CompressorTechTwo - 2010 (Sample)

the possibility that climate change
may be the largest grassroots move-
ment and challenge to confront the
human race in recorded history.
Climate change transcends all politi-
cal, cultural, language and physical
barriers and carbon or “carbon diox-
ide equivalence” will be the com-
mon denominator, or what I have
termed the “carbon denominator.”
I believe the monetization of car-
bon captures the demand side of
economics like no other market sig-
nal in recorded history. Carbon will
drive efforts in consumption effi-
ciency and support the growth of
low and zero carbon technologies by
including the total cost of fossil fuel
consumption. Additionally, the mon-
etization of carbon has created an
environmental commodity and vol-
untary carbon markets that exist and
are expanding. Carbon is the emer-
gence of a sustainable transforma-
tion that will affect all known mar-
kets and people — the alternative to
the transformation will be simply
taxation and stagnation.

So if carbon is so historic, why have the fruits of the Kyoto Protocol and the UNFCCC post-2012 agenda not reflected such transformation? It is with any change that the innovators play and pay a pioneering cost in being the first, and although carbon has not reached global parity (a universally accepted value), it is well on its way to becoming so with the structure, mechanisms and markets the UNFCCC and the Kyoto Protocol have created thus far.

Creating a collective and effective global effort to reduce greenhouse gases is a task of enormous challenge and scale. Establishing a global value for carbon is comparable to developing one plug for all the world’s electric outlets — no more adapters, just one plug no matter where you are on the planet. That is the yardstick carbon brings — the ability to capture the full and true cost of any process as it relates to efficiency and the environment.

Carbon-intensive industries will build the foundation for “carbon light” and “zero carbon” technologies through the valuation of greenhouse gases. A new yard of measure is now included, despite global accord, and as of Jan. 1, 2010, even the United States is now monitoring the largest sources of greenhouse gases.

The accompanying figure illustrates the monetary value the carbon footprint of the natural gas industry in the United States will assume based on an average December price of carbon in a known carbon market, the European Union Emissions Trading Scheme (EU ETS). It shows the proposed reductions nationally in the proposed American Clean Energy and Security Act (ACES). The preemptive existence of the Kyoto Protocol and the resulting activity in Europe allows such an analysis and brings clarity to what can be expected in the United States under a national cap and trade program.

The UNFCCC will have spanned the administration of five presidents and the Kyoto Protocol two, by the time a conclusive path is set for post-2012 ambitions. The world will see a post- 2012 agreement and the next three years will play witness to all carbon markets revealing the connections they truly share. The question that waits to be answered is will the establishment of a global carbon market serve as taxation or transformation?

Carbon is already redirecting financial flows in energy markets and the beginning signs of true scale deployment are just being seen in re-newable markets like wind and solar for power markets of North America. Voluntary carbon markets are also establishing protocols and projects and creating bankable carbon offsets in the process. These voluntary carbon markets will serve to link and subsidize mandatory compliance markets with alternative and cost-effective means of managing and mitigating carbon intensity by industry or entity.

I am convinced that the advent of voluntary carbon markets is of historic influence that will only grow in scope and reach because of the universal nature of carbon. Carbon is breaking historic barriers because it transcends them by allowing management of the demand side of the economic equation. Traditional pollution compliance markets have never been fully transparent in cost, nor could they encourage efficiency. Valuing carbon sets a price signal that allows both investment and demand side management in the encouragement of efficiency by capturing the “true cost” of fossil fuels in comparison to low- and zero-emis-sions technology.

The declining cap then ensures a reduction in time by a deliberately created scarcity of carbon emission limits over time. That is the power of preemptive action, and a future national cap and trade program can be expected to mirror the structure it introduces. I hold that regardless of the perceived outcome of COP 15, this is the message that Copenhagen is sending.

It is a likely prelude that we might expect the list of what is considered a greenhouse gas or what is even considered an “indirect greenhouse gas” to grow both domestically and internationally. This is because carbon is influencing all prior pollution regulations as it merges with the regulatory process. Sources of pollution are also sources of greenhouse gases, and in most instances this has an unknown future impact on the convergence of pollution and climate change regulation.

Expect the EPA to also increase the scope of greenhouse gas reporting to include “fugitive” emissions and noncombustion sources during 2010 as it was left out in 2009 when the mandatory reporting rule passed. The challenges will continue to come nationally from the EPA and from the ground up, as states link their economic and regulatory aims with carbon and climate change stimulus promise. Clearly, carbon will serve to be a dynamic and ever-reaching influence. One only needs to look at what has already been done to know what lies ahead. Like the universe, carbon is still expanding. ;