Environment Forum

Idea dearth at big money sustainability summit

Tom Rand, P.Eng., Ph.D., is Cleantech Lead Advisor at MaRS Disovery District and author of Kick the Fossil Fuel Habit. Any views expressed are his own.

Curious about new financial innovations to accelerate the global transition to a low-carbon economy, I attended the recent United Nations Environment Program Finance Initiative (UNEP FI) summit in Washington, D.C. This was a gathering of big money and those who shape its flows – pension funds, insurance companies, policy wonks and political negotiators.

Not surprisingly, I found nothing mind-blowing.

Our intentions are good, but we move – as always – incrementally. Catastrophic climate change still doesn’t fit our spreadsheets. Pension funds still rely on voluntary principles of risk avoidance.

But hats off to Paul Abberley, CEO of Aviva Investors out of London, England, for the best idea of the conference. Abberley wants to translate, directly, the good intentions of pension contributors into the fiduciary duty of investment managers.

Anyone on the carbon scene knows we’re at a standstill. There are bright spots like California’s brand new cap and trade regulations and Ontario’s Green Energy Act, and there are always some intrepid businesses that carve out a market for their piece of low-carbon infrastructure.

Energy retrofits are occasionally aggregated to attract a few hundred million dollars. But the big money, the trillion dollars a year we need deployed to move the needle on carbon, still sits in the wings.

D.C. dawdles, California leads on climate

Becky Kelley directs the Climate and Clean Energy Agenda at the Washington Environmental Council. Any opinions expressed are her own.

We could smell the sweet winds of change all the way up in Washington State last week, when California adopted final rules to implement a cap and trade program to reduce climate pollution across its economy, beginning in 2013.

California got it right. Cap and trade is a policy at the scale of the problem: big, complex policy to deal with a big, complex problem.

The state’s action to embark on cap and trade, along with a suite of other essential clean energy, energy efficiency and clean transportation polices, matters far beyond its borders.

It is especially important in light of national legislative inaction. With so much at stake, it is extraordinary to consider that Congress is not taking action on climate change to protect Americans’ interests across the country.

States like California, and my own Evergreen State, Washington, are left to take matters into their own hands.

As if 2007 never happened?

If four years is a lifetime in politics, it’s an eternity in climate change politics. Events in Washington this week might make climate policy watchers wonder if 2007 really happened.

At issue is the decision by American Electric Power to put its plans for carbon capture and storage on hold, due to the weak economy and the lack of a U.S. plan to limit emissions of climate-warming carbon dioxide. Read the Reuters story about it here.

Carbon capture and storage, or CCS for short, has been promoted as a way to make electricity from domestic coal without unduly raising the level of carbon in the atmosphere. Instead of sending the carbon dioxide that results from burning coal up a smokestack and into the air, the plan was to bury it underground. But that costs money and requires regulatory guarantees, and neither are imminent in the United States. Legislation to curb greenhouse gas emissions bogged down on Capitol Hill a year ago and has not been re-introduced.

Sarah Forbes of World Resources Institute called AEP’s decision “a surprise, but not a shock.”

“Given that U.S. climate legislation stalled last summer, companies have less incentive to move forward with CCS, which has proven difficult to advance at scale,” Forbes said in a statement.

Compare that to what happened in 2007. Senators Barbara Boxer, John Warner and Joe Lieberman joined forces that year to focus attention on climate change and were able to shepherd a carbon-limiting bill to the Senate floor the next year, the farthest any such measure has gotten in the United States. Al Gore, the former vice president and perennial climate campaigner, shared the 2007 Nobel Peace Prize with the United Nations’ Intergovermental Panel on Climate Change for bringing climate change to public attention.

On Groundhog Day of that year (why did they pick February 2?) the IPCC released its Fourth Assessment report on what was likely to happen in a warming world. The report forecast more severe weather, worse heat waves, dramatic droughts, wildfires and floods, rising seas and melting glaciers. It also famously said, with 90 percent certainty, that climate change was under way and that human activities contribute to it.

How to make communities see green over REDD?

Forests are the lifeblood for millions of people around the world. Murniah, a 40-year-old mother of one in Mentaya Seberang village in Indonesia’s Central Kalimantan Province, knows this only too well.

Large areas to the west of her village on the Mentaya river have been converted to palm oil. Good for a short-term boost in incomes but not so good for the environment.

“The forest is very important,” she said. “There are many examples where the forest has been opened up, such as for palm oil, and this has caused flooding. We only care about rubber and rattan,” she said during a village meeting to discuss a project to save a vast peat swamp forest just to the east.

Forests have become central to efforts to curb the pace of climate change because they soak up large amounts of planet-warming carbon dioxide from power stations, industry and transport. They are a key part of two-week climate talks in the Mexican resort of Cancun that began on Monday aimed at stepping up efforts to curb the growth of greenhouse gas emissions.

Saving what’s left of the world’s tropical rainforests won’t be easy amid growing demands for land to grow food and extract timber and minerals.

A visit to Central Kalimantan shows this in stark terms. The province has lost millions of hectares of forest to logging, palm oil plantations, coal and zircon mining as well as slash-and-burn farming. Large areas are now wasteland, vulnerable to choking fires in the dry season and flooding in the wet season.

Yet, Indonesia. which loses about 1 million hectares (2.5 million acres)  of forest a year, has emerged as a key player in global efforts to preserve carbon-rich forests. The hope is that a U.N.-backed scheme called REDD, or reduced emissions from deforestation and degradation, will eventually develop into an international payment system based on trading carbon credits from forest preservation projects. There are nearly 40 REDD pilot projects in Indonesia, placing local communities in the spotlight.

Making REDD work for illegal loggers

It took just 30 seconds to fell the tree. Hendri, 27, a skinny Indonesian from Central Kalimantan on Borneo island, skilfully wielded the chainsaw more than half his height. The result is a thunderous crash and a tree that is quickly cut into planks on the forest floor near by.

And the reward for this effort? About 125,000 rupiah, or roughly $12 per tree measuring 30 cm or more in diameter. Hendri and the three other members of this local gang of illegal loggers make about $45 a day (not including expenses and bribes) cutting down between 4 and 5 trees and slicing them into planks with a chainsaw, using no protective gear. They work for about 10 days at a stretch.

Their work is tough and highlights the challenge of finding alternative livelihoods in communities surrounding projects that aim to save large areas of forest in the fight against climate change.

Another member of the gang, Maulana, 40, explained he didn’t like the work but he had six children to feed. If given a choice, he said he’d switch to growing rubber or managing a small area of palm oil if given the seedlings and land. Just a hectare of palm oil would be enough to meet his needs. That was preferable than the dangerous work cutting down trees in the steaming, flooded peat swamp forest, he said.

Indonesia has emerged as one of the leading countries in a U.N.-backed scheme that hopes to reward developing nations with carbon credit payments in return for saving forests, particularly carbon-rich peatlands found in southern Borneo.

Called REDD, or reduced emissions from deforestation and degradation, the idea is to pay for reductions of greenhouse gases, such as the carbon dioxide that forests absorb to grow and release in large amounts when cut down or burned. The greater the amount of carbon prevented from being emitted, potentially the greater the rewards in a scheme that could eventually be worth $30 billion a year in annual trade in CO2 credits, the United Nations says.

In Central Kalimantan, there are a number of large REDD projects, including where Hendri and his workers were operating. But project developers know that their investments will only pay off if the loggers are found new jobs, such as rangers, guides for ecotourists or given assistance to set up their own cash crops, such as rubber, rattan or even quick growing timber.

Passage of little-known initiative may disrupt California climate plan

While California’s election results offered plenty for state environmentalists to cheer, the passage of a so-called “stealth” ballot initiative could undermine its proposed carbon market.

Last Tuesday, voters rejected Proposition 23, which sought to halt California’s landmark environmental law, AB 32, which mandates the state reduce its greenhouse gas emissions to 1990 levels by 2020. They also elected climate hawk and AB 32 champion Jerry Brown governor.

But with little fanfare, voters also approved Proposition 26 by a margin of 52.8% to 47.2%. Proposition 26, officially called the “Stop the Hidden Taxes Initiative,” requires two-thirds of legislators to approve fee increases, as opposed to just a simple majority – a difficult political hurdle given the makeup of the state legislature.

In the run-up to the election, not a single public opinion poll was conducted on Proposition 26, and Brown never took a position on the measure. The campaign backing Proposition 26 claimed during the campaign that it was not aimed at disarming the state’s environmental laws.

“Proposition 26 will not diminish the ability of state regulatory agencies to implement and enforce environmental laws in any way,” said Maureen Gorsen, a spokeswoman with the Yes on 26 campaign. But its outspent opponents weren’t buying it then, and they aren’t buying it now. They question why oil giants like Exxon Mobil, Chevron, and Conoco-Philips would funnel millions into the campaign to pass Proposition 26 if not to cripple the state’s environmental law.

Jon Costantino, a senior advisor with law firm Manatt, Phelps & Phillips in Sacramento, said the initiative could now threaten the California Air Resources Board’s (Carb) ability to collect the roughly $30 million a year in administrative fees it uses to implement AB 32 down the road. Carb is responsible for designing the plan to achieve the AB 32 goal.

“I can’t see the Republicans voting for a global warming fee in California,” he said after the election. Another threat to the program depends on whether the sale of carbon allowances in the proposed cap-and-trade system will need the approval of two-thirds of the legislature. If so, that could create a major obstacle when the time comes for the program’s first allowance auction, currently set for early 2012.

from The Great Debate:

States see pushback against carbon trading

-- John Kemp is a Reuters market analyst. The views expressed are his own --

Efforts to implement cap-and-trade programs at state level are faltering, just as policymakers in Washington are struggling to generate enough support to put in place a comprehensive national system.

Recent setbacks in California and Arizona point to growing headwinds against the policy. As cap-and-trade loses momentum and becomes embroiled in bigger political disputes about the size and role of government, opponents are becoming emboldened to try to block the policy completely.

Carbon market supporters have repeatedly expressed the hope that state and regional initiatives can provide at least a temporary substitute as hopes for a national program have dimmed in the wake of last year's failed summit in Copenhagen and a string of election defeats that have thrown the progressive wing of the Democratic Party onto the defensive.

But the same factors that undermined support for a nationwide program, especially concern about the near-term costs and adverse impact on employment when the economy is only just starting to recover from deep recession, are dimming enthusiasm at state level as well.

In trade policy, policymakers and analysts talk about "bicycling theory": you have to keep pressing forward with new liberalizing measures or risk forfeiting the gains already made as the process loses momentum and support falls away.

Gaze into clean technology’s crystal ball for 2010

Clean technology investors who have suffered through 2009 can find cheer in a new report by the Cleantech Group that gives its top ten predictions for 2010.

The number one prediction: Private capital growth will recover, the research group said.

The group believes that the amount of money from global venture capital and private equity in clean technology in 2010 will surpass that in 2009 “by a healthy margin” and could be a record year. The group also is watching for major investments like Khosla Ventures’ raising $1 billion for renewable energy and clean technology funds, more capital in Asia and innovative fund strategies.

Here are the group’s other predictions for 2010:

2.    Clean economies become the new space race. There will be changes in which countries and cities are driving global momentum, but greater protectionism surrounding the industry will be a drawback.

3.    Electric cars take the back seat to smart mobility. The trend will influence city designs, shipping ports and governments’ tax incentives and budgets.

4.    Resource constraints beyond carbon rise to the fore. As the global economy picks up, there could be price spikes that impact clean technology sectors, pushing companies to use resources more efficiently in order to maintain or boost their profitability.

March of the beetles bodes ill for American forests

MEDICINE BOW NATIONAL FOREST, Wyoming – From the vantage point of an 80-foot (25 meter) tower rising above the trees, the Wyoming vista seems idyllic: snow-capped peaks in the distance give way to shimmering green spruce.

But this is a forest under siege. Among the green foliage of the healthy spruce are the orange-red needles of the sick and the dead, victims of a beetle infestation closely related to one that has already laid waste to millions of acres (hectares) of pine forest in North America.

“The gravity of the situation is very real,” said Rolf Skar, a forest campaigner with Greenpeace.

The plague has cost billions of dollars in lost timber and land values and may thwart efforts to combat climate change, as forests are major storing houses of carbon, the main greenhouse gas blamed for global warming.

The beetle outbreak, which has taken a lesser, but mounting, toll on spruce trees, could make it that much tougher to meet the ambitious target to reduce U.S. carbon emissions by 17 percent of 2005 levels by 2020 and 83 percent by 2050.

“taking cars off the road”, or climate tokenism?

There’s no shortage of references these days in corporate and government reports to earnest, new steps to fight climate change. Often they promise to make carbon emissions cuts equivalent to taking millions of cars off the road…

For example, take Europe’s fourth biggest single source of carbon emissions, Britain’s Drax coal plant. It said in March that as a result of efficiency improvements it had cut carbon emissions equivalent to taking 195,000 cars off the road.  But of course that was a cut against a theoretical projection of rising emissions — not an absolute cut.

Take a similar announcement from Canada this week. The oil industry in Alberta is busy trying to extract oil from tar sands. That is a far more polluting, energy-intensive way than just sucking the stuff out of oil wells, because steam must first be injected into the sand to make the oil flow. Now Alberta is experimenting with a technology, called carbon capture and storage, with three test projects which by 2015 would “achieve annual carbon dioxide reductions equivalent to taking about a million vehicles off the road”, the province says.

Funnily enough, 2015 is also the year when a U.N. panel of climate scientists says global greenhouse gas emissions worldwide must stop rising to limit global warming to 2-2.4 degrees celsius, a widely perceived threshold for dangerous effects (page 20 here). It seems a little disingenuous — in that wider context — for  Alberta to talk of taking cars off the road from test projects to trim carbon emissions under a wider programme to expand one of the most polluting forms of oil drilling known to man.

The wider context does seem relevant if we’re not to pat ourselves on the back as catastrophic climate effects creep up. And it may be especially relevant this year, as climate talks and rhetoric ratchet up ahead of a meeting in December in Copenhagen, meant to seal agreement on a new climate pact to replace the Kyoto Protocol.