|Josh Wiener of MetLife, Kevin Rabinovich of Mars Inc., Rusty Hodapp of Dallas-Fort-Worth International Airport and Rob Bernard of Microsoft share the strategies that helped them win Climate Leadership Awards with David Rosenheim of The Climate Registry at the fifth annual Climate Laedership Conference, March 10 in Seattle.|
Climate action can start with an idea, but it takes a goal and a plan to get there to make that idea a reality.
When the folks at Microsoft began their current sustainability journey in 2007, “There was well-intentioned chaos,” according to Rob Bernard, the company’s chief environmental strategist. When the Clinton Foundation asked the software maker for a tool to monitor carbon in cities, “That made us think that, internally, we needed to have a strategy on sustainability,” Bernard said in his remarks at the fifth annual Climate Leadership Conference (CLC) in Seattle earlier this month.
That strategy led Microsoft to set and achieve its first public greenhouse gas goal, a 30 percent reduction within five years. Once that was met, the company then set -- and met -- an even more ambitious goal: carbon neutrality.
Microsoft was one of 13 organizations, three partnerships, and one individual honored with 2016 Climate Leadership Awards for accomplishments in reducing greenhouse gas emissions and driving climate action. The were given by the U.S. Environmental Protection Agency’s (EPA), in collaboration with C2ES and The Climate Registry.
The Center for Climate and Energy Solutions is a source of reliable information about the causes and potential consequences of climate change. Here we provide an overview of fundamental facts and data and answers to frequently asked questions.
The Earth is warming
The world is undoubtedly warming. The Earth’s average surface temperature has increased by about 1.4°F (0.8°C) since the late 1800s. Since the 1970s, each decade has been warmer than the previous decade.
The 10 warmest years on record (since 1880) have all occurred since 1998, and all but one have happened since 2000. See a list of global average annual temperatures here.
Observed global mean temperature anomalies, combined for the land and ocean, from 1850 to 2012 from three data sets. Top panel: annual mean values. Bottom panel: decadal mean values including the estimate of uncertainty for one dataset (black). Anomalies are relative to the mean of 1961-1990. Source: Intergovernmental Panel on Climate Change Fifth Assessment Report (IPCC AR5) Working Group 1, Figure SPM.1.
Human-caused emissions are responsible
The warming of the Earth is largely the result of emissions of carbon dioxide and other greenhouse gases from human activities. These activities include burning fossil fuels and changes in land use, such as agriculture and deforestation.
As a result, greenhouse gases are accumulating in our atmosphere. Carbon dioxide concentrations in the atmosphere since pre-industrial times have increased from 280 parts per million to nearly 400 parts per million.
Atmospheric carbon dioxide from 1958-2014. The red curve shows the monthly average. The black curve has been adjusted to take the seasonal changes in CO2 concentration into account. Source: Dr. Pieter Tans, NOAA/ESRL (http://www.esrl.noaa.gov/gmd/ccgg/trends/) and Dr. Ralph Keeling, Scripps Institution of Oceanography (scrippsco2.ucsd.edu/).
The reason for the accumulation is simple: Human activities are putting more carbon dioxide than the planet’s vegetation and ocean can remove. A useful analogy is that of a bathtub, where the flow of water out of the faucet exceeds the flow through the drain, as illustrated in the U.S. Environmental Protection Agency’s (EPA) background materials on the causes of climate change.
At the rate we are putting carbon dioxide into the atmosphere, it accumulates faster than it can be drained out. Source: EPA: Causes of Climate Change, based on the National Research Council publication Warming World, Impacts by Degree.
The warming we’ve observed has been driven, in large part, by the accumulation of greenhouse gases in the atmosphere.
The Fifth Assessment Report (AR5) from the IPCC summarizes: It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century… It is extremely likely that more than half of the observed increase in global average surface temperature from 1951 to 2010 was caused by the anthropogenic increase in greenhouse gas concentrations and other anthropogenic forcings together.
IPCC AR5, Working Group 1, Summary for Policy Makers, p.17
Other factors capable of changing the climate, like volcanic eruptions and changes in the sun’s intensity, cannot by themselves explain the changes we’ve observed in the Earth’s climate. The figure below shows the outcomes of different computer simulations of climate (see caption for details).Only the simulations that included human influences exhibited warming similar to the observed temperatures around the globe during the last century.
Observed (black lines) and simulated (shading) surface temperatures, ocean heat content, and sea ice extent. The blue shading represents simulations without humans’ influence on climate, and do not match the globally-average observations or those over most continents. The pink shading represents simulations where greenhouse gas emissions and other human influences have been taken into account – these simulations do a much better job at tracking temperatures and ocean heat content globally and regionally. Source: IPCC AR5 Working Group 1 report, Figure SPM.6.
Impacts will be severe if the trend continues
The amount of warming that occurs by the end of this century depends on our choices now. If we don’t make much progress in curbing emissions, temperatures for the planet could rise between 4.7°F to 8.6°F (2.6°C to 4.8°C) by the end of the century, compared to the average temperature around the end of the 20th century (1986-2005). Warming in the United States is expected to be higher than the global average. Warming averaged across the country could be between 5°F to 10°F, assuming that emissions rates continue.
Although we have the opportunity to avoid some of this warming, we are still likely to face a number of impacts arising from climate change in the coming decades. In fact, we are already observing some of these impacts now.
- Sea level rise – Sea level has risen about 8 inches in the last 100 years, making coastal storms more damaging and accelerating erosion. Globally, future sea level rise is likely to range from 1 to 4 feet, and could be even higher if glaciers in Greenland or Antarctica melt especially quickly.
- Polar ice – Arctic sea ice during the summer has been shrinking, and sometime in the 21st century, perhaps within the next few decades, the Arctic will likely be ice-free in the summer. The ice sheets in Greenland and Antarctica have also been melting more rapidly in recent years, which could increase the rate of global sea level rise.
- More heavy downpours – More rain is coming in heavy precipitation events in many parts of the world, including the United States. This may contribute to stronger or more frequent floods.
- More heat waves – Heat waves have become more frequent and intense, threatening human health, stressing water resources, and increasing energy demands.
- Threats to ecosystems – Many plants and animals will be forced to shift their habitats to higher elevations or higher latitudes as warming makes it more difficult to thrive in their current locations.
- Increased agricultural pests – With milder winters, many pests and pathogens that affect plants and livestock have been able to migrate to new areas, posing problems to farmers and ranchers.
- Ocean acidification – Increased carbon dioxide in the atmosphere has caused the oceans to become more acidic. Further acidification could dissolve the shells of many organisms at the bottom of the food chain, threatening to disrupt the ocean ecosystem.
These impacts pose challenges to infrastructure, businesses, and communities, particularly in countries already struggling to meet the basic food, water, shelter, and security needs of their citizens.
In addition, rapid warming can increase the risk of climate “surprises” or “tipping points.” Examples of these tipping points include the injection of methane into the atmosphere from thawing permafrost that could further accelerate warming, or the loss important ecosystems, such as large areas of the boreal or Amazon forests, that occurs as temperatures warm and precipitation patterns change. Although we don’t know when some of these tipping points might be crossed, continued warming would raise the chances that they could occur.,
We must both reduce emissions and build resilience
We now have two jobs ahead of us.
The first is mitigation – using policy, technology and other actions to reduce the greenhouse gas emissions responsible for climate change. We need to transition to a lower-carbon economy. Steps along this path will include improving energy efficiency; increasing the use of low- and zero-carbon energy sources such as wind, solar, and nuclear power; and developing carbon capture and storage technologies.
The second is bolstering our resilience to climate impacts– making sure that businesses and communities can withstand the changes in the climate that we can’t avoid.
What’s the difference between “global warming” and “climate change”?
"Global warming" refers to the increase of the Earth's average surface temperature due to a build-up of greenhouse gases in the atmosphere. "Climate change" is a broader term that refers to weather trends observed over relatively long periods of time (many decades or longer). Climate change can include many variables (temperature, precipitation, wind direction, wind speed) and different geographic scales (over a continent, within an ocean, for the Northern Hemisphere, for the planet).
Is climate change a natural or human-caused phenomenon?
Human activities that release carbon dioxide and other greenhouse gases into the atmosphere are largely responsible for recent climate change. The pattern of warming that we have observed, in which warming has occurred in the lower portions of the atmosphere (the troposphere) and cooling has occurred at higher levels (the stratosphere), is consistent with how greenhouse gases work – and inconsistent with other factors that can affect the global temperature over many decades, like changes in the sun’s energy. Although natural forces affect the climate (like volcanic eruptions and variations in the sun’s energy), they alone cannot account for the warming that has occurred.
How do we know that human activity is causing greenhouse gas concentrations in the atmosphere to rise?
Several pieces of evidence make it clear that greenhouse gas concentrations in the atmosphere are increasing because of human activities:
- Ice cores from Greenland and Antarctica tell us that carbon dioxide and other greenhouse gas concentrations were relatively stable for thousands of years, but began to rise around 200 years ago, about the time that humans began to engage in very large-scale agriculture and industry. Concentrations for these gases are now higher than at any time for which we have ice core records, which stretch back 800,000 years.
- Some greenhouse gases, such as industrial halocarbons, are only made by humans. Their accumulation in the atmosphere can only be explained by human activity
- Scientists and economists have developed estimates of human sources of greenhouse gases. These estimates show that emissions have been increasing, consistent with the increases that are observed in the atmosphere.
- Carbon comes in different isotopes (carbon-12, carbon-13, and carbon-14; the numbers indicate the atomic weight). Carbon dioxide from fossil fuels has a certain isotopic “signature” that differs from other sources of CO2. Scientists measure the different isotopes to confirm that the increase in carbon dioxide in the atmosphere is predominantly from fossil fuel combustion.
This evidence leaves no doubt that greenhouse gas concentrations are increasing because of human activities.
Has the climate already begun to change, and how do we know?
This illustration shows components of the climate system that would be expected to change in a warming world, and the changes they show that are consistent with warming (arrow direction denotes the sign of the change).
In addition to direct measurements of air temperature, we have a number of other changes (see figure) that are consistent with a warming planet. The evidence for these changes has grown stronger over the years.
The National Climate Assessment summarizes the state of our knowledge:
Evidence for climate change abounds, from the top of the atmosphere to the depths of the oceans. Scientists and engineers from around the world have meticulously collected this evidence, using satellites and networks of weather balloons, thermometers, buoys, and other observing systems. Evidence of climate change is also visible in the observed and measured changes in location and behavior of species and functioning of ecosystems. Taken together, this evidence tells an unambiguous story: the planet is warming, and over the last half century, this warming has been driven primarily by human activity.
National Climate Assessment, p.7
How do you explain seasonal cold weather if the climate is warming?
Climate change involves changes in long-term statistics of weather, but it does not mean an end to cold weather or to winter. Instead, it means that, averaged over many decades, cold winters and mild summers will become less frequent, and mild winters and hot summers will be more frequent. In fact, both of these trends have been observed over the past 50 years in the United States and globally. It is also important to remember that a cold winter for one location doesn’t mean a cold winter everywhere. The U.S. Midwest and East Coast experienced a relatively cold winter in 2013-2014, but California had one of its warmest winters ever recorded.
How much warmer will we get?
Projections for average global temperature increase this century range from about 2°F to around 11°F compared to temperatures in the late 1900s. However, at the higher latitudes, many locations are likely to warm by more than the global average (see figure).
The large range among projections stems mostly from different pathways in future energy use and greenhouse gas emissions. To keep warming to the lower end of the range, significant cuts in emission would need to be implemented immediately. In recent decades, the planet’s greenhouse gas emissions trajectory has been much more similar to the high end of the warming projections.
Projected changes in average annual temperature over the period 2071-2099 (compared to the period 1970-1999). The map on the left corresponds to a future where greenhouse gas emissions are substantially reduced immediately and net CO2 emissions become negative near the end the 21st century. The map on the right corresponds to a future in which greenhouse gas emissions continue to grow. Source: National Climate Assessment Figure 2.5.
Has there been a “pause” in global warming?
During the last 15 years or so, global mean surface temperatures have not warmed as rapidly as they had during previous decades. The Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5) concludes that this is probably due to a combination of factors, including a redistribution of heat in the ocean, volcanic eruptions, and the recent minimum in the 11-year solar cycle.
“…trends based on short records are very sensitive to the beginning and end dates and do not in general reflect long-term climate trends.”
IPCC AR5, Working Group 1, Summary for Policy Makers, p.5
Looking at the past temperature record or computer simulations of future climate shows that periods of less warming (or even slight cooling) can occur within longer periods of warming. In other words, the recent apparent “slowdown” in warming does not change the “big picture” of our understanding of climate change, or our expectation for future warming.
Short-term periods of cooling or limited warming can be embedded in longer-term warming trends. The recent “slowdown” of warming is not inconsistent with an expectation of future warming. Source: National Climate Assessment, Appendix 3, Figure 15.
Won’t some parts of the world benefit from warmer weather?
There are some benefits that come with warming and increased carbon dioxide:
- Energy demands for heating usually decrease
- Carbon dioxide can accelerate growth from some types of crops
- Growing seasons get longer, which may increase agricultural production
- Illness and mortality related to cold declines
However, most studies show that damages caused by climate change far outweigh these benefits. Work supporting the Risky Business report shows that in almost all regions of the United States, warming will create more problems than benefits.
According to the National Climate Assessment and the IPCC Working Group 2 Report: Impacts, Adaptation, and Vulnerability, potential harm to individuals, communities, and businesses, include threats to:
- Coasts – In the near-term, sea level rise is likely to increase storm surge, making hurricanes and other severe storms more destructive. It may also contaminate groundwater supplies with saltwater. In the longer term, many coastal communities may become inundated, forcing choices about investing in shoreline protection and/or moving farther inland. This could be more troublesome for people who live in small island nations, where higher ground may be limited or resettlement in new countries may be necessary.
- Water resources – Water may become less available because of changes in precipitation patterns, loss of snowpack, and earlier snowmelt. Warmer temperatures can drive up water demands for agriculture, energy, and human consumption. Flooding from heavier rainfall events can also potentially overcome wastewater treatment systems and spread agricultural runoff into water bodies. This can cause threats to the economy and human health, especially in areas with growing populations or limited reservoirs and water treatment plants.
- Health – Warmer temperatures can increase the risks of heat-related illness and even death. Warmer temperatures can also help expand the ranges of diseases carried by insects or ticks, bringing them to regions where they were previously not a threat. Warmer temperatures can increase smog, reducing air quality and causing health issues for the young, elderly, or those with respiratory problems.
- Security – Climate change can affect access to basic needs (food, water, energy, shelter), especially in developing countries. Impacts on these critical resources can trigger or exacerbate migration, conflict, and political instability, which have security implications for the United States. In addition, loss of Arctic sea ice presents new operational issues for the U.S. Navy and for the security of our Arctic border.
What is the greenhouse effect? How does it work?
The greenhouse effect is a naturally occurring process in the Earth's atmosphere that warms the planet. In the absence of a greenhouse effect, the average temperature at the Earth's surface would be approximately 60°F colder.
Visible light from the sun passes through the atmosphere and is absorbed by the Earth's surface, heating it up. That energy is then emitted back to the atmosphere as heat. Greenhouse gases in the atmosphere can absorb this energy, preventing it from escaping into space. This raises the temperature of the atmosphere and ultimately, the Earth’s surface. You can think of greenhouse gases as a blanket - and human-induced increases in greenhouse gas concentrations make this blanket thicker, warming the planet.
Source: National Park Service
What are the most important greenhouse gases?
We have a complete discussion of the main greenhouse gases and their sources here.
The EPA also provides a wealth of information about greenhouse gas emissions and sources.
Are scientists in agreement about the reality and cause of climate change?
Yes. Polls of climate scientists show there is not an active “debate” within the field. For example, this study shows that 97 percent of science papers that take a position on climate change endorsed the consensus position that humans are causing global warming.
There are plenty of important research questions debated by scientists. How fast will the ice sheets melt? How are changes in the jet stream related to climate change? But scientists agree on the fact that the planet is warming, and that human activities are an important driver.
How reliable are climate projections?
Current computer models can faithfully simulate many of the important aspects of the global climate system, such as how global average temperature changes over many decades, the march of the seasons on large spatial scales; and how the climate responds to large-scale forcing, like a large volcanic eruption. So we can be confident that they correctly represent some of the “big picture” features of climate. However, simulations of climate at more regional and local scales, such as a country or state, can still be uncertain. Models also often have difficulty simulating year-to-year changes in the climate system, so a model run in 2014 is unlikely to precisely predict the global temperature in 2015 or 2016.
It is also important to note that projections for this century should not be viewed as predictions. Rather, they represent a range of possible futures, consistent with different concentrations of greenhouse gases in the atmosphere. If we emit a particular level of greenhouse gases in the coming decades, the projection provides us a glimpse of how different our climate might be.
How much do greenhouse gas emissions have to be reduced to stop climate change?
While greenhouse gases continue to accumulate in the atmosphere, the climate will warm. And even if we were able to “stabilize” the concentrations of greenhouse gases in the atmosphere, the planet will continue to warm for many decades, as time lags within the climate system are relatively long.
It can be most useful to think about climate change through a risk management lens – the more greenhouse gases that we emit, the greater the risks for dangerous impacts to occur. Through this lens, reducing emissions helps lower our risks, and the greater the reductions, the greater the risk avoided.
Other C2ES Resources
Nuclear power supplies more than 60 percent of zero-carbon electricity in the United States. The unexpected retirement of five nuclear reactors is prompting concerns that additional closures could make it tougher to meet U.S. climate goals.
C2ES releases a new brief examining this emerging dilemma and hosts a discussion with government, industry, and policy leaders.
Monday, April 28, 2014
9:30 a.m.-12:00 p.m
National Press Club
529 14th St. NW, 13th Floor
Washington, DC 20045
Assistant Secretary for Nuclear Energy, U.S. Department of Energy
Distinguished Senior Fellow, Center for American Progress
and Former EPA Administrator
President, Entergy Wholesale Commodities
Senior Vice President, Federal Government Affairs, Exelon Corporation
Chief Commercial Officer, North America, AREVA, Inc.
Senior Adviser, Analysis Group
President, Center for Climate and Energy Solutions
Nov. 25, 2013
Contact Laura Rehrmann at email@example.com, 703-516-0621
C2ES Welcomes Jeff Hopkins as New Vice President for Policy and Analysis
WASHINGTON – The Center for Climate and Energy Solutions is pleased to welcome Jeff Hopkins as its new Vice President for Policy and Analysis. Hopkins will lead C2ES programs in the energy, power, and transportation sectors.
Hopkins has more than 15 years of private and public sector experience in economic and environmental policy analysis. Prior to joining C2ES, he led mining company Rio Tinto’s climate policy engagement in the United States and Canada. Previously, he was acting chief economist for the House Budget Committee and worked for the U.S. Department of Agriculture’s Economic Research Service.
“Jeff brings strong experience examining the global energy sector and trends in best regulatory practice. He understands policy from both the corporate and government perspectives. Jeff is a great addition to the team,’’ said C2ES President Eileen Claussen.
Hopkins has a doctorate from Ohio State University in agriculture, environment and development economics and was a Peace Corps Volunteer in Guatemala from 1987-1989.
About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address the twin challenges of energy and climate change. Launched in November 2011, C2ES is the successor to the Pew Center on Global Climate Change. Learn more at www.c2es.org.
As we plunge into the holiday shopping season, take a minute to think about the things you can do to make searching for the perfect gift a little friendlier on the planet (and your wallet).
Here are nine ideas for making the holiday season a little greener and less stressful. Try one. And get more information on how you can save energy and help the planet at http://makeanimpact.c2es.org/
At the moment, our attention is riveted by the events unfolding at a nuclear power plant in Japan. Over the past year or so, major accidents have befallen just about all of our major sources of energy: from the Gulf oil spill, to the natural gas explosion in California, to the accidents in coal mines in Chile and West Virginia, and now to the partial meltdown of the Fukushima Dai-ichi nuclear reactor. We have been reminded that harnessing energy to meet human needs is essential, but that it entails risks. The risks of different energy sources differ in size and kind, but none of them are risk-free.
By Eileen Claussen
December 20, 2010
2010 was a year of highs and lows.
On the high side were global temperatures; 2010 will mark the hottest year in recorded history. At the start of the year, there was also the short-lived high of thinking we might be on the precipice of meaningful action in the U.S. Congress to protect the climate. Finally, at year’s end the climate talks in Cancún delivered (surprise!) tangible results in the form of agreement on key elements of a global climate framework.
But alas, the lows won out for most of 2010 as a trumped-up email controversy, continuing economic unease, and growing anti-government sentiment in the United States undermined the effort to forge lasting climate solutions at all levels.
Congress. Until quite recently, the Pew Center and many others were actively supporting cap and trade as the number-one climate policy solution. After the House passed a fairly comprehensive energy and climate bill in June 2009 that had a cap-and-trade system at its core, we actually thought that it might become the law of the land.
Before long, however, it became eminently clear that the Senate would not be able to pass a similar bill. The 2010 U.S. elections, which brought more doubters of climate change into the halls of Congress, only made it clearer that comprehensive climate action is off the table for now.
EPA. With Congress unable to pass comprehensive climate legislation in 2010, attention turned to what EPA might be able to do under existing authorities. And it turns out that EPA can do quite a lot by taking reasonable steps that have garnered critical support from the business and environmental communities. In late October, for example, the agency announced a sensible proposal to reduce greenhouse gas emissions and improve fuel efficiency for medium and heavy-duty vehicles. This was followed by a November announcement that will go a long way to making sure that new industrial facilities use state-of-the-art technologies to boost efficiency and reduce emissions.
Of course, opponents of these and other EPA regulations will surely raise a ruckus, and there will be loud cries in Congress to delay the regulations and even cut funding for the EPA. But the possibility remains that the agency could conceivably begin to chip away at U.S. emissions in the months and years ahead.
State Actions. Looking beyond Washington, state capitals were the focus of creative thinking and leadership on the issue of clean energy in 2010. Massachusetts, for example, set a statewide energy efficiency standard in 2010 supported by $1.6 billion in incentives. Meanwhile, California voters upheld the state’s greenhouse gas reduction law by defeating Proposition 23. This marked the first direct vote on addressing climate change in the United States, and it won in an overwhelming fashion.
But the overall story regarding climate action in the states was more mixed. While several regional climate initiatives continued to push forward, the November elections brought to the nation’s statehouses a group of new leaders who adopted strong stands against climate action in their campaigns. We will stay tuned to see how their campaign rhetoric translates into governing.
International. The agreement reached by international negotiators in Cancún in December closed out 2010 on a positive note. The Cancún Agreements import the essential elements of the 2009 Copenhagen Accord into the U.N. Framework Convention on Climate Change, including a stronger system of support for developing countries and a stronger transparency regime to better assess whether countries are keeping their promises. The Cancún Agreements also mark the first time that all of the world’s major economies have made explicit mitigation pledges under the Convention.
Of course, the ultimate goal of the continuing international talks should be a legally-binding climate treaty, but in Cancún we saw countries agreeing on incremental steps that will deliver stronger action in the near term and lay the foundation for binding commitments down the road.
Looking Ahead. Looking ahead, I believe 2011 holds promise only if those of us who support climate action can learn from what happened in 2010. In recent years, domestic and international efforts largely centered on a “big bang” theory of trying to achieve everything at once. Instead, it’s instructive now to take a cue from Cancún and accept that a step-by-step approach to building support for climate solutions offers our best shot at progress.
Calling on the new Congress to pass cap and trade or similarly comprehensive solutions will be a nonstarter, for example. But there may be an opportunity on Capitol Hill for less sweeping steps to reduce U.S. emissions.
Supporters would do well to spend the next several months laying the groundwork for incremental solutions by strengthening communications with the public. We need to do a better job of helping people understand both the risks and the opportunities presented by climate change. In the same way we buy fire insurance to protect against an event that has a statistically small chance of happening but would result in severe damage, acting now to cut emissions reduces our vulnerability to severe events that are likely to become more common in a warming world. And the success of the “No on Prop 23” campaign in California suggests that there remains a healthy appetite among the general public and in the business community (which provided substantial support for the effort) to back well-framed climate solutions.
After a year of highs and lows, we still must aim high in our efforts to address one of the greatest challenges of our time. But we should also heed the lessons of the past year and work for more modest victories now that can keep us on the path to longer-term solutions.
By: Janet Peace and Robert N. Stavins
There is broad consensus among those engaged in climate policy analysis—from academia, government, NGOs, and industry—that any domestic climate policy should include, at its core, market-based policy instruments targeting greenhouse gas (GHGs) emissions, because no other approach can do the job and do it at acceptable cost. By “putting a price on carbon,” market-based polices harness the power of our free enterprise system to reduce pollution at the lowest costs. Recent concern, however, about the role of financial markets—and specific fraudulent investment vehicles—in the recent recession have raised questions among the public about the efficacy and functioning of markets. Not surprisingly, some have questioned the wisdom of employing market mechanisms to tackle climate change. Critics ask, how can market-based policy instruments be trusted to look after the public’s welfare with regard to global-warming pollution (or anything else, for that matter)?
When it comes to climate change and environmental issues more generally, environmental economists recognize that the source of many problems is not markets per se, but the absence of markets for environmental goods and services, such as clean air and water. In the absence of prices (costs) associated with environmental damages, producers and consumers need not account for such damages in their activities and choices. Environmental damage is thus an unintentional byproduct of decisions to produce or consume. Because these negative consequences are external to the firm or individual creating them, economists refer to them as externalities. They are one category of market failures; in this case, the failure of existing markets to price accurately the full costs to society of producing and consuming goods that create a pollution externality.
In the case of climate change, the burning of fossil fuels and other activities that release GHGs into the atmosphere are associated with increasing global temperatures. The costs of these impacts, including an increase in extreme weather events, rising sea levels, loss of biodiversity, and other effects, are borne by society as a whole, including future generations. In the absence of a price on carbon, these environmental costs are not included in the prices of GHG-based goods—thus there is no direct cost for emitting GHG pollution into the atmosphere. From a societal perspective, this leads to an inefficient use of resources, excessive emissions, and a buildup of excess concentrations of GHGs in the atmosphere.
The current status quo or “laissez-faire” approach to dealing (or rather failing to deal) with GHG pollution results in an outcome that is not in the interest of society. For this reason, many people have advocated putting a price on GHG emissions to cause market participants to confront or “internalize” the costs of their actions and choices. A policy instrument that puts a price on GHG emissions would, for example, raise the cost of coal-generated electricity, relative to electricity generated with natural gas, because coal as a fuel emits more carbon dioxide (CO2) per unit of energy. Producers and consumers would take this relative cost differential into account when deciding how much electricity to produce and what fuels to use in producing it. That is the point — to make the cost of emitting carbon explicit, so that it becomes part of the everyday decisionmaking process.
Two alternative market-based mechanisms can be used to put a price on emissions of GHGs—cap and trade and carbon taxes. With cap and trade, an upper limit or “cap” on emissions is established. Emission allowances that equal the cap are distributed (either freely or through auction) to regulated sources which are allowed to trade them; supply and demand for these allowances determine their price. Sources which face higher abatement costs have an incentive to reduce their abatement burden by purchasing additional allowances, and sources which face lower abatement costs have an incentive to reduce more and sell their excess allowances. Thus, the government establishes the environmental goal (the cap), but the market sets the price.
In contrast, a carbon tax sets a price on emissions, but leaves the environmental outcome uncertain. The tax creates an incentive for firms to reduce their emissions up to the point where the cost of reductions is equivalent to the tax. If the tax is low, fewer reductions will result; if the tax is high, more abatement effort will be forthcoming. Given the real-world U.S. political context, the more promising of the two market-based approaches to addressing climate change is clearly cap and trade, which creates a market for GHG reductions.
While the common sense justification for putting a price on carbon emissions seems straightforward, some of the public and even some policy makers are questioning whether creating a market for GHG reductions is a cure worse than the disease itself. Some questions and concerns include the following:
- Why employ market-based approaches to GHG emission reductions, when markets are subject to manipulation?
- Would a market-based approach to reducing GHG emissions be a corporate handout?
- Can markets be trusted to reduce emissions?
- Will a market-based approach, such as cap and trade, be too costly?
- Are other approaches—including conventional regulation and taxes—likely to be more effective and less complicated?
Our goal in this paper is to address the questions above, and—we hope—leave the reader with a better understanding of the issues, the rhetoric, and the fundamental reasons why cap and trade is the most promising approach to address the threat of climate change. We believe that past concerns about how markets operate can be effectively addressed and result in a policy that is both environmentally and economically superior to alternative approaches.
This briefing will be held at two separate times and locations to accommodate House and Senate staff.
Wednesday, June 30
12:00 Noon to 1:30 PM
Rayburn House Office Building, Room 2325
3:30 to 4:45 PM
Capitol Visitors Center, Room SVC 202
Seasonal forecasters predict that 2010 will produce between 14 and 23 named hurricanes -- the most active season since 2005, when Hurricane Katrina and 27 other named storms swept the Atlantic and Gulf of Mexico. As economic challenges continue and oil spews from the damaged Deepwater Horizon well in the Gulf, the growing impacts to the region's economic recovery and unique ecosystems are staggering. What risks does an active hurricane season pose for other energy-related infrastructure, for inland areas as storm surges push oil beyond beaches and marshland, and for stakeholders dealing with flooding in coastal communities in the Gulf and along the East Coast? Can recent advances in hurricane prediction help manage these risks? Might related climate change impacts exacerbate them in the future? What does an increasing scale of catastrophic loss associated with hurricane activity mean for critical services provided by the insurance sector? Please join our panelists as they address these questions and discuss research results, institutions, and processes in place to help manage potential catastrophic risk of this hurricane season.
Opening remarks by Senator Mary Landrieu, Honorary Host (3:30pm briefing only)
- Heidi Cullen
CEO and Director of Communications, Climate Central
- Greg Holland
Director, NCAR Earth System Laboratory, National Center for Atmospheric Research
- Rick Luettich
Professor & Director, Institute of Marine Sciences, University of North Carolina at Chapel Hill
- Rowan Douglas
CEO, Global Dynamics, Willis Re and Chairman, Willis Re Research Network
RSVP to Gloria Kelly at firstname.lastname@example.org or (303) 497-2102 by Monday, June 28
Sponsored by the American Geophysical Union (AGU), the Congressional Hazards Caucus Alliance, the National Science Foundation (NSF), the Pew Center on Global Climate Change, the University Corporation for Atmospheric Research (UCAR), and the Weather Coalition.
With appreciation to the House Committee on Science and Technology and the Senate Subcommittee on Disaster Recovery of the Committee on Homeland Security and Governmental Affairs.
June 23, 2010
By Eileen Claussen and Jim Rogers
This op-ed first appeared in Politico.
Passing a meaningful energy and climate bill this year will be challenging — but not impossible.
It’s time for all of us — politicians, business leaders and environmentalists — to put wishful thinking aside, establish realistic goals and develop a consensus for legislation that can be passed this year.
If that means capping emissions from the utility sector first — so be it. There is growing consensus in the electric utility industry to act now, so let’s move forward.
Duke Energy and other electric utilities are already scheduled to retire and replace virtually all coal and other large power plants with cleaner and more efficient technologies by 2050.
A clear and predictable federal energy and climate policy can accelerate these projects and put private capital to work more rapidly. It can also create millions of jobs.
This would not only reduce greenhouse gas emissions but would also reduce sulfur dioxide, nitrogen oxide and mercury emissions, which contribute to acid rain, smog and other health issues. That would improve air quality across the board.
At Duke Energy, approximately 6,000 people are now working on designing and building more advanced power plants. That’s quite an economic stimulus.
When their work is done, permanent jobs would be created, municipal and county tax collections would increase and old and inefficient power plants would be shut down.
With the right signal from Washington, the company can by 2020 close roughly 4,000 megawatts of coal plants more than 45 years old.
This action will drive greater use of cleaner, domestic energy sources that will enhance our nation’s security and limit pollution.
Sensible policy should include incentives for new emissions-free nuclear power, renewable energy and carbon capture and storage for coal plants. It must also clarify federal emissions regulations so electric utilities can shift to cleaner and more efficient power plants without the uncertainty of patchwork regulatory approaches and the threat of litigation.
Electric utilities have some of the strongest balance sheets in industry. They can now borrow private capital at historically low rates. For example, over the past 2½ years, Duke Energy has borrowed $8 billion at an average rate of less than 5.5 percent.
This means lower long-term costs to electric consumers — with no increase in the national debt and deficit.
But this will all take time. We need to be willing to adopt the three C’s: commitment, collaboration and compromise.
Commitment: We have to be in this together — for the long haul. Good energy and climate policies will allow the electric utility industry to make sound investment decisions.
Electric utilities may be willing to go first. But they are not going to be willing to go alone.
Collaboration: All successful environmental legislation has been predicated on a collaborative and bipartisan approach. The 1990 Clean Air Act amendments, designed to reduce acid rain, urban air pollution and toxic air emissions, passed the House by a 401-21 vote and the Senate by a 89-11 vote.
That process of working together to find common ground among diverse stakeholders is what we need now.
Compromise: Collaboration succeeds only when there’s a real spirit of compromise. That’s why it is the cornerstone of our democracy. There must be give-and-take at every decision point.
Current clean energy and climate legislation is not an all-or-nothing proposition. It’s a work in progress that can begin our transition to a clean energy future. We need to look past our differences and act where there is agreement.
It’s time to get started.
Eileen Claussen is president of the Pew Center on Global Climate Change. Jim Rogers is chairman, president and CEO of Duke Energy.