Energy & Technology
With the long-awaited release of the Kerry-Lieberman clean energy and climate bill (The American Power Act) and EPA’s final action on its “tailoring” rule, two important clues emerged this week to the unfolding mystery of whether or not we will have climate legislation this year. And buckle up and enjoy the ride -- two more major developments are just around the corner. On Wednesday, the National Academy of Sciences will be releasing three of its panel reports on America’s Climate Choices and sometime in the next two weeks Senator Murkowski may bring forward for a vote her effort to overturn EPA’s endangerment finding.
The release of the K-L bill demonstrates both how far we have gone and how distant the goal remains. The bill achieved support from some key elements of the business community and goes much further in adding in elements (nuclear power and a hard price collar) that could expand its base of support. But the loss of Senator Graham as a co-sponsor and the absence of any bipartisan backing underscore the challenges it faces in achieving the 60 votes it will need to avoid a filibuster in the Senate. The Senate clock also continues to wind down making it harder to find floor time to move a comprehensive bill forward.
EPA’s recently issued interpretation of when greenhouse gases become regulated pollutants and its final tailoring rule show EPA’s willingness to make reasonable use of the existing Clean Air Act to tackle climate change. By delaying the effective date when new source review will apply to greenhouse gases, and limiting new source requirements for best available control technology to only the largest sources (estimated to impact approximately 900 additional major sources annually), the agency put to rest the fears of some that the Agency’s rules would sink the economy and harm small businesses. The rule shows that the existing Act, though cumbersome, can be used as a tool to reduce greenhouse gas emissions.
Both EPA’s action and the upcoming National Academy panel reports provide the perfect preface to the expected vote in the Senate on overturning EPA’s endangerment finding which links greenhouse gas emissions to health and welfare impacts from climate change. To argue for overturning the finding, some Senators will point to recent controversies: the errors in the IPCC report; the hacked e-mails referred to as “climategate;” and even the DC snowstorms of last winter as evidence that the science of climate change is somehow suspect. Despite the media attention these have received, none in any way undercut the overwhelming case underlying concerns about climate change. Three independent investigations have each cleared the scientists who authored the e-mails of charges that they manipulated data or infringed on the peer review process. The IPCC has corrected the two mistakes (the expected date of the melting of Himalayan glaciers and the percent of land in the Netherlands under water) uncovered to date in its reports – out of a total of thousands of pages, two mistakes neither of which undercuts the IPCC’s key conclusion that “warming of the climate system is unequivocal” and “that most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic GHG concentrations.” Finally, notwithstanding Washington D.C.’s blustery winter, globally 2009 proved to be one of the warmest years on record. The NAS panel reports this week are likely only to reinforce these conclusions, further calling into question any votes in support of overturning EPA’s endangerment finding based on denying what we know about climate science.
Others in the Senate, including Senator Murkowski, make the case that the goal of overturning the endangerment finding is really about the need to take the worst option (EPA regulations) off the table and thereby protect our economy from the potentially dire consequences of EPA action particularly on small businesses. They argue that this would allow our elected representatives the opportunity and time to address this issue. But the limits EPA adopted in its tailoring rule (and its earlier decision to delay implementation) appear to take off the table these concerns about widespread and costly controls on small sources. Although legal challenges to the tailoring rule are possible, they would take time to work their way through the courts, and if they were successful, Congress would then be in a far better position (and have a more compelling case) to provide a narrow legislative fix addressing a specific problem.
When the debate on overturning EPA’s endangerment finding moves to the Senate floor (10 hours of debate is permitted), many will be wondering why the Senate isn’t instead focusing its debate on finding the common ground solutions urgently needed to get our nation on a path that enhances our energy independence, spurs the growth of new technologies, and slows climate change.
Steve Seidel is Vice President for Policy Analysis
Our corporate energy efficiency conference opened by answering the big question: What actions should businesses take to reduce energy use?
- Don't just set goals, set big hairy audacious ones even if you may not know exactly how to achieve them, asserted PepsiCo.
- Efficiency is done better together – you have to get all your business units moving forward on efficiency, advised IBM.
- Make the data visible – quarterly scorecards on efficiency measures lead to shared knowledge, clear measures against goals and the ability to hold leaders accountable and reward those who deliver results, suggested Dow Chemical.
- Show them the money – you need to show everyone from the board room to the boiler room that energy efficiency is good for business, stressed Toyota.
So how do you do all this? The solutions-oriented conference provided answers through panels covering the various components of corporate energy efficiency.
The conference marked the launch of our recent report, "From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency" authored by William Prindle, Vice President of ICF International. Held April 6-7 in Chicago, the two-day conference brought together a diverse audience, including representatives of numerous companies with products ranging from software to soft drinks.
The conference was kicked off with presentations from six companies whose best practices in energy efficiency were highlighted in the report's case studies (Best Buy, Dow Chemical, IBM, PepsiCo, Toyota, and UTC). Subsequent panels examined issues such as overcoming financial barriers in pursuing energy efficiency projects, gaining senior level support for energy efficiency, engaging employees, suppliers and customers in energy efficiency efforts, and the challenges of gathering and reporting energy efficiency data.
In every panel session there was an abundance of questions, and lively discussions spilled out into the hallways during breaks. Panelists discussing financial barriers to energy efficiency were asked about building a financial case for employee engagement programs, PACE financing, and tradable energy efficiency certificates. Attendees had panelists pondering the idea of a best-of-the-best list within the joint U.S. DOE/U.S. EPA ENERGY STAR program and how to include supply chain efficiency metrics in labeling. How to keep employees engaged in energy efficiency measures and bringing suppliers into the fold were other key questions asked of conference panelists.
While the discussions mostly focused on what companies can do to be more energy efficient, the broader issue of climate change was not far from everyone's minds. Former Senator John Warner, a keynote speaker, was asked about the right message that would get Congress moving on climate change legislation. And keynotes John Rowe, CEO and Chairman of Exelon, and our President Eileen Claussen both noted that policy that puts a price on greenhouse gas emissions is essential to moving the United States to a low-carbon economy and addressing climate change.
Videos and presentations from the conference are available on our Web site.
Aisha Husain is an Energy Efficiency Fellow.
Previous posts in this series discussed how the demand for electricity from plug-in electric vehicles (PEVs) would affect the grid as well as a potential problem related to clustering. This final post describes an opportunity for these vehicles to help increase the stability of the grid and hold down utility rates for consumers. As a reminder, a PEV is either an all-electric vehicle (EV) or a plug-in hybrid electric vehicle (PHEV).
In our previous post in this series, we provided evidence that the existing electrical grid has enough spare capacity to accommodate plenty of plug-in electric vehicles (PEVs), if the right incentives are put in place. In this post, we will discuss a technical problem that has its roots in social behavior.
The transition from traditional powered vehicles to electric vehicles will not be without its hiccups. While the aggregate impact of PEVs on the grid is likely moderate, one concern is clustering, which can be thought of as the realization of the famous comic strip Keeping up with the Joneses. If people buy what their neighbors have, this could lead to a clustering of PEVs in certain neighborhoods which might place excessive demand on local areas of the grid.
One of the main concerns over the electrification of vehicles is their impact on the electrical grid. Will they lead to power outages due to the increased demand in certain areas? Will a marked increase in electricity demand raise prices for consumers who don’t own a plug-in hybrid electric vehicle (PHEV) or an all-electric vehicle (EV)? In a series of blog posts, we’ll take a look at a claim from some utilities that vehicle electrification could actually help improve the stability of the grid while keeping costs low through a process called frequency regulation.
In this post, we’ll try to answer the capacity question. In order to determine whether the grid has the capacity to handle the influx of Plug-in Electric Vehicles (PEVs or PHEVs/EVs), utilities must estimate at what time of day these vehicles will demand power from the grid and how many of them the grid can charge at a time without causing power disruptions.
Earth Day – it’s the perfect day to start your energy diet. It’s great to hug a tree, (in fact, that’s how you measure the carbon it sequesters) but for most of us, it’s even better to wrap our arms around that tangle of charger cords and pull the plug. Reducing your energy consumption is the very best way to honor Mother Earth – and save money – this year and every year.
Since I am perpetually on a diet, let me share some of the best strategies for getting started:
A group of nearly 50 companies and organizations, including the Center, sent President Obama a letter this month asking the Administration to lead the way to providing all consumers access to their energy information. The April 5 letter calls for giving consumers access to this information via devices such as computers and phones; making it easier for them to monitor and manage their energy use.
With timely and actionable information on energy consumption, households and businesses can avoid inefficiencies that drive up consumer costs and greenhouse gas emissions. Through its Make an Impact program, we also works to weave sustainability and energy efficiency into the fabric of its partners’ corporate culture. The program provides accessible information to employees and their communities on ways to reduce energy use, lower their carbon footprint, and save money. These savings can be significant: If every U.S. household saved 15% on its energy use by 2020, GHG savings would be equivalent to taking 35 million cars off the road and would save consumers $46 billion on their energy bills each year.
We recently released a report that describes the petroleum sector from production to consumption and examines options for including greenhouse gas (GHG) emissions from petroleum use under climate policy (e.g., GHG cap and trade). Currently, policymakers are considering multiple approaches for coverage of petroleum under comprehensive climate and energy legislation. In deciding how to address a sector of the economy or a particular fuel, policymakers must balance the goals of ensuring maximum coverage of emissions, minimizing administrative complexity and burden, avoiding creating perverse incentives or market distortions, and promoting emission reductions.
While the details of the Kerry-Graham-Lieberman climate and energy proposal in the Senate are yet to be released, press reports indicate that the trio is likely to adopt a new approach to covering transportation fuels—the so-called “linked fee.” Unlike other proposals in the House or Senate, the Kerry-Graham-Lieberman approach would reportedly levy a “carbon fee” on transportation fuels with the fee amount linked to the carbon price from a GHG cap-and-trade program covering at least electric utilities. The forthcoming details of how the “carbon fee” is linked to the cap-and-trade market will determine whether such an approach can lead to significant emissions reductions from transportation and whether such an approach can yield the economy-wide emissions reductions needed to protect the climate.
Our new report includes information relevant to the linked-fee approach. For example, the report calculates that about 80 percent of combustion emissions from petroleum use are attributable to transportation fuels that are already subject to federal fuel excise taxes. Untaxed transportation fuels and large and small stationary combustion sources account for the remainder of emissions from petroleum use. This means that a linked fee could be implemented at least in part by covering the same entities that currently pay the fuel tax.
Another Senate proposal, the Cantwell-Collins Carbon Limits and Energy for America's Renewal (CLEAR) Act, creates an economy-wide cap-and-trade program—in this case just covering CO2 emissions from fossil fuel use. The CLEAR Act adopts an entirely “upstream” point of regulation that would make “first sellers” (i.e., coal mine and natural gas and oil well owners) responsible for surrendering cap-and-trade allowances for end-use emissions from the fossil fuels they sell. As the new Pew Center report explains, there are about a half million oil wells in the United States. Of the nearly 14,000 domestic well operators tracked by the U.S. Energy Information Administration (EIA), the 10 largest (e.g., BP, Chevron) account for about half of total production, and the 670 largest account for about 90 percent of production.
The House-passed comprehensive climate and energy bill (H.R. 2454, the Waxman-Markey American Clean Energy and Security Act of 2009) also included an economy-wide GHG cap-and-trade program. Waxman-Markey, however, would require petroleum refiners and importers to surrender cap-and-trade allowances equal to the GHG emissions from the final end use of their products (e.g., tailpipe emissions from vehicles). This point of regulation for petroleum would achieve complete coverage of combustion emissions and regulate a small number of entities and facilities (about 150 refiners with 67 different owners and a larger number of importers and points of entry). Of note, Waxman-Markey adopted different points of regulation for different emission sources--including large sources (e.g., coal and natural gas power plants and industrial sources) and local natural gas distribution companies (residential, commercial, and small industrial natural gas users).
With different proposals in play, our new report can inform policymakers and others considering options for reducing GHG emissions from petroleum use and help advance approaches that balance the goals of emissions coverage, administrative ease, and cost-effective and significant emission reductions.
Steve Caldwell is a Technology and Policy Fellow
The federal government took the opportunity on April Fool’s Day to show the world the United States is not joking about its commitment to reducing greenhouse gas (GHG) emissions. The U.S. EPA and U.S. DOT have jointly produced a standard that will reduce CO2 emissions by 1 billion metric tons over the lifetime of vehicles covered and on average save consumers around $3,000 in fuel costs over the life of each vehicle purchased in 2016. The new rule requires the corporate average fuel economy (CAFE) for new passenger cars and light-duty trucks to be 35.5 miles per gallon by 2016. It will also limit carbon dioxide emitted from those vehicles to 250 grams per mile on average. The vehicle emissions rule shows how one policy can achieve multiple goals – reduce our dependence on foreign oil and reduce our nation’s GHG emissions.
The implementation of this regulation is a nod to complementary policies that combat climate change. As an organization that has long pushed for a comprehensive market-based mechanism, we are acutely aware of the importance of pricing carbon. However, putting a modest price on carbon, by itself, would not significantly reduce greenhouse gas emissions from this sector. For example, EPA’s analysis of the House-passed climate and energy bill found that the bill would cause the price of a gallon of gasoline to only rise by $0.13 in 2015, $0.25 in 2030, and $0.69 in 2050. The rule finalized Thursday addresses this problem directly by setting an increasingly more stringent standard for reducing GHG emissions but allowing vehicle manufacturers the flexibility to find the most cost-effective technologies to achieve those standards.
In evaluating regulations like these, one important factor to consider is coverage. The new vehicle rule covers over 60 percent of greenhouse gas emissions from the transportation sector. Other sources of emissions in transportation such as aviation, ships, and heavy-duty trucks will require additional actions (see our paper on aviation and marine transportation). EPA has announced its intent to propose GHG standards for heavy duty trucks in June of this year.
Another important factor to consider when evaluating regulations is cost. In order to meet the new standards, vehicle manufacturers will have to make fuel efficiency (as opposed to increased engine horsepower) one of their primary areas of focus for research and development. In doing so, future vehicles will cost more than they would without this rule. However, fuel savings over time will more than make up for that additional upfront cost.
The program is estimated to conserve 1.8 billion barrels of oil over the lifetime of vehicles covered under the rule. Reducing our overall oil consumption can reduce our reliance on foreign oil, which can translate into cost savings. A study by the U.S. EPA and the Oak Ridge National Laboratory estimated that a reduction of U.S. imported oil results in a total energy security benefit of $12.38 per barrel of oil, in part by reducing defense spending. Co-benefits like these are an important part of determining the worthiness of a policy. In the case of the new vehicle rule, the U.S. has taken a big step towards reducing its oil dependency and increasing its energy security.
Nick Nigro is a Solutions Fellow
The Obama Administration made some important announcements about offshore drilling last week. And in the near and medium term, we believe increasing U.S. oil production is compatible with successful efforts to significantly reduce U.S. greenhouse gas (GHG) emissions.
Offshore drilling has been much talked about lately. Expanding offshore drilling in the federal outer continental shelf (OCS) areas and increasing oil and gas revenue sharing for nearby coastal states is part of the package of climate and energy policies being negotiated by Senators Kerry, Graham, and Lieberman.