Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?
Carbon Sequestration: Robin Hoods of the Forest?
says utilities are investing considerable sums to offset emissions through forest sinks, which proves that they are taking it seriously.
Environmentalists generally are proponents of more federal regulation (em which pits them against industry, he says. Political agendas often aren't about the environment (em they're about regulation, Sampson says. What they don't want is a quick and easy answer, he adds.
Several companies have looked to developing countries for sequestration projects. Besides enhancing the global picture, such projects can be more cost-effective than similar U.S. programs. But opponents argue that forest set-asides in foreign nations are precarious, due to a lack of control, particularly in developing countries, and are not as easily monitored. These countries typically have different land laws than the U.S., and the permanency of a project might be questionable.
So while Pedery acknowledges there have been some good efforts to offset emissions through sinks in the U.S., the real problem Sierra Club has is with the push in developing countries. Domestically, the Sierra Club doesn't have an official position (em "As long as it's a real concrete plan."
John Novak of the Edison Electric Institute says a lot of political problems are associated with foreign forest acquisition. "The U.S. goes into another country, buys up land and says, 'You can't use this for the next 100 years.' That's a little bit much. Sure, there are significant issues here that need to be resolved."
He still insists, however, that the projects should be encouraged, because if a country and its companies have to meet a CO2 emissions cap, these options are low-cost compared with others. Analysis shows that to meet 1990 emissions levels in 2010, a $100 per ton of carbon equivalent tax would have to be levied; carbon sinks cost $5 to $10 per ton, he says.
It isn't common practice, however, for a utility to actually purchase the land targeted for a set-aside. Often, an environmental easement is negotiated, in which the landowner is paid to maintain the land as forested and continues to hold title.
An early project, the Rio Bravo Carbon Sequestration Project, involved Wisconsin Electric Power Co., Cinergy Corp., Detroit Edison Co., and PacifiCorp. The utilities, along with UtiliTree, The Nature Conservancy and Programme for Belize, jointly purchased 14,400 acres of forest and continues to manage a total of 120,000 acres in Rio Bravo, Belize.
One of the most recent international sequestration projects took place in Bolivia, the largest such project undertaken to date, setting aside 5 million acres of endangered tropical forest. American Electric Power, The Nature Conservancy, and Fundacion Amigos de la Naturaleza joined to form the Noel Kempff Mercado Climate Action Project, responsible for the set-aside. Noel Kempff could absorb up to 53.2 million metric tons of CO2 over the 30-year life of the project.
While the acreage was declared a national park, its future beyond 30 years isn't clear, according to Pat D. Hemlep, AEP spokesman. "The fact that this has been declared a park goes a long way," he says. AEP expects discussions on the land's future to