July 13, 2005
Contact: Katie Mandes
GE JOINS PEW CENTER ON GLOBAL CLIMATE CHANGE
Next step in company-wide focus on addressing pressing challenges
Washington, D.C.-The Pew Center on Global Climate Change announced today that General Electric Company (GE) has joined the Pew Center's Business Environmental Leadership Council (BELC) and their efforts to address global climate change.
GE, one of the world's largest companies, has committed to reduce its greenhouse gas (GHG) emissions one percent by 2012 and the intensity of its GHG emissions 30 percent by 2008 (both compared to 2004). Based on the company's projected growth, GE's GHG emissions would have risen 40 percent by 2012 without further action. In addition, GE is committed to doubling its investment in environmental technologies to $1.5 billion by 2010. These efforts are part of GE's "Ecomagination" initiative to aggressively bring to market new technologies that will help customers meet pressing environmental challenges.
Eileen Claussen, President of the Pew Center welcomed GE enthusiastically, "When a company like GE stands up and says that climate change is a serious issue that demands immediate action, people tend to listen. As the newest member of our business environmental leadership council, we are pleased to have them at the table as we work to craft acceptable policy here in the United States and abroad."
"Ecomagination is GE's commitment to address challenges such as the need for cleaner, more efficient sources of energy and reduced emissions," said Jeffrey Immelt, GE chairman and CEO. "It is time for the private sector to assume its rightful place as a major catalyst for environmental change. We believe that the growing market for environmental technology can get us where we need to be."
"But industry cannot get there alone," Immelt continued. "We need to work in concert with the government and important groups like the Pew Center to promote and reward leadership. We are glad to join Pew's effort to work toward these goals - all keys for our shared future."
Members of the Pew Center's Business Council agree that enough is known about the science of global climate change to warrant action, and they pledge to take steps to reduce or offset their own greenhouse gas emissions. Members work together to formulate reasonable public policy, both in the United States and internationally. The Pew Center's council now has forty members, most of them Fortune 500 companies with operations around the world.
GE is among the leaders in energy-efficient power generation technologies, renewable energy technologies, water purification, and energy-efficient consumer appliance and lighting products. Also, GE's aircraft engines and locomotives are among the most efficient and cleanest in the world. GE serves customers in more than 100 countries and employs more than 300,000 people worldwide.
The Business Environmental Leadership Council was established by the Pew Center in 1998. The BELC is comprised of mainly Fortune 500 companies representing a diverse group of industries including energy, automobiles, manufacturing, chemicals, pharmaceuticals, metals, mining, paper and forest products, consumer goods and appliances, telecommunications, and high technology. Individually and collectively, these companies are demonstrating that it is possible to take action to address climate change while maintaining competitive excellence, growth, and profitability. The companies together generate over $1.5 trillion in revenue and employ more than 2.5 million people.
The other members of the BELC are: ABB; Air Products and Chemicals; Alcoa; American Electric Power; Baxter International; Boeing; BP; California Portland Cement Co.; CH2M HILL; Cinergy Corp.; Cummins Inc.; Deutsche Telekom; DTE Energy; DuPont; Entergy; Exelon, Georgia-Pacific; Hewlett-Packard Company; Holcim; IBM; Intel; Interface Inc.; John Hancock Financial Services; Lockheed Martin; Maytag; Novartis; Ontario Power Generation; PG&E Corporation; Rio Tinto; Rohm and Haas; Royal Dutch/Shell; SC Johnson; Sunoco; Toyota; TransAlta; United Technologies; Weyerhaeuser; Whirlpool; and Wisconsin Energy Corporation.
For more information about global climate change and the activities of the Pew Center and the BELC, visit www.c2es.org.
The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
GE (NYSE:GE) is Imagination at Work - a diversified technology, media and financial services company focused on solving some of the world's toughest problems. With products and services ranging from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and advanced materials, GE serves customers in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit the company's Web site at www.ge.com
Press Release: New Reports Detail Challenges and Opportunities for Climate Change and Buildings, Electricity Sectors
For Immediate Release: June 16, 2005
Contact: Katie Mandes
BUILDINGS, ELECTRICITY AND CLIMATE CHANGE
New Reports Detail Challenges and Opportunities
Washington, DC —The U.S. buildings and electricity sectors—which together account for the largest portion of our economy’s physical wealth and enable almost every activity of our daily life – also account for approximately half of our nation’s CO2 emissions. Effective long-term climate change policy in the U.S. must address emissions from these two sectors.
Two new reports released today by the Pew Center on Global Climate Change identify a number of technologies and policy options for GHG reductions in both sectors. The first report is Towards a Climate-Friendly Built Environment, written by Marilyn Brown, Frank Southworth and Therese Stovall of Oak Ridge National Laboratory. The other is U.S. Electric Power Sector and Climate Change Mitigation, written by Granger Morgan, Jay Apt, and Lester Lave of Carnegie Mellon University.
Long capital stock turnover, regulatory uncertainty and diverse and often competing interests all contribute to the difficulty of reducing GHGs from these two sectors. These reports find that a portfolio of affordable technology and policy options exist to completely transform the high-emitting buildings and electricity sectors to low-GHG emitting sectors over the next 50 years. However, the long lead time required to develop new technologies, deploy available technologies, and turn over capital stock, means that policies need to be launched now to create the impetus for change. Efforts must be sustained over time to achieve the deep reductions required.
"The importance of these two sectors to both the U.S. economy and to the issue of climate change cannot be over-stated,” said Eileen Claussen, President of the Pew Center on Global Climate Change, “This research shows that we can achieve enormous reductions in the building and electric sectors, but only if we craft a clear and comprehensive policy to guide them."
Some insights that emerge from the reports are:
- Policies are needed to enable meaningful GHG reductions from these sectors. The diverse and fragmented nature of the buildings sector, and the current state of regulatory uncertainty in the electricity sector prevent many available GHG reduction options from being adopted in the market in the absence of policies.
- Significant increases in R&D and deployment policies are essential if we hope to significantly reduce GHGs from these sectors. A significantly expanded R&D program is needed in the U.S. to develop new technologies, and deployment policies are needed to push and pull available fuels and technologies into the market in the near and long term.
- An elimination of most GHGs from these sectors is possible over the next 50 years. If managed properly, the electricity sector could undergo a complete capital stock turnover to low or non-GHG emitting generation sources over the next 50 years; while buildings in the U.S. could become net low-GHG energy exporters in the same time frame – but government policies are essential to provide clear policy direction in order to drive the massive public and private investments and choices necessary to enable such a future.
This report is part of the Solutions series, which is aimed at providing individuals and organizations with tools to evaluate and reduce their contributions to climate change. In 2003, the Solutions series released the first of its sectoral reports, Reducing Greenhouse Gas Emissions from U.S. Transportation, written by David L. Greene of Oak Ridge National Laboratory and Andreas Schafer of the Massachusetts Institute of Technology. Other Pew Center series focus on domestic and international policy issues, environmental impacts, and the economics of climate change.
A complete copy of this report—and previous Pew Center reports—is available on the Pew Center's web site, /global-warming-in-depth/all_reports/.
The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
Towards a Climate-Friendly Built Environment
Prepared for the Pew Center on Global Climate Change
Marilyn Brown, Oak Ridge National Laboratory
Frank Southworth, Oak Ridge National Laboratory
Therese Stovall, Oak Ridge National Laboratory
Eileen Claussen, President, Pew Center on Global Climate Change
Buildings in the United States – homes, offices, and industrial facilities – account for over 40 percent of our nation's carbon dioxide emissions. Most of these emissions come from the combustion of fossil fuels to provide heating, cooling, and lighting and to run electrical equipment and appliances. The manufacture of building materials and products, and the increased emissions from the transportation generated by urban sprawl, also contribute a significant amount of greenhouse gas (GHG) emissions every year. In this report, authors Marilyn Brown, Frank Southworth, and Theresa Stovall identify numerous opportunities available now, and in the future, to reduce the building sector's overall impact on climate.
This Pew Center report is part of our effort to examine key sectors, technologies, and policy options to construct the "10-50 Solution" to climate change. The idea is that we need to tackle climate change over the next fifty years, one decade at a time. Looking at options for the near (10 years) and long (50 years) term, this report yields the following insights for reducing GHG emissions from the largest portion of our nation's physical wealth – our built environment.
- This sector presents tremendous challenges. There are so many different energy end uses and GHG-relevant features, multiple stakeholders and decision-makers, and numerous market barriers to energy efficiency.
- Yet numerous opportunities exist. In the near term, simply bringing current building practices up to the level of best practices would yield tremendous energy and cost savings. Past studies have shown that many climate-friendly and cost-effective measures in the buildings sector are not fully utilized in the absence of policy intervention. The R&D and six deployment policies examined in this report could reduce forecasted energy consumption and carbon emissions of buildings in the United States in 2025 by almost one-quarter, or by an amount roughly equal to 10% of total projected U.S. carbon emissions. In 2025 and beyond, newly constructed net-zero-energy homes and climate-friendly designs for large commercial buildings and industrial facilities could begin to generate sizeable GHG reductions by displacing the energy-intensive structures that embody today's standard practices.
- An integrated approach is needed to reduce GHG emissions from the diverse and fragmented building sector. Such an approach coordinates across technical and policy solutions, integrates engineering approaches with architectural design, considers design decisions within the realities of building operation, integrates green building with smart-growth concepts, and takes into account the numerous decision-makers within the industry.
- An expansive view of the building sector is needed to completely identify and capitalize on the full range of GHG-reduction opportunities. Such a view needs to consider future building construction (including life-cycle aspects of buildings materials, design, and demolition), use (including on-site power generation and its interface with the electric grid), and location (in terms of urban densities and access to employment and services).
The authors and the Pew Center would like to thank Robert Broad of Pulte Home Sciences, Leon Clarke of the Pacific Northwest Laboratory, Jean Lupinacci of the U.S. Environmental Protection Agency, and Steven Nadel of the American Council for an Energy Efficient Economy for their review of and advice on a previous draft of this report, and Tony Schaffhaeuser for contributions to an early version this paper.
The energy services required by residential, commercial, and industrial buildings produce approximately 43 percent of U.S. carbon dioxide (CO2) emissions. Given the magnitude of this statistic, many assessments of greenhouse gas (GHG) reduction opportunities focus principally on technologies and policies that promote the more efficient use of energy in buildings. This report expands on this view and includes the effects of alternative urban designs; the potential for on-site power generation; and the life-cycle GHG emissions from building construction, materials, and equipment. This broader perspective leads to the conclusion that any U.S. climate change strategy must consider not only how buildings in the future are to be constructed and used, but also how they will interface with the electric grid and where they will be located in terms of urban densities and access to employment and services. The report considers both near-term strategies for reducing GHGs from the current building stock as well as longer-term strategies for buildings and communities yet to be constructed.
The United States has made remarkable progress in reducing the energy and carbon intensity of its building stock and operations. Energy use in buildings since 1972 has increased at less than half the rate of growth of the nation's gross domestic product, despite the growth in home size and building energy services such as air conditioning and consumer and office electronic equipment. Although great strides have been made, abundant untapped opportunities still exist for further reductions in energy use and emissions. Many of these-especially energy-efficient building designs and equipment-would require only modest levels of investment and would provide quick pay-back to consumers through reduced energy bills. By exploiting these opportunities, the United States could have a more competitive economy, cleaner air, lower GHG emissions, and greater energy security.
GHG Emissions: Sources and Trends
GHG emissions from the building sector in the United States have been increasing at almost 2 percent per year since 1990, and CO2 emissions from residential and commercial buildings are expected to continue to increase at a rate of 1.4 percent annually through 2025. These emissions come principally from the generation and transmission of electricity used in buildings, which account for 71 percent of the total. Due to the increase in products that run on electricity, emissions from electricity are expected to grow more rapidly than emissions from other fuels used in buildings. In contrast, direct combustion of natural gas (e.g., in furnaces and water heaters) accounts for about 20 percent of energy-related emissions in buildings, and fuel-oil heating in the Northeast and Midwest accounts for the majority of the remaining energy-related emissions. Based on energy usage, opportunities to reduce GHG emissions appear to be most significant for space heating, air conditioning, lighting, and water heating.
Mechanisms of Change
Because the building industry is fragmented, the challenges of promoting climate-friendly actions are distinct from those in transportation, manufacturing, and power generation. The multiple stakeholders and decision-makers in the building industry and their interactions are relevant to the design of effective policy interventions. Major obstacles to energy efficiency exist, including insufficient and imperfect information, distortions in capital markets, and split incentives that result when intermediaries are involved in the purchase of low-GHG technologies. Many buildings are occupied by a succession of temporary owners or renters, each unwilling to make long-term improvements that would mostly benefit future occupants. Regulations, fee structures in building design and engineering, electricity pricing practices, and the often limited availability of climate-friendly technologies and products all affect the ability to bring GHG-reducing technologies into general use. Some of these obstacles are market imperfections that justify policy intervention. Others are characteristics of well-functioning markets that simply work against the selection of low-GHG choices.
Numerous individual, corporate, community, and state initiatives are leading the implementation of "green" building practices in new residential development and commercial construction. The most impressive progress in residential green building development and construction is the result of communities and developers wanting to distinguish themselves as leaders in the efficient use of resources and in waste reduction in response to local issues of land-use planning, energy supply, air quality, landfill constraints, and water resources. Building owners and operators who have a stake in considering the full life-cycle cost and resource aspects of their new projects are now providing green building leadership in the commercial sector. However, real market transformation will also require buy-in from the supply side of the industry (e.g., developers, builders, and architects).
Affordability, aesthetics, and usefulness have traditionally been major drivers of building construction, occupancy, and renovation. In addition to climatic conditions, the drivers for energy efficiency and low-GHG energy resources depend heavily on local and regional energy supply costs and constraints. Other drivers for low-GHG buildings are clean air, occupant health and productivity, the costs of urban sprawl, electric reliability, and the growing need to reduce U.S. dependence on petroleum fuels.
Technology Opportunities in Major Building Subsectors
The technical and economic potential is considerable for technologies, building practices, and consumer actions to reduce GHG emissions in buildings. When studying the range of technologies, it is important to consider the entire building system and to evaluate the interactions between the technologies. Thus, improved techniques for integrated building analyses and new technologies that optimize the overall building system are especially important. In this report, homes and small commercial buildings and large commercial and industrial buildings are analyzed separately for their energy-saving and emission-reduction potential, because energy use in homes and small businesses is principally a function of climatic conditions while energy use in large buildings is more dependent on internal loads.
Applying currently available technologies can cost-effectively save 30 to 40 percent of energy use and GHG emissions in new buildings, when evaluated on a life-cycle basis. Technology opportunities are more limited for the existing building stock, and the implementation rate depends on the replacement cycles for building equipment and components. However, several opportunities worth noting apply to existing as well as new buildings, including efficiencies in roofing, lighting, home heating and cooling, and appliances. Emerging building technologies, especially new lighting systems and integrated thermal and power systems, could lead to further cost-effective energy savings. All of these potential effects, however, are contingent upon policy interventions to overcome the barriers to change.
Community and Urban Subsystems
Evidence suggests that higher-density, more spatially compact and mixed-use building developments can offer significant reductions in GHG emissions through three complementary effects: (1) reduced vehicle miles of travel, (2) reduced consumption for space conditioning as a result of district and integrated energy systems, and (3) reduced municipal infrastructure requirements. Both behavioral and institutional barriers to changes in urban form are significant. The effect of urban re-design on travel and municipal energy systems will need to be tied to important developments in travel pricing, transportation construction, and other infrastructure investment policies.
Past studies have concluded conservatively that changes in land-use patterns may reduce vehicle miles traveled by 5 to 12 percent by mid-century. More compact urban development could also lead to comparable GHG reductions from efficiencies brought about by district and integrated energy systems, with a small additional decrement from a reduced need for supporting municipal infrastructures. In total, therefore, GHG reductions of as much as 3 to 8 percent may be feasible by mid-century, subject to the near-term enactment of progressive land-use planning policies.
Policy research suggests that public interventions could overcome many of the market failures and barriers hindering widespread penetration of climate-friendly technologies and practices. The mosaic of current policies affecting the building sector is complex and dynamic, ranging from local, state, and regional initiatives, to a diverse portfolio of federal initiatives. Numerous policy innovations could be added to this mix, and many are being tried in test-beds at the state and local level.
In this report, buildings energy research and development (R&D) and six deployment policies are reviewed that have a documented track record of delivering cost-effective GHG reductions and that hold promise for continuing to transform markets. The six deployment policies include (1) state and local building codes, (2) federal appliance and equipment efficiency standards, (3) utility-based financial incentive and public benefits programs, (4) the low-income Weatherization Assistance Program, (5) the ENERGY STAR(r) Program, and (6) the Federal Energy Management Program. Annual energy savings and carbon-reduction estimates are provided for each of these policies, both retrospectively and prospectively. Summing these values provides a reasonable estimate of the past and potential future impacts of the policies.
Annual savings over the past several years from these R&D and six deployment policies are estimated to be approximately 3.4 quadrillion Btu (quads) and 65 million metric tons of carbon (MMTC), representing 10 percent of U.S. CO2 emissions from buildings in 2002. The largest contributors are appliance standards and the ENERGY STAR Program. Potential annual effects in the 2020 to 2025 time frame are 12 quads saved and 200 MMTC avoided, representing 23 percent of the forecasted energy consumption and carbon emissions of buildings in the United States by 2025. The largest contributors are federal funding for buildings energy R&D (especially solid-state lighting) and appliance standards.
Conclusions and Recommendations
The analysis presented in this report leads to several conclusions:
- An expansive view of the building sector is needed to completely identify and exploit the full range of GHG-reduction opportunities. Such a view needs to consider future building construction (including life-cycle aspects of buildings materials, design, and demolition), use (including on-site power generation and its interface with the electric grid), and location (in terms of urban densities and access to employment and services).
- There is no silver bullet technology in the building sector because there are so many different energy end uses and GHG-relevant features. Hence, a vision for the building sector must be seen as a broad effort across a range of technologies and purposes.
- An integrated approach is needed to address GHG emissions from the U.S. building sector - one that coordinates across technical and policy solutions, integrates engineering approaches with architectural design, considers design decisions within the realities of building operation, integrates green building with smart-growth concepts, and takes into account the numerous decision-makers within the fragmented building industry.
- Current building practices seriously lag best practices. Thus, vigorous market transformation and deployment programs are critical to success. They are also necessary to ensure that the next generation of low-GHG innovations is rapidly and extensively adopted.
- Given the durable nature of buildings, the potential for GHG reductions resides mostly with the existing building stock for some time to come. However, by 2025, newly constructed net-zero-energy homes and climate-friendly designs for large commercial buildings and industrial facilities could begin to generate sizeable GHG reductions by displacing the energy-intensive structures that embody today's standard practices. By mid-century, land-use policies could have an equally significant impact on GHG emissions. This inter-temporal phasing of impacts does not mean that retrofit, new construction, and land-use policies should be staged; to achieve significant GHG reductions by 2050, all three types of policies must be strengthened as soon as politically feasible.
- Similarly, applied R&D will lead to GHG reductions in the short run, while in the long run basic research will produce new, ultra-low GHG technologies. This does not mean that basic research should be delayed while applied R&D opportunities are exploited. The pipeline of technology options must be continuously replenished by an ongoing program of both applied and basic research.
By linking near-term action to long-term potential, the building sector can assume a leadership role in reducing GHG emissions in the United States and globally.
The energy services required by residential, commercial and industrial buildings produce approximately 43% of U.S. CO2 emissions. Additional GHG emissions result from the manufacture of building materials and products, the transport of construction and demolition materials, and the increased passenger and freight transportation associated with urban sprawl. As a result, an effective U.S. climate change strategy must consider options for reducing the GHG emissions associated with how buildings are constructed, used, and located.
Homes, offices, and factories rarely incorporate the full complement of cost-effective climate-friendly technologies and smart growth principles, despite the sizeable costs that inefficient and environmentally insensitive designs impose on consumers and the nation. To significantly reduce GHG emissions from the building sector, an integrated approach is needed-one that coordinates across technical and policy solutions, integrating engineering approaches with architectural design, considering design decisions within the realities of building operation, integrating green building with smart-growth concepts, and taking into account the timing of policy impacts and technology advances.
A. Technology Opportunities in the 2005 to 2025 Time Frame
In the short run, numerous green products and technologies could significantly reduce GHG emissions from buildings, assuming vigorous encouragement from market-transforming policies such as expanded versions of the six deployment policies studied here. In the coming decade, given the durable nature of buildings, the potential for GHG reductions resides mostly with the existing building stock and existing technologies. Some of the numerous promising off-the-shelf technologies and practices outlined in this report include reflective roof products, low-E coating for windows, the salvage and reuse of materials from demolished buildings, natural ventilation and air conditioning systems that separately manage latent and sensible heat, smart HVAC control systems, and variable speed air handlers.
Federally funded R&D for energy savings in buildings must also be expanded in the short term so that an attractive portfolio of new and improved technological solutions will be available in the mid and long term. Achieving the goal of a cost-competitive net-zero-energy home by 2020, for example, will require scientific breakthroughs to be incorporated into new and improved photovoltaic systems, power electronics, thermochemical devices, phase-change insulation and roofing materials, and other components. In addition, policies that promote higher-density, spatially compact, and mixed-use building developments must begin to counteract the fuel-inefficient impact of urban sprawl.
In the 2025 timeframe, newly constructed net-zero-energy homes and climate-friendly designs for large commercial buildings and industrial facilities will need to begin to displace the GHG-intensive structures that embody today's standard practices. The emerging technologies described in this report could help significantly reduce GHG emissions from the building sector including
- sealing methods that address unseen air leaks,
- electrochromic windows offering the dynamic control of infrared energy,
- unconventional water heaters (solar, heat pump, gas condensing, and tankless),
- inexpensive highly efficient nanocomposite materials for solar energy conversion,
- thermoelectric materials that can transform heat directly into electrical energy,
- solid state lighting that uses the emission of semi-conductor diodes to directly produce light at a fraction of the energy of current fluorescent lighting,
- selective water sorbent technologies that offer the performance of ground-coupled heat pumps at the cost of traditional systems,
- abundant sensors dispersed through buildings with continuously optimizing control devices, and
- 80-90 percent efficient integrated energy systems that provide on-site power as well as heating, cooling, and dehumidification.
Market transformation policies are expected to continue to improve the existing building stock and play an essential role in ensuring the market uptake of new technologies. In addition, land-use policies could begin to have measurable benefits.
The analysis reported here suggests that six expanded market transformation policies-in combination with invigorated R&D-could bring energy consumption and carbon emissions in the building sector in 2025 back almost to 2004 levels. At the same time, the built environment will be meeting the needs of an economy (and associated homes, offices, hospitals, restaurants, and factories) that will have grown from $9.4 trillion in 2002 to $18.5 trillion in 2025.
B. Building Green and Smart in the 2050 Time Frame
Green building practices and smart growth policies could transform the built environment by mid-century. Some of the climate-friendly features of this transformed landscape that are outlined in this report include:
- building efficiency measures that dramatically reduce the energy requirements of buildings;
- high-performance photovoltaic panels, fuel cells, microturbines and other on-site equipment that produce more electricity and thermal energy than is required locally, making buildings net exporters of energy, thereby transforming the entire demand and supply chain in terms of energy generation, distribution, and end use;
- higher-density communities that enable high-efficiency district heating and cooling;
- gridded street plans and other compact and readily accessible local street systems that also enable mass transit, and pedestrian and cyclist-friendly pathways to displace other forms of travel;
- parks and tree-lined streets to act as carbon sinks and to mitigate the "heat island" effect; and
- in-fill and mixed-use land development to shorten trip distances while reducing infrastructure requirements.
In the long run, improving the locational efficiency of communities and urban systems could possibly have as large an impact on GHG emissions as improving the design, construction, and operation of individual structures.
C. Linking Near-Term Action with Long-Term Potential
Given the durable nature of buildings, the potential for GHG reductions resides mostly with the existing building stock for some time to come. However, by 2025, newly constructed net-zero-energy homes and climate-friendly designs for large commercial buildings and industrial facilities could begin to generate sizeable GHG reductions by displacing the energy-intensive structures that embody today's standard practices. By mid-century, land-use policies could also significantly reduce GHG emissions. This inter-temporal phasing of impacts does not mean that retrofit versus new construction versus land-use policies should be staged; to achieve significant GHG reductions by 2050, all three elements of an integrated policy approach must be strengthened in the near term.
Similarly, applied R&D will lead to GHG reductions in the short run, while basic research will take longer to produce new, ultra-low GHG technologies. This does not mean that fundamental research should be delayed while applied R&D opportunities are exploited. The pipeline of technology options must be continuously replenished by an ongoing program of both applied and basic research. Vigorous market transformation and deployment programs will be needed throughout the coming decades to shrink the existing technology gap and to ensure that the next generation of low-GHG innovations is rapidly adopted.
By linking near-term action with long-term potential in an expansive and integrated framework, the building sector can be propelled to a leadership role in reducing GHG emissions in the United States and globally.
For Immediate Release: May 24, 2005
Contact: Katie Mandes
EXELON CORPORATION JOINS PEW CENTER ON GLOBAL CLIMATE CHANGE
Leading Utility Establishes Target to Reduce Emissions
Washington, D.C.-The Pew Center on Global Climate Change announced today that Exelon Corporation has joined the Pew Center's Business Environmental Leadership Council (BELC) and their efforts to address global climate change.
Exelon Corporation, one of the nation's largest electric utilities and a Fortune 500 company, has committed to reduce its greenhouse gas (GHG) emissions by eight percent from 2001 levels by the end of 2008. Exelon has also committed to work with, and encourage, its suppliers to reduce their GHG emissions. The company will incorporate recognition of GHG emissions and their potential cost into its business analyses as a means to promote internal investment in climate-reducing activities. Exelon recently made this pledge under the U.S. Environmental Protection Agency's Climate Leaders program. The Pew Center assisted Exelon in developing its goal, strategy and program.
"Exelon is pleased to join the Pew Center and the other BELC members in addressing this challenging issue," said John W. Rowe, chairman, president and CEO, Exelon. "We believe it is incumbent upon anyone concerned about the consequences of global climate change to take action to begin the transition to a carbon constrained future."
Exelon Corporation is a leader in the electric power industry, with 2004 revenues exceeding $14 billion, about 17,500 employees, over $42 billion in assets, and approximately 5.2 million customers in Illinois and Pennsylvania. In December 2004, Exelon announced plans to merge with New Jersey-based Public Service Enterprise Group. FORTUNE magazine named Exelon one of America's "Most Admired Companies" in its 2005 annual report card on corporate reputation. Forbes magazine named Exelon one of the best-managed utility companies in December 2004.
The Business Environmental Leadership Council was established by the Pew Center in 1998. The BELC is comprised of mainly Fortune 500 companies representing a diverse group of industries including energy, automobiles, manufacturing, chemicals, pharmaceuticals, metals, mining, paper and forest products, consumer goods and appliances, telecommunications, and high technology. The members share the belief that enough is known about the science of climate change to begin taking reasonable steps now to protect the climate. Individually and collectively, these companies are demonstrating that it is possible to take action to address climate change while maintaining competitive excellence, growth, and profitability. The companies together generate annual revenues in excess of $600 billion and employ more than 1.7 million people.
"Exelon Corporation is the latest company to acknowledge publicly not only the certainty of the science, but also the necessity for action now. We look forward to working with them on both market-based solutions to climate change and the formulation of sound public policy here in the United States and around the world," said Pew Center president Eileen Claussen.
The other members of the BELC are: ABB; Air Products and Chemicals; Alcoa; American Electric Power; Baxter International; Boeing; BP; California Portland Cement Co.; CH2M HILL; Cinergy Corp.; Cummins Inc.; Deutsche Telekom; DTE Energy; DuPont; Entergy; Georgia-Pacific; Hewlett-Packard Company; Holcim; IBM; Intel; Interface Inc.; John Hancock Financial Services; Lockheed Martin; Maytag; Novartis; Ontario Power Generation; PG&E Corporation; Rio Tinto; Rohm and Haas; Royal Dutch/Shell; SC Johnson; Sunoco; Toyota; TransAlta; United Technologies; Weyerhaeuser; Whirlpool; and Wisconsin Energy Corporation.
For more information about global climate change and the activities of the Pew Center and the BELC, visit www.c2es.org.
The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
Exelon Corporation is one of the nation's largest electric utilities with approximately 5.2 million customers and more than $14 billion in annual revenues. The company has one of the industry's largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.2 million customers in northern Illinois and Pennsylvania and gas to more than 460,000 customers in the Philadelphia area. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.
Read the full article (pdf)
by Elliot Diringer
This article appeared in Environmental Finance, Dec/Jan 2004 Issue
POLICY FORUM: CLIMATE POLICY
An Effective Approach to Climate Change
By Eileen Claussen
Enhanced online at www.sciencemag.org/cgi/content/full/306/5697/816
Originally published October 29, 2004: VOL 306 SCIENCE
The Bush Administration’s “business as usual” climate change policy (1), with limited R&D investments, no mandates for action, and no plan for adapting to climate change, is inadequate. We must start now to reduce emissions and to spur the investments necessary to reduce future emissions. We also need a proactive approach to adaptation to limit the severity and costs of climate change impacts.
Science and Economics
Those who are opposed to national climate change policies make much of the uncertainties in climate models, specifically the rate and magnitude of global warming. The Climate Change Science Program’s plan, points out Secretary Abraham, would address these uncertainties, although he offers no assurances that the program will be adequately funded. However, the scientific community already agrees on three key points: global warming is occurring; the primary cause is fossil fuel consumption; and if we don’t act now to reduce greenhouse gas (GHG) emissions, it will get worse.
Yes, there are uncertainties in future trends of GHG emissions. However, even if we were able to stop emitting GHGs today, warming will continue due to the GHGs already in the atmosphere (2).
National climate change policy has not changed significantly for several years. The first President Bush pursued a strategy of scientific research and voluntary GHG emissions reductions. The new Climate Change Science Program has a budget comparable, in inflation-adjusted dollars, to its predecessor, the Global Climate Research Program, during the mid-1990s. The Administration’s current GHG intensity target will increase absolute emissions roughly 14% above 2000 levels and 30% above 1990 levels by 2010 (3). These increases will make future mitigation efforts much more difficult and costly.
While reducing uncertainty is important, we must also focus on achieving substantial emissions reductions and adapting to climate change.
Low-Carbon Technology Development
The Administration’s more substantive R&D initiatives, such as Hydrogen Fuels and FutureGen (clean coal) are relatively modest investments in technologies that are decades away from deployment. We need a far more vigorous effort to promote energy efficient technologies; to prepare for the hydrogen economy; to develop affordable carbon capture and sequestration technologies; and to spur the growth of renewable energy, biofuels, and coal-bed methane capture.
Equally important, we need to encourage public and private investment in a wide-ranging portfolio of low-carbon technologies. Despite the availability of such technologies for energy, transportation, and manufacturing, there is little motivation for industry to use them. Widespread use of new technology is most likely when there are clear and consistent policy signals from the government (4).
One-fifth of U.S. emissions comes from cars and trucks (5). The Administration’s targets to improve fuel economy for light trucks and “sports utility” vehicles (SUVs) by 1.5 miles per gallon over the next three model years fall far short of what is already possible. California is setting much more ambitious emission standards for cars and light trucks. Current efficiency standards can be improved by 12% for subcompacts to 27% for larger cars without compromising performance (5).Hybrid vehicles can already achieve twice the fuel efficiency of the average car.
About one-third of U.S. emissions results from generating energy for buildings (6). Policies that increase energy efficiency using building codes, appliance efficiency standards, tax incentives, product efficiency labeling, and Energy Star programs, can significantly reduce emissions and operating costs. Policies that promote renewable energy can reduce emissions and spur innovation.Sixteen states have renewable energy mandates (7).
The Power of the Marketplace
Policies that are market driven can help achieve environmental targets cost-effectively. A sustained price signal, through a cap-and-trade program, was identified as the most effective policy driver by a group of leaders from state and local governments, industry, and nongovernmental organizations (NGOs) (8).
Senators Lieberman (D–CT) and McCain’s (R–AZ) 2003 Climate Stewardship Act proposes a market-based approach to cap GHG emissions at 2000 levels by 2010. The bill, opposed by the Administration, garnered the support of 44 Senators. Nine Northeastern states are developing a regional “cap-and-trade” initiative to reduce power plant emissions. An important first step would be mandatory GHG emissions reporting.
Adapting to Climate Change
An important issue that Secretary Abraham failed to address is the need for anticipating and adapting to the climate change we are already facing. Economic sectors with long-lived investments, such as water resources, coastal resources, and energy may have difficulty adapting (9). A proactive approach to adaptation could limit the severity and costs of the impacts of climate change.
By limiting emissions and promoting technological change, the United States could put itself on a path to a low-carbon future by 2050, cost-effectively. Achieving this will require a much more explicit and comprehensive national commitment than we have seen to date. The rest of the developed world, including Japan and the European Union, is already setting emission-reduction targets and enacting carbon-trading schemes. Far from “leading the way” on climate change at home and around the world, as Secretary Abraham suggested, the United States has fallen behind.
References and Notes
1. S. Abraham, Science 305, 616 (2004). |
2. R. T. Wetherald, R. J. Stouffer, K. W. Dixon, Geophys. Res. Lett. 28, 1535 (2001).
3. “Analysis of President Bush’s climate change plan” (Pew Center on Global Climate Change,Arlington,VA, February 2002); available at www.c2es.org.
4. J. Alic, D. Mowery, E. Rubin, “U.S. technology and innovation policies: Lessons for climate change” (Pew Center on Global Climate Change,Arlington,VA, 2003).
5. National Research Council, “The effectiveness and impact of corporate average fuel economy (CAFÉ) standards” (National Academies Press, Washington, DC, 2002).
6. “U.S. greenhouse gas emissions and sinks: 1990–2002”(EPA/430-R-04-003, Environmental Protection Agency, Washington, DC, 2002), Table 3–6.2002.
7. Workshop proceedings, “The 10-50 solution: Technologies and policies for a low-carbon future,”Washington, DC, 25 and 26 March 2004 (The Pew Center on Global Climate Change and the National Commission on Energy Policy, Arlington,VA, in press).
8. J. Smith, “A synthesis of potential climate change impacts on the United States” (Pew Center on Global Climate Change, Arlington,VA, 2004). Published by AAAS
Global Climate Change and Coal's Future
Remarks by Eileen Claussen
President, Pew Center on Global Climate Change
Spring Coal Forum 2004 - American Coal Council
May 18, 2004
It is a pleasure to be here in Dallas. And I want to thank the American Coal Council for inviting me to address this forum.
I thought I would open my remarks today with some commentary on the upcoming FOX movie about climate change—it is entitled “The Day After Tomorrow.” It is not often, after all, that I get to talk about the movies in my speeches. And I suppose that’s because there are not a lot of movies on the topic of climate change—of course, I am not counting “Some Like It Hot.”
In case you haven’t already heard, “The Day After Tomorrow” comes out Memorial Day weekend. It is a movie that tries to show the consequences of climate change by letting loose tornadoes in Los Angeles, dropping grapefruit-sized hail on Tokyo, and subjecting New York City to a one-day shift from sweltering-to-freezing temperatures.
The only thing I can say is it’s a dream scenario for the people at The Weather Channel.
Actually, the reason I bring this up is because we are bound to be hearing a great deal about the issue of climate change over the next several weeks. This is a major motion picture with a major marketing push behind it.
And, while I know of no one in the scientific community who believes climate change will unfold in the way it is portrayed in the film, I also know this: If this movie sounds far-fetched, it is frankly less of a distortion—much less—than the argument that climate change is a bunch of nonsense. It is not. Climate change is a very real problem with very real consequences for our way of life, our economy and our ability to ensure that future generations inherit a world not appreciably different from our own.
I strongly believe it is time for some straight talk about the problem of climate change and what it means for you - the coal industry. So while my remarks here today are also relevant to the oil and gas industry, I believe coal to be in a more precarious position, and I believe that for 2 reasons: 1) I think coal is an easier target politically and 2) oil and gas are already involved in the policy process. So despite the current outlook for coal in the United States, I am here to say that a robust future for coal is not a sure thing, particularly if we do not find environmentally acceptable and cost-effective ways to use it.
So let’s look at some facts.
Here in this country, as all of you know very well, coal provides 52 percent of all electricity, more than double the amount of any other fuel source and five times more than gas, oil or hydro-electric power. Coal is the most abundant energy source today, it is dispersed throughout the world, and it is available at a relatively low cost. Worldwide coal consumption, according to the U.S. Energy Information Administration, is expected to grow by more than 40 percent between 2001 and 2025, with China and India accounting for three-fourths of that increase.
Given these facts, a scenario in which we meet the world’s various energy challenges without coal seems to me highly unlikely.
At the same time, however, I cannot imagine—or, rather, I fear to imagine—what will happen if over the next 50 years we do not get serious about reducing worldwide emissions of carbon dioxide and other greenhouse gases that we know contribute to climate change.
Coal alone is responsible for 37 percent of CO2 emissions in the United States. Thirty-seven percent. Worldwide, the EIA projects that coal will continue as the second largest source of carbon dioxide emissions after petroleum, accounting for 34 percent of the total in 2025.
Coal’s dominant role in the global energy mix, together with its responsibility for a large share of CO2 emissions, suggests it is high time to figure out how to continue using coal in a way that results in the least amount of harm to the global climate.
I am not going to tell you that we can address this problem with no costs. Our goal must be to ensure that the costs themselves do not become a barrier to action. I believe we can manage those costs in a way that enables continued economic growth and, equally important, in a way that causes the least amount of harm to the environment.
And finally, we must acknowledge the very real costs of not acting to address the problem of climate change. I will talk more about that later.
And so today I want to lay out for you how important it is for this industry—your industry—to become a part of the solution to climate change. I also want to talk about your role in helping to shape the policies and in developing the technologies that will allow us to reduce greenhouse gas emissions from coal generation and other sources.
But before that, I need to address the question of why I am here and why we are having this discussion in the first place. And the answer is because the threat of climate change, as I have already noted, is very real. If you still have any doubts about this, then I refer you to the findings of a special, well-balanced panel put together by the National Academy of Sciences at the request of President George W. Bush. The panel’s conclusion: the planet is warming and human activities are largely to blame. And, of course, the human activity that is most responsible is the burning of fossil fuels.
Let's get one other thing out of the way -- the Kyoto Protocol. I am not here to argue the merits of the Protocol. And I'm certainly not here to argue for ratification of Kyoto. Because I think it's pretty clear that, at least as far as the United States is concerned, the Kyoto Protocol is a dead issue. So, let's agree on that, and let's move beyond Kyoto, and talk about what really needs to happen.
This is what we know. The 1990s were the hottest decade of the last millennium. The last five years were among the seven hottest on record. Yes, the earth's temperature has always fluctuated, but ordinarily these shifts occur over the course of centuries or millennia, not decades.
Now I know there are skeptics on this issue - there might even be a few here today, so let me take a minute to talk about some of the more common misconceptions I hear.
A common one is to point to the satellites circling our planet overhead and to note that these precision instruments show no warming of our atmosphere. Global warming, some skeptics say, is therefore just an artifact of urbanization or some other miscalculation here on the ground.
All I can say about these claims is that they are dead wrong. As early as 2000, the National Academy of Sciences concluded that the warming observed on the ground was real, despite what the satellites might tell us. What’s more, since that time estimates of warming from satellites have progressively increased. Just this month, in fact, a new study in the journal Nature took a fresh look at the satellite data and found that the so-called “missing warming” had been found, bringing the satellite estimates more in line with temperatures observed on the ground.
Warming by itself, of course, is not proof of global warming. Climate conditions vary naturally, as we all know, and I am sure you have heard arguments that such natural variability, whether caused by volcanoes or the sun, can account for the climate change we’ve seen in recent decades. But, when scientists actually take a look at the relative importance of natural vs. human influences on the climate, they consistently come to the same conclusion. And that is this: observed climate change, particularly that of the past 30 years, is outside the bounds of natural variability. Atmospheric concentrations of carbon dioxide are more than 30 percent higher now than they were just a century ago. Despite what you may hear, this increase in carbon dioxide is undeniably human in origin, and it is the only way to explain the recent trends in the global climate.
Scientists project that over the next century, the average global temperature will rise between two and ten degrees Fahrenheit. A ten-degree increase would be the largest swing in global temperature since the end of the last ice age 12,000 years ago. And the potential consequences of even gradual warming are cause enough for great concern.
What will those consequences be? We can expect increased flooding and increased drought. Extended heat waves, more powerful storms, and other extreme weather events will become more common. Rising sea level will inundate portions of Florida and Louisiana, while increased storm surges will threaten communities all along our nation’s coastline, including the Texas coast.
Looking beyond our borders, we can see even broader, more catastrophic effects. Imagine, for example, what will happen in a nation such as Bangladesh, where a one-meter rise in sea level would inundate 17 percent of the country.
In addition to the obvious threat to human life and natural systems, climate change poses an enormous threat to the U.S. and world economies. Extreme weather, rising sea level and the other consequences of climate change will result in substantial economic losses.
We cannot allow the argument that it will cost too much to act against climate change to prevail in the face of the potentially devastating costs of allowing climate change to proceed unchecked.
Furthermore, the longer we wait to address this problem, the worse off we will be. The Pew Center in 2001 held a workshop with leading scientists, economists and other analysts to discuss the optimal timing of efforts to address climate change. They each came at it from a different perspective, but the overwhelming consensus was that to be most effective, action against climate change has to start right now.
Among the reasons these experts offered for acting sooner rather than later was that current atmospheric concentrations of greenhouse gases are the highest in more than 400,000 years. This is an unprecedented situation in human history, and there is a real potential that the resulting damages will not be incremental or linear, but sudden and potentially catastrophic. Acting now is the only rational choice.
But what can we do? The Pew Center on Global Climate Change was established in 1998 in an effort to help answer this very question. We are non-profit, non-partisan and independent. Our mission is to provide credible information, straight answers and innovative solutions in the effort to address global climate change. We consider ourselves a center of level-headed research, analysis and collaboration. We are also a center in another sense–a much-needed centrist presence on an issue where the discussion too often devolves into battling extremes where the first casualty is the truth.
The Pew Center also is the convenor of the Business Environmental Leadership Council. The group’s 38 members collectively employ 2.5 million employees and have combined revenues of $855 billion. These companies include mostly Fortune 500 firms that are committed to economically viable climate solutions. And I am pleased to say that they include firms that mine coal and firms that burn it—some of whom are represented here today. As members of the Business Environmental Leadership Council, all of these companies are working to reduce their emissions and to educate policy makers, other corporate leaders and the public about how to address climate change while sustaining economic growth.
And, if their work with the Pew Center proves anything, it is this: Objecting to the overwhelming scientific consensus about climate change is no longer an acceptable strategy for industry to pursue.
We need to think about what we can realistically achieve in this country and around the world and begin down a path to protecting the climate. And that means making a real commitment to the full basket of technologies that can help to reduce the adverse environmental effects of coal generation. The most promising of these technologies, of course, are: carbon capture and storage; and coal gasification, or IGCC.
Carbon capture and storage, or CCS, holds out the exciting prospect for all of us that we can continue using proven reserves of coal even in a carbon-constrained world. In only the last three decades, CCS has emerged as one of the most promising options we have for significantly reducing atmospheric emissions of greenhouse gases. Today, 1 million tons of CO2 are stored annually in the Sleipner Project in the North Sea, and several more commercial projects are in various stages of advanced planning around the world. Between off-shore, saltwater-filled sandstone formations, depleted oil and gas reservoirs, and other potential storage locations, scientists say we have the capacity to store decades worth of CO2 at today’s emission rates.
Of course, it will still take a great deal more effort before CCS is ready for prime time. In a paper prepared for a recent Pew Center workshop held in conjunction with the National Commission on Energy Policy, Sally Benson of the Lawrence Berkeley National Laboratory identified several barriers to the implementation of carbon capture and storage, or CCS. They include:
- The high costs and quote-unquote “energy penalties” of post-combustion CCS.
- The high capital costs of gasification, as well as a lack of experience with the technology in the utility sector.
- Limited experience with large-scale geologic storage.
- Uncertainty about public acceptance of CO2 storage in geologic formations.
- A lack of legal and regulatory frameworks to support widespread application of CCS.
- And, last but not least, a lack of financial resources to support projects of a sufficient scale to evaluate the viability of CCS.
Yet another technology that could potentially help to reduce the climate impact of coal generation is IGCC. Of course, IGCC’s principal benefit from a short-term environmental perspective is a significant reduction in criteria air pollutant emissions and in solid waste. But, over the long haul, IGCC has great potential to reduce CO2 emissions as well, both because, compared to pulverized coal combustion, it could result in significant improvements in efficiency, because it can be much more easily combined with CCS, and because it enables hydrogen production from coal.
But, as with CCS, IGCC still has a ways to go before it can deliver on its enormous promise. As of today, there are only two real IGCC plants in operation in the United States, but neither is operating fully on coal. Yes, the Bush administration has made a big splash with its announcement of the $1 billion FutureGEN project—which, as you know, would build the world’s first integrated sequestration and hydrogen production research power plant. But no specific plans have yet been announced.
The bottom line: these technologies—both CCS and IGCC—are nowhere near prime time. Right now, to stretch the analogy further, they are far enough from prime time to be on the air around 3 a.m. with a bunch of annoying infomercials. And they won’t get any closer to prime time without substantial investment in research and development, as well as a major policy commitment to these technologies.
The potential rewards are great. If we make the necessary commitment to CCS and IGCC, these technologies could make an important contribution to the United States’ efforts to control greenhouse gas emissions in the decades ahead. And the potential for coal to become a source of hydrogen for transportation could revolutionize the industry and our energy future.
But we need to make a commitment.
Investing in the development of these technologies, in fact, may be the only way for coal to have a long-term future in the U.S. energy mix. There will be a time in the not-too-distant future when the United States and the world begin to understand the very real threat posed to our economy and our way of life by climate change.
When that happens, those industries that are perceived as part of the problem and not part of the solution are going to have a difficult time. Allow me to put it another way: if current trends continue, there is a strong possibility that, at some point, policymakers and the public are going to see the need for drastic reductions in our emissions of carbon dioxide and other greenhouse gases. The coal industry—because of its responsibility for such a large share of those emissions—may find itself the focus of intense scrutiny and finger-pointing. And it will need to demonstrate that it is making steady and significant progress in reducing its emissions—or else face draconian policy measures.
The coal industry, of course, cannot tackle this challenge alone. Government, too, must become a part of the solution, and this is not just a matter of technology policy; there is a need for a broader climate policy. I mean a policy that sets a national goal for greenhouse gas emissions from ALL important sectors - including transportation, utilities and manufacturing - and then provides companies and industries with the flexibility to meet that goal as cost-effectively as possible. This is the approach taken in the Lieberman-McCain Climate Stewardship Act.
The need for a broader climate policy was the key conclusion of a recent Pew Center study that looked at three future energy scenarios for the United States. Even in the most optimistic scenario where we develop a range of climate-friendly technologies such as CCS and IGCC, the study projected that we will achieve no net reduction in U.S. carbon emissions without a broader policy aimed at capping and reducing those emissions.
So the challenge before us is clear: we need to craft a wide-ranging set of policies and strategies to reduce humanity’s impact on the global climate. And coal needs to be proactively and positively engaged—much more so than has been the case thus far.
I am pleased to report that there are elected leaders at the state level and in Congress who understand the importance of government action. In Congress, of course, last year we saw the Climate Stewardship Act introduced by Senators Joseph Lieberman and John McCain. This measure, which would establish modest but binding targets for reducing U.S. greenhouse gas emissions, attracted the support of 43 senators—a respectable number and an indication of growing support for U.S. action on this issue. A companion measure to the Senate bill was introduced in the House of Representatives earlier this year.
Policymakers, particularly at the state level are moving beyond debate to real action on this issue. Among the examples:
- Thirteen states, including Texas, now require utilities to generate a specified share of their power from renewable sources.
- New York and nine other mid-Atlantic and northeastern states are discussing a regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants.
- And, last September, the governors of three Pacific states—California, Oregon, and Washington—announced that they will be working together to develop policies to reduce emissions from all sources.
So the fact is, we have a lot of people in government at the state and federal levels who are beginning to look seriously at this issue and who are trying to figure out how best to respond. So the coal industry needs to be at the table now, because the policy discussion has begun.
But understand - getting to the table is not just a matter of showing up and saying, “Let’s talk.” To earn a seat at the table, coal is going to have to demonstrate that it is committed to real and serious action on this issue. And as you are probably aware, some of your competitors from a climate change perspective - the gas, oil and renewable industries are already there.
The benefits of active involvement by industry in environmental policy became clear to me during negotiations on the Montreal Protocol.
An important reason for the success of that agreement, I believe, is that the companies that produced and used ozone-depleting chemicals—and that were developing substitutes for them—were very much engaged in the process of finding solutions. As a result, there was a factual basis and an honesty about what we could achieve, how we could achieve it, and when. And there was an acceptance on the part of industry, particularly U.S. companies, that the depletion of the ozone layer was an important problem and that multilateral action was needed.
In the same way, industry involvement was an important part of the process that developed the Acid Rain Program created under the Clean Air Act Amendments of 1990. And, once again, those with a seat at the table, by and large, came out with a policy they could live with. Those who were not at the table were not as happy with the outcome.
It is a basic principle of democratic governance: the more you get involved in the process and in shaping solutions, the more likely it will be that those solutions are agreeable to you. Or, as the Chinese proverb puts it, “Tell me, I forget. Show me, I remember. Involve me, I understand.” For those of you who think there is no possible configuration that would allow the coal industry, government and environmental advocates to sit around one table—I am here to tell you that I for one am willing to make the seating arrangements work. Because we need them to work.
Whether the issue is public-private partnerships, incentives for technology development, or the level and timing of reductions in emissions, coal has a chance to shape the right solutions.
What are the right solutions? A lot of it has to do with technology—and, more specifically, with the policies needed to push and pull solutions such as CCS and IGCC to market. (Let me say here that I don’t want to leave the impression that these are the only technologies we need to look at because there are others, such as coalbed methane, that show enormous promise as well.)
I will say it one more time: coal’s place in the U.S. and global energy mix in the decades to come will depend largely on the industry’s ability, in concert with government, to develop the technologies that will allow us to achieve dramatic reductions in carbon emissions from coal generation. Without those technologies, coal loses out when the United States and the world finally appreciate the need for serious action to address this very serious problem.
In closing, I want to note that the promotional materials for the film, “The Day After Tomorrow,” ask the question: “Where will you be?” It is my sincere hope that, whether you go and see the movie or not, this industry will be on the side of solutions to this very urgent problem.
I honestly believe you don’t have much of a choice. After all, a mine is a terrible thing to waste.
Thank you very much.
The following is a brief overview of process improvements undertaken by members of C2ES's Business Environmental Leadership Council (BELC).
For more information on each of these companies efforts to address climate change, please see the Businesses Leading The Way section of this Web site.
- Air Products and Chemicals, working with semiconductor manufacturers, helped to optimize chamber-cleaning processes resulting in perfluorocarbon (PFC) emission reductions of as much as 85 percent.
- Air Products and Chemicals, Inc. was presented with the 2002 Climate Protection Award from the EPA for its role in reducing PFCs in the semiconductor industry. For more information, visit Air Product's EPA Award site.
- As the world’s leading supplier of hydrogen, Air Products is providing hydrogen to petroleum refiners to help them meet government mandates worldwide for producing low-sulfur, cleaner burning gasoline and diesel fuel. Hydrogen Article
- Air Products and Chemicals, Inc. has helped pioneered the LNG industry and have been designing liquefaction systems and supplying cryogenic heat exchangers for LNG plants all over the world for the past 30 years. Building on the leadership position, Air Products saw a breakthrough in liquefaction technology with the introduction of the AP-X™ process in 2004. The new AP-X™ process is capable of producing 50% more LNG product in a single train process. Such projects are key enablers to bringing greater quantities of clean natural gas to the energy consuming markets of the world.
- For the glass industry, Air Products and Chemicals, Inc. has enabled yield and efficiency improvements, as well as pollutant emission reduction, from its experience with oxy-fuel technology. For more information, please visit Oxy-fuel for Glassmaking.
- For the metals industry, Air Products and Chemicals, Inc. has also provided efficiency improvements via oxy-fuel technology. Article: When Do Oxyfuels Make Sense?
Alcoa’s 26 aluminum smelters reduced PFC-generating “anode effects” by 75 percent between 1990 and 2002, resulting in an annual savings of 12 million metric tons of CO2e.
American Water is testing the efficiency of its pumps, evaluating the alternatives for improvement, and designing enhancements. The vast majority of American Water's electricity consumption is used to pump water from source to treatment and storage facilities and on to its customers. Improved pump efficiency is an opportunity to reduce energy use and decrease its carbon footprint.
Research has shown that the average “wire-to-water” efficiency of existing “in-field” water utility pumps is about 55 percent. New installations are designed to achieve efficiency ratings of between 76 percent and 82 percent. American Water sees this as a major opportunity to decrease its carbon footprint. By replacing or refurbishing older pumps, its studies have shown that pump efficiency can improve by as much as 20 percent
- Delta reduced its jet fuel consumption from 2009 to 2010 by 1.8 percent, representing 56 million gallons of jet fuel. While most of this reduction was due to Delta’s decision to exit the dedicated freighter business, Delta also made additional fleet changes and implemented or expanded fuel projects to further improve its fuel efficiency. As a result of these improvements and higher load factors, passenger-miles increased by 2.7 percent despite a 0.1 percent reduction in passenger aircraft fuel.
- Since 2005, Delta has reduced its aircraft-generated NOx emissions by 18 percent, including a 27 percent reduction in emissions during landing and takeoff.
Dominion’s Transmission Business Unit has joined the U.S. EPA’s Natural Gas Star Partnership, a partnership that encourages oil and natural gas companies to adopt cost-effective technologies and practices that improve operational efficiency and reduce emissions of methane
Using the smart meter technology, Dominion has been able to implement voltage conservation strategies that reduce customer electricity use by 4% during off-peak hours and 2.5% total. These strategies do not require any additional infrastructure or changes in customer behavior.
Dominion and Lockheed Martin have recently announced the availability of the EDGE Grid Side Efficiency solution for utilities. EDGE is a modular and adaptive conservation voltage management solution enabling utilities to deploy incremental grid-side energy management that requires no behavioral changes or purchases by end customers. The EDGE product suite provides significant and sustainable energy savings through integrated planning, execution and validation of grid side energy efficiency management.
- In November 2010, Duke Energy and the Electric Power Research Institute (EPRI) released preliminary results of a pilot project showing that data centers operating on direct current (DC), rather than alternating current (AC), can cut their power usage by 10 to 20 percent. Working with EPRI, Duke Energy converted part of a data center in North Carolina to operate only on DC power.
- Entergy has replaced electrical equipment containing SF6.
- SF6 Reduction: SF6 is a highly potent greenhouse gas used for insulation and current interruption in electric transmission and distribution equipment. Exelon’s ComEd and PECO subsidiaries are members of the U.S. Environmental Protection Agency's Sulfur Hexafluoride Emissions Reduction Partnership for Electric Power Systems.
- General Electric's FlexEfficiency 50 Combined Cycle Power Plant is GE’s latest innovation in gas turbine technology, engineered to deliver cleaner, more efficient energy onto the power grid and into our homes. The first product in GE’s new FlexEfficiency portfolio, the FlexEfficiency 50 plant will enable the integration of more renewable resources onto the power grid by combining efficiency and flexibility to rapidly ramp up when the wind is not blowing or the sun is not shining, and to efficiently ramp down when they are available.
- GE uses the Energy Treasure Hunt, a Lean Manufacturing based process created by Toyota Manufacturing North America, to engage employees and identify projects that drive energy efficiency. The process is a structured multidisciplinary review of the energy use at a faciity. GE has identified and implemented numerous cost effective projects to upgrade lighting, HVAC, and industrial process equipment and to better manage energy use through more than 200 Treasure Hunt events since 2005.
GM transitioned from R12 (Freon) to R134a - a hydrofluorocarbon with a much lower global warming potential, as a refrigerant for air conditioning systems in plants and vehicles.
- In June 2011, HP unveiled the HP POD240a, the world’s most efficient modular data center that utilizes 95 percent less data center energy. Also known as the HP EcoPOD, it streamlines a 10,000-square-foot data center into a compact, modular package in one-tenth the space. It provides a traditional data center service model while housing up to 44 industry standard racks of IT equipment and more than 4,400 server. With unique Adaptive Cooling technology developed in part by HP Labs, HP EcoPod gives customers the ability to intelligently optimize energy savings based on IT load, climate and policy by automatically adjusting cooling methods, including using outside air.
In 2010, Intel more than tripled the number of Intel meeting rooms with videoconferencing capabilities, including the addition of videoconferencing rooms in 11 new countries. It estimates that videoconferencing saved employees 57,000 hours of travel time in 2010—a 27% increase over 2009—and saved Intel more than $26 million in travel expenses. In addition, the reduction in travel helped prevent the release of 22,500 metric tons of CO2 emissions.
Intel has deployed energy conservation solutions across the company by retrofitting boilers with more efficient Autoflame™ control technology. At Intel’s New Mexico site, five boilers were successfully retrofitted at a cost of about $250K. The return on investment realized was $170,000 per year in natural gas fuel costs, $50,000 per year in electrical energy savings, and $40,000 per year in boiler maintenance costs. Similarly, where the new technology has been installed, there has been an average reduction of nitrous oxide (N2O) and carbon monoxide (CO) emissions from the boilers of 32 percent and 92 percent respectively.
Intel IT’s Sustainability Framework uses data center, computer, and office infrastructure, as well as its client computer offerings, to collectively contribute to Intel’s emissions reduction goal. Its IT organization has met growing computing demands while reducing Intel’s consumption of IT-related and office energy—resulting in energy cost savings of $5.8 million in 2010 (up from $4 million in 2009) and the avoidance of more than 60,000 metric tons of CO2 emissions.
Combined heat and power (CHP) is inherently more efficient than producing electricity and heat separately. NRG Energy supplies CHP to the new Princeton hospital near its corporate headquarters in New Jersey, and it is actively pursuing additional CHP projects throughout the country. NRG’s thermal business also provides district energy for building heating and/or cooling in several major U.S. cities, such as Phoenix, AZ; Minneapolis, MN and San Francisco, CA. District energy enables building owners and managers to conserve energy and protect the environment.
Environmental Compliance: NRG’s environmental management program is built on a foundation of environmental compliance. Its Environmental Policies and Procedures Manual directs and compels all NRG facilities to follow all environmental regulations in its activities and processes. Plant environmental performance is tracked monthly through NRG’s environmental key performance indicator (EKPI), which measures compliance with permits and regulations, agency citations, reportable spills, completion of required environmental training, internal audit findings and environmental stewardship. Since January 2007, environmental performance across the NRG fleet has improved significantly. EKPI events during 2010 were reduced by more than 36% from 2007. NRG tracks federal, state and local regulations as they are drafted, works collaboratively with regulators to drive sound regulation, provides constructive input during public comment periods and prepares our facilities for compliance. All of the proposed rules generally meet our expectations and the Company expects to fully meet or exceed all requirements through executing our existing plan to spend $721 million on environmental capital expenditures by 2015.
- Air Emissions: Since 2004, NRG has spent $653 million on environmental controls to cut emissions and make our traditional generation cleaner. Through 2015, it expects to spend another $721 million. These controls combined with fuel switching, operational improvements and shutting down older coal units have and will continue to result in dramatic reductions of sulfur dioxide, nitrogen oxides, mercury, acid gas and particulate emissions.
PG&E reduced SF6 emissions by 60 percent from 1998 levels by year-end 2007
PG&E Corporation’s Pacific Gas and Electric Company (PG&E) became a charter member of the U.S. EPA’s Natural Gas Star Partnership in 1994, and its former subsidiary, National Energy and Gas Transmission (NEGT), joined the program in 2000. Through the systematic replacement of equipment and older pipelines, the company has adopted cost-effective technologies and best management practices to reduce methane losses. Efforts in this area continue to include focused inspections and maintenance at compressor stations, modifying system operations to reduce venting, and reducing frequency of engine restarts with gas. In 2002, the PG&E and NEGT undertook numerous activities that resulted in over 185,000 tons of methane avoided. These 2002 emissions avoided equate to over 4.2 million tons of CO2e.
PG&E is a charter member of the U.S. EPA’s Sulfur Hexafluoride Emissions Reduction Partnership for Electric Power Systems.
Rio Tinto reduced annual GHG emissions by 1.76 million tons compared to business as usual through projects undertaken with the Australian Government's Greenhouse Challenge, a program that helps industry identify opportunities to mitigate emissions.
Royal Dutch/Shell's Closed Loop Cooling Water Project is a heat integration project that aims to use waste heat from our process to preheat water and hence reduce on purpose firing.
Royal Dutch/Shell's Pernis CHP Plant. features a new natural-gas fired combined heat and power (CHP) plant that provides steam to the refinery and electricity to the refinery and the grid. It replaces steam boilers that burnt residual heavy fuel oil and a small, older gas-fired cogeneration unit. CHP plant built and operated by Air Liquide.
Royal Dutch/Shell installed a large steam driven turbine was installed in the Caroline gas plant in Alberta, Canada. The turbine is attached to an electricity generator and uses the energy in the surplus low pressure steam (waste heat) in order to develop electricity, thereby reducing the plant's purchase of largely coal fired electricty from the local grid. This project is essentially "energy neutral", since the thermal energy removed in the form of electricity must be replaced with energy from fuel gas combustion, which goes into steam used for heating back up the colder steam condensate production.
Royal Dutch/Shell has ended the practice of continuous venting of gas at oil production facilities and has a target to end continuous operational flaring at such facilities by 2008.
- Toyota reduced the energy required to produce a vehicle manufactured in its North American facilities by 7 percent in fiscal year 2002 through process improvements, such as reducing compressed air usage by improving system operating control, and the development of waste heat recovery systems in painting shops.
U.S. Market Consequences of Global Climate Change
Prepared for the Pew Center on Global Climate Change
Dale W. Jorgenson, Harvard University
Richard J. Goettle, Northeastern University
Brian H. Hurd, New Mexico State University
Joel B. Smith, et al, Stratus Consulting, Inc.
Download Report (pdf)
Download Appendix A (pdf)
Download Appendix B (pdf)
Eileen Claussen, President, Pew Center on Global Climate Change
Over the next century, global climate change is likely to have substantial consequences for the economy of the United States and the welfare of its citizens. As scientists work to narrow remaining uncertainties about the magnitude and timing of future warming, it is becoming increasingly important that we improve our understanding of the likely implications for human and natural systems.
In this report, a team of authors led by Dale Jorgenson of Harvard University developed an integrated assessment of the potential impacts of climate change on the U.S. market economy through the year 2100. The analysis combines information about likely climate impacts in specific market sectors with a sophisticated computable general equilibrium model of the U.S. economy to estimate effects on national measures of productivity, investment, consumption and leisure. To account for uncertainties— both in the trajectory of future climate change and in the ability of different sectors to adapt—a variety of scenarios were modeled to characterize a range of possible outcomes.
The results indicate that climate change could impose considerable, lasting costs or produce smaller, temporary benefits for the U.S. market economy in coming decades. Importantly, potential costs under pessimistic assumptions are larger and persist longer than potential benefits achieved under optimistic assumptions. Because of “threshold effects” in key sectors like agriculture, initial benefits from a moderate amount of warming begin to diminish and eventually reverse as temperatures continue to rise toward the end of the century and beyond. These findings suggest that near-term action to limit the pace and scale of future climate change would be warranted not only because the potential damages outweigh potential benefits (which are transient in any case), but because early intervention would reduce the long-term damage under either set of assumptions, and reduce the need for more costly measures if pessimistic scenarios materialize.
This study makes an important contribution to our current understanding of the potential impacts of climate change, but it represents at best a partial assessment of the full range of those impacts. Certain market sectors (e.g., tourism) and a variety of indirect effects (e.g., climate change induced healthcare expenditures) could not be included because of a lack of data. Even more significantly, the analysis does not account for critical non-market impacts such as changes in species distributions, reductions in biodiversity or loss of ecosystem goods and services. These types of effects are described in a companion Pew Center report—A Synthesis of Potential Impacts of Climate Change on the United States—but remain extremely difficult to value in economic terms. Their inclusion in a more complete evaluation of both market and non-market impacts would almost certainly offset any temporary market benefits and add to the negative impacts, thereby underscoring the case for mitigative action.
The Pew Center and the authors are grateful to Henry Jacoby and Billy Pizer for helpful comments on previous drafts of this report.
The continued accumulation of heat-trapping gases in the atmosphere is projected to have far reaching consequences for earth’s climate in coming decades. For example, in 2001, the Intergovernmental Panel on Climate Change (IPCC) predicted that average global temperatures could rise anywhere from 1.4oC to 5.8oC (2.5-10.4oF) over the 21stcentury, with warming for the United States as much as 30 percent higher. Climatic shifts of this magnitude would affect human and natural systems in many ways. Therefore, quantifying these impacts and their likely costs remains a critical challenge in the formulation of appropriate policy responses.
This study aims to advance understanding of the potential consequences of global climate change by examining the overall effect on the U.S. economy of predicted impacts in key market activities that are likely to be particularly sensitive to future climate trends. These activities include crop agriculture and forestry, energy services related to heating and cooling, commercial water supply, and the protection of property and assets in coastal regions. Also considered are the effects on livestock and commercial fisheries and the costs related to increased storm, flood and hurricane activity. Finally, the analysis accounts for population-based changes in labor supply and consumer demand due to climate-induced mortality and morbidity. Impacts in each of these areas were modeled to estimate their aggregate effect on national measures of economic performance and welfare, including gross domestic product (GDP), consumption, investment, labor supply, capital stock and leisure.
At present, our knowledge of the direct or indirect impacts of climate change on a broad range of economic activities is incomplete. Accordingly, there are important sectors and activities—such as tourism—that are omitted from this effort. Similarly, there is little information concerning possible interactions among the benefits and costs in different sectors. For example, the impacts on crop and livestock agriculture may have consequences for human health. Given the absence of reliable insights into such externalities or spillovers, these effects are also excluded from consideration. These limitations suggest that the results of this analysis are likely to understate the potential market impacts of climate change.
More importantly, this analysis does not consider the non-market impacts of climate change such as changes in species distributions, reductions in biodiversity, or losses of ecosystem goods and services. These considerations are essential to a complete evaluation of the consequences of climate change but are very difficult to value in economic terms. A companion report, A Synthesis of Potential Impacts of Climate Change on the United States, provides more detail on the relative vulnerability of different U.S. regions to both the market and non-market impacts of climate change.
To capture the range of market consequences potentially associated with climate change in the United States and to address the considerable uncertainties that exist, several distinct scenarios were developed for this analysis. Each incorporates different assumptions about the magnitude of climate change over the next century and about the direction and extent of likely impacts in the market sectors analyzed. Specifically, three different levels of climate change (low, central and high) were considered in combination with two sets of market outcomes (optimistic and pessimistic) for a total of six primary scenarios. In terms of climate, the low, central and high scenarios encompass projected increases in average temperature ranging from 1.7oC to 5.3oC (3.1-9.5oF) by 2100, together with precipitation increases ranging from 2.1 to 6.6 percent and sea-level rise ranging from 17.2 to 98.9 cm (7-40 inches) over the same period. In terms of impacts, the optimistic and pessimistic scenarios reflect a spectrum of outcomes from the available literature concerning the sensitivity of each sector to climatic shifts and its ability to adapt. As one would expect, the optimistic scenarios generally project either smaller damages or greater benefits for a given amount of climate change compared to the pessimistic scenarios.
Because several of the market sectors included here are especially sensitive to changes in precipitation, two additional scenarios were analyzed. The first assumes the high degree of temperature change combined with lower precipitation (“high and drier”) while the second assumes the low level of temperature change combined with higher precipitation (“low and wetter”).
By introducing the sector-specific damages (or benefits) associated with each of these scenarios into a computable general equilibrium model that simulates the complex interactions of the U.S. economy as a whole, the combined effect of climate impacts across multiple sectors could be assessed in an integrated fashion. Detailed results are described in the body of this report, but five principal conclusions emerge:
1) Based on the market sectors and range of impacts considered for this analysis, projected climate change has the potential to impose considerable costs or produce temporary benefits for the U.S. economy over the 21st century, depending on the extent to which pessimistic or optimistic outcomes prevail. Under pessimistic assumptions, real U.S. GDP in the low climate change scenario is 0.6 percent lower in 2100 relative to a baseline that assumes no change in climate; in the high climate change scenario, the predicted reduction in real GDP is 1.9 percent. Under the additional “high and drier” climate scenario, however, real GDP is reduced more dramatically—by as much as 3.0 percent by 2100 relative to baseline conditions. Furthermore, under pessimistic assumptions negative impacts on GDP grow progressively larger over time, regardless of the climate scenario. In contrast, under optimistic assumptions real U.S. GDP by 2100 is 0.7 to 1.0 percent higher than baseline conditions across the low, central and high climate scenarios, but these benefits eventually diminish over time. Nevertheless, to the extent that responses in certain key sectors conform to the optimistic scenarios, there is a distinct possibility that some degree of climate change can provide modest overall benefits to the U.S. economy during the 21st century.
2) Due to threshold effects in certain key sectors, the economic benefits simulated for the 21st century under optimistic assumptions are not sustainable and economic damages are inevitable. In contrast to the pessimistic scenarios which show increasingly negative impacts on the economy as temperatures rise, the economic benefits associated with optimistic scenarios ultimately peak or reach a maximum. Specifically, the agriculture and energy sectors initially experience significant cost reductions, but only so long as climate change remains below critical levels. Once temperature and other key climate parameters reach certain thresholds, however, benefits peak and begin to decline—eventually becoming damages. Different thresholds apply in different sectors and the time required to reach them depends on the rate at which warming occurs. In the high climate change scenario, the trend toward economic benefits under optimistic assumptions slows and peaks around mid-century, whereas, in the central climate case, this transition appears toward century’s end. In the optimistic, low climate change scenario, benefits continue to accrue throughout the 21st century. Nevertheless, the existence of these thresholds means that continued climate change—even if it proceeds slowly—eventually reverses market outcomes so that predicted economic benefits are only transient and temporary.
3) The effects of climate change on U.S. agriculture dominate the other market impacts considered in this analysis. Currently, the agriculture, forestry and fisheries industries represent about 2.0 percent of total U.S. industrial output and about 3.5 percent of real GDP. However, agriculture accounts for a much larger share of the overall climate-related economic impact estimated in this analysis. For example, across the low, central and high climate change scenarios, field crop and forestry impacts account for over 70 percent of the total predicted effect of climate change on real GDP under optimistic assumptions and almost 80 percent of the total GDP effect under pessimistic assumptions. These figures rise to 75 and 85 percent, respectively, if one includes climate effects on livestock and commercial fisheries. Clearly, significant impacts in relatively small sectors can exert a disproportionate influence on the overall economic consequences of a given climate change.
4) For the economy, wetter is better. All else being equal, more precipitation is better for agriculture —and hence better for the economy—than less precipitation. Not surprisingly, reductions in precipitation are costlier at higher temperatures than at lower temperatures and the negative impacts of drier climate conditions are greater under pessimistic assumptions than they are under optimistic assumptions. These results are driven by model assumptions about the relationship between agricultural output and different levels of precipitation; they do not consider regional or seasonal variability nor do they account for possible changes in the incidence of extreme events such as drought and flooding. To date, variations in precipitation have not been routinely incorporated in assessments of the agricultural impacts of climate change; nevertheless, they are potentially quite important and could significantly affect actual benefits or damages associated with climate change in this sector of the economy. Therefore, in future assessments, more attention should be paid to the specific effects of precipitation under different climate scenarios.
5) Changes in human mortality and morbidity are small but important determinants of the modeled impacts of climate change for the U.S. economy as a whole. An increase in climate-induced mortality or illness reduces the population of workers and consumers available to participate in the market economy, in turn leading to a loss of real GDP. In this analysis, mortality and morbidity effects alone account for 13 to 16 percent of the aggregate predicted effect of climate change on the economic welfare of U.S. households. Failure to include such effects therefore understates the potential market impacts of climate change as well as the likely benefits of climate-mitigating policies. Furthermore, the economic consequences of the mortality and morbidity effects arising from a given change in temperature are at the low end of mortality valuations found in the reported literature. Hence, the contribution of health effects to the aggregate market impacts of climate change could be even higher than these results suggest.
Taken together, these findings have important implications for current policy debates and for ongoing efforts to further refine our understanding of the likely impacts of global climate change. From a policy standpoint their primary relevance lies in the extent to which they support (or diminish) the case for intervention to avoid or mitigate the impacts being evaluated. Specifically, does the analysis suggest that the likely consequences of future climate change will be sufficiently negative as to warrant near-term actions aimed at reducing greenhouse gas emissions? This question is all the more difficult to answer because the benefits of policy intervention tend to accrue slowly, over a long period of time, while the costs of mitigative action must be borne in the near term.
On the one hand, the results of this analysis clearly point to the possibility that climate change could produce measurable negative impacts on the U.S. economy within this century that might justify anticipatory policy responses. On the other hand, the fact that some of the scenarios analyzed produce positive, albeit temporary, benefits for the U.S. economy in the same timeframe might seem to weigh in favor of forgoing, or at least delaying, such actions.
A number of nuances in these results—together with several larger considerations related to limitations inherent in the study’s design—argue against the latter conclusion. Within the scope of this analysis, perhaps the most important point is the fact that most, if not all, potentially positive impacts of climate change under optimistic assumptions are likely to be transient and unsustainable over the long run in the face of steadily rising temperatures. If, on the other hand, pessimistic assumptions prove to be more correct, the economic impacts of climate change are not only immediately negative, but worsen steadily over time. Thus, the potential for temporary economic benefits must be balanced against the potential for immediate and lasting economic damages.
A second important point is that the modeling results reveal asymmetries in the magnitude of potential benefits versus potential damages. Specifically, the economic losses estimated under pessimistic assumptions are generally larger than the transient benefits gained under optimistic assumptions in all but the low climate change scenarios. Moreover, the asymmetry becomes more pronounced with rising temperatures as certain types of costs—such as those associated with extreme weather events—increasingly offset possible benefits to other sectors of the economy.
A further caution relates to the partial and incomplete nature of the analysis itself. This effort was limited from the outset to considering only market impacts of global climate change within the United States. As has already been noted, it was not possible to include all potentially climate-sensitive market sectors in the analysis; nor was it possible to account for all externalities or spillover effects. Moreover, the results of this analysis are not likely to be representative of other parts of the world, especially for those countries whose overall economic well-being is more closely tied to sectors like agriculture. For these countries, the potential damages associated with future climate change could be a much larger proportion of GDP than in the United States and the downside risks under pessimistic assumptions—especially in regions where climate change is likely to cause increasingly warmer and drier conditions—could be far more substantial.
Even more significant, in terms of drawing policy conclusions from these results, is the fact that the underlying analysis does not address a host of potential non-market impacts associated with climate change. These include shifts in species distribution, reductions in biodiversity, losses of ecosystem goods and services and changes in human and natural habitats. Such impacts—many of which are explored in other Pew Center reports—are probably of great concern to the public and could carry substantial weight in future policy deliberations. They are, however, extremely difficult to value in economic terms. To the extent that they have been assessed—even qualitatively—the results suggest that climate-related impacts on natural systems are far more likely, on the whole, to be negative rather than positive. As such they would tend to add to any negative market impacts associated with future climate change, while offsetting potential market benefits of the kind simulated in this study under optimistic assumptions.
In sum, the disparity in results between optimistic and pessimistic scenarios—and the likelihood that a consideration of non-market impacts would tend to exacerbate this disparity—highlights the continuing uncertainty associated with quantifying climate change impacts. The fact that the economic losses associated with pessimistic scenarios are both larger and more continuous than the transient benefits gained under optimistic scenarios would seem, by itself, to provide some support for cautionary action on climate change. In fact, such action—by slowing the pace and magnitude of temperature increases in the U.S. market consequences of global climate change coming decades—actually could forestall any damages or even improve the odds that optimistic rather than pessimistic outcomes prevail. If, on the other hand, worst-case scenarios appear more likely over time and ultimately justify more dramatic intervention, early efforts to achieve moderate near-term emissions reductions may help avoid the need for more costly measures later on. Meanwhile, high priority should be given to improving and integrating future assessments of market and non-market outcomes and to refining our understanding of the probabilities associated with varying degrees of climate change and the positive or negative responses that follow.