Alberta, where oil companies have been actively drilling the tar sands and are major customers of that mandatory carbon market. It is important to note the various international emissions reductions programs because greenhouse gas emissions affect the world no matter where the emissions occur and many believe that, ultimately, an international program will be needed to properly address the situation. Those countries already implementing emissions reduction programs will no doubt set the standard for others to follow.
Change is on the horizon for carbon emitters in the United States and ethanol producers need to be aware of their potential role to shape the nation’s carbon market. Ethanol producers, as they currently stand, are emitters of carbon dioxide. If no changes are made to the way ethanol is produced, most producers will find themselves competing with other industrial companies to buy carbon credits should some type of cap-and-trade-program become law. However, with a few energy-saving steps, the ethanol industry can “green” its image and become an example of a fuel production industry that earns credits rather than uses them.
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“I don’t know if the ethanol industry is prepared for what might happen,” says Jim Murphy, president of Carbon Green LLC. His company specializes in working with biofuels companies to reduce their “carbon profile” in order to become carbon generators and then monetizes the credits on the U.S. voluntary market, namely the Chicago Climate Exchange. Murphy has been working in the carbon world exclusively for a few years now, and he admits that it is not easily understood. But one thing is certain, he says. Once ethanol producers begin to focus on carbon they automatically begin to focus on energy, and “ethanol plants need to focus on energy.” Murphy believes many ethanol producers may not realize that they will be forced to reduce their emissions under a federal greenhouse gas emissions reduction program and it may come as an unwelcome surprise unless they begin to take steps now to reduce their energy use.
Pressure for Policy
So what is in store for carbon as a regulated commodity in the United States? No one really knows. The number of proposed legislative measures that have been introduced regarding the reduction of greenhouse gas emissions is in the hundreds and no one seems to think that the government will agree on a program by the end of 2009.
At press time, the most recent document to be posed to Congress was a discussion draft on climate change legislation presented to members of the U.S. House of Representatives Committee on Energy and Commerce by committee Chairman John Dingell, D-Mich., and energy subcommittee Congress Chairman Rick Boucher, D-Va. In a memorandum to committee members, Dingell and Boucher state, “Politically, scientifically, legally, and morally, the question has been settled: regulation of greenhouse gases in the United States is coming.” But even they say that it is unclear exactly what form of regulatory program will be adopted.
The draft proposed by Dingell and Boucher calls for a cap-and-trade-program which will gradually reduce greenhouse gas emissions until reaching a goal of 80 percent below 2005 levels by 2050. Major company types to be regulated under this proposal are power plants, producers and importers of petroleum, other fossil fuels and bulk gases and other “large industrial facilities,” which may very well include ethanol producers. Those producers not covered in the “large” category would then fall into the small source category, which includes all sources emitting less than 25,000 tons of carbon dioxide per year. The draft proposes those sources be held to industry-specific emissions standards, as should be determined by the U.S. EPA.
The proposal given to energy committee members is a discussion draft, not a bill proposal. Boucher and Dingell say their draft is the result of nearly two years of committee work on climate change and that it should result in the passage of climate change legislation by the next Congress. However at the same time, their executive summary of the draft states, “Reaching a consensus on a national approach to addressing climate change will be difficult under the best of circumstances.”
Certainly the views of the next president will play a role in shaping the policy. Elections had not been held by press time, but Sens. Barack Obama, D-Ill., and John McCain, R-Ariz., have both stated their support for a nationwide, mandatory cap-and-trade carbon emissions reduction program. In response to a question posed to the candidates by ScienceDebate2008.com regarding their positions on a cap and trade system, Obama said he planned to reduce emissions to 80 percent below 1990 levels by 2050. McCain’s plan would reduce emissions to 60 percent below 1990 levels by 2050. Obama said his plan is in line with reduction levels scientists have deemed as necessary. McCain said his approach would be easier on American businesses, specifically coal-fired plants, allowing them time to adapt to policy changes. Both candidates’ plans call for a more stringent baseline than the draft proposed by Boucher and Dingell, which serves as an indicator of all the specifics that need to be debated before a program can be put in place. There’s much work to be done, but it is expected that no matter who takes office in January, a cap-and-trade-program will be addressed within his first year of office.
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