October Surprises—Power Industry Edition

The first week of October was noteworthy for the volume of potentially life-changing and industry-changing carbon and climate change–related news. While the U.S. power industry awaited a decision from the D.C. Circuit Court of Appeals on the merits of the Clean Power Plan, efforts to limit the effects of climate change advanced around the world while an unusually unpredictable hurricane slammed the Caribbean and southeast U.S., reigniting predictable arguments.

Canada Proposes Carbon Tax

While America was obsessed with its presidential campaign, Canada introduced its own “October surprise,” as political developments in the final month before an election have come to be known. Canada’s debate over ratification of the Paris Agreement in the first week of October took an unexpected turn when Prime Minister Justin Trudeau announced plans for a carbon tax with a “floor” of C$10 (US$7.60) per metric ton (mt) beginning in 2018 that would rise to C$50/mt by 2022. “Provinces and territories will have a choice in how they implement this pricing,” he said. “They can put a direct price on carbon pollution, or they can adopt a cap-and-trade system, with the expectation that it be stringent enough to meet or exceed the federal benchmark.”

The province of British Columbia already has a carbon tax—effective July 1, 2008, it was the first in North America. Alberta’s carbon tax is to go into effect next year. Ontario and Québec have cap-and-trade programs, but they would not meet the goals set by the federal program as outlined by the prime minister. Other provinces and northern territories oppose the plan. If provinces fail to adopt a tax or cap-and-trade program, Trudeau said the federal government would impose a carbon price in that jurisdiction—similar to the U.S. federal implementation plan for the currently stayed Clean Power Plan.

Paris Agreement Goes into Force

Canada was among the countries formally ratifying the Paris Agreement—the world’s first global agreement to support measures limiting global temperature increases to 2 degrees Celsius—on October 5. On that date, the agreement met its second condition for entering into force: ratification by countries representing at least 55% of total greenhouse gas (GHG) emissions. The first condition, ratification by at least 55 of the 195 Parties to the Convention, was met September 22. The agreement, struck in December 2015, enters into force 30 days after the second condition was met. (For more on the unexpectedly quick ratification, see “Paris Agreement Meets Final Requirement to Enter into Force”.)

Meanwhile, at the EPA…

On October 4, the Environmental Protection Agency (EPA) released its sixth year of GHG Reporting Program data (epa.gov/ghgreporting). The agency reports trends and emissions by industrial sector, geographic region, and individual facilities, although the Aliso Canyon methane leak was not included. In 2015, reported emissions from large industrial sources—representing approximately 50% of total U.S. GHG emissions—were 4.9% lower than in 2014 and 8.2% lower than in 2011. Power plants remained the largest source, with 1,480 facilities emitting approximately 2 billion mt of carbon dioxide (CO2), roughly 30% of all U.S. GHG emissions last year. Power plant emissions declined in 2015 by 6.2% compared to 2014 (1,547 power facilities reporting) and by 11.3% since 2011 (1,593 facilities reporting).

Some might wonder why we need the Clean Power Plan if GHG emissions are already dropping. The short answer is that, without it, according to U.S. Energy Information Administration scenarios, further reductions could stall and CO2 emissions from power plants are projected to increase.

Hurricane Matthew Hits

Also capturing headlines that first week of October was Hurricane Matthew. After battering the Bahamas and killing more than 1,000 people in Haiti, it hit the southeast U.S. and killed more than 30 by the end of the weekend. Storm surges up to 5 feet caused flooding in North Carolina, where 1,000 people had to be rescued. Florida Power & Light (FPL) shut down its St. Lucie nuclear power plant the morning of October 6 in anticipation of the hurricane. The utility predicted that half of its 4.8 million customers could lose power; about 150,000 FPL customers actually lost power temporarily, but almost a million lost power throughout the state.

Although most scientists remain cautious about attributing a particular storm or its intensity directly to climate change, they do agree that Earth’s warming air and ocean temperatures create the conditions for more intense weather events. The more exceptional storms and hurricanes the power industry has to deal with, the greater the cost—not just to infrastructure but potentially to lives as well.

Finding the Right Balance

After announcing the Canadian carbon tax, Trudeau, who leads the Liberal Party, was quoted as saying, “We have the Conservative Party thinking we go too far, we have the [New Democratic Party] thinking we’re not going far enough.” He continued, “I think—like most Canadians will think—that we have got the right balance.”

Well-informed people of good intentions in all countries can disagree about how to achieve the right balance, but taking no counterbalancing action is irresponsible. Will governments and industries move rapidly and wisely enough to forestall the worst damage from climate change—including damage to power infrastructure? That depends on everyone’s willingness to consider new ways of doing business.

Even the fossil fuel industry can be part of the solution. On one extreme are those who want to continue extracting fossil fuels as fast as possible; at the other are those who want to leave all remaining fossil fuels in the ground. Somewhere in the middle is an effort by industry outsider Tom Clarke to mine coal from bankrupt Patriot Coal operations, remediate mining-scarred land by planting trees to absorb CO2, and sell the coal bundled with carbon credits—thereby saving miners’ jobs. (See the Bloomberg Businessweek article at http://bloom.bg/1PzZgu3.) This plan alone won’t sufficiently mitigate the effects of burning the mined coal, but it’s at least a worthwhile rebalancing effort. ■

Gail Reitenbach, PhD is POWER’s editor.

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