invested 6 billion U.S. dollars in renewable energy in 2005 out of a global total investment of 38 billion dollars.
Soaring oil prices have made renewable energy a focus for world investors, said Martinot.
Government support for renewable energy was 10 billion dollars in 2004 for the United States and Europe, including budget fund and policy support. The United States and Europe provide more than 700 million dollars per year for research and development, said Martinot.
Moreover, large commercial banks are starting to notice renewable energy and several are adding renewable energy investments to their lending portfolios, he said.
The industry of renewable energy is booming. There are now more than 70 renewable energy companies worldwide with a market capitalization greater than 40 million dollars each. Their total market capitalization has been over 30 billion dollars.
Major investments and acquisitions have been made in recent years by leading global companies such as GE, Siemens, Shell, BP, Sanyo and Sharp and the industry could provide over 1.7 billion jobs worldwide, he said.China is a great potential renewable energy market for world investors.
Among the 6 billion dollars investment in 2005, most was poured into small hydropower and solar hot water energy, with 600 million US dollars for wind power.
China plans to raise its electricity installed capacity for renewable energy to 10 percent of its total power capacity by 2010 and 20 percent by 2020.
By 2010, renewable energy excluding large hydropower will account for five percent of China's total primary energy consumption and the percentage is planned to rise to 10 percent by 2020.
The Chinese government has given much policy support to the industry of renewable energy.
The law for renewable energy, the first of its kind is China, came into effect at the beginning of this year.
Speaking at a meeting on energy development on the last month, Chinese Premier Wen Jiabao called for effective measures to ensure the implementation of the government's energy saving and renewable development policies and emphasized that renewable energy is an important strategic alternative to coal and oil.
China has become the top investor in renewable energy in the world, experts said Tuesday at the ongoing forum for decentralized sustainable energy solutions in China.
Dr. Eric Martinot, a senior research fellow with the U.S.-based Worldwatch Institute and senior visiting scholar of Tsinghua University, said that excluding large hydropower, China invested 6 billion U.S. dollars in renewable energy in 2005 out of a global total investment of 38 billion dollars.
Soaring oil prices have made renewable energy a focus for world investors, said Martinot.
Government support for renewable energy was 10 billion dollars in 2004 for the United States and Europe, including budget fund and policy support. The United States and Europe provide more than 700 million dollars per year for research and development, said Martinot.
Moreover, large commercial banks are starting to notice renewable energy and several are adding renewable energy investments to their lending portfolios, he said.
The industry of renewable energy is booming. There are now more than 70 renewable energy companies worldwide with a market capitalization greater than 40 million dollars each. Their total market capitalization has been over 30 billion dollars.
Major investments and acquisitions have been made in recent years by leading global companies such as GE, Siemens, Shell, BP, Sanyo and Sharp and the industry could provide over 1.7 billion jobs worldwide, he said.China is a great potential renewable energy market for world investors.
Among the 6 billion dollars investment in 2005, most was poured into small hydropower and solar hot water energy, with 600 million US dollars for wind power.
China plans to raise its electricity installed capacity for renewable energy to 10 percent of its total power capacity by 2010 and 20 percent by 2020.
By 2010, renewable energy excluding large hydropower will account for five percent of China's total primary energy consumption and the percentage is planned to rise to 10 percent by 2020.
The Chinese government has given much policy support to the industry of renewable energy.
The law for renewable energy, the first of its kind is China, came into effect at the beginning of this year.
Speaking at a meeting on energy development on the last month, Chinese Premier Wen Jiabao called for effective measures to ensure the implementation of the government's energy saving and renewable development policies and emphasized that renewable energy is an important strategic alternative to coal and oil.
Heat 'Batteries' Dramatically Cut Energy Use
Source: Edie News
LONDON, May 26, 2006 - Heat storage tanks that can cut energy used for heating by 50%-70%, and are becoming an increasingly profitable investment as energy prices shoot up.
"The heat tank is basically a battery for heat," said Trefor Evans of First Light Energy Ltd., the company currently launching its heat tanks in the U.K. following their success in Germany, following a presentation at the Nemex exhibition at the NEC in Birmingham.
Such high energy savings can be achieved thanks to the thermal properties of paraffin wax, used to capture as much as 10kWh in a storage tank with dimensions of 2x1x1m. As the paraffin melts it takes in large amounts of heat -- melting down paraffin requires around four times the amount for melting ice. The heat is then released when it cools and returns to the solid state.
For air and water heating, this means that almost all the heat generated is used. Storing excess heat also means that boilers can be fired much less frequently, increasing efficiency. As boilers typically take five to six minutes to reach peak efficiency, intermittent firing wastes much energy.
By reducing the number of boiler start-ups by 90%, a heat storage tank can also dramatically reduce the production of soot and other pollutants.
But the highest savings of 70% tanks are achieved when the tanks are used in conjunction with solar systems.
"All the heat produced on a sunny day is stored, and can be used when it is necessary," Trefor Evans explained.
The tanks are also ideal for use with air and ground-source heat pumps, he said -- "basically any renewable energy source that produces heat."
While an insulated hot water tank initially at 80 degrees will cool by roughly ten degrees overnight, a heat tank storing thermal energy as latent heat will only lose one degree in the same conditions.
Rising energy prices are good news for heat tanks, increasing their economic viability together with continuous technological development.
LONDON, May 26, 2006 - Heat storage tanks that can cut energy used for heating by 50%-70%, and are becoming an increasingly profitable investment as energy prices shoot up.
"The heat tank is basically a battery for heat," said Trefor Evans of First Light Energy Ltd., the company currently launching its heat tanks in the U.K. following their success in Germany, following a presentation at the Nemex exhibition at the NEC in Birmingham.
Such high energy savings can be achieved thanks to the thermal properties of paraffin wax, used to capture as much as 10kWh in a storage tank with dimensions of 2x1x1m. As the paraffin melts it takes in large amounts of heat -- melting down paraffin requires around four times the amount for melting ice. The heat is then released when it cools and returns to the solid state.
For air and water heating, this means that almost all the heat generated is used. Storing excess heat also means that boilers can be fired much less frequently, increasing efficiency. As boilers typically take five to six minutes to reach peak efficiency, intermittent firing wastes much energy.
By reducing the number of boiler start-ups by 90%, a heat storage tank can also dramatically reduce the production of soot and other pollutants.
But the highest savings of 70% tanks are achieved when the tanks are used in conjunction with solar systems.
"All the heat produced on a sunny day is stored, and can be used when it is necessary," Trefor Evans explained.
The tanks are also ideal for use with air and ground-source heat pumps, he said -- "basically any renewable energy source that produces heat."
While an insulated hot water tank initially at 80 degrees will cool by roughly ten degrees overnight, a heat tank storing thermal energy as latent heat will only lose one degree in the same conditions.
Rising energy prices are good news for heat tanks, increasing their economic viability together with continuous technological development.
Cars Running On Water?
Source KXAN.com
May 24, 2006, 09:11 AM
With gas prices soaring higher and higher, local inventors are getting closer to making engines that run on water. Sound far-fetched? Well, it's not.
The pain at the pump is hurting us all, but believe it or not, there are many people out there working to eliminate our need altogether for that black gold.
"There will be alternative fueled vehicles that are being tested. Some of them will end up being great successes. Others will end up being failures," David Allen with the UT Department of Chemical Engineering said.
We met an Austin man determined to solve that problem, but let's start with a Florida man who says he's already done it.
Dennie Klein lives in Clearwater, Florida and says he's invented a machine that allows his old Ford Escort to use water for fuel instead of gas. Klein, who runs a company called Hydrogen Technology, believes his invention is a resounding success.
"We virtually open this valve and start injecting the Aquagyn into the engine," Klein said.
He developed a formula called Aquagyn -- a hydrogen/oxygen gas mixture that he says can make your car run instead of using strict gasoline. It's a new type of hybrid.
"So, as we drive down the road, it's making the gas from water on demand as we drive," Klein said.
Now, using water to power cars has been tried before, but the amount of energy needed to get hydrogen out of water was immense. However, Klein says he's solved that problem. Part of the solution is using the wasted energy from a car's alternator to separate the hydrogen and oxygen in water.
"If you have excess electricity that is otherwise being wasted, one possibility is to make hydrogen out of that wasted electricity and then use that hydrogen," Allen said.
Allen is doing his own project with TxDOT and soon, possibly, the federal government. He and his team are also working to produce hydrogen-powered vehicles.
"It would be a fuel-celled bus. So you take a hydrogen fuel, you put it into a fuel cell and it generates water as the end product and electricity to power the bus," Allen said.
So, does all this mean we're going to soon pay a lot less to drive? Allen says it all depends on how much it would cost to adapt to the new technology. The Aquagyn produces oxygen, which can melt through brick and turn a brass ball into liquid metal.
The only problem is when that oxygen gets so hot; Allen says it could possibly burn the cylinders in your car, which could require you to get a car specially made to withstand the heat.
Klein says if you take a look at his old Ford Escort, with just eight ounces of water, he drove 100 miles.
There's a lot of competition out there to make the successful car of the future. One guarantee is that there will be cleaner, more efficient cars on the road soon and hopefully more money in your wallet.
May 24, 2006, 09:11 AM
With gas prices soaring higher and higher, local inventors are getting closer to making engines that run on water. Sound far-fetched? Well, it's not.
The pain at the pump is hurting us all, but believe it or not, there are many people out there working to eliminate our need altogether for that black gold.
"There will be alternative fueled vehicles that are being tested. Some of them will end up being great successes. Others will end up being failures," David Allen with the UT Department of Chemical Engineering said.
We met an Austin man determined to solve that problem, but let's start with a Florida man who says he's already done it.
Dennie Klein lives in Clearwater, Florida and says he's invented a machine that allows his old Ford Escort to use water for fuel instead of gas. Klein, who runs a company called Hydrogen Technology, believes his invention is a resounding success.
"We virtually open this valve and start injecting the Aquagyn into the engine," Klein said.
He developed a formula called Aquagyn -- a hydrogen/oxygen gas mixture that he says can make your car run instead of using strict gasoline. It's a new type of hybrid.
"So, as we drive down the road, it's making the gas from water on demand as we drive," Klein said.
Now, using water to power cars has been tried before, but the amount of energy needed to get hydrogen out of water was immense. However, Klein says he's solved that problem. Part of the solution is using the wasted energy from a car's alternator to separate the hydrogen and oxygen in water.
"If you have excess electricity that is otherwise being wasted, one possibility is to make hydrogen out of that wasted electricity and then use that hydrogen," Allen said.
Allen is doing his own project with TxDOT and soon, possibly, the federal government. He and his team are also working to produce hydrogen-powered vehicles.
"It would be a fuel-celled bus. So you take a hydrogen fuel, you put it into a fuel cell and it generates water as the end product and electricity to power the bus," Allen said.
So, does all this mean we're going to soon pay a lot less to drive? Allen says it all depends on how much it would cost to adapt to the new technology. The Aquagyn produces oxygen, which can melt through brick and turn a brass ball into liquid metal.
The only problem is when that oxygen gets so hot; Allen says it could possibly burn the cylinders in your car, which could require you to get a car specially made to withstand the heat.
Klein says if you take a look at his old Ford Escort, with just eight ounces of water, he drove 100 miles.
There's a lot of competition out there to make the successful car of the future. One guarantee is that there will be cleaner, more efficient cars on the road soon and hopefully more money in your wallet.
Feeling the Effects of Global Warming?
Source: Miami Herald
May 25, 2006
SYNOPSIS: Greenland's disintegration could become irreversible by mid-century, which would eventually raise sea levels 20 feet. That would inundate one quarter of Florida.
As the 2006 hurricane season begins, three questions hang over Florida.
• Were the 2004 and 2005 hurricane seasons just part of a natural cycle, or have we entered a new period of global-warming-enhanced hurricane seasons?
• As global warming leads to ever-rising sea levels, how will that affect low-lying South Florida?
• What can the state do to help avert the worst climate change impacts?
Since the 1970s, the number of intense Category 4 and 5 Atlantic hurricanes has nearly doubled. Hurricanes are heat engines that draw their power from the warm, moist water beneath them. The warmer the water, the more intense the hurricane. Statistical analysis reveals the major cause of the increase in hurricane intensity is rising sea surface temperatures.
Since the 1970s, the Atlantic's hurricane-forming region has warmed nearly 1 degree Fahrenheit. Recent research attributes nearly all that warming to increasing emissions of heat-trapping greenhouse gases from human activity.
As the sea surface temperature increases, we are also seeing longer hurricane seasons. In 2005, Emily became the only known Category 5 Atlantic hurricane to form in July. Zeta was the longest-lived January tropical cyclone on record.
A fraction of the recent warming may be due to natural cycles, but on our current emissions trend, the Atlantic will warm another 2 degrees Fahrenheit by mid-century, and more than double that by 2100. If we don't act fast, global warming will utterly overwhelm the natural cycles. The moderate hurricane seasons of the 1960s and 1970s are a thing of the past. Four or more Atlantic super-hurricanes -- Category 4 or stronger -- a year is likely to be the norm by 2025.
The devastation of Katrina showed what havoc a super-hurricane can wreak when it hits a city that's largely below sea level. Just a few years ago, scientists projected a mean sea level rise of 20 inches, with little or no contribution from the huge ice sheets of Greenland and Antarctica.
Today we know the ice sheets are melting much faster than predicted. Both Greenland and Antarctica are already contributing to rising seas. Greenland's disintegration could become irreversible by mid-century, which would eventually raise sea levels 20 feet. That would inundate one quarter of Florida.
How can Florida protect itself from such sea level rise and a constant barrage of hurricane seasons such as 2004 and 2005? While there are engineering solutions for coastal regions below sea level, the best hope is to minimize future sea level rise by acting now to avoid catastrophic warming.
America is responsible for 25 percent of greenhouse gas emissions from burning coal, oil and gas. Absent federal leadership, the states must act. While Florida will suffer terribly from global warming, it is doing little to slow emissions growth. State electricity demand is projected to grow by one third over the next decade, with much of that demand met by highly polluting coal power.
Demand growth comes largely from new homes. Yet the Florida Solar Energy Center has shown that simple cost-effective changes can reduce residential demand 40 percent, avoiding the need for countless new power plants.
In recent weeks, the Florida Legislature took a good first step by passing legislation to establish an Energy Commission and develop a comprehensive state climate plan with greenhouse gas reductions.
The new commission should learn from the experience of the country's best -- the California Energy Commission. Over the past three decades, while Florida's electricity per capita has risen nearly 50 percent, California's strong efficiency efforts have kept per capita demand flat. And California's efficiency investments cost 2.9 cents per kilowatt hour -- far cheaper than new power plants.
Reduce addiction to oil
Finally, 11 states have embraced tailpipe emissions standards aimed at reducing carbon dioxide emissions from cars. This strategy would also help reduce addiction to imported oil.
If global warming goes unchecked, South Florida faces substantial risk of devastation by the steady rise in sea levels and intense hurricanes. While the state needs to prepare for the expected onslaught of hurricanes in the coming decades, I urge Florida to join California and the other states aggressively investing in cleaner energy. By acting now, we can have lower energy bills and less dependence on Mideast oil, while minimizing the more extreme climate risks we face later in the century.
Joseph Romm is a former acting assistant secretary of energy and author of the forthcoming book, Hell and High Water: How Global Warming Will Forever Change American Life.
May 25, 2006
SYNOPSIS: Greenland's disintegration could become irreversible by mid-century, which would eventually raise sea levels 20 feet. That would inundate one quarter of Florida.
As the 2006 hurricane season begins, three questions hang over Florida.
• Were the 2004 and 2005 hurricane seasons just part of a natural cycle, or have we entered a new period of global-warming-enhanced hurricane seasons?
• As global warming leads to ever-rising sea levels, how will that affect low-lying South Florida?
• What can the state do to help avert the worst climate change impacts?
Since the 1970s, the number of intense Category 4 and 5 Atlantic hurricanes has nearly doubled. Hurricanes are heat engines that draw their power from the warm, moist water beneath them. The warmer the water, the more intense the hurricane. Statistical analysis reveals the major cause of the increase in hurricane intensity is rising sea surface temperatures.
Since the 1970s, the Atlantic's hurricane-forming region has warmed nearly 1 degree Fahrenheit. Recent research attributes nearly all that warming to increasing emissions of heat-trapping greenhouse gases from human activity.
As the sea surface temperature increases, we are also seeing longer hurricane seasons. In 2005, Emily became the only known Category 5 Atlantic hurricane to form in July. Zeta was the longest-lived January tropical cyclone on record.
A fraction of the recent warming may be due to natural cycles, but on our current emissions trend, the Atlantic will warm another 2 degrees Fahrenheit by mid-century, and more than double that by 2100. If we don't act fast, global warming will utterly overwhelm the natural cycles. The moderate hurricane seasons of the 1960s and 1970s are a thing of the past. Four or more Atlantic super-hurricanes -- Category 4 or stronger -- a year is likely to be the norm by 2025.
The devastation of Katrina showed what havoc a super-hurricane can wreak when it hits a city that's largely below sea level. Just a few years ago, scientists projected a mean sea level rise of 20 inches, with little or no contribution from the huge ice sheets of Greenland and Antarctica.
Today we know the ice sheets are melting much faster than predicted. Both Greenland and Antarctica are already contributing to rising seas. Greenland's disintegration could become irreversible by mid-century, which would eventually raise sea levels 20 feet. That would inundate one quarter of Florida.
How can Florida protect itself from such sea level rise and a constant barrage of hurricane seasons such as 2004 and 2005? While there are engineering solutions for coastal regions below sea level, the best hope is to minimize future sea level rise by acting now to avoid catastrophic warming.
America is responsible for 25 percent of greenhouse gas emissions from burning coal, oil and gas. Absent federal leadership, the states must act. While Florida will suffer terribly from global warming, it is doing little to slow emissions growth. State electricity demand is projected to grow by one third over the next decade, with much of that demand met by highly polluting coal power.
Demand growth comes largely from new homes. Yet the Florida Solar Energy Center has shown that simple cost-effective changes can reduce residential demand 40 percent, avoiding the need for countless new power plants.
In recent weeks, the Florida Legislature took a good first step by passing legislation to establish an Energy Commission and develop a comprehensive state climate plan with greenhouse gas reductions.
The new commission should learn from the experience of the country's best -- the California Energy Commission. Over the past three decades, while Florida's electricity per capita has risen nearly 50 percent, California's strong efficiency efforts have kept per capita demand flat. And California's efficiency investments cost 2.9 cents per kilowatt hour -- far cheaper than new power plants.
Reduce addiction to oil
Finally, 11 states have embraced tailpipe emissions standards aimed at reducing carbon dioxide emissions from cars. This strategy would also help reduce addiction to imported oil.
If global warming goes unchecked, South Florida faces substantial risk of devastation by the steady rise in sea levels and intense hurricanes. While the state needs to prepare for the expected onslaught of hurricanes in the coming decades, I urge Florida to join California and the other states aggressively investing in cleaner energy. By acting now, we can have lower energy bills and less dependence on Mideast oil, while minimizing the more extreme climate risks we face later in the century.
Joseph Romm is a former acting assistant secretary of energy and author of the forthcoming book, Hell and High Water: How Global Warming Will Forever Change American Life.
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