The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
March 27, 2012
In a March 27 editorial, Bloomberg editors addressed how the U.S. can learn from China's push for capturing carbon and highlighted the work of the National Enhanced Oil Recovery Initiative (NEORI), a group of industry, state, environmental and labor leaders convened by C2ES and the Great Plains Institute. In the piece, Bloomberg endorses NEORI’s recommendation that Congress create a production tax credit for power companies that capture CO2 and send it to oil companies for enhanced oil recovery. Below is an excerpt from the editorial.
The federal government, too, could help push the technology forward, by taking up a smart strategy that has been suggested by a coalition of oil industry executives, environmentalists and state officials called the National Enhanced Oil Recovery Initiative. It has to do with the other side of the carbon- capture equation -- what to do with the CO2 once you’ve taken it out of the power-plant exhaust.
China’s Huaneng plant sells its carbon dioxide to companies that make carbonated drinks and dry ice. Duke envisions turning it into solid carbonate to be used for building materials or road construction. Some innovators are feeding CO2 to microscopic algae to produce either fuel or proteins used in nutrition supplements or animal feed.
But it can also be used to coax more oil out of the earth. Since 1972, oil companies have injected carbon dioxide taken from natural sources to free up crude trapped in rock formations. The industry operates 3,900 miles of pipelines carrying 65 million tons of CO2 per year, and “enhanced oil recovery,” as the technique is known, accounts for 6 percent of U.S. oil production.
With new technology and enough CO2, the industry could use enhanced recovery to increase production by 67 billion to 137 billion barrels, according to a report from the National Enhanced Oil Recovery Initiative. The report envisions using 20 billion to 45 billion metric tons of CO2 from carbon capture -- the total amount expected to be produced by power plants for the next 10 to 20 years.
We endorse the coalition’s recommendation that Congress create a production tax credit for power companies that capture CO2 and send it to oil companies for enhanced recovery. By increasing domestic oil production, such a credit is estimated to be able to pay for itself within a decade.
Click here to read the full editorial
What are New Source Performance Standards (NSPS)?
The Clean Air Act requires the Environmental Protection Agency (EPA) to regulate pollution from new, modified and reconstructed facilities through the New Source Performance Standards (NSPS) program, established in Sec. 111 of the Act. (Confusingly, the New Source Performance Standard provisions of the Clean Air Act also require EPA to set standards for existing sources, as described below.) NSPS are technology-based standards which apply to specific categories of stationary sources. As with many other Clean Air Act programs, EPA establishes a federal standard for a given category of facility, which state environmental agencies then translate into requirements for individual facilities. On March 27, 2012 EPA proposed NSPS for electric power plants. None have yet been proposed for refineries.
Under Section 111(b), EPA must establish performance standards for new and modified sources. An NSPS requires facilities to attain an emissions level that "reflects the degree of emissions limitation achievable through the application of the best system of emissions reduction which (taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." In setting this performance standard, EPA has some discretion to distinguish among classes, types, and sizes of facilities within source categories. However, the limit EPA sets must take the form of a standard, and it may not prescribe a particular technology itself. The law ostensibly requires EPA to review the technological options available for emissions reduction and, if appropriate, establish a new standard every eight years, but in practice, standards have typically remained unexamined and unchanged for much longer than eight years, often because of resource constraints at EPA.
Under Sec. 111(d) of the Clean Air Act, EPA is required to set standards for existing stationary sources. Again, EPA designates categories and establishes minimum technology-based standards, and states are delegated the authority for establishment, implementation, and enforcement of these performance standards. As with implementation of the National Ambient Air Quality Standards (NAAQS) program, EPA must approve state plans for meeting the requirements of Sec. 111(d) or implement a federal implementation plan if the state plan is not satisfactory. Unlike the NAAQS program, Sec. 111(d) appears to allow EPA to give the states broad discretion in establishing their programs.
Who are the covered entities?
The definition of "refinery" EPA uses comprises establishments primarily engaged in refining crude petroleum into finished petroleum products, including gasoline, kerosene, asphalt, lubricants, and solvents, among others. Under this definition, there are 147 refineries in the United States.
Why a Refinery NSPS for greenhouse gases?
Petroleum refineries have been subject to new source performance standards for a variety of pollutants since the Clean Air Act was passed in 1970. EPA is required to establish NSPS for GHGs under the Clean Air Act, as was clarified in the US Supreme Court case Massachusetts v. EPA.
Following other required regulatory steps, in a 2010 judicial settlement, EPA committed to a timeline for promulgating NSPS for greenhouse gases for two existing source categories: power plants and oil refineries. It held five, broad-based, sector specific listening sessions on the topic and received comments from numerous stakeholders. The deadline for a proposed refinery rule outlined in the settlement was December 10, 2011. At EPA's request, this deadline was extended to September 30, 2011, and then a further delay was agreed to. It is not clear when EPA will release proposed regulation for refineries, but under the court-approved settlement agreement, the final refinery NSPS were due on November 10, 2012.
- Learn more about Power Plant NSPS
- Statement: Eileen Claussen comments EPA's proposed greenhouse gas standard for new power plants
1. Despite the name "New Source Performance Standard," Sec. 111 requires the regulation of both new and of existing sources for pollutants that are not otherwise regulated as toxic pollutants or through the National Ambient Air Quality Standards Program. Because GHGs are not regulated in either of these manners, Sec. 111 would apply.
Statement of Eileen Claussen
President, Center for Climate and Energy Solutions
March 27, 2012
We welcome EPA's proposal today to limit greenhouse gas emissions from new power plants and urge the Administration to quickly move forward with rules for existing plants, which account for 40 percent of U.S. carbon dioxide emissions. Power companies face huge investment decisions as they meet new pollution standards and retire or upgrade outdated plants. They need to know the full picture - including future greenhouse gas requirements - in order to keep our electricity supply as reliable and affordable as possible.
While highly efficient natural gas-fired power plants would meet the standard proposed today, new coal-fired power plants not already in the pipeline could likely meet the standard only by capturing and permanently sequestering their greenhouse gas emissions. This underscores the urgency of stronger public and private investment in carbon capture and storage technologies. The United States, China and India - the world's three largest greenhouse gas emitters - all have substantial coal reserves. If we can't figure out how to get the energy value out of coal with a minimal carbon footprint, we will not solve the climate problem.
With prospects for substantial public investment in CCS unclear, C2ES is now working with policymakers and stakeholders on ways to expand enhanced oil recovery using captured carbon dioxide - an approach that can boost domestic oil production, reduce greenhouse gas emissions, and help lay the groundwork for full-scale carbon capture and storage.
Contact: Rebecca Matulka, 703-516-4146
Learn more about EPA's greenhouse gas standard for new power plants.
Bloomberg editors endorse NEORI's production tax credit recommendations
Few policy options can be a win-win for both political parties, as well as industry, environmental advocates, and labor. Similarly, increasing oil production and decreasing carbon emissions are thought of as conflicting goals. Yet, a solution may be on the horizon. On February 28, the National Enhanced Oil Recovery Initiative (NEORI) released its recommendations for advancing enhanced oil recovery with carbon dioxide (CO2-EOR). NEORI is a broad coalition of industry, state officials, labor, and environmental advocates.
While NEORI participants might not agree on many energy and environmental issues, each participant recognizes the vast potential of CO2-EOR and worked toward producing a set of policy recommendations for its expansion. CO2-EOR already produces 6 percent of U.S. oil, and it could potentially double or triple existing U.S. oil reserves. In comparison to other options, CO2-EOR offers an extraordinarily large potential expansion of domestic oil production, while also advancing an important environmental technology.
Market Mechanisms: Understanding the Options
The most recent study on climate change by the U.S. National Academy of Sciences concluded that, “Climate change is occurring, is caused largely by human activities, and poses significant risks for—and in many cases is already affecting—a broad range of human and natural systems. (See Climate Change 101: Science and Impacts.) The combustion of fossil fuels has contributed to the expansion of the global economy since the start of the Industrial Revolution. It has also substantially increased the concentration of carbon dioxide, the primary greenhouse gas in the atmosphere. The cumulative impact of these emissions poses significant economic risks. Policies to reduce emissions are required if we are to avoid the most costly damages of a rapidly changing climate. This brief describes how market-based policies can achieve climate goals more cheaply and efficiently than alternative policy structures—all while driving innovation to develop more cost effective, clean energy solutions that will serve as the foundation for strong economic growth throughout the 21st century.
The most basic form of a market-based policy is a tax that sets a price on each unit of pollution. A tax on pollution provides an incentive for an entity to reduce the quantity of pollution produced by changing its processes or adopting new technology. Taxes on greenhouse gases (GHGs) can come in two broad forms: an emissions tax, which is based on the quantity of emissions an entity produces; and a tax on goods or services that are generally GHG-intensive, such as a carbon tax on gasoline.
A pollution tax differs from a cap-and-trade system in that the latter places a quantitative limit on emissions while the former places a limit on the price of the pollutant. Both policy instruments can be equally effective in reducing pollution.
Internationally, a number of countries, along with a number of local and regional governments, have implemented a carbon tax or energy taxes related to their carbon content. For example, South Africa is considering the introduction of a carbon tax from 2016 onwards. In July 2014, Australia repealed its carbon tax, which was to transition to a cap-and-trade program.
In the United States, the last several Congresses have seen the introduction of carbon tax proposals. In the current Congress (2013-2014), five carbon pricing proposals have been introduced.
There has been increased attention on a revenue-neutral carbon tax as a way to pay for reductions in taxes on productive activities, such as income tax, or tax territoriality reform, and offsetting those reductions by taxing harmful activities. Recent studies estimate a $20 tax on carbon could raise between $1.2 to $1.5 trillion in the next 10 years.
Neither Congressional leadership nor President Obama have expressed interest in a carbon tax. Nevertheless, the need for new revenues to address the looming fiscal shortfall may shape the discussion of a carbon tax in the current Congress.
- A Carbon Tax in Broader U.S. Fiscal Reform: Design and Distributional Issues, May 2014
- Blog: Pricing carbon - What are the options?, May 22, 2014
- Event: Carbon Pricing: State and Federal Options, May 22, 2014. See video of the event, and relevant slides from Adele Morris and Aparna Mathur
- Blog: Conservatives debate a carbon tax, June 20, 2013
- Carbon Pricing Proposals of the 113th Congress, April 2013
- Options and Considerations for a Federal Carbon Tax, February 2013
- Market Mechanisms: Understanding the Options, March 2012
- Australia's Carbon Price Mechanism, December 2011
- Cap and Trade vs. Taxes. Climate Policy Memo, March 2009
- Tax Policies to Reduce Greenhouse Gas Emissions. Congressional Policy Brief Series, November 2008
- Joseph Aldy, and Robert N. Stavins, The Promise and Problems of Pricing Carbon: Theory and Experience, Discussion Paper (Washington, DC: Resources for the Future, 2011).
- The Economics of Carbon Taxes, American Enterprise Institute, Brookings Institution, International Monetary Fund, and Resources for the Future, last modified November 13, 2012.
- Terry Dinan, Offsetting a Carbon Tax's Costs on Low-Income Households, Working Paper 2012-16 (Washington, DC: Congressional Budget Office, 2012).
- Kevin A. Hassett, and Gilbert E. Metcalf, An Energy Tax Policy for the Twenty-First Century, AEI Online (Washington, DC: American Enterprise Institute, 2007).
- Donald Marron, and Eric Toder, Carbon Taxes and Corporate Tax Reform, (Washington, DC: The Urban Institute and Urban-Brookings Tax Policy Center, 2013).
- Aparna Mathur, and Adele Morris, Distributional Effects of a Carbon Tax in the Context of Broader Fiscal Reform, (Washington, DC: Brookings Institution, 2012).
- Warwick J. McKibbin, Adele Morris and Peter J. Wilcoxen, The Potential Role of a Carbon Tax in U.S. Fiscal Reform, (Washington, DC: Brookings Institution, 2012).
- Adele Morris, The Many Benefits of a Carbon Tax, The Hamilton Project (Washington, DC: Brookings Institution, 2013).
- National Research Council, Effects of U.S. Tax Policy on Greenhouse Gas Emissions (Washington, DC: The National Academies Press, 2013).
- Jonathan Ramseur, Jane Leggett, and Molly Sherlock, Carbon Tax: Deficit Reduction and Other Considerations, CRS Report for Congress R42731 (Washington, DC: Congressional Research Service, 2012).
- Sebastian Rausch, and John Reily, Carbon Tax Revenue and the Budget Deficit: A Win-Win-Win Solution?, Joint Program Report Series Report 228 (Cambridge, MA: Joint Program on the Science and Policy of Global Change, 2012).
- Fiscal Reform and Climate Protection: Considering a U.S. Carbon Tax, Resources for the Future and the Peterson Institute for International Economics, last access March 9, 2012.
- Robert N. Stavins, The Problem of the Commons: Still Unsettled after 100 Years, American Economic Review, 101(1):(2011): 81–108. DOI:10.1257/aer.101.1.81
While Americans bought nearly 18,000 PEVs last year, 2012 is the first full year when plug-in electric vehicles will be available nationwide. The long-term success of PEVs could bring some very real benefits to energy security, air quality, climate change, and economic growth.
Ridesharing: Context, Trends, and Opportunities
by Cynthia J. Burbank and Nick Nigro
March 6, 2012
Is enhanced oil recovery (EOR) the missing link in the United States' energy policy? During today's OnPoint, Judi Greenwald, vice president for technology and innovation at the Center for Climate and Energy Solutions and Robert Baugh, executive director of the AFL-CIO Industrial Union Council, outline the recommendations of the National Enhanced Oil Recovery Institute, a coalition of business and environmental groups. Greenwald and Baugh call on Congress to pass an enhanced oil recovery tax credit to spur innovation and growth in carbon capture and storage. They also address the environmental concerns associated with EOR. Click here to watch the interview.
Good afternoon. Thank you for joining us. I’m Eileen Claussen, President of C2ES, the Center for Climate and Energy Solutions. Some of you may have known us until recently as the Pew Center on Global Climate Change.
Judging from recent headlines, and from what you hear on the campaign trail, the biggest energy challenge facing America today is the rising price of a gallon of gas. And indeed, for many Americans, this is a genuine concern. But the reality – as I suspect you all know – is that there is virtually nothing that anyone at either end of Pennsylvania Avenue can do in the near term to bring prices down. Oil moves in a global market, and as long as oil remains a mainstay of our economy, we will be subject to its gyrations.
So the only real answer is to end our dependence on oil -- which of course is easier said than done. Even with our best possible efforts, weaning ourselves from oil will take not years, but decades -- which is all the more reason to get started on it right now.
We’re here today to talk about one part of the solution: plug-in electric vehicles. With PEVs, we now have a mass-produced alternative to the internal combustion engine. Depending on the model, PEVs either use no oil at all, or use it very sparingly. And, as they insulate their owners from rising gas prices, PEVs can deliver a whole range of other benefits as well.
By reducing our reliance on imported oil, they enhance our energy security. When they’re running on their batteries – which is all or most of the time -- they produce no tailpipe emissions, and that reduce local air pollution. If we can make real headway in decarbonizing our electricity supplies, PEVs can play a very significant role in reducing greenhouse gas emissions. And they present a genuine opportunity to put American industries and workers out front on a truly transformative technology.
So there are lots of reasons to like PEVs. And thanks in part to some help from Washington – including tax incentives enacted under the Bush administration, and investments under President Obama’s stimulus package – these cars are now in the showrooms and on the road. In their first year on the market, PEVs sold 50 percent better than hybrids did when they were first introduced. Nearly 10 companies already have models on the road, and over the next year or two, all of the major automakers will be offering them.
As GM can tell you, the PEV pathway is not without its bumps. But the same was certainly true for the internal combustion engine – and for so many other game-changing technologies that we now take for granted. For PEVs to take off – for them to truly deliver on their promise – we need to ramp up the effort. From the federal government, we need more support on the R&D side, in particular. But the real nuts-and-bolts challenges faced by PEVs are well outside Washington – and for the most part, so are the solutions. So that is where we at C2ES have chosen to focus our efforts.
It’s fairly obvious, I suppose, that if plug-in electric vehicles are to succeed, they need someplace to plug in. And creating that infrastructure – connecting plug-ins to the grid – involves a lot of different parties. It’s not just the consumers and carmakers. You need the electric utilities, which means you also need the state public utility commissions. You need the companies that make batteries and charging stations. You need people thinking about this from an environmental perspective. And you need them all working together.
That’s where we thought we could help. One year ago we convened the PEV Dialogue Group to bring together all of these interests. We said, let’s come up with a plan we can all agree on. And today, we are thrilled to be sharing with you the product of those efforts – An Action Plan to Integrate Plug-in Electric Vehicles with the U.S. Electrical Grid. A little later in the program, Judi Greenwald will give you a more detailed overview of the plan. In a nutshell, the plan provides a roadmap for coordinated action by the public and private sectors at the state and local level to ensure that PEV owners have a place to plug in – that they can conveniently charge their cars at home and on the road, without in any way compromising the reliability of the grid. It recommends ways to harmonize regulatory approaches across the country; balance public and private investments in charging infrastructure; and help consumers understand the benefits and choices offered by PEVs.
As I said earlier, we see this as just one part of the solution. On the transportation front, we need to keep pushing ahead with stronger fuel economy standards, and we need to be advancing other alternative fuels and technologies. At C2ES, for instance, we’re also looking at the options presented by natural gas.
But at a time of economic struggle, fiscal crisis and political gridlock, I believe this effort is an encouraging example of how we can and must make progress. Much as I would like to see comprehensive solutions to our climate and energy challenges, those don’t appear to be on the immediate horizon. But if we come at these issues one by one, look for opportunities where interests converge, and are open to compromise, we can arrive at practical solutions benefiting our economy and our environment.
This same approach delivered another success two weeks ago, when we announced recommendations from a coalition of industry, state, labor and environmental leaders to boost domestic oil production while reducing CO2 emissions. Another win-win. The opportunities are there, if only we seize them.
I want to thank all the members of PEV Dialogue Group for the hard work and dedication that brought us to this moment.