Back in the mid-1980s, a cartoon depicted a sodden and visibly degenerating group of Canadians peering forlornly south of the border as rain fell-acid rain as it turned out spiced by the sulfurous output from a hundred coal-burning power plants in the Northeast U.S. “Dang fool Canadians ain't got the common sense to get out of the rain.” commented a group of perfectly dry American industrialists looking north.
Thirty years later in a new environmental era, and carbon dioxide (CO2) is the gas that gets the cartoonists in a lather. More significantly, the U.S. Supreme Court has finally ruled on CO2 as an “endangerment” to public health. While still not officially recognized as a full-blown pollutant, those holding the legislative reins are helping to swing the numbers away from those who still think that CO2 is nothing more than plant food, and a threat to nobody.
George Schulz, who served in three separate administrations, recently looked north of the border to British Columbia to point out the apparent success of taxing carbon dioxide to try to stem the threat of global warming. Surprisingly popular with the citizens of B.C., it has not been met with the same level of enthusiasm by the concrete and cement sector.
Technically, a tax on carbon rather than CO2 ( hence, carbon tax) and levied on combustion rather than process emissions has just ramped up to its peak at $30 per ton in July from an initial $10 per ton when it was introduced four years ago. The tax effectively adds almost 1.8 cents to a gallon of gasoline, between $53 and $62 per ton on coal, and more than $75 on coke.
An operator choosing to burn shredded tires now faces an additional cost of $72 per ton. All this extra cost has a cost of its own-the importation of untaxed cement (mostly from China and neighboring Washington State) has risen from below 4 percent to an unprecedented 27 percent of the total since the tax was imposed. This is the dreaded “carbon leakage.”
Taxing carbon and trading carbon are seen as the two main mechanisms to curb emissions, but they are not mutually exclusive. Both can coexist to serve a common purpose, but so far, we haven't seen it.
Good for U.S. producers?
While the tax is unpopular among concrete producers in British Columbia, would U.S. producers be in a better position to get involved in emissions trading, either at the facility level or within an industry association? The regional U.S. trading initiatives are proving slow to get going. Even though the Western Climate Initiative has been hemorrhaging members at a greater rate than it has been picking up official “observers” (including several concrete-producing and heavily-emitting Mexican states), it has managed to unite two jurisdictions as geographically remote and ideologically distant as California and Quebec.
Based on the recent European experience, the problem with emissions trading is in the details, especially the administrative burden of establishing a functioning system. The complexities of validation and verification of the data takes a toll.
Amidst an entirely new industry of carbon brokerages and commissioned agents, and the unfortunate carousel fraud and computer phishing episodes that derailed the recent EU trading experience, the key question is, how do U.S. producers stack up in the arena of data quality?
To its credit, California, operating under its Air Resources Board, has delayed the compliance requirements of its proposed emissions Cap and Trade scheme until the beginning of 2013. As the highest volume cement producer in the U.S., other states will look West for leadership.
At the federal level, where Cap and Trade legislation faltered in Congress in 2009, the U.S. EPA has undertaken detailed analysis of industrial emissions across a range of operations and activities that compares favorably with anything that the Europeans have achieved, including the Germans who largely serve as the quality assurance benchmark within the European standards arena.
If U.S. concrete producers launch a full-blown emissions trading program, would the data stand up to scrutiny? If the focus falls on CO2 in the first instance, the answer would be probably not. The EPA's use of Emissions Factors for various gaseous releases (collectively entitled AP-42) grades the quality of the data available from operating facilities on a scale of A (highly credible and representative based on data from multiple sites ) to E ( highly randomized and statistically invalid based upon limited data sets.).
Within concrete production there is still too much uncertainty. Where the various Emissions Factors from combustion processes are well documented and consistently return an A-Grade for data quality, the same cannot be said for the various components of concrete production itself. CO2 emission factor ratings for portland cement production are classed as Grades D or E. Construction sand and gravel processing operations score a D, but CO2 data quality rises to a B for operations using a fluidized bed dryer.
Emissions Factors derived for processing lightweight aggregates score high for reliability with a minimum of Grade B for CO2 data, using the Fyrite method (chemical absorption). Using wet scrubber technology generally raises the grade to at least a B. The numbers of pulverized and crushed stone are not impressive (between Grade C and E) but does draw the distinction between 'controlled' and 'uncontrolled' emissions-a rather arbitrary 1.5 percent moisture content being the benchmark, typically derived from whether wet suppression was used to control.
Quality emissions data
It reflects far more upon the EPA than the industry itself that the highest quality of emissions data of all 14 industry groups is for batch concrete processing. The significance of wind speed and moisture levels in influencing emissions factors have been computed to levels of unprecedented precision using powerful statistical tools such as regression analysis. But all the high-class data are for particulates and controlled metals on all operations from silo-filling to truck-transfers, and nothing exists for any tradable commodity such as CO2 .
So even if U.S. concrete producers collectively get their CO2 emissions fully accountable, what would they face in terms of trade? Could ready-mix producers in Arkansas do an emissions deal with a counterpart in Canada or Mexico?
Looking at the U.S. experience, the key is to keep it simple. The fear of carbon leakage (offshoring production to unregulated jurisdictions) has been the reason for the issuing free allowances within some Cap and Trade schemes, most notably in the EU. Devaluation of the allowance price effectively rendered the European experiment an abject disaster, with an allowance price currently languishing in the area of EUR7 per tonne, and leaving little incentive for emitters to get too excited about trading .
What does seem certain, however, is that if and when CO2 trading gets underway in the U.S. heavy-emitting industries, there will be an element of auctioning in place. The very first U.K.-based emissions auction generated a lot of interest but relatively little participation.
U.S. participation so far has been comparatively successful. The Regional Greenhouse Gas Initiative, targeting a 10 percent reduction in CO2 from coal-powered electricity production in the Northeast, auctioned off 100 percent of its allowances in the first and only round, with no free allowances dispensed. The success lay with an independent research company enlisted to do the necessary groundwork and design. The auction itself accounted for a tiny fraction of the time and budget allocated.
Every year, the U.S. completes sulfur dioxide auctions as part of the acid rain mitigation program, usually without a hitch. Extending the principles into a sectoral CO2 trading program, including concrete producers, should not be difficult once the data is verified for specific facilities. There is some way to go on that, however .
Would recycling concrete generate any credit in terms of greenhouse gas trading ? The EPA's own 2010 research is mired in uncertainty. According to the Construction Materials Recycling Association, about 140 million short tons of concrete are recycled annually in the U.S. Whether or not recycling cement actually rehydrates some cement and therefore delivers some benefit is equally undocumented.
The EPA's analysis did suggest that recycling concrete (reusing as crushed aggregate, as opposed to the use of 'virgin' mined aggregate) was about four times less harmful than landfilling used concrete, due entirely to transportation emissions in delivery to the landfill site.
Whether or not these emissions are offset, or foregone, by avoiding landfill, and generate tradable credit is a matter that the forestry industry has been wrestling with from the implications of land use change. This has kept delegates at the annual climate change conferences occupied for years. Perhaps now is the time to invite concrete producers to the next one.
Peter Ion is a free-lance author specializing in environmental issues. Email firstname.lastname@example.org.