The new green collar economy is beginning to emerge, right here in New York. Four news items caught my eye this week:
These four stories are the evidence for this economic tide: The allowance auction is part of it. So is closure of a major polluter and the arrival of a biogas technology firm.
Dealing with acid rain successfully since 1990 has taught us how to tackle other more troublesome airborne emissions. The essential tool in reducing sulfur dioxide, the emission most responsible for acid rain, was market-based regulation that let polluters decide how and when to meet lowered emission caps. (For more on how the US tackled acid rain with a cap and trade program, see the Appendix to this column on Abating Acid Rain.)
Carbon dioxide is a byproduct of burning fossil fuels. Over 80% of the carbon dioxide we put in the air comes from combusting coal, oil, gasoline, and natural gas. And half of that comes from industrial processes and power stations generating electricity and, less than 20% (!) from the internal combustion engines in our cars, trucks, planes and trains.
The US is a leading exporter of carbon dioxide to the global atmosphere. Of course, once carbon is in the atmosphere, it is not American or Chinese carbon anymore, but everyone’s carbon. View a world map of who is responsible for atmospheric carbon dioxide(CO2), at Wikipedia.
It began in earnest with the invention of the effective coal-fired steam engine in the early 1800s—an invention that propelled America trains and boats to a economic and industrial manifest destiny across the entire North American continent and beyond. Since then a steady rise of carbon as a thick blanket in the atmosphere that has been accompanied by a rise global average temperatures, hence the term “greenhouse gas.”
While scientists disagree on exactly how much the Earth is warming due to burning fossil fuels and deforestation, they do agree the Earth is getting warmer and will keep getting warmer unless we lower our carbon dioxide emissions.
The carbon allowance auction will use market principles to reduce the total amount of carbon dioxide we send into the Earth’s atmosphere. This well-thought out ” cap and trade” program is not a federal initiative. The feds have lagged far behind America’s states and cities in the recent years on environmental policy innovation. But you already knew that!
Ten states have decided not to wait for Washington. Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, Vermont, Maryland, Massachusetts and Rhode Island are the signatory states, with others as observer states and regions, Pennsylvania, District of Columbia, and the eastern Canadian provinces (See the Regional Greenhouse Gas Initiative Members and Observers (2008) map.).
Hey, didn’t these same states also kick off the Declaration of Independence 230 years ago? The states establishing this regional partnership are also the same states most heavily afflicted by acid rain (See the 2004 pH map in the Appendix). The overlap between those who acted on acid rain 18 years ago and those acting on greenhouse gases today is no coincidence.
The states in this partnership call it the Regional Greenhouse Gas Initiative. RGGI (or “ReGGIe”) was founded in fall 2007, and is a great example of the states acting as laboratories of policy innovation. Other regional partnerships are underway in the West and the Midwest as well.
Getting back to local polluters on the Hudson, the Lovett Generating Plant in Tompkins Cove has been on the NYS DEC’s dirtiest emissions list for a long time. The plant owner, Mirant Inc., tried to get permission to be able to generate electricity at peak times (summer days) and sell it for an above market “reliability fee” to the Orange and Rockland Utilities Inc (O&R). Ironically, O&R used to own the plant and sold it to Mirant, who became responsible for installing pollution control devices. Lovett has a stormy environmental history. The state DEC’s attempts to hold Lovett to cleaning up its emission reached an accord last summer.
This year owner Mirant tried to argue that O&R could pass on the higher cost for the proposed reliability fee to its local customers. The Public Service Commission wasn’t buying that argument. Mirant had proposed—higher prices for a closed market—the direct opposite of what energy deregulation is trying to accomplish. The Public Service Commision’s goal is an open market that yields cleaner plants and more competitive prices.
The silver lining is Mirant will raze the aging Lovett coal-fired plant and may replace it with a cleaner power plant that would burn natural gas. This gas could potentially be provided by the Millennium Pipeline when it’s terminus in Rockland County is completed. Burning natural gas produces less carbon dioxide per unit of power than coal, under most conditions.
Mirant also owns and operates the much larger Bowline Point in West Haverstraw a few miles south of Lovett. Bowline is fired by natural gas and produces six times more electricity than Lovett. The Millennium Pipeline expected to be completed by late 2008 and reach Stony Point. (See a map of the pipeline.)
The energy firm in the third story, Environmental Power, Corp., is moving from Portsmouth NH to Tarrytown NY. They license technology from Europe that produces and refines methane captured from farm byproducts such as animal and plant waste. The firm is moving here to position itself closer to Big Apple’s talent pool and financial markets for the sale of greenhouse gas offsets to companies that are required to reduce emissions. In short, Environmental Power installations in Texas and California currently produce methane-rich biogas while generating significant quantities of carbon offset credits.
And that brings us back to the innovative carbon allowance auction set for September. These cap and trade schemes have worked well in Europe, so there is every reason to believe this auction market here will evolve similarly as these financial instruments mature.
The fourth news item broke on April 1. Al Gore’s “We Can Solve It” climate change campaign, was launched on April Fools’ Day starting with appearances on “60 Minutes” on Sunday March 30. At the website, we can learn about the technologies that exist to solve the climate crisis and the tremendous economic opportunities that can open up for early adopters.
Resources on climate change and energy policy:
Good recent book on environmental markets:
Quick reliable overviews in Wikipedia:
The Alliance for Climate Protection “We Can Solve It” project
Editor’s Note: The author is a former Village of Croton-on-Hudson Trustee who served three terms from 2001 to 2007.