Bookmark

BUSINESS WEEKLY

GLOBE EVENTS


QUICK POLL

Will investment in cleantech dry up in today’s financial climate?

Yes
No
submit view results

THIS WEEK'S MARKET REPORT

GLOBE-Net Special Feature

A Primer on Climate Change and Carbon Trading

What can be done about climate change?

This question has been widely considered governments around the world and by such global organizations as the United Nations for nearly two decades. In broad terms there are two avenues open to us: adaptation and mitigation. Adaptation involves minimizing the negative effects of likely or occurring climate change through precautionary measures. Mitigation involves a large-scale effort to reduce human-caused greenhouse gas emissions.

Scientific modeling has shown that stabilizing levels of greenhouse gases in the atmosphere could reduce or prevent damaging levels of climate change. Atmospheric levels of greenhouse gases are currently around 430 parts per million, compared to a pre-industrial level of 280 ppm. Stabilizing this concentration between 430 ppm and 550 ppm will help to reduce the most serious risks of climate change.

In the short-term, slight climate changes are expected to occur as global economies are projected to continue consuming fossil fuels for the majority of their energy supply.

As a result, adaptive measures may need to be taken in many regions. These could include construction of sea barriers, altered agricultural methods, stockpiling of food, and improved protection against pests and diseases. Simply constructing buildings to withstand extreme weather events and maintain a constant temperature efficiently are some small adaptive measures that could be undertaken in Canada. Conservation efforts that will help northern peoples and animal species to cope with melting permafrost are also important aspects of climate change adaptation.

Adaptation is generally overlooked in favour of mitigation efforts however, as reducing greenhouse gas emissions is the only way to slow climate change. Ways of reducing greenhouse gas emissions are well-known: improving energy efficiency, reducing fossil fuel consumption, diversifying energy supply by expanding the use of renewables, and decreasing deforestation. Energy use through the consumption of fossil fuels to generate electricity, for heating, and for transportation, is the source of most anthropogenic greenhouse gas emissions, so it is in this area that most new technologies have emerged.

Renewable energy such as hydroelectricity, wind, solar, biomass, geothermal and tidal power provide clear emissions reductions by displacing fossil-fuel consumption, but currently make up only a small portion of the world's energy supply. Their usage is expected to increase nearly 60 percent by 2030, according to the International Energy Agency, although their total share of world energy supply is expected to remain relatively constant at 14 percent.

In many cases, these emissions-free energy sources are a viable alternative. Wind turbines are becoming larger, solar panels are more efficient, and the costs for renewable energy are showing signs of convergence with traditional energy sources, though hurdles still remain.

Bioenergy - using plants, trees, and shrubs as fuel - is also emerging as a major energy sector. Biomass can be converted into fuels such as ethanol and biodiesel, or combusted directly using advanced technologies that reduce air emissions. Bioenergy is considered 'carbon neutral' because growing the crops needed to produce fuel offsets the greenhouse gas emissions from combustion. While economic and technical challenges to the wide-scale use of biofuels remain, ethanol markets will continue to grow, and the UN Food and Agriculture Organization (FAO) projects that bioenergy could provide up to 25 percent of the world's energy by 2025.

Hydrogen is also looked upon as a potentially major source of 'clean' energy in the future. This basic element is now being used in fuel cells to power buses and cars, and can also be deployed in large-scale power plants. When combusted, its only emissions are water vapour. Technical challenges must still be overcome surrounding the production, distribution, and cost of hydrogen technologies, but many believe the 'Hydrogen Economy' is well on its way.

Although the alternative energy sources listed above are sure to make up a growing component of the worldwide energy mix, most international organizations are projecting that fossil fuels will continue to dominate global energy generation until at least 2050. Faced with that reality, a push to demonstrate the use of 'clean fossil fuels' is underway. New technologies are emerging that allow for the gasification of coal to reduce its emissions, and one are of particular importance is that of carbon dioxide capture and storage.

Technologies now exist to capture carbon dioxide from point sources, and demonstration projects have established the viability of storing the gas for the long term in geological formations, abandoned oil wells, or deep sea reservoirs. In the case of the Weyburn project in Saskatchewan, injection of CO2 into an oil well for storage also results in the recovery of extra oil reserves. If fossil fuels must be combusted in the near-term future, then carbon capture and storage is likely necessary on a large scale to control global greenhouse gas emissions.

Energy efficiency is perhaps that largest area of opportunity for reducing the expected rise in global greenhouse gas emissions. The International Energy Agency has shown that that improved energy efficiency using today's technologies can reduce expected growth in electricity demand by half, and cut the need for added generation capacity by one-third, even as global energy demand increases by fifty percent. Sustainable building techniques, efficient lighting technologies, and other existing products should not be overlooked for their energy and cost-saving potential.

Deforestation and the clearing of land for crops and pastures is a significant source of greenhouse gas emissions, and the loss of tropical forests is a vital issue that must be tackled along with energy use. The carbon-storage value of many forests exceeds the value of the marginal lands they provide when cleared, and reducing deforestation can be a significant measure that developing countries can be encouraged to take.

Applying these technology-based solutions on a large enough scale to make the needed emissions reductions is a challenge, however. One way to make this happen, is through the use of market-based incentives. This is where carbon trading becomes important.