Decarbonization: Public Policy, Greenwashing, & Carbon Accounting webinar transcript
City, state, and federal governments are working side-by-side with big and small businesses to set goals for greenhouse gas reduction. But how can these entities successfully work together? What exactly does a “carbon goal” mean? And how could it be most effectively achieved?
The experts at EcoEngineers answered these questions and more in our webinar on May 18, 2021. They’ll discussed how science, public policy, and private carbon reduction goals can (and should) come together to help create a Clean Energy Economy.
Lyndsey Nielsen (00:00):
Welcome to another EcoEngineers Webinar. Let’s get started on time here so we can make sure that we get all this good content out to you. My name is Lyndsey Nielsen. I’m the marketing coordinator at EcoEngineers. I want to welcome you to our Webinar in Decarbonization, Public Policy, Greenwashing and the importance of carbon accounting. We’re excited to be sharing with you on this topic and it’s kind of a broad topic that we are delving into a lot more, but first I want to go over some housekeeping items. I know many of you have attended our events in the past, so some of these are probably familiar. We’re going to have a Q&A session in the last 10 to 20 minutes of the presentation. During the presentation feel free to type your questions into the questions chat function and we’ll try to answer as many as we can.
Lyndsey Nielsen (00:46):
We also will send out emails to answer your questions if we don’t get to all of them. And as usual, this Webinar’s recorded and it will be shared following the event, you should just get a link in the followup email and we don’t provide copies of the slides. You will be also asked to do a feedback survey after the Webinar. We’d love to know what you thought of it and if you have any ideas for future Webinars. Before I hand it over to our CEO, Shashi Menon, I want to play a brief video explaining how EcoEngineers can help you in this low carbon world.
Carbon is the biggest disruptor of the 21st century and the world as we know it is changing. EcoEngineers can guide you to make the best decisions as you navigate toward your clean energy goals. A diverse team of carbon analysts, engineers, scientists, auditors, and regulatory specialists, are trusted advisors of the clean energy fuel sectors worldwide. Clean energy regulations are a maze. We simplify them with an unbiased approach and fully manage your compliance. Modeling your carbon reduction is complicated. We quantify your emissions with a rigor based insights. Together we can create markets that will protect and grow your investment. We create sustainable solutions for a better tomorrow. We are EcoEngineers.
Shashi Menon (02:16):
Thank you, Lyndsey. Good afternoon, everyone. I’m Shashi Menon, CEO at EcoEngineers and that video is EcoEngineers in a nutshell. There is an energy transition happening around us and that is creating the new marketplace for carbon and at EcoEngineers we helped you find your way to it. The question that we always get asked is how do we go about navigating this transition? We have a very systematic approach to help you navigate the complexity of this new marketplace. What we do is we provide basic supports that an emerging marketplace needs. We provide you with up-to-date information on regulations, technologies, and markets. We’ve measured carbon reductions through a very rigorous life cycle approach. We translate the implications of policy on projects and we translate the science of carbon reduction for policy makers and regulators.
Shashi Menon (03:14):
We help you create a carbon accounting framework to properly track monitor and report your emissions reductions and finally, we act as a third-party verifier with appropriate to certify your reductions. We have successfully doing all of this because we have deep expertise in fuels, technologies and policies. Our team consists of scientists, engineers, lawyers, accountants, analysts, auditors, et cetera, all with a single-minded vision of ushering in a new low carbon economy. At the core of this transition to a new energy economy are policies, policies that either mandate new forms of energy or they create carbon markets that incentivize the transition to new energy sources, but the foundation of measuring and tracking greenhouse gas emissions reductions is a carbon accounting framework. And so today we are here to talk about the intersection of those two intersectional policy and carbon accounting systems and how it is important for policy makers to understand carbon accounting and force the scientists behind carbon accounting to understand policy formation. Without this dialogue, policies with the best intentions become ineffective.
Shashi Menon (04:26):
We’re going to start with an overview of the intersection of carbon accounting and policy followed by a high level policy outlook and then to make this subject a little more interesting we’re going to look at three case studies and we’ll see how policies impact carbon accounting and project revenues. Joining me today and doing this Sarah Caswell and Dr. Roxby Hartley and Lyndsey Nielsen, who you already met. Sarah is our federal and state policy lead at EcoEngineers. She’s a lawyer by training and has dedicated her career to low carbon fuels policy. She has decades of experience working with industry and government in Washington in analyzing and crafting policy that balances industrial needs with climate goals. She’s going to share an overview of the federal policy landscape and what is happening in some key states today.
Shashi Menon (05:16):
We also have Dr. Roxby Hartley with us today. Roxby is our team lead for compliance management services. He has decades of experience in scientific research and development and management of low carbon diesel substitutes, biodiesel and renewable diesel. He combines a passion for environmental issues with a deep scientific knowledge and a keen ability to analyze regulations. He holds a doctorate in geophysics and a bachelor’s degree in geology, both from Oxford University in England. And last but not least, Lyndsey Nielsen, our marketing coordinator will be narrating the case studies and controlling the picture show and acting as the overall MC for the Webinar. I said earlier that the transition to a low carbon economy has already started and that cannot be reiterated enough. Ambitious climate goals are being put in place right now and carbon policies are being enacted to achieve really, really aggressive climate reduction goals.
Shashi Menon (06:20):
Most of you may have seen the release from the EIA today that talked about what it will take to reach a zero carbon goal by 2050. You’re talking about a world that none of us know of, it’s a strange world, it’s a new world and these policies are being put in place right now. It’s really important as we write these policies to understand greenhouse gas measurements and how carbon markets work and this is key to successful policy implementation. The uniqueness of carbon accounting makes this little difficult. There are terms such as additionality, leakage, and net-zero, these terms need definitions and they need to be properly defined and placed within the context of policy. If this isn’t done, policies will not have a shared coherent vision and an approach for reducing emissions.
Shashi Menon (07:12):
As policies are being written we want you to ask are these policies prescriptive or are they market-based? What are the pros and cons of each? What are some challenges having multiple patchwork policies versus one national policy or can an actual policy be sufficiently flexible to accommodate regional differences? These are all very real problems and there are no easy answers, but in this Webinar and in subsequent Webinars, we hope to outline the shapes of some possible solutions and that is what we’re going to try to do today. So with that, I want to invite Sarah Caswell to give us an overview of US current policy as it stands today, Sarah.
Sarah Caswell, Esq. (07:52):
Thank you for your introduction. This is so prescient and so important for us to be talking about this in our deep experience with greenhouse gas reduction policies to-date. EcoEngineers has deep experience with the renewable fuel standard and the low carbon fuel standard in California and the practical effects of both in terms of implementation. To start, effective public policies will be a key driver of success in achieving the ambitious carbon reduction commitments that Shashi mentioned that are made by governments. In this Webinar, we will explore the sometimes complex scientific understanding and nuances that policymakers and regulators should consider as they work to enact and implement climate mitigation laws. Governments around the world have already begun to evaluate the science of climate change and make public greenhouse gas reduction commitments at levels and within time periods designed to reverse and prevent further negative effects from climate change.
Sarah Caswell, Esq. (09:06):
For instance, several US states have passed or are working to enact climate mitigation laws. The US, under Biden, has committed to net-zero by 2050 and then nearly 200 members of the Paris Climate Accord have committed to keeping global warming rise below two degrees Celsius. For sure private companies throughout the world have made great strides in technology and innovation and some have even made voluntary carbon reduction commitments. However, a central and overarching public policy is necessary to ensure country and economy-wide carbon reductions that will be able to be measured in order to meet the ambitious decarbonization commitments that have already been made. We’ll take all possible greenhouse gas reductions, not just in the transportation sector, for instance. The policy can be structured in many different ways. For instance, we’ve seen in the US the Renewable Fuel Standard creates a volumetric mandate for the use of carbon biofuels by obligated parties, while California’s Low Carbon Fuel Standard provides market-based incentives to drive cleaner transportation fuels into that state market.
Sarah Caswell, Esq. (10:32):
In addition, policy makers and regulators must decide whether effective decarbonization policies can be made up of a patchwork of individual policies like we’re seeing in the US with the various state policies that are beginning to be enacted, or whether it will be necessary to enact a uniform national or even a global decarbonization policy with a central carbon accounting system. President Biden and his administration have been focused on developing public policy to achieve the ambitious net-zero emissions commitment in the US by 2050. The president has signed executive orders to this end, including one that would protect supply chains for needed components in the production of clean energy like electric vehicles.
Sarah Caswell, Esq. (11:27):
Currently the Biden administration is focused on working with Congress to pass a massive infrastructure spending bill that will propel investments in clean energy, infrastructure, and green jobs. One question is, how does spending bills like this fit within the broad net-zero by 2050 climate commitment made by the Biden administration? Is that sufficient or do we need an additional type of policy? There’s a good argument that these spending bills are needed, but only as complimentary policies to an eventual national comprehensive decarbonization law, like perhaps a national low carbon fuel standard. Without such a uniform law setting and driving the overarching goals, rules, and carbon accounting system, it will be much more difficult, if not impossible, to ensure and measure progress towards the achievement of net-zero by 2050. To illustrate the real-world impacts of climate policies and regulations, we’re going to provide an analyze three hypothetical scenarios. Now I’m going to turn this over to my colleague, Roxby Hartley, to introduce the first scenario illustrating what we’ve been speaking about so far. Roxby.
Shashi Menon (12:54):
Thanks, Sarah. Thank you, Shashi as well. As Sarah says, for the second part of the Webinar we will introduce three hypothetical case studies to illustrate different aspects of carbon accounting. Each case study has a question with a poll and hopefully many of you will participate in the polls. Carbon accounting is where policy meets science. Any carbon reduction policy has to have a robust scientific basis to ensure that reductions claimed are real reductions in greenhouse gases. Now the program has integrity and it can be trusted both by the participants in the program and by external observers. The other path really is that any program has to have some means of auditing the carbon reductions. Today we’re going to start off with what our first scientists seemingly straightforward example. Sarah and I are going to own and fuel cars in California. I’ll make grant to examine who should claim net-zero benefits under the LCFS regulation. And I should point out, net-zero emissions is net-zero greenhouse gas emissions and it shouldn’t be confused with zero tailpipe emissions. Zero tailpipe emissions means that the only gas is coming off of the tailpipe is water. There still might be greenhouse gas emissions associated with driving that car, but they’re upstream, they’re from the energy production. With that, Lyndsey, would you please take away the first case study.
Lyndsey Nielsen (14:33):
Sure. Thanks, Roxby. Let’s meet Sarah. She lives in California and she really, really loves her gasoline pickup truck. It can haul things, it makes her feel powerful on the road, however, she does know that it creates emissions. The gas she puts into her truck emits 10 metric tons of carbon dioxide equivalent per year. Now here’s her neighbor Roxby. Roxby really wants to be environmentally friendly, so he decides to purchase an electric vehicle and install solar panels on his roof to charge it, which according to the California Air Resources Board generates zero metric tons of carbon dioxide equivalent per year in emissions. Good job, Roxby. Now, let’s say that they both drive their vehicles for a full year throughout 2021. Here’s Roxby again, the EV lover. CARB and other upcoming state programs can offer credits for low carbon fuel driving.
Lyndsey Nielsen (15:33):
So Roxby goes to CARB to generate LCFS credits for his green driving. He generates nine metric tons of carbon dioxide equivalent in credits. Meanwhile, Sarah decides that she also wants to be environmentally conscious. She and Roxby had been talking and she knows Roxby generates credits for his driving, so Sarah decides to purchase his credits in order to satisfy the emissions she created with her pickup truck while she was driving and then Roxby gets some cash. Both Sarah and Roxby brag to their neighbors that they’re driving is creating zero pollution and has a net-zero carbon footprint, so this is where you guys come in. We’re going to do a poll here. I want to know what you think. If both Sarah and Roxby claim to have zero net carbon footprint, who really does have it? Here we go. Let’s launch this guy. It should pop up there on your screen.
Roxby Hartley, Ph.D. (16:34):
I think it’s very unfair that we can’t vote as panelists.
Lyndsey Nielsen (16:37):
You know the answers though. Okay, here we go. Let’s see what we have here. It looks like most people… It was kind of across the board, but Roxby and neither is the answer that most people are going with. So what do we think about that Roxby?
Roxby Hartley, Ph.D. (16:57):
Well, the correct answer is actually neither. We have to do a little bit of math to show why that is. How did the LCFS? Roxby generates nine metric tons of emission offsets against the benchmarks that CARB has put in place and Sarah and her driving emitted 10 metric tons and I sold all my emission offsets to Sarah. In the end, Sarah effectively has one metric ton of emissions and I’ve taken on the other nine metric tons, so neither of us are net-zero, neither of us are offsetting greenhouse gases, so any claim we could be accused of [inaudible 00:17:50] because neither of us are doing it. However, there are claims that we can both make. We can both say that were contributing to the green economy and that I’m helping Sarah meet her climate goals by buying an electric car, which just cause emissions, but I am not net-zero.
Shashi Menon (18:07):
Roxby, this is fascinating. I want to extrapolate this. Let’s say that you have an entire city, let’s say it’s Los Angeles. LA sets an ulterior goal. There’s a lot of private sector activity, project development, and investment is going on within the city and let’s say hypothetically five years LA achieves 100% reduction in greenhouse gas emissions within its geographical boundaries. Let’s say that all this private activity, the emissions reductions, the private developers bundle those reductions and sell it, let’s say they sell it to San Diego or San Francisco. At the end of that is LA really net-zero.
Roxby Hartley, Ph.D. (18:55):
No. If they’re sold their offsets, if they’re sell their emissions reductions, then they take on the other party’s emissions effectively. Both parties can not be net-zero, so if San Francisco is buying emissions reductions, then LA can’t claim them.
Shashi Menon (19:12):
Opens a can of worms.
Roxby Hartley, Ph.D. (19:14):
Sarah Caswell, Esq. (19:17):
It also illustrates the complexity of getting the policies and the regulations that follow right from the get-go in order to prevent potential fraud. It requires this really deep understanding of who can claim credit for what and under what circumstances. I think it’s really important that we’re going over these case studies to illustrate these complexities that policy makers and stakeholders really need to grapple with.
Shashi Menon (19:51):
Thank you, Sarah and Roxby. I can’t reiterate how complex is can get because you have a variety of jurisdictions and private corporations that are making net-zero claims and then they’re buying and selling offsets in order to reach those goals, but perhaps the jurisdiction where the offset was created could be double accounting if they’re also making a net-zero claim. So you really need a broad universal carbon accounting system to really account for this and to prevent double accounting. I mean, that’s the message I’m getting from this. Is that accurate?
Sarah Caswell, Esq. (20:37):
That’s exactly right. Currently there’s voluntary efforts among businesses, they’re doing great. A lot of worldwide businesses are making great strides to unsustainability and to reduce their carbon footprint but to what end? Who’s the regulator? How are we going to ensure that their claims of net-zero or what have you are accurate? How are we going to ensure that they’re not actually double accounting? We need a central accounting system with the same rules for all players in order to accurately measure carbon reductions. And I think that it’s also a really important, this is sort of a basic understanding that can sometimes get missed. Carbon as you know is global, carbon emissions is global. It doesn’t stay in one location, so as policy makers craft carbon reduction policies, potentially someone who reduces carbon in one location or somebody who emits but buys the credits that where the reduction occurred in another location can claim credit for carbon reductions. And so I think it’s just really important that, to drive home the point, policies and regulations really do need to follow the science on climate.
Shashi Menon (22:17):
That’s a really good segue to go into the case study too because that’s exactly what we’re going to talk about, is this concept of additionality. Additionality is a key concept in carbon accounting that requires projects that claim emissions reductions to demonstrate that the reductions would not have occurred in the absence of the project. In other words, the reductions are truly additional and they would not have occurred in a business as a usual scenario. Let’s take a look through this case study and how policies can impact a project in relation to additionality and project revenues, Lindsey.
Lyndsey Nielsen (22:54):
All right. Thanks, Shashi. I want to get to know Roxby a little bit more. Did you guys know that he actually owns a restaurant in Nevada? He makes organic burgers and fries, which I hear are really good, but like all restaurants he produces a lot of organic waste. We all know Roxby strives to be environmentally conscious, while he also wants to reduce the carbon footprint of his restaurant. He currently landfills all of the organic waste from his restaurant and according to the US CPA the landfill, despite having collection wells, is losing approximately 25% of the methane generated into the air, which means that 75% of the methane is actually getting captured from the waste. Roxby comes up with a great idea. He decides to take all their organic waste from the restaurant and put it in an anaerobic digester in his backyard, where it will eventually produce renewable natural gas.
Lyndsey Nielsen (23:50):
By using the AD, 100% of the methane from the waste is actually captured instead of the landfills 75%, so that’s an extra 25% methane. He plans to sell the RNG across the border in California as a low carbon fuel. If he does that, he can generate LCFS credits for the fuel. Since his waste would have released methane into the air without his project, PCI calculation includes a credit for the avoided methane. Going back to California, Sarah has decided that she wants to convert her pickup to CNG fuel. Sarah and Roxby get to talking, remember they are neighbors, together they make a plan. They’re going to use the fuel that Roxby created to power Sarah’s truck through the book and claim system in California. Her CNG usage will generate LCFS credits. Later, she can sell the credits to finance the digester and make a small profit for both of them.
Lyndsey Nielsen (24:48):
Sounds like a great deal, but after Roxby and Sarah sign the deal, this one’s a little bit more complicated, Nevada announces a landfill diversion law where all organic waste from the restaurants are banned from landfills within the state. The law was established after Roxby had already built his anaerobic digester and because of this new law, CARB or any other state regulatory body on carbon, rejects Roxby and Sarah’s joint application to generate the credits from the 25% avoided methane saying that there is no additionality and Roxby is not actually capturing that extra 25% because the food no longer goes to landfill or the organic waste no longer goes to the landfill. So Roxby continues to use his AD, he built it after all, but it only generates a cost now. His good intentions are not rewarded and he loses money. At this point, let’s launch another poll. I want to know from you guys, should Roxby be given credits for the avoided methane offsets for landfill diversion? Roxby, I hear you are a good cook?
Roxby Hartley, Ph.D. (25:51):
I am. I have to cook for you guys one day when you all come to California to see me. I promise.
Lyndsey Nielsen (25:58):
Sounds good. Here we go. It looks like about two-thirds said yes, he should be given credits for avoided methane offsets for landfill diversion. I’m really sorry because it was kind of a trick question.
Shashi Menon (26:16):
Yes. Thank you, Lyndsey. That was a trick question. Before we dive into the answer, I do want to say that all references to CARB and California Air Resource Board and LCFS is all purely hypothetical. CARB has not ruled on any of these case studies, they’re not real. I just want to make sure that we state that disclaimer very explicitly. Now coming back to this case study. It is a trick question, it depends. The answer really depends on what your policy is trying to achieve. On the one hand, carbon accounting rules do require additionality. If there’s a mandate, then there is no additionality. However, mandated do achieve 100% compliance within their jurisdictions, but the regulated entities incur costs as a result of the mandate, but try to avoid the cost by moving outside the jurisdiction or by doing the minimum necessary.
Shashi Menon (27:10):
So as mandates and prescriptive policies have been written it is very important to understand what impact it will have on regulated parties and the good actors have already started reducing their emissions reductions. Grandfathering projects or allowing a window of time to transition on some of the projects that I’ve worked in dealing with this. It’s a very complicated issue and it’s a very, very sensitive issue because when projects and policy makers don’t talk to each other there’s a lot of money at stake, it’s a high stakes game. So Sarah, I want to kind of maybe invite you to comment further on how to go about writing these policies.
Sarah Caswell, Esq. (27:51):
Yeah, thanks Shashi. I think that what you just talked about really illustrates the potential pitfalls of a patchwork of climate policies rather than a uniform policy and a uniform carbon accounting system. A uniform policy and national policy, for instance, would largely prevent what you’re talking about, where there’s one climate policy in one state that inadvertently disincentivizes clean energy projects to be invested in, in that state because of the impact it has on a different state policy, right? The only other thing I’ll say is that, as a general matter, and we saw this with the renewable fuel standard, for instance, these kind of public policies utilize as one of the ingredients driving the clean energy economy in order to achieve the ambitious decarbonization goals. These policies must be constructed based on science, but also based on the fundamental principle that the policy should drive the kind of clean energy projects that will lead to measurable carbon reductions in order to achieve that broader national or international policy goal.
Sarah Caswell, Esq. (29:23):
The RFS, for instance, worked, especially when there was a stability of the policy and at the beginning. The stability of the implementation of the RFS policy took away the investment risk or this nascent biofuels industry, right? And so that therefore took away the investment risk and allowed for more biofuels projects to come online than otherwise would have happened absent that public policy. And here, where we’re talking about the need to get carbon reductions not only from the transportation sector, but from all sectors of the economy in order to achieve these ambitious goals by 2050. It seems to me that a policymaker could look to a low carbon fuel standard type of policy because it’s a market driving policy, it’s technology neutral, and it accomplishes, or it seeks to accomplish, and there’s a path for accomplishing carbon reductions based on science and to drive the types of investments that will be necessary.
Shashi Menon (30:42):
Thank you, Sarah. The larger issue that policymakers have to worry about is how to accommodate a regional industry and how to nurture regional industry and incentivize them to stay in the region, even if they are asset transitioning from a high emitting source to a low emitting source. That takes a lot of thought and effort and coordination between different agencies and policy tools. With that, let’s transition to case study three. In this we’re going to talk about it very, very interesting case and we’ll be calling it, who is a polluter? In this case it all about LCA boundaries to measure where’s the source of carbon and who should be taking the responsibility for introducing the carbon into the atmosphere. Oh, Roxby you’re back?
Roxby Hartley, Ph.D. (31:40):
I’m sorry. Are we talking about the next case study about hypothetical, who is a polluter?
Shashi Menon (31:46):
Roxby Hartley, Ph.D. (31:48):
Oh, well. I was going to say, for the next case study, it’s very important to understand exactly the boundaries of where the LCA model is set and to not pollute that, so that greenhouse gas emissions aren’t used to drive the policy goals. Lyndsey, would you like to take away the next study?
Lyndsey Nielsen (32:14):
I can. Thanks guys. All right. Let’s launch into this third and final case study. Let’s say a refiner extracts oil from fossils in Texas. The factory it is sent to create single use plastics, such as laundry, detergent, bottles, water bottles, plastic straws, et cetera. These plastics are created, marketed, purchased, used by consumers, and eventually make their way into a landfill where they won’t decay for at least a hundred years and then some of it also ends up into the oceans. We’ve all heard about the oceans plastics issue. Very creative company called EcoFuels invents a process to make EcoDiesel from these waste plastics. Their process takes all of the plastics from the landfill and the oceans and it turns it back into fuel and again, this is a hypothetical situation. It is a slightly costly process for EcoFuels and they’re going to need a higher diesel price in order to operate profitably for the first five years.
Lyndsey Nielsen (33:14):
In this situation, they decide to sell the fuel in California and put an application into CARB for an LCFS tier 2 pathway and hopes that they can generate LCFS credits for their recycling efforts and offset some of the costs of the expensive process that it takes to create the fuel. Unfortunately, CARB rules that the fuel EcoFuels created from the waste plastics has the same carbon intensity as the fuel initially extracted from the earth to create plastic in the first place. EcoDiesel that the company creates will not be generating any credits in California and it will generate deficits. Without LCFS credit money, EcoFuels is not profitable, it’s funding pulls out, and they shutter their company. This is kind of a shorter situation, but here’s the next poll question? Who do you think should take responsibility of the greenhouse gas emissions from combustion of the diesel made from the waste plastics? Let me launch this poll. All right. Let’s close the poll here and see what we get. Looks like it’s kind of a tie game for both the refiner and people thinking that they should both take the responsibility of those greenhouse gases. Let’s go to what our answer is.
Roxby Hartley, Ph.D. (34:42):
This is one that depends. If the plastic isn’t going to decay in the landfill the baseline is that it uses new greenhouse gases, so if somebody makes into a fuel and generates greenhouse gases is that way, then you’d expect them to take on the full burden of all the greenhouse gases in the plastic. Of course, We want to reduce plastic pollution. It seems wrong to me personally that it we would try and squash a environmental protection law into a lifecycle analysis, which should be based on baselines and the science. Shashi, I know you have opinion on this too.
Shashi Menon (35:33):
Actually, this case definitely is very problematic because you’re asking me to choose between plastics and oceans and fossil fuel combustion. Most people will, should there be need to craft a policy that solves both those problems, but what I’m hearing you say is that keep them separate and don’t joining them and lump them together into one policy and plastics in oceans should not be treated as biogenic carbon and combusted with a low carbon fuels policy and given any kind of a low carbon fuels benefit and I get that. I hear what you’re saying. If you incentivize conversion of ocean plastics to fuel, then you’re right, it’ll perpetuate the production of plastics from fossil sources and it doesn’t solve the problem of fossil fuel combustion anyway, but, there’s a big but, it’s a blurry boundary.
Shashi Menon (36:26):
I can also argue that all plant-based carbon is ultimately recycled fossil carbon. What a corn plant is breathing today was probably emitted by a coal plant 20 years ago. In that sense, there’s an overall constitution of fossil carbon in the atmosphere right now, so where do you draw the line? At what point does that fossil carbon become biogenic carbon? Because right now we give biogenic carbon a benefit. It’d be good to say combustion is carbon neutral because it’s sort of essentially recycling the carbon of the atmosphere. At what point does that carbon plastic in the ocean become biogenic? What if a fish eats it and then you throw the fish into a digester, does it become biogenic at that point? This is kind of where that LCA boundary gets a little blurry for me.
Roxby Hartley, Ph.D. (37:22):
I agree. CO2 has continued to go up in the atmosphere. I think it’s 417 operating PPM at the moment above the baseline, the pre-industrial baseline of 280 or so and you have to say, “Well, how many gigatons of carbon dioxide are we going to present to the atmosphere? What’s the climate response to that carbon dioxide going into the atmosphere, and where should we actually draw the line in the sand?” They’re very difficult questions to answer. They’re way beyond my ability.
Sarah Caswell, Esq. (38:03):
That’s where science meets policy, in my view. You and Shashi just raised a lot of the scientific questions that need to be grappled with, but it’s going to be the policymakers and the regulators who ultimately make the decision, for instance, where the line gets drawn in the sand, like you talked about Roxby. The science and the goals of the climate mitigation policies and the policies go hand-in-hand, you can’t separate them. The policies have to be based on science, but the regulators will need to grapple with and make decisions on the rules of the game that enable investments to be made and stakeholders to really engage in these new investments to drive down carbon in the atmosphere. It’s really interesting, but very complicated as well.
Shashi Menon (39:10):
I just want to throw in maybe one more thought on the subject. That issue of where to draw the line for the LCA boundary becomes a real problem. If you’re talking about some sort of a carbon tax, where do you place the full weight of the text? Do you place it on the extraction and the first use of that hydrocarbon, or do you place it at the point it’s combusted and released into the atmosphere? Between that, if there is a value chain, is there a diminishing tax on the carbon on its second use and third use and fourth use. These are the real problematic questions and anytime we craft a policy, you kind of almost need to think about this, right? Ask yourself, what are you trying to achieve?
Sarah Caswell, Esq. (39:59):
Well, yes, exactly. I can envision those questions coming up in, for say, a proposed rulemaking that invites public comment. At that point, stakeholders who plan to participate in carbon reduction investments and in this law should weigh in because that only helps the regulators as they grapple with and ultimately decide the answers to those questions. The policies and the regulations are only as good as the input and the real world illustrations provided to the regulators that make those ultimate decisions.
Shashi Menon (40:50):
Thank you, Sarah. At the beginning of the Webinar, I briefly mentioned that the EIA has come up with sort of an outlook for 2050 in which there is no… I think 70% of power generation is from renewable sources and they have created all of these assumptions into this scenario. It’s a world that I don’t recognize. It’s not our world today. It’s a completely world. I think that we can begin to anticipate that the world in 2015 may not exactly be the way EIA has painted in this report, but it will be different from what we are living in today and very, very creative in formulating policies to guidance through this new world as we go forward. I mean, we have no idea what 2050 is going to look like, but we know it’s going to be different. So with that I just want to… I think we are running out of time and I want to let you take us home.
Sarah Caswell, Esq. (41:47):
Sure. Yeah, my pleasure. Well, the point of today’s Webinar was to educate all stakeholders, including policymakers and regulators and folks in business on the importance of understanding the science that drives climate mitigation, the importance of the policies that reflect the science, and the need to be aware of potentially conflicting rules and policies that could inadvertently disincentivize beneficial clean energy projects or inadvertently cause double accounting, et cetera. We just wanted to highlight the complexities and the nuances that will be necessary as different governments consider their climate policies to address and to achieve the very lofty commitments that have already been made. We’ll plan to hold a future Webinar on a potential model policy with a lot more specifics about the components that we feel might be necessary in any one of these climate mitigation policies, but today we just really wanted to highlight the science and how science is related to the policy, how they’re intertwined and all of the nuances that really need to be considered and questions that need to be answered as policy makers go forward. Lyndsey, should I turn it back to you for questions and answers?
Lyndsey Nielsen (43:32):
Sure. We have a couple of questions here. There was one. Oh, here we go. It says, the UN and some airlines offer opportunities to purchase carbon offsets. Do we have an opinion generally as to whether those are greenwashing or are they actually cutting GHG emissions in the process?
Shashi Menon (43:52):
I support carbon offsets and I think it’s a good way to create a market based mechanism to reduce overall emissions. I think the point where I’m making is that we are not knocking carbon offsets in any way in this Webinar, but what we are saying is that in order for offsets to work there has to be a uniform and a universal carbon accounting framework that is kind of accounting the credits and the debits related to carbon accounting are being kept, is a ledger being kept and if that ledger is not kept appropriately, you get mixed results. Overall, offsets are good, they’re a good mechanism to move forward, but let’s just get the accounting right.
Lyndsey Nielsen (44:39):
There’s another one here. It says, I’ll kind of just read the whole paragraph because it sets it up. 2050 seems to be a great target for net-zero, however, the IPCC gave us a 10 year window which we must cut GHG emissions sufficiently to stabilize the climate. The urgency to radically cut GHD emissions has been with us for decades. What are we observing in the field, so to speak, that suggests that this push to cut it is any different than what we’ve experienced over the last 10 years?
Roxby Hartley, Ph.D. (45:13):
Yeah. We’re very lucky, okay? EcoEngineers. We see an awful lot of projects come across our desks. We have deep involvement in a lot of the certainly on the fuel side reducing carbon and fuels. We’re seeing vast investments in renewable diesel plants, RNG and in carbon capture and sequestration. I’m cautiously optimistic that California pretty much on its own is driving this huge decarbonization of the fuel supply across the US and as more of those policies come into place, I’m optimistic that more of these projects will go forward.
Shashi Menon (46:18):
Yeah. I think what I’m seeing is that there’s a collective will that is needed to move decarbonization forward and that collective will is sort of getting a snowball effect. It started off small, maybe 10, 20, 30 years ago, but in the 2020s, in this decade, we’re seeing that snowball effect taking shape and the momentum is getting bigger. More policymakers are paying attention to what’s going on and being able to support industry in their jurisdiction to navigate this. If I’m an industry then I’m probably asking a question, what do I need to do to prepare for this? There’s a critical mass that is reached and we’re approaching the critical mass.
Lyndsey Nielsen (47:16):
Thanks guys. Here is one about double accounting, if I can find it here. Can you discuss the risks of clients trying to double dip on offsets under a few programs and then the program start to disallow double accounting at some point?
Roxby Hartley, Ph.D. (47:31):
Well, that depends on the penalties that are built into each regulation and how the audits are done. If somebody double dips onto two different programs, I don’t know how two programs would, by themselves, penalize anybody who does that. That’s a difficult question to answer.
Shashi Menon (47:58):
Well, I think it’s fair to say that all programs explicitly prohibit double accounting. The integrity of each program is built into it. We don’t see a whole awful lot of bad actors trying to circumvent that law. Most people are trying very hard to check off all the boxes, meet the requirements, and create effective solutions to this. The examples we gave are sort of unintentional. In the case study we looked at, both Sarah and Roxby, they both believed that they were doing the right thing. Our only point was to show that you can’t have two parties with the best of intentions trying to do the right thing, but if you don’t keep your books in order you don’t really know who is zero carbon and you really need to keep your books in order and you need to have an established baseline and, again, just keep repeating this. You need a universal accounting system to truly understand where are the credits and where are the debits?
Roxby Hartley, Ph.D. (49:10):
My guess is if some did double dip in that way, both the regulators for each program would claw back the credits and say these credits have to be made up, so they’ll be penalizing in both program.
Lyndsey Nielsen (49:26):
There was a question here about that third scenario. I’ll just read the whole thing again. The current GHD framework seems to promote the disposal of plastics in the ocean or in the landfill as recycling plastics, versus either of these options takes energy in thus emit CO2. This person agrees that fuel compressed plastic should not be considered green, but shouldn’t there be a better incentive to promote chemical and mechanical recycling? I guess that’s not really a question, but more of a what is your thought on the better incentive to promote chemical and mechanical recycling.
Shashi Menon (50:03):
I absolutely agree. You need a whole toolbox. If you only have a hammer, you’ll keep hitting the nail, but you need an entire toolbox. You need to have different policies that address different things, plastics, GHG emissions in the atmosphere. There’s a variety of issues to deal with. In this particular instance, you’re absolutely right. Where do recycle plastics fall in that spectrum? Do you treat it as a waste product or do you treat it as fossil carbon? There’s no good answer. Just as this individual thinks that it should not be treated as a low carbon fuel. There are others who may believe that it should be. This is a really, really difficult question, where do you draw that line?
Lyndsey Nielsen (50:54):
Sarah, this is maybe a good question for you. Are we working with North American fuel ethanol industry associations, like Growth or RFA to present a united message to state and national government? What are those associations doing? What are we doing to help promote?
Sarah Caswell, Esq. (51:09):
Well, I have relationships with policy folks at all of those associations, full disclosure before being at EcoEngineers. One of my former jobs was that at IO in Washington, D.C, which is one of those national trade associations for biofuels. I have a longterm working relationship with policy, government affairs folks at all the trade associations and I’m in touch with them quite a bit. There are several informal working groups that I’m aware of right now among industry discussing what kind of structure or what does a framework for carbon accounting look like on a national level, sort of grappling with those types of questions. The answer is yes. We work with those other groups, but to my knowledge there’s nothing formal yet in terms of influencing a message. When we hold Webinars like this… I’m aware that invitations went out to folks at those trade associations, I’m not sure if they’ve joined us.
Sarah Caswell, Esq. (52:27):
We continue to try to educate utilizing the deep experience of EcoEngineers on the practical level with various climate mitigation policies. Like I talked about earlier, they are and the LCFS what works, what doesn’t, trying to get our messaging out to not only those trade associations, but really anyone who is a stakeholder on this issue and anyone who’s carrying messaging to policy makers on Capitol Hill or throughout the country to help influence how a climate mitigation policy is crafted and what kind of considerations they should really be focused on, like a central accounting system.
Lyndsey Nielsen (53:22):
As carbon capture technology improves, how can we hold the regulating bodies accountable to improve modeling methods like GREET to truly account for more GHG captured?
Sarah Caswell, Esq. (53:36):
I’ll just say, from where I sit, how can you hold them accountable? It’s all about stakeholder engagement. They need to hear from folks in the industry, they need to hear from stakeholders that regulators need to hear from stakeholders with respect to the importance of updated GREET modeling within the regulations. Shashi, maybe you can expand a little bit more on that as well or Roxby.
Shashi Menon (54:08):
No, I think that’s a good answer, Sarah. There’s no one easy answer to our silver bullet to solve these issues. I think stakeholder engagement is probably the best answer I’ve heard. It takes a lot of time, it takes a lot of effort, and takes a lot of conversations to advance an agenda and to get good results in place. I absolutely second that. I think stakeholder engagement is the key. Lyndsey, I know we have a little bit of time, but I do want to jump in and repeat that, for anybody, if we didn’t make it clear enough throughout the Webinar, all references to California Air Resource Board and LCFS is purely hypothetical. CARB did not endorse anything in here and we’re not suggesting that they did or will do anything that was stated today. Thank you, again, for everybody for joining us.
Lyndsey Nielsen (55:06):
All right. Have a good afternoon, everybody.
Sarah Caswell, Esq. (55:08):
Shashi Menon (55:08):
Roxby Hartley, Ph.D. (55:08):
Thank you everyone.
Shashi Menon (55:08):
Sarah Caswell, Esq. (55:11):
Thank you for joining us.