Energy & Technology
Last week, the Obama Administration’s Interagency Task Force on Carbon Capture and Storage (CCS) released its final report and recommendations. President Obama created the task force, co-chaired by the Department of Energy (DOE) and the Environmental Protection Agency (EPA) and involving 14 executive departments and federal agencies, in February. The President’s directive charged the task force with delivering “a proposed plan to overcome the barriers to the widespread, cost-effective deployment of CCS within 10 years, with a goal of bringing 5 to 10 commercial demonstration projects online by 2016.”
Despite the uncertain future of comprehensive federal climate legislation, states continue to move forward with energy policies that reduce greenhouse gas emissions and save consumers money on their electricity bills. One policy in particular is quickly gaining traction in the states: Property Assessed Clean Energy, or PACE, programs. Twenty-three states plus Washington, DC, have PACE legislation, and 13 others have proposals on the table including Kentucky, South Carolina, Nebraska, and Pennsylvania.
PACE is an innovative funding mechanism that addresses many of the financial barriers to energy efficiency and renewable energy retrofits on residential, commercial, and industrial properties. In general through PACE states delegate authority to local governments to designate an improvement district and issue bonds, which provide low-interest, long-term loans to property owners for energy saving measures. The loans are paid back through an addition on the property tax bill and often over a 20-year period. If the property is sold, the debt transfers to the new owner. PACE programs usually create a lien on properties that is “senior” to (i.e., takes precedence over) other obligations on the property.
Because PACE is run by local governments, there are different styles of implementation for the various program elements including: program administration, underwriting criteria, source of funds, eligible measures, and quality control. For example, San Francisco uses a third party for administrative functions and issues “mini-bonds” to be purchased by a pre-determined investor, while Babylon County, in New York, uses in-house staff to administrate and has repurposed an existing solid waste fund for financing.
The White House strongly supports initiatives that make it easier for homeowners to get loans for energy efficiency and renewable energy improvements, and PACE programs have benefited from $150 million in stimulus funding. In an effort to standardize best practices and ensure that PACE is good policy for all stakeholders, the White House released a Policy Framework for PACE Financing Programs in October 2009. The measures initially accelerated the adoption of PACE and served as a guide for the second generation of PACE programs.
However, both existing and developing programs have been slowed or halted entirely due to opposition from Freddie Mac and Fannie Mae. In May, both agencies sent letters to mortgage lenders reminding them that an energy-related lien may not be senior to a federally backed mortgage. The letters place a burden on the lender to determine if they originate mortgages in any state or locality that permits a first lien priority on energy loans. Proponents of PACE and its senior lien provision say it is a necessary requirement for local governments to raise funds.
Following Freddie and Fannie, on July 14 the Federal Housing and Financing Agency (FHFA) released a statement of their opposition to PACE. As a result, the California attorney general’s office has sued the FHFA, Fannie Mae, and Freddie Mac for their actions and unwillingness to guarantee properties with PACE assessments. The July 14 lawsuit asks the court to declare that PACE does not violate the standards of Fannie and Freddie and also requests an injunction to prevent the agencies from taking action against home owners with PACE loans. Congress is also working on legislation that would require Freddie and Fannie to use underwriting standards that would facilitate the use of PACE programs. With a scarcity of financing options that overcome the high upfront cost of retrofits, this is an issue worth watching closely.
Olivia Nix is the Innovative Solutions intern
A hot topic in environmental circles lately has been the impact plug-in electric vehicles (PEVs) will have on reducing greenhouse gas (GHG) emissions. Some are optimistic about PEVs’ emission reduction potential, while others are pessimistic. The truth is, not surprisingly, somewhere in between. In order to reduce emissions from the transportation sector, we must both move to low carbon fuels (including electricity, which has zero GHG emissions from the tailpipe) and reduce the carbon intensity of the electrical grid.
By: Jessica Shipley, Solutions Fellow, Pew Center on Global Climate Change
Any climate and energy legislation will impact U.S. farmers and ranchers, and this paper examines the many legitimate concerns the agriculture sector has with such legislation. There have been a large number of economic analyses, modeling exercises, and reports published in the past several months based on an array of climate policy assumptions, and the resulting scenarios have ranged from realistic to doomsday. The results of these efforts have often been skewed or cherry-picked to support particular arguments. This brief tries to objectively assess the impacts of climate legislation and identify ways that such legislation could be shaped to provide greater opportunities for the sector. U.S. farmers have long exhibited adaptability and entrepreneurship in the face of changing circumstances, and they will be presented with a host of new markets and opportunities with the advent of climate and energy legislation.
Farmers have many reasons to be engaged participants in the climate and energy policymaking process. It is imperative that the United States take constructive action on climate and energy to maintain a leading role in the new energy economy. In shaping those actions, productive engagement by American farmers can help ensure that U.S. policy addresses their concerns and embodies their ideas. America’s farmers will be the best advocates of both the principles of a robust offset market and the creation of other market and renewable energy opportunities.
Key takeaways from this brief are:
- American farmers and industry will face greenhouse gas limitations regardless of what happens in the legislative and regulatory process. Market-driven requirements from the private sector (e.g. Walmart), regulation by the U.S. Environmental Protection Agency (EPA), state or regional programs, and nuisance lawsuits will continue to require greenhouse gas (GHG) emissions to be reduced going forward. Legislation can simplify requirements on business, provide incentives and new markets for farmers, and provide mechanisms to lower the risks and costs to all sectors of the economy. In fact, without legislation, the piecemeal nature of GHG limitations will likely result in a worse outcome for farmers.
- Costs to farmers from GHG legislation can be substantially mitigated by cost-containment mechanisms. Though there is potential for increased costs (namely energy and fertilizer input costs) to farmers, mechanisms potentially available in legislation can significantly minimize price volatility and cost impacts to farmers and the economy as a whole, even though not all these can be adequately reflected in economic modeling.
- The opportunities for farmers to realize a net economic gain from climate legislation are significant. Offsets, biofuel and biopower, renewable power, and the ability to receive payments for multiple environmental benefits from well-managed working farmlands are among the new potential opportunities. The key to making this a reality is climate and energy policy that is shaped by the agriculture sector and farmers themselves.
- Climate change and resulting weather patterns pose numerous risk management concerns for agriculture. The strong scientific evidence behind climate change should concern farmers because of the significant new risks climate change poses to farmland and the rate at which those risks are increasing.
The Midwest Governors Association (MGA) recently held a briefing in Washington for congressional and federal agency staff to highlight key regional developments in clean energy job creation. As the Senate prepares to take up energy legislation this summer, state government officials and representatives from business groups and environmental organizations in the Midwest described the progress they have made promoting renewable energy in order to create jobs, benefit the environment, and increase energy security.
- Transportation-related activity – including the movement of people and goods as well as the purchase of transportation-related products and services – accounted for over 10 percent of Gross Domestic Product (GDP) in the United States in 2002 with a value of over $1 trillion. That same year, over 19 billion tons of freight, with a value of $13.3 trillion, was carried over 4.4 trillion ton-miles in the United States.
- Inefficiencies and poor maintenance throughout the transportation sector hurt the economy. According to the Federal Highway Administration (FHWA), bottlenecks for trucks on America’s highways caused 226 million hours of delay and cost $7.3 billion in 2006. Almost half of the locks on inland waterways maintained by the Army Corps of Engineers are more than 60 years old, even though the planned design life of these locks was 50 years.
- Trucks transport 70 percent of all goods by weight in the United States and emit 75 percent of greenhouse gas (GHG) emissions from freight transportation. GHG emissions from freight trucks increased by 80 percent from 1980 to 2007 while the amount of freight shipped in trucks measured in ton-miles has grown by over 100 percent in that same period.
Freight transportation is a critical component of the American economy. According to the U.S. Department of Transportation, the movement of goods played a significant role in U.S. economic growth in the past two decades. The relative importance of international merchandise trade, and thus the movement of goods, to the overall U.S. economy increased from 12 percent in 1990 to 23 percent in 2008.
Public policy that affects freight transportation must reflect the sensitivity of the national economy to these policies’ effects on freight. The players in freight transportation span the full spectrum of private enterprise from sole proprietors to very large international corporations. The relative importance of freight transportation within the overall U.S. economy is likely to continue growing, given current transportation trends and the policies of the Obama Administration. For example, President Obama hopes to double exports by 2015 though his Administration’s National Export Initiative (NEI).
Freight transportation is a complex mix of publicly and privately managed systems – the roads and rivers used by trucks and barges, respectively, are almost entirely managed by the government while the railroads are managed by the private sector. Trucks must share the road with passenger vehicles, and freight rail companies sublease their tracks to passenger rail companies to offset maintenance costs.
This overview will focus mostly on truck and rail transport, as they account for nearly 60 percent of freight transport in ton-miles and 80 percent of the sector’s greenhouse gas (GHG) emissions. For more details about aviation and marine, see the Climate TechBook sections on Aviation Emissions Mitigation Strategies and Marine Shipping Emissions Mitigation.
Freight Travel by Mode
There are many modes of transportation for the movement of goods including truck, rail, water, air, and pipeline. By weight and value, most goods are moved on trucks, but the amount of freight moved by rail is comparable when one considers the amount multiplied by distance as measured in ton-miles (see Figure 1).
Because the freight transportation industry is highly competitive, the private sector chooses the most cost-effective mode for transportation. For instance, intermodal transport (using more than one mode) handled less than 11 percent of goods by value in 2008, likely due to the cost of transferring goods between modes. There is evidence that some of the transfer costs are offset by low-cost, long-distance hauls. The Federal Highway Administration (FHWA) estimates intermodal transport’s share of goods will increase to over 21 percent by 2035.
Each mode of freight transportation offers advantages and disadvantages. Some useful metrics to compare and contrast freight transportation modes are energy efficiency, convenience, and cost.
Energy Efficiency by Mode
When measuring the movement of goods in units of energy consumed per ton-mile, rail is the most energy- efficient form of freight transportation (see Table 1). Using this metric, rail is twelve times more efficient than trucks and almost twice as efficient as ships. According to the Association of American Railroads (AAR), trains transported a ton of freight 457 miles on one gallon of diesel fuel on average in 2008, a 94 percent increase since 1980. However, fuel efficiency is not a comprehensive metric. For instance, the road infrastructure within the United States is so extensive that in many cases goods delivered by trucks can travel fewer miles than goods moved by competing modes.
Table 1: Energy intensity of domestic transportation modes in the U.S. from 1980 to 2006.
Percent Change from 1980-2006
Trucks (Btu per vehicle mile)
Trucks (Btu per ton mile)
Rail (Class I) (Btu per freight car mile)
Rail (Class I) (Btu per ton mile)
Ships (Btu per ton mile)
Note: Class I railroads are the largest freight railroad companies based on operation revenue
Source: U.S. Department of Energy, Transportation Energy Data Book. 2008. U.S. Department of Transportation, National Transportation Statistics, 2009.
Figure 1: Freight distribution among modes by ton-miles, tons, and value in 2007.
Note that the Commodity Flow Survey is for domestic shipments only; it does not include movements such as ship-to-land imported intermodal transfers.
(1) Multimodal includes the traditional intermodal combination of truck and rail plus truck and water; rail and water; parcel, postal, and courier service; and other multiple modes for the same shipment.
Source: U.S. Department of Transportation, 2007 Commodity Flow Survey, 2009.
Convenience by Mode
Which transportation mode is most convenient for moving a good depends on the good itself and the good’s source, destination, and time requirements for delivery. Industrial goods like coal as well as other large and heavy goods tend to be moved by rail and ships. Coal is the good moved second most by weight and the good moved the most by ton-miles, and more than 70 percent of coal is moved by rail.
Rail’s share of freight increases as trip length increases; goods travel 691 miles on average with rail. This explains why rail’s share of freight transport is almost equal to truck’s when the metric is ton-miles, while it carries less than 12 percent of the total tons moved.
Infrastructure constraints limit both ship and rail freight volume. It is simply not possible for many trips to be accommodated solely by rail or ship and the cost of transferring goods from one mode to another is often prohibitive. For many short trips (known as short haul), trucks are the only mode available. Furthermore, in many cases trucks must also be used for the last mile of freight distribution. This helps explain why trucks have such a dominant share of the tons of goods moved (nearly 70 percent in 2007).
One of the most significant advantages for trucks over other modes is the extensiveness of the highway system. The Dwight D. Eisenhower System of Interstate and Defense Highways is an engineering feat that was recognized as one of the “Seven Wonders of the United States” by the American Society of Civil Engineers (ASCE) in 1994. The nation’s rail and water freight transportation networks are much less extensive geographically than the network of highways and roads, making trucks a faster and more convenient delivery mode for most short- and many long-distance freight trips than these other modes or intermodal options. In fact, the miles of infrastructure for rail actually decreased by 24 percent between 1980 and 2007, while the road infrastructure increased by 5 percent.
Another factor affecting each mode’s convenience is a recently developed inventory strategy known as Just-In Time (JIT). JIT attempts to minimize the amount of goods businesses hold at any given time. Holding goods can entail substantial costs, including the cost of storage. Thus JIT helps the bottom line for many companies, and frees up more capital to spend on other business needs. This strategy puts increased time pressure on freight transportation, however. There is less tolerance for shipping delays because the receiver’s on-site inventory of goods is not as large. As a result, goods must arrive on time, when expected, and reliably.
Figure 2: Average freight revenue per ton-mile (2006 $)
Source: U.S. Department of Transportation, National Transportation Statistics, 2009.
Cost by Mode
The cost of freight transportation varies greatly by mode and is an important factor in determining which mode is appropriate. Figure 2shows the revenue per ton-mile by mode. The cost of moving goods by airplane and truck is significantly more expensive than by rail or ship.
As mentioned previously, the two most competitive modes are truck and rail, both of which spend most of their revenue on fuel and labor (Figure 3). Rail must pay the complete costs of maintaining the railroad tracks while trucks share road maintenance cost with other vehicles, principally through fuel excise taxes.
Estimating costs for both rail and truck is very complex. Figure 3is provided for illustrative purposes and should not be treated as a definitive breakdown of the costs for either mode. The costs for any movement of goods depend on the current fuel prices, the distance traveled, the level of congestion, and other factors. These cost shares may all vary considerably and thus the cost breakdown by mode is difficult to quantify in the general case.
Figure 3: The cost of shipping goods by truck and rail in 2008.
Note that truck costs are based on a survey conducted by the American Transportation Research Institute while rail costs are calculated using data from Schedules 410 and 210 of the R-1 annual report filed with the Surface Transportation Board by the Class I railroads.
Source: American Association of Railroads, Rail Cost Adjustment Factor, 2009. American Transportation Research Institute, An Analysis of the Operational Costs of Trucking, 2008.
Greenhouse Gas Emissions from Freight
Freight contributed 27.9 percent of the U.S. GHG emissions from transportation, or 7.8 percent of total GHG emissions in 2007. This share has grown from 23 percent of transportation GHG emissions in 1990 due to the increased emissions from trucking (see Figure 4).
It is clear from Figure 4that the key challenge to reducing GHG emissions from freight transportation is to reduce the amount of emissions from truck transport. At a high level, there are two ways to accomplish this goal: reduce GHG emissions from trucks or shift more freight transport to less GHG-intensive forms of transport such as rail. The latter option is referred to as modal shift.
Figure 4: GHG Emissions from Transportation from 1990 to 2007 in Million Metric Tons of CO2e.
(1) Fluctuations in emissions estimates reflect data collection problems. (2) Includes only CO2 emissions from natural gas used to power pipelines.
Source: U.S. Environmental Protection Agency,Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2007, 2008.
Reducing Emissions from Trucks
The U.S. Environmental Protection Agency (EPA) is taking the lead in reducing GHG emissions from transportation through its rulemaking authority. In April of 2010, the EPA in partnership with the National Highway Traffic Safety Administration (NHTSA) promulgated the first federal GHG standard for passenger vehicles and light trucks, which together accounted for over 60 percent of GHG emissions from transportation in 2007. The agency is currently working on a similar standard for heavy-duty trucks; the EPA expects to issue a notice of proposed rulemaking by October of 2010. In May of 2010, President Obama issued a Presidential Memorandum indicating the standards should consider the recommendations in a report released by the National Research Council’s report detailed below. It is unclear how stringent the EPA’s standard will be.
As mentioned above, convenience and cost determine which mode of transportation is appropriate for the distribution of goods. At least one of these factors must be addressed in order to cause a modal shift – i.e., to change which mode is used to transport a good.
The market for freight transportation is highly competitive in the United States, so most changes will likely come from the private sector. The optimizations or enhancements necessary to cause any modal shift would require significant increases in fuel prices to send a strong signal to freight shippers. Another necessary condition for modal shift is the further containerization of freight; this enables quick transport from one mode to another, encouraging intermodal transport such as truck-to-rail or truck-to-ship movements.
National Research Council Report on Medium- and Heavy-Duty Trucks
The Energy Independence and Security Act of 2007 required the U.S. DOT to enact a first-ever fuel economy standard for medium- and heavy-duty vehicles (MHDV). In order to assist in developing this new standard, the National Research Council (NRC) assembled a committee to assess fuel economy technologies for MHDVs.
The final report, released in April of 2010, recommends that a load-specific fuel consumption standard be adopted for medium- and heavy-duty trucks instead of an absolute fuel efficiency standard, as has been done in the past by the EPA with passenger vehicles and light-duty trucks. Such a standard would acknowledge that trucks are designed as load-carrying vehicles. Thus, the standard would measure the performance of the vehicle against its intended purpose. The following are other recommendations from the report:
Trends in Freight Transportation
From 1993-2007, freight transportation grew by over 35 percent (see Figure 5). Much of this growth came from trucks, which now lead other modes of transportation in the three main measures of goods movement: tons, ton-miles, and value.
These trends can be explained by cost competitiveness and the advent of just-in-time (JIT) inventory management. Low fuel prices throughout the 1990s and much of the 2000s made modes of transportation most dependent on fuel prices (i.e., trucks) more attractive. The rise in popularity of JIT inventory management made businesses more reliant on timely delivery, favoring trucks since they have access to an expansive network of roads and can move product quickly. As a result, trucks gained more and more market share throughout the 1990s and into the 2000s.
Figure 5: Percent change in ton-miles from 1993-2007.
(1) CFS plus out-of-scope estimates. (2) Multimodal includes the traditional intermodal combination of truck and rail plus truck and water; rail and water; parcel, postal, and courier service; and other multiple modes for the same shipment.
Source: U.S. Department of Transportation, Freight Shipments in America, 2006.
Current trends will likely continue into the future. Figure 6shows an estimate of the goods by weight and value from 2002-2035. The U.S. DOT estimates that trucks will continue to increase their share of freight transportation.
Both the private and public sectors play a role in the effort to reduce GHG emission from freight transportation. As mentioned in above, reducing emissions from trucks and encouraging modal shift are the two most effective strategies. Since freight is a highly competitive market, incentives to improve technology and the efficiency of freight transportation already exist and play a major role in both approaches to reduce GHG emissions. However, the government can also influence the market by pricing GHG emissions.
Figure 6: Trends for freight transportation by weight and value.
(1) Intermodal includes U.S. Postal Service and courier shipments and all intermodal combinations, except air and truck. Intermodal also includes oceangoing exports and imports that move between ports and interior domestic locations by modes other than water. (2) Pipeline and unknown shipments are combined because data on region-to-region flows by pipeline are statistically uncertain.
Source: U.S. Department of Transportation, Freight Facts and Figures 2009, 2009.
The following are a list of some policy options that will reduce GHG emissions from freight transportation:
- Government support: funding research and development, providing financial assistance for environmentally friendly logistics practices such as freight containerization, and EPA’s SmartWay program.
- Trucks: engine standards, speed limit reduction, increasing size constraints, anti-idling policies including the electrification of rest stops, eco-driving to optimize fuel consumption, the advanced technologies such as use of hybrid electric engines or waste heat recovery, and alternative fuel support, such as support for biodiesel.
- Logistics: support for a more efficient organization of supply-chain networks, including optimal location of trans-shipment points and freight consolidation and distribution centers.
Related Business Environmental Leadership Council (BELC) Company Activities
Related C2ES Resources
Climate TechBook. Transportation Overview
Climate TechBook.Aviation Emissions Mitigation Strategies
Climate TechBook. Marine Shipping Emissions Mitigation
Greene, D. L., & Schafer, A. (2003). Reducing Greenhouse Gas Emissions From U.S. Transportation.
McCollum, D., Gould, G., & Greene, D. L. (2009). Aviation and Marine Transportation: GHG Mitigation Potential and Challenges.
Further Reading / Additional Resources
National Research Council. (2010). Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles.Washington: The National Academies Press.
U.S. Department of Transportation. (2009). Freight Facts and Figures 2009.Washington: U.S. Department of Transportation.
U.S. Department of Energy. (2008). Transportation Energy Data Book.Washington: U.S. Department of Energy.
 U.S. Department of Transportation, Freight In America, 2006.
 Cambridge Systematics, Inc., Estimated Cost of Freight Involved in Highway Bottlenecks, 2008.
 American Society of Civil Engineers. Statement Of The American Society of Civil Engineers Before the Subcommittee on Energy and Water Development On the Budget for The U.S. Army Corps of Engineers and Bureau of Reclamation For the Fiscal Year 2010. Washington: American Society of Civil Engineers, 2009.
 U.S. Department of Transportation, 2007 Commodity Flow Survey, 2009. U.S. Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2007, 2009.
 U.S. Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2007, 2009. U.S. Department of Transportation, National Transportation Statistics, 2009.
 U.S. Department of Transportation, America’s Freight Transportation Gateway, 2009.
 U.S. Department of Commerce, Department of Commerce - Press Releases, Fact Sheets and Opinion Editorials- Commerce Secretary Gary Locke Unveils Details of the National Export Initiative, 2010, http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_008895
 U.S. Department of Transportation, Freight Facts and Figures 2009, 2009.
 Association of American Railroads, Railroads: Green From the Start, 2009.
 Government Accountability Office, Freight Railroads: Industry Health Has Improved, but Concerns about Competition & Capacity Should Be Addressed, 2006. U.S. Department of Transportation, 2007 Commodity Flow Survey, 2009.
 Margreta, M., Ford, C., & Dipo, M. A., U.S. Freight on the Move: Highlights from the 2007 Commodity Flow Survey Preliminary Data, 2009.
 U.S. Department of Transportation, Freight Facts and Figures 2009, 2009.
 U.S. Environmental Protection Agency, EPA and NHTSA Finalize Historic National Program to Reduce Greenhouse Gases and Improve Fuel Economy for Cars and Trucks | Transportation and Climate | US EPA, 2010, http://www.epa.gov/otaq/climate/regulations/420f10014.htm
 U.S. Environmental Protection Agency, Control of Greenhouse Gas Emissions from Heavy-Duty Vehicles - Rulemaking Gateway | Laws Regulations | US EPA., 2009, http://yosemite.epa.gov/opei/RuleGate.nsf/byRIN/2060-AP61
 Office of the Press Secretary. Presidential Memorandum Regarding Fuel Efficiency Standards | The White House. May 21, 2010. http://www.whitehouse.gov/the-press-office/presidential-memorandum-regar... (accessed May 27, 2010).
 Containerization is the use of standard intermodal containers as defined by the International Organization for Standardization (ISO).
 National Research Council, Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles, 2010.
 Load-specific fuel consumption (LSFC) is measured in gallons of fuel per payload tons per 100 miles. This metric includes the extra weight of a truck when it is carrying a payload; the lower the fuel consumption of the vehicle and the higher the payload the vehicle carries, the lower the LSFC.
Provisions in any legislation can be confusing. Trying to compare similar provisions across different bills can compound the confusion. To help make things more clear, we have two side-by-side comparison charts, one on energy-efficiency provisions, and the other on electric plug-in vehicle provisions, of this Congress’ energy and climate legislation.
This post was written with Cynthia J. Burbank, National Planning and Environment Practice Leader at Parsons Brinckerhoff. It first appeared in the National Journal Transportation Experts Blog in response to the question: What should transportation departments do for electric cars?
The call for the government to act to promote plug-in electric vehicles (PEVs), and all clean alternative fuels for that matter, is to correct the clear market failures that exist in today’s petroleum-based transportation sector.
Historically, petroleum has been a key driver in the growth of the economy and development of nations worldwide. Gasoline and diesel fuel’s impressive energy density, portability, and low production cost made it the fuel of choice for nearly a century. All the while there have been costs, although they haven’t always been obvious. Petroleum’s impact on climate change and U.S. energy security, and the risks of drilling, result in real and significant costs to society, and currently the price of petroleum does not include those externalities.
- Plants, soils, and organic matter contain nearly three times the amount of carbon currently stored in the atmosphere.
- Biosequestration has the potential to make a significant impact by absorbing annual human-caused carbon emissions through changes in land management practices.
- Increasing rates of biosequestration can support other environmental outcomes such as improved wildlife habitat, water quality, reduced run-off, and better recreational opportunities.
- Biosequestration may someday be profitable for private landowners who adopt certain land management practices and participate in a carbon market.
- Biosequestration decreases atmospheric CO2 until the carbon that is in the plant, soil, or end product is released back to the atmosphere.
Addressing the risk of dangerous climate change requires the combined efforts of both greenhouse gas (GHG) emission reductions and sequestration. The purpose of this document is to discuss briefly the technology of biotic sequestration (or "biosequestration"): the absorption and storage of carbon in organic matter.
Biosequestration refers to a category of biological processes that absorb carbon dioxide (CO2), the primary GHG, from the atmosphere and contain it in living organic matter, soil, or aquatic ecosystems. The opportunities for expanding biosequestration by changing management and land-use practices are generating debate among landowners, policymakers, and the media. Other avenues of enhancing natural carbon capturing processes may exist, but more study is needed to determine their potential for climate change mitigation.1
Biosequestration occurs naturally in the global carbon cycle (Figure 1). It is estimated that the atmosphere contains about 2,750 billion metric tons of CO2 (2,750 gigatons of carbon, GtCO2).2 Terrestrial vegetation, soils, and organic matter contain the equivalent of up to 8,030 GtCO2 or just under 3 times the amount contained in the atmosphere.3 It is estimated that in the 1990s, 5.8 GtCO2 per year were released into the atmosphere as a result of global land-use change and deforestation, though some forests expanded in temperate and boreal zones.4 For comparison, the United States emitted on average about 7 GtCO2 per year from land-use change between 2003 and 2007, or about 0.25 percent of the entire atmospheric CO2 each year.5 Enhancing the capacity for carbon storage or the rate that CO2 is biosequestered is an important strategy for mitigating climate change.
|Figure 1: The Global Carbon Cycle (in GtC)|
Technology, Environmental Benefits, and Emission Reduction Potential
Although biosequestration occurs naturally every day, actions preventing the loss of carbon stocks and increasing the rate of biosequestration can also be intentional. Some biosequestration methods have a greater carbon impact than others depending on the rate of carbon absorption and storage. For example, fast-growing tree species can be used in afforestation and reach sequestration rates of 5 metric tons CO2 (tCO2) per acre per year, while planting prairie grass in place of an annual agricultural crop could sequester an additional 1.5 tCO2 per acre per year depending on local climate and weather variability.6,7 A range of carbon sequestration rates from selected land-use practices is presented below (Table 1).8,9,10
Although carbon stocks in forests, agricultural lands, and wetlands have been reduced over time, and thus offer opportunities for carbon storage through restoration, they are not pools where unlimited amounts of CO2 can be stored. All biosequestration practices will reach a saturation point at which a new carbon equilibrium is reached.11
Like other GHG mitigation options, different quantities of biosequestration are achievable at different costs. Under the cap-and-trade program passed by the U.S. House of Representatives in 2009 (H.R.2454), domestic biosequestration (in the form of cap-and-trade offsets) was projected to provide between 292 and 676 million metric tCO2 of annual abatement in the year 2030. (For comparison, GHG emissions from sources covered under the cap were projected to be between 926 and 2586 million metric tCO2 below the "business-as-usual" projected emissions level in 2030.)12,13
|Table 1: Estimated Sequestration Potential by Practice in the United States (Metric Tons CO2 per Acre per Year): Selected Land Use and Production Practice Changes|
Biosequestration is a biogeochemical process, meaning that it occurs at the interface of living organisms and geological processes. For example, when CO2 from the atmosphere is taken in by a plant, newly formed molecules (usually sugars and other carbohydrates that contain the carbon) end up in all parts of the plant including the leaves, stems and roots (Figure 2). The carbon is considered sequestered until the organic matter decomposes or burns, at which point it returns to the atmosphere as CO2. After plants die and fall to the ground, some carbon is incorporated into the soil when roots or dead leaves become soil organic carbon (SOC). Land that has been afforested or planted in perennial crops may have the greatest potential for accumulating soil organic carbon.14
|Figure 2: Biosequestration at the Level of an Organism|
Not only may biosequestration help to mitigate climate change, but certain methods can also contribute other significant environmental benefits. For example, changes in forest management can provide benefits beyond storing carbon by reducing soil-erosion and run-off, reducing flooding, protecting fisheries, and enhancing wildlife habitat and biodiversity.15 Similar benefits could also accompany changes in the management of farmlands and rangelands, and the restoration of wetlands. Environmental benefits will not happen automatically in biosequestration projects but must be planned for if they are preferred.
The cost of biosequestration varies widely depending on the practice, the land-owner, and the location of the biosequestration project. Much agricultural and forested land in the United States is privately-owned. Biosequestration would likely have to be financially favorable compared with current management practices for land managers to consider a change.16 Therefore, increasing carbon sequestration on these lands probably requires some form of payment for the carbon service provided or the practice implemented. Carbon markets and other pricing policies are discussed in more detail below.
A review of 11 cost analyses focusing on U.S.-based forest sequestration programs that varied broadly in their estimated costs of carbon sequestration estimated that 300 million metric tons CO2-equivalent (tCO2e) of annual carbon sequestration could occur in forest ecosystems at a cost of $7.50 to $22.50 per tCO2e.17 A separate study of the costs of sequestering carbon on agricultural land yielded an estimate of up to 77 million tCO2e per year when carbon is priced in a similar range (~$13 per tCO2/acre/year).18 For comparison, total U.S. GHG emissions are about 7 billion metric tons of CO2e per year. The estimate of agricultural carbon sequestration is about 1 percent of the total annual U.S. GHG emissions. The aforementioned estimate of forest biosequestration projects is equivalent to about 4 percent of annual U.S. GHG emissions.
Studies of global biosequestration estimate that a carbon price of $23.54 could induce 744 million tCO2e per year of forest carbon sequestration by the year 2010.19 Again, total annual biosequestration would vary considerably depending on the region, ranging from 20 million tCO2e in Oceania to 280 million tCO2e per year in North America. The difference between the North American estimate and the U.S. estimate above illustrates that biosequestration estimates vary.
Carbon prices and markets to trade carbon will help considerably in supporting biosequestration practices. However, reputable markets will require measurement and verification that also add to the cost of these practices. It is also reasonable to expect that credit aggregators will act as facilitators between biosequestration project owners and the credit exchanges. This facilitation will also come with a cost. In the end, transaction costs such as these could be significant.20
A global system of recognized practices and credits for biosequestration does not currently exist. Policies and programs that are effective in increasing the adoption of biosequestration practices are fragmentary, especially in the United States.
The Kyoto Protocol – an international agreement governing GHG emissions – comes nearest to establishing a global system of biosequestration initiatives.21 Nations that are party to the Kyoto Protocol have agreed to country-specific GHG emissions reductions by 2012. Articles 3.3 and 3.4 of the protocol outline the ways in which nations can account for afforestation, reforestation, deforestation, and certain other land-use activities in their particular emission reduction goals. Countries are also allowed to reach part of their goal through investments in flexible GHG offsets guided by United Nations programs called the Clean Development Mechanism and Joint Implementation (CDM/JI).22 Biosequestration projects in CDM/JI are mostly afforestation projects sponsored by countries with carbon reduction targets in countries without reduction targets (typically, countries that are considered non-industrialized).
The European Union Emission Trading Scheme (EU ETS) is currently the largest mandatory carbon market in the world. However, offsets from biosequestration are not currently allowed in the EU ETS.23
Current U.S. drivers of biosequestration include voluntary offset programs like the Chicago Climate Exchange and the Climate Action Reserve, and regional GHG reduction programs like the Regional Greenhouse Gas Initiative (RGGI). Each of these programs defines how biosequestration projects can be measured in slightly different ways.24,25,26
It bears repeating that biosequestration practices depend on living systems that are not easily quantified in a direct way. This lack of established measurement protocols leads to uncertainties in actual carbon sequestered compounded by the uncertain storage time. Measurement is made even more challenging by seasonal variations in weather and precipitation, differences between plant species, and the variation in the quality of soils and lands where these practices could be used. Land managers know a lot about growing trees, perennial crops, managing rangeland for carbon, and even restoring wetlands, but those practices need better measuring techniques for their legitimacy to be widely accepted.
Obstacles to Further Development or Deployment
A number of challenges have emerged to the further development of biosequestration practices:27
- Lack of a price on GHG emissions
Currently, in the United States there is no comprehensive policy that values biosequestration. A policy, such as cap and trade (see Climate Change 101: Cap and Trade), that puts a price on GHG emissions and limits total emissions, could create a market for offsets from biosequestration.
- Carbon storage easily reversed and re-emitted to the atmosphere
Living systems are subject to natural variation including unforeseeable climatic, weather, and destructive events. If a biosequestration project is destroyed by wildfire or heavy storms, the carbon stored there will be rapidly released back to the atmosphere. Without clear ownership or contracts, the liability of restoring this carbon remains uncertain.
- Establishing "baseline" measurements
The significance of choosing a baseline year against which sequestered emissions will be measured and compared is often understated or overlooked. A baseline will determine how much carbon is sequestered or emitted from a particular practice or project compared to a given year, usually in the past. This often serves as an anchor to measure how well a certain practice is performing relative to a certain emission reduction effort.
- Measurement of real carbon sequestered
Measurement, monitoring, and verification have been mentioned above. Biosequestration is difficult to quantify quickly or cheaply due to the constant flow of CO2 into and out of these living systems. This makes trading metric tons of biosequestered carbon difficult without accurate tracking and certification.
- Transaction costs
Transaction costs are projected to be significant in carbon markets. For example, in the voluntary Chicago Climate Exchange (CCX), some aggregators already in operation charge 8-10 percent of the value of the carbon credits in addition to a common listing fee of $0.20 per metric ton. Costs to implement biosequestration practices will need to be minimized in order to most cost-effectively utilize biosequestration for GHG abatement.
- Property rights and decision-making
Land-use decisions are often complicated by government regulation and property-owner preferences and traditions. Any successful implementation of biosequestration practices will depend on the legitimate involvement of all stakeholders including landowners, policymakers, community members, private enterprise, and other affected parties.
Each of these challenges must be addressed appropriately for biosequestration to be implemented at a climatically significant scale.28
Policy Options to Help Promote Biosequestration
There are two primary policy strategies that could help promote biosequestration:29
- Practice-based incentives
Practice-based incentive programs are already common for farmers using conservation practices on their land. Some U.S. farm programs - for example the Conservation Reserve Program - explicitly recognize carbon sequestration as a benefit. Farmers implementing a land-use change for the primary purpose of increasing biosequestration on their land could be supported through cost-sharing of the practice establishment, for example. Supporting a practice but not performance leaves little room for rewarding actual carbon benefits aside from the shift in management.
- Performance-based incentives
Performance-based incentives reward actions that have higher rates of carbon sequestration.30 Performance-based incentive programs are compatible with a carbon market, which would be created by a cap-and-trade program (see Climate Change 101: Cap and Trade).
Many cap-and-trade proposals allow biosequestration projects to generate offset credits that can be used by covered entities to comply with the emission limit. Offsets from biosequestration can be thought of as reducing carbon emissions in place of actions taken by a covered entity to reduce emissions directly at the source through energy efficiency measures and other activities. For example, an electric generator faced with a need to reduce its emissions could do so via a combination of increasing its non-emitting generation (e.g., from nuclear, wind, or solar power), decreasing its traditional fossil fueled generation, and paying a forest landowner to increase biosequestration on her land. If biosequestration offsets are adequately verified, then offsets could be a cost-effective way of reducing net GHG emissions over time.
Other helpful policies that would foster higher biosequestration penetration in performance-based markets would include risk reduction strategies for uncontrollable events (wildfires and weather), transaction cost reduction, and increased certainty in carbon measurement.
Related Business Environmental Leadership Council (BELC) Company Activities
Related C2ES Resources
Agriculture's Role in Greenhouse Gas Mitigation, 2006
Biological Sequestration through Greenhouse Gas Offsets: Identifying the Challenges and Evaluating Potential Solutions, April 2009 Workshop co-sponsored by the Center.
Briefing on Domestic Offsets in a Greenhouse Gas (GHG) Cap-and-Trade System, 6 March 2009.
The Cost of U.S. Forest-Based Carbon Sequestration, 2005.
Greenhouse Gas Offsets in a Domestic Cap-and-Trade Program, Congressional Policy Brief, 2008.
Issue Overview: Role of Offsets in Cap and Trade, U.S. Climate Action Partnership (USCAP), 2009.
Offset Quality Initiative (OQI).
Further Reading/Additional Resources
Baker JM, Ochsner TE, Venter RT, Griffis TJ (2007). Tillage and soil carbon- what do we really know? Agriculture, Ecosystems and Environment 118: 1–5.
Birdsey R (2004). Data Gaps for Monitoring Forest Carbon in the United States: An Inventory Perspective. Environmental Management 33. Supplement 1: S1–S8.
United States Department of Energy (2008). Carbon Cycling and Biosequestration Workshop Report: Publication No. DOE/SC-108.
European Union Memo (2008). Questions and answers on deforestation and forest degradation. Reference: MEMO/08/632.
Hansen EA (1993). Soil carbon sequestration beneath hybrid poplar plantations in the north central United States. Biomass and Bioenergy 5: 431-436.
Johnson R (2009). Climate Change: The Role of the U.S. Agriculture Sector and Congressional Action. Congressional Research Service. Publication No. RL33898.
Johnson R, Gorte RW (2009). Estimates of Carbon Mitigation Potential from Agricultural and Forestry Activities. Congressional Research Service. Publication No. R40236.
Johnson KS, Karl DM (2002). Is Ocean Fertilization Credible and Creditable? Science 296: 467-468.
Kopp RJ, Pizer WA et al. (2007). Assessing US Climate Policy Options. Report briefings on climate policy options including Biosequestration, among many others.
Lal R (2008). Sequestration of atmospheric CO2 in global carbon pools. Energy & Environmental Science 1: 86–100.
Lewandroski J, Peters M, et al. (2004). Economics of Sequestering Carbon in the U.S. Agricultural Sector. Technical Bulletin No. (TB-1909).
McLauchlan KK, Hobbie SE, Post WM (2006). Conversion of agriculture to grassland builds soil organic matter on decadal timescales. Ecological Applications 16: 143-153.
Murray BC, Sohngen B, et al. (2005). Greenhouse Gas Mitigation Potential in U.S. Forestry and Agriculture. Publication No. EPA 430-R-05-006.
Nabuurs GJ, Masera O, et al. (2007). Chapter 9: Forestry. Climate Change 2007: Mitigation. Assessment Report 4 of the IPCC. Cambridge University Press.
Parrotta JA (2002). Restoration and management of degraded tropical forest landscapes. In Modern Trends in Applied Terrestrial Ecology. R.S. Ambasht and N.K. Ambasht (eds.), Kluwer Academic/Plenum Press, New York, pp. 135-148 (Chapter 7).
Parry IWH, Pizer W (2007). Backgrounder: Emissions Trading versus CO2 Taxes versus Standards. Resources for the Future.
Schlamadinger B, Johns T et al. (2007). Options for including land use in a climate agreement post-2012: improving the Kyoto Protocol approach. Environmental Science and Policy 10: 295-305.
Sedjo RA, Amano M (2006). The Role of Forest Sinks in a Post-Kyoto World. Resources for the Future.
Shrestha R, Lal R (2008). Offsetting carbon dioxide emissions through minesoil reclamation. Encyclopedia of Earth.
Smith P, Martino D, et al. (2007). Chapter 8: Agriculture. Climate Change 2007: Mitigation. Assessment Report 4 of the IPCC. Cambridge University Press.
United States Department of State (2000). United States Submission on Land-Use, Land-Use Change, and Forestry to the Kyoto Conference of Parties. Accessed August 1, 2009.
Wise, A (2008). The US Carbon Market. Renewable Energy World News.
NETL Regional Carbon Sequestration Partnerships
DOE Terrestrial Sequestration Research
1 See, for example, Johnson KS, Karl DM, "Is Ocean Fertilization Credible and Creditable?" Science 296: 467-468, 2002.
2 The difference between tons of carbon (tC) and tons of carbon dioxide (tCO2) is often confused. It is confusing because CO2 is 3.67 times more massive than C alone due to the added molecular weight of oxygen (O2). Therefore 1 tC is equivalent to 3.67 tCO2.
3 Stavins R, Richards K, The Cost of U.S. Forest-Based Carbon Sequestration, 2005
4 Nabuurs GJ, Masera O, et al., "Chapter 9: Forestry" in Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007.
5 Johnson R. Climate Change: The Role of the U.S. Agriculture Sector and Congressional Action, Congressional Research Service, 2009. Report RL33898.
6 Hansen EA, "Soil Carbon Sequestration beneath Hybrid Poplar Plantations in the North Central United States," Biomass and Bioenergy 5: 431-436, 1993.
7 McLauchlan KK, Hobbie SE, Post WM, "Conversion of Agriculture to Grassland Builds Soil Organic Matter on Decadal Timescales," Ecological Applications 16: 143-153, 2006.
8 Johnson R, Gorte RW, Estimates of Carbon Mitigation Potential from Agricultural and Forestry Activities, Congressional Research Service, 2009. Report R40236.
9 Lewandroski J, Peters M, et al., Economics of Sequestering Carbon in the U.S. Agricultural Sector, U.S. Department of Agriculture Technical Bulletin Number1909, 2004.
10 Murray BC, Sohngen B, et al., Greenhouse Gas Mitigation Potential in U.S. Forestry and Agriculture, U.S. Environmental Protection Agency (EPA) Publication No. 430-R-05-006, 2005.
11 U.S. EPA , "Representative Carbon Sequestration Rates and Saturation Periods for Key Agricultural & Forestry Practices," 2006.
12 Energy Information Administration (EIA), Energy Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009, 2009. See Table ES-1.
13 For more information on H.R.2454, the American Climate and Energy Security Act of 2009 (ACESA), see /acesa.
14 Degryze S, Six J et al., "Soil Organic Carbon Pool Changes Following Land-Use Conversions," Global Change Biology 10: 1120–1132, 2004.
15 Parrotta JA, "Restoration and Management of Degraded Tropical Forest Landscapes," in Modern Trends in Applied Terrestrial Ecology, R.S. Ambasht and N.K. Ambasht (eds.), Kluwer Academic/Plenum Press, New York, 2002.
16 Richards K, Sampson RN, and Brown S, Agricultural & Forestlands: U.S. Carbon Policy Strategies, 2006.
17 Stavins, 2005.
18 Paustian K and Antle JM, Agriculture's Role in Greenhouse Gas Mitigation, 2006.
19 Sohngen B and Mendelsohn R, Optimal Forest Carbon Sequestration, Department of Agricultural, Environmental, and Development Economics, Ohio State University. Working Paper AEDE-WP-0009-01, 2001.
20 Nabuurs et al., 2007.
21 Schlamadinger B, Johns T et al., "Options for Including Land Use in a Climate Agreement Post-2012: Improving the Kyoto Protocol Approach," Environmental Science and Policy 10: 295-305, 2007.
23 European Union, "Questions and Answers on Deforestation and Forest Degradation," MEMO/08/632, 2008.
24 Chicago Climate Exchange, "CCX Exchange Offsets and Exchange Early Action Credits" in CCX Confidential, 2004.
25 California Climate Action Registry, Forest Project Protocol, 2009.
26 Regional Greenhouse Gas Initiative (RGGI), "Offset Project Categories: Afforestation."
27 Smith P, Martino D, et al., "Chapter 8: Agriculture," in Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007.
29 Richards et al., 2006.
It will probably take some time to fully understand what went wrong in the Deepwater Horizon oil spill, and what ought to be done to make sure it doesn’t happen again. But at least one thing is already perfectly clear: recent technological advances in extracting oil in deep water offshore have been dramatic, whereas unfortunately the same cannot be said for technological advances in spill prevention and cleanup techniques.
Why is this the case? Innovation is complicated, but we do know something about it. In the private sector, the profit motive is a primary driver of innovation. Because of the world’s seemingly insatiable demand for petroleum products (mainly gasoline and diesel), oil companies have invested hundreds of millions of dollars in offshore drilling technology (just one company, GE Oil & Gas, reported offshore oil and gas drilling-related R&D spending of $150 million from 2009-2011) in order to reap tens of billions in proceeds from fuel sales (for fiscal year 2009, MMS reported oil production worth $20.2 billion from the Gulf of Mexico federal outer continental shelf). According to the U.S. Energy Information Administration (EIA), oil production from federal offshore areas accounted for 29 percent of total domestic oil production in 2009. In 2009, ultra-deepwater offshore drilling (drilling in more than 5,000 feet of water) accounted for about a third of total federal offshore oil production, and ultra-deepwater production tripled from 2005 to 2009. Until recently there has been no comparable incentive for spill prevention and cleanup techniques: the pre-Deepwater Horizon spill record had been excellent, lulling both regulators and oil companies into complacency.
The free market by itself cannot motivate investment in spill prevention and cleanup technology, because spills themselves yield public damage, not private profits. Our government, on behalf of the public interest, could have put rules in place that would have motivated the private sector to make such investments – such as requiring oil companies to actually demonstrate that spill prevention technology works as a condition for obtaining drilling rights.
We have an analogous situation with respect to energy security and climate change. The free market by itself is driving innovation, but in the wrong things: in energy investments that are warming the climate and making us ever more dependent on foreign oil. We need our government to intervene on behalf of the public interest to motivate private investment and innovation in clean energy, through comprehensive energy and climate legislation.
The catastrophe in the Gulf is still unfolding, and will ultimately provide many lessons relevant to our energy and environmental future. But one lesson we can take to heart and act on right away is that there is a profound public interest in spurring innovation in clean and safe energy and that the private market on its own will not adequately provide it. It is our job as the public to demand it, and it is our government’s job to use all the tools at its disposal – from regulations to incentives to penalties – to make it happen.
Judi Greenwald is Vice President for Innovative Solutions