pipelines and carbon tax: June 2015

Summary

The delay of 3 pipelines from Alberta has increased rail transport to such extent that most of the oil gets out anyway. Possibly we lost some business but that oil volume will have been supplied by other countries so the increase in the world’s GHG emissions remains unchanged. Only a global carbon tax will make oil expensive, encouraging the use of electricity for land transportation. Oil products will always be needed to power ships, fly airplanes and produce many of our goods. Canada has one disadvantage. We use a lot of fossil fuel to extract the oil but that can be rectified by wind and solar power as soon as a global carbon tax has been established or Alberta is forced to cut down drastically on fossil fuel, like the US did with their new EPA regulations. Alberta can develop a lot more solar and wind power and BC could sell 45% of its green energy to Alberta by increasing its windpower from 1.5% to 20%. A carbon tax is needed to make this possible because in North America there is still a lot of cheap electricity traded. A lot of It is generated by coal and natural gas power plants.

A carbon tax will also encourage the use of Carbon Capture and Storage (CCS). By giving carbon tax credits to companies that extract CO₂ from smokestacks or the atmosphere those companies become more competitive. Norway has an offshore tax of $ 75 per tonne of CO₂, It costs Statoil $17 per tonne for CCS so the company gains $ 58 per tonne. In addition it stopped the burning off of excess natural gas from oil wells. If the BC carbon tax of $ 30 per tonne of CO₂ would apply world wide CCS would save Coca Cola $ 42,900 per day. The CO₂ emissions from Coca Cola are 3,300 tonnes per day and since the CO₂ does not have to be stored underground the CCS cost is unlikely to exceed that of Statoil, Without CCS it would cost Coca Cola $99,000 per day in carbon tax to fill up their bottles and cans. So this would be a win win situation. The company gains while there is no GHG increase in the atmosphere. Also some additional jobs are created in the CCS industry,

Alberta still loses $15 billion per year in revenue due to poor access to Asian markets. This will only change when either the 2 contested BC pipelines or the proposed G7G railway have been completed. In the meantime we have to campaign for a global carbon tax allowing us to use green energy for oil extraction. The main media does not release much of these environmental considerations hence I hope that in particular the younger people, who have to suffer the most when we don’t reverse the trend, will use their social media to promote the global carbon tax.

In Canada many people oppose the carbon tax because it is seen as a tax grab rather than a tax shift. The Canadian Government keeps portraying it as a tax grab in order to win votes. Meantime other countries can’t stand our attitude hence the pipeline protests continue. To make carbon tax acceptable it has to be made clear how people get their money back. In the US one carbon pricing bill was defeated partly because people were told they would share in dividends from the sale of auctioned pollution allowances. The British Columbia tax has reduced the use of petroleum products by 17% without loss of GDP. 37% of all tax collected is paid out to low income earners, 11% to other personal credits and 52% to businesses. In the US the Sanders Boxer bill, yet to be passed, will return 60% of all tax collected to households, 25% to debt reduction and 15% towards green projects. It will raise additional money by imposing import duties (border tax adjustments) on good from countries without carbon tax.

One way to make your voice count is to follow some of the articles on www.desmog.ca , write a comment and share it with your family and friends via facebook, google plus or any other communication tool. Please copy and paste any text from this post or other posts while mentioning that the details can be found on www.neilwilhees.blogspot.ca. Except for summaries each statement is hyperlinked to source documents. Earlier posts show references to EP and CT documents which show text and hyperlinks.These EP and CT documents were u attachments to 3 emails to the Canadian government and 5 to Enbridge to show in 2013 how much opposition there was to the Northern Gateway pipeline and how that could be lessened by changing our carbon tax policy and publishing far more technical information about the past problems and required improvements of pipelines. Most of the observations in those emails are now post 1 of this blog. Enbridge has a copy of post1 with a special note that at the very end there is a list of unanswered questions. Most questions are still relevant and part of them apply to all pipelines.

You will note that this post shows some promising development in solar technology and battery storage. The efficiency of solar panels can be improved quite a bit and cost per KWh is coming down. Energy storage for homes and businesses was made cheaper and simpler by Tesla batteries. Five days after the company announced production plans , 38,000 reservations had been made for the powerwall unit and 2,500 reservations for the much bigger, commercial-scale battery systems. That shows that there is a real interest in renewable energy. It will lower the required peak power generating capacity for hydro plants.

A) The importance of carbon tax

Had the pipeline protesters fought for a carbon tax there might have been some progress. Until a global carbon tax has been established demand for oil will keep rising and it makes little difference in the world’s greenhouse gas emission which country or which pipeline supplies the extra oil. The amount of fossil fuel used to extract the oil is a consideration. A carbon tax is an important incentive to use renewable energy for that extraction. British Columbia has better wind conditions than most provinces and 31 hydro storage reservoirs where excess wind power can be stored to obtain an even export flow. The clean energy act limits fossil fuel power generation to 7% and encourages export by creating excess hydro capacity to meet peak demands by hydro alone because during those cold winter nights there may be no wind. By increasing the wind power from the present 1.5% to 20%, utilizing the 17.5% over capacity and redirecting the power obtained from the Columbia River Entitlement, British Columbia could make 45% of its power available to help Alberta improve the oil sands image. Due to a lack of carbon tax this is not yet possible. Power from new hydro stations or wind farms costs about 8.5 cents/KWh but is at times hard to sell, even at 4c/KWh because the North American net is still fed by many coal or natural gas fired power plants producing it so cheaply.(post 21) The 8.5c/KWh for wind power is conservative. Present day wind turbines produce 15 times more electricity than 1990 models (1) and the levelized cost for some installations can be as low as 3.7c/KWh (2)

B) Many busineses are well ahead of politicians by demanding carbon pricing

If the British Columbia carbon tax were to be applied globally it would increase the price of thermal coal by 70% (post 17), which would force many coal fired plants to phase out or switch to natural gas. It produces only half the amount of greenhouse gases compared to coal. The world’s largest oil company and 2 other major ones have large natural gas reserves. They demand a global carbon tax so they can profit from increased gas sales. Cathay Pacific, the world’s third largest airline is very fuel efficient and demands the global tax because higher fuel prices will make them even more competitive. Other major multinationals who demand the tax are in the food processing, construction, computer, insurance and petrochemical business(post 12) These are just a few of the over 1000 businesses from more than 60 countries who signed communiqués demanding global carbon pricing. Most Canadian oil companies already use a "shadow" carbon price to write their long-term budgets, assuming a higher price is coming. The current shadow price ranges from about $30 to $40 a tonne.(23)

It shows how taxing can reduce emissions without having to resort to special subsidies. Present carbon tax systems provide subsidies to individuals and businesses that use below average fossil fuel. Many people still don’t realize that a well defined carbon tax returns the money to the public in predictable amounts so that those who spend below average on fossil fuel get more money back than they paid. The proposed US Sanders Boxer bill will return monthly 60% of all tax collected to households. (post 20) In British Columbia the government has to show yearly how all money collected was distributed. 48% goes to households, which includes 37% to low income earners.(post 19)

C) Solar power versus wind power and battery storage

In populated areas solar panels on roof tops are much more acceptable than wind mills. The official US figures show 8.7c/KWh for onshore wind versus 14.4 c/KWh for PV solar(3) but the technology is moving fast and costs are bound to drop rapidly. In the last five years the solar energy capacity has increased six fold (4). While rooftop solar still costs 14.4c/KWh utility solar is now available for 6-8.6c/KWh (2). Theoretically 70 % of all the solar energy striking the solar panels can be converted to electricity. The commercial panels available today have an efficiency of 15 %. A theoretical efficiency of 60 % can be achieved by converting the solar energy that heats up the panels into electricity as well. (5). Diamond films can increase the efficiency from 15 to 50% and the panels last longer. There are a number of other improvements which could make solar more efficient. These are triple junction cells, peal and stick panels, nanowire panels and light splitting panels, (5, 6)

The recently announcement by Tesla Motors that they will produce wall mounted batteries (power walls) for homes and large battery packs for commercial applications will give a further boost to solar energy. When equipped with solar panels a $3500 wall mounted battery, guaranteed for 10 years could store enough energy to supply a house without external power supply.(7) This is a great advantage for people in remote areas which rely on diesel but it is already speculated that, “like with cell phones, customers will jettison their landlines”. That seems unlikely considering that most people will want to sell surplus power and buy during unusual dark periods. Public acceptance has been great. Just 5 days after Elon Musk announced the news he mentioned that they already received 38,000 reservations for the Powerwall which will start shipping this summer. There are 2,500 reservations for the much bigger, commercial-scale battery systems. That's a lot in less than a week (8). Powerwall could alone "easily" take up the entire capacity of Tesla's $5 billion, 50GWh factory in Nevada,

For BC this can make quite a difference. If more residents no longer require power from the net it will be easier to obtain the electricity for the planned LNG and mining projects. One North Vancouver commentator proposes to equip all household with a Tesla “powerwalls ‘ to be charged during off peak hours and running the house on battery power during the one hour peak loads. He also visualizes local manufacturing of the many batteries required (22) The one hour peak load on cold winter days exceeds the average for the day by 13-17%.(post 21). Prior to the LNG and mining power forecasts we could meet the peak demands for many years to come but now peak power is a major justification to build site C. Instead of using powerwalls we could use parked electric vehicles. This Vehicle to grid system is also promising (post 21) and BC Hydro does not have to pay for replacement batteries every 10 years.

With all this good environmental news it is very important to make enough money available to ensure that the disposal of old panels and batteries is properly regulated, and monitored. Solar modules contain some of the same potentially dangerous materials as electronics, including silicon tetrachloride, cadmium, selenium, and sulfur hexafluoride, a potent greenhouse gas. (9)

D) The importance of carbon capture and storage (CCS)

When new coal fired power plants with CCS produce electricity at 13.6 c/KWh while much cheaper renewable energy is available (3) you could wonder why we pursue this technology. Even with a carbon tax the development of renewable energy sources is not fast enough and CCS helps to reduce emissions from power plants. It can also be used to capture carbon from the atmosphere to counteract the overloading which has already occurred. CO₂ stays in the atmosphere for at least 100 years and any removal helps. The CCS technology is described in a long US government paper. (11). When using biomass energy to do the pumping it reduces the Global Warming Potential (GWP) in existing power plants from 4.44 to .25. With the new EPA rules for power plants and a possible carbon tax (post 20) the US will need CCS badly to save its coal industry. Due to CCS credits companies that use CCS can compete much easier with companies that don’t. Norway has very high carbon taxes and the savings are staggering: “It costs Statoil about $17 a tonne to squirt the CO2 into the ground, meaning it saves about $58 a tonne (the difference between the CCS cost and the carbon tax).” (23) Previously Norway had proposed to nearly doubled its carbon tax on offshore oil companies and fishing fleets allowing it to plough an extra £1bn into its funds for climate change mitigation, renewable energy, food security in developing countries and conversion to low-carbon energy sources. This shows how the taxing reduces GHG emissions, helps poor countries and enriches oil companies which will keep exporting until high global taxes slow down the demand for oil. In BC the savings would be $ 13 per tonne (30-17) but that is still significant.

Canada and China spend a lot of money on the CCS technology. Alberta’s power generation still includes 9 coal fired plants and 40 using natural gas (10). China depends on coal for 70% of its primary energy and emits more GHG than any other country. China started taxing carbon (post 20) but with CCS China can easier reach the deal it made with the US (post 20) For Canada a rapid development of CCS may get us closer to our Copenhagen commitment. As documented in post 19 a recent audit shows that without drastic changes we will only reach 7% reduction rather than the 17% agreed upon. When flipping through the auditor’s report (12) or a Macleans article on the subject (13) it is clear that a lot of work has to be done in a hurry. Canada has 2 of the 21 world’s operating CCS plants (14). China has at least 6 large scale fully integrated projects(LSIP), driven by state owned power companies with help from major international partners (15). A recent article describes the GreenGen project, a billion-dollar facility built with support of Peabody Energy, a Missouri firm that is the world’s biggest private coal company. The author notes . “ Part of a coming wave of such carbon-eating facilities, it may be China’s—and possibly the planet’s—single most consequential effort to fight climate change”(16)

The importance of CCS is also stressed by a professor in economics who has for years studied the economic aspects of pricing resources based on how they affect the environment. He is co-author of a recently published book “Rediscovering Sustainability” . In a recent article he had this to say in about CCS . “ CCS is needed both for the removal of CO₂ generated by processes other than power generation and for bringing back the CO₂ content of the atmosphere to a more sustainable level” (17)

I learned that CCS from the atmosphere is being used. Also knowing that China captured carbon and stored it in soft drinks I did a further search and found some optimistic data including that a lot of the captured carbon can be used in processes rather than having to be stored underground:

“Capturing CO2 directly from the air allows emissions originating from any source to be managed with standardized scalable industrial facilities. Our full-scale design, for example, could absorb the emissions created by 300,000 typical cars. Direct air capture can remove far more CO2 per acre of land footprint than trees and plants. Air capture produces a stream of pure CO2 as its principal output”. (18) “The idea of capturing carbon dioxide emissions and using it to fizz soda products like Coca-Cola was discussed by an Australian government agency’s Energy White Paper as a possible means of using captured carbon emissions.”(19) Millions of tonnes of carbon dioxide are safely transported each year around the world, for example in the soft drinks industry.”The U.S.A. has several decades experience of transporting and injecting carbon dioxide for enhanced oil recovery.(24) It's estimated that 3,299 tonnes of carbon dioxide are released every day from people drinking Coca Cola alone, according to an article in the Herald Sun. So if the gas came from a recycled source, it could play a small role in helping the environment.(20)

E) Cimate change

I don’t document climate change like I did carbon tax but from what I saw in the news I conclude that the greenhouse gases in the atmosphere trap heat and cause the polar ice to melt. That creates more open water which absorbs the heat rather than reflect it like the ice does. The temperature changes in the sea cause part of the climate change. Today, 25 May 2015 we hear of hundreds of people in India dying due to 48^oC heat and dry wells. Close to home many people lost all they had due to flash floods in Cache Creek. At the same time tornadoes and huge floods caused great havoc and deaths in Texas and Oklahoma. Previously we saw how California crops were destroyed by drought and power reservoirs running out of water. These conditions will worsen unless you, young people promote a global carbon tax. It is the best tool to combat climate change. So please promote it as suggested in the summary

F) Origin and purpose of this blog

In 2012 I realized that Enbridge’s Northern Gateway pipeline proposal met a lot of opposition due to our environmental record, our carbon tax policy and Enbridge’s catastrophic Kalamazoo spill. In January 2013 I read the advertisement and table of contents of a new book “Rediscovering Sustainability”, which, among many economic aspects deals with carbon pricing. I sent an email to our Prime Minister Mr Harper to make him aware of this book with the suggestion to soften his stand on carbon tax.

Since that first email I kept looking at websites and discovered many aspects of our problems, hardly ever discussed in the media. On the environmental side I found how badly we are rated by other countries and why. I also saw that at that time Alberta lost 20-30 billion dollars per year in revenue due to pipeline delays. I saw that the Kalamazoo spill was caused by using instrumentation which can only detect large spills and misses some of them due to misinterpretation. The Kalamazoo spill was caused by many known but unattended cracks, some of them combining into a large rupture which was allowed to spill for 17 hours due to misinterpretation of the instrument signals. I learned how all these problems can be avoided. In 2 further emails to our PM and 5 to Enbridge I showed with reference to websites how much bad news there is around and suggested to make more positive news available to the public. The PMO assured me that all points have been carefully considered, while Enbridge thanked me for my interest and support.

After having collected so much information I figured it may be very useful to others so I started this blog. I kept on adding new discoveries but also repeated a lot in subsequent posts. This post 22 covers the most important material of previous posts plus new data on solar panels, Tesla batteries and the importance of carbon capture and storage.

G) Comtents of previous posts

Post 1 contains the points raised in the emails to the Canadian Prime Minister and Enbridge, It shows how carbon pricing works, how it is accepted by many countries and how well it works, It shows in detail how several organizations are not aware or ignore how the collected tax is returned to those who paid for it by publishing completely wrong figures on how the tax affects households. The post shows how the Kalamazoo spill was caused and what has to be changed to prevent such disasters. It covers some design aspects for pipelines and at the very end is a list of unanswered question about pipelines and marine transportation.

Post 2 shows that a number of technical questions related to the Enbridge pipeline will also apply to the Kinder Morgan line

Post 3 gives a summary of all data collected prior to October 2013

Post 4 discusses the safety record of oil tanker traffic and refers to some regulations . It also notes that some questions brought up at the enquiry have as yet to be answered.

Post 5 repeats the unanswered questions shown in post 1 , Enbridge has a copy of post 1 with a note that at the very end there is this list of unanswered questions.

Post 6 explains that due to the BC carbon tax refunds, business taxes are so low that US companies buy their US coal through Canadian subsidies and ship through Canadian ports to avoid higher US taxes.

Post 7 documents how fast the GHG emissions are rising and that some major oil companies support a carbon tax. It also shows that the British Columbia tax system will be used as a model for Oregon and Washington to join the Pacific Coast Collaborative, signed in October 2013. This will bring carbon pricing to 4 states and one province with a combined population of53 million people and a GDP of $2.8 trillion

Post 8 notes that support for the Enbridge pipeline increased from 35% to 42% but that the Canadian Prime Minister does not help the project by congratulating his Australian counterpart following repeal of the carbon tax by a narrow margin.

Post 9 copies under the heading “Pipeline and Carbon tax update “ a focus article I wrote for a local paper. This was suggested by a columnist after I supplied specifications and laboratory test results of diluted bitumen .That ‘dilbit’ had become a controversial subject in one of their articles. From the comments the columnist made I gather it is too controversial: “I've learned in a hurry that pipeline companies are ready to charge will all guns at the ready “ not surprising, since they have a lot to lose if they don't get their permits.” The paper also wanted to know my background and "where you come from" on the topic. Things like, whether you belong to the corporate side, the environmental side, political, etc.”. It shows how at the end of 2013 the main media was still hesitant to discuss the real problems about pipelines and required oversight.

Post 10 gives more details about carbon tax and shows the link to the BC government tables. These tables show year by year how much tax was collected and how all of it was refunded to individuals and businesses. At present there are 17 refund categories.

Post 11 is a copy of an update which I send from time to time to family and friends. This one was in January 2014

Post 12 explains why 3 major oil companies and the world’s third largest airline signed communiqués demanding a carbon tax. Also shown is the importance and type of business of 5 major multinationals who signed the communiqués along with more than 1000 business from over 60 countries. In contrast politicians still don’t know or ignore how a revenue neutral carbon tax works resulting in at least one totally misleading statement in the house. It is analysed together with the energy and cost savings by using heat pump systems instead of natural gas

Post13 gives a summary of all posts till May 2014

Post 14 highlights a few politicians who don’t even mention carbon tax and tell the public how much our oil exports contribute to the global emission as if we are the only country which can supply the increased demand

Post 15 reconfirms that despite increased rail shipping of oil, Alberta still loses $ 15 billion per year in revenue. It is argued that lots of money will be well spent to ensure that all the rules and regulation pertaining to tanker design, operation, maintenance and navigation are followed. These rules and regulations are summarised and explained by a chief engineer who during his 37 years at sea has spent most of his time in BC waters, knows the particular inlets well, has had many conversations with other mariners has been in rough weather himself and concludes the tanker transport is safe provided all the rules and monitoring of ship movements from a control tower are followed.

Post 16 shows once more how many major companies demand a carbon tax. In addition there is an analysis of the June 2014 US announcement that power plants have to cut emissions to 30% below 2005 levels by 2030

Post 17 calculates that based on August 2014 prices and a global tax identical to the BC tax the price of thermal coal would go up by 70% and crude oil by 9%.

Post18 documents how due to pipeline protests the railways are replacing pipelines. There is already sufficient equipment on order to supply the Gulf Coast refineries with as much oil as the Keystone XL pipeline can carry. In BC the controversial Enbridge and Kinder Morgan pipelines can be replaced by the much studied G7G railway which would bring the oil to Alaska for shipment through the under-utilized port of Valdez, which is 2 days closer to Asian destination. First Nations prefer this over the pipelines because it eliminates additional tanker traffic through BC waters.

Post 19 shows how outdated Canada’s carbon tax policies are and how difficult it will be to change course unless the public gets more involved in the details

Post 20 compares the figures of the US-China deal with recent commitments in European countries The US has a well defined carbon tax bill under review. It would achieve the drastic EPA emission reductions while collecting lots of money including from countries without carbon tax by imposing import duties (border tax adjustments).

Post 21 looks at many details of BC Hydro’s operation and the Clean Energy Act, which requires BC Hydro to buy all the renewable energy which independent power producers (IPP’s) can supply. Since the system has to be self sufficient under the worst peak load conditions there is a lot of excess capacity which can only be sold at a huge loss until a global carbon tax has been established. Since BC is an ideal province to develop windpower it is shown that by increasing it from 1.5% to 20% BC could send 45% of its electricity to Alberta. That province uses a lot of fossil fuel energy for oil extraction and by replacing it with green energy the Alberta oil would be more acceptable to the public

1 http://www.windenergyfoundation.org/interesting-wind-energy-facts (131)

2 http://www.lazard.com/PDF/Levelized%20Cost%20of%20Energy%20-%20Version%208.0.pdf (153)

3 http://www.eia.gov/forecasts/aeo/pdf/electricity_generation.pdf (62)

4 http://news.nationalgeographic.com/news/energy/2014/11/141111-solar-panel-manufacturing-sustainability-ranking/ (150)

5 http://www.theresearchpedia.com/research-articles/latest-developments-in-solar-panel-technology (150)

6 http://www.greenerideal.com/alternative-energy/0207-new-developments-in-solar-panel-technology/ (149)

7 http://arstechnica.com/information-technology/2015/05/teslas-new-powerwall-home-battery-will-cost-3500-for-10kwh-units/ (155)

8 http://www.treehugger.com/clean-technology/week-after-teslas-powerwall-battery-announced-sold-out-mid-2016.html (152)

9 http://www.theguardian.com/environment/2010/sep/03/solar-panels-ewaste (151)

10 http://en.wikipedia.org/wiki/List_of_generating_stations_in_Alberta (156)

11 ((http://www.netl.doe.gov/publications/proceedings/01/carbon_seq/p4.pdf) (22)

12 http://www.oag-bvg.gc.ca/internet/English/att__e_39876.html (157)