• CSGA

Clean Power Plan


On Thursday, January 11, a hearing was held in Annapolis regarding the Clean Power Plan. Wilfred Candler gave the following testimony:

I wish to comment on the Trump Administration's proposed repeal of the Clean Power Plan.

Scientists first speculated about the insulating effect of CO2 200 years ago: Michael Faraday demonstrated it 160 years ago, and in 1896 Svante Arrhenius published estimates of the increase in Global Temperature that would result from increased atmospheric CO2. In 1959 Edward Teller (“Father of the H-Bomb”) told the Petroleum Institute of the warming effect of fossil CO2 in the atmosphere (The Guardian, 1 Jan 2018). So please, no argument that Global Warming does not exist, or is not caused by fossil CO2 in the atmosphere.


This year we have had hurricanes Harvey, Irma, Jose, Maria and forest fires in California and Canada, drought in the Dakotas and California, droughts in India and Russia, fires in Portugal, and so on. Half of Porto Rico's population is still without power. Evidently Global Warming and resultant Climate Change is happening now.


So the idea of repealing (not replacing) the Clean Power Plan is simply irresponsible and ridiculous.


A Neoliberal/Market Replacement (Modelled on Maryland's Renewable Portfolio Standard): Currently the CO2 produced from fossil carbon is released into the atmosphere at no charge, leading to Global Warming. Obviously fossil fuel companies are not paying the full costs of their operations, since they are not removing and sequestering a ton of carbon from the atmosphere for every ton extracted from the Earth. At the same time there are a number of technologies for carbon removal and sequestration, but no market to help technology development and price reduction.

A replacement for the CPP (Clean Power Plan) could require fossil fuel companies to surrender a Carbon Removal Certificate for every ton of carbon extracted from the Earth. These certificates could be produced by Fossil Fuel companies or purchased from companies specializing in carbon removal and sequestration. It is possible that the market price of certificates would force fossil fuel price up to the point of causing economic collapse. To prevent this the Government should stand ready to issue Emergency Carbon Removal Certificates, at say $525 per ton of carbon. The revenue to be used for research into promising methods of sequestering carbon from the atmosphere, or to subsidize start-up sequestration companies to help bring down sequestration costs.


Currently oil is about $50 a barrel, Emergency Carbon Removal Certificates would raise the cost of oil for manufacturing to $100 a barrel, a price that ruled from 2011 to 2014.


Note: Under this plan the price of Carbon Removal Certificates would be market determined, and fossil fuel companies would pay the full cost of their activities. What could be more Neoliberal/Republican than that?


Cost of Fossil Fuels with CRC's Costing $525 per ton of carbon

Fuel Cost Cost with CRC.

(per ton of carbon)

Coal $ 63.71 $589

Natural Gas $144.20 $669

Oil $525.00 $1,050


Note that a ton of carbon bought as coal is only an eighth as much as it cost if bought as oil…….. $100 spent on coal, does eight times as much damage (or global warming) as if it was spent on oil. ….. This is no way to run an economy!


We do not want doing damage to be cheap!



Clarification


Several friends, after reading the above asked: “Why are you recommending that fossil fuel companies pay $525 per ton of carbon extracted?” I now realize that a busy and sensation oriented reporter could mistakenly summarize my testimony as: “$525 carbon fee recommended”. …. This is the opposite of my intended message, so some clarification is called for.


In brief my argument is that the benefits of a free-market solution depend on companies paying the full cost of their operations. This has not been the case for fossil fuel companies since the disposal of “waste CO2” into the atmosphere has been allowed free of charge.


At the same time numerous technologies exist for extracting CO2 from the atmosphere (plants do it every day) and storing or sequestering it for different periods. These technologies have not been “brought to scale” because there is no market or demand for stored or sequestered CO2.


So my proposal is to create a demand for atmospheric CO2 removal by requiring fossil fuel companies to provide evidence (Carbon Removal Certificates, CRCs) of removal of atmospheric CO2 equivalent to the carbon removed from the Earth by their activities. (For Marylander's this is modeled on the operations of the Maryland Renewable Portfolio Standard).


Initially the demand for CRC's would likely greatly exceed the supply, since fossil companies have been allowed to operate as if there was no cost to society of releasing additional fossil CO2 in the atmosphere, and consequently there has been no demand to CO2 removal. Thus left to itself, the market might settle on a price of $1,000 or even $2,000 per ton of carbon, leading to massive increases in the price of electricity, gasoline, domestic heating and the myriad everyday products dependent on fossil fuels for their production.


It is to avoid such a total market disruption, that I propose government issued Emergency Carbon Removal Certificates (ECRC's), if the market clearing price for CRC's threatens to be so high as to cause major market disruption. The ECRC's are an “interference with the market” if the market price threatens major economic collapse….. It is in no way intended to set the price of CRC's. If the market price for CRC's is less than $525, then there would be no demand for ECRC's, and the market determined price for CRC's would be the price used by fossil fuel companies in deciding what to produce and where, and what infrastructure to build (or not build) in the light of predicted demand.


Why $525? My recommended $525 price for ECRC's is highly negotiable. If others can show that unacceptable economic disruption would follow from a CRC price above $300 a ton of carbon, so be it and set the ECRC price at $300. Contrariwise if experts conclude that the economy could adjust to a CRC price of $700, so be it and the ECRC should be set at $700.


My simple-minded rationale for $525 a ton, is that it would raise the cost of oil from $50 to $100; and we had oil at $100 a barrel from 2011 through 2014. We did not like it, but since it was a market determined price we adjusted. …. Coal and natural gas prices would be higher with ECRC's at $525 than they were in 2011 to 2014, but it is even more urgent we get off these fuels, than oil.


Anyway, let's be clear, I am not recommending a CRC price of $525 a ton. I am just showing how we can prevent the market-determined price of CRC's exceeding $525 (or whatever) a ton.


I am not recommending an arbitrary tax or fee on fossil fuels, just that companies pay the cost of removing the excess CO2 that their activities cause to be added to the atmosphere.


One final observation: Almost all environmentalists agree that “we need to put a price on carbon”. This “agreement” is, in my view, entirely worthless until they agree what the price should be.