Inclusion of Carbon Capture and Storage in the CDM

Perhaps the most controversial of the agreements achieved at COP16 was the decision to make carbon capture and storage (CCS) eligible as a project activity under the CDM, provided certain issues are satisfactorily addressed.

There is, however, a long road to travel before the carbon reductions achieved by CCS projects are monetized via certified emission reduction (CER) credits. The COP's decision makes this a possibility, but it's by no means a fait accompli that the journey will be finished anytime soon. Moreover, even if CCS projects result in CERs, it seems clear that given current market prices for carbon, the financial inducement of CERs--taken alone--is hardly strong enough make CCS projects financially viable in developing countries. And of course CDM is all about developing countries.

The COP decision--which is available here--is carefully worded such that it opens the door for the inclusion of CCS under CDM, while simultaneously pointing out the array of concerns that need to be satisfactorily addressed prior that becoming a reality.

In the Preamble, the decision notes that the Parties have "highlighted issues which need to be addressed and resolved in the design and implementation of carbon dioxide capture and storage in geological formations, in order for these activities to be considered within the scope of the clean development mechanism . . . ."

The crux of the decision is that CCS is eligible, if and only if certain conditions are met—namely “the issues identified in decision 2/CMP.5, paragraph 29,” which must be “addressed and resolved in a satisfactory manner . . . .”

2/CMP.5 is available here. Agreed on at last year’s COP15, paragraph 29 delineates a number of “outstanding issues” pertaining to CCS, namely:

(a) Non-permanence, including long-term permanence;
(b) Measuring, reporting and verification;
(c) Environmental impacts;
(d) Project activity boundaries;
(e) International law;
(f) Liability;
(g) The potential for perverse outcomes;
(h) Safety; and
(i) Insurance coverage and compensation for damages caused due to seepage or leakage.

Under the COP16 decision, the Subsidiary Body for Scientific and Technological Advice (SBSTA) is tasked with elaborating “modalities and procedures for the inclusion of carbon dioxide capture and storage in geological formations as project activities under the clean development mechanism . . . ."

Modalities and procedures are the rules that govern the CDM that were adopted at COP 7 in Marrakesh in 2001 and later adopted by the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (COP/MOP) at COP/MOP in Montreal in 2005 in the Annex to Decision 3/CMP.1.

In addition to the concerns cited in 2/CMP.5, paragraph 3 of the COP16 decision requires that the SBSTA’s modalities and procedures address a number of related and distinct issues, such as site selection criteria; monitoring procedures for leakage; the use of modeling; delineation of project boundaries (which is required to include the project components related to “capture, treatment, transportation, injection” as well as the subsurface); reservoir pressure and pre-injection monitoring plans; the implications of transboundary CCS projects; leakage; risk and safety assessment methodologies; socio-environmental impact assessments; pre-approval determinations of short-, medium-, and long-term liability and the risk of inducing seismic events; the means for using such liability determinations to redress affected entities from leakage; liability allocation; transfer of liability; state liability; ecosystem remediation funding and mechanisms; and compensation for affected communities.

This is not a short or simple list to tackle.

Here’s the formal procedure going forward:

The decision invites observer organizations to submit to the secretariat their views on addressing the issues referenced in paragraph 3 by February 21, 2011. The secretariat is then charged with preparing a synthesis report based on these submissions.

The secretariat is then tasked with convening, prior to the 35th session of the SBSTA, a technical workshop of legal and technical experts to consider the synthesis report and discuss how best to resolve the issues noted in paragraph 3 through “modalities and procedures.”

Based on the synthesis report and the deliberations of the technical workshop, the secretariat is then charged with preparing draft “modalities and procedures” for consideration by the SBSTA at its 35th session.

Following this, the SBSTA is supposed to make a recommendation to the COP at its next session in Durban, South Africa.

And then it’s up to the COP to decide if these issues were resolved in a “satisfactory manner.”

So to sum up, there’s a long way still to go before CCS truly becomes a viable project category under CDM. And even if it does . . .

From Copenhagen to Cancún (From Nopenhagen to No-Can-Do)

I'm in Cancún for week two of COP16. A year ago I was freezing my backside off in a line in Copenhagen waiting to get credentials, winding my way through a Kafkaesque study in bureaucratic incompetency. Things couldn't be more different this year. After waking up to an amazing view of white sands flanked by the turquoise ocean, I breezed through the credentials line yesterday (took me all of 5 minutes). Expectations are low for this COP (this is not Hopenhagen). No surprise there. It's both purposeful, as a way to ensure the conference doesn't repeat the debacle of Copenhagen by raising expectations too high, and literal, in that nobody really expects much to happen (i.e., no binding agreement, just incremental progress on things like fast-start-financing, REDD, tech transfer, etc.). There are some subtle developments on CCS--which happened last week. I'll be talking about this in subsequent posts, as well as blogging on other COP related developments.

Interview with NIST's George Arnold and Kevin Doran

A recent interview that I did with George Arnold, the US National Coordinator for Smart Grid Interoperability (NIST), Ajit Jaokar, founder of Futuretext.  Interview conducted by Prof. Mattias Ganslandt from the University of Lund. 

This is part 1 of 6.  Click on the video to see the rest of the interview.

CEES Research in the New York Times (etc.)

CEES assisted the Presidential Climate Action Project in preparing a series of climate change-related executive orders; in NYT . . . CEES is mentioned toward the middle of the story:

Obama gets a menu of climate actions he can take without Congress

President Obama could invoke strong climate policies without congressional input before world leaders convene this fall to negotiate an international global warming treaty, a research group says in a plan provided to the administration. The report lists a host of quick-start recommendations that can be implemented with executive orders, bypassing the cumbersome legislative process that sank Senate efforts this summer, according to members of the privately funded Presidential Climate Action Project.

Dead, Not Dead, Dead, Not Dead, Dead ...

From E&E (subscription req'd):

CLIMATE: White House still hopes to pass bill this year -- Browner


The White House is "deeply disappointed" that Congress hasn't passed climate legislation but won't give up on getting it done this year, President Obama's top climate and energy adviser said yesterday. Carol Browner said on NBC's "Meet the Press" that the administration is still holding out hope for a legislative victory on climate and energy, despite the political challenges of passing a controversial bill through the Senate after the chamber returns from its August recess.

Debbie Downer Doran?

I've received some interesting flack for my recent quote in this Wall Street Journal article.  The descriptive / arguably normative jist of the article is aptly summarized by its title: Even Boulder Finds It Isn't Easy Going Green.  My basic perspective on sub-federal efforts such as these is that they're worthy, laudable efforts that should be duplicated.  But as my quote endeavored to emphasize, getting consumers to respond meaningfuly to demand-side management and energy efficiency initiatives is tough going.  A strong price on carbon would go a long way toward improving this. 

One rather odd thing in the story is Roger Pielke's absurd comment that charging our personal gadgets wipes out the conservation value of motion-detector lights.  Additionality, anyone?  The problem with the comment is that the students didn't go out and buy gadgets just because the University had installed new lights!  Also, the gadgets would have been charged anyway, even without the purchase of the new lights.  So in no way does charging them negate the conservation value of the lights. 

SEC Issues Interpretive Guidance on Climate Risk Disclosure

Here's a press release issued today by CEES:

CENTER FOR ENERGY AND ENVIRONMENTAL SECURITY
UNIVERSITY OF COLORADO AT BOULDER
________________________________________

SEC ISSUES GUIDANCE ON CLIMATE RISK DISCLOSURE

Yesterday (Jan. 27, 2010) the U.S. Securities and Exchange Commission said for the first time that public companies must disclose climate-related risks to their investors. The SEC press release is available here.

 The "interpretive guidance" requires that public companies disclose such climate-related risks as the impact of legislation and regulation; the impact of international accords; the indirect consequences of regulation or business trends; and the physical impacts of climate change.

Upon issuing the guidance, SEC Chairman Mary Schapiro stated, "We are not opining on whether the world's climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics. Today's guidance will help to ensure that our disclosure rules are consistently applied."

In 2009 CEES co-released a report with Environmental Defense Fund and Ceres entitled "Reclaiming Transparency in a Changing Climate: Trends in Climate Risk Disclosure by the S&P 500 from 1995 to the Present." Authored by CEES Senior Fellow Kevin Doran, CEES Policy Analyst Elias Quinn, and Environmental Defense economist Martha Roberts, the report provided the first comprehensive sectoral analysis of the quantity and quality of climate risk disclosure by the S&P 500.

"The SEC's guidance is an extraordinary breakthrough," said CEES Senior Fellow Kevin Doran. "The guidance recognizes that climate change can present material opportunities and challenges for business, and that companies are obligated to communicate this information to investors. The report that CEES, EDF and Ceres released, along with many other efforts, was instrumental to achieving this recognition."

A copy of the report is available here.

Commenting on the report, Harvey L. Pitt, former chairman of the SEC and E. Donald Elliott, former assistant administrator and general counsel for the EPA, stated: "The Center for Energy and Environmental Security and the Environmental Defense Fund have performed a valuable public service by co‐sponsoring this important Report that assesses trends in disclosures to investors by publicly‐traded companies about the potential effects of climate change and related public‐policies on their businesses. We congratulate the authors and the sponsoring organizations, and we commend their work to those who are interested in protecting the environment, or improving SEC‐disclosure obligationsbut most especially to those, like us, who care about both."

Senior United Nations Fellow Robert Repetto also remarked, "Investors need accountable, consistent information regarding which companies are ready to seize new market opportunities spurred by climate policy, and which are falling behind. This report underscores the immediate need for the new SEC administration to restore transparency regarding corporate management of climate risks and opportunities by issuing guidance that clarifies appropriate climate disclosure practice."