By Joe Petrowski
World CO2 emissions are 36 million tons annually and for now declining as the United States, China and EEC replace coal fired power plants plants with wind, solar, hydro, natural gas and nuclear. The individual country contribution to this 36 million tons is as follows:
- China 11
- US 5
- Europe 4
- India 3
- Russia 2
- Japan 2
- Rest of world 9
The good news is China and the United States are declining in CO2 emissions, partly driven by the Kyoto protocols and the switch to alternate fuels. Though to be frank, China was declining before the concern with climate change driven more by the need to remove particulates, sulfur and nitrogen dioxide and other nasty pollutants from the burning of coal including arsenic (there were 5,000 deaths in homes burning coal in an open fire in China in 2012).
The bad news is world power demand is growing by 6% per annum, which is 2.5 times faster growth than world GDP. And China is now the largest vehicle market in the world. Half of U.S. CO2 production comes from transport fuels. It is estimated that Chinese vehicle growth in the next decade will add 2 million tons of CO2 to the balance sheet alone.
So what are the practical policy initiatives besides walking, sitting in the dark at non-controlled temperatures or signing more “feel good” protocols demanding change?
- We need more natural gas and hydrogen vehicles and the supporting infrastructure.
- Higher CAFE standards and more efficient engines can work.
- We need to embrace hydro power (it is outrageous that we have net decreased hydro production in the United States and have restricted Canadian access to U.S. markets to protect incumbent power generators). We currently have 2600 hydroelectric dams producing 400 million megawatts or 7% of our electricity. This is down from 2,900 dams 40 years ago.
- We need to build more pipelines and LNG export facilities to get natural gas to export points helping India, China and Japan feed their growing transport and power demand with a cleaner fuel.
- We need to encourage carbon mitigation either by Cap & Trade, a carbon tax or the development of a vigorous offset market that would invest in trees, solar or wind to offset carbon emissions.
There are several start-up and nascent companies such as VNG (natural gas), IVYS (hydrogen) and Green Point (carbon offset) focusing on a more efficient solution to CO2 than a straight carbon tax (that would add 12 cents to a gallon of petroleum fuel taking $35 billion dollars out of U.S. consumers’ hands in a regressive fashion while lowering GDP by 2 points). And while Cap & Trade is the favorite of Wall Street and its political cohorts, it is for that very reason I oppose Cap & Trade. At best, Cap & Trade invites more cronyism and rewarding favorites while punishing the non-connected, and at worst it’s a a rigging system that would make the California electric market during Enron look like a bingo game.
I’ll have more on the carbon mitigation concept next week.
Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October of 2008 he was named CEO of the now combined Gulf Oil and Cumberland Farms whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is now managing director of Mercantor Partners, a private equity firm investing in convenience and energy distribution and Chairman of the Gulf board.