Energy & Technology
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.
U.S. Electric Power Sector and Climate Change Mitigation
Prepared for the Pew Center on Global Climate Change
Granger Morgan, Carnegie Mellon University
Jay Apt, Carnegie Mellon University
Lester Lave, Carnegie Mellon University
Eileen Claussen, President, Pew Center on Global Climate Change
The electricity sector in the United States enables almost every aspect of our economy—from agriculture, to manufacturing, to e-commerce. As witnessed during the California Energy Crisis and the 2003 blackout in the northeast and midwest, interruptions in the supply of electricity can be highly disruptive. It is hard to imagine a sector that is more important to our economy than electricity. But electricity also accounts for one third of our nation’s greenhouse gas emissions. In order to effectively address the climate challenge, we must significantly reduce greenhouse gas emissions associated with electricity production and use. In this report, authors Granger Morgan, Jay Apt, and Lester Lave identify numerous opportunities to decarbonize the U.S. electricity sector over the next 50 years.
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 available now and in the future, this report yields the following insights for reducing GHG emissions from the electricity sector.
- There are likely multiple pathways to a low-carbon future for the electricity sector, and most involve some portfolio of technological solutions. The continued use of coal with carbon capture and sequestration; increased efficiency in the generation, transmission and end use of electricity; renewable and nuclear power generation; and other technologies can all contribute to a lower-carbon electric sector. Yet, all of these technologies face challenges: Cost, reliability, safety, siting, insufficient public and private funds for investment, and market and public acceptance are just some of the issues that will need to be resolved.
- A major effort is needed to develop and deploy commercially available low-carbon technologies for the electric sector over time. The lower-carbon efficiency and generation technologies available and competitive in the market today are probably insufficient to decarbonize the electricity sector over the next few decades. Given the magnitude of the challenges the industry faces in coming decades, it is critical that the United States—both the public and private sectors—develops and maintains dramatically expanded R&D. Near-term and long-term R&D investments will help ensure that we have technologies to enable a low-carbon electricity sector.
- It is critical that we start now to embark on the path to a lower-carbon electric sector. A decarbonization of the electricity sector could be achieved in the next 50 years through increased efficiency and fuel-switching in the near term, and a gradual deployment of lower-carbon technologies over the next several decades. Over the long term, GHG reductions will be achieved at lower cost if climate considerations are incorporated into the industry’s investment decisions today. Voluntary efforts to reduce GHG emissions will not be enough, especially given the current uncertainty in the industry. A clear timetable for regulation of GHG emissions is essential—a timetable that begins in the near future.
The authors and the Pew Center would like to thank Severin Borenstein of the University of California Energy Institute, Ralph Cavanagh of the Natural Resources Defense Council, and Tom Wilson of EPRI for their review of and advice on a previous draft of this report.
Measured by environmental impact and economic importance, the electricity industry is one of the most important sectors of the American economy. The generation of electricity is responsible for 38 percent of all U.S. carbon dioxide (CO2) emissions and one third of all U.S. greenhouse gas (GHG) emissions. This sector is the largest single source of these emissions. It is also the largest source of sulfur dioxide (SO2), oxides of nitrogen (NOX), small particles, and other air pollutants.
At the same time, electricity is critical to the U.S. economy. Recent annual national expenditures on electricity totaled $250 billion—making the electricity sector’s share of overall GDP larger than that of the automobile manufacturing industry and roughly equal in magnitude to that of the telecommunications industry. Expenditures alone, however, understate the importance of electricity to the U.S. economy. Nearly every aspect of productive activity and daily life in a modern economy depends on electricity for which there is, in many cases, no close substitute. As the most desirable form of energy for many uses, electricity use has grown faster than GDP. The Internet and computers would not operate without very reliable, high-quality electricity. Electricity also plays a major role in delivering modern comforts and easing household tasks, from running heating and cooling systems to washing clothes and dishes. It plays an even more important role in the commercial, manufacturing, and agricultural sectors, where it provides lighting and powers a variety of machines. In short, it is hard to imagine a modern economy functioning without large amounts of reliable, high-quality electricity.
The economic and environmental importance of the electric power industry is, moreover, likely to grow in coming decades. Electricity demand has increased steadily over the last three decades and is projected to continue rising in the future, despite ongoing improvements in end-use efficiency. The industry, meanwhile, has undergone dramatic structural changes over the last 10 years, moving from a system of monopolies subject to state price regulation to a mixed system that now includes some elements of market competition in many states. After declining for 75 years, electricity prices have risen since 1970, making expenditures for carbon control a difficult proposition in the absence of mandatory GHG policy. The uncertain state of electricity market restructuring efforts around the country, particularly since the California crisis of 2001-2002, has increased perceptions of investor risk and sharply raised the cost of borrowing for capital investments by investor-owned utilities.
In this context, reconciling growing demand for affordable and reliable electricity supplies with the need for substantial reductions in GHG and criteria pollutant emissions presents a significant challenge for policy-makers and for the electricity industry itself. Indeed, even if worldwide growth in demand for electric power ceased today, the industry’s current level of emissions is not sustainable. Stabilizing atmospheric carbon dioxide concentrations at twice the level of pre-industrial times is likely to require emissions reductions of 65-85 percent below current levels by 2100. Clearly, reductions of this magnitude can be achieved only by taking action globally and across all sectors of the economy.1 But the electricity sector will undoubtedly need to assume a major share of the burden—in the United States and worldwide—given its centralized structure and contribution to overall emissions.
This report explores the electric power industry’s options for reducing its GHG emissions over the next half century. Those options include new technologies that are still being developed—such as coal gasification with carbon capture and sequestration—as well as strategies that rely on existing technologies at different stages of commercial and technical readiness (such as nuclear and renewable generation), lower-carbon fuels (like natural gas), and efficiency improvements (both at the point of electricity production and end use). Many of these options, in addition to reducing CO2 emissions, also reduce conventional air pollutants.
Although a power generating plant has a lifetime of 30-50 years, low-carbon technologies could claim a substantial fraction of the generation mix by mid-century—in time to help stabilize atmospheric GHG concentrations within the next century or two. Some of these technologies, such as coal-based integrated gasification and combined cycle (IGCC) generation, still need to overcome basic cost, reliability, and market-acceptance hurdles; others, such as carbon capture and sequestration, have yet to be demonstrated on a large scale. Still others, such as wind, nuclear, or even (given recent fuel price increases) natural gas combined cycle power, are relatively well developed but face constraints in terms of siting, public acceptability, cost, or other factors.
Nevertheless, the analysis presented in this report suggests that substantial GHG reductions could be achieved by the power sector—without major impacts on the economy or on consumer lifestyles—through the gradual deployment of lower-carbon options over the next several decades. At the same time, more immediate emissions reductions can be achieved through lowering demand by increasing the efficiency with which electricity is used; substituting natural gas for coal; improving efficiency at existing plants including highly efficient combined heat and power systems at suitable sites; expanding deployment of renewable generation technologies, including biomass co-firing of coal plants; and through the use of carbon offsets such as forestry projects and methane capture and collection. These immediate measures can reasonably be expected to reduce electricity growth and expand low-carbon electricity production in the United States from its 28 percent share in 2003, while also reducing emissions from higher-carbon generators.
While initial steps to limit electricity sector CO2 emissions will have only a modest impact on total U.S. emissions, steady and deliberate efforts to promote long-term technological change in this sector eventually could produce significant climate benefits, given the industry’s share of current emissions. The dollar cost of achieving GHG reductions will depend to a significant extent on which of several possible technology pathways emerge as both feasible and cost-effective in the decades ahead. Increasing the efficiency with which electricity is used is important to any energy future. In one scenario, the successful commercialization of carbon capture and sequestration technology would allow for continued use of fossil fuels in combination with somewhat increased reliance on similarly priced wind resources. In another scenario, a new generation of nuclear technology proves acceptable and plays an expanded role in meeting future electricity needs. Future emissions reductions might need to be achieved chiefly through increased reliance on relatively more expensive natural gas and renewable energy. Some forms of renewable energy can certainly play a role, but just how large a role depends on a range of uncertain issues in terms of cost, technical performance, and power system architecture. A major scale-up of renewable energy would likely require a greatly enhanced transmission network and expensive energy storage technologies to compensate for the remoteness and intermittency of much of the wind and solar resource base. These issues will be resolved only through further research and expanded field experience.
In all cases, however, long-term reductions will be achieved at lower cost if climate considerations are incorporated into the industry’s investment decisions sooner rather than later. Building another round of conventional pulverized coal plants that comply with new pollution control requirements for SO2, NOX, particulate matter, mercury, and other toxic emissions, but that later need to be scrapped, or retrofitted with costly and inefficient CO2 scrubbers, would likely be the most costly path.
To ensure that climate considerations figure in the industry’s planning decisions and to provide effective market incentives for investment in low-carbon technologies, a clear timetable for the regulation of GHG emissions is essential. Many industry experts and utility executives see such regulations as inevitable over the next 10-20 years, but cannot—without some certainty about future regulation—justify added expenditures for low-carbon technologies today, either to their shareholders or to state regulators concerned about the local economic impacts of higher-priced power. Voluntary efforts to reduce CO2 emissions simply will not be sufficient in an increasingly cost-competitive and risk-averse market. If, however, GHG emission limits are implemented in concert with other pollution control requirements, long-term air quality and climate objectives will be achieved more quickly and at lower total cost than under a piecemeal approach.
Four major policy recommendations emerge from the findings in this report concerning prospects for a long-term transition to a low-carbon electricity power sector:
- Establish a firm regulatory timetable for reducing CO2 emissions from the electricity industry that parallels the timetable for reducing discharges of conventional pollutants. To assure that emissions targets are met at minimum cost, they should be set well in advance and should be implemented using market-based mechanisms such as a cap-and-trade system or a carbon tax. Avoiding high costs later requires accounting for CO2 in current investment decisions and technology choices.
- Address the most serious institutional and regulatory barriers to the development of low-carbon and carbon-free energy technologies by implementing policies aimed at: (1) developing an adaptive regulatory framework for managing geologic carbon sequestration, in order to provide an alternative (coal gasification with carbon capture) to building new conventional coal plants; (2) determining if it is feasible to mitigate the safety, proliferation, and waste-management concerns that currently inhibit the expansion of nuclear power; (3) facilitating the adoption of cost-effective low- or no-carbon renewable technologies such as wind and biomass and promoting distributed resources and micro-grids—that is, clusters of small, modular generators interconnected through a low-voltage distribution system that can function either in concert with, or independent of, the larger grid; and (4) creating financial arrangements that decrease the risk penalty assigned by investors to new capital in the restructured era that have tended to discourage major electricity industry investments and that present further hurdles to the deployment of new technologies.
- Promote greater end-use efficiency through policies that encourage power companies to invest in cost-effective, demand-side energy savings. Impose stricter federal efficiency standards for appliances and buildings (as detailed in the Pew Center report, Towards a Climate Friendly Built Environment) and promote the deployment of efficient combined heat and power systems. California has succeeded in slowing per capita electricity demand growth significantly through a variety of efficiency initiatives; these and other programs should be examined to estimate their potential to reduce demand more broadly and to identify “best practices” that can be documented and implemented elsewhere.
- Create a federal requirement that all parties in the electricity industry invest at least one percent of their value added in R&D in order to explore how promising new technologies can solve the difficult reliability, efficiency, security, environmental, cost, and other problems facing the industry. Firms should have the choice to make the investments themselves or contribute to a fund managed by the U.S. Department of Energy. In parallel with this industry mandate, the Department of Energy needs to develop a more effective program of needs-based research into power generation and storage, electricity transmission and distribution, conservation, demand management, and other electric power technologies and systems.
The path to a low-carbon future for the electricity sector poses a range of challenges. As France has demonstrated, nuclear power is a known technology that could produce such a future, but nuclear power faces a number of major problems including high cost, low public acceptance, and risks of proliferation. Large-scale fuel switching to natural gas could lead to substantial reductions in CO2 emissions, though not their complete elimination, but it would be expensive and probably adversely impact the nation’s energy independence. Carbon capture and sequestration holds the promise that it could allow continued use of America’s enormous coal reserves. While likely affordable and technically feasible, it has yet to be demonstrated on a large scale and faces open questions of cost and reliability. Some forms of renewable energy can certainly play a role, but just how large that role can be depends on a range of uncertain issues in terms of cost, technical performance, and power system architecture. These issues will be resolved only through further research and expanded field experience. Conservation and load management hold great potential, but to date regulators and political decision makers have not advanced these solutions with the vigor that is needed. Clearly there are multiple paths to success, most involving some portfolio of these solutions. Today our best option is to work hard to advance the most promising, in the hopes that several ultimately prove to be technically, economically, and politically feasible.
The electricity industry’s investment decisions are unlikely to favor low-carbon options unless and until a clear regulatory timetable for limiting CO2 emissions is established. Absent such a timetable, aging pulverized coal units will likely be retrofitted with add-on controls for SO2, NOX, and mercury and could continue operating for decades with no provision for CO2 abatement. This could lead to a situation where more drastic CO2 reductions must be achieved over a shorter timeframe in the future, potentially at far higher cost.
Environmental issues generally, and global warming concerns in particular, have focused attention on a number of major challenges to the current U.S. electricity system. Industry restructuring, underinvestment in transmission infrastructure and other system assets, under-utilization of currently available low-carbon electricity generation sources, reliability and security issues, and insufficient R&D funding interact to cloud the future of this vital sector of the U.S. economy. Under any future scenario, this complex set of issues must be addressed in a manner that accounts for the hybrid—half restructured and half traditionally-regulated—nature of the industry. The elements that matter most now are:
- An end to regulatory uncertainty regarding future CO2 control. Establishing clear and consistent policy goals sooner rather than later and implementing these goals through mechanisms such as a cap-and-trade system with scheduled cap reductions will avoid very significant costs.
- Development efforts focusing on promising technologies that do not require fundamental breakthroughs, such as IGCC with carbon capture and sequestration for coal as well as natural gas.
- Adoption of best practices for promoting energy conservation and improved efficiency.
- A federal requirement that electricity industry companies spend at least one percent of their value added on research to develop critical enabling technologies and to address core questions that are likely to be crucial in determining which of several possible technology paths the industry should follow in the future. Examples include making carbon capture and sequestration feasible and determining whether cost-effective electricity storage options can be developed for intermittent resources like wind and solar.
Properly managed, it should be possible to accomplish the transition to a low-carbon electricity future at manageable cost and with little disruption to the U.S. economy. But the United States must initiate that transition now.
About the Authors
M. Granger Morgan
Carnegie Mellon University
M. Granger Morgan is Professor and Head of the Department of Engineering and Public Policy at Carnegie Mellon University where he is also University and Lord Chair Professor in Engineering. He is also a Professor in the Department of Electrical and Computer Engineering and in The H. John Heinz III School of Public Policy and Management.
Morgan's research addresses problem in science, technology and public policy. Much of it has involved the development and demonstration of methods to characterize and treat uncertainty in quantitative policy analysis. He works on risk analysis, management and communication; on problems in the integrated assessment of global change; on improving health, safety, and environmental regulation; on energy systems, focused particularly on electric power; and on several other topics in technology and public policy. His books, published by Cambridge University Press, on Uncertainty: A guide to dealing with uncertainty in quantitative risk and policy analysis (1990 with Max Henrion) and Risk Communication: A mental models approach (2002 with Baruch Fischhoff, Ann Bostrom, and Cynthia J. Atman) are widely cited as providing the definitive treatment of these topics.
At Carnegie Mellon, Morgan directs the new NSF Center on Climate Decision Making and co-directs, with Lester Lave, the Carnegie Mellon Electricity Industry Center.
Morgan serves as Chair of the EPA Science Advisory Board, Chair of the EPRI Advisory Council, and Chair of the Scientific and Technical Council for the International Risk Governance Council (based in Geneva, Switzerland). He is a Fellow of the AAAS, the IEEE, and the Society for Risk Analysis.
He holds a BA from Harvard College (1963) where he concentrated in Physics, an MS in Astronomy and Space Science from Cornell (1965) and a Ph.D. from the Department of Applied Physics and Information Sciences at the University of California at San Diego (1969).
Carnegie Mellon University
Jay Apt is Executive Director of the Carnegie Mellon Electricity Industry Center at Carnegie Mellon University's Tepper School of Business and the CMU Department of Engineering and Public Policy, where he is a Distinguished Service Professor.
He received an A.B. from Harvard College in 1971 and a Ph.D. in experimental atomic physics from the Massachusetts Institute of Technology in 1976. His research interests are in economics, engineering, and public policy aspects of the electricity industry, economics of technical innovation, management of technical enterprises, risk management in policy and technical decision framing, and engineering systems design.
He received the Metcalf Lifetime Achievement Award for significant contributions to engineering in 2002 and the National Aeronautics and Space Administration's Distinguished Service Medal in 1997.
Lester B. Lave
Carnegie Mellon University
Lester B. Lave is University Professor and Higgins Professor of Economics at Carnegie Mellon University, with appointments in the Business School, Engineering School, and the Public Policy School. He has a BA from Reed College and a Ph.D. from Harvard University.
He was elected to the Institute of Medicine of the National Academy of Sciences and is a past president of the Society for Risk Analysis. He has acted as a consultant to many government agencies and companies. He has received research support from a wide range of federal and state agencies, as well as foundations, nongovernmental organizations, and companies.
Lave is the director of the CMU university-wide Green Design Institute and is co-director of the CMU Electricity Industry Center. His research is focused on applying economics to public policy issues, particularly those related to energy in general and electricity in particular.
Judith M. Greenwald, Director of Innovative Solutions at the Pew Center, Discusses Keeping the Nuclear Power Option Open
(This article appeared in Oxford Energy Forum, May 2005)
Addressing the challenge of global climate change will require a sustained and comprehensive commitment to climate-friendly policies and investments throughout the world. Such policies and investments must be focused on enabling a transition to a low-carbon economy through a significant reduction in annual greenhouse gas (GHG) emissions by 2050. A commonly stated goal is to stabilize the atmospheric concentration of carbon dioxide (CO2) at twice its pre-industrial level. Such a “decarbonization” in the context of increasing global demand for energy would necessitate an increase of roughly 100 to 300 percent of present-day worldwide “primary power” consumption from non-CO2-emitting sources such as renewables, nuclear power, the use of fossil fuels with carbon capture and sequestration, and energy efficiency improvements.
Achieving this transition depends on both near-term and long-term actions...
TECHNOLOGY, PUBLIC POLICY AND COAL: MAKING THE CONNECTION
SPEECH BY EILEEN CLAUSSEN
PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE
COAL21 ANNUAL CONFERENCE
APRIL 5, 2005
Thank you very much. I appreciate the opportunity to be here for your first Annual Conference. It is always a pleasure to come to Australia from the United States. For this trip, I decided to bone up a bit on Australian phrases. And I was interested to learn that someone who has “gone bush” in Australia is actually traveling in the outback.
In America, of course, someone who has “gone Bush” is someone who supports the President. And then there are all the others who merely want Bush gone.
Seriously, I am delighted to be here and to learn more about COAL21. As I looked through the program for the next two days, it occurred to me that we have a long way to go in terms of educating people about some of the things you will be talking about. There is IGCC, CCS, ultra-clean coal, oxy-fuel and more. To get an idea of the degree to which these issues have penetrated the mainstream consciousness, I decided turn to that all-important resource: Google. And so I typed in CCS, confident that I would immediately be referred to information about carbon capture and storage.
But, lo and behold, I was directed before anything else to a firm called Custom Computer Services in Brookfield, Wisconsin. Other listings on the opening pages of my CCS search were for the Canadian Cardiovascular Society, the Congress of California Seniors, the Community College of Spokane and, of course, the Captain Cook Society, which should be of great interest here in Australia. The Australian branch of the society, by the way, will be holding its annual meeting later this month right here in Sydney, in case you are interested.
In any case, I clicked through several pages of results and failed to find even one mention of carbon capture and storage. And when I typed in IGCC, I had to scroll through listings for the Insulating Glass Certification Council and the Indo-German Chamber of Commerce before I got to anything about coal.
The point of all this is that it appears we have some work to do in order to bring the technologies we are talking about into the mainstream of society. And that is what I want to talk about today: what we need to do so that we can get these technologies developed as quickly as possible, and begin to significantly reduce greenhouse gas emissions from coal generation.
But first I want to say how impressed I am to learn more about COAL21 and to see such a serious and sincere commitment to climate solutions on the part of industry. And I applaud the partnerships you have forged with government and the research community.
We may not have an initiative quite like COAL21 in the United States, but we do have industry leaders like you, who are acknowledging that climate change is a problem and who are committed to addressing it.
To date, 38 companies have joined the Pew Center’s Business Environmental Leadership Council. These companies include some of the most well-recognized brand names across the globe. They represent most industrial sectors and the largest emitters of greenhouse gases, including coal-burning utilities, mining companies, aluminum producers, automobile manufacturers, pulp and paper manufacturers, chemical companies, oil and gas businesses, and the cement industry. In joining the Council, these companies are united with the Pew Center in several beliefs, including this one – and I quote:
“We accept the views of most scientists that enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences.”
It is a very simple statement – and it is a statement that all of you, through your participation in COAL21, could surely sign onto as well. But, of course, I didn’t come all this way simply to give you a pat on the back and say “G’day.” What I want to do this morning is challenge you to think even bigger and more broadly about coal’s future.
I want to start by laying out what I believe are two predictions for the future in which I have great confidence. The first is that we will soon be living in a carbon-constrained world. And the second is that coal will continue as a primary source of energy throughout the globe. How we reconcile these two predictions is, I believe, the crucial question facing this industry in the months and years ahead.
So let me talk briefly about prediction number one: the inevitability of carbon constraints. The scientific consensus on this issue seems to me to be quite clear. The earth is warming, this warming will accelerate in the years ahead, and it is largely the result of human activities. Yet another point of consensus – it is actually an indisputable fact – is that there is a great deal of inertia in the climate system. The greenhouse gases we have already placed in the atmosphere will continue to warm the planet for many decades, if not centuries with important consequences for sea-level rise, water availability, ecosystems and human health.
Right now, there is about 40 percent more carbon dioxide in the atmosphere than there was at the dawn of the Industrial Revolution. In fact, we haven’t experienced this level of carbon dioxide emissions for over 400,000 years.
In order to stabilize atmospheric CO2 concentrations at double their pre-industrial level (or 550 ppm)– a scenario that many scientific studies use to project the consequences of global warming but one that involves some adverse effects from climate change – the TOTAL amount of CO2 emissions we can release is roughly 1200 Gigatons (Gt).
Now think about this: Since the beginning of the industrial revolution – when the burning of fossil fuels began adding CO2 to the atmosphere -- we have consumed one-quarter of this budget.
At current growth projections, and I believe these are quite conservative, we will have consumed another quarter of the budget in a fraction of that time – in only another 25 years, or by 2030. So you can see where this is going – it took us over 100 years to use the first quarter – only 25 for the next – and in the absence of change from our current path, we reach – and surpass concentrations of 550 ppm (a doubling of pre-industrial levels) well before the end of this century, leading to greater impacts, such as the loss of coral reefs and barrier islands.
We have to get serious. I recognize that cost is the biggest driver in business decision making. But we also have to think about the environment when we make decisions, particularly for substantial capital investments that will last a long time. Because if we make the wrong decisions, we will not only be sacrificing the environment, but we will also end up by stranding significant amounts of capital.
So it is critical that we wake up and pay attention both to what the science is telling us and to where the economics of bad decision-making will lead. If we start now, I am convinced we can do this in an intelligent, measured way – a way that promotes investment in new technologies and allows time for capitol stock to turn over, so that we both protect our environment and sustain a growing global economy.
And the fact is, people already are waking up. The growing scientific consensus on this issue has prompted people and governments around the world to stand up and take notice, and to embrace the need for change. One sign of how far this issue has progressed came at this year’s World Economic Forum in Davos, Switzerland. When asked to identify key issues facing the world today, participants in the forum (50 percent of whom came from industry) listed climate change as one of the top three – ahead of terrorism and weapons of mass destruction. Here is a brief quote from the official review of the meeting:
“Increasingly, global businesses recognize that we are at a tipping point on climate change. There is growing recognition that mitigation decisions must be taken now.”
And right here in Australia a poll conducted by the Lowy Institute found that the two international issues that most concern your citizens are nuclear weapon development and global climate change.
70 percent of Australians polled expressed concern about global warming, while only 63 percent expressed concern about international terrorism and 44 percent spoke of illegal immigration and refugees.
But people are not just acknowledging this problem; they are also doing something about it. Kyoto, as all of you know, is now in force, meaning that more than 140 countries, including most of the world’s industrial powers, are implementing or considering steps to meet their treaty commitments and reduce their emissions.
We are also beginning to have serious discussions about what happens after 2012, when Kyoto’s current commitment period is over. And, as the world embarks on the next phase in all of this, what has happened until today will be a walk in the park. Because, whatever form it takes, the next international agreement is going to include much more action from many more countries, as we enter a seriously carbon constrained world.
Kyoto, of course, is not the only case of governments responding to this issue. We also have seen the launch in the EU of the broadest emissions trading system ever established. And, in Great Britain, the government has developed an energy blueprint for the next 50 years that makes climate change a key driver of that country’s energy policy, along with price and security of supply. Prime Minister Tony Blair, who is serving as president of the G-8 nations this year, has made climate change a priority for that group.
And it is not just national governments that are taking action. In the United States, 28 state governments have adopted climate action plans, and 15 have programs or policies in place to reduce, sequester or register greenhouse gases. Governors from 10 northeastern states are working on a strategy to reduce carbon dioxide emissions from power plants through a regional cap-and-trade initiative. And, 19 states have adopted renewable energy mandates that will result in real reductions in emissions.
Here in Australia, there is also a great deal of activity going on, at all levels of government. So the ball is rolling for real action on this issue at the international, the national and the subnational levels. And it is gaining speed. The trend is undeniable. Carbon constraints are on the way – indeed, in many instances they are already here.
“One day we will live in a carbon-constrained world.” That is a direct quote from Jim Rodgers, the CEO of Cinergy Corp. in the United States. And he is not the only U.S. electricity or energy executive saying this. John Rowe of Exelon has said in no uncertain terms that – quote – “there should be mandatory carbon constraints.” And here’s a quote from Wayne Brunetti of Xcel Energy: “Give us a date, tell us how much we need to cut, give us the flexibility to meet the goals, and we’ll get it done.” End quote.
I hope I have made a compelling case to you that carbon constraints are on the way – and industry needs to be prepared. So then we can move on to the second prediction, that the world will continue to rely on coal. I do not need to tell you about the vital role that coal plays, and will continue to play, in meeting the world’s energy needs. But I do want to offer a few statistics to put it in perspective.
In the United States today, coal provides 51 percent of all electricity, more than double the amount of any other fuel source and five times more than gas, oil, or hydroelectric power. Here in Australia, of course, coal is even more dominant in the energy mix, providing 85 percent of the nation’s electricity. And then there are the developing countries like China and India. China alone now accounts for 31 percent of worldwide coal consumption, and the developing world is going to be bringing huge amounts of new coal burning capacity online in the years ahead.
The bottom line: Coal is the most abundant energy source today, it is dispersed throughout the world, and it is available at a relatively low cost. There is no way that the world can continue to quench its growing thirst for energy without it.
So those are the facts: carbon constraints are coming, as they should be, and coal is here for the long haul. Now the question is how do we reconcile these future scenarios? How can the future include both carbon constraints and coal?
In the United States today, coal is responsible for 33 percent of carbon dioxide emissions. The comparable figure for Australia is 58 percent. Worldwide, the proportion of CO2 emissions from coal is 26 percent. As we say in America, something’s got to give.
To the extent that the coal industry fails to take seriously its obligation to substantially reduce emissions, then the controls imposed from outside are likely to be both more severe and less business-friendly. This is why the COAL21 National Action Plan is so important.
By laying out a pathway for developing new technologies to reduce coal-related emissions, you are planting your flag on the side of solutions. But the most important point I want to leave you with today is that a technology strategy alone is not enough. It is absolutely essential. But we also need broader climate policies that will draw the new technologies into the marketplace– policies that reflect the urgency of this issue and the need for real reductions in emissions.
Technology and policy. We need to do both. And we can do both. So let me go back to the 2005 World Economic Forum meeting at Davos, where there are two thoughts that are particularly relevant. First, “There is no single “magic bullet” or technology to address climate change. A diverse portfolio of low and zero carbon technologies will be required.” And second, “But it is essential that business be guided by clear price signals and a predictable regulatory path.” I’d like to spend a little time now talking about ways to move forward on each of these priorities.
First, technology. You are the experts on the technologies that can reduce greenhouse gas emissions from coal. And the agenda for this conference reflects that. Over the next two days, you will be talking about CO2 capture and storage, IGCC, oxy-fuel combustion, lignite dewatering and drying, ultra-clean coal and more. The potential for combining IGCC with carbon capture and storage is, of course, where a lot of the attention is right now – and for obvious reasons: whatever we do, we have to do it as efficiently as possible. But each of the technologies on your agenda holds great promise. And we need them now.
Worldwide, in developing and developed nations, the International Energy Agency anticipates that about 250 gigawatts of new coal capacity will be built in this decade. We will build almost double that (480 gigawatts) between 2011 and 2020. We have already missed our chance to influence the choice of technology for most of the capacity that will come online before 2010. But the longer we wait, the more likely it is that we will fail in the next decade as well. We simply cannot afford to do this.
So where are we today in developing the technologies we need? Well, let’s look at IGCC as an example. Right now, there are only two real IGCC plants in operation in the United States, but neither is operating fully on coal. Of 106 proposed new coal plants for the U.S., nine are IGCC. There is also the Bush administration’s $1 billion FutureGEN project, which you will hear about later. But no specific plans have yet been announced. So, in reality, we haven’t figured out if this is even viable yet.
With carbon capture and the other technologies, it is the same story. Lots of great ideas, some demonstrations here and there, but we are nowhere near where we need to be. And governments and industry are going to have to work together to jump-start these technologies and get them to a point where they can actually make a difference.
The COAL21 National Action Plan is absolutely correct in saying that international collaboration in this work is essential. We need to reduce duplication of effort—and that means planning, funding and deploying trial projects with publicly shared results. Any R&D we do on these technologies should be focused squarely on the remaining technical hurdles to their deployment, with special attention to reducing the costs involved. There is enormous potential here – but, as all of you know, we have a lot of work to do before these technologies can even begin to make a real contribution to protecting the climate. And the clock is ticking.
But again, an R&D focus alone is not enough. We need to combine technology and policy. A recent Pew Center study looked at three future energy scenarios for the United States – one where oil and gas are abundant and relatively inexpensive; one where energy supply disruptions and terrorism concerns lead to more interest in both alternative energy and coal; and one where government and industry partner to get climate-friendly technologies to the marketplace.
Even in this last scenario, where technology triumphs and where we presumably would get a fairly good handle on technologies such as carbon storage and coal gasification, the study projected no net reduction in U.S. carbon emissions by 2030 without a broader climate policy. I want to repeat that for emphasis – even if we get these technologies to a point where they can be deployed in cost-effective ways, we still need broader policies to enable change. Industry needs to know that government is serious about this issue, that there are clear and certain goals driving our policies, and that all sectors will be held accountable for reducing their emissions.
What types of policies am I talking about? At the international level, we need an agreement that engages all major emitters of greenhouse gases, from both the developed and the developing world. It is the only fair way to do this. It is the only way to bring the United States – and Australia too – back into the process. And it is the only way to fully engage the major emitters in the developing world.
But I am not saying that all countries—or all companies—need to play by the same rules. Flexibility is key. Different countries are at different stages in their development, and they have different resources to invest in climate solutions. And different countries are endowed with different kinds and quantities of natural resources. So we need a framework where everyone is involved in ways that they and their competitors view as fair. “Fair and effective” should be our mantra as we move forward. “Fair” because we need broad engagement in this effort, and “effective” because we need to create pathways that get us to a low-carbon global economy. .
Moving from the international stage to policies at the national level, we need to look at an assortment of policies that can contribute to reduced emissions. One of these is cap-and-trade. As you know, this is a policy that sets targets for greenhouse gas emissions and allows companies the flexibility to trade emission credits in order to achieve their targets. This is the policy in New South Wales, and, as I already mentioned, a number of U.S. states are considering a cap-and-trade initiative as well.
The United States Senate for the first time voted on a national cap-and-trade measure last year. It attracted the support of 43 senators, and its sponsors have vowed to bring it up for consideration again. Cap-and-trade policies can be important because they encourage economy-wide reductions in emissions. And the work we have done shows this is the least expensive way to do it – reductions happen where it is cheap and where it makes the most economic sense.
However, cap-and-trade is far from the only policy option at the national level. And for some countries, it may not be the preferred approach. Government standards and codes, public infrastructure investments, public-private partnerships and government procurement all have a role to play in reducing emissions and forcing change. We also may need to think sector by sector, either on a national or a global basis. Are there specific sectors where a particular approach makes the most sense, and if there are, how should we go about getting new technologies and new processes into the market for that sector.
In the electricity sector specifically, we need policies and incentives that will result in companies building the best, most efficient plants they can; retiring old, inefficient plants as expeditiously as possible; and capturing and storing the carbon stream.
We also need national energy policies like the British example – policies that balance our desire for security, growth and affordability with the need to build a diverse portfolio of climate-friendly technologies.
Last but not least, we need to pay attention to adaptation. Because, even with an ambitious strategy to reduce emissions, we’re already committed to future changes in the global climate that will pose serious challenges to our natural ecosystems and resources, our economies, and human health. The recent report from the Arctic Climate Impact Assessment made it crystal clear: climate change is happening now. And the nations of the world need to be ready to adapt.
This morning, I have made 2 predictions: carbon constraints are coming; and coal will remain a crucial source of energy throughout the world. And I have talked about how we can reconcile these facts in two ways: first, by making a much more vigorous commitment to technologies that will reduce the environmental impact of coal generation; and, second, by advancing broader public policies to mobilize real action on the climate issue both in our domestic economies and worldwide.
I believe the only way to address this problem successfully is to unleash a global technological revolution. And the goal of governments, acting multilaterally and within their own borders, must be to adopt policies and strategies that spur this revolution on.
In Australia, in America and throughout the world, businesses continue to receive mixed signals from their governments about whether or not we are serious about addressing this challenge. It is time to erase all the doubts and the uncertainty. It is time to act boldly, government and industry together, to embrace the importance of both technology and public policy in protecting the climate we share.
Thank you very much.
The 10-50 Solution: Options for a Low-Carbon Future
Prepared by the Pew Center on Global Climate Change
Download "The 10-50 Solution: Options for a Low-Carbon Future" In Brief (pdf)
View In Brief Figures:
- Figure 1: The Effect on the U.S. Wind Industry of the Expiration of the Production Tax Credit
- Figure 2: The Effect of Consistent Policy Support for Wind in Germany
- Figure 3: " Decision Analysis" of Hydrogen Energy as a Carbon Dioxide Mitigation Strategy for Transportation
For Immediate Release: January 19, 2005
Contact: Katie Mandes
CLIMATE SOLUTIONS AND FORESTS
New report examines the economic and climate impacts of storing carbon in trees
Washington, DC — Cost-effective climate change policies should include storage of carbon dioxide (CO2) in U.S. forests, according to a new report from the Pew Center on Global Climate Change.
“Climate change is the major global environmental challenge of our time and in order to deal with it in the most cost-effective way, we need to consider the full range of solutions – and that includes carbon storage in forests,” said Eileen Claussen, President of the Pew Center on Global Climate Change. “If we ignore the potential for forest-based sequestration, any projection of the costs and feasibility of addressing climate change is going to be overly pessimistic and wrong.”
Most analyses of the climate issue have tended to focus on the implications of reducing emissions of carbon dioxide and other greenhouse gases from key industrial and transportation sources. Less attention is paid to the potential for storing (or “sequestering”) carbon in forests and other ecosystems. Both emissions reduction and carbon sequestration are important strategies for addressing climate change.
The Pew Center report, The Cost of U.S. Forest-based Carbon Sequestration, investigates the potential for incorporating land-use changes into climate policy. Authored by economists Robert Stavins of Harvard University and Kenneth Richards of Indiana University, the Pew Center report looks at the true “opportunity costs” of using land for sequestration, in contrast with other productive uses. The report also examines the many factors that drive the economics of storing carbon in forests over long periods of time.
Among the authors’ key conclusions: The estimated cost of sequestering up to 500 million tons of carbon per year—an amount that would offset up to one-third of current annual U.S. carbon emissions—ranges from $30 to $90 per ton. On a per-ton basis, this is comparable to the cost estimated for other options for addressing climate change, including fuel switching and energy efficiency.
A sequestration program on the scale envisioned by the authors would involve large expanses of land and significant up-front investment. As a result, implementation would require careful attention to program design and a phased approach over a number of years. Nevertheless, the report offers new evidence that sequestration can and should play an important role in the United States’ response to climate change.
“This report shows that large-scale forest-based sequestration can be a cost-effective tool which should be considered seriously by policymakers,” said the Pew Center's Claussen.
The full text of this and other Pew Center reports is available at http://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.
CLIMATE CHANGE: BEYOND A SIDEWAYS APPROACH
SPEECH BY EILEEN CLAUSSEN
PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE
DONALD BREN SCHOOL OF ENVIRONMENTAL SCIENCE
AND MANAGEMENT- UNIVERSITY OF CALIFORNIA, SANTA BARBARA
JANUARY 14, 2005
Thank you. I am delighted to be here – and I have to say it was awfully nice of the weather to clear up for my arrival.
Of course, I am not here to talk about the weather. I am here to talk about the climate. And the difference, as we all know, is that climate is what you expect. Weather is what you get. And California has certainly gotten more than it expected or deserved these last few weeks.
I am sure some of you saw the movie, The Day After Tomorrow, and it is hard not to think about it given the recent weather you’ve been having. This is the film that dramatized the effects of climate change by releasing tornadoes in downtown Los Angeles and flooding all of Manhattan. People called it left-wing propaganda, but I remember watching the movie and wondering why only Blue states were getting hit.
And then of course we have the new Michael Crichton book that you have probably heard about. The book, which is climbing the bestseller lists as we speak, tells a fictional tale of how climate change itself is a fiction created by overzealous environmentalists so that they can enact draconian regulations on big business.
The book is called “State of Fear,” and my only fear is that people will take seriously its absolutely wrongheaded portrayal of the problem of climate change.
I hope all of you will join me in reminding people that Mr. Crichton’s specialty is fiction – even if he does include all sorts of graphs and charts in the current book to make it seem like a scientific tract. This is the man who wrote such fantastical books as Jurassic Park, and it seems to me he has been hanging out with too many dinosaurs – people who are mired in the past and who simply cannot and will not accept the broad scientific consensus that we have a significant problem on our hands, and that there are practical and economically sound ways to tackle it.
The point is– whether we are talking about the movie or the book: They are both fiction.
In contrast to the book’s sensationalistic tone and style, your school’s emphasis on rigorous, interdisciplinary approaches to environmental problem-solving is something that is desperately needed in today’s world. With so many complex and urgent environmental issues on the agenda at the local, national and international levels, your work here is essential. And I applaud your interest in these issues and your commitment to solutions.
At the Pew Center on Global Climate Change, we are committed to solutions, too. And today, I would like to talk for a little bit about some of the potential solutions to the problem of climate change. More specifically, I want to talk about the nexus of technology and public policy – in other words, what policies do we need in order to unleash the global technological revolution that is necessary to protect the climate?
I understand there is a hit movie in theaters right now that was filmed in the wine country around here. The movie is called Sideways – and, unfortunately, this is a title that could just as easily apply to current U.S. policy on climate change. But in saying we are moving sideways, even that may be giving us too much credit. Perhaps Backwards would be more appropriate.
Clearly, we can do better. And today I want to talk about how. More specifically, I want to talk about a plan that the Pew Center is developing for U.S. action on the climate issue. We call it our Agenda – and it is something we have been working on in concert with business and government leaders and others to lay out a responsible and practical policy course for the United States for the years to come.
But, before I talk about that, I want to talk briefly about what is at stake here. And I want to paint a clearer picture of the problem we are trying to solve, the problem we must solve—that is, of course, global climate change.
Just last month, the World Meteorological Organization reported that 2004 was the fourth hottest year on record – and that the last four years were among the top five. Of even greater concern was the news we learned in November about the arctic region. This is the canary in the coal mine of climate change, the place where researchers have always said that the effects of this global problem will hit early and hard.
And in November, we learned just how hard. The report of the Arctic Climate Impact Assessment showed that the Arctic region is indeed undergoing dramatic and alarming changes. The reason: It’s warming much more rapidly than previously known, at nearly twice the rate of the rest of the globe.
And it’s important to remember that this isn’t a random, out-of-left-field report. It is the result of an unprecedented, four-year scientific study of the region conducted by an international team of 300 scientists. And its conclusions should be a wake-up call for all nations.
According to the report, at least half the summer sea ice in the Arctic is projected to melt by the end of this century, along with a significant portion of the Greenland Ice Sheet. The Arctic region is projected to warm by an additional 7 to 13 degrees Fahrenheit by 2100. These changes will have major global impacts, contributing to sea-level rise and even intensifying global warming as the disappearance of Arctic ice masses means that more incoming solar radiation will be absorbed at the Earth’s surface instead of being reflected back.
This is scary stuff. And, the fact is, we don’t have to travel to the Arctic to see that climate change is already being observed, even if the impacts in that region may be more pronounced and are occurring at a faster rate. Also in November, the Pew Center released a report showing some of the closer-to-home effects of climate change – effects right here in the United States. Right now.
For example, we are seeing a long-term trend toward an earlier spring, with earlier flowering and reproduction of plant and bird species. Butterflies here on the U.S. west coast are moving north and to higher altitudes in search of tolerable climate conditions, with some populations disappearing altogether from the southern end of their ranges. And this is only the beginning. In addition to their potential to lead to future declines in the diversity of U.S. wildlife, these ecological changes are indicators that global warming is already upon us and that adverse effects to other systems, and ultimately our economy, are just around the corner.
With warming for the next century projected to be two to ten times greater than the last, we’re heading toward a fundamental and potentially irreversible disruption of our ecology and natural systems, both in this country and around the world.
So what can we do? Well, at this point, we have to accept that some climate change already is built into the system – indeed, it is already happening, as I have said. But we do have the power to limit the scope and severity of climate change. And what we need to do is stabilize greenhouse gases in our atmosphere at a level that will keep this problem from becoming a global crisis.
According to the Intergovernmental Panel on Climate Change, stabilization means shooting for the magic number of 550 parts per million – that would be roughly double the pre-industrial level of atmospheric greenhouse gases.
But to get to that level, we need to reduce global CO2 emissions by 55 to 85 percent below what is currently projected under a “business-as-usual” scenario. Fifty-five to 85 percent. Making this challenge even more daunting, energy demand around the world is growing at a breakneck pace. We need to act now to come up with ways to keep global economies growing while curbing the growth in greenhouse gas emissions around the world. And make no mistake: The United States, which is responsible for one-fourth of global emissions, needs to take the lead.
Over the past year, as I have said, the Pew Center has been working to develop a comprehensive plan for U.S. action on this issue. This Agenda is our attempt to develop and articulate a responsible course for addressing climate change.
It is built on six years of Pew Center analysis and experience with leading businesses, and through dialogue with international leaders and experts. And what we recommend in the Agenda is that the U.S. develop an Integrated National Climate Change Strategy. That means a strategy that combines technology development with wide-ranging policies on issues from mitigation and science to adaptation.
This last point, about adaptation, is a crucial part of what we have to do, because even if we push forward with an ambitious strategy to reduce greenhouse gas emissions, we’re already locked in to future changes in the global climate. There is no way around it. And these future changes will pose many challenges to ecosystems and natural resources, as well as human health and national economies. We need to plan now for these changes so that our society and others are able to adapt.
But adapting, of course, is not enough. We also need to take serious action to limit the extent of climate change by reducing our emissions. More than anything else, that will require a global technology revolution – and we need policies to make that revolution happen.
While it’s true that technology normally advances over time on its own, it does not always advance in the right direction. Also, we plainly do not have time to wait. The challenge before us requires a much more deliberate, enunciated effort to develop policies that will help push and pull climate-friendly technologies to the market. We need a guiding vision on the order of putting a person on the moon or developing a cure for cancer. And we need to look at the full range of policy approaches that will get us where we need to be – from market incentives and public-private partnerships to a range of R&D efforts focusing on everything from basic research to deployment.
Perhaps the best way to look at the technology and policy challenge we face is on a sector-by-sector basis. From manufacturing and electricity to buildings, agriculture, forestry and transportation, all sectors of the economy have important parts to play in reducing greenhouse gas emissions. Let me talk briefly about just two: transportation and electricity.
The transportation sector is responsible for more than a third of our greenhouse gas emissions, and a quarter of U.S. energy consumption. To reduce these emissions, the Pew Center's Agenda identifies a range of specific policies-all aimed at speeding the development and deployment of new technologies. And what we need to do is focus on both short-term technologies such as hybrid gas-electric vehicles, as well as longer-term technologies such as hydrogen.
Looking first at the short term, we can do a lot more on the issue of hybrids. This is, in fact, a classic case of how smart policy can make a difference. Yes, hybrid vehicles are selling. But, despite their popularity, there is no way they will represent more than a small fraction of U.S. vehicle sales without government stepping in and creating a bigger market. What can government do? Well, we can do a lot more to step up consumer incentives for buying these low greenhouse gas emitting vehicles - and it is not just hybrids I am talking about but clean-diesel vehicles as well.
We can also remove incentives in the law for purchasing inefficient vehicles such as SUVs - it is frankly hard to believe these incentives exist, given the energy and climate challenges we face. And, last but not least, government can and should take steps to boost public-sector procurement of climate-friendly vehicles. The goal is to create and expand the market - and government can help do that with its own purchases.
Among the longer-term transportation technologies we need to be looking at are hydrogen, biofuels, and all-electric cars and trucks. But every one of these technologies faces substantial barriers that the private sector is unlikely to be able to resolve on its own. We need to ramp up funding for research, design and deployment. Just as important, we need demonstration programs. Everybody talks about a hydrogen economy, but you need a hydrogen infrastructure to make it work. And the government needs to work with industry to come up with demonstrations that will show what's feasible and practical - and how to do it right. For example, it is absolutely essential that we find environmentally friendly ways of producing hydrogen - because if we merely use fossil fuels to do it, the climate problem does not improve; it actually gets worse.
I have talked a lot about cars, but we need to look at other forms of transportation, too. Air, rail, marine transportation, road freight - all of these are a part of the problem, and all of them must be a part of the solution. In the Pew Center Agenda, we talk about the need for government to work with the International Civil Aviation Organization to adopt policies aimed at boosting the fuel efficiency of aircraft. The bottom line is that there are countless ways to reduce emissions from this vital and growing sector. Our challenge is to adopt policies that will ensure that those reductions happen sooner rather than later - when the damage may already be done.
People in California know what needs to happen. Your state is on the verge of establishing tough but achievable standards for greenhouse gas emissions from cars. You would be the first state to do this – and, if it happens, you’ll be charting a productive path forward for the rest of the country. Because the fact is we need national standards like those proposed for California. And, in the Pew Center Agenda, we recommend converting the United States' current fuel economy standards to a set of tradable standards based on greenhouse gas emissions. If you are looking to protect the climate, focusing on emissions is the way to go.
Another sector where we can and must achieve significant progress is electricity, which is responsible for almost 40 percent of U.S. emissions. And here I want to start by talking about coal. In 2003, coal provided 51 percent of U.S. electricity. Worldwide, it is the most abundant and widely distributed fossil fuel. Given current rates of production and use, we have 200 years of reserve supply. Whether you like it or not, coal is going to remain a major part of the energy mix for decades to come.
And so our challenge is twofold: we need to come up with better, cleaner ways to burn coal; and we also need to do everything in our power to figure out how to capture and store the carbon that is produced when we do burn it. There are technologies being developed that hold promise on both of these counts. But, once again, these technologies will go nowhere fast if we don’t light a fire under them, so to speak, with government R&D and other policies. We need tests to find out the practicality of geologic storage of carbon. We need demonstrations so we can understand the ins and outs of CO2 injection underground. We also need to build demonstration plants so we can learn more about coal gasification, which holds the promise of allowing us to burn coal with dramatically reduced carbon emissions.
All of these are smart and necessary investments – not just for climate reasons but also because they can place the United States in a leadership position around the world so we can then export these technologies to other countries with significant coal resources, such as India and China.
So that’s the story with coal. But what about other energy technologies? What about combined heat and power? This is when you capture and use the waste heat generated along with electricity. Want to know the overall efficiency of the U.S. electricity system – what we put in vs. what we get out? It’s 30 to 33 percent of input energy; that level has remained constant since the 1970s. This is inexcusable when you consider that combined heat and power systems can boost efficiency to upwards of 80 percent. Right now, these systems account for just 8 percent of U.S. energy supply, compared to 40 percent in Europe. What policy steps can we take to promote combined heat and power? Well, we can start by regulating utilities based on total energy output. A lot of these are just common-sense solutions.
Another promising energy technology is distributed generation, or DG. This is when you generate electricity close to the point of use. With distributed generation, you can reduce CO2 emissions in a number of ways. In fact, a major benefit of this technology is that you avoid so-called transmission and distribution losses; when electricity is moved over long distances, 7 to 8 percent of it is lost along the way. With distributed generation, you can also use waste heat for combined heat and power in ways that you cannot in a large, centralized power station. So it can be more efficient in that way too. But we need policies to make distributed generation more feasible -- for example, by allowing people to sell excess power back to the grid at a fair price.
Now, what about renewables? If you are talking about climate-friendly sources of energy, you have to talk about renewables – wind, solar, hydropower, geothermal and more. In the past, these technologies have cost significantly more than fossil fuels for the same energy output. But over time we have adopted policies at the national, state and local levels that promote renewables – tax breaks, consumer incentives, portfolio standards that require utilities to generate a set share of their power from these sources. California’s aggressive deployment policies in the 1980s helped bring the cost of wind power down to where it is today – close to the cost of fossil fuel generation in some markets. Yet, the lack of policy leadership in the U.S. meant that we lost our leadership position in the wind field to Europe.
So it is policy that has made these technologies more competitive, but policy needs to do more. We need to do things like extending the wind production tax credit, creating renewable portfolio standards at the state, regional and/or national level, and investing more in research and development. Given the energy security challenges we face in this country, not to mention the climate challenges, developing and deploying renewables should be at the top of our national agenda.
Burning coal in clean ways. Safely storing carbon. Investing in combined heat and power and distributed generation. And making renewables an integral part of our national energy mix. These are critical energy challenges for the future – and they are not the only ones. At the Pew Center, we have always been careful to remain “technologically neutral” – we will throw out the welcome mat for any and all technologies that can be part of the climate solution. And, in our Agenda, we address the need for policies to encourage the development and deployment of everything from advanced nuclear power to new energy-efficiency technologies. This problem is too big for any one solution.
We need to look at an array of technologies, and at an array of policies as well. We need strong R&D policies, government standards and codes, public infrastructure investments, public education programs, public-private partnerships and more. And we also need to look at broader, technology-neutral policies as well – policies that can encourage action across all sectors of the economy. Here I am talking specifically about the policy known as “cap and trade.”
Cap-and-trade is the approach taken in the Climate Stewardship Act introduced last year by Senators Joseph Lieberman and John McCain. Their bill attracted the support of 43 U.S. senators and prompted the first serious debate in Congress about exactly what we need to be doing to respond to the problem of climate change.
The reason cap-and-trade works is that it enables companies to reduce emissions as cheaply as possible. We all know the example of how trading has worked to achieve cost-effective reductions in emissions of the pollutants that cause acid rain. In fact, it was because of the United States’ successful use of trading to reduce sulfur emissions that our country insisted that trading be a central element of the Kyoto Protocol. And now, inspired by Kyoto, the European Union is on the verge of launching the broadest emissions trading system ever established.
What’s more, right here in the United States, nine Northeastern governors, led by New York Governor George Pataki, are developing a multi-state regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants. This effort is proceeding well, and we expect them to complete their work by this spring, with agreement on a model rule.
Now, it will probably be some time before we establish a national, economy-wide cap-and-trade system in the United States—the political support for it is not there. But what might be possible is a series of interlinked trading systems – the east coast with Europe and perhaps with Canada and the west coast as well. Such a “bottom-up” system could be robust enough both to achieve some environmental benefit and to keep costs down. And it would be a valuable learning experience for both sides on this issue, hopefully one that would show that taking action to protect the climate is both practical and affordable.
Of course, cap-and-trade is not the only broad policy that we need to think about. We also need a climate-conscious energy policy for the United States. In Great Britain, the government has developed an energy blueprint for the next 50 years that makes climate change a key driver of that country’s energy policy, along with price and security of supply. The United States would be wise to follow suit.
I have tried in these remarks to talk about what we need to do here at home in order to approach the climate issue in a serious way. We need a robust, climate-friendly energy policy. Incentives and requirements for clean technologies. A cap-and-trade program to reduce emissions at the lowest cost. But it is important to remember that we need to engage on this issue at the international level too. Climate change is a global problem. Even if we were to get dead serious about reducing our emissions tomorrow, we won’t get where we need to be unless all countries become a part of the solution.
In December, as many of you know, delegates from the United States joined representatives of other nations at a climate meeting in Buenos Aires. The ostensible purpose of the meeting was to tie up any loose ends that remained before the Kyoto Protocol goes into force in February. The Protocol, of course, is the international agreement that commits all of its signatory countries to specific targets for reducing their greenhouse gas emissions before 2012. The Buenos Aires meeting also, it was assumed, would begin to lay the groundwork for the next steps in the international climate effort – in other words, what happens after 2012?
The only problem with the latter assumption is that the United States, which is not even a party to the Protocol, was opposed to any discussion of the future. In a truly Orwellian quote, the lead U.S. negotiator at the meeting was heard to say, “We need to absorb and analyze lessons learned before committing to new actions.” End quote. New actions? I didn’t know that we had committed to any old actions. And it is hard to learn any lessons when you’re doing next to nothing.
We might as well have had Michael Crichton as the head of our negotiating team. At least he would have made it more interesting.
In any case, the events in Buenos Aires underscore how far the U.S. has strayed since 1992, when President George H.W. Bush signed the United Nations Framework Convention on Climate Change. This is the treaty where the nations of the world acknowledged that climate change was a problem and pledged to act – voluntarily, I might add – to reduce their emissions. Even during the Clinton administration, despite signing the Kyoto Protocol, we clearly were not willing to own up to our global responsibility on this issue.
Climate change requires that we act at both the international and the national levels, and my goal today has been to give you some ideas and examples of the kinds of things we need to do. Now, at this point I could wrap up by remarks by comparing what we need to do with what is actually happening. And, I would start by talking about the relatively low level of investment in this issue on the part of the federal government. I would then have to mention the Administration’s goal of growing our emissions. And I would come back again to our reluctance to enter the debate on how we might move forward on this issue globally. But I don’t want to leave you depressed, particularly given the fact that you have had such frightening weather these last few weeks.
Instead, I will leave you with a look on the bright side of this issue. Because, despite everything else, we have seen a few signs of progress in the past year. One of these, of course, is the fact that the Kyoto Protocol is ready to enter into force in February – no matter what you want to say about it, this is an historic achievement. And, in a related development that I already mentioned, we have seen the launch of the EU trading system for carbon dioxide – it is another historic achievement and, hopefully, the first of many such trading systems around the world.
Next, I want to pay tribute to British Prime Minister Tony Blair, who has spent a good part of the past year touting climate change as one of two key issues he intends to work on as president of both the EU and G-8 group of industrialized nations.
Yet another thing to celebrate is the work of many U.S. states to get a handle on this issue, even despite the lack of action in Washington. I mentioned the work of the Northeastern governors on cap-and-trade. And I also talked about what’s happening here in California with regard to motor vehicle emissions. And there are many more stories from the states about people stepping up to their responsibility to act. U.S. states are a large source of greenhouse gas emissions – California’s exceed those of Brazil. And, while national policies are essential, we also need the states to do their part.
Last but not least, I want to celebrate what is happening in many corners of the business community to address this problem. Many of the companies we work with at the Pew Center are adopting voluntary targets for reducing their greenhouse gas emissions. And, not only that, they are taking action to meet their targets by investing in new technologies, increasing efficiency, and developing energy-saving products, clean fuels, biomass energy, and more.
In closing, let me say that the forecast for the future needn’t be gloomy. A lot is happening to address the climate change problem. But we need to do a lot more. And I encourage all of you to do what’s needed to make sure your state remains a leader in addressing this issue in the years ahead. We need to show that solutions are within our grasp, that smart, forward-thinking policies can drive the development and deployment of new, low-carbon technologies, and that progress is possible.
Climate change is the most important global environmental challenge we will face in the years ahead. Don’t let anyone tell you it’s fiction. You know better. And it is going to be people like you who come up with the solutions we need.
Thank you very much.
Comparison of Passenger Vehicle Fuel Economy and GHG Emission Standards Around the World
Prepared for the Pew Center on Global Climate Change
Feng An, Energy and Transportation Technologies LLC
Amanda Sauer, World Resources Institute
Download Entire Report (pdf)
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