Dear EarthTalk: I understand that mountaintop removal as a way of coal mining is incredibly destructive. Didn’t a report come out recently that named major banks that were funding this activity? -- Seth Jergens, New York, NY

Yes it’s true that many major banks invest in companies that engage in the environmentally destructive practice of mountaintop removal (MTR) coal mining, whereby the tops of mountains are removed by explosives to expose thin seams of recoverable coal. The wasted earth and other materials are either put back onto the mountain top in an approximation of their original contours, wreaking havoc on local ecosystems and biodiversity, or dumped into neighboring valleys, polluting lakes and streams and jeopardizing water quality for humans and wildlife.

According to the non-profit Rainforest Action Network (RAN), this dumping—especially throughout Appalachia where MTR is most prevalent—“undermines the objectives and requirements of the Clean Water Act.” The group adds that some 2,000 miles of streams have already been buried or contaminated in the region. “The mining destroys Appalachian communities, the health of coalfield residents and any hope for positive economic growth.”

This past April, RAN teamed up for the second year in a row with another leading non-profit green group concerned about MTR, the Sierra Club, in publishing a “report card” reviewing 10 of the world’s largest banks in regard to their financing of MTR coal mining projects. The new 2011 version of “Policy and Practice” takes a look at the MTR-related financing practices of Bank of America, CitiBank, Credit Suisse, Deutsche Bank, GE Capital, JPMorgan Chase, Morgan Stanley, PNC, UBS and Wells Fargo.

What did they find? Since January 2010, the 10 banks reviewed have provided upwards of $2.5 billion in loans and bonds to companies practicing MTR. While some of the banks—Chase, Wells Fargo, PNC, UBS, and Credit Suisse—adopted policies limiting their financing of MTR, few actually pulled funding in place from any such activities upon adopting such policies. Citibank, despite announcing publicly in 2009 that it would limit its involvement in MTR, doubled its investments in the business in 2010.

RAN and the Sierra Club are also keeping a close eye on UBS which, soon after stating that it “needs to be satisfied that the client is committed to reduce over time its exposure to [MTR],” went ahead and acted as a paid advisor on the merger of Massey Energy, which operated the West Virginia mine where 29 men died last year, and Alpha Natural Resources. This merger created the largest single MTR company in the country, now responsible for some 25 percent of coal production from MTR mines.

The report card grades each bank based on its current position and practice regarding MTR investments, and calls on the banks to strengthen their policies and cease their financial support for coal companies engaging in MTR. “The ‘best practice’...is a clear exclusion policy on commercial lending and investment banking services for all coal companies who practice mountaintop removal coal extraction,” says RAN.

RAN and the Sierra Club hope that by exposing the impact these banks are having on the environment through their financing programs, they can help alert the public and policymakers to the need to outlaw MTR coal mining altogether.

Photo: Ilovemountains.org

EarthTalk® is written and edited by Roddy Scheer and Doug Moss and is a registered trademark of E - The Environmental Magazine (www.emagazine.com). Send questions to: earthtalk@emagazine.com. Subscribe: www.emagazine.com/subscribe. Free Trial Issue: www.emagazine.com/trial.

Dear EarthTalk: What is “tar sands oil” and what is the controversy over possibly building a pipeline for it from Canada into the United States? -- Bill Berkley, Omaha, NE

Tar sands oil (or “tar sands”) is slang for bituminous sand, a mixture of sand, clay, water and an extremely gooey form of petroleum known as bitumen, which resembles tar in appearance. Extracting commercially viable crude oil from tar sands is especially difficult because the thick and sticky mixture won’t flow unless it is heated or diluted with other hydrocarbons. Turning the extracted bitumen into liquid fuel requires large inputs of energy; the process also uses, pollutes and wastes large amounts of fresh water.

A Rainforest Action Network protest against a tar sands oil pipeline that would stretch from Canada to U.S. Gulf Coast refineries.

Research has shown that these processes alone generate as much as four times the amount of greenhouse gases per barrel of final product as the post-extraction production of conventional oil. Taking the entire life cycle of both final products into account, the extracting, processing and burning of liquid fuel from tar sands emits between 10 and 45 percent more greenhouse gases overall than conventional crude. Extraction of oil from tar sands also damages land to the point where it can no longer sustain forestry or farming.

Despite the environmental pitfalls of harvesting oil from tar sands, those countries that have them are making the most of them. More than half of Canada’s relative sizable oil production comes from the tar sands of Alberta and other areas, while Venezuela is also a big producer of tar sands oil.

Tar sands have been in the news of late because green groups and many U.S. public officials are worried that the construction of a new pipeline to transport tar sands crude from northeastern Alberta into the U.S. —TransCanada’s Keystone XL project—would greatly increase American consumption of this carbon-intensive fuel and jeopardize U.S. efforts to reduce its oil consumption and overall carbon footprint.

Plans call for running the 2,000-mile-long pipeline all the way from Canada to Gulf Coast refineries. On the way it will carry as much as 900,000 barrels of oil per day, passing through six U.S. states and possibly jeopardizing the integrity of farmland, public water sources and wildlife habitat.

In June 2010, 50 members of Congress signed a letter asking Secretary of State Hilary Clinton to block approval of Keystone XL because it would “undermine America's clean energy future and international leadership on climate change.” The U.S. Environmental Protection Agency subsequently announced that the State Department’s draft environmental impact study for Keystone XL was in need of revision because it didn’t sufficiently take into account oil spill response plans, safety issues and greenhouse gas concerns.

In December 2010, several concerned U.S. nonprofits—including the Natural Resources Defense Council and Sierra Club—launched the No Tar Sands Oil campaign to urge President Obama to halt Keystone XL, which is scheduled for completion by 2013. In March 2011 some two dozen U.S. mayors got into the act, asking Secretary Clinton to stop approval on Keystone XL as it could “undermine the good work being done in local communities across the country to fight climate change and reduce our dependence on oil.”

Photo: Rainforest Action Network

EarthTalk® is written and edited by Roddy Scheer and Doug Moss and is a registered trademark of E - The Environmental Magazine (www.emagazine.com). Send questions to: earthtalk@emagazine.com. Subscribe: www.emagazine.com/subscribe. Free Trial Issue: www.emagazine.com/trial.

Dear EarthTalk: Many people oppose dams because they change the flow of rivers and affect the migrating patterns of fish and other species, but aren’t they also a great renewable energy source? -- Ryan Clark, Milton, WA

Hydroelectric dams are among the greenest and most affordable electricity sources in the world—and by far the most widely used renewable energy sources—but they also take a heavy environmental toll in the form of compromised landscapes, ecosystems and fisheries. Hydroelectric dams have been an important component of America’s energy mix since the powerful flow of rivers was first harnessed for industrial use in the 1880s. Today hydroelectric power accounts for seven percent of U.S. electricity generation—and some two-thirds of the country’s renewable power—according to the U.S. Geological Survey.

Globally, about 19 percent of electricity comes from hydroelectric sources. The U.S. Energy Information Administration reports that China is the world’s largest producer of hydroelectricity, followed by Canada, Brazil and the U.S. Some two-thirds of the economically feasible potential for hydro power remains to be developed around the world, with untapped resources most abundant in Latin America, India and China.

Of course, despite the inexpensive and emissions-free power, many environmentalists consider hydroelectric dams to be man-made abominations that prevent salmon and other fish from swimming upstream, divert otherwise natural riparian settings, and fundamentally change the character of surrounding ecosystems. Green groups including American Rivers, Defenders of Wildlife, Earthjustice, the Endangered Species Coalition, Friends of the Earth, National Wildlife Federation and the Sierra Club are pushing the federal government to mandate the removal of four dams along the Snake River in Washington State that help the region have the lowest power-related carbon footprint in the country. The dams have decimated once teeming salmon runs, and upstream forest ecosystems have suffered accordingly.

But the Bonneville Power Administration, the quasi-federal utility that runs the dams and distributes the electricity they produce, says that keeping them going is crucial even as wind plays an increasingly larger role in the region’s electricity mix. Since hydro power can be generated and released when most needed, it is an important resource for backup power when intermittent sources like wind (and solar) aren’t available.

The scheduled removal of two century-old dams on the Elwha River in Washington State’s Olympic National Park beginning in 2011 may well serve as test cases for larger dam removal projects in the Pacific Northwest and beyond. Planners hope wild salmon numbers will rebound as a result, and that other wildlife—such as bald eagles and black bears—will follow suit.

President Obama has committed $32 million to modernize existing hydropower dams, increase efficiency and reduce environmental impacts. “There’s no one solution to the energy crisis, but hydropower is clearly part of the solution and represents a major opportunity to create more clean energy jobs,” U.S. Secretary of Energy Steven Chu told reporters last year. “Investing in our existing hydropower infrastructure will strengthen our economy, reduce pollution and help us toward energy independence.”

Photo: George Green, U.S. Army Corps of Engineers

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by Peter Asmus

The radically altered political dynamics in Washington, D.C. due to the loss of a Democratic Senate seat in Massachusetts mean that so-called “cap-and-trade” climate legislation probably has little chance of passing this year.  The only hope for passing a bill in 2010 that would cut carbon emissions could involve what most pundits have long thought of as the least politically viable approach: a tax on carbon.

But if that’s going to happen, an alliance of strange bedfellows will have to coalesce in short order, bringing together extremes on the left and right.  Joining in a legislative push would be environmental advocates and some large oil companies – most notably ExxonMobil, long a chief climate change skeptic, but more recently a carbon tax advocate following shifts in upper management.

“Climate change is an issue we take seriously and (we) believe responsible steps should be taken to address the risk,” says Ken Cohen, the oil company’s vice president of public affairs.  “We believe a revenue-neutral carbon tax is a more efficient policy option to reduce emissions…and is more able to be applied on a global basis than a cap-and-trade system.”

ExxonMobil’s opposition to a cap-and-trade policy is based, Cohen says, on a belief that “we should not be creating a complex derivatives market for a new commodity called an ’emission allowance’ as the recent financial crisis demonstrates. There is no need to create an opportunity for traders to extract profits from a trading system.”

Getting 60 Votes

Cohen’s critique of proposed cap-and-trade legislation – long the favorite of Washington insiders – sounds almost identical to that of the system’s environmental critics, like Friends of the Earth, Greenpeace and the Sierra Club.

Under a cap-and-trade framework, a cap would be set on carbon emissions.  Then, large carbon emitters would be able to trade for “clean air” credits created by companies which either perform activities that allegedly reduce net carbon (like planting trees or controlling emissions) or deploy new energy technologies that displace carbon, like replacing coal with wind.

A carbon tax involves a tax on all fossil fuels, such as coal, oil and gas.

“In my view, there is zero chance that any [cap-and-trade] climate legislation will pass this year,” predicts David Bookbinder, chief climate counsel for the Sierra Club. “The only thing that really makes sense is a carbon tax – but that’s the big ‘T’ word. A carbon tax has no price volatility, there is no abusive manipulation or a market; it is a very rational policy approach.”

In January, 80 U.S. corporate leaders -- including CEOs from companies such as eBay, Virgin America and Pacific Gas & Electric -- signed a joint letter urging President Obama and Congress to pass comprehensive climate and energy legislation this year. The prime message in the letter is that unless the U.S. sets clear carbon reduction targets, it will fall behind in the current global race to develop new carbon-free renewable technologies.

But most of those companies hold little sway among conservatives in Congress.  ExxonMobil and other energy companies not invested in coal do carry weight.  If they place a high priority on passing climate legislation in the form of a carbon tax, they could bring with them the prized 60^th Senate vote environmentalists need to avoid a filibuster against climate legislation.

Changing of the Guard

Under its prior CEO, Lee Raymond, ExxonMobil earned a reputation as an eco-renegade.  A smart and hard-nosed chemical engineer, Raymond was tone deaf to the social and environmental investors and advocates who framed the sustainability movement a decade ago.  He proudly positioned the company as the world’s most powerful climate change denier.

Now, three years after the transition to current CEO Rex Tillerson, the company is gently edging out of its self-imposed period of sustainability exile.  Tillerson can’t be regarded as an unbridled green advocate, in the model of BP’s former chairman Sir John Browne, but an increasing number of one-time critics think that, when it comes to actual performance on the human rights and the environment, Tillerson and his company could be the real deal.

“ExxonMobil seems to have recently had a dose of reality pills, and is taking climate change seriously,” says Bennett Freeman, Senior Vice President, Sustainability Research and Policy, for Calvert Investments, a leading socially responsible investment company. “For example, they recently invested $600 to $700 million on developing biofuels from algae.”

Freeman suggests that ExxonMobil’s support of a carbon tax is not driven by any desire to woo environmental advocates. “ExxonMobil does not do the warm and fuzzy thing well,” he says.  On the other hand, the company could be a powerful force in the carbon tax debate.  Culturally, says Freeman, “they are very straightforward. If they tell you ‘no,’ they mean ‘no.’  They have a “command and control” culture that helps drive commitments through the company.”

Seasoned eco-warriors like Randy Hayes, founder of the Rainforest Action Network and former head of the International Forum on Globalization, are happy to see oil companies such as ExxonMobil supporting a carbon tax.

“Either cap-and-trade or a carbon tax can be made to work to reduce the damage our society does, but the carbon tax is cleaner and my choice,” says Hayes. He goes on to say that “I can't imagine the version [of the carbon tax] that ExxonMobil, the Wall Street Journal, or the Financial Times want is the same one that nature needs. That said, we need the captains of industry to back a plan commensurate with the scale and timing of the problem.”

The Business Virtues of a Tax

There are compelling business reasons for companies like ExxonMobil to support a tax on carbon.

First, if Congress fails to act on climate, the U.S. Environmental Protection Agency will be forced to regulate carbon emissions under the Clean Air Act, creating a library of complex rules that could be expensive and only marginally effective.

Second, if Congress enacts a cap-and-trade approach, ExxonMobil fears the price volatility that could come with a global carbon trading regime, which could wreak havoc on oil development planning and finance.

Third, a carbon tax will reduce demand for coal, the most polluting fossil fuel, and give a marketplace advantage to natural gas and biofuels, the most carbon-lean.  ExxonMobil has increased its investments in natural gas, and recently made major investments in advanced algae biomass energy conversion.

Fourth, ExxonMobil may want to counter competitors like Shell, who are highly invested in energy commodity trading.

Environmental groups have their own reasons for supporting a carbon tax. “The whole concept behind the House and Senate cap-and-trade bills – creating large, international markets for carbon – is flawed. Worse, it gives away incentives to polluters and the targets for reductions are woefully inadequate,” concludes Ben Schreiber, Climate & Energy Tax Analyst for Friends of the Earth.

Friends of the Earth is one of more than 400 organizations now collaborating under the broad umbrella of “Climate Reality Check,” an initiative contemplating alternative legislative approaches to those already being considered by Congress.  “We don't have the 60 votes in the Senate to get where we need to be: a 40% reduction in carbon from 1990 levels,” says Schreiber.  “Even if the offsets included in either House or Senate cap-and-trade bills were real and verifiable, the reductions in carbon from 1990 levels are still less than 10 percent.”

Members of the “Climate Reality Check” coalition – which includes environmental justice, low-income and faith-based organizations - signed a letter last year opposing the House cap-and-trade legislation sponsored by Reps. Henry Waxman and Edward Markey.  The group had been exploring a "Plan B" even before the Copenhagen summit, but has yet to publicly come endorse a carbon tax or any other approach.

Elaine Kamarck, of the Kennedy School at Harvard University, and co-chair of the U.S. Climate Task Force, thinks the political viability of a carbon tax has actually increased over time.

“If a consensus emerges that cap-and-trade is just not going anywhere – and that seems to be just sinking in – then they will go back to the drawing board and examine other options,” she said. “You have to realize that cap-and-trade was initially being pushed before the economy fell apart. Markets were God and Wall Street was still filled with heroes. In that kind of political environment, cap-and-trade had some ‘oomph’ behind it. Now, Goldman Sachs and the rest of Wall Street are in the same category of bad guys as big polluters.”

Is ExxonMobil Serious?

Of course, any alliance with environmentalists depends on whether ExxonMobil is truly committed to a carbon tax.   Some critics claim the company’s public about face on climate change under CEO Tillerson is not heart-felt.

Robert A.G. Monks, a long-time ExxonMobil shareholder and critic, gives Tillerson credit for acknowledging “that there is such a thing as global warming” but harshly criticizes the ”inability of top management of this colossal company to understand, to take into account, to respond responsibly to the expressed concerns of entitled constituents.”

And there are lingering doubts regarding ExxonMobil’s role in the climate change debate. A recent story in the U.K.’s The Independent claims ExxonMobil was the funding source behind the rash of stories feeding skepticism about climate change in the lead up to the Copenhagen summit last December. While there is no doubt that ExxonMobil has delivered large financial contributions to think tanks such as the Atlas Economic Research Foundation (in the U.S.) and the International Policy Network (in the U.K.) as late as 2008, there is a lack of current available evidence the firm is the largest funder of such activities in 2009.

Whether ExxonMobil is playing two sides of the climate change issue at once is intriguing, to say the least. It could very well be that the company is a bit schizophrenic, which would not be surprising, given the history and size of the firm.

If a carbon tax is to ride to the rescue for both radical environmentalists, the faith community, human rights activists and, yes, oil companies, then something had better happen soon, since the attention span of Congress is limited, and another election cycle is nearing.

Peter Asmus (www.peterasmus.com) is the author of four books on energy and has been covering energy policy for over 20 years.