Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions

U.S. DOT April 2010 Report to Congress

A wealth of potential solutions, from electric cars, to better transit, to reduced VMT, are detailed in the recent Department of Transportation’s report to Congress. Not only is the report rich with promising climate action, solutions are detailed to address U.S. energy security, with 97 percent of our transportation coming from one source – petroleum.


The DOT report offers a wealth of data and tactics supporting these four strategies:

1. Low-carbon fuels
2. Fuel economy
3. Transportation system efficiency
4. Reduce carbon-intensive travel

The report also details cross-cutting policies that facilitate the above strategies:
• Align transportation planning and investments to GHG reduction objectives
• Price carbon

Low-Carbon Fuels

The alternative fuels evaluated in this report include ethanol, biodiesel, natural gas, liquefied petroleum gas, synthetic fuels, hydrogen, and electricity. Considering scalability, the potential to follow a favorable cost reduction curve, and lifecycle emissions, electricity, hydrogen, and advanced biofuels have the most promise. Report summary:

If significant advances were to occur in battery technology and the use of low-carbon energy sources for electricity generation, battery-electric vehicle could reduce transportation GHG emissions by 80 percent or more per vehicle in the long term (25 years or more). Aggressive deployment could reduce total transportation emissions by 26-to-30 percent in 2050 if a 56 percent light-duty vehicle (LDV) market penetration could be achieved.

The estimates for plug-in hybrid and battery electric vehicles depend on reductions in the GHG emissions intensity of U.S. electricity production. The estimates were calculated using GHG emission intensity modeled by the Electric Power Research Institute (EPRI). The input is 379 to 606 g/kWhr in 2030, and 240 to 421 g/kWhr in 2050. This compares to a 618 g/kWh national average today and would require increased use of low carbon electricity production technologies such as wind, solar, nuclear, and hydro-electric power. However, even under a very high GHG intensity scenario relying on coal generation using older technology (1,014 g/kWhr), at a low battery efficiency of 0.4 kWhr/mile,
PHEVs operating in a charge depleting mode would still result in 12 percent lower GHG emissions than corresponding conventional gasoline vehicle operation, on a per mile basis. However, under these extreme circumstances, PHEV operation will not provide benefits relative to an HEV baseline.

In the long-term, if technical successes in fuel cell development and low-carbon hydrogen production, distribution, and onboard storage can be achieved, hydrogen fuel cell vehicles could reduce per vehicle GHG emissions by 80 percent or more. Aggressive deployment could reduce total transportation emissions by 18-to-22 percent in 2050.

Fuel Economy

Fuel use per light duty vehicle averages 578 gallons per year. In addition, average new vehicle fuel economy improved from 2005 to 2007 as the market share of passenger cars increased compared to light-duty trucks.

Vehicle and fuel efficiency strategies include developing and bringing to market advanced engine and transmission designs, lighter-weight materials, improved vehicle aerodynamics, and reduced rolling resistance. Many of these technological improvements (such as hybrid-electric powertrains, truck aerodynamic improvements, and more efficient gasoline engines) are well developed and could be further incorporated into new vehicles in the near future. In the long-term, propulsion systems relying on more efficient power conversion and low- or zero-carbon fuels.

Fuel economy benefits are limited by the turnover time of the fleet. Passenger cars and light trucks last about 16 years on average before retirement, compared to 20 years or more for trucks, up to 40 years for locomotives and marine vessels, and about 30 years for aircraft.

• Increased fuel economy in light-duty vehicles could reduce GHG emissions significantly. On a per vehicle basis, compared to a conventional vehicle, GHG reductions are 8-to-30 percent for advanced gasoline vehicles; about 16 percent for diesel vehicles; 26-to-54 percent for hybrid electrics; and 46-to-75 percent for plug-in hybrid electrics.

• Retrofits can be used to expedite improvements. Heavy-duty trucks retrofitted to use aerodynamic fairings, trailer side skirts, low-rolling resistance tires, aluminum wheels, and planar boat tails can reduce per truck GHG emissions by 10-to-15 percent. For new trucks, combined powertrain and resistance reduction technologies are estimated to reduce per vehicle emissions by 10 to 30 percent in 2030.

Reduce Carbon-Intensive Travel

These strategies would reduce on-road vehicle-miles traveled (VMT) by reducing the need for travel, increasing vehicle occupancies, and shifting travel to more energy-efficient options. The collective impact of these strategies on total U.S. transportation GHG emissions could range from 5-to-17 percent in 2030, or 6-to-21 percent in 2050.

• Transportation pricing strategies, such as a fee per vehicle-mile of travel (VMT) of about 5 cents per mile, an increase in the motor fuel tax of about $1.00 per gallon, or pay-as-you-drive insurance—if applied widely—could reduce transportation GHG emissions by 3 percent or more within 5-to- 10 years. Lower fee or tax levels would result in proportionately lower GHG reductions.

• Significant expansion of urban transit services, in conjunction with land use changes and pedestrian and bicycle improvements, could generate moderate reductions of 2 to 5 percent of transportation GHG by 2030. The benefits would grow over time as urban patterns evolve, increasing to 3-to-10 percent in 2050. These strategies can also increase mobility, lower household transportation costs, strengthen local economies, and provide health benefits.

Recent trends indicate that light duty vehicle emissions are leveling off as VMT growth slows and fuel economy improves. Growth in passenger vehicle VMT slowed from an annual rate of 2.6 percent from 1990 to 2004 to an average annual rate of 0.6 percent from 2004 to 2007. In 2008, VMT on all streets and roads in the United States decreased for the first time since 1980, likely due to a combination of high fuel prices and a weakening economy. Light-duty vehicles average 1.6 persons per vehicle.

Land use changes — such as density, diversity of land uses, neighborhood design, street connectivity, destination accessibility, distance to activity centers, and proximity to transit — reduce trip lengths and support travel by transit, walking, and bicycling.

Transportation and land use are interdependent. Decisions on the locations and densities of housing, retail, offices, and commercial properties impact travel patterns to these destinations. Similarly, the geographic placement of roads, public transportation, airports, and rail lines influences where homes and businesses are built. Areas of lower density tend to have higher levels of automobile use per capita.

Over the past several decades, housing densities have decreased and the amount of developed land in the country has grown faster than population. Land use strategies yields a reduction of U.S. transportation GHG emissions of 1 to 4 percent in 2030 and 3 to 8 percent in 2050.93 The Moving Cooler study assumptions, which fall in the middle of the range, rely on 43 to 90 percent of new urban development occurring in areas of roughly greater than five residential units per acre, which accommodates single family and multifamily homes.

TCRP Report 128: Effects of Transit-Oriented Development (TOD) on Housing, Parking, and Travel, surveyed 17 housing projects that combined compact land use with transit access and found that these projects averaged 44 percent fewer vehicle trips per weekday than that estimated by the Institute for Transportation Engineers (ITE) manual for a typical housing development.

Commuter/worksite trip reduction programs have modest potential for GHG reductions—0.2 to 0.6 percent of all transportation sector emissions in 2030. The most effective actions from a policy perspective are trip reduction requirements combined with supporting activities such as regional rideshare and vanpool programs and financial incentives for the use of alternative modes.

Investing in transit sufficiently enough to nearly double the average annual ridership growth rate from the current 2.4 percent to 4.6 percent and expanded urban transit could reduce GHG emissions from 0.2 to 0.9 percent of transportation GHG by 2030, or 0.4 to 1.5 percent in 2050.
Buses have the lowest emissions per PMT because of their high occupancy rateaveraging 21 people per bus. Transit buses have a lower occupancy rate of 10 people per bus averaged across the U.S. However, transit buses only account for 15 percent of all bus passenger-miles traveled. Intercity passenger rail averages about 20 passengers per car, while rail transit averages 23, and commuter rail averages 31.

Price Carbon

Mechanisms to price carbon emissions include:
• Federal motor fuels tax
• Cap and trade system, in which GHG emissions allowances are traded in the market to cap overall emissions
• Carbon tax

Transportation GHG emissions are 29 percent of total U.S. emissions. The report provides detailed data on sources of transportation greenhouse and air quality emissions. For GHG, the new GREET 1.8b model is used to measure emissions from source to wheels. Emissions from on-road vehicles accounted for 79 percent of transportation GHG emissions.

• Emissions from light-duty vehicles, which include passenger cars and light duty trucks (e.g., sport utility vehicles, pickup trucks, and minivans) accounted for 59 percent of emissions
• Emissions from freight trucks accounted for 19 percent
• Emissions from commercial aircraft (domestic and international) for 12 percent
• Emissions from all other modes accounted for 10 percent of total emissions

The United States is starting to reduce its total consumption of oil, become a bit more energy secure, and to implement promising strategies. By eliminating some of the biggest subsidies to oil and widening of highways, with some positive policy shifts, and with a modest carbon price, we could achieve significant reduction of oil use and reduce damaging emissions. Individuals, fleets, and regions have a wealth of options to use low-carbon fuels such as renewable energy, improve fuel economy including implementing electric cars, improve system efficiency, and reduce VMT.

DOT 600 Page Report PDF

Climate Action Scenario 26-Page for SF Bay Area

Addressing Cost Concerns in the Climate Debate — Focus on Offsets

By Lisa Jacobson

After hundreds of Congressional hearings and over a dozen legislative proposals, the House of Representatives took historic and concrete action last month to advance federal climate change legislation. Through a largely collegial and efficient committee “mark-up” of the American Climate and Security Act of 2009 (ACES), a deal was reached that earned the support of several conservative Democrats and one Republican. The bill establishes a national cap-and-trade program — with opportunities for domestic and international offsets to help meet compliance obligations while containing costs — as well as incorporating critical complementary energy policies.

The House is now poised to move the bill through other key committees with jurisdiction in June and could take floor action on the legislation as early as July.

Given the current state of the economy, the issue of cost was understandably central to the committee’s debate. Concerns were raised that businesses and consumers would face higher electricity bills or incur other costs associated with the cap-and-trade program. In rebuttal, proponents of the bill spoke about of the economic opportunities presented by transitioning towards a low-carbon and clean energy economy. Clear and sustained market signals that result from the cap on emissions will drive capital investments into existing technology solutions – such as renewable energy, energy efficiency and other clean generation options. This new investment will make our economy more efficient and secure, while creating high-quality jobs in the US. As this transition takes time, offsets provide an important balancing mechanism in the face of economic downturn, for containing program costs while new technologies are developed and implemented.

Another refute to this argument was the flexibility at the heart of the cap-and-trade model. The bill’s cap sets emissions limits that ramp down over time, and the ability to trade results in lower cost compliance costs. The cost-containment benefit of this market-based approach is further enhanced with the inclusion of a robust and high integrity offset program.

Offsets have an important role to play in the coming debates over ACES, both because they provide one of the best rebuttals to anti-cap and trade arguments about cost concerns, but also because they truly have a role to play in moderating the blow of energy cost increases in the short term while still promoting emission reductions outside of the cap. Furthermore, the combination of emissions trading and offsets drives over-performance and technology innovation and deployment, especially when a broad set of offset projects are eligible.

Ensuring the environmental integrity of offset credits is essential to meet desired emission reduction levels and ensure a well functioning cap and trade system. Real and additional offsets must be the standard for program integrity, and independent, third-party monitoring and verification requirements are essential to ensuring that greenhouse gas emission reductions are delivered. The offset provisions in ACES provide a foundation for quality domestic and international offsets to help achieve the proposed US emission reduction targets more cost-effectively. However, leading up to possible floor action, improvements to the bill should be considered that expand opportunities for both domestic and international offsets.

Currently, ACES allows up to 2 billion tons of offsets to be used for compliance purposes. Of this, 50 percent can be offsets generated in the United States and 50 percent can be generated outside the U.S. If, in any given year, the EPA determines that the domestic limit will not be reached, the international limit can be increased to 1.5 billion tons per year, which offers important added cost savings.

A key change from previous draft proposals is the removal of a 25 percent discount on domestic offsets. According to a preliminary analysis by US EPA, this change will result in an 11 percent increase in the use of offsets and lowers allowance prices by 7 percent in each year.

International offsets are subject to discounting starting in 2018, however, which dampens their cost containment benefits. In addition to discounting provisions, international offsets face additional limitations, such as restrictions on the countries where offsets can be generated. Under ACES, only offsets that are generated in a country that has entered into an agreement with the US can qualify. US EPA has the ability to accept offsets issued under the United Nations Framework Convention on Climate Change, such as the Clean Development Mechanism, but the current language leaves considerable uncertainty. Because a domestic offsets program will likely take a few years to operationalize, international offsets will be critical bridge to filling the supply gap left by domestic offsets, and providing cost containment in the early years of the program.

As a start, discounting of international offsets should be removed, and clarity is needed on the role of international offset eligibility, especially for CDM projects. Increasing the eligibility of high quality offsets – inside and outside the US — reduces the cost of the program to consumers and businesses, while advancing the objectives of the program – greenhouse gas emission reductions. If the political opposition continues to raise cost concerns in order to question the legitimacy of climate change legislation, offsets certainly provide one crucial component of the answer.

Lisa Jacobson is the President of the Business Council for Sustainable Energy, a coalition of business and trade associations representing the energy efficiency, renewable energy and natural gas industries in the United States.

SGS Climate Change Head on the First Carbon Credits from the Voluntary Carbon Standard

I had the chance to catch up with Robert Dornau, an economist who is Vice President of SGS Climate Change Programme, one of the leading verifiers of carbon credits, just as SGS verified the first carbon credits under the Voluntary Carbon Standard.

Robert, I saw the press release on the first verified VCUs by SGS. Can you tell me a little bit about what VCS is and how it’s different?

I am happy to tell you that SGS also validated the first projects registered under the Voluntary Carbon Standard (VCS). The VCS provides a rigorous, trustworthy and innovative global standard and validation and verification program for voluntary emission reduction projects. It ensures that carbon credits generated from those projects can be trusted by business and consumers and have real environmental benefits. The VCS was initiated by the Climate Group, the World Business Council for Sustainable Development (WBCSD) and the International Emissions Trading Association (IETA). What sets the VCS apart from other voluntary standards is not only this prestigious group of founding fathers, but the fact that it has undergone two rounds of global stakeholder consultation and was developed under guidance of an international steering committee from the business, industry and non profit sector (including SGS).

The VCS provides innovative approaches to a credible and diligent approval of new methodologies especially for the forest sector. Another element that sets the VCS apart is the recently launched registry system.

We’ve heard the VCS discussed for some time now – are these really the first carbon credits from VCS? Why did it take so long? Are we going to see more of these?

The first version of the VCS was released on 28 March, 2006. Soon after, first projects were validated and verified against this standard. Until the recent launch of the registry system, the credits generated were only traded on the back of certificates issued by verification companies like SGS. Having a registry system that lives up to the high standards of financial registries was a number one goal of the VCS from the start. Unfortunately it took a bit longer than expected to develop this system. It now consists of three independent registries and the VCS database. I am absolutely certain this was the final launch pad for the VCS to establish itself as the standard of choice for any credible market participant.

What can you tell us about the differences between validation and verification of projects under VCS as compared to CDM and the Kyoto carbon project markets?

In principle there are not many different ways to conduct a proper validation or verification of a GHG project. The VCS relies on the principles for validation and verification of GHG projects established by the International Organization for Standardization (ISO). The new set of standards for the Carbon Market (ISO 14064 family) was develop taking into account best practice and experience from a number of global programs while being in itself program neutral.Two of the main differences are, that 1) the aim of the VCS is to assure that the emissions reduced by a project are measured, reported and verified correctly. If a buyer is interested in additional sustainability criteria, he/she can add those by applying a different add on standards like the Gold Standard for energy efficiency projects or Forest Stewardship Council (FSC) for forest projects. 2) Project developers can rely on methodologies approved in other accepted GHG Programs (like the CDM) to establish baselines, additionality and monitoring procedures. However, if the project developer wants to use a new approach towards additionality or a new methodology for baseline and monitoring of project emissions, this has to be approved by two verifiers (Double approval process). We expect this process to be a lot quicker than the current CDM process while delivering results of similar environmental integrity.

You’ve mentioned 3rd party verification. Is this similar to getting a CPA’s financial audit of a company? What role do you think 3rd party verification will play in the voluntary and US carbon markets going forward?

Market credibility requires that data used for emission trading is reliable, true and fair as well as credible. The third-party verification model has played an integral role in providing this credibility, and it has been accepted in major established markets. Third-party verification has been important in relation to both emission offsets, such as CDM and JI projects, and organization GHG emissions such as EU ETS, JVETS,.UK ETS, The Climate Registry, Western Climate Initiative. As emission allowances, related to the verified emissions, have the status of a financial commodity, it is a requirement that its verification and assurance meet financial market needs. In this regard, the third party verification model involves assessment of an organization’s internal control system including calibrations and QA/QC checks as well as actually data checks. It is also common in existing GHG programs for the verifier to assure the market risk of misstatements or omissions in any GHG emissions report and hence allowances or credits traded. We sincerely hope that a similar approach will finally be taken in the US for inventory and project emissions to assure that this market can be linked with other markets on the basis that “a ton is a ton” and the allowances traded have the same environmental and financial integrity.

I know that your main competitor in the global carbon markets, DNV, has also been growing it’s US presence.

Are we seeing a new wave of European carbon expertise moving into the US?
SGS is in the very fortunate position to be able use extensive global expertise in the development of our internal procedures. We of course always adapt those to local GHG program requirements. We bring in expertise from Europe in key technical quality management positions in the beginning of any new market. But the aim is and will be to run a local program with local capacity. I encourage everybody interested in the interesting job of a GHG auditor to apply with SGS an join our international team of experts.

You’ve told me that SGS has been hiring in the US for climate change, where is your office and what plans can you share?

SGS has offices in most US states and employs a staff of more than 3000 in the US working in all kinds of industry sectors. Our climate change program is headquartered in Ontario, California, but we are already in the process of training auditors across the country. SGS has been a first mover in all GHG programs globally and we understand that we have to develop expertise and manpower before the market is actually there. As such, SGS has been an active verifier under CCAR for years and is one of only six entities that achieved ANSI accreditation for ISO 14064 verification of TCR and CCAR. DNV by the way is not ANSI accredited.

And finally, you’re an economist by original training, so can you share a personal opinion on the causes of recent carbon price collapse and the recent article by Point Carbon suggesting that prices should rise by 2012?

The recent price collapse is a result of the international credit crunch and economic crisis. Decreasing industrial production resulted in lower emissions, which had an immediate effect on the demand for allowances in the EU. In addition companies were cash strapped and were selling EU allowances. 2012 is the final true up for phase II emissions in the EU ETS, until then companies will be able to borrow from next years allocation of allowances to meet last year compliance requirements, so that we should see the true demand and supply balance only towards the end of the period. Another result of the credit crisis is that less energy efficiency measures are being undertaken at industry and household level now, so that while the crisis caused relatively less emissions in the short run, it might cause relatively higher emissions in the medium and long run.

As EU companies can meet their compliance targets also with CDM credits, CDM supply also has an influence on the equation. The credits crisis results in less CDM project being started, meaning less supply of CDM credits. New GHG Markets in Australia, New Zealand and the US will compete for this reduced amount of credits. This will result in a decoupling of the CDM price from the EU ETS price, which has basically been the benchmark to date. So when you talk about the price of carbon, I don’t think that there will be a uniform price by 2012 yet.

So, depending on how deep and lasting the cuts in industrial production are, you will see an upward trend in prices towards the end of the Kyoto phase. So much for the different economic developments that will influence carbon prices, but as you know, the econometrician in me will simply say: the best forecast for tomorrow’s price is the price of today…

Thanks Robert, always good to catch up.

Neal Dikeman is Chairman and CEO of Carbonflow, providing software services to carbon developers and funds cut the cost of carbon abatement, including managing the validation and verification processes. Carbonflow is partnered with both SGS and DNV.

Carbon Trading, The Game

At our company Christmas party this year we played Carbon Trading, The Game. Bascially, I devised a simple cap and trade game in a power sector, and then we played out four rounds to see what happened. The results were an interesting summary of how small rules can have big impacts in the outcome. And perhaps a good Christmas lesson to everyone involved in carbon market design. The good news, the market in our game came in well under its caps even in the early round.

Basic rules were as follows:

Players start with a certain amount of cash, and then each round bid for different types of power plants, fuel, and carbon credits each round (there were shortages of each), then run their plants (assuming they were able to acquire power plants, adequate fuel, and adequate carbon credits to operate). In our simple cap and trade model, the cap was based initially off of a coal plant’s emission factor, and declined on a per plant basis each year. Power was priced at a flat $100/MWH (makes the math simple). The winner was the one with the most cash after converting carbon to cash at the market clearing price in the last round.

The idea was that the declining cap and fuel shortage would lead to players bidding high for low emissions hydro and wind farms to get under their cap, and lead to reductions.

A few interesting outcomes. Wind and hydro plants did command premium prices, but not all the way to pricing carbon in (probably since no one was sure what then final carbon price would be – proving uncertainty wins again). And since we did not let power prices float, nor require a must run component, fuel prices went on a wild swing but eventually fell as at least two players opted for a strategy to essentially mothball plants and instead just bank the carbon credits, and buy a few more. As a result, carbon prices also stayed low in the early rounds, since fewer operating plants were hitting their caps – however, the players who has stockpiled carbon then bid up the price of the final credit of the final round to $70 instead of the $10-$20 in previous rounds (it only stopped there because they ran out of money).

The final result, that high price of carbon in round 4 meant the winning strategy ended up being buy cheap coal plants throughout the game, run them only when fuel and carbon were very cheap, and make your money off the carbon.

I am planning on revising the rules for better play, then releasing an actual carbon trading game in the near future.

Besides operating, Neal Dikeman is a partner at cleantech merchant bank Jane Capital Partners LLC, CEO of Carbonflow, Inc., and Chariman of

Climate Change Policy Thoughts, McCain, Palin, Obama, Et al

Those of you that know me know that fighting climate change is an issue near and dear to my heart – and day to day life, since I am currently involved with a start up working on helping to deliver even better transparency and environmental integrity to carbon credits.

So as a small government, energy focused, environmentally conscious, social liberal, fiscal conservative, who has worked in both oil & gas and alternative energy, I had a lot to like about the McCain-Palin ticket. And I’ve stated that and my reasons for it, and gotten ripped for it for an audience on this blog that is commendably and passionately progressive when it comes to these issues, but unfortunately doesn’t always read to the end of the blog articles or do their research before ripping me for being Republican. But one key area I struggled on was where Palin came down on climate change. Luckily for the 182 small government, energy focused, environmentally conscious, social liberal, fiscal conservatives like me left in America, John McCain’s climate change position has apparently rubbed off on her. Like her or not, this is a very good sign for progressives. It means we as a nation are joining the climate change fight no matter who wins the election fight.

To those of you who say we should have signed Kyoto, don’t forget, Obama, GW Bush, Hillary Clinton, and John McCain all agree on this one, multilateral climate change legislation has to include China and India committing to something. (Hillary actually flopped on this topic). And China and India haven’t agreed. The Senate voted something like 98 to 0 during the Clinton years saying no to Kyoto if China didn’t agree to caps.

The main difference between US politicians has been the willingness of every one on this list except Bush to work to push through some sort of cap and trade in the US – independent of a multilateral framework like Kyoto. McCain has been pretty lock step with the Democrats on this one. And then smaller differences emerge in their approach to tough the caps should be, and whether the profits from trading ought to go into the government coffers as a new (Iraq war size massive) tax, or back to industry to fund future abatements. Of those, Obama talks the toughest game, but McCain is the only one who has ever tried.

The problem with a unilateral approach to cap and trade is that it’s about like going into Iraq unilaterally – it’s a bad a idea. Carbon is a global problem, and lots of separate policies aren’t likely to solve it without significant economic collateral damage. And worse, with cap and trade or taxes, if we try to have separate markets or tax schemes, it means we likely get a different price of carbon in California than in Texas than in China, than in Europe. And if there is no way to equalize the price by trading credits in linked markets, the only route left for industry is to shift production out of the country with the highest price, or lose out to competitors from those markets with lower prices. If the markets aren’t linked (which Obama supports in small amounts and McCain in medium amounts), we will definitely see these geographical price differentials. Then industry will respond by shifting production to China and India, whether it’s overt or not, they won’t have a choice. The power of the consumer dollar will force it to some degree. And the tighter the US carbon legislation is compared to the Kyoto, the bigger incentive to shift production overseas. Hence Obama’s position on 80% auctions for very rapidly implemented, very tight caps results in a large tax windfall to the US government, and a correspondingly large effective price differential on the price of carbon from the US to Europe even, let alone the US to China which still has caps. Where as McCain-Lieberman’s slower and lighter (but still much faster and tighter than Kyoto) plan with explicit links to Kyoto markets, would result in more moderate price differentials. If the markets are linked (meaning you can buy Chinese credits to meet California demands), but the local carbon regulations are tighter, industry has less of a need to shift production ourseas, but can instead cans sometimes shift it’s carbon purchases overseas instead of labor or other materials, but instead we would still see an increased trade imbalance as dollars flow to China to pay for the carbon.

Basically, if the US cap and trade is tighter than foreign cap and trade, either manufacturing has to go off shore, or if the markets are linked and you can buy carbon offshore, then either dollars could go offshore for carbon to keep jobs and production home. That’s why the big push for multilateral climate change, carbon trading markets, and environmental regulation that moves in lockstep with our biggest trading partners.

Hey wait, does that mean that the Democratic position on climate change will actually exacerbate outsourcing to Asia and trade imbalances even MORE than the Republican position this time? ‘Fraid so. The thing I like about McCain on climate change, is that despite getting a bad rap on economics, he’s the only candidate who’s bothered to include the impact on you and I into the complex calculus of climate change legislation.

It’s a catch-22 with no real way out, and a lot of bad options. The worst option however, is doing nothing. Luckily, with Palin now toeing McCain’s line on climate change. That option may finally be off the table.

The Shiny Copper Penny Plan for Energy and Cleantech

I wrote a piece last week arguing that McCain / Palin was my energy/cleantech dream ticket, and promptly got slammed by my readers on the left (who generally think McCain’s plans for the environment /cleantech investing are nowhere near aggressive enough and that Palin is way too conservative), AND friends on the right (who think that Palin is anti-Big Oil). There were more of the former than the latter since Cleantech Blog has been more of a progressive voice than anything else. I think I have published all the comments that came through on the blog (though not the emails), even those ripping me to shreds.

But pretty much everyone agreed I was crackers for one reason or another. So of course I’ve expanded the discussion, and am opening the floor to you. I am looking for comments that reflect at least one pro AND con for each candidate as the best candidate for energy / cleantech. Comments that only offer pros on one side or the other will be sent straight to the trash can.

Here’s mine to get you started – and while you’ll see my opinion come straight through, attached are the reasons behind it:

Barack Obama – Dubbed the Shiny Copper Penny Plan

His environmental and energy issues page

His stated plan’s objectives (editor’s notes in [brackets])

“Provide short-term relief to American families facing pain at the pump [How, by raising taxes elsewhere to subsidize energy and thereby support increased demand but oppose any increase in domestic production? Our gas prices are already way lower than Europe’s. The best policy I’ve seen to reduce gas prices is corn ethanol, yes the much maligned corn ethanol, which has reduced prices at the pump $0.29 to $0.40 / gallon. That plus CAFE plus domestic drilling, and we may have a viable answer. The real short term answer to high gas prices is break the back of OPEC as a cartel, but NOBODY wants to go there.]

Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future. [Despite the fact that this would likely make me quite rich (I have significant interests in several companies that could milk the hell out of this), I’m not really interested in massive increases in government spending. And let’s be clear, Presidents do not create jobs, you and I do. Oh, and Barack wants to get the US government into the venture capital business in cleantech. On what planet is THAT a good idea?]

Within 10 years save more oil than we currently import from the Middle East and Venezuela combined. [We don’t import a lot of our oil from the Middle East, it’s too far away, we get a large chunk of ours from Mexico and Canada :)].

Put 1 million Plug-In Hybrid cars — cars that can get up to 150 miles per gallon — on the road by 2015, cars that we will work to make sure are built here in America. [I’m a big fan of PHEVs, but right now the technology is just not there yet, despite all my electric car friends. This is definitely a shiny copper penny. I would rather focus on CAFE, car size, and biofuels.]

Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025. [2012 is just around the corner in energy terms, virtually nothing the next President can do would really change our trajectory here. 25 x 25 is a good goal, and probably his best energy plank in my opnion, but he’s short on the details of how to actually achieve it, even at astronomical energy price increases. One main challenge is that to accomplish this, we need more clean baseload (coal, gas, nuke or hydro) to underpin it and lots and lots and lots of new transmission lines – which are 7 to 10 year projects in of themselves. And of course, it depends on what you mean by renewable, right now every state in the US defines it differently.]

Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050. [I’m very pro cap and trade, but Obama’s plan is the high cost, unilateral way to do it, resulting in the most revenues to the government. The other issue here (which McCain will also face), is that even reducing the US impact on CO2 emissions is pretty much lost in the wash if China and India et al don’t commit to some sort of reductions (And of course if we do and they don’t the net effect is to push manufacturing jobs overseas. THAT is why neither the US Senate, the Clinton administration nor the Bush Administration, Barack Obama or John McCain has supported ratifying Kyoto (Hillary used to, then flipped once she figured it out))]”

The Pro

  • Clearly the most aggressively stated energy and environmental plan – if you like all green with costs taking a back seat, Obama is the way to go. But it’s very hard to conceive of cheap energy and aggressive switchs to alternatives.
  • Supports most aggressive climate change proposals out there – would definitely put us in the lead in solving the climate change problem – if you believe that us solving our part of the problem internally is more important than the world working to solve it together.
  • Supports long term not short term incentives for alternatives in general (as does McCain)
  • Would likely spend mega bucks on new energy techology spending and subsidies – great for me personally, bad for you and the country in the near term, possibly good for the country in the long term.

The Con

  • Very limited resume of actually authoring any legislation on energy or the environment
  • No experience in domestic energy policy
  • Anti- drilling (or was until he realized that like two-thirds of Americans support it)
  • Supports climate change plan that would represent a wealth transfer from the central US to the coasts and result in a several hundred billion dollar per year new tax on energy (that’s on the order of the Iraq war size)
  • Picked a VP with no real energy experience
  • Seems to have little respect for the cost of his energy plan to you and I – read Jimmy Carter all over again?

John McCain – Steady Wins the Race

John McCain’s energy page. His stated plan’s objectives (editor’s notes in [brackets])

  • “Expanding Domestic Oil And Natural Gas Exploration And Production – John McCain Will Commit Our Country To Expanding Domestic Oil Exploration. John McCain Believes In Promoting And Expanding The Use Of Our Domestic Supplies Of Natural Gas. [You may not like it, but most Americans do, and underpinning domestic supplies should be a part of every energy policy discussion. Tax the output at the pump if you want, but this country was built on cheap domestic energy, never forget that.]
  • Taking Action Now To Break Our Dependency On Foreign Oil By Reforming Our Transportation Sector – The Nation Cannot Reduce Its Dependency On Oil Unless We Change How We Power Our Transportation Sector. John McCain’s Clean Car Challenge. John McCain Will Propose A $300 Million Prize To Improve Battery Technology For Full Commercial Development Of Plug-In Hybrid And Fully Electric Automobiles. John McCain Supports Flex-Fuel Vehicles (FFVs) And Believes They Should Play A Greater Role In Our Transportation Sector. John McCain Believes Alcohol-Based Fuels Hold Great Promise As Both An Alternative To Gasoline And As A Means of Expanding Consumers’ Choices.Today, Isolationist Tariffs And Wasteful Special Interest Subsidies Are Not Moving Us Toward An Energy Solution. John McCain Will Effectively Enforce Existing CAFE Standards. [I hate prizes. The government shouldn’t be in the l0ttery business, but battery technology IS the ultimate force multiplier in energy and transport. Flex fuel, should be a basic requirement. See above on ethanol’s impact on prices already. CAFE standards, here is our near term transport lynchpin, I’d like to see McCain stronger on this.]
  • Investing In Clean, Alternative Sources Of Energy – John McCain Believes That The U.S. Must Become A Leader In A New International Green Economy. John McCain Will Commit $2 Billion Annually To Advancing Clean Coal Technologies. John McCain Will Put His Administration On Track To Construct 45 New Nuclear Power Plants By 2030 With The Ultimate Goal Of Eventually Constructing 100 New Plants. John McCain Will Establish A Permanent Tax Credit Equal To 10 Percent Of Wages Spent On R&D. John McCain Will Encourage The Market For Alternative, Low Carbon Fuels Such As Wind, Hydro And Solar Power. [Long term R&D tax credit, finally! This is part of a policy that has helped Australia punch outside it’s weight in technology for years. Nukes + clean coal, we may not like it, but it HAS to be done to baseload all those new renewables. Obama will figure this out, eventually.]
  • Protecting Our Environment And Addressing Climate Change: A Sound Energy Strategy Must Include A Solid Environmental Foundation – John McCain Proposes A Cap-And-Trade System That Would Set Limits On Greenhouse Gas Emissions While Encouraging The Development Of Low-Cost Compliance Options. Greenhouse Gas Emission Targets And Timetables: 2012: Return Emissions To 2005 Levels (18 Percent Above 1990 Levels)2020: Return Emissions To 1990 Levels (15 Percent Below 2005 Levels) 2030: 22 Percent Below 1990 Levels (34 Percent Below 2005 Levels) 2050: 60 Percent Below 1990 Levels (66 Percent Below 2005 Levels). The Cap-And-Trade System Would Allow For The Gradual Reduction Of Emissions. [See below, the most practical multi-lateral plan yet devised in the US]
  • Promoting Energy Efficiency John McCain Will Make Greening The Federal Government A Priority Of His Administration. John McCain Will Move The United States Toward Electricity Grid And Metering Improvements To Save Energy. [Investing in the smart grid and smart metering, now there’s an interstate highway style policy I can support. Smart grid is THE key to underpinning a generational shift in our power use or EV fleets. It’s our electric power sine qua non – without which there is nothing]”

The Pro

  • His energy plan is balanced, focuses on the force multiplier’s like R&D tax credits, batteries, and smart grid, and cleaning up cheap domestic resources like gas, coal, nuke, and ethanol, not the shiny copper pennies like a US Venture Capital Fund, PHEVs, and cool sounding names like 25×25.
  • Only candidate to actually author a climate change bill. It gets dinged for not being aggressive enough, but it is MORE aggressive than Kyoto, and probably the most reasonably practical one that’s come through Congress.
  • Picked a VP with lots of domestic energy experience (The state of Alaska is basically an oil company) who while pro drilling is not pro Big Oil.


  • Legislative record on environmental protection issues is generally considered spotty. I’d like to see more balance here.
  • Hasn’t pushed CAFE like I’d like.
  • I’d like to see explicit support for a 10 year PTC (Obama supports a 5 year one)
  • Depending on your position, pro nuclear (which is a very climate change friendly answer, by the way), but often viewed as anti environmental.

So sorry folks, I think McCain’s energy and environmental plan is as spot on as any presidential candidate in a long time. Yes his record on the environment is “spotty”, but energy and environment always involve tradeoffs with economic and technological reality, and I think any balanced plan will look spotty to some.

My rationale for McCain getting the crown on energy and cleantech, because it’s real and focuses on the long term force multipliers that will keep us competitive, clean and safe in the most economic manner, not Obama’s shiny copper penny plan.

In full disclosure for those of you who don’t know me, of my two largest clients, one is an oil company, and the other is an all renewable power company. I have been helping them develop their solar and low carbon strategies and businesses. I have founded cleantech startups myself in superconductors and carbon, and stand to see more financial benefit from Obama’s plan than McCain’s. But that doesn’t make it right.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of

The Voluntary Carbon Market Does Not Reward Complexity

I had a lively discussion with Susan Wood, the CEO of SCC Americas, at the Carbon Finance North America Conference last week. SCC Americas is the US arm of Syndicatum Carbon Capital, one of the largest developers of Kyoto based CDM carbon credit projects in the world, and Susan herself has been doing emissions trading for over a decade, after starting out as an environmental engineer.

The punchline in our chat was quite fascinating – the US voluntary carbon market does not reward complexity in projects, Susan says. Basically, US carbon credit developers are only doing a few limited types of projects, like methane destruction. Why? Because the buyers, who dictate the voluntary markets, tend to be scared off by anything complex that they do not understand, or anything that does not appear to be future proofed against coming US regulations. This stands in stark contrast to the CDM market, where complexity is often the hallmark of the major developers since the methodology and standards process is trusted to a much greater degree by compliance buyers than the voluntary standards are.

One other way to look at this issue is that much of the innovation in new ways to abate carbon is coming from CDM under Kyoto, not the voluntary markets. A bit sad, and a challenge to the voluntary standards community to get its act in order. Possibly the rise of new standards like Voluntary Carbon Standard and Green-e Climate will help fix the crisis in complexity, but we have been saying that for a while. As Susan puts it, we need it to happen yesterday.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of, and a blogger for CNET’s Greentech blog. He is also the founder of Carbonflow, a provider of software solutions for the carbon markets.

California High-Speed Rail

By John Addison (Earth Day 2008). Fiona Ma was nervous about getting on a train that was about to set a world speed record. Just before Easter 2007 in the countryside outside Paris, she saw the people lining the green and flowered route. The French were flying flags, waving, and cheering. Less reassuring were those of faith who crossed themselves as the new train accelerated past 200 miles per hour. The people blurred into a collage of spring time colors. The train vibrated much as when a jet plane roars down the runway and starts to ascend. Fiona hoped that this train would not leave the tracks.

At three hundred miles per hour, the train was still on the tracks, accelerating. Out the window, only one image was distinct. A plane that was filming the historic event flew along side the train. Surrealistically, Fiona and the eleven other dignitaries could see what was filmed from the plane on a screen inside the train. Another LCD displayed their world record – 357 miles per hour on a train. Everyone cheered. The train slowed over the next few miles. Fiona took a deep breath, exhaled, and smiled; she took part in history.

These days, Fiona Ma, needs to find new courage every day. As California Majority Whip, she takes on the tough issues and is a force in making things better. For every important issue, there are vested interests on all sides whether it is better health care, better transportation, stopping global warming, or keeping California’s $1.7 trillion economy moving forward. Among her many responsibilities, Assemblywoman Ma chairs the Legislative High Speed Rail Caucus.

The California High-Speed Rail Authority (CHSRA) believe they just may have the answer — an 800 mile statewide high-speed rail system that would serve more than 32 million passengers per year by 2020. Because the rail will be powered by electricity, and because of the efficiency of moving up to 1,200 people per train, CO2 emissions may be reduced by 12 billion pounds per year by 2020, and 18 billion pounds by 2030.

If you have ever been stuck in gridlock trying to get to work between Orange County and LA, or between San Jose and San Francisco, you will appreciate that the high-speed rail would add the equivalent of a 12-lane superhighway. Express high-speed trains will take one hour and fifteen minutes between San Diego and Los Angeles, and a little over two and one-half hours from San Francisco to Los Angeles.

CHSRA is upgrading their 2020 forecast to 68 million, from 32 million, and 94 to 117 million passengers by 2030. As Hall of Fame baseball great Yogi Berra observed, “It is difficult to forecast, especially about the future.” 2020 annual passengers will depend on California voters approving the November bond, matching funding, and regulatory approval. CHSRA forecasts are achievable. By comparison, Europe already provides 250 million annual rides, and Japan over 300 million.

High-speed rail systems, using the new grade-separated high speed lines planned for California have not had one fatality in 41 years. Neither automobiles nor airplanes can match the safety of high speed rail.

California high-speed rail addresses a number of goals. Our current highways cannot support the planned growth to 50 million people. Only the USA and China use more oil than California. If there are more price hikes, or if supply is disrupted by war or terrorism, where will California get its needed billions of gallons of gasoline, diesel and jet fuel? Draughts, likely caused by climate change, are already hurting California agriculture and industry. California is unlikely to meet its targeted reduction of greenhouse gases without high-speed rail. Especially damaging are the greenhouse gas emissions from short-haul air travel. The per passenger greenhouse gas emissions of flying from LA to SF are equivalent of each person driving solo in a large SUV. Carbon Calculator

Although California faces rush-hour gridlock without high-speed rail, a project with a starting price north of $33 billion is certain to face some opposition.

With HSR, it’s about money. Proposed is that Californians approve a bond of $10 billion for one-third of the cost. One-third would be matched by federal funds and one-third by private investment. Although some anticipate cost overruns, more are worried that the price of not acting will be much higher. Because California is implementing AB32, the high-speed rail may be able to sell carbon credits to help finance the project and operations.

Since high-speed rail will reduce greenhouse gas emissions by 18 billion pounds per year, you would think that all environment groups would support the measure. While there has been some support, the Sierra Club opposed disrupting environmentally sensitive areas and areas of wildlife migration, specifically in the Los Banos area. Beyond some local opposition, however, the national Sierra Club strongly supports high-speed rail.

Southwest Airlines successfully sued and stopped high-speed rail in Texas in the 1990s. Texas is now staring at a $183 billion price for the Trans Texas Corridor as a 4,000-mile-long stretch of 10 auto lanes and six railroad tracks for high-speed freight and commuter trains. This is over twenty times higher than if they had not been stopped from implementing high-speed rail years ago. Opponents of high-speed rail carefully follow Mark Twain’s advice, “Never put off until tomorrow what you can do the day after tomorrow.”

Airlines may not oppose high-speed rail. Today, Southwest cannot get the expanded gates and routes in California due to lack of airport expansion everywhere from San Diego to Los Angeles to San Francisco. Some airlines may support high-speed rail as it will more easily bring people to SFO and be part of bringing passengers to other airports more quickly.

Most are optimistic that voters will approve a bond issue for high-speed rail. Voters are faced with record gasoline prices and concern about California’s economic future. More people are commuting longer distances as they are unable to sell their homes in today’s difficult real estate market.

The major concerns are addressed in new legislation proposed by Assemblywomen Cathleen Galgiani and Fiona Ma – AB 3034 “Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century.” The governor wanted more private funding of the rail. The new bill allows for private rail funding provided by law. The Sierra Club does not want a Los Banos station. The new bill provides: “Preserving wildlife corridors and mitigating impacts to wildlife movement, where feasible as determined by the authority…” Also the bill, “Prohibits a high-speed train station between Gilroy and Merced.”

On April 14, the legislative committee approved the bill with 10 voting yes and no one opposing. It is expected to get the approval of the full Assembly and Senate and the Governor. Read the Bill and Post your Comment

Even if voters approve the bond, high-speed rail will not move forward unless there are matching federal funds. Congressman Jim Costa believes that will happen. As he states in his op-ed: “Congress has begun to take action to help make the idea of high-speed rail in California a reality. Two bills I introduced, HR 4122 the American Investment in Safe, Reliable High Speed Rail Act and HR 4123, the High-Speed Rail Authority Development and Formation Act, will help bring federal dollars to California to invest in the proposed high-speed rail system. The Senate also passed S. 294, which will help high-speed rail development in America…. Overall, for every dollar invested in this system, we will see two dollars in return.” Capitol Weekly Article

Will Californians park their cars and ride the rails? Last year, LAMTA carried 64 million riders. In the Bay Area, BART carried 47 million riders. With gasoline prices rocketing, Amtrak ridership on the Capitol Corridor is up 16% this March over a year ago; on the San Joaquins it has jumped 27%. Although Californians will not exclusively ride rails and rapid transit, but they will ride more and drive less. In fact, high speed rail will integrate with public transportation. All 25 HSR stations will be multi-modal. For example, to get to Sacramento I currently take BART to Richmond, then get on Amtrak in the same station.

As a manager covering several states, I used to travel weekly on airplanes. Point-to-point always required at least four hours to get to the airport, get thru security, taxi in the runway, fly, taxi in the runway, then rent a car. In contrast, when taking a train from Washington D.C. to New York, I found that train travel was faster than airlines and better integrated with public transportation. With high-speed rail, airline travel to cover a few hundred miles would never be a personal option.

Travel between Washington D.C. and Boston is now even faster with speeds of up to 150 miles per hour on Amtrak’s Acela, the only high-speed rail in the United States. Now you can get from the nation’s capital to downtown Manhattan in less than three hours; an impossibility with airline travel and the fastest taxi driver in New York history. Over ten million passengers road this Northeast Corridor in 2007, making it the most popular train route in the U.S. Acela is now profitable.

In 12 years, 32 to 68 million passengers may be riding on an even faster system in California. The high-speed rail will keep California’s economy moving forward, with more jobs, more energy security and far less emissions.

Copyright (c) 2008 John Addison. This article may be reproduced if it preserves this copyright notice. John Addison publishes the Clean Fleet Report.

Bringing Seapower to the Fight Against Global Warming

The cleantech sector has developed as a major player in the fight against climate change. One of my friends, Dan Whaley, has founded a company called Climos to attack global warming in a new way, sinking massive amounts of carbon into the ocean depths using ocean iron fertilization. The approach has seen significant scientific study, but as he acknowledges, still has a ways to go to prove its effectiveness. That is where Climos comes in. The exciting part is the sheer scale of the potential carbon sequestration (on the order of a billion tons) and the low cost (possibly on the order of $5 to 7 per ton, according to Dan). Dan and Climos believe that they can use iron fertilization to sequester tremendous amounts of carbon, play a big part in reducing global warming, and use the carbon trading markets to finance the projects. I was also intrigued to learn more from Dan given the quality of the companies, like DNV and Ecosecurities (LSE:ECO.L), that Climos is working with to help design the carbon abatement methodology, and the care that Climos is taking to understand the environmental science. Like our own efforts in carbon, Dan believes in science and standards first. (On a personal note, I do not have a lot of choice in that matter, as my wife is an environmental scientist and statistician.) As a result, we asked Dan to do an interview with Cleantech Blog and tell us how they believe harnessing the power of the sea can play a big role in the fight against climate change.

Dan, you are one of the new class of technology entrepreneurs who is moving into cleantech. Can you share some of your background, and why you chose carbon?

In 1995 I founded the first company to commercialize travel reservations over the net, We went public in 1999 and sold to Sabre in 2000. If you’ve booked a ticket on United Airlines’ website, you’ve used an example of the infrastructure we built.

I think that entrepreneurs by nature love big challenges. We like to find opportunities where key technologies, services or business transformations can make a profound difference to the world. We understand that the missing ingredient we provide is the vision and the sheer will to make those transformations happen. We are perhaps at our best when the odds are against us, and when most people say we’re crazy.

A few years ago, I drove from here down to Buenos Aires. Somewhere along the way, I think I woke up and really fully realized that there were some extraordinary challenges out there facing us that were much more pressing than most people had been giving them credit for. Challenges that were much more important than whether people could book their travel online, for instance. GetThere was a powerful lesson to me that I could set my mind to something and achieve it, but it was also a little numbing at times too—sometimes I wondered just exactly what I was really contributing to the world.

By contrast, the energy and environmental challenges we face as a species are exactly the kind of thing an entrepreneur likes to tackle head on. Plus it actually makes a difference whether we succeed or not.

Tell me a bit more about the concept of ocean fertilization and how it could abate C02? Why iron?

Ocean Iron Fertilization (OIF) was first proposed nearly 20 years ago by an oceanographer here in California named John Martin, at the time he was the Director of Moss Landing Marine Labs. He was the first to discover that iron was the trace nutrient limiting photosynthesis, and hence primary production, in most of the world’s oceans.

Photosynthesis uses freely available sunlight to convert CO2 to organic material, which higher level organisms consume directly or which sinks into deep waters of the ocean to be sequestered for up to 1000 years. Clearly we need to lower our emissions dramatically, and immediately, but if atmospheric CO2 that we have already put into the atmosphere is ever to decline, it will be photosynthesis that eventually does the work.

Over the last billion years, phytoplankton (the micro algae that grows ubiquitously in the ocean) have helped to concentrate over 80% of all mobile carbon on the planet into the deep ocean. This process is referred to as the Biological Pump, where after plankton bloom, mature and die, they sink to the deep ocean, carrying carbon along with them. The deep ocean recirculates over very long time periods. The lag between downward flux and eventual recirculation creates an extremely effective trap. This process is probably easily 20-30x more effective at storing carbon than plant growth on land, which returns most carbon back to the atmosphere on short time scales (10-100 years).

A tiny amount of iron can stimulate a lot of phytoplankton growth. 12 publicly-funded, open ocean experiments over 15 years have shown this. The science community is now proposing the next generation of experiments, at moderate as opposed to small scale and potentially funded by private sources. We hope to answer the question just how much carbon is sequestered (not just grown), at what scale can this be done safely, and whether this can fit in to the market mechanisms that have evolved worldwide to fund the mitigation of carbon dioxide.

Who else is doing this and what exactly do you do differently as far as ocean fertilization goes?

Up until now, it has been purely been a research effort, with cruises funded by public agencies such as the National Science Foundation. There are now a few companies proposing to do this, though the primary competitor, Planktos, appears to be winding down operations due to problems fundraising. We decided to pursue this because we feel like this is one of the largest potential tools mankind might have to address global warming. Perhaps our primary differentiator is that we want to make sure that if this is done, it is done credibly and scientifically.

Our Chief Science Officer, Dr. Margaret Leinen left NSF in January. She was the head of Geosciences there and managed a $700M research budget. Her research career was in paleoceanography and biogeochemistry. Our Science Advisory Panel includes people such as Dr. Rita Colwell, the former Director of NSF, Dr. Tim Killeen, the Director of the National Center for Atmospheric Research and the recent President of the American Geophysical Union, Dr. Bob Gagosian, the former President of Woods Hole Oceanographic Institute, Dr. Tom Lovejoy, the President of the Heinz Center, and so forth.

What is different about what is happening now is that the demonstrations of OIF will be larger, focused on different questions and also funded in part by the private sector. The carbon market is the mechanism that the world has chosen to fund emissions reductions and carbon mitigation, and so if OIF can be an effective way to safely remove CO2 from the atmosphere, that will probably be financed via the carbon market.

How will you verify that the abatement is happening?

To quantify the carbon removed, we deploy a range of sensors, the most important of which are called “Neutrally Bouyant Sediment Traps” to measure the amount of carbon falling past a certain depth in the ocean. Identical measurements are taken both inside the project area as well as outside the project area—this gives us an idea of what would have happened if we hadn’t been there.

There are further nuances which are important to account for, such as how much carbon really ends up coming out of the atmosphere to replace that which is being used at the ocean’s surface. Also, we will need to model the impact on nutrient stocks before they are replenished via deep winter mixing, etc. There many important other details, but this probably illustrates the basic concept.

Can you go into some more detail on the questions of permanence, always a major concern in new carbon reduction methodologies.

The permanence of storage is measured in choosing the depth we place the sensors at. This depth is determined by looking at what is called the ventilation or residence time of water at difference depths in the project area. Because the oceans circulate so slowly, most of the world’s water mass, in fact the majority, has not seen the surface since before fossil fuels began being combusted in the late 1800s. I think that is a fairly surprising fact to most people. By sampling water at depth for signs of human activity which also have a known history, such as tritium from bomb testing in the 1950s or from CFCs that began being released in the 1920s, oceanographers can tell how long any cubic meter of water has been away from the surface.

Putting this to practice, if you sink carbon past water that hasn’t seen the surface for 300 years, and if you know the directionality of circulation in that place in the ocean, you can be fairly sure that this carbon won’t see the surface for at least 300 years moving forwards. This is how we understand permanence in addition to quantity.

The IPCC defines permanence as at least 100 years, so we will likely use this definition—but ultimately the carbon market will decide what that number is, not us. Keep in mind that significant amounts of carbon are stored for timeframes which are shorter as well, i.e. 75 years, 50 years, etc. This timeshifting of carbon is meaningful and helpful as well, but we won’t claim credit for this. Also, the minimum (i.e. 100 years) is just that, the minimum. Much of the carbon will be stored for much longer—hundreds to even thousands of years.

Many people question the value of ‘timeshifting’ carbon. They wonder if we’re creating a problem for ourselves later when this carbon comes back. There are several important things to consider here. First, we really have no other options—other than emissions reductions, which are important—but really separate. There is no other way to ‘dispose’ of the carbon that we’ve put up in the atmosphere already. Nature timeshifts carbon—at some point, nearly all carbon will see the atmosphere again, the question is on what timeframe. The effectiveness of sequestration in the ocean is the reason that the majority of ‘mobile’ carbon has ended up there over time. Second, this approach gives us time to address our emissions problem. People have likened this to a concept called ‘oscillation damping’, where if you have a pulse that takes time X (as in the number of years we have been adding too much CO2 to the atmosphere) then it may take you 2X or 3X or 4X to ‘dampen’ that pulse, depending on its amplitude. So if we’ve been creating this problem for 100 years, and it takes us another 25 years to solve, then we may have to mitigate for several multiples of that. This is an unscientific quantification, but perhaps a useful illustration—and I think it also serves to highlight what a huge challenge we have ahead of us.

Aren’t you worried about the impact on the environment on “adjusting” ocean nutrients? I know that has been a concern of some environmental groups.

I think there are a number of distinct concerns rolled up in your statement. One is the fear that OIF is ‘messing with mother nature.’ Many people feel that humans simply can’t get anything right, and that we if we try to fix what we’ve already broken, we’re likely to make it worse. This is an unscientific attitude, and one that I think also fails to appreciate some of the unique aspects of this concept.

Other concerns are whether a change in the level of iron is potentially harmful, or whether the drawdown of existing macronutrients such as nitrates, phosphates and silicates (which is what the addition of iron triggers) could result in permanent shifts, or deplete productivity elsewhere—i.e. no net benefit. There are a number of answers for this.

First, this is already happening. Iron naturally fertilizes phytoplankton blooms—and these are the largest source of carbon sequestration happening as we speak. About three billion tons of CO2 is stored safely at depth in the ocean every year, and has been for a long time. Iron is a benign mineral. It in and of itself is simply not harmful.

Second, nature has already done more aggressive iron fertilization at scales much larger and for periods much longer than we are contemplating. During the last million years on at least five or six separate occasions between the major ice ages, natural iron inputs to the ocean increased by many times what they are now for thousands of years at a time. Productivity (i.e. plankton) increases appear strongly correlated with these times of increased iron. A recent paper by Cassar, et al this year has linked nearly 40ppm of the 80-100ppm swing of carbon in the last interglacial to increased iron enrichment of ocean waters by aerosol and other transport mechanisms. If iron fertilization simply removes nutrients that would have eventually been used elsewhere, then you would not have seen sustained productivity increases in the paleo record. Where we are now is a result of all of these previous episodes—and more than likely this will happen naturally again in the future, whether humans do it on purpose or not.

Lastly, OIF will be done gradually, over decades. It can be stopped at any time.

The key is to continue to explore this as a potential mitigation mechanism and to see whether it can be both effective and safe. Demonstrations run by scientists, and funded by the private sector which can deploy the capital required for the larger projects, are probably our best chance of this.

You intend to sell carbon credits based on this process. What standard will you use, and who do you expect will be the likely buyers?

Long term if this is to be meaningful it will need to be accepted in regulated markets, in the short term the voluntary market can help provide the bridge financing to get us there. We think the Voluntary Carbon Standard (VCS) is probably the best current standard, but there are others as well. We’ll target as many standards as appropriate. The methodology we are currently developing is designed around the UN Clean Development Mechanism (CDM) specification—though since it takes place in the middle of the ocean it will never qualify for those credits without changes to the regulatory framework.

You mentioned you approached the problem from the science, standards and measurement & verification end first. That’s an approach I definitely agree with. Can you go into some more detail? I know you had mentioned working with DNV, among others.

A number of things need to be done before larger demonstrations like the one we propose.

First, the key science questions that will to be asked of this next generation of experiments need to be asked. We will be proposing a series of science workshops with the community this year to help facilitate that. One of the conferences will be on long term modeling. Another will be on measurement and verification techniques. We will be announcing these over the next several months.

Second, a comprehensive Environmental Impact Assessment needs to be performed by an outside party that reviews concerns in detail and against the peer-reviewed literature, identifying which are likely not an issue, which are questions of appropriate project design, and which need more study. We will be initiating this process over the next several months.

After these processes are complete we will begin to structure our proposed cruise, and publish this ahead of time. This also involves applying for appropriate international permits, etc.

DNV, or a company like that, will be involved in validating the Project Design Document (PDD) after we select a specific operating site, and before we actually go to sea. They will also come on the cruise to provide direct verification of the results.

Many of these general activities are called for by a document we produced last year which we call a Code of Conduct. We think that it is vital that companies like ours operate in a scientific, responsible and transparent manner.

So this process is kind of like planting trees, except in the ocean?

Yes, except it happens faster and the storage is more permanent. Forests store carbon in the form of standing biomass—in other words, you get storage for as long as the forest is managed and preserved. If it burns down, or gets harvested, a large part of that carbon is returned to the atmosphere. Also, if the tree dies and is not replaced, nearly all of that carbon is returned on short time scales (< 100 years). This is not to say that we shouldn’t be planting trees. We should, and we are—the UN just finished planting a billion trees the week before the recent Bali conference. We need to be doing a lot more of that.

Two of the most attractive aspects of ocean fertilization are low cost and large scale. Can you give us some insight into where ocean fertilization fits on the spectrum of cost and potential abatement levels?

We think credits from OIF can be delivered for about $5-7 a ton long term. No one knows what the annual global capacity might be. Certainly three billion tons a year (CO2) are already being done naturally. It is possible that another billion tons annually might be able to be added to this number, but that is pure speculation. Some people have quoted numbers that are much higher than this, but I think that’s probably not a constructive exercise right now.

And of course, when do you expect to be able to offer credits off of this platform, now that the VCS has been released?

We have just received the first draft of the methodology back from Ecosecurities and DNV (Det Norske Veritas) is in the process of a formal assessment. After their comments, and possible revisions, we will submit the methodology to the VCS steering committee. They have told us they will require a 2nd formal review by a qualified verifier, after which it would qualify to be accepted as a VCS methodology.

We will also be asking other peers in the science community to help us evaluate and refine the methodology. They will certainly be the most important check. We expect it will be refined many times as measurement and modeling approaches improve.

The credits of course will be dependent on the successful completion of our first cruise. We expect this in 2009.

Dan, your OIF approach is certainly exciting given the scale and low cost of the potential CO2 abatement, and I wish you the best. It is certainly not a easy task.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairs, and a blogger for the CNET Cleantech Blog.

Australian voluntary carbon market Opened

by Nick Bruse

Australia’s first carbon trading exchange opened last week and its now one week on. The initial prices for carbon was set at A$8.50 (US$7.50) per metric ton under the voluntary scheme. Current price isA$8.55 per metric ton. I’ve pieced together my research on the ACX from a variety of stories run after its opening.

Australian Climate Exchange (ACX) established the joint venture aimed at cutting the country’s greenhouse gas emissions and bracing firms for possible pollution limits five years ahead of the introduction of a government-backed scheme.

About 1,600 tonnes of Voluntary Emission Reductions (VERs) changed hands, opening at A$8.50 per tonne for 2007 and closing at A$8.60. The total value of the trades was A$13,610, according to data on ACX’s Web site

This compared with prices of 19.50 euros ($26.96) for European Union carbon emissions on the ECX exchange for delivery in December 2008, the first year of commitments under the U.N. Kyoto Protocol on climate change.

Australia has not ratified Kyoto, which sets binding limits on emissions and envisages global emissions trading, but Prime Minister John Howard has pledged to establish a national carbon trading scheme by 2012.

The ACX exchange is the fourth voluntary market, following schemes in the United States, UK and Japan.

ACX Limited Managing Director Tim Hanlin said businesses wanted an opportunity to sponsor clean technology now.

“This is a voluntary emissions trading market and it’s business to business trading of greenhouse gas emissions,” Hanlin told Australian Broadcasting Corp. (ABC) radio.

Carbon trading involves putting a price and limits on pollution, allowing companies that clean up their operations to sell any savings below their allocated level to other companies. ACX is a joint venture with companies trader Australia Pacific Exchange

“Under the ACX system, buyers and sellers trade the VERS in minimum lots of 100 tonnes. Each offset unit is certified by the government greenhouse watchdog and must be lodged with the ACX registry first before it can be traded. The registry tracks the traded offsets until they are extinguished – that is when an owner acquits the offset against emissions.”The Australian

The ACX is the first cab off the rank with further initiatives to be launched by the National Stock Exchange (NSX) and the Australian Stock Exchange (ASX)

The NSX, which recently bought a water trading exchange used by farmers, has said it wanted to launch a carbon emissions trading platform next month. The ASX has said it would proceed with its scheme after the federal government’s pricing details were known. The Australian

Whilst presenting an opportunity for companies to begin mitigating their carbon emissions, and also providing a market to source credits for voluntary offset retailes, not everyone is so sure that these voluntary schemes are a positive step. The world bank was quoted in a May 2007 article in the UK paper the Guardian.

The World Bank cautioned that moves in carbon offsets outside the regulated “cap and trade” systems could pose a threat to the development of the overall market. There has been growing criticism that schemes where companies or individuals seek to offset their emissions by investing in projects to cut emissions elsewhere, are either not delivering or funding developments that would have been financed anyway. Critics say that the system needs a greater degree of standardisation.

The World Bank said that on some estimates voluntary carbon offset schemes could rise to 400m tonnes by 2010. It added: “This high potential voluntary sector, however, lacks a generally acceptable standard, which remains a significant reputation risk not only to its own prospects, but also to the rest of the market, including segments of regulated emissions trading and project offsets.” The Guardian

If you would like some more dialogue with the Managing Director of the ACX, Tim Hanlin you can find it here, in an ABC radio interview transcript. There is a conference, Voluntary Carbon Markets, set to be held in London in a few months to address some of these questions regarding voluntary carbon markets as well.

If your interested in understanding the detail of carbon emissions trading schemes, you can listed to an interview I conducted with Rob Fowler from Abatement Solutions Asia Pacific on The Cleantech Show. Rob is heavily involved in helping the Australian Greenhouse Office with the development of the Australian Emissions Trading Scheme. On the show he provides a significant amount of insight into the trading schemes and the process of setting them up. You can listed to the show here.

Nick Bruse runs Strike Consulting, a growth venture consultancy specialising in the cleantech sector and hosts the cleantech show, a weekly podcast of interviews with leaders involved in clean technology research, entrepreneurship, commentary and investment.