Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions
December 6, 2016
On Google's announcement that it will power its operations with 100 percent renewable energy:
We congratulate Google on achieving its goal of powering its global operations with 100 percent renewable energy.
Google’s achievement is further evidence of the continuing momentum of America’s clean-energy transition. Companies like Google are investing billions of dollars in clean energy and efficiency because it makes sound business sense. Hundreds of companies have not only made commitments like these, but reaffirmed their support for the Paris Agreement and U.S. policies that address climate change.
Businesses like Google are taking climate action because they understand the costs of inaction and see the economic benefits of a clean-energy economy. Google’s commitment to 100 percent renewable shows that leading companies are committed to making long-term investments that are good for the environment, their consumers and their bottom lines.
Addressing climate change will require tremendous investment in low- and zero-carbon energy technologies. Estimates are as high as $1 trillion per year through 2030.
Some of that investment must be in carbon capture technology, which can reduce emissions from both the power and industrial sectors. Carbon capture could provide 13 percent of global emissions reductions through 2050.
Innovative corporate partnerships will play a critical role in launching this investment. That’s because partnerships can bring together the right combination of resources, talent, and experience and combine technical knowhow with business-oriented analyses of commercial viability. To solve our emissions challenges, innovation will be key, not just in technology, but also in investment models and business partnerships.
One example of an innovative corporate partnership that is bringing carbon capture technology into the field is the NET Power demonstration project in La Porte, Texas.
The NET Power project, which is expected to come online in 2017, will be the first in the world to use supercritical CO2 (when the gas has the density of a liquid), instead of steam, to drive a turbine. It will make electricity from natural gas using patented technology that captures almost all carbon- and non-carbon emissions at no additional cost: it has equipment costs and fuel usage that are equivalent to or better than best-in-class conventional natural gas combined cycle power plants without carbon capture. The technology is also capable of very low or no levels of water usage.
Each partner in the project brings a unique competency: 8 Rivers is the technology expert, contributing its invention and engineering oversight capabilities. Exelon Corporation contributes its sizeable network of business contacts, financial resources, project development support, and operations and maintenance expertise and may adopt the technology for commercial use in its operations. CB&I provides engineering, procurement and construction services, as well as financial assistance and experience with sales. Finally, Toshiba provides specialized expertise in high-pressure turbines.
During a recent C2ES webinar on financing carbon capture, some of the partners explained why the collaboration model works better than the venture capital model of investment in this case.
From the investor perspective, corporate partnerships are viewed as more mature transactions “both as an investment opportunity, but also as a technology that we think is ready for us to deploy when the time comes,” said David Brown, senior vice president of federal government affairs and public policy at Exelon.
From the developer perspective, NET Power CEO Bill Brown said, “Normally, too many startup firms don’t have market definition as a critical part of their first stage. They should. By reaching out to the customers [like Exelon] to begin with, we were able to get a very good focus on the market.”
More capital is being committed to a low-carbon future:
- A year ago, 20 nations launched Mission Innovation to double their cumulative annual spending on clean energy research from $10 billion to $20 billion, with CO2 capture utilization and storage being one of the “R&D Focus Areas.”
- As a complement, leading entrepreneurs launched the Breakthrough Energy Coalition and pledged to invest billions in early-stage clean energy technology.
On Nov. 4, the CEOs of 10 oil and gas companies announced the Oil and Gas Climate Initiative which aims to direct $1 billion over the next decade to accelerate the development of technologies that could reduce greenhouse gas emissions on a significant scale, including carbon capture, use and storage.
As this private capital is mobilized, innovative corporate partnerships can combine business experience and commercial viability with government contributions to research and development to advance the commercial deployment of clean energy technology quickly.
The potential benefits for accelerated clean energy technology deployment are substantial. By reducing the cost of capture, the NET Power project may create an opportunity for U.S. innovation to help achieve emissions reductions globally.
Also, reducing the cost of capture lets us explore re-use of CO2, an area of increasing focus. Launched in January, the Global CO2 Initiative aims to enable the capture and re-use of 10 percent of annual global CO2 emissions by converting them into useful products. Its new roadmap highlights the potential for CO2 reuse in concrete, fuels (methane and liquid fuels), carbonate aggregates, polymers, and methanol.
To solve our emissions challenges, innovation will be key, not just in clean energy technology, but also in investment models and business partnerships.
NET Power demonstration project in La Porte, Texas, expected to come online in 2017.
By Fatima Maria Ahmad, Solutions Fellow, Center for Climate and Energy Solutions
A version of this article first appeared in the Sep./Oct. 2016 edition of the Carbon Capture Journal
Even in an election year, there are areas of energy policy where leaders of both parties and stakeholders from diverse sectors of the economy can find common ground. Encouraged by the landmark Paris Agreement in December 2015 and motivated by the need to avoid stranded assets and preserve jobs in the power sector, policymakers took seriously the challenge of accelerating deployment of carbon capture, use and storage (CCUS or carbon capture). Midway through the year, the International Energy Agency issued a report concluding that financial and policy support for carbon capture is not at a sufficient level to ensure an adequate pipeline of carbon capture projects that will enable the world to stay on track to meet mid-century goals of keeping global warming within 2 degrees Celsius of pre-industrial levels. Bipartisan proposals that are before Congress this year would encourage CCUS technology. State political leaders also supported carbon capture in notable ways this year.
H.R. 4622, the Carbon Capture Act
On Feb. 25, 2016, Rep. Mike Conaway (D-Texas) introduced H.R. 4622, the Carbon Capture Act, a bill to extend and expand Section 45Q, which is the primary tax credit for the use of carbon dioxide in enhanced oil recovery (CO2-EOR), a form of tertiary production. In the United States, carbon dioxide has been safely used in commercial enhanced oil recovery for more than 40 years. The United States produces about 4 percent of its oil through CO2-EOR. However, most of the carbon dioxide used is from naturally occurring underground reservoirs instead of from man-made sources. In addition to the climate benefits of reducing the amount of carbon dioxide vented into the atmosphere, CO2-EOR maximizes production from existing oil fields and may displace more carbon-intensive imported crude oil.
Rep. Conaway’s bill has 45 co-sponsors: 30 Republicans and 15 Democrats. These co-sponsors hail from 24 states and all regions of the country. This broad support challenges the notion that energy policy debates must be polarized and partisan.
H.R. 4622 provides four changes to 45Q. First, it would remove the existing cumulative cap of 75 million tons of CO2 and make the tax credit permanent. With less than half of the credits left for new projects to use, there is too much uncertainty for carbon capture project developers to secure financing. By making the tax credit permanent, the bill aims to establish certainty that would enable carbon capture project financing.
Second, the bill would increase the value of the credit per ton of CO2. Under current law, there is a credit of $10 per ton of CO2 for EOR and $20 per ton of CO2 for saline storage. Rep. Conaway’s bill would increase these values to $30 for both EOR and saline storage. These increases would ramp up over time reaching their full value in 2025.
Third, the bill would lower the threshold for qualifying facilities to 150,000 tons of CO2 for both power plants and industrial facilities. Industrial facilities that emit CO2 include ethanol plants; natural gas processing facilities; steel, cement, fertilizer and chemical plants; hydrogen production plants, and refineries. Capture of industrial CO2 emissions is critical because the sector accounts for almost 25 percent of global greenhouse gas emissions.
For these industrial sources, the cost to capture CO2 is often lower than for power plants. Technology to separate the CO2 stream has been used in natural gas processing for decades. The by-product CO2 stream is often of higher purity, i.e. less mixed with other gases, than power plant emissions. Importantly, there is no alternative to CCUS to achieve deep decarbonization in the industrial sector because production of CO2 is often an inherent part of the chemical or industrial process. By lowering the threshold for industrial sources of CO2, the bill aims to incentivize investment in industrial carbon capture projects.
Finally, the bill would allow transferability of the credit within the chain of CO2 custody. This change would allow entities with little or no tax liability to benefit from the incentive by transferring it to entities with the ability to use the credit.
In the Senate, companion legislation was offered on April 12, 2016, by Sens. Heidi Heitkamp (D-ND) and Shelly Moore Capito (R-WV) in the form of an amendment to the Federal Aviation Administration (FAA) reauthorization bill. The amendment had bipartisan support from two Democrats and five Republicans. While the amendment was voted into the tax title of the FAA bill, the tax title was ultimately dropped for other reasons.
S. 2012, Energy Policy Modernization Act
On Apr. 20, 2016, the Senate passed a broad energy bill authored by Senate Energy Committee Chairwoman Lisa Murkowski (R-Alaska) and Ranking Member Maria Cantwell (D-WA). The bill was approved 85-12, demonstrating bipartisan support. Section 3403 of the bill authorizes a new research, development and demonstration program at the U.S. Department of Energy (DOE) on CCUS technology. Section 3404, added by Sens. Heitkamp and Capito and co-sponsored by six Democrats and four Republicans, directs the DOE to report on long-term contracts to provide price stabilization support for carbon capture projects, a mechanism that is often referred to as a Contract for Differences (CfD). The DOE report would identify the costs and benefits of entering into CfDs and would outline options for how such CfDs could be structured and describe regulations that would be necessary to implement such a program.
North American Climate, Clean Energy, and Environment Partnership
On Jun. 29, 2016, President Barack Obama, Canadian Prime Minister Justin Trudeau, and Mexican President Enrique Peña Nieto announced the North American Climate, Energy, and Environment Partnership. The three nations aim to achieve 50 percent clean power generation by 2025, including through CCUS technology. One of the goals identified in the White House Action Plan is leveraging participation in Mission Innovation by identifying joint R&D initiatives to advance CCUS technology. By highlighting the role of CCUS in achieving deep decarbonization in North America, there is a renewed opportunity to focus on how the three nations can work together.
S. 3179, the Carbon Capture Utilization and Storage Act
On July 13, 2016, Sens. Heitkamp and Sheldon Whitehouse (D-RI) introduced S. 3179, the Carbon, Capture, Use and Storage Act, along with co-sponsoring Sens. Jon Tester (D-MT), Brian Schatz (D-Hawaii), Cory Booker (D-NJ), Tim Kaine (D-VA), and Bob Casey (D-PA). Republican co-sponsors include Sens. Capito and Blunt and Senate Majority Leader Mitch McConnell, putting the Kentucky Republican and some of the Senate’s leading advocates for climate action on the same side.
The Senate bill allows forms of CO2 utilization beyond EOR to be eligible for the tax credit. Under the bill, utilization is expanded to include the fixation of CO2 “through photosynthesis or chemosynthesis, such as through the growing of algae or bacteria,” chemical conversion of CO2 to a material or chemical compound in which CO2 is securely stored, or the use of CO2 for “any other purpose for which a commercial market exists.” A leading example of carbon dioxide use beyond EOR is algae biofuels.
The Senate bill would extend the tax credit for seven years and would allow the credit to be claimed for 12 years. For new facilities, the Senate bill increases the value per ton of CO2 of the tax credit to $35 for EOR and $50 for geologic storage. The bill lowers the threshold for qualifying facilities to 100,000 tons for industrial facilities. Finally, the Heitkamp-Whitehouse bill provides the tax credit to the owner of the carbon capture equipment.
Other Federal Efforts: H.R. 2883, the Master Limited Partnerships Parity Act and S. 2305, the Carbon Capture Improvement Act.
Developments this year build on previous efforts to promote carbon capture. On June 24, 2015, Rep. Ted Poe (R-Texas) and Rep. Mike Thompson (D-CA) re-introduced H.R. 2883, the Master Limited Partnerships Parity Act, which would extend the publicly traded partnership ownership structure available for certain oil and gas activities to renewable energy development. The bill would also extend the tax treatment to carbon capture for EOR or other secure geologic storage. The bill was co-sponsored by six Democrats and six Republicans.
Additionally, on Nov. 19, 2015, Sens. Michael Bennet (D-CO) and Rob Portman (R-OH) introduced S. 2305, the Carbon Capture Improvement Act, which would allow the use of tax-exempt private activity bonds (PABs) issued by state or local governments to finance carbon capture projects.
From the perspective of project developers, the extension and expansion of Section 45Q will do the most to accelerate the deployment of CCUS technology, although the MLP and PAB efforts will play a critical role. Like with other low- and zero-carbon energy technologies such as wind and solar, multiple and complementary incentive policies are often more effective in enabling investment to drive deployment than any single incentive policy.
A number of states have demonstrated leadership on carbon capture policy in 2016 by voicing growing support for federal incentives. In February, the National Association of Regulatory Utility Commissioners (NARUC) adopted a resolution urging Congress and the Obama Administration to support state efforts on CCUS including CO2-EOR. In June, the Western Governors’ Association followed up on a June 2015 resolution supporting CO2-EOR with a letter of support for federal incentives for this technology. In July, Montana Governor Steve Bullock released Montana’s Energy Future Blueprint, which highlights the need for federal and state support of accelerated commercial deployment of CCUS technology. Last fall, the Southern States Energy Board also issued a resolution supporting federal incentives for CO2-EOR.
Despite encouraging progress at the federal and state levels, formidable challenges lie ahead. Developers of carbon capture projects face serious obstacles in obtaining financing. Deployment of carbon capture technology is not on track to meet our climate goals. Fewer than half of the Intergovernmental Panel on Climate Change models were able to stay within a 2-degree scenario without CCUS. Without carbon capture, the costs of climate change mitigation increase by 138 percent. Carbon capture projects are capital-intensive and require long lead times to reach commissioning. In this context, the need for action is urgent.
What we have seen this year is that U.S. political leaders are able find common ground on energy policy where the goals of emissions reduction, energy security, and economic development converge. Looking forward, there is reason to hope that through working together on carbon capture policy this year, elected officials on both sides of the aisle have developed working relationships and built bridges that will enable continued action on climate in the next administration.
 See H.R. 4622, 114th Cong. (2016) available at https://www.congress.gov/bill/114th-congress/house-bill/4622
 The IRS announced that almost half of the credits available under the cumulative cap have been claimed. U.S. Internal Revenue Service, Notice 2015-44, Credit for Carbon Dioxide Sequestration: 2015 Section 45Q Inflation Adjustment Factor (2015), available at https://www.irs.gov/pub/irs-drop/n-15-44.pdf
 In the U.S., there are states and regions that will have candidates for carbon capture at lower-cost industrial facilities before they do in the power sector.
 Global CCS Institute, Global Status of CCS: Special Report – Introduction to Industrial Carbon Capture and Storage 4 (2016), available at https://www.globalccsinstitute.com/publications/industrial-ccs
 H.R. 636, 114th Cong. (2016), available at https://www.congress.gov/amendment/114th-congress/senate-amendment/3645
 Senators Joe Donnelly (D-IN), Jon Tester (D-MT), Roy Blunt (R-MO), John Barrasso (R-WY), Dan Coats (R-IN), Steve Daines (R-MT), and Mike Enzi (R-WY).
 Geof Koss, Blame Game Follows Collapse of Senate Tax Talks (E&E News PM, Apr. 12, 2016).
 S. 2012, 114th Cong. (2016), available at https://www.congress.gov/bill/114th-congress/senate-bill/2012
 Section 3403 establishes a new coal technology program, which includes programs for research and development, large-scale pilot projects, demonstration projects, and co-fired biomass-coal projects. Id. The section authorizes $632 million annually from 2017 – 2020, and $582 million in 2021. DOE continues to do substantial work and focus domestic and international policy efforts on CCUS. An important domestic DOE initiative is the creation of seven Regional Carbon Sequestration Partnerships to help develop infrastructure and regulations for CCUS technology and sequestration. An important international DOE initiative is the Carbon Sequestration Leadership Forum, a ministerial-level panel that meets to advance CCUS RD&D worldwide.
 Senators Joe Manchin (D-WV), Cory Booker (D-NJ), Sheldon Whitehouse (D-RI), Jon Tester (D-MT), Roy Blunt (R-MO), Al Franken (D-MN), Joe Donnelly (D-IN), John Barrasso (R-WY), Dan Coats (R-IN), and Mike Enzi (R-WY).
 S. 2012, 114th Cong. (2016), available at https://www.congress.gov/114/bills/s2012/BILLS-114s2012es.pdf
 As context, carbon capture projects often face steep financing challenges. This is because one of the main uses of CO2 that is in commercial operation today is CO2-EOR and the revenue from the sale of CO2 for EOR is dependent on volatile oil prices. The futures market for oil prices does not enable the type of commercial hedge that is needed to finance these projects. A CfD would address that market weakness by providing a reference oil price that would remain the same over the duration of the contract. When oil prices are above the reference oil price, the developer would pay the U.S. Treasury. When oil prices fall below the reference oil price, the Treasury would pay the developer. By providing certainty, a Federal CfD would make it easier for carbon capture projects to reach financial close.
 The White House, North American Climate, Clean Energy, and Environment Partnership Action Plan (Jun. 29, 2016), available at https://www.whitehouse.gov/the-press-office/2016/06/29/north-american-climate-clean-energy-and-environment-partnership-action
 Mission Innovation is an initiative that was launched in Paris in November 2015. Through this initiative, 20 nations have committed to doubling their clean energy R&D investments over five years. The Breakthrough Energy Coalition is an independent initiative spearheaded by Bill Gates that launched simultaneously with Mission Innovation. Through the Breakthrough Energy Coalition, a global group of private investors have committed to commercializing the research that is funded by Mission Innovation.
 S. 3179, 114th Cong. (2016), available at https://www.congress.gov/bill/114th-congress/senate-bill/3179
 S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(e)(7)(A).
 S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(a)(3) and 45Q(d)(1)(A). The determination of eligibility is based on the date that a project commences construction. This provides greater certainty for investors than the existing cumulative cap of 75 million tons of CO2 but not as much certainty as a permanent tax credit.
 S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(b)(1). The value of the credit ramps up over time. The Senate bill does not increase the value of the credit for existing facilities. S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(a)(1)-(2).
 S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(d)(1)(B). For power plants, the threshold for power plants remains at 500,000 tons. This would exclude some smaller demonstration carbon capture projects at power plants. The threshold is 25,000 for projects that utilize CO2.
 S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(e)(5). Like H.R. 4622, this would enable rural electric cooperatives without tax liability to benefit from the incentive because the incentive could be claimed by a third-party that puts up the investment funds in the equipment. This would reduce the cost of capital for these projects.
 H.R. 2883, 114th Cong. (2016), available at https://www.congress.gov/bill/114th-congress/house-bill/2883
 Representatives Mark Amodei (R-NV-2), Peter Welch (D-VT-At Large), Paul Gosar (R-AZ-4), Earl Blumenauer (D-OR-3), Mike Coffman (R-CO-6), Jerry McNerney (D-CA-9), Mia Love (R-UT-4), Tammy Duckworth (D-IL-8), Carlos Curbelo (R-FL-26), John Delaney (D-MD-6), Chris Gibson (R-NY-19), and Scott Peters (D-CA-52).
 Access to tax-exempt private activity bonds will provide project developers an important tool in a broader toolkit of measures needed to help attract private investment and finance carbon capture projects. The benefits to consumers and businesses of PABs include their tax-exempt status and the fact that they can be paid back over a longer period of time. S. 2305, 114th Cong. (2016), available at https://www.congress.gov/bill/114th-congress/senate-bill/2305
 MLPs and PABs will be especially helpful for electric power generation and some industrial sectors where the costs of carbon capture remain high.
 National Association of Regulatory Utility Commissioners, ERE-1: Resolution on Carbon Capture and Enhanced Oil Recovery (Feb. 17, 2016), available at http://pubs.naruc.org/pub/66436AF7-DFB2-C21E-43B2-1AE83A02D8F5
 Western Governors’ Association, Policy Resolution 2015-06 (Jun. 25, 2015), available at http://westgov.org/images/images/RESO_EOR_15_06.pdf
 Letter from Matthew Mead, Governor, State of Wyoming, and Steve Bullock, Governor, State of Montana to Rep. Mike Conaway (R-TX-11) and Sens. Heidi Heitkamp (D-ND) and Shelley Moore Capito (R-WV) (Jun. 3, 2016), available at http://westgov.org/letters-testimony/343-energy/1195-letter-governors-support-enhanced-oil-recovery-technology
 State of Montana, Montana’s Energy Future (Jun. 21, 2016), available at https://governor.mt.gov/Newsroom/ArtMID/28487/ArticleID/4325
 Southern States Energy Board, Resolution Supporting Carbon Capture and Storage and Enhanced Oil Recovery (Sep. 28, 2015), available at http://www.sseb.org/wp-content/uploads/2015/09/6.2015.pdf
 Intergovernmental Panel on Climate Change, Working Group III Contribution to the Fifth Assessment Report (2014), available at https://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf
|Innovation to Power the Nation (and the World): Reinventing our Climate Future event held at the Carnegie Institute of Science Auditorium. Keynote remarks by Michelle Lee, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office; and panelists including: Dr. Jayant Baliga, Dr. Kristina Johnson, Nathan Hurst, Bob Perciasepe and moderated by Amy Harder.|
Energy, business and policy experts agree: Current technologies aren’t enough to keep the world from warming more than 2 degrees Celsius by 2100, the ambitious goal of the Paris Agreement. We will need innovation to fill the gap.
Where do we need breakthroughs? What do we need do more, do differently or do faster to evolve our energy system to be efficient, dependable and low-carbon? What policies would help drive the innovation we need?
These are some of the questions that guided a recent discussion C2ES helped organize at the Carnegie Institution for Science.
U.S. Patent and Trademark Office Director Michelle K. Lee opened the conversation by emphasizing the importance of innovation to face the challenges posed by climate change. “History has shown us there are few challenges that innovative minds cannot overcome,” she said.
Here are some of the highlights of the discussion, which you can watch here:
We can vastly improve energy efficiency
Dr. B. Jayant Baliga, an inventor with 120 patents and a professor at North Carolina State University, sees an enormous opportunity to improve energy efficiency, not necessarily through new inventions, but by more widely using some of the technologies we already have.
One of Baliga’s inventions, the insulated gate bipolar transistor (IGBT), dramatically improves efficiency in power flow in everything from appliances to cars to factories, saving an estimated 100 trillion pounds of carbon dioxide emissions.
Using variable speed motor drives that take advantage of IGBTs can improve efficiency by 40 percent, but only about half of U.S. motors run on these drives, compared with nearly 100 percent in Europe, Baliga said. With two thirds of U.S. electricity used to run motors, the energy savings could be enormous.
Lighting consumes about a fifth of electricity in the U.S. Going from incandescent bulbs to CFLs reduces energy use 75 percent. But in the U.S., only 2 billion out of the 5 billion light sockets have CFL bulbs in them, Baliga said. “We need some encouragement for people to use these kinds of lights,” he said.
Business plays a crucial role
Businesses understand the importance of climate change for both their operations and customers. Nate Hurst, Chief Sustainability & Social Impact Officer at HP, said companies should examine their operations and supply chains to drive energy efficiency, and also make products that are as energy efficient as possible.
HP, along other multinational companies, recently pledged to power global operations with 100 percent renewable energy, with the goal of 40 percent by 2020. The company also announced a new commitment to achieve zero deforestation also by 2020, which means all HP paper and paper-based packaging will be derived from certified recycled sources.
Companies need to diversify their energy sources, but the biggest challenge is price. Hurst suggested government incentives and tax credits can play a role in bringing alternative energy prices down.
Policy is needed at the federal, state and city level
C2ES President Bob Perciasepe said policies to recognize the costs of greenhouse gas emissions, such as a price on carbon, can stimulate innovation. Cities, states and businesses are pressing forward with policies and actions to save energy and expand clean energy. C2ES recently launched an alliance with the U.S. Conference of the Mayors to bring businesses and cities together to speed deployment of new technologies.
One area where more innovation is needed is carbon capture, use and storage. “We know how to do it, but we have to find cheaper ways to do it,” Perciasepe said. “And we have to find ways to use carbon, not just shove it all back into the earth.” For example, the Ford company is testing ways to capture carbon emissions from its manufacturing plants to make plastic for use in the interior of cars.
Hydropower can play a key role
Dr. Kristina Johnson, an electrical engineer and former Undersecretary for Energy at the Department of Energy, said it’s crucial to find new ways to use renewable energy. Her company, Cube Hydro Partners, acquires and modernizes hydroelectric facilities and develops power at unpowered dams.
“When we built our first little power plant in an existing dam, it cost less than $20 million, but it was the equivalent of having planted a million fully grown trees in the rainforest, which would have been a billion dollars,” she said. Hydropower can help provide constant energy to fill in for wind and solar power, she said.
Other areas where innovation would boost clean energy would be small modular nuclear reactors, although more work needs to be done on handling the waste, and an economic way to store or reuse emissions from fossil fuel plants, she said.
The last question asked by moderator Amy Harder of The Wall Street Journal was: What is the most important invention society needs to make and bring to scale to address the challenge of climate change?
What our panelists said:
- A visionary new source of power,
- Enhanced versions of the sources already known, such as ocean currents or solar power,
- The right economic incentives to scale the solutions we already have, and
- New materials that can be reused and recycled without compromising quality.
Back in 2005, the U.S. Energy Information Administration projected that, under current policies, U.S. energy-related carbon dioxide emissions would increase nearly 18 percent by 2015.
They did not.
In fact, emissions fell – by more than 12 percent. So we were off by 30 percent.
As Yogi Berra may have said: It's tough to make predictions, especially about the future. We didn’t know then the impact a variety of market and policy factors would have on our energy mix. And we don’t know now all of the factors that could help us meet, or exceed, our Paris Agreement pledge – to reduce our net emissions 26-28 percent below 2005 levels by 2025.
U.S. emissions have fallen over the last 10 years due to factors that include:
- Growth in renewable energy
- Level electricity demand
- Improved vehicle efficiency
- A shift in electricity generation from coal to natural gas.
An unanticipated abundance of cheap natural gas has transformed the U.S. electricity mix. Coal-fired generation has fallen from 50 to 33 percent of the mix, while less carbon-intensive, natural gas-fired generation has risen from 19 to 33 percent.
The last 10 years also included a major economic downturn, which in 2009 drove electricity sales below 2005 levels. Despite a return to positive economic growth in the following year that continues through today, electricity sales have remained flat. Declines in manufacturing; improvements in energy efficiency, including in buildings, lighting, and appliances; warmer winters; and increased use of on-site generation like rooftop solar panels are the likely drivers.
What will happen in the next 10 years?
Certainly, the electric power sector will continue to decarbonize. It is not unreasonable to assume that natural gas will play an even larger role, while coal will play a substantial albeit diminishing role in the electricity mix.
Here are some other factors that are hard to quantify now, but could affect how quickly we transition to a clean energy future:
More zero-emission electricity
Increased clean and renewable electricity production, spurred by the Environmental Protection Agency’s Clean Power Plan and congressional tax credit extensions for wind and solar, could reduce renewable power costs, which have already been dropping. In other words, economies of scale could lead to higher deployments and lower emissions than currently forecast.
Wind and solar generation have grown nearly twelve-fold since 2005, nearly eight times greater than what was expected back then. In the 2016 Annual Energy Outlook, wind and solar generation are projected to increase 2.5 times by 2025. Historical precedent would tend to suggest that this is a highly conservative estimate.
However, sustained low prices in wholesale power markets from low natural gas prices and a proliferation of renewable electricity sources could harm another zero-emission source: nuclear. In particular, we could see natural gas continue to replace zero-emission merchant nuclear plants, moving us in the wrong direction, unless remedies are implemented. Also, low wholesale prices would tend to discourage new renewable generation.
More zero-emission vehicles
Electric vehicles (EVs) make up less than 1 percent of new U.S. car sales. But as their prices drop and range expands, the adoption rate could accelerate over the next 10 years, spurring important reductions from what is now the largest emitting sector. In one sign of growing demand, more than 400,000 people have put down a deposit for a Tesla Model 3 EV that won’t even be on the market until 2018.
Advances in battery storage could drive the transformation of the transportation sector and would provide obvious benefits to the electric power sector as well.
Meanwhile, automakers are exploring alternative fuels: natural gas, hydrogen fuel cells, and biofuels. And more than a dozen states and nations have formed a Zero-Emission Vehicle (ZEV) Alliance to encourage ZEV infrastructure and adoption.
Action by cities, the magnitude of which is not easily captured by national macroeconomic models, could lead to greater than anticipated emission reductions. Starting with the groundbreaking Mayors Climate Protection Agreement in 2005, initiatives are evolving to connect cities with each other to exchange knowledge and achieve economies of scale for new technologies.
More cities are exploring ways to generate additional reductions by 2025. These include: more energy-efficient buildings; better tracking of electricity and water use, innovative financing for more efficient generation, appliances and equipment; and improved public transportation and promotion of electric vehicles.
Last, but not least, steps taken by companies beyond regulatory requirements could produce greater emission reductions than we can foresee. Companies are investing in clean energy projects, reducing emissions throughout the supply chain, establishing internal carbon pricing, and helping customers reduce their carbon footprint. More than 150 companies have signed the American Business Act on Climate Pledge.
C2ES and The U.S. Conference of Mayors are teaming up to encourage city and business leaders to work together to reduce greenhouse gas emissions. Imagine how effective we can be when we coordinate climate action.
A 2015 UNEP report suggests that beyond each countries’ individual commitments to the Paris Agreement, actions by sub-national actors across the globe can result in net additional contributions of 0.75 to 2 billion metric tons of carbon dioxide emissions in 2020.
The United States has significantly reduced its greenhouse gases over the past decade, and has put in place policies ensuring continued reductions in the years ahead. With so many resources and tools at our disposal, it is clear that we can meet or exceed our climate goal. The only uncertainty is how we will do it.
Event: Innovation to Power the Nation
Technology, policy, and business experts discuss how innovative technology and policy can help us reach our climate goals at Innovation to Power the Nation (and World): Reinventing Our Climate Future at 1 p.m. ET on Wednesday, June 29. Watch the livestream.
Speakers include Patent and Trademark Office Director Michelle K. Lee; C2ES President Bob Perciasepe; Dr. Kristina Johnson, CEO of Cube Hydro Partners; Nate Hurst, Chief Sustainability & Social Impact Officer at HP; and Dr. B. Jayant Baliga, inventor and director of the Power Semiconductor Research Center at North Carolina State University.
Webinar: Financing Climate Resilience – What Are Our Options?
Extreme weather events and disasters are already damaging assets, disrupting supply chains, reducing productivity and revenues, and destroying livelihoods. Projected climate impacts will also likely hit the creditworthiness of companies, posing risks to financial institutions and may affect companies' credit ratings. The need to update infrastructure provides an opportunity to build in climate resilience.
This webinar explores options for financing resilience and features an interactive discussion with experts in the field about opportunities and potential challenges.
July 21, 2016
Noon – 1:30 p.m. ET
Managing Director for HUD Programs (Office of Recovery), New Jersey Energy Resilience Bank
Founder & CEO, re:focus partners
Science Fellow and Resilience Project Coordinator, Center for Climate and Energy Solutions
Fatima Maria Ahmad
Solutions Fellow, Center for Climate and Energy Solutions
Shalini Vajjhala is founder & CEO of re:focus partners, a design firm dedicated to developing integrated resilient infrastructure solutions and innovative public-private partnerships, including the RE.invest Initiative and the RE.bound Program. Prior to starting re:focus, Ms. Vajjhala served as Special Representative in the Office of Administrator Lisa Jackson at the U.S. EPA, where she led the U.S.-Brazil Joint Initiative on Urban Sustainability, EPA Deputy Assistant Administrator in the Office of International & Tribal Affairs, and Deputy Associate Director for Energy & Climate at the White House Council on Environmental Quality. She joined the Obama administration from Resources for the Future, where she was awarded a patent for her work on the Adaptation Atlas. Ms. Vajjhala received her Ph.D. in engineering & public policy and Bachelor of Architecture from Carnegie Mellon University.
Katy Maher is a Science Fellow and Resilience Project Coordinator at the Center for Climate and Energy Solutions (C2ES). She contributes to C2ES’s efforts to assess and communicate the current state of knowledge regarding climate change and its impacts, and to promote actions that strengthen climate resilience. Ms. Maher has more than eight years of experience supporting climate change impacts and adaptation projects. Prior to joining C2ES, she worked for ICF International assisting a range of clients – including the U.S. Environmental Protection Agency, Federal Highway Administration, U.S. Agency for International Development, and state and local governments – in assessing climate change risks and developing adaptation solutions. Ms. Maher also served as Chapter Science Assistant for the Social, Economic and Ethical Concepts and Methods chapter of Working Group III’s contribution to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.
Fatima Maria Ahmad is a Solutions Fellow at the Center for Climate and Energy Solutions (C2ES) where she co-leads the National Enhanced Oil Recovery Initiative with the Great Plains Institute. Ms. Ahmad focuses on financing opportunities and policy support for emerging energy technologies, including carbon capture, use, and storage (CCUS). In a volunteer capacity, Ms. Ahmad is the Co-Chair of the American Bar Association Section of International Law International Environmental Law Committee and is the Women’s Council on Energy & the Environment Vice-Chair for Membership.
Bruce Ciallella is currently the Managing Director for HUD Programs (Office of Recovery). In this role, he oversees the Hurricane Sandy recovery effort for the New Jersey Economic Development Authority (EDA). His role includes managing the Stronger NJ Business Grant Program, the Stronger NJ Business Loan Program, the Neighborhood Community Revitalization Program, and the Energy Resilience Bank. Prior to joining the EDA, Mr. Ciallella served as Deputy Attorney General for the state of New Jersey representing the EDA and New Jersey Housing and Mortgage Finance Agency in various legal matters, including but not limited to the creation of various Hurricane Sandy programs. Furthermore, before joining the state, Mr. Ciallella was a market maker on the floor of the NASDAQ OMX PHLX trading in the oil service, homebuilder, and gold and silver sectors.
When it comes to carbon capture, innovative technology exists, but the financial and policy support needed to accelerate its deployment is lacking.
At a recent Carbon Capture, Utilization & Storage (CCUS) Conference attended by leaders of industry, federal and state agencies, and environmental organizations, one theme that emerged is the importance of policy parity with other low- and zero-carbon energy technologies like wind and solar to advance widespread deployment of CCUS technology.
We know that CCUS technology is essential to meet our mid-century climate goals. In fact, without CCUS, mitigation costs will rise by 138 percent.
Exchange Monitor, the organizer of the CCUS conference, noted that it is “an extremely important technology, enjoying a bit more spotlight on the heels of the Paris climate change agreement.” Many nations specifically referenced CCUS technology in their Nationally Determined Contributions to the agreement, including Canada, China, Norway, Saudi Arabia, the United Arab Emirates, and the United States.
Even as nations diversify their energy portfolios, fossil fuels are expected to serve 78 percent of the world’s energy demand in 2040. The most recent Energy Information Administration analysis suggests that global energy consumption is expected to rise 48 percent over the next 30 years.
Clearly, there will be a need for CCUS technology to be widely deployed, in both the power and industrial sectors. Industry, including refining and chemicals, steel, and cement production, contributes roughly 25 percent of global emissions and there are no practical alternatives to CCUS for achieving deep emissions reduction in this sector.
CCUS project development is not on track, however. The most recent International Energy Agency (IEA) Tracking Clean Energy Progress report notes: “No positive investment decisions were taken on CCUS projects, nor did any advanced planning begin in 2015, resulting in a fall in the total number of projects in the development pipeline.”
Since a project can take five to 10 years from conception to operation, financial and policy support is critical now, the EIA adds. The report concludes: “As with other low-carbon technologies, the market for CCS projects in most regions will be created by policy and regulation.”
That conclusion was echoed at the conference by Dr. Julio Friedmann, the Senior Advisor for Energy Innovation at the Lawrence Livermore National Laboratory and former Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Department of Energy. He said the financing challenge for CCUS projects “is fundamentally a policy issue; this is not a technology issue.” Barry Worthington, Executive Director of the U.S. Energy Association, emphasized at the conference that “providing identical fiscal tools for all no-carbon/low-carbon technologies reduces market distortion.”
Policies that would accelerate the deployment of CCUS technology include:
- Stronger federal and state incentives for carbon dioxide enhanced oil recovery (CO2-EOR)
- The inclusion of CCUS technology in state clean energy standards
- Funding for continued CCUS research, development, and demonstration
- A price on carbon
These policies would help overcome the barriers that innovative CCUS projects face, such as higher cost and higher perception of risk by investors. The cost reductions and performance improvements experienced by the wind and solar energy industries demonstrate that these kinds of policies (tax incentives, renewable portfolio standards, etc.) can accelerate the deployment of low- and zero-carbon energy technologies.
What policy parity means is sustained public sector support through the process of achieving a declining cost curve: from deploying initial first-of-a-kind CCUS technologies in both power and industrial applications to driving deployment of next-of-a-kind projects. It also means sustaining R&D on CCUS technologies so that low- and zero-carbon energy technologies are ultimately competitive without incentives.
As more CCUS projects come online, opportunities for cost reductions become apparent. SaskPower estimates it can save up to 30 percent on future CCUS units at the Boundary Dam power plant.
Finally, there is significant support for accelerated deployment of CCUS technology. C2ES co-convenes the National Enhanced Oil Recovery Initiative, which is a broad and unusual coalition of executives from the electric power industry; state officials; and environmental and labor representatives, all of whom support improved policy for CCUS technology in the United States. Based on our experience, and as expressed at the conference, policy parity needs to be an essential component of future federal and state efforts on climate to meet our agreed-upon goals and to match the growing need for CCUS technology.
June 21, 2016
Alliance for a Sustainable Future Announced
The U.S. Conference of Mayors and C2ES will bring together city and business leaders to focus on reducing power sector emissions and spurring sustainable development
WASHINGTON -- The U.S. Conference of Mayors (USCM) and the Center for Climate and Energy Solutions (C2ES) today announced a new alliance to spur public-private cooperation on climate action and sustainable development in cities.
The USCM-C2ES Alliance for a Sustainable Future will create a framework for mayors and business leaders to develop concrete approaches to reduce carbon emissions, speed deployment of new technology, and implement sustainable development strategies as a part of implementing the Clean Power Plan and responding to the growing impacts of climate change.
City and business leaders will identify barriers to action and share research and analysis on climate and sustainable development solutions. By building crucial links between cities and companies, the alliance aims to spur innovative partnerships and increase participation in state and national climate efforts.
“Since 2005, USCM has been leaders on climate change and reducing greenhouse gas emissions. Mayors and businesses must work together to develop sustainable solutions,” said Baltimore Mayor Stephanie Rawlings-Blake, The U.S. Conference of Mayors President. “The Clean Power Plan is the cornerstone of the nation’s strategy to achieve these reductions, which are becoming more and more important as the effects of climate change are upon us.”
“This alliance brings together mayoral political leadership and the pragmatic policy expertise of C2ES to advance climate change action and sustainable development, including by working with states to implement the Clean Power Plan” said Tom Cochran, CEO and Executive Director of The U.S. Conference of Mayors. “It is time for more concerted action and cooperation to spur ingenuity and expedite solutions.”
“Separately, cities and businesses have already been demonstrating climate leadership,” said C2ES President Bob Perciasepe. “Together, we can put our foot on the accelerator and reach our emissions-cutting goals.”
Santa Fe Mayor Javier Gonzales has been appointed by Mayor Rawlings-Blake to lead the effort for The U.S. Conference of Mayors, which will be approaching business partners with C2ES following the mayors' 84th Annual Meeting, June 24-27 in Indianapolis.
“Cities are our nation’s economic powerhouses, making them a key proving ground for policies to increase energy efficiency, deploy clean energy, and foster clean transportation,” said Mayor Gonzales. “Cities and companies have an opportunity to develop best practices to reduce greenhouse gas emissions and deal with the consequences of climate impacts.”
About The U.S. Conference of Mayors: The U.S. Conference of Mayors is the official nonpartisan organization of cities with populations of 30,000 or more. There are nearly 1,400 such cities in the country today, and each city is represented in the Conference by its chief elected official, the mayor. Learn more at www.usmayors.org.
About the Center for Climate and Energy Solutions: C2ES is an independent, nonprofit, nonpartisan organization that brings policymakers, business, and other diverse interests together to forge practical solutions to the pressing challenge of global climate change. Learn more at www.c2es.org.
Innovation is an essential component to meet the challenges of climate change. Better ways to produce, store, conserve, and transmit energy will help the U.S. and other nations meet the ambitious goals set at the United Nations climate change conference held in Paris in December 2015.
Join the Director of the U.S. Patent and Trademark Office, Michelle K. Lee, and a panel of technology, energy, and climate experts for a discussion on how present and future innovation can change the course of our planet’s future. Questions to explore will include:
- What do we need do more, do differently, do faster, to change course and evolve our energy system to be clean, efficient, accessible, dependable and low-carbon?
- Where do we need breakthroughs in technology to really make a difference?
- What policies would help drive the innovation we need? What business model innovation is needed?
June 29, 2016
1:00 - 3:00 p.m.
Carnegie Institution for Science Auditorium
1530 P St. NW Washington , DC 20005
Hon. Michelle K. Lee
Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office
Dr. B. Jayant Baliga
Director, Power Semiconductor Research Center, North Carolina State University
National Inventors Hall of Fame Inductee, 2016, Insulated Gate Bipolar Transistor
Chief Sustainability & Social Impact Officer, HP
Dr. Kristina Johnson
Chief Executive Officer, Cube Hydro Partners National Inventors Hall of Fame Inductee, 2015, Polarization Control Technology
President, Center for Climate and Energy Solutions
Moderator: Amy Harder
Energy Reporter, The Wall Street Journal
See full bios of speakers
Beyond Paris: From Agreement to Action on Climate Change
Hosted by: Microsoft and the Center for Climate and Energy Solutions
The historic Paris Agreement represents not only the culmination of years of negotiations, but also a unique moment in which businesses, cities, and heads of state from over 150 countries gathered to make their own commitments and discuss solutions to climate change.
Please join Microsoft and the Center for Climate and Energy Solutions (C2ES) for a lively discussion on Wednesday, April 27, 8:30-10 a.m., with senior representatives from various sectors to discuss innovative and proactive climate solutions, what Paris means four months later, and how to move from agreement to action on climate change.
Special Assistant to the President and Director of Private Sector Engagement,
The White House
Executive Vice President, Center for Climate and Energy Solutions
Corporate Vice President, U.S. Government Affairs, Microsoft
Tamara “TJ” DiCaprio
Senior Director of Environmental Sustainability, Microsoft
Global Director, Environment and Energy Policy, Intel
Global Environmental Executive, Bank of America
Senior Vice President, Environmental Services and Chief Environmental Counsel
Berkshire Hathaway Energy
President, Center for Climate and Energy Solutions (C2ES)
Additional panelists may be announced.
Follow the discussion on Twitter: #MSFTClimateAction