Archive for carbon

Analysis: Pacific states get leeway in CO2 rule

Portland, 4 August (Argus) — California, Oregon and Washington could face a relatively easy path to compliance with new federal rules for CO2 emissions from the power sector.

The three states could end up over-complying with their targets under the federal Clean Power Plan, potentially giving their leaders leverage in trying to convince inland neighbors to create a regional compliance plan for the regulations.

All three Pacific coast governors praised the final rule issued yesterday and said they would quickly begin work on figuring out how to comply. If the three joined a common trading program and kept their emissions in line with the US Environmental Protection Agency’s (EPA) projections for 2020, they would run a surplus of about 67mn short tons of CO2 by 2030, based on the tonnage targets the agency assigned each state. EPA also assigned CO2 rate targets for states to meet from 2022-2030, allowing the states to choose between the two.

That stands in stark contrast to the inland portions of the 11-state western grid. The other eight states plus tribal areas would need to cut a cumulative 336.1mn st of CO2 from 2022-30. If the states banded together for a regional compliance plan, the surpluses run by the coastal states could help ease the shortfalls in the other states.

The western US electric grid is characterized by inland power plants serving electric demand in the coastal states. Some of the highest-emitting units along the Rocky Mountains are partially owned or have power purchase agreements with electric utilities in California, Oregon and Washington.

California’s economy-wide cap-and-trade program will complicate efforts to create a regional or national market under the Clean Power Plan. The state would likely have to separate its power sector from the current cap-and-trade program. The state is committed to its economy-wide program and has been working to find more trading partners after linking with Quebec.

The state will need to cut power sector emissions by about 35mn st from 2022-2030 under the Clean Power Plan, but should be well-positioned to comply because of its existing trading program and a host of related policies. The state legislature is poised to approve raising the state’s renewable energy mandate to 50pc by 2030 and set more aggressive energy efficiency targets. Those policies would allow the state to exceed its federal obligations.

Oregon and Washington benefited from significant changes to how EPA calculated their 2012 baselines, leading to significantly higher 2030 targets than in the proposed rule. The targets are also higher than the states’ projected emissions for 2020. But direct comparisons between the proposed and final targets are difficult because of changes in EPA’s methodology.

EPA adjusted Washington state’s baseline for coal and gas generation and emissions by 207pc to account for 2012 being an unusually wet year, with a warm winter that led to significantly lower demand for fossil fuel-fired generation. EPA raised Oregon’s baseline by 118pc. The states have some of the cleanest power sectors in the US because of an abundance of hydropower. Idaho and Montana received similar adjustments as well.

bp/ee

Send comments to feedback@argusmedia.com

 

$300B wasted on natural gas projects

By Jaclyn Brandt

Carbon and natural gas could soon be at odds, according to a new report by the Carbon Tracker Initiative. The report found that by 2025, there will be $283 billion of surplus liquefied natural gas (LNG), based on projects currently underway.

Map of LNG production needed and not needed 2015-2035. Credit: CarbonTracker.org

The report found that gas can continue to grow, but not at the rate the gas industry believes — due to numerous factors, including carbon-emission rules.

“We certainly don’t see any prospect of a ‘golden age of gas’, as the International Energy Agency suggested a few years ago,” said Anthony Hobley, CEO of Carbon Tracker, in a statement.

The UN target limits global warming to a 2?C target, and the report said that in order for this to happen, the energy industry needs to be more selective in gas projects.

“Gas is a complex fossil fuel,” Hobley added. “The gas industry argues that coal is the enemy and gas is part of the solution. Obviously there is a push to position it as a bridge to a low-carbon future and there is some basis for that, particularly in North America and Europe. There is some room for growth, but nowhere near as much as the gas industry would have us believe. Certainly in the LNG sector, most of the capacity that will be needed for the next 10 years has already been built.”

Natural gas is considered carbon-emitting because production results in leaked methane. Hobley explained, “Gas can be efficient, but more needs to be done, particularly on fugitive emissions. We have a very hazy understanding of these fugitive emissions in regions such as China and Russia. This is an area where the industry clearly has to work harder if gas is to be perceived as a cleaner fuel.”

However, Jake Rubin, director of public relations with the American Gas Association, told Fierce Energy that “Natural gas is clean, domestic, abundant, efficient and affordable, making it the perfect foundation fuel to help strengthen America’s economic recovery, meet our environmental challenges and improve our overall national security by reducing our dependence on foreign energy sources.”

Rubin explained that the abundance of natural gas in the United States has created a landscape that can help “address many of the challenges facing our economy and environment,” but that the regulatory environment has not yet caught up to the abundance of natural gas.

“It is critical that business models, fuel choices, regulation and energy policy be re-evaluated in light of the new opportunities presented,” Rubin told FierceEnergy. “Natural gas utilities, through their roles in communities across the nation, are already bringing the benefits of natural gas to homes and business. We are fueling the future where wise and efficient growth of natural gas consumption will help address many of our energy challenges.”

The report found that certain aspects of LNG infrastructure, including the production of US shale gas or Australian coal-bed methane, emit high levels of greenhouse gases (GHG) — and only 17 percent of LNG produced by North American Shale gas or Australian coal-bed methane is needed.

Of the planned projects that will cause a surplus, the report found $82 billion in Canada, $71 billion in the United States, and $68 billion in Australia — all in the next 10 years — due to carbon regulations.

“Many parts of the world do not have the infrastructure needed to take advantage of gas,” Hobley said, “and we are getting to the stage where renewables are becoming more viable. If we can scale renewable energy to the level needed, then there will be a jump straight from coal to renewables. If there is a breakthrough on energy storage, it will be a game-changer.”

The study also looked at the 20 largest LNG companies in the world, and found that 16 of them are looking at major future projects that are unneeded. Three — by Eni, Cheniere, and Noble — are working on projects that are needed to meet demand by 2025. Only one company, Total, is not planning on developing any new LNG projects by 2025.

“Investors should scrutinize the true potential for growth of LNG businesses over the next decade,” said James Leaton, Carbon Tracker’s head of research, in a statement. “The current oversupply of LNG means there is already a pipeline of projects waiting to come on stream. It is not clear whether these will be needed and generate value for shareholders.”

For more:
– view the report