Carbon is Forever
Calculating the cost to control CO2
It’s abundant throughout the universe and essential to all known life. In its pure form, the commonest stuff on Earth is also the stuff diamonds are made of. And when we tally the cost of capturing its gaseous form (mixed with oxygen) and its permanent removal from circulation, the price differential between carbon and diamonds is sure to narrow down a bit.
Earth’s atmosphere is a mixture of about 78 percent nitrogen and 21 percent oxygen. That leaves about 1 percent of the total composition for everything else: trace gases like argon, helium, hydrogen, which tend to occur in constant, minuscule percentages, and gases that occur in variable percentages, like water vapor and carbon dioxide. Carbon dioxide (CO2) currently accounts for roughly thirty-eight one-thousandths of 1 per cent of the entire atmosphere.
Water vapor is not only a lot more common; it’s by far the most powerful greenhouse gas, much more so than carbon dioxide. Methane is also far more potent, with about 23 times carbon dioxide’s capacity to trap infrared radiation and warm the planet. But minor as it may be as a component of the atmosphere and weak as it is compared with other greenhouse gases, carbon dioxide is, by volume, the one most commonly emitted as a consequence of human activity. The simple fact that it is reachable by regulation may be the most important factor making it a target in plans to control Earth’s climate.
Name Your Price
Using numbers from the United Nations Intergovernmental Panel on Climate Change (IPCC) to do the arithmetic, emissions caused by human activity—fossil fuel combustion, agriculture, changing land use patterns—account for about 3.7 percent of the CO2 being added to the atmosphere at any given time. The remainder—slightly more than 96 percent—comes from natural sources like vegetation and soil and “outgassing” from the world’s oceans. But, the IPCC says, the natural emissions are reabsorbed by soil, vegetation, and water, and most of the human-induced emissions are not.
If that’s true, and if it’s true that those emissions are responsible for the estimated 0.7 degree, Celsius, increase in global average temperatures since the mid-19th century, and if it is then the objective to keep those emissions from further increasing CO2’s presence in the atmosphere, there are just two ways of doing so: collect the emissions and seal them away (carbon capture and sequestration) or don’t emit them in the first place. Neither can be accomplished for free.
Capture and sequestration (C&S) technologies are very much in their developmental stages. That, along with cost considerations, points toward the latter choice—avoidance of emissions—as a place to begin looking for solutions.
As a practical matter, avoiding emissions means deciding which CO2-producing activities must continue and which ones can be reduced or done away with. It means making choices at the personal as well as the societal level. It means assigning a price to certain activities and deciding whether we’re willing to pay it.
Where electric generation is concerned, carbon dioxide emissions could be totally eliminated by a transition to nuclear power plants for 100 percent of our electricity supply instead of the roughly 20 percent they currently provide. But that choice is unacceptable for many people and in any case, construction of new nuclear plants in Wisconsin has been effectively ruled out by state law since the early 1980s.
So in that instance, price is a moot point. Moot but not irrelevant, because each option that’s foreclosed makes the price of every remaining option more important.
The chairman of the House Energy and Commerce Committee helped put that into perspective last month. Congressman John Dingell (D–MI), is the longest-serving current House member. The automobile industry, a high-profile target for cutting CO2 emissions, is the economic heart of the district that’s elected him since 1956, and for 27 consecutive terms he has been its able defender. In August, Dingell told a gathering back home in Michigan that he planned to spread the cost of controlling carbon across all economic sectors.
Dingell said that means he’ll advocate a 50-cent-per-gallon increase in the federal gasoline tax, impacting motorists and the transportation industry; eliminating the income-tax deduction for mortgage interest on homes larger than 3,000 square feet, impacting homeowners and the building industry; and a new federal tax of $100 per ton of CO2 emitted by power generation, impacting everyone who uses electricity.
Running the Numbers
As unpleasant as a $100-per-ton carbon tax might sound, Dingell’s stance wins points with the National Rural Electric Cooperative Association (NRECA) for the sobriety it introduces to the discussion. Glenn English, himself a former congressman (D–OK) and now CEO of the nationwide trade association, wrote last month that Dingell’s proposal “is in contrast to other proposals that obscure the real costs under a fog of required carbon reductions, target dates, carbon allocation strategies, and choices of industries to which the mandates will be applied while never admitting that executing such policies will be costly to consumers and the economy.”
English added that those issues would be discussed in depth by NRECA member cooperatives during regional meetings scheduled around the country this month.
Among the things those members will be talking about are estimates of what carbon-related additions to the cost of generating electricity will mean for end-use consumers; meaning the individual members of electric distribution cooperatives.
Of course a tax on anything is expected to discourage use by increasing cost. In this case, a tax increasing the costs of electricity, and driving, and heating big houses, seeks to train consumers to avoid activities that cause CO2 emissions from coal, gasoline, and natural gas. The harder they are to train, the bigger the financial penalty they will pay.
The other available strategy, carbon capture and sequestration (C&S), theoretically could operate in two ways. First, it would simply take emitted CO2 out of circulation; but it could also function in the same way as a tax, suppressing emissions by increasing the cost of the product—in this case electricity specifically—through the added expense of deploying C&S technology.
The crucial feature of C&S is underground storage of CO2, collected from the flue gases of utility generators, compressed and pumped into deep geological structures that will hold it permanently.
At a May 1 University of Wisconsin symposium sponsored by the Public Service Commission and the Wisconsin Public Utility Institute, State Geologist Jamie Robertson told utility officials this state lacks suitable rock formations for CO2 disposal.
Illinois, however, is believed to have the right geology. To make use of it, Wisconsin power producers would need to build an interstate pipeline.
With no specific plan on the table, there were no estimates of what a Wisconsin-to-Illinois pipeline would cost. But Robert Finley of the Illinois State Geological Survey said half the CO2 emissions from power plants in the Illinois Basin could be stuffed under his state’s rock formations at a cost of about $53 per ton. The Illinois Basin includes south-central Illinois, southwest Indiana, and western Kentucky.
Finley said his $53 estimate included all costs, from capture at the power plants through pipeline transportation and underground disposal. About 80 percent of the cost—a little more than $42 per ton—would be incurred directly at the power plant in deploying and operating the capture technology.
The price for applying C&S technology to all the Illinois Basin plants, based on an estimated 296 million tons of emissions: a little more than $7.8 billion annually.
A few weeks earlier, Jack Reasor, CEO of Virginia-based Old Dominion Electric Cooperative, testified to the House Energy and Commerce Subcommittee on Energy and Air Quality that best-case estimates claim C&S would push the cost of electricity 60–80 percent higher than it is today.
Reasor traced those figures back to an anticipated additional cost of $27 per ton of CO2, driving a 50-percent increase in the wholesale cost of electricity.
There is no reason to assume technological spending would affect prices differently than a tax—an expense is an expense—so if an additional cost of $27 per ton of CO2 for C&S technology would drive up wholesale prices by 50 percent, it seems reasonable to believe the additional cost of a tax almost four times that large, $100 per ton, might boost them in the neighborhood of 200 percent, effectively three times today’s wholesale price.
Not Going Away
One reason John Dingell attaches what look like inflated numbers to his carbon tax might be that he’s calculated it will require those high costs to exert downward pressure on fossil fuel combustion.
Put another way, three-dollar gasoline has done little or nothing to alter Americans’ driving habits, and if Dingell thinks the world right now is on a path toward using more coal instead of less, he’s in good company.
In March, the Massachusetts Institute of Technology (MIT) released a study titled “The Future of Coal,” examining the imminent collision of two conflicting priorities: steadily increasing energy demand and simultaneous demands to curb or modify energy production over concerns about global warming.
A key finding of the interdisciplinary MIT research team is that coal use won’t end any time soon. In fact, the authors spend only two paragraphs before getting to this statement: “We believe that coal use will increase under any foreseeable scenario because it is cheap and abundant.”
Implicitly, nothing short of a deliberate policy choice is likely to raise the cost of coal enough to make natural gas, with its lower CO2 emissions, price-competitive. Coal can provide usable energy at about one-sixth the cost for the same output from oil or natural gas—$1 to $2 per million Btu as compared with $6 to $12, the MIT report noted. And coal has the advantage of being abundant in regions other than the Persian Gulf, the MIT scholars added, emphasizing that the U.S. and China have “immense reserves.”
China, they said, is currently building the equivalent of two, 500-megawatt coal-fired power plants each week and adding coal-based generation capacity comparable to the entire British power grid every year.
“Absent a technological breakthrough that we do not foresee,” the MIT report said, “Coal, in significant quantities, will remain indispensable.”
Pain Without Gain?
Reducing carbon dioxide emissions will not be achieved without very large costs, and in July, Glenn English spelled out the NRECA position that those costs will be unacceptable unless they result in significant benefits.
“Already we have a significant number of consumer-members who have difficulty paying their power bills,” English wrote in a column for Electric Co-op Today. “The reality now is that even larger numbers will be unable to afford electric power. That’s bad for families and bad for the nation. And it’s just unacceptable.”
Pointing out that electric cooperatives nationwide have been at the forefront of renewable energy development—citing among them Dairyland Power Cooperative’s on-farm methane digester projects—English maintained that the answers lie in technological advances, not in punishing consumers for meeting their basic needs.
“This is where we must draw the line in the sand,” he wrote. “We agree that carbon emissions should be reduced. However, we will not agree to higher rates without commensurate gain.
“I urge lawmakers to keep in mind that electric power is not a luxury; it is a necessity,” English wrote.
Exactly one month later, on August 13, ABC News reported that a bill introduced by Senators Joseph Lieberman (I–CT) and John McCain (R–AZ) would shrink U.S. economic output by more than half a trillion dollars between 2009 and 2030 because of increased energy costs linked to meeting its CO2 reduction targets.—Dave Hoopman
