Energy & Technology

Community Adjustment to Climate Change Policy

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Community Adjustment to Climate Change Policy

Prepared for the Pew Center on Global Climate Change
December 2001

By:
Judith M. Greenwald, Pew Center on Global Climate Change
Brandon Roberts, Brandon Roberts & Associates
Andrew D. Reamer, Andrew Reamer & Associates

Press Release

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Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

A Pew Center report series on the economics of climate change has identified many ways in which economic modeling can be improved to more reliably project the costs of greenhouse gas reduction policies. These studies show that better model design – for instance, more realistically portraying technological progress and flexibility in the economy – can yield substantially lower projections for the costs of addressing climate change. They provide strong evidence that a rational climate policy that sets realistic short-, medium-, and long-term goals can achieve significant environmental gains while minimizing economic costs.

At the same time, it is important to recognize that the costs of addressing climate change are likely to fall disproportionately on certain industries, communities, and workers, and to explore ways to minimize these adverse impacts. This report is one of three focusing of these critical transition issues. It draws from past community assistance efforts to recommend ways the government can best assist communities that may suffer economic disruption as a result of climate change policies. A report released simultaneously looks at potential impacts on American workers and a future Pew Center report will evaluate competitiveness issues.

In the case of community assistance, the government has considerable experience assisting communities adversely affected by policies such as trade agreements, defense downsizing, and forest protection. For this report, authors Judith Greenwald, Brandon Roberts, and Andrew Reamer apply lessons learned from previous adjustment programs to the challenges posed by addressing climate change. Specifically, the report examines the risks faced by communities whose economies rely heavily on energy production and energy-intensive industries. The authors conclude that a new federal adjustment program for at-risk communities should be part of U.S. climate change policy. The report recommends that the U.S. government take the following actions:

  • Designate and fund the Economic Development Administration (E.D.A.) of the U.S. Department of Commerce to design and implement an economic adjustment program for communities;
  • Identify and assist communities that are particularly dependent on energy-producing and energy-intensive sectors before dislocations occur;
  • Leverage and integrate additional resources by involving multiple federal agencies and state and local governments through federal and regional task forces; and
  • Be flexible in addressing community needs by supporting locally determined, comprehensive strategies for five to seven years after the implementation of new climate policies.

C learly, some steps recommended in these reports will require funding. As policies to address climate change are developed, revenue streams from related fees (e.g., from permit fees or auction revenues) could be used to assist with these programs. Addressing climate change through sound policy will make it possible to achieve our environmental objectives while shielding workers and communities from potential economic harm. The authors and the Pew Center are indebted to Robert Atkinson, Ev Ehrlich, and Phil Singerman for their comments on previous drafts of this report.

Executive Summary

The world is becoming increasingly concerned about the risks of global warming from the buildup of greenhouse gases in the atmosphere, but many American decision-makers are worried about the economic impacts of policies that may be needed to reduce U.S. greenhouse gas emissions. The overall size and distribution of the impacts of such policies are uncertain, and depend greatly upon how governments, businesses, consumers, and workers respond to the challenge. Efforts to avert global warming would put some American businesses, workers, and communities at risk of economic dislocation. This paper focuses on how the federal government can best assist at-risk communities. Since the burning of fossil fuels such as coal, oil, and natural gas to produce energy is a major source of greenhouse gas emissions, such communities include those with high reliance on jobs in energy production — say, coal mining in Wyoming, or oil and gas production in Louisiana — and in energy-intensive industries such as steel manufacturing in Pennsylvania.

This is not the first time that important national policies have forced economic change on particular communities. The same story has been told for trade agreements, defense downsizing, and forest protection, for example. In each case, the U.S. government helped affected communities through various forms of economic adjustment assistance. In addition, in the last 20 years, numerous U.S. communities have sought to adapt to wrenching economic change brought about by global competition and recession, both with and without federal assistance.

The United States has substantial infrastructure and experience at the federal, state, and local levels in community economic adjustment. Thus, a foundation is in place for creating a new government program to help communities adversely affected by global climate change policy. Experience in the United States and elsewhere suggests that, although economic adjustment programs do not usually remove the pain of economic disruption, appropriately designed programs can lessen that pain considerably. At the same time, there is substantial room for improvement in existing adjustment efforts.

This paper recommends a new federal adjustment program for communities as part of global climate change policy. Specifically, the United States should do the following: (1) commit to address the problem by designating a single agency, the Economic Development Administration (EDA) of the U.S. Department of Commerce, and authorizing about $550 million dedicated dollars, to design and implement an economic adjustment program; (2) be proactive by identifying communities that are particularly dependent on energy-producing and energy-intensive sectors, and by helping communities to take action before dislocations occur; (3) leverage and integrate additional resources by involving multiple federal agencies and state and local governments through federal and regional task forces; and (4) be flexible in addressing community needs by supporting locally determined, comprehensive strategies for five to seven years.

Such a program would take advantage of available experience and expertise at all levels of government, and would take into account the wide variability in local circumstances and opportunities. By doing so, it would minimize economic dislocation and maximize opportunities to create jobs and protect the environment.

About the Authors

Judith M. Greenwald
Pew Center on Global Climate Change

Brandon Roberts
Brandon Roberts & Associates

Brandon Roberts, president of Brandon Roberts & Associates since 1990, is a public policy consultant specializing in economic and workforce development matters. He works primarily with state- and local-level organizations to develop and implement effective policies and program activities, and to evaluate the benefits of past efforts. He has worked in California, Delaware, Florida, Massachusetts, Michigan, Minnesota, Iowa, Ohio, Oregon, and Washington; in large cities such as Baltimore, Cincinnati, Cleveland, Miami, and Portland; and on a number of projects involving community-based organizations.

Before starting his own consulting firm, Mr. Roberts served as Deputy Director of the Council of State Community Development Agencies in Washington, D.C., where he worked extensively with state economic and community development agencies and helped develop policies and strategies to address the employment needs of low-income individuals. He also has held positions in the U.S. Economic Development Administration and the Executive Office of the President. Mr. Roberts has a BS in government (1975) and a MSP in urban and regional planning (1977) from Florida State University.

Andrew D. Reamer
Andrew Reamer & Associates

Andrew Reamer, Ph.D., is Principal of Andrew Reamer & Associates, a Boston-based consulting firm specializing in economic development and public policy. Dr. Reamer received a Ph.D. in Economic Development and Public Policy (1987) and a Masters in City Planning (1981) from the Department of Urban Studies and Planning, Massachusetts Institute of Technology.

Andrew D. Reamer
Brandon Roberts
Judith Greenwald
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Agriculture's Role In Addressing Climate Change

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Introduction

Human activities are increasing atmospheric greenhouse gas (GHG) concentrations. Evidence is growing that higher global temperatures, higher sea levels, and increased climatic variability, including changes in precipitation patterns and magnitudes, will result. These changes will affect agriculture by making some crop and animal production operations difficult or infeasible in their current locations. Slowing the rate of increase of atmospheric GHG concentrations will require efforts in every sector of the economy. Agriculture can make important contributions to these efforts, and can benefit by doing so. Agricultural practices that reduce or offset GHG emissions can increase farmer income, improve soil productivity and water quality, and enhance wildlife habitat.

Agriculture contributes approximately 7 percent of total U.S. GHG emissions, with nitrous oxide (N2O) accounting for 66 percent and methane (CH4) 34 percent of agricultural emissions.1 In addition to reducing these emissions, agriculture has opportunities to assist in offsetting emissions from other sectors. The agricultural sector can:

  • Store carbon in soils and plants;
  • Produce fuels and energy from biomass and animal waste to replace fossil fuels; and
  • Reduce CH4 and N2O emissions from livestock operations and agricultural lands.

This paper describes how the U.S. agricultural sector could take advantage of these opportunities.2

Figure 1

Sources of Total U.S. GHG Emissions

 

Source: U.S. EPA. Inventory of Greenhouse Gas Emissions and Sinks: 1990-1999.
Note: Emissions from electricity produced by industries but sold to the grid are included in the “Industrial” category. Emissions due to other industrial, residential and commercial use of electricity are included under “Electric Utilities.” Excludes emissions from U.S. territories. 1CO2E means carbon dioxide equivalents.

 

Opportunities for U.S. Agriculture

Storage of Carbon in Plants and Agricultural Soils.  Photosynthesis removes carbon dioxide (CO2) from the atmosphere and stores the carbon in plant materials and soils. U.S. cropland soils currently sequester 20 million metric tons of carbon per year (MMTC/yr), and have an estimated biophysical potential to sequester 60-150 MMTC/yr more; grazing lands could sequester up to another 50 MMTC/yr.3  To put this in context, 60-200 MMTC is about 12–40 percent of the reduction that would be needed to return expected 2010 U.S. GHG emissions to their 1990 level.

Carbon sequestration can be accomplished through the following measures:

Carbon Sequestration

 

 

 

 

 

 

Soils have natural carbon-carrying capacities, and it may be difficult or impossible to increase their carbon content beyond these limits. Most soil carbon gains from conservation tillage are achieved within approximately 20 years, and the carbon stored can be released later—for example, if farmers revert to traditional farming practices. Reversion to traditional practices will result in most of the carbon being released back into the atmosphere within a few years. However, temporary storage of carbon may offer significant benefits by reducing the rate of increase of atmospheric CO2 until more permanent solutions are found.

Production of Fuels and Electricity. Fossil fuel combustion is the major source of U.S. GHG emissions. The agricultural sector can help reduce reliance on fossil fuels in several ways. Agricultural lands can be used as sites for generation of electricity via wind power, reducing the need to generate electricity from fossil fuels. In addition, use of plant materials and animal waste as an energy source can help reduce reliance on fossil fuels. Plant materials can be used either to generate electricity or to produce transportation fuels. Unlike the release of CO2 from fossil fuel combustion, CO2 released during combustion of plant materials and animal wastes is counterbalanced by the CO2 that plants remove from the atmosphere during photosynthesis. However, the overall net GHG benefits of ethanol are uncertain due to GHG emissions from the farming, transportation, and conversion methods currently used in the U.S.

Where large amounts of animal wastes are available in a concentrated location, as in large confined animal feeding operations (CAFOs), CH4 can be captured and used to generate electricity. The most significant constraints to utilization of animal wastes for power generation are: the rates offered by utilities to medium-scale independent power producers; lack of access to capital; lack of appropriate farm-scale technologies; lack of standardized connection requirements; and lack of “net metering” requirements.4

Options for Biofuels and Bioenergy — i.e., use of plant materials and animals wastes to produce energy — include:

Options for Biofuels and Bioenergy

Reducing CH4 and N2O Emissions from Agricultural Lands and Livestock Operations. As shown in Figure 2, N2O from agriculture soils constitutes the bulk of agricultural GHG emissions. Agricultural lands contribute to N2O emissions through the breakdown of nitrogen fertilizers, manure decomposition in soils, and releases from legumes. Emissions can be reduced by increasing efficiency of fertilizer use, including more precise fertilizer placement and timing, immediate incorporation of fertilizers into soils, and improved matching of manure application rates to crop utilization rates. Efficient fertilizer management will also improve water quality by reducing nutrient runoff into waters.

Figure 2

Agriculture Emissions by Gas and Source
Source: U.S. EPA. Inventory of Greenhouse Gas Emissions and Sinks: 1990-1999.



Whereas most N2O emissions come from cropland, over 95 percent of CH4 emissions are due to livestock,5 both from the digestion process and from manure. Digestive processes of beef cattle account for 40 percent of these emissions. Further reduction of these emissions through more efficient feed rations is somewhat limited given the large feed efficiency gains over the last 20 years. However, digestive process CH4 emissions can be further reduced through improvements in grazing-plant quality. Improved herd management — particularly improved nutrition and increasing the percent of cows producing calves — can reduce CH4 emissions per unit of beef produced. It is estimated that widespread adoption of these measures could reduce CH4 emissions from beef cattle by 20 percent.6

Manure management options to reduce CH4 emissions include:

Manure management options

Tradeoffs and Complementarities. Agricultural practices may affect more than one greenhouse gas as well as other environmental goods and services. Consequently, optimizing the net GHG or environmental effects of an agricultural practice requires a comprehensive evaluation of a complex set of environmental interactions. For example, while irrigation can increase soil carbon, the increased CO2 emissions due to energy used in pumping and the increased N2O emissions due to increased fertilizer use may negate much of the gain.

 

U.S. Policy Options – The Farm Bill

Reducing net U.S. GHG emissions through changes in agricultural practices and land uses will require new agricultural policies. It is useful to classify such policies as those that could be adopted as part of the conservation title of the Farm Bill and those that go beyond the Farm Bill.

The Farm Bill. At present, there are a large number of narrowly focused conservation programs. Responsibility for implementing these programs is divided between the Natural Resources Conservation Service (NRCS) and the Farm Services Agency (FSA), both agencies of the U.S. Department of Agriculture (USDA). The large number of programs and the disparities in eligibility requirements are major barriers to farmer participation. Major conservation programs and the environmental benefits they now encourage are shown below:

Major conservation programs
1- Implemented by the FSA 2 -Implemented by the NRCS CRP: Conservation Reserve Program; CREP: Conservation Reserve Enhancement Program; WHIP: Wildlife Habitat Incentive Program; FPP: Farmland Protection Program; EQIP: Environmental Quality Incentive Program; SWP: Small Watershed Program; CC: Conservation Compliance; CTA: Conservation Technical Assistance.

Participation in environmental programs such as the CRP, WRP, and EQIP has been voluntary. These programs provide payments to farmers for taking environmentally friendly actions. The Conservation Compliance program required farmers who opted to receive government subsidies to control erosion and protect wetlands. In recent years, however, the trend has been to make fewer demands on farmers, and eligibility for crop insurance payments has been delinked from wetland (Swampbuster) and erosion control (Sodbuster) provisions.

Effectiveness of present programs in addressing environmental goals is also hampered by the restricted geographic spread (see Figure 3), limited sizes and types of farm operations participating, and limited funding. Thus conservation programs could be more effective if they were more fully funded, simplified, broadened, and harmonized.

Figure 3

Percentagge of Direct Dollar Support to Percentage of Value

Source: Center for Agricultural and Rural Development, Iowa State University, 2001.
Note: Ratio shown is the percent of total commodity payments received by a state divided by the state’s share of total U.S. value of agricultural production.

New Approaches. Reform of farm programs is under consideration for a variety of reasons, including international trade rules that constrain production subsidies. Guaranteed commodity prices and crop insurance subsidies encourage more acreage under cultivation than would occur without the programs. Reforming these subsidies might be one of the most cost-effective means of reducing net GHG emissions from agriculture and providing other soil, water quality, and wildlife habitat benefits.

A number of proposed new conservation programs are intended to provide payments for a wide range of conservation practices and environmental services, including soil, water quality, wildlife habitat, and GHG benefits across a wider variety of land use and management categories. These programs would offer higher payments as more conservation practices are adopted or services provided.

Important program design considerations include:

  • Whether all who use a practice or only new adopters can participate;
  • Potential loss of environmental benefits – e.g., buffer strips reverting to cropland; and
  • Benefits being offset by other changes – e.g., conservation tillage offset by additional lands brought into production, or increased pesticide use that may accompany no-till.

S ome have formally expressed concern that “good actors” (i.e., those who adopted practices before program implementation) should not be excluded from program benefits. Including all who use an eligible practice addresses this concern, avoids problems of early adopters of desired practices reverting to detrimental ones in order to become eligible to participate, and would be easier to implement as it eliminates the need to differentiate between current adopters and farmers who adopt because of the program.

Research has shown that targeting programs to induce adoption of conservation tillage could cut program costs by more than 50 percent depending on the scale of the program. Approximately 36 percent of U.S. cropland was under some form of conservation tillage last year, and the effect of policies that encourage adoption of conservation tillage should be measured relative to this baseline adoption rate. Furthermore, the environmental benefits of many practices vary widely depending on soils, topology, climate, and location. Consequently, linking program criteria to the level of environmental benefits could help maximize environmental gains.

Programs that encourage environmentally friendly practices may be easier to implement if they do not require measurement, verification, or monitoring of specific environmental benefits. However, a policy that does include measuring, monitoring, and verification might generate more real environmental benefits, encourage innovation in measurement methods, and facilitate GHG emissions trading. Short of measuring specific GHG reductions, regional, practice-based benchmarks or baselines can be used. The approach of offering an incentive for adopting a practice could be coupled with additional incentives if measurement, monitoring, and verification are undertaken.

Pilot Programs. A pilot program would be a relatively low-cost way to demonstrate the feasibility of encouraging a large proportion of farmers to adopt climate-friendly practices. Pilot projects in a range of geographic areas, cropping and animal husbandry systems, and farm sizes could be selected to provide critical information on how many, and what types of, farmers will adopt practices at various subsidy levels, and whether demonstration sites, technical assistance, or other outreach efforts are effective. Pilot programs could also serve to test methods for measurement, monitoring, and verification.

 

Beyond the Farm Bill

Emissions Trading.   Emissions trading has the potential to bring income into the agricultural sector from external sources. Electricity generators and other industries with relatively high marginal GHG emission reduction costs are already experimenting with purchasing GHG reductions from farmers who increase soil carbon or reduce animal waste emissions. Emissions trading could increase total income flowing into agriculture and decrease the need for government subsidies.

Emissions trading can be a cost-effective way to meet a national emission goal. The key to keeping costs low is to include in the market all potential sources of emission reductions, particularly those that can achieve reductions at low costs. Most evidence points to agriculture as being a low-cost provider of GHG reductions. The costs of sequestering soil carbon and reducing agricultural CH4 and N2O emissions are likely low relative to the costs of emission reductions from fossil fuel combustion.

Emissions trading would increase the need for more elaborate baseline information and measurement, monitoring, and verification systems because buyers of GHG reductions need to document, and be confident, that the reductions have taken place. Although there is substantial U.S. experience in point source emissions trading, there is very limited experience with trading programs that allow trades to take place between point and non-point source emitters, and most agricultural emission reduction options are non-point. In addition, in an emissions trading program that includes the agricultural sector, contracts would have to be designed: (a) to address possible post-contract losses in the case of stored carbon; and (b) to prevent current users of climate-friendly practices from abandoning these practices in a quest for reductions to sell. Trading arrangements limited to GHG reductions may be less effective than trading approaches that also include other environmental benefits such as water quality improvements.

Biofuels and Bioenergy Legislation. Policies that encourage biofuel and bioenergy research and use could improve their competitive position, provide environmental co-benefits, and enable these fuels to play a significant role in GHG mitigation. For example, to improve the net GHG benefits of ethanol, technological advances are needed in feedstock production and conversion processes. Biofuel use can be encouraged by equalizing the price of biofuels and fossil fuels. The current market for ethanol exists only because a gallon of ethanol is taxed at a lower rate than a gallon of gasoline at the federal level and in some states.

Increased use of fuels and energy from biomass could also be accomplished through new laws. For example, Minnesota mandates that only ethanol blends be sold instead of pure gasoline and is considering a similar mandate for biodiesel. In the Midwest, Environmental Protection Agency summer air pollution reduction mandates are achieved through use of ethanol. Vermont has explicitly included farming operations in its net metering rules, thus removing a key barrier to the use of biomass for generation of electricity. A number of states have established renewable portfolio standards, under which a set fraction of electricity must be generated using renewable resources, including biomass.

Water Quality Initiatives. Initiatives designed to meet water quality goals can induce changes in agricultural practices that also contribute to GHG reduction goals. For example, water quality can be improved by practices that increase carbon storage and reduce CH4 and N2O emissions. Such practices include conservation tillage, use of buffer strips, conversion of cropland into grass or forestland, efficient use of fertilizers, and improved management of animal wastes.

Benefits and Costs to U.S. Agriculture

Depending upon the form of the policy implemented, U.S. agricultural producers stand to gain financially from programs that effectively promote GHG reductions. For many farmers, climate-friendly practices and land use make good financial sense, independent of policies to promote them. Providing more and better information might lead more of these farmers to adopt such practices. Other farmers find that climate-friendly practices do not make financial sense for them, and would only increase their use of climate-friendly practices if financial inducements were available. These farmers would adopt new practices if the payments were large enough to cover all costs associated with switching practices, including:

  • Direct costs. These include the cost of new equipment, lower crop yields, or loss in profits caused by crop-switching.
  • Indirect costs. For example, experience indicates that six years may be needed to successfully switch from conventional tillage to no-till, a period during which farmers may experience increased risks and workloads.

Even though agriculture may be a low-cost provider of GHG emission reductions, a full cost analysis needs to include the costs of monitoring and verifying those reductions, regardless of who bears those costs.

 

Conclusions

Agriculture could play a significant role in addressing climate change. In doing so, agriculture may be able to tap additional revenue sources. Farmers will likely reap economic benefits, emitters could reduce their GHG reduction costs, and the public could receive greater environmental benefits from farm payments. The magnitude of environmental benefits will depend on what policy is adopted, the care with which trade-offs inherent in agricultural practice changes are weighed, and how the policy is implemented.

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Endnotes


1 Source: U.S. EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-1999. Historically, agricultural practices caused losses of soil carbon resulting in carbon dioxide (CO2) emissions. As of 1990 U.S. agricultural soils are estimated to be either losing or gaining small amounts of carbon (between a loss of 2 million metric tons carbon (MMTC)/yr to a gain of 10 MMTC/yr).
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2 This Brief describes major reduction opportunities. Other more limited and emerging opportunities will be examined in future Pew reports.
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3 This potential is a result of soils’ capacity to regain the carbon lost due to previous management practices. Sources: Bruce, J.P., et al. Carbon Sequestration in Soils. Journal of Soil and Water Conservation. 54:382-389. Lal, R., et al. Managing U.S. Cropland to Sequester Carbon in Soil. Journal of Soil and Water Conservation. 54:374-381. Sperow, M, et al. Potential Soil C Sequestration on U.S. Agricultural Soils. Unpublished Paper.
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4 At least 18 states now allow customers with their own electric generating systems (such as rooftop solar photovoltaic panels) to sell unused electricity back to their local electric utility. To accomplish this, these states have established “net metering” to measure electricity sent into the power grid from customers as well as electricity drawn from the grid.
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5 Rice production contributes approximately 6% to U.S. agricultural CH4 emissions. Improved water, residue and fertilizer management offer opportunities to reduce these emissions, as do changes in types or mixes of rice grown and fertilizers used.
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6 Source: U.S. EPA. Methane Emissions 1990-2020: Inventories, Projections and Opportunities for Reductions. EPA 430-R-99-013, September 1999.
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An Overview of Greenhouse Gas Emissions Verification Issues

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An Overview of Greenhouse Gas Emissions Verification Issues

Prepared for the Pew Center on Global Climate Change
October 2001

By:
Christopher P. Loreti, Scot A. Foster, and Jane E. Obbagy
Arthur D. Little, Inc., Cambridge, Massachusetts

Press Release

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Foreword Eileen Claussen, President, Pew Center on Global Climate Change

The need for information on how to count, track, and verify greenhouse gas emissions has never been greater. Many of the world’s nations are working toward international, national, and subnational regimes for reducing emissions. These efforts have been accompanied by a growing number of corporate targets to reduce greenhouse gas emissions, as well as the emergence of a greenhouse gas trading market. To ensure that the numbers on which governments determine compliance, and on which companies stake their finances and reputations, are real, greenhouse gas emissions verification is critical.

In this Pew Center report, authors Christopher Loreti, Scot Foster, and Jane Obbagy of Arthur D. Little, Inc. describe the evolving approaches to corporate greenhouse gas emissions verification. They identify factors that drive verification activities and suggest a number of principles that organizations should consider when verifying greenhouse gas emissions, with an eye toward the experiences of the firms, governments, and non-governmental organizations that have been involved in verification activities.

This report builds on An Overview of Greenhouse Gas Emissions Inventory Issues which the Pew Center released last year, and which offered a set of principles for conducting greenhouse gas inventories. Both of these reports are part of the Solutions series, which is aimed at providing individuals and organizations with tools to evaluate and reduce their contributions to climate change.

The authors and the Pew Center would like to thank the companies featured in this report for sharing their experiences and perspectives, and acknowledge the members of the Center’s Business Environmental Leadership Council, as well as Jean-Bernard Carrasco of the Australian Greenhouse Office, Nick Hughes of BP, and Janet Ranganathan of the World Resources Institute for their review and advice on a previous draft of this report.

Executive Summary

The growing number of companies that inventory greenhouse gas (GHG) emissions, implement emissions reductions projects and targets, and trade GHG emissions reductions has generated increasing interest in emissions verification. Stakeholders in the corporate, governmental, and non-governmental sectors recognize the need for complete, credible, and accurate information about GHG emissions and emissions reductions. To address this issue, some government bodies have developed standards for verifying GHG emissions for specific programs. More general approaches to verifying emissions are just beginning to evolve, however, as uniform approaches to inventorying and reporting GHG emissions are not yet fully established.

This paper describes the evolving approaches to corporate GHG emissions verification. The authors discuss the experiences of leading firms that inventory and verify GHG emissions, the approaches to verification embodied in various GHG programs sponsored by governments and non-governmental organizations, and the factors that drive verification. They also review general verification issues, including who should verify, what should be verified, and when verification should occur.

This paper builds on an earlier publication of the Pew Center on Global Climate Change, An Overview of Greenhouse Gas Emissions Inventory Issues (Loreti et al., 2000). Much of the content is the result of discussions with the Pew Center’s Business Environmental Leadership Council, a survey of leading corporations on approaches to GHG emissions verification, a review of the current literature on corporate GHG emissions verification, discussions with representatives from governmental and non-governmental organizations involved in GHG emissions issues, and prior experience of Arthur D. Little, Inc. in environmental auditing and GHG verification.

Just as there are multiple purposes and methods for performing emissions inventories, there are a variety of reasons for verifying emissions inventories and a range of approaches to verification. However, the authors’ review of the work to date on GHG emissions verification suggests several principles for any firm that conducts a GHG emissions inventory:

  1. Conduct your inventory as if it is going to be verified, regardless of whether your organization is planning to verify it. Rigorous reporting, emissions estimation, and data management systems will facilitate any future verification. Indeed, these systems will make it possible to conduct third-party verification of today’s emissions in the future should it become necessary, for example, to establish a baseline or obtain credit for early emissions reductions.

  2. Be clear on the purpose of verification. Verification can be conducted for many reasons and the results of verification performed for one purpose may not be applicable to another. Be sure that all stakeholders who rely on the verification result will be satisfied with the scope and methods of the verification.

 3. Choose your verifiers carefully. Be sure the individuals conducting the verification understand your organization, its type of business, and its emissions. The verifiers’ knowledge and experience are more important than the type of organization they are from. If the verification is performed as part of an established GHG reporting or reduction program, be sure the verifiers you choose have the qualifications that that program requires.

 4. Learn from your verification experience. Organizations will maximize the value of the verification if they use it to improve their inventory process, improve the reliability of reported information, and facilitate future verification. When hiring third-party verifiers, be sure that they provide specific recommendations for improving your organization’s GHG inventory.

About the Author

Christopher P. Loreti
Arthur D. Little, Inc., Cambridge, MA

Christopher P. Loreti is a Senior Manager in the Global Environment and Risk practice of Arthur D. Little, Inc., and the author of two Center reports, An Overview of Greenhouse Gas Emissions Inventory Issues, and An Overview of Greenhouse Gas Emissions Verification Issues. Since joining Arthur D. Little in 1985, his work has focused on the assessment of the release, fate, and transport of pollutants in the environment. He has conducted numerous air pollutant emission inventories for conventional and toxic air pollutants and greenhouse gases. He has co-authored reports examining trends in Canadian emissions of selected greenhouse gases and technologies to reduce these emissions, economic instruments for reducing U.S. emissions of carbon dioxide, and the potential for electric vehicles to reduce emissions of greenhouse gases and conventional air pollutants in Hong Kong. Mr. Loreti holds an M.S. in Technology and Human Affairs from the Department of Engineering and Policy at Washington University and B.S. degrees in Chemical Engineering and Environmental Engineering from Northwestern University.

Christopher P. Loreti
Jane E. Obbagy
Scot A. Foster
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Timing of Climate Change Policies Workshop Summary

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The Pew Center on Global Climate Change held a Workshop on the Timing of Climate Change Policies in Washington, D.C.

Pew Center Workshop on the Timing of Climate Change Policies

October 10-12, 2001
The Westin Grand Hotel, Washington, DC

On October 10-12, 2001, The Pew Center on Global Climate Change held a Workshop on the Timing of Climate Change Policies in Washington, D.C. This workshop brought together leading economists, scientists, policy-makers, business leaders, and others interested in climate change science and policy. The purpose of the workshop was to investigate the appropriate timing of the world's policy response to the challenge of global climate change. The workshop produced a consensus that action on climate change needs to begin now to satisfy a variety of concerns. This volume includes a summary of the workshop proceedings, final texts of peer-reviewed papers commissioned for the workshop, and other presentation materials.

U.S. Domestic Response to Climate Change

July 2001 | Download the PDF

Index

 

Introduction

The United States is the world’s largest emitter of greenhouse gases (GHGs), accounting for roughly 25 percent of global emissions. No strategy to address global climate change can ultimately succeed without substantial and permanent reductions in U.S. emissions. Voluntary efforts in a number of sectors over the past several years have failed to curb the overall growth in U.S. GHG emissions. A number of policy options are available to secure additional emissions reductions. However, to be effective and affordable, a long-term emissions reduction program must couple mandatory GHG reductions with technology development and market mechanisms.

To date, efforts to reduce U.S. GHG emissions have been limited almost exclusively to voluntary activities at the federal, state, local, and corporate level. Many of these efforts were spurred by the United Nations Framework Convention on Climate Change, which set a non-binding target of reducing emissions from industrialized countries to 1990 levels by 2000. Though some voluntary efforts have resulted in significant emissions reductions – some companies, for instance, have cut emissions 10 percent or more – in the aggregate, they have not succeeded in curbing the overall growth in U.S. emissions.1 While technology has improved the energy intensity of products and processes over the last 50 years, this greater efficiency has been outpaced by increased demand driven by economic expansion, population growth, and changing consumer preferences. U.S. emissions rose roughly 12 percent over the past decade, and are projected to continue rising for the foreseeable future.2

U.S. GHG Emissions
Source: U.S. EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-1999. 2010 projections for CO2 are from: U.S. DOE. Annual Energy Outlook 2000. 2010 projections for non-COs gases are from: U.S. EPA. Annual Energy Review (2000).


(See Figure 1.) Voluntary programs can make an important contribution to a domestic climate change program, and can provide valuable experience for designing future efforts, but they cannot stimulate the broad engagement that will be necessary to achieve the level of emissions reductions that will ultimately be required.

Climate change is a long-term challenge that will require sustained global action and investment over many decades. Ideally, a national strategy would be guided by a specific long-term emissions goal. It would also couple short- and long-term measures – and both supply and demand elements – to signal markets to begin the transition toward that ultimate objective. More specifically, short-term measures are needed to improve energy efficiency and encourage the use of lower-carbon fuels; long-term measures are needed to encourage sustained investment in development of the technology and infrastructure needed to facilitate the transition to a low-carbon economy. Further, because energy consumption is an important component of GHG emissions, any domestic energy policy program must be geared toward long-term GHG emissions reductions. (See Figure 2 for chart of emissions by sector in carbon dioxide equivalents [CO2E].)

A domestic strategy ultimately must reflect any international commitments by the United States. However, its design and implementation should proceed now even if the United States is not yet prepared to enter into an international agreement. As domestic and international programs evolve, close coordination between them is critical. This is especially important for companies that operate and compete both domestically and abroad, and for U.S.-based companies that sell products abroad, as they will be subject to rules dealing with climate change in other countries. In addition, coordination is necessary to maximize the effectiveness of emissions trading and other flexibility mechanisms now being developed at the international level.

The cost of meeting a given emissions target can vary by orders of magnitude depending on the approach taken. In general, the most cost-effective approaches allow emitters flexibility in deciding how to meet a target or performance level; provide early direction so targets can be anticipated and factored into major capital and investment decisions; and employ market-based mechanisms such as emissions trading to achieve reductions where they cost the least. To ease the transition and enlist the broadest possible participation, early targets should be realistic and achievable without stranding major capital investments or imposing undue economic hardships. These could be followed over time by more stringent constraints that allow for the turnover of existing capital stock and the development of new breakthrough technologies and innovative measures for reducing GHG emissions. This paper outlines possible elements of a comprehensive domestic strategy that couples short- and long-term measures. The proposed elements – some voluntary, others mandatory – aim to:

  • improve the tracking and reporting of greenhouse gas emissions;
  • promote new technologies and practices; and,
  • provide a foundation upon which to secure long-term emissions reductions.

 

Sources of Total GHG Emissions
Source: U.S. EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-1999.
Note: Emissions from electricity produced by industries but sold to the grid is included in the "Industrial" category. Emissions due to other industrial activities as well as residential and commercial use of electricity are included under "Electric Utilities." Excludes emissions from U.S. territories.

While each of these objectives can be pursued in a number of different ways (several options for securing emissions reductions are proposed), an effective strategy must address all three.

Tracking and Reporting Greenhouse Gas Emissions

No effort to reduce greenhouse gas emissions can succeed without the accurate measuring and tracking of emissions. Improved tracking and reporting of emissions reductions could provide the basis for government assurances that companies will not be penalized for their early reductions under a future climate policy. Public disclosure of emissions data can also serve as a powerful incentive for reductions.

A first step is establishment of a registration program to more accurately and reliably measure, report, and track GHG emissions. This could be done through legislation that builds on current efforts such as the Department of Energy’s 1605(b) program. The current program has limited value because its reporting standards lack rigor, there are no verification requirements, and many companies choose not to report. In an improved registry program, a company would establish a baseline consisting of current aggregate emissions from all major GHG sources under its control in the United States. Gross emissions on an annual basis could be compared to this established baseline. In addition to accounting for emissions from a company’s core operations, an improved registry should over time develop the means to measure, report, and track GHG emissions resulting from: the use of products manufactured by that company; offsets achieved through sequestration projects designed to store carbon in forests, soils, oceans, or underground; and offsets achieved through increased energy efficiency.

A reliable registry would make it possible to provide “baseline protection” for companies taking action now to reduce their emissions. These entities could be assured that – in the event of future controls involving the allocation of emissions allowances or requiring emissions reductions – they would not be penalized for reductions already achieved voluntarily. The improved registry program could also provide a mechanism to recognize the emissions reductions resulting from companies manufacturing more efficient or carbon-saving products. Finally, it could ensure that GHG reductions and sequestration offsets are of sufficient integrity that they can be traded and sustain their value in future years. This registry would include reductions and offsets achieved outside of the United States, in both developed and developing countries. In this manner, both gross and net (reductions and offsets) emissions would be recorded.

An additional step would be to require public disclosure of GHG emissions data for all facilities or companies whose emissions exceed a given threshold. At present, only electric generating sources must report their CO2 emissions and, although publicly available, emissions data are not tabulated and disclosed in a manner that encourages companies to reduce their emissions voluntarily. To address these shortcomings, a mandatory GHG reporting program should apply to all major source categories of GHG emissions and require public disclosure as is now required under the federal Toxics Release Inventory (TRI) program. Disclosure reports would be subject to verification and reporting entities would face enforcement action if emissions were misrepresented. As with the TRI program, reported data would be aggregated and made available on facility-specific, company-wide, and source-category bases. Under the TRI program, such disclosures have encouraged companies to assess potential mitigation opportunities and reduce emissions voluntarily, and the same is likely with a GHG reporting program. Gross emissions from an entity’s U.S. sources as well as net emissions (after considering sequestration activities and trading) would be reported to encourage comprehensive mitigation strategies.

A mandatory GHG reporting obligation (and an improved registry) could be linked to a voluntary program for mitigating GHG emissions. Such linkage would likely increase the effectiveness of each initiative, judging by the success of the voluntary pollution prevention programs that were coordinated with mandatory TRI reporting.3 Following the model used in EPA’s 33/50 (Industrial Toxics) Project, the voluntary program could establish clear performance targets to be achieved by each sector within specified time frames. Although voluntary, participation in the program could be limited to only those companies willing to make corporate-wide commitments to achieve minimum reduction levels from their core business operations or prescribed performance levels for products sold in the United States. Setting minimum standards would likely increase the pressure for companies to step forward with voluntary commitments achieving substantial emissions reductions. The minimum standard approach could also be combined with a graduated scale of incentives for those who make voluntary commitments, rewarding those who exceed their emissions goals with greater financial or other incentives like tax credits.

Finally, improved registries coupled with reporting requirements would also serve as an important foundation for mandatory approaches to reducing GHGs.

Promoting Clean Technologies and Practices

The ultimate success of a climate change strategy will hinge on the timely development and deployment of technologies that over time can substantially reduce the carbon intensity of the overall U.S. economy – including industry, the transportation sector, and residential/commercial activity. (See Figure 3 for historic energy use of these sectors.) In the short term, improved technologies can significantly enhance energy efficiency, provide opportunities to store – or sequester – carbon, and expand use of lower-carbon fuels (such as natural gas). In the long term, new technologies will be needed to develop non-fossil energy sources such as biofuels, wind, hydrogen, and solar, and provide opportunities for more permanent forms of sequestration.

Energy Consumption by End-Use Sector
Source: U.S. DOE. Energy in the United States: A Brief History and Current Trends (1999).


A successful technology strategy demands sustained, coordinated investments at a very high level from all stakeholders. A variety of incentives and direct investment tools can be used to promote technological innovation, from basic research to deployment:

  • Targeted tax credits or low-interest loans can encourage the development and adoption of energy-efficient technologies (such as combined heat and power, and state-of-the-art lighting); clean fuel technologies (including advanced fossil fuel technology, hydrogen, fuel cells, and biofuels); and carbon storage in forests and agricultural soils, using innovative management techniques.
  • Investment in basic research may be especially critical in inventing breakthrough technologies that will facilitate the transition to a low-carbon economy.
  • Public-private partnerships, such as Industries for the Future and the Partnership for a New Generation of Vehicles, can team government and corporate researchers to accelerate technology gains.
  • Basic research and tax credits could accelerate the development and diffusion of climate-friendly alternatives to non-CO2 greenhouse gases or technologies and practices that reduce their emissions.
  • Investment in training to improve agricultural practices can decrease the release of methane (CH4) and nitrous oxide (N2O).
  • Public education through the use of required labeling and other means can help consumers reduce their contribution to climate change.
  • Incentives to builders and landlords can encourage the use of energy-efficient materials and appliances in new construction and rental units.


Finally, improved product efficiency standards – coupled with incentives to exceed minimum requirements – can achieve significant emissions reductions. Under the traditional command-and-control approach, the incentive is to meet, but not exceed, a government-set standard. A combined hybrid standard/incentive approach (e.g., one that combines a minimum efficiency standard with a sliding tax or emissions credit for those who go beyond the standard) would provide incentive to exceed minimum regulatory requirements. This approach should be added to existing product standards as they come up for review and employed for new products for which standards have not yet been set.

Securing Emissions Reductions

An especially critical element of a domestic climate change program will be the design of a market-based GHG emissions management framework to ensure significant long-term reductions in emissions. Also, an effective program ultimately will entail some form of mandatory requirements. The approaches that follow include voluntary activities that could be implemented in advance of, or alongside, mandatory emissions reductions:

Enter into agreements with companies willing to make significant, enforceable commitments to achieve net GHG emissions reductions in lieu of future GHG control requirements.

Securing regulatory certainty may be a powerful incentive for those willing to undertake substantial GHG reduction commitments. By committing to take action yielding specified reductions over an established period of time, a firm could receive a commitment from the government that (as long as its contractual obligations are met) it would not be bound by subsequently developed GHG controls over the same time period. For example, if a company were to commit to significant reductions over a 20-year period (e.g., a 20 percent reduction achieved either through steady declines of 1 percent per year or through a major capital investment at some point during this timeframe), the company could avoid additional mandatory GHG control obligations during the same 20-year period.4 This approach would allow companies to move forward with substantial capital investments that will secure significant emissions reductions.

Under this approach, reductions below company baseline levels (e.g., 1990 GHG emissions) could be achieved through meeting either rate-based or specified net targets. These commitments would provide baseline protection, and shelter firms from additional requirements developed during the term, in exchange for legally binding agreements containing measurement, verification, and reporting requirements. Such an approach would require enabling legislation authorizing the Executive Branch to enter into these agreements. This legislation should include provisions for public notice and comment. Companies also could be allowed to enter into similar agreements with respect to their services or products manufactured and sold in the United States.5

Ultimately, the ability of the United States to achieve significant long-term GHG reductions depends on our success in the design and implementation of a mandatory program to reduce emissions.

Additional features could include allowing program participants to trade emissions credits and allowing credit for reductions achieved through sequestration and offsets. In other words, companies that reduce their emissions beyond the levels specified in the agreement would be able to trade these additional emissions reductions with firms that were unable to meet their reduction targets under a future regulatory program. Similarly, credit for real, quantifiable, and verifiable sequestration activities could be granted towards the obligations and, when in excess of specified targets, could be sold in an emissions trading market.

Set voluntary emissions reduction targets for major industry sectors with a trigger mechanism for imposing mandatory requirements if a sector falls short of its targets.

A second approach would establish initial rate-based or specified reduction targets for major industry sectors, but impose stricter controls for sectors that do not meet their initial targets. The program, for example, could call for a sector to stabilize its emissions at year 2000 levels over the 2005-to-2010 period, while providing federal authority to impose stricter mandatory control requirements by a later date if the sector as a whole fails to achieve its reduction target. Similar performance targets could be set for products, such as automobiles and appliances. Companies would receive shelter from the stricter requirements so long as they achieve their proportionate share of the reduction target.

One advantage of this approach is that it would promote immediate action towards the reduction target, even while the details of the mandatory control program are being developed. Another advantage is that it would enable companies to coordinate their emissions control strategies for conventional air pollutants with their carbon dioxide reductions. This would be especially important for those sectors whose near-term control obligations for conventional air pollutants (involving major capital investments) may conflict with a long-term GHG control strategy for that sector.

New legislation would be required to either establish general criteria that apply economy wide or set out design elements specific to individual sectors. In the latter case, for example, the legislation could specify for the power generation sector: (a) the initial and “backstop” reduction levels, (b) the reduction timeframes, (c) allocation of emissions allowances through a generation performance standard, (d) the ability of participants to trade emissions credits, and (e) the flexibility to “bank” allowances for future use.

In addition, if a sector that makes products fails to meet its target, those companies not doing a proportionate share could have tighter efficiency standards imposed.

Allow an opt-in for coverage of carbon dioxide emissions in conjunction with air regulatory programs.

Many companies – particularly utilities – are interested in addressing their CO2 emissions in conjunction with new reduction obligations likely to be enacted for other pollutants. Many studies have documented substantial environmental and economic benefits of harmonizing the timing and reduction levels of multiple air pollutants.6 An “opt-in” approach would permit these companies to consider reduction obligations and goals comprehensively, thereby minimizing the chance of stranding pollution control investments aimed at conventional pollutants without regard for CO2. By providing an opt-in strategy, overall emissions (including GHGs) could be considered simultaneously – avoiding the now-common scenario that control strategies devised for reductions in traditional pollutants have little or no beneficial impact on GHG emissions. (Post-combustion controls aimed at reducing conventional pollutants, in fact, often increase GHG emissions. In contrast, all GHG reduction strategies that reduce fuel consumption – the largest GHG emissions source – also reduce conventional air pollutants.) Harmonizing time frames for achieving reductions could avoid piecemeal and uncoordinated implementation of conventional and GHG emissions.

At the same time, streamlining the existing New Source Review (NSR) program for changes in facilities could enable power plants, refineries, and other major stationary sources to improve their production efficiencies more easily. Such efficiency improvements directly translate into lower CO2 emissions. Companies participating in this “opt-in” could be allowed to implement environmentally beneficial projects without triggering the NSR requirements.

Design and implement an economy-wide domestic emissions program to meet a mandated cap.

Ultimately, the ability of the United States to achieve significant long-term GHG reductions depends on our success in the design and implementation of a mandatory program to reduce emissions. Since such a program will take time to design and administer, the near-term approaches discussed above should be developed in such a way that they are consistent with important design elements of a future mandatory program. The most cost-effective method of obtaining such reductions is likely to come in the form of a domestic emissions trading program that could be integrated with an international trading regime.

Elements of an effective domestic trading program could include:

  • allocation of permits to existing and new sources based on historic emissions, output levels, auction, or – preferably – some combination thereof;
  • creation of an independent authority to oversee the GHG registry and trading activity;
  • providing for a declining cap in permitted GHG levels over time;
  • including credit for other GHG emissions on a CO2-equivalent basis;
  • establishing a multi-year compliance period for meeting any GHG emissions reduction obligation; and,
  • recycling revenues from auctioned permits to reduce other tax burdens, increase R&D, and provide transition assistance to affected workers and communities.

Ideally, a domestic program should be compatible with trading programs in other countries to allow credit for reductions undertaken abroad. Also, with improved confidence in measuring and monitoring sequestration-related activities (both domestically and abroad), credit for carbon storage should be included.

Conclusion

To address global climate change effectively, the United States must actively pursue real reductions in GHG emissions at home and abroad. The steps outlined here chart a course for a sound, credible, and cost-effective domestic program. Starting now on a path to reduce these emissions is necessary both to meet the environmental objective of moderating human interference with the climate system and to avoid the need for more costly measures in the future.

 


Endnotes

1 A significant investment has been made in a variety of federal programs to encourage voluntary reductions. Such programs include: the U.S. DOE’s Climate Challenge Program for electric utilities; and U.S. EPA programs such as Climate Wise, the Landfill Methane Outreach Program, the Coalbed Methane Outreach Program, Energy Star, and the Green Lights Program, as well as the U.S. Initiative on Joint Implementation. In addition, DOE’s Voluntary Reporting of Greenhouse Gas Program required by Section 1605(b) of the Energy Policy Act of 1992 records the results of voluntary measures to reduce, avoid, or sequester carbon. During 1999, a total of 201 U.S. companies and other organizations reported on 1,715 projects that achieved reductions and sequestration equivalent to 226 million metric tons of carbon dioxide, or about 3.4 percent of total 1999 greenhouse gas emissions. (Voluntary Reporting of Greenhouse Gases, 1999, DOE/EIA – 0608(99), February 2001.)
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2 In the United States, the transportation, industry, and combined residential/commercial sectors are each responsible for roughly one third of overall emissions.
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3 EPA enjoyed considerable success in encouraging substantial voluntary reductions of 17 toxic chemicals by linking the TRI reporting program with a voluntary pollution prevention program. Entitled the 33/50 (Industrial Toxics) Project, this entirely voluntary program established an interim goal of a 33 percent reduction by 1992 and an ultimate goal of a 50 percent reduction by 1995 in aggregate emissions of 17 high-priority toxic chemicals. Individual companies entered into voluntary, non-binding commitments to achieve specific reductions on a company or facility basis. In addition to achieving the ultimate goal in 1994 (one year ahead of schedule), the 33/50 Program enhanced the effectiveness of the TRI reporting program. Most importantly, participating facilities reported substantially more reductions of the 33/50 targeted chemicals than of other TRI chemicals.
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4 Similar relief has been provided for voluntary early reductions in other regulatory contexts. For example, section 112(i)(5) of the Clean Air Act provides a 6-year compliance extension from air toxic control standards set under section 112(d) for achieving early reductions of hazardous air pollutants (HAPs). The 6-year extension applies to those facilities achieving a 90 percent reduction in listed HAPs (95 percent reduction in the case of HAP particulates) before the proposal of the applicable HAP emissions standard(s). The reduction obligation must be federally enforceable and incorporated into the facility’s permit issued under Title V of the Clean Air Act.
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5 In such cases, companies would make binding commitments to improve the performance of their products sold by specified amounts over the term of the agreement. Auto manufacturers, for example, could agree to meet declining GHG emissions budgets reflecting improvements in fuel efficiency of vehicle fleets sold for each model year during the agreement. Appliance manufacturers could commit to improving efficiency of their products by set amounts over a fixed period of time.
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6 See, for example, STAPPA/ALAPCO, Reducing Greenhouse Gases and Air Pollution: A Menu of Harmonized Options (October 1999); and EIA, Analysis of Strategies for Reducing Multiple Emissions from Power Plants: Sulfur Dioxide, Nitrogen Oxides, and Carbon Dioxide (December 2000).
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Oil & Gas Markets and Climate Change Policy

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Workshop on
Oil & Gas Markets and
Climate Change Policy

August 9-10, 2001 - Snowmass, Colorado

On August 9 and 10, 2001, The Pew Center hosted a workshop in conjunction with the Energy Modeling Forum of Stanford University to bring together experts from around the world to discuss the manner in which economic models portray fuel use. Determining future supply and demand of natural gas (NG) is important in determining climate policies since natural gas is a relatively cleaner fuel – in terms of carbon emissions – than are coal and oil. A climate policy based on reducing the carbon content in fuels would presumably favor gas, along with other less carbon-intensive energy sources, thus accelerating its demand.

But economic models that examine the climate change issue show mixed results on this score: many models show the demand for gas increasing relative to more carbon-intensive fuels while others show its demand decreasing at a rate faster than oil (which is explained by gas demand being more responsive to a tax). Without clear information on the true path of natural gas, policy-makers will not be fully informed on how to address the climate change problem. The modelers took first steps towards investigating this problem by determining common definitions for various oil and gas categories and expect to be able to compare results of their various models regarding oil and gas consumption early next year.

Other topics discussed in this workshop included the anticipated supply of various fuels, primarily oil and gas, and the factors that determine the ultimate level of global reserves, the potential for developing a world market in natural gas through liquefaction, and advances in technology which influence the cost of production of oil and gas.

Transportation in Developing Countries: Greenhouse Gas Scenarios for Shanghai, China

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Transportation in Developing Countries: Greenhouse Gas Scenarios for Shanghai, China

Prepared for the Pew Center on Global Climate Change
July 2001

By:
Hongchang Zhou, Tongji University, Shanghai
Daniel Sperling, Mark Delucchi, and Deborah Salon, Institute of Transportation Studies, University of California, Davis

Press Release

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Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

The transportation sector is a leading source of greenhouse gas (GHG) emissions worldwide, and one of the most difficult to control. In developing countries, where vehicle ownership rates are considerably below the OECD average, transport sector emissions are poised to soar as income levels rise. This is especially true for China, whose imminent accession to the World Trade Organization will contribute to economic growth and could make consumer credit widely available for the first time. These factors are likely to accelerate automobile purchases, and GHG emissions.

Shanghai is one of China's most dynamic cities. Extremely densely populated, with very low personal vehicle ownership rates for its income level, Shanghai is also home to a nascent Chinese automotive industry. Transportation plans and policies there are designed to achieve broader urban objectives of population decentralization, with an eye to controlling increases in traffic congestion and improving environmental quality. Because Shanghai's transportation system and planning process are so sophisticated, Shanghai may be a 'best case' for controlling transportation sector GHG emissions in the absence of climate change mitigation goals.

This report creates two scenarios of GHG emissions from Shanghais transportation sector in 2020. It finds:

  • Greenhouse gas emissions quadruple in the low-GHG scenario; they increase sevenfold in the high scenario. On a passenger-kilometer basis, the estimated increase ranges from 10 to 100 percent.
  • Providing an array of high-quality options to travelers can help meet the demand for transportation services while keeping traffic congestion in check and meeting other urban objectives.
  • Special lanes and other infrastructure to accommodate vehicles such as buses, minicars, and bicycles can save money and improve traffic circulation.
  • Using clean technology and fuels in motorized vehicles lowers the environmental impact of various transportation modes.
  • Perfecting the use of 'intelligent' traffic control systems through improved coordination will yield higher returns on capital investments.

Transportation in Developing Countries: Greenhouse Gas Scenarios for Shanghai, China is the second report in a series examining transportation sector GHG emissions in developing countries. The report's findings are based on a Lifecycle Energy Use and Emissions Model developed by the Institute of Transportation Studies at the University of California at Davis, which estimates GHG emissions from the transportation sector.

The Pew Center would like to thank Kebin He of Tsinghua University, Feng An of Argonne National Laboratory, Ralph Gakenheimer of MIT, and Michael Walsh, an independent transportation consultant, for their review of earlier drafts. 

Executive Summary

Shanghai is experiencing rapid economic growth. Affluence is motivating dramatic and far-ranging changes in urban structure, transportation, and energy use. This report examines two transportation trajectories that Shanghai might follow and how they would affect greenhouse gas (GHG) emissions. Shanghai’s metropolitan population of over 13 million people continues to grow relatively slowly, but its economy is growing rapidly. The average annual per capita income is $4,000, three times higher than the rest of China, and the Shanghai economy is expected to grow at more than 7 percent per year through 2020.

Massive new transport system investments planned for the next two decades are aimed at lowering Shanghai’s extremely high population density, supporting economic growth, and enhancing the quality of life. The list of new investments is impressive: expansion of the new airport, construction of a deep-water harbor, three new bridges and tunnel river crossings, completion of a 200-kilometer modern rapid transit rail system, expansion of suburban highways, and construction of 2,000 kilometers of new and upgraded urban roads. These investments will improve the city's transportation system, but are costly and threaten greater energy use and air pollution.

A central issue in Shanghai’s development is the role of personal vehicles, especially cars. The city currently devotes little land to roads and has only 650,000 cars and trucks — very few of which are privately owned — placing vehicle ownership levels well below virtually all cities of similar income. Even with this small number of vehicles, Shanghai already suffers from serious transport-induced air pollution and traffic congestion.

Shanghai city planners project a quadrupling of cars and trucks in the city by 2020. This projected increase is premised principally on two factors. First is rapid income growth, which will make car ownership possible for a much larger segment of the population. And second is vehicle prices, which are likely to plummet due to China’s imminent accession to the World Trade Organization (WTO). Lower prices will result from increased competition, compulsory reductions in vehicle tariffs, and easier access to consumer credit.

These projected increases in vehicle use are not certain.  Even apart from the WTO membership, vehicle ownership and use--and GHG emissions--will be strongly influenced by three interrelated policy debates: industrial policy toward the automotive industry, air quality policy, and transportation and urban growth policy.

The city's decision about vehicle use will be critical in shaping Taiwan's future.
This report addresses the forces about to transform the transportation system of Shanghai, and examines policies and strategies that that direct it toward greater economic, social and environmental sustainability.

The two transportation scenarios draw upon extensive interviews with decision-makers and experts in Shanghai and Beijing.  One scenario is premised on rapid motorization, the other on dramatic interventions to restrain car use and energy consumption, resulting in lower GHG emissions.  Neither is the "business-as-usual" scenario, since this characterization is meaningless in a time of massive investments and policy shifts.  Instead, these scenarios are meant to estimate likely upper and lower bounds of greenhouse gas emissions from Shanghai transport in 2020, taking as given the projected strong economic growth.  If the economy grows more slowly, emissions will likely be lower than the scenarios indicate.

The rapid motorization scenario is based on the projected quadrupling of cars by 2020, coupled with a substantial increase in population.  It results in a seven-fold increase in GHG emissions.  The restrained scenario results in a four fold increase in GHG emissions.  In this restrained scenario, almost all emissions growth is due to increase in travel, not increases in energy intensity or GHG intensity of the travel.  Emissions per passenger-kilometer increase only about 10 percent the restrained scenario compared to a doubling in the rapid motorization scenario.

Caution is urged in generalizing the findings of this report to other cities in developing nations.  Shanghai is not a typical Asian city, given its surging economy and its world-class planning capabilities.  However, the conditions for alternative transportation options are more propitious here than perhaps any other megacity in the world.  If the city is effective at restraining growth in vehicle use (and GHG emissions), Shanghai may serve as a model for other cities in the developing world. 

Daniel Sperling
Deborah Salon
Hongchang Zhou
Mark Delucchi
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Transportation in Developing Countries: Greenhouse Gas Scenarios for Delhi, India

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Transportation in Developing Countries: Greenhouse Gas Scenarios for Delhi, India

Prepared for the Pew Center on Global Climate Change
May 2001

By:
Ranjan Bose and K.S. Nesamani, Tata Energy Research Institute (TERI)
Geetam Tiwari, Indian Institute of Technology-Delhi
Daniel Sperling, Mark Delucchi, and Lorien Redmond, Institute of Transportation Studies, University of California, Davis
Lee Schipper, International Energy Agency

Press Release

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Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

Greenhouse gas emissions in developing countries are increasing most rapidly in the transportation sector. Even people with low incomes are meeting their need for mobility, and projected income growth over the next two decades suggests that many more will acquire personal modes of transportation. How this will affect the earth's climate is a great concern.

In Delhi, India, transportation sector greenhouse gas emissions are expected to soar. There are policy and technology choices that could significantly lower the emissions growth rate while increasing mobility, improving air quality, reducing traffic congestion, and lowering transport and energy costs. To realize these benefits, vision, leadership, and political will must be brought to bear. Delhi has high vehicle ownership rates for the city's income level, increasing congestion, poor air quality, poor safety conditions, and insufficient coordination among the responsible government institutions. Travelers in Delhi desire transportation services, reflected by the increasing numbers of inexpensive but highly polluting scooters and motorcycles.

This report creates two scenarios of greenhouse gas emissions from Delhi's transportation sector in 2020. It finds:

  • Greenhouse gas emissions quadruple in the high-GHG, or business-as-usual, scenario; but only double in the low scenario.
  • Transportation policies are readily available that will not only slow emissions growth, but also significantly improve local environmental, economic, and social conditions.
  • Improved technology would maximize the efficiency of automobiles, buses, and other modes of transportation and could play a key role in reducing emission increases.
  • Keeping many travel mode options available - including minicars and new efficient scooters and motorcycles - will help individuals at various income levels meet their mobility needs.
  • The time to act is now. The issues facing Delhi represent opportunities for improvement, but the longer authorities wait to address transportation inefficiencies, the more difficult and expensive it will be to produce a positive outcome.

Transportation in Developing Countries: Greenhouse Gas Scenarios for Delhi, India is the first report in a five-part series examining transportation sector greenhouse gas emissions in developing countries. The report findings are based on (1) a regression model developed by TERI to forecast future increases in vehicle ownership and travel by different modes and (2) a Lifecycle Energy Use and Emissions Model developed by the Institute of Transportation Studies at U.C.-Davis which estimates greenhouse gas emissions from the transportation sector.

The Pew Center gratefully acknowledges Anita Ahuja of Conserve, Ralph Gakenheimer of MIT, and Michael Walsh, an independent transportation consultant, for their review of earlier drafts. 

Executive Summary

Delhi, India is a rapidly expanding megacity. Like many other cities its size, Delhi faces urban gridlock and dangerous levels of air pollution. Vehicle ownership is still a fraction of that in industrialized countries, but remarkably high considering the population's relatively low income. Worldwide, energy use is increasing faster in the transport sector than in any other sector, and fastest of all in developing countries. From 1980 to 1997, transportation energy use and associated greenhouse gas (GHG) emissions increased over 5 percent per year in Asia (excluding the former Soviet Union) and 2.6 percent in Latin America, compared to one percent growth in greenhouse gases from all sectors worldwide.

Delhi faces the same transportation, economic, and environmental challenges of other megacities. Population, motor vehicles, pollution, and traffic congestion are all increasing. Air pollution levels greatly exceed national and World Health Organization health-based standards, and transportation is by far the largest source of pollution. In the past 30 years, Delhi's population more than tripled and the number of vehicles increased almost fifteenfold.

By 2000, Delhi had about 2.6 million motor vehicles - 200 for every 1,000 inhabitants, a rate far higher than most cities with similar incomes. Most of these vehicles are small, inexpensive motorcycles and scooters, rather than automobiles. This proliferation of vehicles in a relatively poor city indicates the strong desire for personal transport - a phenomenon observed virtually everywhere. Delhi is an example of how that desire can now be met with relatively low incomes.

Delhi is expected to continue growing at a rapid rate. Its population is expected to surpass 22 million by 2020. Motor vehicles, including cars, trucks, and motorized two- and three-wheelers, are expected to grow at an even faster rate. The domestic auto industry is predicting car sale increases of 10 percent per year. With an extensive network of roads and increasing income, there is every reason to expect vehicle sales and use to continue on a sharp, upward trajectory. 

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Equity and Global Climate Change Conference

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The Pew Center conference on Equity and Global Climate Change will bring together experts from a variety of disciplines and nationalities to explore how best to ensure fair and reasonable actions by all countries in addressing climate change.

April 17-18, 2001 - Washington, DC

Conference Press Release

The Pew Center conference on Equity and Global Climate Change will bring together experts from a variety of disciplines and nationalities to explore how best to ensure fair and reasonable actions by all countries in addressing climate change. Given critical differences among nations -- in their economies, their historic and projected emissions, and their vulnerability to climate change impacts -- achieving equitable international commitments is an extraordinary challenge. Speakers and panelists will examine the underlying economic, cultural, and ethical issues and how they influence this crucial debate. Through this conference, the Pew Center hopes to stimulate an ongoing international dialogue leading to the better understanding of equity concerns and solutions that all parties believe are fair.

PANEL DESCRIPTIONS

Approaches to Equity

Equity concerns are at the very core of the climate change debate: Who bears the greatest responsibility for climate change? Who is at greatest risk? Who is best able to act? Even if we agree that equity is a goal, how do we define "equitable"? Many approaches to conceptualizing and addressing equity in the context of climate change have been advanced, including: per capita emission rights; various forms of "grandfathering;" allocating reductions according to ability to pay; sharing costs according to historic emissions; and combinations of these and other critiera. This panel will explore some of these approaches and will ask whether, ultimately, equity is more feasibly addressed through a political bargain than through a given principle or formula.


Economic Considerations

At the root of many equity concerns are stark economic realities. Countries face widely divergent costs in addressing climate change - both the direct costs of mitigation, and the opportunity costs of diverting scarce capital from other social needs. The stakes of not acting also vary widely; and those facing the greatest costs from flooding, drought and other climate change impacts may be those with the fewest resources to spare. While some developed countries are concerned about competitiveness impacts if other nations do not act, developing countries are reluctant to assume obligations that may jeopardize their economic development. This panel will explore these differing perspectives, and will examine opportunities to address economic inequities through technology transfer, capacity building, clean energy investment, and other climate change strategies.


Ethical, Moral, and Cultural Considerations

Equity concerns are also shaped by differing ethical, religious, and cultural perspectives. Some cultures and traditions place a higher priority on meeting collective needs and those of future generations. Some argue that developed countries must be willing to sacrifice the comforts of an energy-intensive lifestyle. Some hold more strongly than others to the creed of market efficiency. While these differences can exert a powerful influence on national perspectives, they are typically overshadowed by pure economic concerns. This panel will explore how these differences color the climate change debate, and how a better understanding of other cultures and traditions can lead to stronger international cooperation against climate change.


Fair and Reasonable Action: First Steps

The Kyoto Protocol attempts to address equity concerns in at least two respects: it sets binding emissions targets only for developed countries, reflecting broad agreement that it is their obligation to act first; and among developed countries, it sets differentiated targets reflecting differences in national circumstance. How equitable are these decisions? Negotiations over rules to implement Kyoto raise another set of concerns: How is fair representation on the body overseeing the Clean Development Mechanism ensured? What must developed countries do to fulfill their commitments on finance and technology transfer? This panel will examine the underlying rationale for agreed-upon measures such as differentiated targets, and explore ways to resolve other equity issues that arise within the existing climate framework.


Fair and Reasonable Action: The Path Forward

Ultimately, it will be impossible to achieve safe, stable atmospheric concentrations of greenhouse gases by addressing only developed country emissions. There is growing pressure in the United States and elsewhere for developing countries to take stronger action against climate change. Developing countries want greater recognition for efforts already underway and are unwilling to commit to stronger action, insisting that industrial countries first demonstrate real progress toward achieving their emission targets and fulfilling their commitments on finance and technology transfer. This panel will explore differing perspectives on this central issue, and consider when and how a real dialogue on developing country commitments can or should begin.

Op-Ed: Getting It Right: Climate Change Problem Demands Thoughtful Solutions

OPINION EDITORIAL
"Getting It Right: Climate Change Problem Demands Thoughtful Solutions"

By Eileen Claussen, Executive Director for the Pew Center on Global Climate Change

Appeared in the Washington Post

November 14, 2000

Many of the government officials gathering this month for the climate change negotiations in The Hague are hoping to put the finishing touches on rules to implement the Kyoto Protocol. But getting those rules right is more important than getting them all completed.

Still unresolved on the eve of the meeting are a range of very complicated political and technical issues that will play a decisive role in determining whether we achieve our goal of stabilizing the earth's climate system. It is not a stretch to say that how we decide these issues will determine how we are judged by future generations.

Decision-makers in The Hague should remember that the Kyoto Protocol was designed as both a first step in reducing atmospheric concentrations of greenhouse gases and as a framework for long-term, cost-effective action. In other words, this is a treaty that will have to stand the test of time. Short-term political considerations-including the desire to resolve all remaining issues this year-should therefore take a backseat to the goal of creating a global system that is transparent, fair, environmentally effective, economically efficient, and as simple as possible.

The Remaining Issues

Four key sets of issues remain in play as the negotiators come together:

  1. The Kyoto Mechanisms. The Kyoto mechanisms were designed to allow countries to pursue the most cost-effective means of reducing their emissions-for example, by engaging in international emissions trading. But there are provisions being negotiated that would make the Kyoto mechanisms totally inoperable, and others that would seriously limit their use. If the negotiators are careless in defining the rules, or determined to constrain when and how the mechanisms can be used, this will simply increase the costs of complying with the Protocol. And the result might be a higher level of noncompliance, an outcome that no one should want.
  2. Carbon Sequestration. The question here is whether and how countries should receive credit toward their emissions reduction targets for using agricultural lands and forests to store carbon. A related question is whether credit should be given for investments in sequestration projects in developing countries. The important role of soil and forest sequestration in stabilizing the global climate system cannot be denied. However, we have not yet defined what types of sequestration activities ought to count-or even how to count them.
  3. Compliance. Yet another unanswered question is whether the Kyoto Protocol will include binding consequences for noncompliance. In other words, how will we penalize those countries that miss their targets? This is a crucial issue to the Protocol's success. Only by establishing and enforcing significant noncompliance penalties can we create a fair and efficient global system, and one that yields results.
  4. Assistance to Developing Countries. Developing countries properly argue that the industrialized world is not doing enough to implement provisions of the United Nations Framework Convention on Climate Change. In that precursor agreement to the Kyoto Protocol, the United States and other nations pledged to support developing countries in their efforts to reduce emissions through capacity building, technology transfer, and funding for "adaptation" initiatives. Decision makers in The Hague will have to respond seriously to these concerns at the same time as they are working on the more fractious issues of the Kyoto framework.

Looking Ahead

As if resolving these immediate questions were not enough of a challenge, everyone concerned with this issue must also give serious thought to the future. After all, the 2008-2012 deadline for achieving the first round of emissions reductions under the Kyoto Protocol is fast approaching. And, even if these initial targets are met (an unlikely prospect), they represent only a first step toward the sustained and significant reductions in emissions that will be necessary to reduce the threat of climate change throughout the 21st century.

A crucial issue for the future, then, is to think about what kind of targets we will have to establish in the years after 2012. At the same time, we need to think about how to involve developing countries in these future global efforts in a more active way. Developing countries are struggling to lift their people to a higher standard of living, and doing so will mean absolute increases in energy use and emissions.

We will accomplish very little, if anything, by requiring developing countries to achieve short-term emissions reductions. The better approach is to craft an equitable and effective framework for future targets for all countries, bearing in mind that we face a common challenge: maximizing the environmental benefits we are able to achieve while minimizing the costs of reducing and limiting our emissions.

Meeting the challenge of global climate change calls for no less than a second industrial revolution. We need to promote new technologies and new investments that will put the entire world on a path to clean economic development. And, in creating the global legal framework to make this happen, we need to make absolutely certain that we get it right.

Appeared in the Washington Post, Tuesday, November 14, 2000— by Eileen Claussen
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