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Climate Change Is Important: Energy Conservation is the First Step


May 16, 2009

Why Cap and Trade is Better Than a Carbon Tax

Category: Climate Change,Economics,Policy – Tom Harrison – 10:23 pm

The Times posted a very thoughtful article explaining why a carbon Cap and Trade policy is now the favored approach making its way through Congress now.

In the end, the merits of the system are mostly that it is expedient, politically and from a management perspective. No one likes a tax, even if it may be the far simpler solution to the problem. But if no one likes a tax, then it’s kind of a tough sell.

Some argue that cap and trade is just a tax wrapped in a politically tolerable icing. They’re pretty much right. But there’s one aspect of cap and trade that differentiates it from a tax — its fungible. Political wranglers can wrangle deals that are palatable, to constituents, companies, conservatives and liberals — the ultimate outcome is the same. This makes it more complicated. But perhaps a little complication is all that differentiates a tax from a successful program.

I have argued before the merits of cap and trade. This article supports my thinking, namely that it’s primary advantage is that cap and trade is the pragmatic solution, and currently, we need a real solution to climate change. The solution that can become law is the best one.

5 Comments

  1. An opinion from Paul Krugman at the Times on this topic makes some good points on cap and trade. Don’t hold it against Krugman that he’s an economist or that he won the Nobel Prize (you know, from those socialist Swedes).

    Comment by Tom Harrison — May 18, 2009 @ 6:14 pm

  2. Thought you might find this carbon capture success story in Wisconsin worthwhile. Good to know someone is experimenting.

    Capturing the carbon dioxide that wafts up the smokestack after burning coal (or any other fossil fuel) has been identified by everyone from President Obama to the United Nations Intergovernmental Panel on Climate Change as a critical technology to help keep the lights on while combating climate change. And now there has been yet another successful demonstration that the technology to capture that CO2 from flue gas might actually work: chilled ammonia can capture more than 88 percent of the greenhouse gas before it goes up the smokestack.

    Alstom Power and We Energies have released preliminary data on their carbon capture pilot project at Pleasant Prairie, Wisc. The pilot plant, set up to siphon the CO2 from a small stream of the total flue gas using chilled ammonia, not only captured most of the CO2, it captured it in a more than 99 percent pure form, according to Robert Hilton, vice president of power technologies and government affairs at Alstom, which is important for any future storage or industrial reuse. “We can [capture] 90 percent [of the CO2] and do it consistently,” he notes. “We’ve done over 90 percent at times.”

    So far the project has run some 4,600 hours continuously without issue and captured some 18,000 tons of CO2 over the last year.

    Because this was just a demonstration project, Alstom didn’t do anything with the CO2, which in the future would either be sold to industrial users for carbonated beverages or oil recovery or pumped deep underground for permanent storage. Alstom just re-released the CO2 right back up the smokestack with the other flue gas.

    A similar demonstration project using Alstom’s chilled ammonia at AEP’s Mountaineer power plant in West Virginia this fall aims to be the first to put together the full package. “It really will be the first plant that will take flue gas from a coal-burning power plant, clean it, remove the CO2, compress it and inject it in a true sequestration at 8,300 feet deep,” Hilton says. “It’s the first time that will be done anywhere in the world.”

    Following that test and others, the company plans to have the chilled ammonia technology available for sale by 2015.

    Of course, employing such technology uses up much of the energy produced by burning the coal in the first place. Although Alstom declined to give exact figures, Hilton claimed the process used up less than 25 percent of the electricity produced: “We expect chilled ammonia to be in the low 20s.”

    In other words, capturing that CO2 will cost between $50 and $90 per metric ton, though Hilton believes that scaling up the process and refining it will reduce that cost to as little as $20 per metric ton of CO2. That could make such carbon capture and storage a cheap alternative for avoiding CO2 emissions under any regulatory scheme to fight global warming, such as the cap-and-trade proposal currently being debated in Congress.

    The company is also developing amine scrubbers as well as pilot projects in Europe of so-called oxyfuel combustion—burning coal in pure oxygen to create flue gas of nearly pure CO2.

    The reason to pursue multiple technologies, Hilton says, is because they can be added on to existing plants—either by replacing the boiler in the case of oxyfuel or adding processes to the back-end in the case of amine and ammonia. And that may be the key to halting the CO2 emissions from power plants driving climate change. As Hilton says: “You can’t make any of the goals [for emission reductions] anybody’s proposed without doing the existing fleet.”

    Credit: Courtesy of We Energies

    Comment by Jean — May 26, 2009 @ 10:37 pm

  3. Ok, let’s see. You get some ammonia, you chill it, you capture 90% of the CO2, you inject it into rock, and in the process lose 25% of the heat produced when the coal is burnt. Oh, yeah, and ammonia is made by heating or super-pressurizing nitrogen and hydrogen. And nitrogen is pretty available, but hydrogen needs to be separated from water using hydrolysis or other methods, all of which use even more energy.

    I wonder, in the end, how much energy it takes to separate the CO2, and then in turn how much energy it takes to pump it into the ground, pressurize it and so on. (Answer: a great deal).

    There’s no doubt that carbon sequestration is one method of reducing the amount of CO2 released into the atmosphere. We should certainly study and invent as many methods as we can think of to isolate and sequester this gas.

    However, if you look at other forms of energy that don’t have a significant CO2 output, they look very attractive compared to the costs we bear once we start paying for CO2 output, or what’s know as the “burdened cost”.

    Wind, solar, geothermal and other sources of energy that don’t involve CO2 are all a little more expensive than the unburdened cost of coal and other fossil fuels used to make electricity now, indeed, solar power is almost at “grid parity” — costing the same as other forms of power. Renewables are considerably less expensive than fossil fuels, however, when a fully burdened cost is applied, as would happen over time if a cap and trade, or carbon tax bill were turned into law.

    To be sure, we have unbelievably huge amounts of coal. If we must burn it, we should try to find ways of reducing the CO2 output. This, and many other methods are possible, and some may even be less expensive.

    But we also have unbelievable amounts of sun and wind, and the technologies for making power from them have been around for many decades, getting cheaper all the time, and even cheaper more quickly as demand has increased in the last few years.

    Another thing we have an unbelievable amount of energy from is … waste. The major benefit of the Smart Grid, for example, is to greatly reduce the inefficiencies in generation and transmission of electricity. Everywhere you look, there are opportunities to save 5% here, 10% there, and more often than not, there are low-hanging fruit that will save 25% or even more, on a massive scale. What makes conservation attractive is that the costs are very, very low, and the technology is simple (e.g. home insulation), and it can happen immediately.

    If I had $100 to invest, I might put $5 of it towards carbon-recapture projects. I would put $75 of it towards efficiency projects, and the remaining $20 towards R&D in various renewable energy technologies.

    Once this investment started paying for itself, which would happen in several years, the dividends could be put back into additional R&D, including sequestration.

    The thing is, it takes energy to get CO2 out of the air. We have plenty of energy in the country, but the type we use most of today produces CO2. Once we get ahead of the curve on this and start generating energy using methods that don’t produce CO2, we may be able to use the extra energy to start pulling the CO2 out of the air and water and transforming it into a form that is not harmful for the environment.

    But first things first — let’s put our effort into taking advantage of the opportunities to reduce waste, and further develop renewable energy sources. Doing this alone will help us not need to have all those coal plants in the first place.

    When the world changes, it’s often a good time to ask whether we should try to fix the current problem, or come up with a new, more complete solution. This is undoubtedly one of those times.

    Comment by Tom Harrison — May 27, 2009 @ 3:23 pm

  4. [ed note: content from unattributed source violates copyright. Replaced copy with link to climateprogress.org]

    From the book, Hell and High Water, the author, Joseph Romm gives some pretty good examples of companies already doing terrific things to lower their utility bills along with eco-friendly practices. Your retort above points out some obvious things which after I sent the previous post, I could see that this was not truly any answer to problems with carbon. In fact, one could make the case, that it is as dumb as using ethanol which we all know actually makes the environment worse, not to mention, would boost food prices beyond what most could or would pay.

    At any rate, here are some examples that Joe Romm provides.

    http://climateprogress.org/2009/05/26/the-united-states-of-waste-cogeneration-chp/

    Comment by Jean — May 27, 2009 @ 11:05 pm

  5. [ed note: replaced copy from article with link]

    To add to the conversation on Cap and Trade, I offer the following article I ran across this morning. It pretty much portends what happens when a country does adopt a cap and trade policy.

    Could Down Under Go Under?
    Posted by David Kramer at 09:44 AM

    New Zealand may go bust over Global Warming
    “No country in the world would risk as much for “global warming” as New Zealand if it goes ahead with the cap-and-trade energy taxation installed by Helen Clarke’s now-departed Labour Government.

    From http://canadafreepress.com/index.php/article/11534

    Looks to me that Aussies would go down under in more ways than one….what advice would you give them if they lose their primary means of support?

    Comment by Jean — June 5, 2009 @ 10:56 am

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