In Defense of Markets

This blog post originally appeared on Belfer Center's An Economic View of the Environment

Cap-and-trade has been demonized by conservatives as part of an effective strategy to stop climate legislation from moving forward in the U.S. Congress.  As I wrote in my previous blog post (“Beware of Scorched-Earth Strategies in Climate Debates,” July 27, 2010), this unfortunate tarnishing of market-based instruments for environmental protection will come back to haunt conservatives and liberals alike when it becomes politically difficult to use the power of the marketplace to reduce business costs in the pursuit of a wide variety of environmental objectives.

How Should We Think About Extreme Weather Events?

The rough weather of 2010 teaches us that climate change is risky business.

Recently, I posted a blog discussing the possible link between global climate change and two related extreme weather events: the heat wave in Russia and historic flooding in Pakistan. Although there is no method to definitively attribute any single event to climate change, based on documented trends in extreme weather events and research showing that specific types of meteorological phenomena are more common in a greenhouse-warmed world, I said:

“It is reasonable to conclude that, in aggregate, the documented increase in extreme events is partially a climate response to global warming, and that global warming has increased the risk of extreme events like those in Russia and Pakistan. On the other hand, there is no scientific basis for arguing that these events have nothing to do with global warming.”

That’s as far as the science permits me to go with this question. We simply cannot know whether any particular weather event was “caused” by climate change. In recent weeks, however, the media have done their all-too-common “he said-she said” routine of finding one source who says the extreme weather of 2010 is because of climate change and another who says it’s not. This is a meaningless argument that distracts us from what we should be thinking about, which is what these events can teach us about our vulnerabilities to climate change.

InterAcademy Council Completes Review of IPCC Report Process

You might recall earlier this year that a few mistakes were discovered in the Intergovernmental Panel on Climate Change’s (IPCC) 3,000-page assessment report published in 2007. The mistakes did nothing to undermine the report’s major findings: It is unequivocal that the climate is changing, and there is greater than 90 percent certainty that most of the observed warming of the past half-century is due to human influences. Earlier this year, I discussed the errors on E&ETV’s On Point program.

FutureGen 2.0

The first two weeks of August saw two big news items from the U.S. Department of Energy (DOE) related to carbon capture and storage (or CCS, for an overview of CCS see the our Climate TechBook CCS brief). First, on August 5, DOE announced its plans for FutureGen 2.0. One week later, President Obama’s Interagency Task Force on CCS delivered its final report and recommendations regarding overcoming “the barriers to the widespread, cost-effective deployment of CCS within 10 years, with a goal of bringing five to ten commercial demonstration projects online by 2016” (see the separate post regarding the task force’s report).

Why is this FutureGen announcement from DOE important? CCS is anticipated to be a key technology for achieving large reductions in U.S. and global greenhouse gas (GHG) emissions (for example, see the recent projection from the International Energy Agency that CCS could provide nearly one fifth of all global GHG emission reductions by mid-century). Initial commercial-scale CCS demonstration projects are a critical step in advancing CCS technology; these projects provide valuable experience and confidence in “scaling-up” CCS technologies and technology improvements and cost reductions from “learning by doing.” The aforementioned report from the Interagency Task Force on CCS notes that FutureGen is one of ten planned CCS demonstration projects supported by DOE (see Table V-2 of the task force’s report for the list of seven power-sector and three industrial CCS projects).

The FutureGen project has had a somewhat tumultuous history. In 2003, DOE announced its plan to work with an industry consortium on the FutureGen plant to demonstrate commercial-scale integrated gasification combined cycle (IGCC) technology coupled with (pre-combustion) CCS at a single new coal-fueled power plant (with DOE covering most of the project’s costs). In 2007, the industrial consortium selected a site in Mattoon, IL, for the FutureGen power plant. In 2008, though, DOE abandoned the idea citing the escalating cost estimates for the FutureGen project and decided instead to pursue cost-sharing agreements with project developers to support multiple CCS demonstration projects (this time with DOE covering a smaller fraction of project costs). DOE received only a small number of applications for this restructured FutureGen approach, and this change of plans came in for some criticism from the Government Accountability Office (the GAO report also provides a helpful overview and history of what might now be referred to as “FutureGen 1.0”).

In 2009, the Obama Administration revived plans for a single FutureGen plant and restarted work with the industrial consortium on preliminary design and other activities, promising a decision in 2010 on whether to move forward with the project. That decision came on August 5 and included another shift in DOE’s plans for the FutureGen project (now dubbed “FutureGen 2.0”). Energy Secretary Chu announced the awarding of $1 billion in Recovery Act funding for the repowering of an existing power plant in Meredosia, IL, as a coal-fueled power plant using oxy-combustion and CCS. With “FutureGen 2.0,” DOE decided to change from building a new plant to repowering an existing one and chose a different technology (oxy-combustion with CCS rather than IGCC with CCS).

When subsidizing initial CCS demonstration projects, policymakers should support a variety of relevant technologies and configurations. With respect to applying CCS technology to coal-fueled electricity generation, there are factors that are expected to make certain variants of CCS technology more appropriate for certain circumstances. These factors include the application of CCS with: new plants vs. retrofitting/repowering existing plants; different coal types; and various geologic formations for CO2 storage. Importantly, there are three types of CO2 capture technology—pre-combustion, post-combustion, and oxy-combustion—with the latter two appropriate for use at existing coal-fueled power plants (see our Climate TechBook CCS brief for details). 

With its new approach for “FutureGen 2.0” DOE has focused on large-scale demonstration of oxy-combustion. Of the ten CCS demonstration projects supported by DOE, FutureGen will be the only one to use the oxy-combustion technology. Of the 34 large-scale power plant CCS projects worldwide tracked by MIT, only four (counting FutureGen) use or plan to use oxy-combustion, and FutureGen will be the only such oxy-combustion project in the United States. Given the greater focus so far given to the two other alternative CCS approaches, oxy-combustion is likely the CCS technology that can most benefit from the FutureGen large-scale demonstration project.

With its new approach for “FutureGen 2.0,” DOE is taking an important step in demonstrating a portfolio of different CCS technologies. Such demonstrations, along with other supportive government RD&D policies, provide a critical “push” for low-carbon technologies. Long-term policy certainty (such as from a GHG cap-and-trade program) for the private sector regarding future GHG emission reduction requirements can provide the necessary technology “pull” to guide private investments in widespread deployment of CCS and other low-carbon technologies.

Steve Caldwell is a Technology and Policy Fellow

Climate Risks: Lessons from 2010’s Extreme Weather

Update: Dr. Jay Gulledge is featured on National Journal's Energy & Environment Expert Blogs. Click here to read Dr. Gulledge's take on Climate Risks Here and Now

Last fall I posted a blog about the unusual number and severity of extreme weather events that have been striking around the globe for the past several years. That entry focused on the alternating severe drought and heavy flooding in Atlanta in 2007-2009 as an example of the roller coaster ride that climate change is likely to be. As every dutiful scientist does, I stopped short of blaming those individual weather events on global warming, but I am also careful to point out that it is scientifically unsound to claim that the confluence of extreme weather events in recent years is not associated with global warming; I’ll return to this question later.

Tempestuous 2010

The weather of 2010 continues the chaos of recent years. In the past six months, the American Red Cross says it “has responded to nearly 30 larger disasters in 21 [U.S.] states and territories. Floods, tornadoes and severe weather have destroyed homes and uprooted lives …” Severe flooding struck New England in March, Nashville in May, and Arkansas and Oklahoma in June.