All Carbon is not created equal
As carbon trading markets continue to evolve under the ETS, the challenges and obstacles can provide a lesson for the development of a US trading market under a mandatory regime. In general, the mechanism design and the resulting market price of allowances under the ETS promote singular transactions. Because there is no additional reward for carbon reduction as a system, projects are evaluated on a case by case basis resulting in one-off transactions. Accordingly, there is no realization of a broader system of carbon reduction and little incentive for long-term investment in capital, operations upgrades or large-scale energy efficiency upgrades or resource conservation. This is indeed the case in Europe where the volume of trading has declined as easy, short-term projects become exhausted. Part of this is a result of the relative prices of carbon-based fuels and renewable energy. Even with a carbon price in the $40 range, practicality and investment risk still favor construction of new coal plants over investments in wind or solar energy generation and distribution.
One solution is to further raise the price of carbon along with increased subsidies for renewable energy and alternative fuels. Higher energy prices and fuel costs make this politically intractable, especially in the United States. Another solution may lie in rewarding long-term systems of carbon reductions based on performance, rather than singular projects for quick turnaround. This is particularly important because of another, somewhat overlooked consequence of carbon-trading markets—biodiversity loss.
A recent paper by Nelson, et al (PNAS 2008) find that incentive programs and for private landowner carbon sequestration do not necessarily maximize the gains from carbon reduction or species conservation in the targeted region. Further, many conservation payment or trading programs are too specifically targeted to address ecosystem protection and conservation. Research by Shaikh (2001) found that agricultural landowners in Canada sought faster paybacks, thereby choosing faster-growing hybrid poplar trees over longer lived native species for carbon uptake land conversion programs.
Carbon is not a single commodity. There are many flavors and performances. Consider grasslands and forests on the sequestration side, or cement and “clean”ish coal on emissions side. Each investment has initial upfront capitol costs (prairie reconstruction, reforestation, construction/refurbishing costs on the built capitol) and an operating cost. We seek to calculate a total cost of ownership over say 30 years. The sequesteration side has little upfront costs (aside from the opportunity cost of missing agriculture), then pays back in CO2 sink, with compound interest of several % per year for >200 years, with minimal maintenance costs. Eg natural really pays in future. Emmissions reduction today requires large investment in new equipment that essentially still emits just at a lower rate delivering savings that eventually pays for the initial investment.
The trick is to balance the Carbon biosphere band book at a stable 350ppm CO2 in < 20 years. This will require a portfolio of supply and demand. Currently we have massively underpaid the true price of CO2. The true price depends on how far away from the goal we are. Polluters must transfer the cost to those who sequester. There must be a carbon contract that include an analysis of performance through time. Ecological restoration, for carbon sequesteration, has up front costs but then grows exponentially at first until a steady state is reached at maturation (100-500 years).
Nelson, Polasky, Lewis, Plantinga, Lonsdorf, White, Bael and Lawler, “Efficiency of incentives to jointly increase carbon sequestration and species conservation on a landscape.” PNAS, July 15, 2008.
Shaikh, S.L., L. Sun, and G.C. van Kooten. “Are Agricultural Values a Reliable Guide in Determining Landowners’ Decisions to Create Forest Carbon Sinks?” Canadian Journal of Agricultural Economics, 55 2007.
New thoughts 5/25/09
Biological carbon can replicate and thus has the ability to fix more biological carbon and do other work like harvest sun energy to pump water and eat rocks. Biocarbon in soil can be more secure against future drying, forests can burn.
It is often said "We need to squeeze the carbon out of our economy.....with a gradual decrease in the carbon cap" decoupling of CO2 and GDP
better would be "create an equitable economic system works to squeezes the carbon out of the atmosphere" Strong CAP and dividend at 350ppm for a sequestration green economy.
In a decoupled energy carbon economy like photosynthesis, fusion energy is stored on H after splinting water in the light reactions, then transferred to reduce CO2 into stable fuel in the dark reactions. Biofuels are temporary storage that can do work. Living carbon is storage than can increase its capacity to store and is self regulating.
June 28th,2009
Obviously the time scale of biological carbon is different 10^6X between the two and we do need to regulate both.. One way to think about it when talking to others would be the “trade” between the two is certainly not equal given the greater short term risk associated with biological sequestration. Forests can burn (which fossilizes some carbon in the process depending on temp and oxygen levels) or decompose releasing a good portion back to the atmosphere.. However that biological carbon can do work like fix more carbon, hold and purify water. Who will insure the biological carbon credit and for how long? On the other hand a credit is a good motivation to manage for healthy land and get away from our fertility extraction process. As biological carbon sequestration is established, water credits would tend to dominate the land use ecosystem service.
On the geological side however how do we store permanently carbon? Col, tar sands, shale, oil, gas, limestone, soil, peat, permafrost (in order of stability). How stable are saline aquifers? What side effects? Acidification, dissolving limestone, groundwater contamination? There will be a carbon market soon but what about liability on the credit summed over 100,000,000 years? With that full price included the cheapest carbon storage form is likely to be unburned coal safely covered up in the ground. The long term security of various forms of geological sequestration is much more difficult to trade and certainly requires international agreements. One would imagine the rocks on Oman as the next fossil commodity (peridotite). We should see the price on saline aquifer real estate going up as well as abandon oil fields for supercritical CO2 (who’s insuring that recharged mini volcano?). A market is created to rebuild removed mountaintops with a mixture of sequestered carbonate rock (currently extracted for cement) and charded biocarbon. Where are the rock making resources? Should we look to the worlds salt flats which could be multiply employed to buffer ocean levels while growing and storing renewable energy?
These grand plans require financial and labor coordination among many government agencies, business, and private land owners, not seen since the great public works of the depression times. Fortunately we happen to have just that opportunity now. What policy mechanisms can lead to such action? Regulated markets are an option that can be especially effective when many land holders are involved, and times are on a human scale. Here carbon cap and trade is much discussed (now in the senate). Missing in the debate is the time and risk/liability trade off between biological and geological carbon. Land use planning (largely agriculture and rangeland) can be managed through ecological development credits, including carbon, water, habitat, and others. Such ecosystem service commodities could be traded under a strict cap, with the strength and slope of the cap set to an appropriate regional Carbon/Water balance. Fossil carbon (non renewable) offsetting with biological carbon (renewable) is not sustainable for humans and a regulatory system needs to distinguish as such. We saw this as biofuels could not supply fossil demand.
As geologcial carbon sequestration offsetting is less proven and inherently more risky than the extraction of geological carbon in the first place, it may be most prudent to set an immediate extraction tax to raise the floor on the cheep supply of this carbon pool. This could end the debate on cap and trade vs carbon tax with an answer of both. A green stimulus in the land use carbon credits (from polluters to the land stewards), and a clean stimulus from polluters to energy efficiency and renewables. Such a dual policy approach could be a global model. It allows local control of land use decisions on best practices. It can be measurable and insurable on human time scales as a green development mechanism. A dual policy also looks at globally circulating (atmospheric CO2 ppm and ocean pH) and sets aside money for clean development at a rate where clean energy can replace fossil energy as needed to fit cost benifit in global climate models (<20 years to avoid major costs). This money can be distributed as rebates or dividends to individuals (CapAndDividend) stimulating efficiency and conservation and to public works projects for research, training, facilitation, and modernization of carbon and water infastructure.
Oct 5th, 2009
The climate problem has two parts, Clean and Green. Clean is going to 0 emissions from energy production, uncoupling from carbon and recouping to sun (conservation, efficiency, solar and wind). The Green part is land use and photosynthesis. This is recoupling solar energy with carbon sequestration and water management. ~1/2 the total anthropogenic CO2 in the air is from land use emissions, agriculture, deforestation, soil loss (recently green part released over the past centuries of land use manipulation). The other half of the total CO2 is from burning fossil carbon (anciently green part released during industrialization).
Plant biologists can contribute models of sustainable and restorative land use, sustainable agriculture, forestry, soil erosion control. We cannot wholesale offset geological carbon with biological carbon (coal != rainforest). Agrichar and bio-concrete, limestone and chalk formation are potential steps bioC -> geoC, and there are plenty of stability types within each pool as well.
Oct 8th, 2009
A discussion of carbon sequestration must include
Agrichar and even bioconcrete, and especially biomass combustion with capture and sequestration. Notice $500-50 per ton sequestered and the space to put the stuff is 30,000km3! Clearly the best place to sequester carbon is in coal, stable and right under the ground. Worst thing is to dig it up and burn it, 2nd worst is to frac it apart so methane leaks out and ground water is contaminated. However net terrestrial productivity is >50Gt/y or ~10X our emissions, if some of this could be prevented from rotting back to CO2 we can clean the air.
Just remember that earth’s incoming energy can move the carbon cycle in both directions and at different rates depending on our land use. Wind, solar, geothermal are energy forms uncoupled from the carbon cycle and are CLEAN. Contemporary bioenergy == photosynthesis, and is GREEN, using sunlight to reduce CO2. The goal is to increase the capacity to accumulate this stored bioenergy through forest, grassland, wetland, and aquatic ecosystem restoration. Then move it into a stable form, in soils or sediments and stones.
Oct 19th
This report is getting around the central issue of water, carbon, and energy. Efficiency in photosynthesis includes the light and dark reactions. 1) to harvest light energy and 2) to fix carbon at a cost of water evaporation. Research on plant water use efficiency calculates the biomass production vs given water transportation and can be calculated in real time with leaf gas exchange. Zoom out to ecosystem function and compare the sign and magnitude of carbon and water balance per MegaWatt (incoming sun, captured, or delivered). How does bioenergy perform? This calculation depends clearly on local and seasonal water availability as well as light (think deserts, grasslands, forests, wetlands). How does fossil energy compare, across current and forecast water and carbon prices? How does this compare to solar electric (PV or thermal) and wind, which have little water or carbon exchange in either direction.
Qualitatively.
FOSSILE energy has large carbon and water footprint/MW
CLEAN energy (solar wind) has little carbon or water footprint/MW.
GREEN energy (biomass) has negative carbon and positive water footprint/MW/m2. The trade off balanced through ecosystem management and planting the appropriate Green stuff and harvesting it now when it loses its color. This is the land use question.
BLUE energy (hydro) has traditionally had a large water footprint but new micro hydro/run of the river can give better control of the flow including pump storage.
