Can Norway's black gold be green?

Event 1: The greenest barrel of oil in the world
CNN went offshore to an oil rig in the North Sea to see how in Norway we manage to produce the greenest barrel of oil in the world. For every barrel of oil produced, 8kg of carbon dioxide is emitted (sixty percent less than the global average).

"In Norway they have a great attitude towards the environment. There were little notes on our beds in fifth-floor hotel rooms with encouragements to use the stairs; the napkin dispensers in restaurants are emblazoned with "just take one"; and there were recycling bins on every street corner. I was left wondering how this environmental awareness translates into the big business of oil and gas exports."

Link to the article on CNN.com

Comment 1: Didn't he give the answer himself in the first sentence? Statoils CEO Helge Lund (ref previous blog post) is very proud of the fact that his company produces oil with 60% less CO2 emissions than the industry average. Without the environmental awareness this would not have happened.

Oil and gas is- and will for a long time be their primary focus, but Helge Lund is also happy to talk about their other "green" R&D efforts - new renewable energy sources (offshore windmills, wave-energy, tidal etc.) and of course their carbon capture and storage projects.

You may also want to see the articles "Environment and Society" and
"Statoil publishes annual and sustainability report for 2009" and the actual Sustainability Report to get more information on this topic.
 
Event 2: Hungary's sale of used CO2 credits worries carbon traders
EU has the world's largest emissions-trading market. On March 15th the International Emissions Trading Association (IETA) said sales of ‘recycled’ United Nations carbon credits could damage the reputation of the European Union’s emissions-trading market.

The warning came after Hungary said it agreed to sell UN credits to an unspecified broker for 4 billion forint ($21 million).

Link to article on this AAU sale

ASPECTS OF CARBON TRADE

There are two main kinds of UN carbon credits.

• Assigned Amount Units (AAU): Under the Kyoto Protocol, countries were granted a certain number of permits to release greenhouse gases into the atmosphere, called Assigned Amount Units (AAUs), which are equivalent to one tonne of CO2. On average 1.5 billion AAUs are accumulated every year under the Kyoto Protocol, according to European Commission figures circulated among EU member states.
• Certified Emission Reductions (CER): is accepted in Europe’s market. CERs are also known as carbon offsets because they are created when polluters or investors pay for emission reductions in poorer countries in exchange for the tradeable credits.

Rich countries can buy carbon offsets to help them meet emissions caps, paying for carbon cuts in developing countries. International trade in recycled credits is legal, and exploits the fact that the greenhouse gas emissions of some former communist countries are far below their Kyoto targets, leaving them with surplus emissions rights (Note: this is due to worse than expected market growth and NOT a result of big investments in CO2 reduction projects).

The AAU figures (per year) are broken down as follows:  

• Russia: 1.1 billion AAUs (see definition below)
• Ukraine: 478 million AAUs
• EU10 (East & Central Europe): 439 million AAUs
• In contrast, the older member states of Western Europe (EU15) have a shortage of 144 million AAUs per year that they should buy from other countries on the carbon market.

The Hungary deal
Hungary figured out how to swap its more valuable CERs for less-valuable UN credits known as Assigned Amount Units (sold some 800,000 tonnes of used CERs, saying it would put aside the equivalent number of AAUs) .  

The European Commission, the EU’s regulatory arm, said it was “concerned” as the central European country sold credits that had already been turned over to comply in the bloc’s system.


"Carbon leakage"
Carbon leakage occurs when there is an increase in carbon dioxide emissions in one country as a result of an emissions reduction by a second country with a strict climate policy. Carbon leakage may occur for a number of reasons:

• If the emissions policy of a country raises local costs, then another country with a more relaxed policy may have a trading advantage. If demand for these goods remains the same, production may move offshore to the cheaper country with lower standards, and global emissions will not be reduced.
• If environmental policies in one country add a premium to certain fuels or commodities, then the demand may decline and their price may fall. Countries that do not place a premium on those items may then take up the demand and use the same supply, negating any benefit.

Carbon leakage does not necessarily imply that the increased emissions are from competing companies; climate policies may have the effect of causing companies to relocate its production to countries without a climate policy in order to take advantage of the economic benefits.

Carbon leakage has been cited as an impediment to the effective reduction of carbon dioxide emissions through the Kyoto Protocol. This is because the 37 developed countries are the only parties to have agreed to cap their industrial emissions and there is no visibility of the carbon footprint of their imports.

Recent studies suggest that nearly a quarter of China's CO2 emissions are as a result of its production of goods for export, primarily to the USA but also to Europe, suggesting that the current focus on emission policies within national schemes may be misplaced, and question whether responsibility for emissions should rest with the producer or the consumer. It has also been argued that developed countries have a responsibility for the historical legacy of pollution which obliges them to act first, whilst allowing other developing countries with a low intensity of emissions per person to find methods of raising their economies and standard of living in a sustainable way. Kyoto's Clean Development Mechanism was designed as a way of funding the technology transfer needed for such sustainable development.

One example is the Norwegian company Norsk Hydro who uses a lot of energy to produce the light-metal aluminum. They argue that unless they can continue to get cheap electricity in Norway - they will have to move all production to other parts of the planet where they will use cheaper fossil-fueled energy (in countries where they do not have to pay for CO2 emissions). Link to information about their new gas-powered Qatar-plant.         

Green certificates
A Green Certificate - terminology used in Europe - also known as Renewable Energy Certificates (RECs) in the USA, are a tradable commodity proving that certain electricity is generated using renewable energy sources. Typically one certificate represents generation of 1 Megawatthour of electricity. What is defined as "renewable" varies from certificate trading scheme to trading scheme. Usually, at least the following sources are considered as renewable:

• Wind (often further divided into onshore and offshore)
• Solar (often further divided into photovoltaic and thermal)
• Wave (often further divided into onshore and offshore) and tidal (often further divided into onshore and offshore)
• Geothermal
• Hydro (often further divided into small - microhydro - and large)
• Biomass (mainly biofuels, often further divided by actual fuel used).

Green certificates represent the environmental value of renewable energy generated. The certificates can be traded separately from the energy produced. Several countries use green certificates as a mean to make the support of green electricity generation closer to a market economy instead of more bureaucratic investment support and feed-in tariffs. Such national trading schemes are in use in e.g. Poland, Sweden, the UK, Italy, Belgium (Wallonia and Flanders), and some US states.

Norway is not on the list, but it isa positive move that our Oil and Energy Minister Terje Riis-Johansen, and the Swedish industry minister Maud Olofsson signed an agreement in september 2009 on principles for further cooperation on green certificates. The ambition is a common certificate market in the two countries.

In contrast to CO2-reduction certificates (AAU's or CER's under the UNFCC), which can be exchanged worldwide, Green Certificates cannot be exchanged/traded between e.g. Belgium an Italy, let alone the USA and the EU member States.

Comment:
Given that "the greenest energy is the energy we don't use" - I hope that we will get to a point when 1 MWh of saved electric energy will equal 1 certificate. This would lower the total cost of "Jahus" projects and therefore help reduce the demand for electricity for heating houses.