Obama surprises with climate commitment

After a general election campaign in which environmental issues received almost no attention, it was heartening, but very surprising, to hear President Barack Obama give such prominence to fighting climate change in his 2nd Inaugural Address. He commented:

“We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.

Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms.

The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries – we must claim its promise.

That is how we will maintain our economic vitality and our national treasure – our forests and waterways; our croplands and snowcapped peaks.”

For those of us who believe in the imminent threat of human-made global warming — and I suspect we are a minority in the chemical industry — this is a heartening statement. But can this broad, but determined, goal become a reality?

Obama may have the wind at his back. As long as the price of natural gas stays low, the shift to this fuel to power reviving US industrial production will bring with it big cuts in CO2 emissions compared with burning coal or oil. The reductions could be up to 50% according to some estimates. And the share of coal and oil fuels in the US mix has started to fall already.

But great care will have to be taken to ensure that the gains are preserved — starting with careful regulation of fracking to capture any escaping methane, which is itself a more powerful greenhouse gas than carbon dioxide.

While the shift to burning gas will bend the curve of CO2 emissions, consolidating those gains would probably require a new coalition in the legislature which I think is unlikely to emerge. Truly to reform the US’ relation to GHG producing materials would almost certainly require disadvantaging them by levying taxes on them. But once you start down that road, you hit a lot of obstacles. First you have to get the legislation written and passed. But what do you do then to influence other countries so that your own progressive thinking does not disadvantage your own industrialists? A future of import tariffs on others’ carbon production is just not feasible.

Overall, I think that Obama will have some success in elevating the discussion of GHGs and will fire up the public to want to bend the GHG curve in the USA. But four years is not enough to take the type of global action that true change will require, even given the power and influence of the USA.

Let’s hope that the next president is also as determined as Obama seems to be, and that the public’s attention on this subject proves sustained.

 

“We will never end poverty if we don’t tackle climate change”

These clear words come from a scientist who also happens to be head of the World Bank — Jim Yong Kim. Amid all the gloom of political inaction on climate change, it is refreshing to see the leader of this august institution, which has the potential to influence the funding of development around the world, taking climate change very seriously, and seeing it in its totality, as a threat to humanity on a scientific and social level.

Kim was answering questions about a new report from the World Bank, called Turn Down the Heat — http://www.huffingtonpost.com/2012/11/18/world-bank-climate-change-report_n_2156082.html. It foresees a rise in the planet’s temperature of 4C, if current policies continue, by the end of the century. Kim writes: “It is my hope that this report shocks us into action”. And the World Bank does have some influence. It will now mix climate change considerations in with its approach to development investment. The amount of money it can deploy will not change the curve of a warming planet on its own, but it is a good signal to others.

And it is not the only one. Four other news stories indicate that there could be some renewed activity in tackling climate change:

– People are accepting the idea of man-made climate change, even in the USA, where a recent Yale study found: “Americans’ belief in the reality of global warming has increased by 13 percentage points over the past two and a half years, from 57 percent in January 2010 to 70 percent in September 2012.” And more than half of Americans think that climate change is caused by man’s activity. With the USA’s leading role in emitting greenhouse gases, these are significant findings (http://environment.yale.edu/climate/files/Climate-Beliefs-September-2012.pdf);

– The State of California is going it alone in introducing a cap-and-trade system for limiting GHG emissions. Auctions of permits have already started. While California is out on its own in this regard, it has a reputation for blazing a trail that others follow (http://www.nytimes.com/2012/11/14/business/energy-environment/california-to-hold-auction-of-greenhouse-gas-emissions.html). The gamble on forming an emissions trading system could backfire and see jobs leave the state, or it could become the harbinger of wider action by other states and nations;

– President Obama, fresh from his re-election, has indicated that he will try to find at least incremental changes to legislation to bend the GHG curve. But at the same time, he is not promising any national legislation while unemployment remains high (http://www.washingtonpost.com/national/health-science/obama-to-continue-efforts-to-curb-greenhouse-gases-push-energy-efficiency/2012/11/07/06c70c66-28f9–11e2-96b6-8e6a7524553f_story.html);

– In the EU, with the economy going into a double dip recession (at least in the Euro Zone), and with output falling, the nascent Emissions Trading Scheme (or ETS) has hit a critical moment. Credits, which were issued in abundance, have become practically valueless, or at least worth so little that there is no incentive for companies to cut emissions. The EU is moving to correct that situation now (http://www.chemweek.com/envirotech/climate_change/EU-proposes-immediate-action-to-halt-buildup-of-CO2-emission-allowance-surplus_47689.html) by delaying the release to auction of a batch of new permits. It is also looking at how it can improve the program. The good news is that, recession or no recession, Europe still seems committed to playing its role in reducing man-made climate change.

Taken together these actions, plus that of the World Bank, are good signs that the world may yet rise to the climate change challenge before it is too late. That said, it will take something of a miracle at the upcoming talks in Doha to get truly concerted international action to reverse a warming trend that threatens to become irreversible.

Sandy brings global warming back to the headlines

It’s not before time that global warming got some major headlines. It is, after all, the biggest economic and social threat faced by the human race at this moment in our history. However, as noted before in this column, elections in the world’s leading economy had scarcely seen a reference to the world’s most serious challenge. Until now. After the devastating effect of SuperStorm Sandy, even climate change skeptics are beginning to see that plans that events that were meant to happen every 100 years are showing up with much more regularity. Some still say that this is not because of climate change, but more and more are beginning finally to take the threat seriously.

It is interesting to hear the proposals now emanating from New York and New Jersey about keeping those two great states safe in the future. This morning, I heard experts describing how to build permanent barriers around New York harbor to protect low-lying areas of New York City. The cost? a few billion dollars.

This illustrates why it is so important to act now to avert climate disaster. Delaying can look like a wise option. If you have assets in the ground that are carbon dioxide polluters, but which are playing a key role in industrial chains, then it is very attactive to maximize those assets and to make as much profit as possible. But, as we used to say in the 1980s, there is no free lunch. If you don’t change strategy now, you will find yourself committing a large share of those profits to remedial measures in the future — just think of the New York barriers I heard proposed this morning.

In short, hanging on to current constructs of value creation — which do not take into account the effect of human activities on the environment and society — will ultimately lead to great value destruction in the future.

For a big industry like chemicals, change comes slowly, but we have to be committed to accelerating the journey towards a sustainable future in the coming crucial few years. Otherwise, we shall go down in history as some of the biggest value destroyers of all time.

 

Carbon as a feedstock: more encouraging news

Using waste carbon-containing gases as a feedstock seems like a utopian goal. It makes perfect environmental sense — compared with pumping carbon dioxide underground to sequester it, using that same carbon to make valuable products while removing it from the atmosphere is a major potential step forward in tackling climate change.

But there are many challenges: carbon dioxide in particular is a very stable gas, and getting it to react to form new compounds generally involves high temperatures and pressures. Some new companies, however, have developed ways of catalyzing the reactions of CO2, to enable them to be done at lower T and P values.

I have written before in this column about Boston-based Novomer, which uses proprietary catalyzed processes to make polyethylene carbonate and polypropylene carbonate. Today’s news, however, is from New Zealand company, LanzaTech, which has entered into an agreement with Malaysia’s Petronas to commercialize its gas fermentation processes for making useful chemicals from carbon dioxide and natural gas (http://www.chemweek.com/regions/southeast_asia/thailand/LanzaTech-and-Petronas-to-recycle-CO2-into-sustainable-chemicals_46971.html). In this case, Petronas and LanzaTech are targeting an extension of LanzaTech’s process for converting carbon monoxide into fuels and chemicals to include CO2 from a Petronas’ refineries and natural gas well. The end product will be acetic acid. You can read more about Lanza’s CO technology at http://lanzatech.com/content/lanzatech-process.

It is very encouraging to see these steps forward in using CO2 as a feedstock. The more companies that get behind these efforts the better.

 

 

LanzaTech has formed a

Ready for a giant leap?

The passing of Neil Armstrong, the first man to walk on the Moon, left me thinking what challenges in today’s world can match the 1960s goal of walking on another celestial body. The key challenges are closer to home, but they are just as big: avoiding irreversible global warming is key among them, and, in my view, the biggest challenge we face as a planet and global society.

That is why is was encouraging to see a paper from the MIT Joint Program on the Science and Policy of Global Change, arguing for a carbon tax in the USA as a “win-win-win” solution to America’s massive budget deficit. The paper (http://globalchange.mit.edu/research/publications/2328?utm_source=Carbon+Tax++List&utm_campaign=3faedc1d1b-Carbon_Tax_Report_Release8_24_2012&utm_medium=email) see three wins from enacting a tax on carbon and letting current tax cuts put through under President George W. Bush expire:

– Congress could extend spending on programs while reducing tax rates;

– The resulting lower tax rates and elevated government spending would spur growth;

– Last, the environment would benefit from reduced CO2 levels.

Even better, the proposal is for a modest tax rate of $20/ton, rising at 4%/yr. The authors say the effects would be as follows: “We find that, whether revenue is used to cut taxes or to maintain spending for social programs, the economy is better off with the carbon tax than if taxes remain high to maintain Federal revenue. We also find that, in addition to economic benefits, a carbon tax reduces carbon dioxide emissions to 14% below 2006 levels by 2020, and 20% below by 2050. Oil imports remain at about today’s level, and compared to the case with no carbon tax, are 10 million barrels per day less in 2050. The carbon tax would shift the market toward renewables and other low carbon options, and make the purchase of more fuel-efficient vehicles more economically desirable.”

What’s not to like about this proposal? Unfortunately, politically it is unlikely to cause even a ripple of interest in the entrenched politics of today. But it is the sort of thinking that we need to show that growth and environmental and social responsibility are intricately linked in today’s world. Bravo MIT for having the courage to raise this idea at a crucial juncture in America’s political discourse.

 

 

Listed in London? You must report your GHGs

Congratulations to the UK government on deciding that carbon emissions reporting will be mandatory for UK FTSE listed companies as of April 2013! There are many reasons to welcome this change. Here are four:

– It makes companies more responsible to their investors for their non-balance sheet activities, which are potentially more devastating to investor dollars that the most flagrant misconduct of corporate management;

– It starts to standardize a measurement and reporting standard that other countries can follow, http://www.defra.gov.uk/environment/economy/business-efficiency/reporting;

– It enables businesses and enlightened government to get a grip on where the emissions come from and how they should be reduced;

– It has already started a wave of new software announcements that will help not only UK companies, but all companies, measure and improve their emissions performance. Check out a new launch by the Carbon Trust (http://www.carbontrust.com/home) and CRedit360 (http://www.credit360.com/credit/site/en/home.acds).

If the US government would react in a similar way, we would see change start to happen much faster.

 

Viewing the ExxonMobil study in a brighter light

I recently wrote that ExxonMobil has reached the conclusion that total carbon dioxide emissions from power generation would level off between 2030 and 2040 (see http://chemicalroundtables.com/?p=425). While that looked like considerable progress, I queried whether the bending of the CO2 curve would come too late, and whether true decoupling of economic growth and carbon emissions would have happened by then.

A new study (http://www.nature.com/nature/journal/v488/n7409/full/nature11299.html), however, suggests that we may have a bit more time than we thought to get carbon emissions under control. It concludes that the “carbon sinks”, the oceans and the plants that can absorb carbon emissions, have taken up 55% of human-made emissions since 1959 — that is, 55% of 350 billion tons. The expectation had been that the “sinks” would get full and the amount of carbon in the atmosphere would start to grow dramatically, but it appears from this study that the sinks have doubled their absorptions as human emissions have quadrupled since that 1959 date. In short, the date of the tipping point — when carbon emissions cause irreparable change in the climate — may be further away that we had imagined.

This, taken with the Exxon report and with genuine concern about a lack of political will to tackle the problem, is some limited reason to take a small sigh of relief. But we should not take our foot off the accelerator for a new paradigm in how we think about growth, how we measure success, and how we regard our impact on the planet.

XOM: CO2 emissions will peak in 2030, but is that too late?

Energy efficiency improvements and a move to fuels with a lower carbon intensity (i.e., natural gas instead of oil and coal) will cause the world’s energy-related CO2 emissions to level off around 2030 and stay flat through 2040, even as the world’s population continues to grow and become more wealthy. That is the finding of a new Energy Outlook from ExxonMobil (http://www.exxonmobil.com/Corporate/energy_outlook_emissionsoutlook.aspx).

The company sees several trends at work:

– OECD countries’ emissions will decline by 20% to 2030, due to a combination of more energy efficiency and lower-carbon-intensity fuels;

– China’s emissions will peak around 2025, and then start to decline, for the same reason that emissions are declining in the OECD countries now;

– Countries outside of the OECD and China are likely to show the same sort of rapid rise in emissions that has occurred in all industrializations, India is the example cited;

– The rate of growth in CO2 emissions will be around half of the rate of growth in energy demand.

This report undoubtedly provides some encouraging news, and it clearly shows how shifting to natural gas, nuclear and other power sources with low carbon intensity can produce spectacular results in terms of emissions. But are the results spectacular enough? Climate scientists have worried aloud, and with considerable evidence to support their theories, that we have only till around 2020 to decouple growth from carbon emissions and avert devastating and unstoppable climate change. ExxonMobil clearly doesn’t think that will happen. Although the curve is in the right direction, the time span associated with it is too long. More urgency is needed to avoid irreversible change.

 

Will the USA waste the promise of shale gas?

The Financial Times today has a depressing comment piece by Edward Luce on the USA’s energy (and by extension to some degree, its chemical) future.

Luce points out that any nascent commitment to control of greenhouse gas emissions that might have existed at the outbreak of the Great Recession in 2008, has been converted into an unbridled desire to harness the promise of abundant shale gas and tight oil, and to become a manufacturing superpower once again. Technology improvements now allow these resources to be exploited: environmental consequences are at best an after-thought. Some analysts think that the USA will become the new Saudi Arabia, with up to 15m barrels of liquid energy production per day in 2020, above the KSA’s  11m/day barrels this year.

It is not that Americans are unaware of global warming. The latest polls show a large majority believe in the phenomenon, and think that it is man-made. But they don’t believe in doing much about it. There is somewhere in the American psyche the faith in technology to overcome the effects of global warming, and a confidence that it is all just a matter of better teamwork at home. There is little focus on global society, and how the actions of the USA affect others. That is not considered a problem for Americans to address. Even more alarming, most Americans live guilt-free about their impact on the environment and are somewhat uncurious as to how their actions affect the planet.

(Anecdotally, there is a strong contingent in America that believes that natural resources are a gift from God to promote American exceptionalism and leadership. This is the same contingent that cannot explain why the same rationale does not apply to Saudi Arabia today.)

And it is not that there is anything wrong with exploiting the locked up reserves. I have written before that the US’ energy reserves, especially shale gas, should be exploited as a way of reducing greenhouse gas emissions compared with burning coal and imported oil. Problems with water pollution can be managed. You can already see the effects of shale gas in the reduction of greenhouse gas emissions from the US energy sector in recent years. But the history of the USA is one of squandering resources through unbridled consumption. Cheap energy may well create a situation in which the latest in the list of under-priced resources, shale gas, is pumped out in order purely to spike the punchbowl and reignite the consumption orgy of the 1980s, 1990s and early 2000s. Unless the USA puts a price on carbon, it will automatically undervalue a fantastic asset. But with no political will to restart the debate, and with no public outcry on behalf of the planet, the USA is likely to go back to its historical behavior of consumerism.

It looks like China, India, and a much economically-weakened European Union, will be the regions that the world depends on to bend the carbon emissions curve for the long term. Some help will come from the US’ switch to shale gas, but it will be well below what it could have been. What a shame if that is the best that the USA can do.

Propylene glycol start up puts focus on bio-routes again

One effect of the recent boom in biodiesel production (made from vegetable oils like soybeans or oilseed rape, or from waste animal fats) has been a massive over-supply of the byproduct, glycerin. News of a startup of a new bio-propylene glycol plant in Belgium today (http://www.chemweek.com/home/top_of_the_news/Oleon-Inaugurates-Worlds-First-Bio-Propylene-Glycol-Plant-in-Belgium_44536.html) shows how that byproduct can itself be used to create a new market for bio-propylene glycol, and at the same time achieve a reduction in greenhouse gas emissions, compared with conventional production routes.

The company involved is Oleon, in the northern part of Belgium. It is a small, 20,000-ton/yr plant, which will scarcely make a dent in this 2 million ton market. The process is by BASF, as are the catalysts involved. The reduction in carbon dioxide emissions is estimated at 70% compared with fossil-based feedstock routes to the same product. With a very reasonable investment cost of $10 million in the process, expect to see more companies consider this new route to a very useful product (propylene glycol is used as a dispersant and deicer ingredient, as well as in formulations for pharmaceuticals and as a food ingredient).