Normative Narratives


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Green News: The Roles of “Rich” and “Poor” Countries in Combating Climate Change

Major Polluters: 

A rule proposed by the Enivironmental Protection Agency would cut carbon pollution from power plants 30 percent from 2005 levels by 2030 – the equivalent, according to the agency, of taking two-thirds of all cars and trucks in America off the road. Here are some things to know about the rule:

• The E.P.A. expects that under the regulation, 30 percent of electricity in the United States will still come from coal by 2030, down from about 40 percent today.

• The rule is not an executive order. Under the Clean Air Act, the E.P.A. is required to regulate any substance defined as a pollutant, which the law defined as substances that endanger human life and health. A 2007 Supreme Court decision led to an E.P.A. determination that carbon dioxide is a pollutant, thus requiring that the agency regulate it or be in violation of the law.

• The rule will not, on its own, lower greenhouse gas pollution enough to prevent catastrophic effects of climate change. But, in combination with other regulations, it would allow the United States to meet its commitment to the United Nations to cut carbon pollution 17 percent by 2020 and press other major polluting countries, particularly China and India, to follow suit.

Energy production accounted for 26% of global GHG emissions in 2008, the largest source by sector. If the United States can cut its own emissions from energy production by shifting towards renewable energies and natural gas, and pressure other leading emitters to follow suit, this could significantly mitigate the environmental damage caused by carbon dioxide emissions. Countries such as China and India will point to comparatively high levels of U.S. per capita emissions to counter pressure from the U.S. to reduce their emissions.

Least Developing Countries (LDCs):

Access to energy is an essential component of modernization, poverty alleviation, and economic development. According to the International Energy Agency, 1.3 billion people (18% of the global population) live without access to electricity, 95% of which live in Sub Saharan Africa or developing Asia. In order to reconcile two fundamental components of sustainable human development–environmental sustainability and [extreme] poverty alleviation–the worlds least developed countries will need to satisfy their energy needs from low / zero emission sources.

There are a number of reasons to believe LDCs will rise to this challenge. As largely agrarian economies, LDCs face the negative impacts of climate change directly; food / water insecurity and communicable disease patterns are directly affected by changing climate patterns. Furthermore, because traditional energy infrastructure by definition does not exist in places without access to energy, the perceived “sunk costs” associated with renewable energy are largely non-existent.

However, LDCs face one large impediment to clean energy production–cost. As refined production techniques, market penetration, and creative financing drive down the price of renewable energy in the developed world, it is imperative that the technology gap be bridged to include LDCs in the renewable energy revolution. If the 18% of the global population without access to energy instead gain access to dirtier forms of energy, the actions of developed countries to combat climate change could be almost entirely negated.   

Despite this cost gap and shortfalls in pledged financing from developed countries, developing nations accounted for 43% of new renewable energy investment in 2013 ($93 billion out of a global total of $214 billion). However, only $9 billion of this investment came from Sub-Saharan Africa. Efforts to provide financing for renewable energy to those who currently lack access to any form of energy are at crux of sustainable human development, and must be scaled up immediately.

To this end, developed countries have pledged $100 billion per year in “climate aid” by 2020–if realized this would more than double investment in renewable energy in LDCs. Developing a global network of carbon taxation / cap and trade policies (or even a less ambitious patchwork of policies by the worlds largest emitters) can provide a steady revenue stream to ensure such aid is delivered.

Which countries are considered “rich” (and therefore are donor countries), and which countries are considered “poor” (and therefor aid recipients)? Once consensus is reached on this contentious issue, the question of how much aid each specific donor country should contribute remains (between historically high emitters / high per capita emitting “rich” countries, and current high emitting “emerging economies” such as China and India). These are the  challenges world leaders must work together to overcome while drafting the Post-2015 Climate Agreement / Sustainable Development Goals (SDGs).

Neither “rich” nor “poor” countries can adequately address global environmental risks alone–concerted action is needed.  

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Conflict Watch: Oil Sand and Renewable Energy, a New Case for a Carbon Tax / Cap and Trade

An interesting piece in the NYT about how a less incentive-laden renewable energy sector in Europe is actually helping the industry grow “sustainably”:

“Europe used to be nirvana for companies in the clean-energy business, but in the past couple of years it has become a much tougher place. With economies anemic, electricity demand is down; and, not surprisingly, once-generous subsidies that encouraged installing swaths of solar collectors in sun-poor Germany or wind farms in relatively calm areas of France are either being reduced or look as if they could be.

But for some people and companies, the harsher environment is fostering a tough-minded approach that may be healthy for the effort in the years ahead to curb the greenhouse gases that are blamed for global warming.

Europe’s struggles, for instance, pushed Enel Green Power, one of the world’s largest electricity generators from renewable sources like wind and solar, to explore markets like Brazil, Chile and Mexico, that may turn out to be a lot more promising than Europe.”

“Contrary to the practice in much of Europe, where subsidies are used as a lure for renewables projects, developing countries like Brazil often award contracts to build new power capacity through competitions that sometimes pit clean energy against fossil fuels like natural gas and diesel. For instance, Enel Green Power recently won wind power deals in Brazil in bake-offs that included proposals for natural gas-fired stations.

‘There was a competitive approach to renewables that we liked a lot,’ said Francesco Starace, the company’s chief executive'”

“Mr. Starace especially likes long-term deals like the ones he has worked out in Mexico with Nissan and Nestlé to build wind farms to supply factories with power. He hopes to replicate this sort of arrangement across emerging markets, including east Africa. These private, one-on-one arrangements are more sustainable, he figures.

You don’t run the risk of a regulator or a state coming back at you and saying, ‘Guys, the good days are over, now we have to talk about reducing this and that,’ he said.”

“The goal of the renewables business, Mr. Murley said, should be to be competitive eventually on costs with other energy sources and not to rely on subsidies. He also believes in building businesses like his clusters of Swedish wind farms that have the scale to engage a team of managers and the clout to cut better deals with suppliers. His organization tries to buy turbines and other equipment that are reliable rather than cheap and does not skimp on spending money on maintenance.

The closer you are to the wholesale price of power, the less you are at risk,’ he [Tom Murley of HgCapital] said. He is also investing in onshore wind projects in Ireland, where the operating environment resembles that of Sweden.”

Talking about the “sustainability” of the renewable energy sector may be an interesting choice of words, but how the renewable energy sector matures is yet to be decided. Perhaps a rethinking of the subsidy approach to developing renewable energy would be a good think, if a more efficient complimentary / substitute path is proposed. Subsidies distort markets, so governments must have a credible threat that they will stop providing subsidy support if companies in the industry do not mature as they are  supposed to. But pulling the plug on subsidy programs is a bad move politically–it is always difficult to find politicians that are willing to let jobs leave their municipality.

What you get is subsidies and tax-breaks that are not at all linked to any real C-B analysis or long term commitment from companies (Another reason that making MNC themselves finance sustainable energy infrastructure makes sense as it locks the company into a longer term commitment–the cost of closing up shop is greater).  Some tax breaks and subsidies are good ideas, but they should be based on adequate C-B analysis and should contain long-term legally binding commitments. Additionally, tax breaks and subsidies for “dirty-energy” have to go, so that these two competing industries can actually compete on common ground. If we are considering an approach to scale back subsidies for an “infant industry”, removing subsides for a more mature competing industry must be part of that approach.

Ending tax breaks for “dirty energy” brings us to the next point of this article, which is the argument for some sort of carbon-tax or cap-and-trade system. If we are not going to reward the renewable energy industry for its implicit positive externalities, we should make dirtier forms of energy pay for their negative externalities. An article about “petroleum coke” highlights the need for something to keep emissions in check:

“Assumption Park gives residents of this city lovely views of the Ambassador Bridge and the Detroit skyline. Lately they’ve been treated to another sight: a three-story pile of petroleum coke covering an entire city block on the other side of the Detroit River.

Detroit’s ever-growing black mountain is the unloved, unwanted and long overlooked byproduct of Canada’s oil sands boom.

And no one knows quite what to do about it, except Koch Carbon, which owns it.

The company is controlled by Charles and David Koch, wealthy industrialists who back a number of conservative and libertarian causes including activist groups that challenge the science behind climate change. The company sells the high-sulfur, high-carbon waste, usually overseas, where it is burned as fuel.”

““What is really, really disturbing to me is how some companies treat the city of Detroit as a dumping ground,” said Rashida Tlaib, the Michigan state representative for that part of Detroit. “Nobody knew this was going to happen.” Almost 56 percent of Canada’s oil production is from the petroleum-soaked oil sands of northern Alberta, more than 2,000 miles north.”

“Detroit’s pile will not be the only one. Canada’s efforts to sell more products derived from oil sands to the United States, which include transporting it through the proposed Keystone XL pipeline, have pulled more coking south to American refineries, creating more waste product here.”

“And what about the leftover coke? The Environmental Protection Agency will no longer allow any new licenses permitting the burning of petroleum coke in the United States. But D. Mark Routt, a staff energy consultant at KBC Advanced Technologies in Houston, said that overseas companies saw it as a cheap alternative to low-grade coal. In China, it is used to generate electricity, adding to that country’s air-quality problems. There is also strong demand from India and Latin America for American petroleum coke, where it mainly fuels cement-making kilns.

“I’m not making a value statement, but it comes down to emission controls,” Mr. Routt said. “Other people don’t seem to have a problem, which is why it is going to Mexico, which is why it is going to China.”

“It is worse than a byproduct,” Ms. Satterthwaite said.“It’s a waste byproduct that is costly and inconvenient to store, but effectively costs nothing to produce.””

“Lorne Stockman, who recently published a study on petroleum coke for the environmental group Oil Change International, says, “It’s really the dirtiest residue from the dirtiest oil on earth,” he said.”

–Here we have an example of billionaire industrialists selling oil and shipping the dirty byproduct around the world to be burned, releasing even more emissions. And how much does all this profit-generating business pay for it’s emissions? Essentially zero. Oil sand creates 3rd degree pollution (burning of the oil, transportation of petro-coke, and burning of the petro-coke), and because of their lobbying power, industrialists are able to shift the cost onto future generations.

It is appalling our government, and other governments, let companies do this without paying anything for the emissions they produce.  Companies claim they cannot deal with a carbon-tax or cap and trade, while posting billion dollar profit margins. At the end of the day, a carbon tax is a small blip on the companies cost-function. Cap and Trade would initially not even make emissions more expensive, as the market is depressed (due to lower energy demand following the Great Recession) and swamped with low-price / free vouchers. For these reasons, a carbon tax would likely be more effective in the short-run, but having either system in place would be better than what we have now (which is essentially having no system in place to check emissions).

Corporate interests will always claim the sky is falling, and that any additional cost will bring that industry to it’s knees, forcing  them to outsource jobs and close operations. What we would see , I imagine, is that if you call this bluff, often companies will decide the cost and uncertainty of relocation is not worth the small price of paying for emissions (especially if that company had to install, say, a wind-farm when it started operations). If companies want access to developed countries markets, they should have to pay for their emissions. If America and Europe came up with a strong carbon-market (perhaps part of a larger U.S.-Europe FTA?), the rest of the world would join in. The ultimate goal would be a global carbon-market, which would eliminate the threat of companies to move operations to a lower regulation  area.

A double sided approach–ending subsidies / tax-breaks for both renewables and “dirty-energy”, combined with a carbon-tax / cap-and-trade system, could allow market forces to help renewable energy prices converge towards the price of more traditional forms of energy. It would do so while creating a more resilient renewable-energy industry, create a cleaner environment, and open up fiscal space for spending on important social programs.

This approach is different, and theoretically sound–it would be very interesting to see how effective a pilot version of this program could be.

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Transparency Thursday: Recycling New York City’s Garbage

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Turning waste into energy may seem futuristic, but in this case the future is today. There is currently a high capacity operational waste-to-energy plant in Malaysia.
“K.S. Sivaprasad, an engineer from India, spent four decades perfecting a factory that accepts city trash, dries it, picks out the burnable elements and ignites them to create electricity. His first full-scale plant chews through 700 tons of garbage a day and delivers 5.5 megawatts to the power grid.”

In the U.S., waste-to-energy used to be unregulated and, as you could imagine, quite environmentally harmful. Burning trash, without taking the proper measures, released all sorts of greenhouse gasses into the atmosphere. Over time, the process has become more regulated and environmentally friendly:

“Proponents of WTE technology argue that thermal processing is a form of recycling and that new technologies and EPA regulations have eliminated the odor and air pollution many people connect with the process of incinerating trash. Professor Nickolas J. Themelis, director of the Earth Engineering Center at Columbia University, said he thinks that much of the opposition to creating WTE plants in the city stems from people’s memories of the bad old days.

“At one point New York had 30 municipal incinerators and about 15,000 residential incinerators with no regulation at all. It was a mess,” said Themelis. “There is this kind of animus among people who have been exposed to incinerators in the past. They associate them with black smoke and horrific pollution. But the truth is, those are all gone now. The pollution generated by trucking waste to landfills can’t compare to how little a modern WTE facility produces. The people who oppose these technologies are like the Flat Earth Society, they are holding back progress.”

Mayor Bloomberg called for a pilot waste-to-energy program in NYC this past March:

“Mayor Michael R. Bloomberg announced on Tuesday that the city was looking for a pilot “state of the art facility” that could handle a maximum of 450 tons of trash a day — out of a total of 10,000 tons currently in need of disposal — with plans to double that capacity if successful. The plant, which must be in New York City or no farther than 80 miles away, would be privately built and operated.”

Mr. Sivaprasad wants to expand his operation, not in NYC, but in India.

“Mr. Saxena’s involvement will help the company apply for a grant from the Trade and Development Agency in the United States for the next project that Mr. Sivaprasad would like to build: a plant that would absorb 1,200 tons of trash a day and produce 10 megawatts of power in the southern Indian cities of Chennai or Bangalore.

“Some improvement is coming in, and with American money I can clinch a project,” he said. “This has taken a very long time.”

If he is applying for American financing, the project should be in America. Seeing as Mayor Bloomberg is a proponent of the project, and Mr. Sivaprasad clearly has the ability to create a high capacity fully functional waste-to-energy plant, a NYC project seems like a natural fit for both parties.

“There are currently 10 WTE facilities statewide licensed by the Department of Environmental Conservation to burn municipal waste and convert it into steam and electricity. One is located in Peekskill, about 50 miles up the Hudson River. The facility is owned by Wheelabrator, a subsidiary of Waste Management, the country’s largest waste processor, which serves more than 20 million residential, commercial and municipal customers nationwide.”

This idea sounds like a great way to deal with New York City’s garbage in a sustainable and profitable way, whats not to like about it? It is literally making money from trash, brilliant!