Though it is often ignored in national conversations about renewables, wood energy dominates renewable energy portfolios in many developed countries—and is poised for exponential growth. Francisco Aguilar sets the record straight about this salient energy source.
Considered to be the first form of energy harnessed by humans, wood was long the primary source of heat and illumination for people in every corner of the globe. Today, it is estimated that more than 2 billion people in developing countries rely primarily on wood and other forest products for their daily cooking and heating needs, causing the public to associate the use of such resources with tropical deforestation and poverty. Meanwhile, energy headlines in developed economies have been dominated by stories about coal and oil since the mid-1800s, making it easy to forget that the exploitation of those fossil sources by humans has been a relatively recent development.
Both ideas—that energy derived from forests is used primarily in developing nations and that its importance in the energy portfolios of developed economies is negligible—fail to capture the reality of current energy markets. Wood energy represents the leading source of renewable energy in many developed countries across North America and Europe. And in the United States, wood energy accounts for 25 percent of renewable energy consumption, second only to hydropower and more prominent than wind and solar energy. This high level of generation has been achieved thanks to healthy forest resources supported by a combination of recent market and policy developments.
Wood Energy in the Twenty-First Century
The term “wood energy” refers to energy derived from solid, liquid, and gaseous wood fuels, including raw firewood, processed charcoals, pellets, briquettes, residual fibers, and black pulping liquors. Some of these fuels can be sourced directly from forests or indirectly as by-products from the wood processing and pulp industries, whereas others can be created from processed wood products that are recovered and repurposed at the end of their consumer life cycles. About 58 percent of wood fuels across the United Nations Economic Commission for Europe (UNECE) region—a group of 56 countries that includes the United States, Canada, European nations, the Russian Federation, and the Commonwealth of Independent States—come from indirect sources. The rest are attributed to direct sources (32.9 percent), recovered wood (3.8 percent), and unspecified supplies (5.4 percent).
Wood fuels are ultimately converted to energy through combustion using one of three main processes. Direct firing or co-firing with other fuels—such as coal—is likely the method most familiar to consumers and requires the least amount of pre-processing in order to render fuels usable. Woody feedstock can also be biochemically transformed (using chemicals or enzymes) into sugars for the production of biofuels, or thermochemically transformed (using heat, pressure, and catalysts) into biofuels and other co-products.
The wide range of feedstocks and conversion processes available today allows for a diversity of sectors that manufacture and use wood energy. Forest-based industrial producers, such as pulp and paper manufacturers, burn wood-based fuel to generate electricity or heat used internally to support production. So do plants designed to generate electricity or combined heat and power to sell to third parties. And residential consumers use wood-burning fireplaces or pellet stoves for home heating. Technological progress has allowed an increase in energy output while reducing the amount of associated pollution, including particulate matter, that limited wider adoption in the past.
Modern Wood Energy Markets
One of the most comprehensive sources of information about wood energy markets in developed countries comes from the Joint Wood Energy Enquiry, a survey of wood energy consumption in the UNECE region. The most recent results, from a 2011 Joint Wood Energy Enquiry answered by 27 UNECE member countries, revealed that wood energy accounted for 3.3 percent of the region’s total primary energy supply (Figure 1). Although absolute wood energy consumption tends to fluctuate in the United States and Canada, the European Union has experienced an increase in consumption of more than 104 percent in the last two decades. Notably, the share of wood used for energy jumped during the recent recession, suggesting that energy production may have provided an alternative market for wood fibers while demand for more traditional products, such as paper and cardboard, declined.
In this edition:
- Analysis on how to revise the tax code to address climate change
- Examining California’s climate policy
Federal Budget and Taxes
The White House’s recent $4 trillion annual budget request included a number of proposed changes aimed at addressing climate change through the US tax code. The plan would “strip an estimated $44 billion tax breaks over a decade” from oil and gas producers, while also permanently extending tax credits for wind and solar-energy systems.
Policymakers can also use the tax code to mitigate climate by imposing a carbon tax. Such a tax would reduce harmful emissions while raising “billions of dollars each year,” according to RFF’s Marc Hafstead and Stanford University’s Lawrence Goulder. This revenue can “serve a wide range of purposes” such as financing energy efficiency investments, financing payments to negatively affected households or firms, or reducing the federal deficit. Hafstead also notes that the revenue could be used to finance corporate tax reform to “discourage corporate tax inversions.” Read More
Each week, I review the papers, studies, reports, and briefings posted over at the RFF Library Blog.
Decarbonizing Pipeline Gas to Help Meet California’s 2050 Greenhouse Gas Reduction Goal
[Green Car Congress] A new study by Energy Environmental Economics (E3) consulting suggests that low-carbon gas fuels are a viable option for meeting California’s greenhouse gas (GHG) reduction goals and can simultaneously help achieve pollution emission reduction targets. – via Energy Environmental Economics (E3)
2013 Renewable Energy Data Book
The newly released 2013 Renewable Energy Data Book illustrates United States and global energy statistics, including renewable electricity generation, renewable energy development, clean energy investments, and technology-specific data and trends. The Data Book is produced and published annually by the National Renewable Energy Laboratory (NREL) on behalf of the Energy Department’s Office of Energy Efficiency and Renewable Energy… – via National Renewable Energy Laboratory (NREL)
Historical Hydraulic Fracturing Trends and Data
Two new U.S. Geological Survey publications that highlight historical hydraulic fracturing trends and data from 1947 to 2010 are now available… – via USGS
The Guidance Manual on Valuation and Accounting of Ecosystem Services for Small Island Developing States
The global net loss of the coral reef cover will cost the international economy an estimated US$ 11.9 trillion, with SIDS [small island developing states] especially impacted by the loss. – via United Nations Environment Programme (UNEP)
Map of US Dam Removals 1936-2014
Few things have such a fundamental impact on a river as a dam. Dams block a river’s flow and can harm clean water, fish and wildlife, and recreation opportunities. American Rivers has pioneered a science-based approach to the removal of outdated dams. – via American Rivers
This post originally appeared on Robert Stavins’s blog, An Economic View of the Environment.
At the recent climate negotiations at the 20th Conference of the Parties (COP-20) of the United Nations Framework Convention on Climate Change (UNFCCC) in Lima, Peru, a very important issue was left on the table, unresolved: Will the 2015 Paris Agreement (scheduled to be signed in December of this year at COP-21) facilitate – or at least avoid inhibiting – international linkage of national (and for that matter, sub-national) climate policies?
In the Durban Platform for Enhanced Action, adopted by COP-17 in 2011, negotiators agreed to develop a new legal instrument “under the Convention applicable to all Parties,” for adoption at COP-21 in December, 2015, in Paris. With the Lima talks now behind us, it appears that the 2015 agreement will reflect a hybrid climate policy architecture—one that combines top-down elements, such as for monitoring, reporting, and verification, with bottom-up elements, including “Intended Nationally Determined Contributions” (INDCs), describing what a country intends to do to reduce emissions, based on domestic political feasibility and other factors. (I wrote about this in Assessing the Outcome of the Lima Climate Talks, posted on December 14, 2014.)
Can the Aggregation of INDCs be Cost-Effective?
A major question facing negotiators is how can the new hybrid policy architecture encourage greater ambition, while remaining true to the principle of “common but differentiated responsibilities.” A key answer to that question is to allow for the linkage of heterogeneous national policy instruments. Why do I say that?
Here’s the reason. An attribute of the Paris architecture that will encourage greater ambition over time is cost-effectiveness. (Another key attribute to encourage greater ambition is comparability of INDCs, a topic on which we’re also working at the Harvard Project on Climate Agreements, about which I will write in the future.) To enhance the cost-effectiveness of the new system, a key feature will be linkages among regional, national, and sub-national climate policies. By linkage, I mean formal recognition by a greenhouse gas (GHG) mitigation program in one jurisdiction (a regional, national, or sub-national government) of emission reductions undertaken in another jurisdiction for purposes of complying with the first jurisdiction’s mitigation program.
Linkage can be straightforward, as with the bilateral recognition of allowances under two cap-and-trade regimes, but – importantly — linkage can also take place among a heterogeneous set of policy instruments, such as between systems of performance standards, carbon taxes, and cap-and-trade.
Linkage in the Paris 2015 Agreement
In a new paper that was released by the Harvard Project on Climate Agreements at a packed “side event” in Lima, my co-authors – Daniel Bodansky of Arizona State University, Seth Hoedl of Harvard Law School, and Gilbert Metcalf of Tufts University – and I analyze theoretical issues relating to linkage among heterogeneous climate policy instruments and apply this analysis concretely to the 2015 Paris agreement. In “Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies Through a Future International Agreement,” we examine how the agreement can help facilitate the growth and operation of a robust system of international linkages of regional, national, and sub-national policies, as well as how inappropriate or excessive rules could obstruct effective, bottom-up linkage. Importantly, both economic and legal perspectives are represented in this research (which was supported by the International Emissions Trading Association (IETA) and six of its member companies: Chevron, GDF-Suez, Global CCS Institute, Rio Tinto, Shell, and TransCanada)
Key Findings from Research
First, there are a number of design elements the 2015 agreement should avoid, because they would inhibit linkage. These include “supplementarity requirements” that require parties to accomplish all or most of their emissions-reduction commitments within their national borders. The 2015 agreement also should avoid including detailed linkage rules in the core agreement; an agreement with more flexibility would allow rules to evolve on the basis of experience.
Second, to advance linkage, the 2015 agreement should: define key terms, in particular the units that are used for compliance purposes; establish registries and tracking mechanisms; and include default or model rules, from which nations are free to deviate at their discretion.
The most valuable outcome of the Paris Agreement regarding linkage may simply be including an explicit statement that parties may transfer portions of their emissions-reduction contributions to other parties—and that these transferred units may be used by the transferees to implement their own commitments.
It sounds simple, but a small but vocal set of (largely socialist) countries – including Bolivia, Venezuela, and Cuba – have vehemently opposed in the climate negotiations anything that looks remotely like a market, and will try hard to prevent such provisions from appearing in the 2015 agreement.
As the negotiating teams from 195 countries prepare to meet this month in Geneva, Switzerland, and in June in Bonn, Germany, the question remains of whether the 2015 Paris Climate Agreement will allow for and indeed facilitate international linkage of national and sub-national policies, and thereby encourage cost-effectiveness and greater environmental ambition. Over the next several months, the answer to this question will become clear.
Superstorm Sandy’s total losses have been estimated at $65 billion. The president issued a disaster declaration and Congress approved more than $50 billion in supplemental funding for post-storm recovery. More than two years later, the northeastern coastal regions of the United States are still rebuilding, and much of that aid has yet to be allocated.
RFF’s Carolyn Kousky and Leonard Shabman have been investigating federal disaster aid. They compared the Sandy supplemental to the 2012 outlays for federal agencies and found that it was greater than the amount spent by the US Environmental Protection Agency, National Aeronautics and Space Administration, State Department, Department of Justice, Department of Energy, and many others (Figure 1). As the costs of these disasters to the taxpayers have been rising, the number of presidential disaster declarations has been growing significantly over time (Figure 2).
Most of the Sandy supplemental funds were designated as “emergency” spending for immediate recovery and thus are exempt from the normal appropriations process and budget caps. But affected individuals and households will only receive a fraction of the funds. Funds primarily were used to cover the costs to local governments, provide assistance to businesses, and rebuild infrastructure. In addition, the supplemental is funding many projects to reduce the damage from future storms. Though future-oriented projects may be worthwhile investments, many had not been considered justified before the storm. According to Kousky and Shabman, “If Congress is going to spend billions of dollars on future risk reduction, a more deliberate approach would evaluate risks around the country, assess the risk reduction investments, and then allocate funding to maximize the benefits.”
Note: Register now for RFF’s First Wednesday Seminar on February 4, Toward a Global Climate Change Agreement: Comparing Countries’ Levels of Effort.
In this edition:
- Results from an RFF/NYTimes/Stanford poll on American attitudes on climate change
- Commentary on China’s ability to chart a path toward green growth
RFF/NYTimes/Stanford Climate Poll
On Friday, the New York Times published results from a new poll on American attitudes toward climate change, conducted by the Times, RFF, and Stanford University. The findings revealed that “an overwhelming majority of the American public, including nearly half of Republicans,” is in favor of government action to mitigate climate change.
The survey also showed that two-thirds of Americans would be more likely to support political candidates who want to combat climate change—a result that “could have implications for the 2016 presidential campaign.” In a press release on the poll’s results, RFF president Phil Sharp said, “The American people seem far more unified than our political leadership on the need to address climate change. As often happens, politicians would do well to catch up with the electorate.” The poll is the latest in a series by RFF and Stanford, and can be found at www.rff.org/climatesurvey. Read More
Each week, I review the papers, studies, reports, and briefings posted over at the RFF Library Blog.
Modelling Adaptation to Climate Change in Agriculture
This paper investigates how climate change can affect agricultural production and proposes some adaptation measures that could be undertaken to mitigate the negative effects of climate change while enhancing the positive ones. The paper stresses the importance of planned adaptation measures and highlights possible strategies for reducing risk and improving resilience. To quantify the possible effects of climate change and the effects of adaptation measures this study uses the International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT). The analysis first explores the potential effects of climate change on yields and prices. It then goes on to analyse the potential impacts of two distinctive sets of adaptation strategies on yields, prices, and food security, namely: i) research and development (to develop new crop varieties that are better suited to changed climate conditions) and ii) changes in irrigation technology. Last, the analysis in this paper estimates the public and private investment needs in research and development (R&D) for developing new crop varieties, and further develops estimates of the cost of improving irrigation technologies in OECD countries. – via OECD / by Ada Ignaciuk and Daniel Mason-D’Croz
Shale Gas and EU Energy Security
While the United States has abundant supplies of cheap gas thanks to the ‘shale revolution’, the EU remains dependent on gas imports. The Ukrainian crisis has given rise to increasing concerns about the security of the EU’s gas supply. At the request of the European Council, the European Commission has analysed the situation, and published a European Energy Security Strategy. Among other elements, the strategy focuses on increasing energy production in the EU and diversifying external supplies. – via European Parliamentary Research Service
Fracking Failures: Oil and Gas Industry Environmental Violations in Pennsylvania and What They Mean for the U.S.
[From Executive Summary] …In Pennsylvania, fracking companies violate rules and regulations meant to protect the environment and human health on virtually a daily basis. Between January 1, 2011, and August 31, 2014, the top 20 offending fracking companies committed an average of 1.5 violations per day. – via Environment America
The Adoption of New Smart-Grid Technologies Incentives, Outcomes, and Opportunities
Abstract: Studies in the academic and gray literatures have touted the potential large-scale benefits of a smart grid for the United States. Despite an overall lack of technological constraints, however, the empirical evidence shows a potential gap between ex ante expectations and ex post realizations of the benefits of modernization, as well as some reluctance on the part of utilities and consumers to adopt or use the technologies as expected. The surge in technological deployment during the early 2010s, in fact, was a result of federal funding via the American Recovery and Reinvestment Act of 2009. In this report, RAND Corporation researchers review the current technical, regulatory, and economic context of the electricity market and theoretical benefits of developing a smart grid. They then discuss some of the entrepreneurial opportunities associated with smart-grid data once the grid is fully modernized. Next, they examine the existing empirical evidence related to smart-grid adoption and implementation and investigate the potential reasons for these experiences. Finally, they offer some policy suggestions that might help overcome the identified barriers and discuss their relative merits. - via Rand Corp.
Global Supply Chains Ignoring Climate Change Risk: Carbon Disclosure Project Study
[GreenBiz.com] Climate change warnings keep growing more dire, and the world’s business leaders now even cite water crises and extreme weather as top economic risks. And yet the supply chains leading to many of the world’s biggest companies reflect only middling attention to these issues. - via Carbon Disclosure Project
By Shanjun Li, Han Kyul Yoo, and Jhih-Shyang Shih.
Americans produce about 4.4 pounds of waste per capita every day, according to the latest information from the US Environmental Protection Agency (EPA). About 65 percent of that waste—a total of about 164 million tons each year—is disposed in landfills. But is burial in a landfill the end of the story? Not at all. The organic matter in landfills is eventually broken down by bacteria. This process produces an abundance of gases, including methane. In fact, landfills represent the third-largest source of methane emissions in the United States. Methane is a potent greenhouse gas and thus a concern—but it increasingly is being captured and used to power homes and other establishments.
The first landfill gas energy projects started operation in Wilmington and Sun Valley, California, in 1979. Today, more than 630 US landfill gas energy projects generate 16.5 billion kilowatt hours of electricity per year—equivalent to the electricity consumption of 1.5 million homes—and deliver 317 million cubic feet per day of landfill gas to direct-use applications. EPA has identified an additional 450 landfill sites for the potential development of energy projects.
However, these projects come at a price. Between 1991 and 2010, the average cost for a landfill gas energy project to generate a kilowatt hour of electricity was 4 to 5 cents. The wholesale electricity price was 2.5 to 3 cents during that same period.
Given the important energy and environmental benefits of these projects—and the potentially prohibitive price tag—state and local governments use various policy tools to encourage municipal landfills to adopt them. But do these incentives work?
To answer this question, we conducted the first in-depth analysis of the factors that affect project adoption, primarily using two datasets: a database of potential landfill sites for landfill gas energy project development from EPA’s Landfill Methane Outreach Program and a database of state tax incentives and renewable portfolio standards from the Database on State Incentives on Renewable Energy and Efficiency, maintained by North Carolina State University. We looked at policy variables, the physical characteristics of landfills, and energy prices. Our focus was on four types of government policies that offer incentives to landfill gas energy projects: renewable portfolio standards, production tax credits, investment tax credits, and state grants.
President Obama touched on a number of environmental issues during last week’s State of the Union address, emphasizing that “no challenge poses a greater threat to future generations than climate change.” Read on for analysis by RFF researchers on the policy ideas mentioned throughout the address.
On regulating carbon emissions:
- In RFF’s Expert Forum on the Clean Power Plan, leaders from the public and private sectors answer 10 questions about EPA’s proposal to cut power plant emissions—from increasing the efficiency of coal plants to improving energy efficiency.
- In an RFF webinar series cohosted with the Electric Power Research Institute, experts explore the costs and benefits of EPA’s Clean Power Plan.
- RFF experts examine the electricity price impacts of a carbon tax, which they note would be smaller across states than across income groups.
On climate change:
- An RFF/Stanford/USA Today survey reveals that 81 percent of Americans think the government should limit US greenhouse gas emissions.
On falling gas prices:
- Stephen Brown explains why falling crude prices will boost economic activity in 42 states and DC, while negatively affecting eight other states that depend on energy production exports.
- Alan Krupnick notes that low oil prices will affect the US production of tight oil when companies’ rates of investment return begin to fall.
On fuel efficiency standards:
- Joshua Linn explains the tradeoffs between fuel efficiency and other technologies—like horsepower—that occur when manufacturers respond to tightening fuel economy standards.
On the US agreement with China:
- Phil Sharp writes that “attention to the environment by federal and state governments … has created a major American asset,” noting that both countries have much to learn from one another.
- Nathan Richardson cautions against optimism, noting that “[even] controlling local air pollution is not sufficient to reduce [China’s] dependence on coal.”
Each week, I review the papers, studies, reports, and briefings posted over at the RFF Library Blog.
Massachusetts Low Gas Demand Analysis: Final Report
[Fierce Energy] Prioritizing energy efficiency, renewable energy, and imports of Canadian hydroelectricity would reduce Massachusetts’s exposure to wintertime price spikes that result from the state’s growing dependence on natural gas for heating and electricity generation. That is according to a new analysis conducted by Synapse Energy for Acadia Center, a non-profit, research and advocacy organization with a self-described commitment to advancing the clean energy future. – via Synapse Energy for the Acadia Center
Climate Change and Space Heating Energy Demand: A Review of the Literature
This paper reviews recent evidence on the potential impacts of climate change on energy demand for space heating in residential and commercial buildings. We cover two main topics. First, we review empirical studies of the historical relationship between temperature and energy use for heating and cooling. These studies show consistent evidence of a U-shaped relationship between temperature and energy demand, in which energy use for heating is greatest at very low temperatures, and energy use for cooling is greatest at very high temperatures. The temperature at which energy use is minimized varies across geography and time periods, but in most studies is between 53°F and 72°F (12°C and 22°C). Second, we review studies that estimate how climate change will affect future energy use for space heating and cooling. – via US EPA, National Center for Environmental Economics / by Matthew Ranson, Lauren Morris and Alex Kats-Rubin
Commercializing Second-Generation Biofuels: Scaling Up Sustainable Supply Chains and the Role of Public Policy
The promise, prospects, and public policy trade-offs related to the greater use and production of second-generation biofuels were addressed in an executive session convened by the Harvard Kennedy School on November 13 and 14, 2014. The session attracted more than 25 of the world’s leading experts from the fields of policy, science, and business for an intensive two day session. The agenda consisted of three sessions focused on (i) the sustainability of cellulosic supply chains, (ii) government policy options to attract investment and (iii) government policy options to ensure that environmental objectives are met. The discussions were off-the-record, with each participant present in his or her own capacity, rather than representing an organization. This report is a summary of the main points and issues raised over the two days. – via Rapporteur’s Report, Energy Technology Innovation Policy research group, Belfer Center for Science and International Affairs, Harvard Kennedy School / by Joern Huenteler, Laura Diaz Anadon, Henry Lee and Nidhi R. Santen
The Economic Importance of the Colorado River to the Basin Region
[Wall Street Journal] A new study for the first time quantifies the economic importance of Colorado River water to seven Western states—and the dire outcome should ongoing droughts dry up even a portion of it. – via Carey School of Business, Arizona State Univ. / by Professor Tim James, et al.
New York Ocean Action Plan
The New York Ocean Action Plan (OAP) is a coordinated and inclusive effort focused on improving the health of our ocean ecosystems and their capacity to provide sustainable benefits to New Yorkers. Together, scientists, resource managers, and a wide range of stakeholders will take stock of New York’s ocean-related activities and programs. Through a ten-year action plan, the goal of the OAP is to achieve better-managed and healthier ocean ecosystems that will benefit people, communities, and the natural world. Grounded in short-term actions to reach long-term goals, the OAP will guide State government funding, research, management, outreach, and education choices. – via New York Dept. of Environmental Conservation