GLOBAL WARMING
STATUS
The House passed, the American Clean Energy and Security
(ACES) Act of 2009, H. R. 2454, on June 26, 2009 by a
219-212 vote.
LEGISLATION
Under ACES, carbon emissions from large sources (25,000 tons
of emissions annually) must be reduced by 17 percent below
2005 levels by 2020 and 83 percent below 2005 levels by
2050. To achieve these limits, ACES establishes a system of
tradable permits called “emission allowances.” Under ACES,
approximately 80 percent of allowances are distributed
without charge during the early years of the program. This
transition period starts to phase out after 2025. By 2031,
about 70 percent of the allowances are auctioned.
While some
manufacturers may incur direct costs, all will certainly
bear some of the indirect costs because the two main sources
of Greenhouse Gas (GHG) emission are electricity
generation and vehicles, and both are significant cost
centers for any small businesses. The legislation
converts greenhouse gases in to Carbon Dioxide
(CO2)equiavalents
Electricity
generation is the biggest source of emissions. Electricity
generators consumed 36 percent of U.S. energy from fossil
fuels and emitted 42 percent of the CO2 from fossil fuel
combustion in 2007. Transportation activities are number
two on the list, accounting for 33 percent of CO2 emissions
from fossil fuel combustion in 2007.
GLOSSARY
Global warming is the
name given to the increase in the average temperature of the
Earth’s near-surface air and oceans. Since the Industrial
Revolution of the Mid-19th Century, the Earth’s
climate has warmed by 1.1 to 1.5 degrees Fahrenheit (ºF).
While that number may seem unspectacular, many scientists
argue that the Earth is now at, or near, its warmest in the
past 12,000 years. However the greater concern is that this
rate will either continue or dramatically increase over the
next century, ranging from 2.0 to 11.5 degrees.
Allocation Schemes
(upstream and downstream)
Regulatory approaches to
allocating allowances (as opposed to auction schemes) which
can choose different points and participants along the
production process to assign allowances and the resulting
compliance responsibility. Upstream allocation schemes
establish emission caps and assign allowances at a production,
importation, or distribution point of products that will
eventually produce greenhouse emissions further down the
production process. For example, in the natural gas sector,
emission caps could be established and allowances assigned at
processing facilities where facilities and participants shrink
from about 400,000 wells and 8,000 companies to 500 plants and
200 companies. In contrast, downstream allocation schemes
establish emission caps and assign allowances at the point in
the process where the emissions are emitted. In the case of
the natural gas industry, to achieve the same coverage as the
upstream scheme, this would involve assigning allowances to
natural gas-fired electric generators, industry, and even
residential users.
Allowance
An allowance is
generally defined as a limited authorization by the government
to emit 1 ton of pollutant. In the case of greenhouse gases,
an allowance generally refers to a metric ton of carbon
dioxide equivalent.
Auctions
Auctions can be used in
market-based pollution control schemes in several different
ways. For example, Title IV of the 1990 Clean Air Act
Amendments uses an annual auction to ensure the liquidity of
the credit trading program. For this purpose, a small
percentage of the credits permitted under the program are
auctioned annually, with the proceeds returned to the entities
that would have otherwise received them. Private parties are
also allowed to participate.
Banking
Although allowances are
generally allocated on an annual basis, most cap-and-trade
programs do not require participants to either use the
allowance that year or else lose it. Under many proposals,
allowances can be banked by the receiving participant (or
traded to another participant who can use or bank it) to be
used or traded in a future year. Banking reduces the absolute
cost of compliance by making annual emission caps flexible
over time.
Bubble
A bubble is a regulatory
device that permits two or more sources of pollutants to be
treated as one for the purposes of emission compliance.
Cap-and-trade Program
A cap-and-trade program
is based on two premises. First, a set amount of pollutant
emitted by human activities can be assimilated by the
ecological system without undue harm. Thus, the goal of the
cap-and-trade program is to impose a ceiling (i.e., an
emissions cap) on the total emissions of that pollutant at a
level below the assimilative capacity. Second, a market in
pollution licenses (i.e., allowances) between polluters is the
most cost-effective means of reducing emissions to the level
of the cap. This market in allowances is designed so that
owners of allowances can trade those allowances with other
emitters who need them or retain (bank) them for future use or
sale.
Carbon Tax
A carbon tax is
generally conceived as a levy on natural gas, petroleum, and
coal according to their carbon content, in the approximate
ratio of 0.6 to 0.8 to 1, respectively.
Emissions Cap
A mandated limit on how
much pollutant (or greenhouse gases) an affected entity can
release to the atmosphere. Caps can be either an absolute cap
where the amount is specified in terms of tons of emissions on
an annual basis, or a rate-based cap, where the amount of
emissions produced per unit of output (such as electricity) is
specified but not the absolute amount released.
“No Regrets” Policy
A “no regrets” policy is
one of establishing programs for other purposes that would
have concomitant greenhouse gas reductions.
Safety Valve
Provisions designed to
prevent or to respond to unacceptably high compliance costs
for greenhouse gas reductions. Generally triggered by prices
in the allowance markets, safety valve approaches can include
(1) a set price alternative to making reductions or buying
allowances at the market price, (2) a slowdown in tightening
the emissions cap, and (3) lengthening of the time allowed for
compliance. Depending on the interplay between the emissions
cap and safety valve and actual compliance costs, a safety
valve can affect the integrity of the emissions cap.
Sequestration
Sequestration is the
process of capturing carbon dioxide from emission streams or
from the atmosphere and then storing it in such a way as to
prevent its release to the atmosphere.
GREENHOUSE EFFECT
The cornerstone of this
issue is understanding greenhouse gasses-what they are, how
they are caused, and what can be done about them. It is
important to note that the greenhouse effect is essentially a
natural process that helps regulate the temperature of the
Earth. It prevents the Earth from freezing, and without it,
the Earth would be about zero degrees Fahrenheit instead of
its current 57ºF. The greenhouse effect is caused by the heat
absorption of certain gasses in the atmosphere, which are
called greenhouse gases. The heat from the gas that is
absorbed in the atmosphere is then re-radiated downward.
Greenhouse gasses are
created both naturally and by humans. Water vapor causes
between 30 and 70 percent of the greenhouse effect (not
including clouds);
carbon
dioxide causes 9 to 26 percent;
methane
causes between 4 and 9 percent; and
ozone
causes 3 to 7 percent. The remaining greenhouse gases come
from fluorinated gases.
The concern, therefore,
is not that we have greenhouse gases, but that human
activity could be leading to an increase in greenhouse
gases. This concern, drawn out over the next century, is what
has led some scientists to believe that we could be heading
towards a much larger temperature increase.
CAUSES OF GLOBAL WARMING
Greenhouse Gases
Carbon Dioxide
As noted above, carbon
dioxide is the second leading contributor of greenhouse
gases. It would therefore follow that increased emissions of
carbon dioxide is an area of concern in regards to global
warming. Not surprisingly, there was a substantial increase
in measured carbon dioxide concentrations following the
Industrial Revolution, from 280 parts per million (ppm) to
about 380 ppm. Also, not surprisingly, the United States, as
the world’s economic leader, has produced nearly one-fifth of
net global greenhouse gas emissions, in large part due to
carbon dioxide. The main human-related source of carbon
dioxide emissions is the combustion of fossil fuels, solid
waste, wood, and wood products. The second leading cause of
carbon dioxide increase is deforestation.
Methane
Another contributor of
greenhouse gases is methane. Methane is a much more potent
gas than carbon dioxide, but not nearly as prevalent in the
atmosphere. It is the principal component of natural gas. It
is also emitted from trash decomposition in landfills and from
coal mining. However, methane emissions have historically
been nature-made rather than man-made. It is believed that
early in the Earth’s history, before mankind, there was 1,000
times as much methane in the atmosphere as now. The earliest
methane was released by volcanic activity. Methane is also
released naturally from certain animals, such as livestock and
termites.
Ozone
Ozone is another
greenhouse gas. While not directly emitted by humans, its
potency is elevated by emissions such as nitrogen oxides and
solvent evaporation. Since the Industrial Revolution, ozone
concentrations have increased by as much as 50 percent.
Currently, the U.S. regulates the air pollutants that
contribute to ozone concentrations through the Clean Air Act.
Others
Nitrous Oxide is the
third leading cause of global warming, which is largely
emitted through agricultural activities such as the use of
fertilizer. The remaining greenhouse gases come from
fluorinated gases, which make up commercial, industrial, and
household products, such as refrigeration systems.
Sulfur and Carbon
Aerosols
Aerosols, tiny particles
suspended in the air, come from a wide variety of sources.
Some are natural, such as volcanoes and forest fires. Others
come from human pollution, such as emissions from power plants
or vehicles. The aerosols of most concern, from a climate
change perspective, are black carbon and organic carbon.
Black carbon is thought primarily to warm the atmosphere while
organic carbon has a mostly cooling effect. Aerosols work by
either scattering light, which has a cooling effect, or
absorbing light, which has a warming effect.
CLIMATE CHANGE PROJECTIONS
The main argument for
those who are most concerned with global warming is not what
already has happened, but what they fear will happen. They
believe that global temperatures are only beginning to rise
and that we face a much steeper increase over the next
century. Most studies indicate that if current trends
continue, the global average temperature will increase by at
least 2.7ºF by the end of the 21st Century, with a
10 percent chance it could exceed 9ºF. Most climate modelers
estimate that temperatures will increase between 4 and 7 ºF by
2100. However, the accuracy of these models is the subject of
a wide debate.
KYOTO PROTOCOL
The Kyoto Protocol is an
agreement made under the United Nations Framework Convention
on Climate Change (UNFCCC). Some of the countries that ratify
this protocol commit to reducing their greenhouse gas
emissions (carbon dioxide, methane, nitrous oxide, and three
of the fluorinated gasses). Governments that sign the
protocol, which currently covers 160 nations, are separated
into two categories: developed countries, referred to as Annex
I countries; and developing countries, referred to as
Non-Annex I countries.
Annex I countries must
reduce their greenhouse gas emissions by an average of 5
percent below their 1990 level by sometime between 2008 and
2012, depending on the specific country. For many of these
countries, this represents a 15 percent decrease from current
levels. These nations must submit to an annual greenhouse gas
inventory inspection by the UNFCCC.
Non-Annex I countries
have no greenhouse gas emission reduction obligations but may
participate in the Clean Development Mechanism (CDM). The CDM
is an arrangement allowing Non-Annex I nations to create a
greenhouse gas emissions reduction project. Once this project
is complete, they receive a credit and are allowed to sell the
credit to an Annex I nation, which will essentially allow them
to pollute a little less.
On July 25, 1997, the
U.S. Senate unanimously passed the Byrd-Hagel resolution, by a
vote of 95-0. This resolution expressed the sense of the
Senate that the U.S. should not be a signatory of any protocol
(the Kyoto Protocol had not yet been finalized) that would
seriously harm the U.S. economy and not include timetables or
binding targets for industrialized nations. Vice President Al
Gore symbolically signed the protocol, but the Clinton
Administration never submitted it to the Senate for
ratification.
OUTLOOK
The Senate is expected
to consider legislation in Fall, 2009. The question is
whether Congress can pass two major pieces of legislation -
health care reform and climate change, in the same year.
If Congress moves forward with health care reform, climate
change legislation may be held over until next year.
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