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such as release of toxic substances, depletion of the ozone layer
and the likelihood of causing algae blooms. Their conclusions
about environmental impacts were:
• Producing the optical equipment (OLTs and ONTs) accounts
for more than three-quarters of the environmental impact of
building the network.
A Carbon Cap-and-Trade System
It is hardly a secret that the Obama Administration
wants to reduce greenhouse-gas emissions – it was part
of the candidate’s stump speech during the primaries,
on his Web site during the final election campaign, and
is part of the “New Energy for America Plan” that can be
viewed on the spiffy new www.whitehouse.gov site.
While some think the whole idea is unnecessary, and
others believe a simple tax on creation of CO 2
emissions
could do the job, the Administration is leaning toward
a “carbon cap-and-trade” program. Big emitters would
have to limit their actual emission to some extent, but
would also be allowed to buy “carbon credits” from those
who can more easily conserve energy and resource use.
SELLING OFFSETS TO FREQUENT FLYERS
Frequent flyers are already familiar with offers to voluntarily
“soak up” the CO 2
emissions they cause by taking a
trip. For a flight across the Atlantic from the East Coast,
for instance, green consumers might pay $10 each for
the two or three metric tons of CO 2
represented by their
presence on a 747.
The money, usually minus a commission to the exchange
that brokers it, is handed to an organization that
might be reducing fuel use – a wind farm, for example.
Thus, the flyer essentially subsidizes clean energy. A
number of exchanges have sprung up in the US and in
Europe to handle such deals.
In the same way, FTTH network builders could sell
their energy savings, and perhaps their residential customers’
energy savings, to coal-burning companies like
electric utilities. Corporations using fiber-borne bandwidth
to cut their own energy demand might do the
same. The effect would be to subsidize fiber and make
coal more expensive, providing an incentive to find alternative
energy sources.
Though it sounds dicey at first glance, FTTH is already
eligible for credits in some European countries. And the
worldwide market for traded carbon was almost $120
billion in 2008, up from less than $80 billion in 2007. The
forecast for 2009 is $150 billion, though it may be lower
due to the poor economy.
THE VALUE OF A CARBON CREDIT
How much would the credit actually be worth The flyer
example suggests that a ton (actually, a metric ton, or
2,205 pounds) of emissions is worth $2 or $3 after commissions.
But almost the same price is also charged for
short-range flights; different sources put the average at
closer to $20 a ton for these small, “retail-level” sales.
Wholesale prices are at the lower end of the range.
One big exchange that focuses on trades among electric
utilities, the Regional Greenhouse Gas Initiative, sold almost
32 million tons of CO 2
credits at auction in December
for $106 million – about $3 a ton.
Down the road, carbon-emitting companies should
be willing to pay something close to what the federal
government might tax them. The policy wonks have been
citing tax figures ranging from $20 to $50 per ton of CO 2
,
probably starting low and increasing over time. There’s a
broad understanding that such taxes would have to be
phased in, and that this is not a good year to start.
But the auction shows that big emitters – especially
electric utilities that rely on coal – are already in the market,
buying credits now. Prices are lower, and some of
them are required to do so by state governments anyway.
Some European governments have set up a capand-trade
system as well. The anticipation is that credits
would be traded worldwide. As the box on the energy
model for FTTH points out, burning coal satisfies half the
US electricity demand.
FUTURE CREDITS ALREADY IN DEMAND
An example often mentioned is Ameren, which emitted
about 70 million tons of CO 2
in 2008 by burning coal to
generate electricity in Illinois and Missouri. Its emissions
would be capped, slowly falling to 20 percent of the current
level by 2050 under the preliminary Obama Administration
plan. So Ameren would eventually need to buy
credits for the other 80 percent. A more likely near-term
scenario would be a 5 or 10 percent cap in three years.
But even that would send Ameren into the market looking
for 3.5 to 7 million tons’ worth of credits, costing
roughly $200 million a year.
Ameren, an S&P 500 company, is already in the market,
buying “future credits” now at a discount. That’s
rather a good indicator of industry’s expectations.
What could FTTH network builders and their customers
share In our December issue, we looked at calculations
commissioned by Connected Nation, which
estimated 3.2 billion pounds of CO 2
emissions saved annually
by bringing broadband to an extra 7 percent of
US households – not necessarily FTTH. That’s about 1.5
million tons, or a $40 million annual “carbon tax benefit.”
To look at it another way, that’s enough to pay the interest
on $500 million to $1 billion in borrowing.
The new FTTH Council study cited in the main article is
a much more precise foundation for making these calculations.
No investor would bank on it until a federal capand-trade
system is signed into law, of course. But this
study is an important first step in setting up the account.
January/February 2009 | www.broadbandproperties.com | BROADBAND PROPERTIES | 29