In view of the stalemate on climate legislation in the Senate President Obama has  instructed the Environment Protection Agency (EPA) to prepare executive regulations for capping green house gas emissions from automobiles, trucks, refineries, power plants and major industrial emitters. These measures are designed to enter into force in early 2011 if no legislation has been signed by then.

On March 10, 2010,  98 business groups representing oil, gas and coal interests and 20, mostly Republican, governors have sent a letter to the House and Senate leaders protesting against the intention of the President to by-pass Congress in his efforts to reduce green house gas emissions. They contest the legitimacy of EPA to issue rulings against green house gases. In their view the EPA is not equipped to assess the potential for very real harm to jobs when regulating emissions. According to them the proposed EPA rules would discourage investments in oil and gas projects, harm jobs and create limits to US energy production.

This campaign is the opening salvo aimed at preventing or at least delaying any action by the EPA. It will certainly intensify as the mid-term elections come closer, when the Republicans will not hesitate to win potential voters with anti-climate arguments.

For the time being the President can relax and retort that it is up to the Senate to produce a climate bill before the end of the year and to both houses to agree on a common text. But the virulence of the attacks and the continued misinformation of the public should push the President into a more “aggressive” stance. He has to convince his 250 million citizens that the future of the US economy and society cannot rely on coal and oil, that the USA has a huge potential for energy efficiency and that in a few years solar, nuclear and wind energies will not be more expensive than oil or coal.  That is worthwhile campaign for the coming months and years. Presently more than half of the US citizens do not believe that climate change constitutes a risk for them or their children. Such a score is not reliable basis for far-reaching legislative action in the energy field, certainly not for an increase in petrol taxes.

In parallel, he should call upon the presidents of US universities to introduce mandatory courses on climate and energy as of the next academic year. Without a fundamental change of mentality the USA will not be able to play the necessary in world climate policy and diplomacy. And without a strong US commitment Humanity is bound to overstep its basic climate target to contain the increase of the earth’s temperature within two centigrade.

Brussels 11.03.10   Eberhard Rhein

Kerosene is the only fuel that is globally exempt from any taxation. This bizarre situation is due to an extensive interpretation of article 24 of the Chicago Convention (1944!) on civil aviation, which provides that states should admit aircraft temporarily free of duty and that fuel shall be exempt from customs duty.

This provision prevents any state from even taxing its domestic carriers when taking kerosene, as this would give foreign competitors a competitive advantage. That is why the EU had to abstain from imposing a kerosene tax on domestic and intra-EU flights in 2004, which it wanted to do under the Directive 2003/96 EC. But the International Civil Aviation Organisation (ICAO) prevented EU countries from also extending the tax upon foreign carriers using EU airports.

It is overdue to put an end to legal provisions that no longer make sense in the era of globalisation and climate change increasingly caused by aviation. Since 1990 C02 emissions from air transport have risen faster than from any other source, due to the rapid expansion of air transport. Today their share of global C02 emissions is in the order of 2 percent. Allowing business as usual the emissions from aviation might double until 2020.

It should have been the duty of the ICAO to negotiate a global agreement for cutting C02 emissions from air transport. But despite several efforts it has not been able to make much headway in its negotiations: another proof of the incapacity of UN bodies to agree by consensus.

The EU has therefore decided to go it alone. As of 2012, all carriers, domestic and foreign, using EU airports will fall under the EU emission trading system. This will establish a level playing field and overcome the legal objections of Article 24 of the Chicago Convention, which ignores emission caps. The USA has, however, protested against the EU proceeding unilaterally and “taxing” its carriers. Other countries are likely to follow suit when the Commission will submit a formal proposal in the course of 2010.

This should be the ideal opportunity for the EU to ask for a re-interpretation of Article 24 of the Chicago Convention: in the light of pressing climate problems every country should have the freedom to tax kerosene. Domestic and foreign carriers should be subject to a kerosene tax, without any discrimination and reciprocity. A kerosene tax is important for the majority of countries which do not dispose of the administrative machinery for effectively managing a cap and trade system for emissions from aviation but still consider it necessary to tackle the rise of C02 emissions from that source.

It is time for humanity to wake up to the challenge of C02 emissions from  aviation and stop being impeded by a dubious juridical interpretation of a Convention that has been negotiated 65 years ago in a totally different global environment! It is not tolerable for the UN Secretary General to preach action against climate change and ignore the inaction of a major UN agency under his orders!

Brussels 10.03.10   Eberhard Rhein

Iran is probably the country with the cheapest gasoline prices.

A litre of gasoline costs only 45 cents beyond the monthly entitlement of 80 litres per car for which car owners pay ridiculous 11US cents.

The Iranian government has to pay almost $ 100 billion annually for financing its generous subsidies on petrol, fuel and electricity (one kWh cost only 0.6 cents!) The excessively low petrol prices are responsible for the congestion on Teheran’s street and the exorbitant level of C02 emissions, comparable to those of France, for what is still a medium income country. According to the World Bank, Iran could reduce its C02 emissions by 49 percent if it phased out the petrol subsidies.

Several efforts have been undertaken during the past years to put an end to this folly, the last in early January 2010 when the parliament decided to phase them out until       March 2015 and align energy prices to the level prevailing in the Gulf.

The risk of an impending embargo on petrol shipments has re-fuelled the debate on the future of the unsustainable petrol subsidies, which harm Iran and are a scandal for the world climate.

Even if the embargo will not deter Iran from continuing its nuclear development its positive by-effect on fossil energy consumption and C02 emissions should be appreciated.

Let the international community therefore proceed with it.

Brussels, 10.03.10  Eberhard Rhein

Not everything has become dark on the climate front after the disappointing outcome of the Copenhagen Climate Talks three months ago.

In procedural terms, the Mexican hosts of the Cancun meeting in November/December have multiplied their contacts with main players to insure a more successful outcome.

But more important, there many signs that the business, consumers and governments across the world continue pushing energy efficiency and non-fossil energy sources: the vast majority of people continue to believe that climate change remains the most serious problem in the years ahead.

First, the drive for renewable energies seems unbroken, even if 2009 has not been brilliant in terms of investments.

The new International Renewable Energy Agency (IRENA) formally established in early 2009, has enlisted more than 140 member countries since. This demonstrates the strong interest world-wide in renewable energies. The new Agency will be the focal point for technologies and policies promoting renewable energies. It will establish a network of the best experts for advising countries on how to best exploit their potential for renewable energies.

The private sector continues to push wherever there are ideal conditions for investment. Thus Iberdrola, the world’s biggest wind – power utility, unimpressed by the stalemate of US climate legislation, will continue to invest heavily in wind farms in the USA, the country offering the best opportunities for wind energy.

And the two huge long-term European programmes, DESERTEC and the North Sea off-shore wind investments, involving the leading utilities will of course continue whatever the still stand at the global level.

Second, the gasoline has stopped rising, at least in the West. People drive less and in more fuel-efficient cars, thanks to efforts undertaken by the automobile industry to introduce more energy-efficient models. Car dealers world-wide prepare for the gradual transition towards hybrid and electric plug-in cars.

Governments have encouraged this process. The US government has imposed new fuel efficiency standards that will raise fuel-efficiency for new cars by 40 percent as of 2016.

Similarly the Chinese government has systematically pushed its car makers to build small fuel-efficient cars. It is in this perspective that one has to see the most recent decision by Chinese regulatory authorities to block a deal between General Motors and a Chinese engineering company to build the Hummer jeep, a notorious gas-guzzler

High budget deficits will also help to restrain gasoline consumption. Many governments will have to abolish subsidies or to raise taxes on gasoline.

India, where all subsidies combined account for more than 10 percent of government expenditures, plans to overhaul its energy subsidies which would lead to an increase of gasoline and fuel prices.

Greece will have to raise its excise tax on gasoline to restore fiscal stability.

And should one exclude that even the USA with its huge budget deficit may one day be obliged to raise federal taxes on gasoline?

Third, the private sector continues its drive for higher energy efficiency and lower C02 emissions, if only in order to cut costs.

Thus several Dutch companies are introducing incentives for sustainability and lower green house gas emissions by linking bonus payments to progress in emissions or sustainability. DSM, a big chemical country, intends to pay full bonuses only if the company succeeds in substantially reducing green house gas emissions. AKZO NOBEL, another chemical company, calculates bonuses in relation to the company’s position in the Dow Jones sustainability index for chemical companies.

Brussels, 25.02.10 Eberhard Rhein

Less than two months after the Copenhagen Climate Conference Congress the US Administration has taken three major decisions on its future energy policy:

• A 10 percent  increase of its  nuclear  capacity

President Obama has signed an $ 8 billion loan guarantee for the first two new nuclear reactors to be built in 30 years. The 2011 budget will provide for additional loan guarantees of some $ 54 billion, which should enable the USA to increase the total number of nuclear power plants from 104 to 124 and cover more than 20 percent of its electricity demand, compared to 80 percent for France, from nuclear reactors

• A Trebling of  Biofuel  production

The Obama Administration aims at trebling the production of biomass from 8 billion tons in 2009 to 36 billion tons in 2022. In doing so it is following in the footsteps of the Bush Administration that had put a bet on biofuels as the alternative to fossil gasoline.

Producing biofuels from maize is not very energy-efficient, because it requires too much fossil energy for tilling the fields, harvesting, transporting the harvest to the distilleries and transforming it into the bio-gasoline. It is therefore not the ideal method for reducing the consumption of gasoline; the expected impact on C02 emissions will be marginal: they are expected to fall by 138 million tons per year, compared to total US emissions of more than 8 billion tons!

• A Boost to Carbon Capture and Storage (CCS)

The new US Administration is determined to develop a comprehensive and coordinated federal strategy on CCS. By 2016 10 commercial demonstration projects should be operating.

There are increasing doubts about the commercial viability of CCS because of the rapid technological progress in power generation from wind and solar sources. A programme for 10 demonstration projects may therefore send the wrong signals to the US coal industries and utilities. They might  find themselves reassured  in their conviction that coal has a long-term  future for US energy supply,  though it  should be phased  out sooner rather than later because of its health and environmental damages in the  coal mining  regions.

Add to these three measures the tightening of the automobile fuel efficiency standards by 40 percent until 2016 and the investment packages for thermal insulation in private and public buildings that form part of the 2009 economic stimulus.

Taken together, these measures seem to indicate the desire of the Executive to send a signal to the Congress that the USA must continue its fight against climate change whatever the present stalemate on the climate legislation. The inclusion of carbon capture& storage and the boost to the nuclear industry constitute no more than adroit gestures to critical senators to also support the legislative package.

And last not least, Obama has signalled to the international Community that he is as much as ever committed to fighting climate change.

The President may still keep some powder dry!

• He could instruct EPA to issue an administrative order to US power utilities to generate at least 25 percent of their electricity from non-fossil sources by 2020 and raise that percentage to 35-40 by 2030!

• EPA could issue a similar order to the automobile industry for raising fuel efficiency by 60 percent until 2025.

• EPA could issue stricter insulation instructions for all new buildings.

Maybe the USA is about to introduce a basic new approach into energy and climate policy.

We may have arrived at the crucial point where global and national emission targets will become irrelevant. International climate policy will be no more than an aggregation of national energy policies aiming at higher energy efficiency and lower C02 emission.

Ideally, the major players would exchange their experience with the most effective technologies and economic incentives. They might establish a secretariat with a loose coordination role.

However shocking it may sound, this bottom-up approach may be very effective provided the main countries discover that low-energy technologies serve their economic interests by creating jobs and new export potentials.

And we no longer have to quarrel endlessly about emission targets that nobody can really monitor!

The international Community seems too bruised from Copenhagen to make decisive progress in 2010 along the old track.  Let it try with a hands-on approach and see how it operates.  The non-committal “Copenhagen Accord” would be an umbrella for the multitude of practical policy measures to be adopted by the main emitter countries!

Brussels 17.02 10  Eberhard Rhein

The most recent FAO report on the “State of Food and Agriculture” contains a comprehensive analysis of the profound changes that have taken place in the livestock sector during the past 30 years. These transformations have outpaced the capacity of governments and societies to provide the necessary policy and regulatory framework to ensure an appropriate balance between private and public goods, in particular concerning the rising pressure on the ecological system.

The livestock sector is one of the biggest emitters of man-made green house gases. Directly and indirectly the 4 billion heads of cattle, sheep, goats and pigs on earth emit 7 billion tons of green house gases annually, in particular methane, nitrogen oxides and carbon dioxide. Deforestation for creating additional grazing areas, manure management and enteric fermentation are the three main causes of the green house gas emissions caused by the livestock sector.

In view of its weight in the global emission balance it is no longer possible to ignore livestock in the fight against climate change.

The FAO report calls upon governments to correct the externalities through appropriate regulations and sees a rising momentum for taxation. It insists in particular on eliminating all subsidies that promote overgrazing, deforestation and overuse of water.

These are courageous recommendations, however cautiously formulated.

They will need to be followed up by specific proposals to major live stock producing countries like Brazil, Argentina, Australia or USA for reducing their green house gas emissions from livestock.

The report should also be a reminder to all meat consumers. Global per capita meat consumption has grown from 30 kg in 1980 to 41 kg in 2005, with the USA and Brazil at the top with 80 kg and vegetarian India at the bottom with less than 5 kg. They should be made aware that a diet heavily relying on red meat is as bad for the climate as high emission cars!

Brussels 21.02.10   Eberhard Rhein

The international community has failed to address climate change. And there is no prospect for it being more successful in the near future. Nobody expects the ministerial meeting (COP 16) scheduled for the end of the year in Cancun to lead to a substantive breakthrough.

The time has come for a more thorough reflection on where we stand and should go in the future before pursuing further routine “climate tourism”:

• Is the UN the appropriate body for international climate negotiations? Why should 190 countries “negotiate”, while less than 40 of them account for 80 of the global emissions?

• Has there not been too much emphasis on abstract emission goals from arbitrary base years?

• Have we sufficiently considered the huge differences in per capita emissions?

• Have the negotiations not become overcharged with far too many issues in order to “buy off” each of the 190 participants?

• Have the negotiations not often been surrealistic when considering the limited means of monitoring the implementation of whatever climate targets agreed?

Instead of losing more time and energy on endless quarrels about global temperatures, C02 content in the atmosphere and reduction targets for green house gases, the international Community should concentrate on concrete measures that everybody understands and that are easy to track.

To start with, the international Community should focus on three major sources of C02 emissions: automobiles, electric power and lighting.

• Automobiles are undergoing a technological revolution, away from the internal combustion engine to electrical drive. This is the challenge for the coming 30 years. In view of encouraging this process, governments need to fix increasingly stricter fuel efficiency standards, as the EU and the USA have already done. A fuel efficiency standard, of say 3 litre/100 km or 50 g C02 emissions/ km by 2025, will require electric engines.

The 10 major automobile-producing countries should negotiate    appropriate standards and time frames in which they are to be respected. This should not be difficult as there is no need for complete identity or synchronisation of the standards.

• To obtain a reduction of global green house gas emissions of at least 50 percent by 2050, it is indispensable to “decarbonise” power generation. By 2050 all electricity generated in the world should come from solar, wind, biomass, hydro or nuclear sources! That is technically and economically feasible.

To get there, humanity has to start today and fix intermediate targets for the share of non-fossil sources in power generation. EU, USA and other countries are already doing so by committing the power sector to generate at least 20 percent of its electricity from renewable energies in 2020. To facilitate an international consensus on intermediate targets for 2020, 2030 and 2040 nuclear power should be included as “acceptable” non-fossil sources.

This negotiation will be more complex as more countries will be involved. China, Russia, Australia and the USA will find it not easy to part from coal. But these obstacles should not be insurmountable, provided the process allows for flexibility and equitable burden sharing.

Engaging international negotiations will send the necessary long- term signal to the global power industry that the international community is determined to achieve zero emission power generation world-wide by 2050: it would radically change expectations and investment strategies of power companies as of today. This is crucially important because of the long-term horizon under which the industry operates, power plants being built for a lifetime of 30-60 years.

•        Lighting is a major consumer of electricity world-wide. Much of existing lighting continues to be supplied by the venerable, 100 year old, incandescent lamp, which wastes 80 percent of the energy through heat.

Replacing the incandescent lamp by more energy-efficient technologies like the light-emitting diodes (LED) would substantially lower the demand for electricity.

That is why the EU has decided to phase them out. The decision may have been taken too hastily before the practical and cheap alternatives were in the market, but objectively it was the right one.

Other countries have taken similar decisions. The EU should therefore explore the possibility of arriving at a world-wide arrangement that would phase out incandescent lamps, say over the next 10-15 years.

To achieve an effective arrangement it would suffice to get the major 20 producing countries on board.  This will be immensely easier than a consensus among almost 200 countries and have a visible effect on global C02 emissions before 2025.

These three “sectors” matter for the global climate; they account for more than one third of global C02 emissions. And their share is bound to rise due to the increasing demand for electricity and mobility. Any effective action would therefore be rapidly visible.

Other sectors with high green house gas emissions might be included in due time.

Aviation comes to mind; it will also have to become C02 emission free before 2050, most probably by means of bio-fuels.

The most urgent sector to be tackled is forests. Deforestation is a plague for the climate and the regional environment that must be addressed without further delay. It cannot wait. It can be handled bilaterally with the forest countries concerned, as had been tried with Equator. Brazil would appear the most propitious case to tackle. In the run-up to Copenhagen the negotiations for a forest deal were quite well advanced. The issue should therefore be brought to a conclusion in the course of the year. It will have a measurable impact on the climate and the trust among the parties.

Of course, this approach focuses only on the supply side. It does not address the issue of externalities. Countries should continue to address this part of the equation by C02 taxation or cap and trade systems. But these do not easily lend themselves to international negotiations and standards.

In 2010 the top priority is to restore confidence and trust in the capacity of the international community to act effectively against climate change.

The international community needs rapid results to regain the confidence lost. China and USA must be brought back into the game.

Quick results are only possible by picking up issues that do not require a consensus among 200 parties. We need “alliances of the willing” to push ahead and build upon.

The EU should take the initiative, very cautiously. The Commission should test member states on the acceptability of such a pragmatic approach, which may offer the chance of some rapid success.

Brussels 22.02.10 Eberhard Rhein

The decision by Areva, the French engineering company with a turn-over of some € 12 billion and employing 75 000 people around the world, to buy Ausra, a tiny US start-up company with less than 100 employees, is likely to give a further boost solar thermal power generation, after the launch of DESERTEC by a group of major European finance and engineering companies in 2009.

Ausra is building a 177 MW power plant in California, using a simple low-cost version of CST technology: instead of applying the trough technology with huge parabolic mirrors, it will use the so-called Fresnel technology applying almost flat mirrors and a simple receiver system that allows the cost-effective application to small solar power plants of less than 3 MW.

Several medium size power plants with 6-10 MW capacity, designed for “Fresnel reflectors”, are planned in Spain and Portugal.

Areva offers its world-wide engineering and sales network to sell Fresnel-type solar power plants. It intends to invest some $ 200 million for establishing an efficient sales and service network. In doing so it will compete with companies engaged in PV solar installations linked to the grid that have mushroomed during the last years in Spain, Italy and the South-West of the USA.

It will be interesting to follow how the competition between the different types of solar power plants – PV, CST trough and CST Fresnel - will develop in the decades to come. The outcome will depend on the relative operating costs of these competing technologies. CST technology moreover has the advantage of producing steam to be used for heating.

In any event,   the take-over demonstrates the need for the nuclear business to diversify into renewables, if only for image reasons. It will take decades before the renewable business of companies like Areva or Siemens, strongly entrenched in conventional nuclear or fossil power generation, will overtake their traditional power generation business. But developments in the last few years are encouraging and demonstrate that the management has understood the message that the future energy supply will be in renewables.

Brussels, 09.10.10   Eberhard Rhein