Climate Compass Blog

Transportation emissions roll over power sector emissions

There’s a new challenge in the drive to reduce carbon emissions. Efforts in the power sector are apparently succeeding, but now transportation emissions are rising.

In fact, for the first time since 1979, U.S. cars, buses, trucks and airplanes emitted more carbon dioxide than U.S. power plants.

Based on the latest available rolling 12-month average, the electricity sector emitted 1,868 million metric tons (MMt) of carbon dioxide while the transportation sector emitted 1,876 MMt.

What happened

For the past 10 years, electricity emissions have been declining due to a number of factors, including growth in renewable energy, level electricity demand, and a shift from coal to natural gas. Since 2005, 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.

Transportation emissions had been largely flat since the early 2000s, likely due to increasing vehicle efficiency and a combination of social trends (e.g. growing cities, ageing population, increasing telework). But emissions have begun to creep up in the past couple of years.

Some of this uptick can be attributed to much lower oil prices over the past 12 months. But even before oil prices dropped, the total number of vehicle miles traveled was increasing. So, even though our vehicles are getting more fuel efficient over time thanks to corporate average fuel economy (CAFE) standards, the increase in vehicle use is moving emissions in the wrong direction.

The projections

Over the long-term, the Energy Information Administration (EIA) projects that transportation emissions will decline as stricter vehicle emission standards come into force for cars and for trucks. As a result of these policies, we expect the adoption rate of vehicles with improved fuel economies, including zero-emission vehicles, will begin to accelerate in the next decade.

At the same time, EIA sees electricity sector emissions continuing to fall, especially as states begin to comply with targets set out in the Environmental Protection Agency’s Clean Power Plan and as the industry responds to other zero-emission incentives like the recently extended renewable tax credits.

Over the next 25 years, the rate of emission decline in the power sector is expected to be greater than in the transportation sector, so it looks like transportation will remain the largest emitting sector for the foreseeable future.

The good news is that carbon dioxide emissions will be declining in the two largest emitting sectors, due in part to strong policies to encourage a low-carbon future.

However, it’s also clear that additional policies and actions will be required for all economic sectors to see larger emissions reductions, which scientists say are necessary by mid-century in order to avoid the worst effects of climate change.

Working together for more efficient buildings

Cities and states on the West Coast are teaming up to tackle one of the biggest sources of urban emissions: energy use in buildings.

Three governors, six mayors, and the environment minister of British Columbia adopted the Pacific North America Climate Leadership Agreement this month at the Clean Energy Ministerial in San Francisco. The leaders of British Columbia, California, Los Angeles, Oakland, Oregon, Portland, San Francisco, Seattle, Vancouver, and Washington state agreed to work together to address the energy use and greenhouse gas emissions from buildings.

Energy use in buildings is one of the largest sources of emissions in most cities. Buildings account for 52 percent of emissions in San Francisco, and 33 percent in Seattle. Even in smaller cities, the building sector remains a significant source of emissions. If cities can cut energy use in buildings, it can help them deliver on their ambitious climate mitigation commitments.

Since cities are already filled with buildings, improvements must be made to those that are already in use, rather than waiting for newer, more efficient buildings to be constructed.

A place to start is with benchmarking and disclosure policies, which are in place in 15 cities. Cities require building managers to record and report their energy use with the help of EPA tools. The resulting database can help identify opportunities for reducing energy use. And city officials can use the information to guide policy and create long-term strategies to reduce energy use and emissions.

To ensure that buildings achieve reductions in energy use, cities are complementing benchmarking and disclosure policies with additional actions, including: retro-commissioning, a process that assesses buildings to uncover low-cost operational improvements; supporting buildings through retrofit processes; and ensuring that buildings undergoing major renovations are brought up to current code. 

Examples of these policies can be found throughout the West Coast and the U.S. at large. Seattle recently required commercial buildings 50,000 square feet or larger to undertake retro-commissioning processes every five years. Los Angeles is supporting property owners and managers to execute building performance upgrades to achieve 20 percent reductions in energy usage. And Washington, D.C., like many cities, requires major upgrades to existing buildings to meet current, more energy-efficient building codes.

With a comprehensive suite of policies aimed at commercial building efficiency, cities can take action to address one of their largest sources of emissions. We are heartened to see that the Western states and cities have committed to work together on this challenge, and look forward to seeing the local progress that might be accelerated with supportive state policies. By working together, cities and states can help shape policy, investment, and behavior change strategies that can become models for broader action.

International transparency provides domestic benefits

A central feature of the Paris Agreement is a stronger transparency system requiring countries to regularly report on their emissions and their national climate efforts.  

At the international level, this provides a critical means of accountability by letting countries see whether others are sticking to their commitments.

But one of the key messages that emerged at last month’s U.N. climate negotiations in Bonn, Germany — including at a side event organized by C2ES — is that greater transparency has important benefits back at home, too.

The May climate meeting, the first since negotiators adopted the Paris Agreement, featured a first-ever facilitative sharing of views (FSV) for developing countries. Thirteen developing country parties gave presentations on their first biennial reports on their efforts to reduce emissions, required under the 2010 Cancún Agreements, and responded to questions from other parties.

These countries, were applauded for their efforts and their achievements. Most of them focused on the challenges they faced in fulfilling their reporting obligations, the lessons learned in addressing or overcoming these obstacles, and what they might need to do more.

Many of these lessons were echoed in a C2ES side event, “Learning from UNFCCC Transparency Experience: Perspectives of Parties and Expert Reviewers.” The event featured negotiators and technical experts from Canada, the European Commission, New Zealand, South Africa and Brazil, with the latter two countries just having completed the FSV.

Both developed and developing countries said compiling their reports benefited them domestically by stimulating regular conversations among various levels of government and with nongovernment stakeholders. The process also helped institutionalize measurement, reporting and verification (MRV), and identified opportunities to strengthen domestic climate policies.

In two other side events hosted by the UNFCCC secretariat, Uruguay, Vietnam, Ghana and Peru reflected on their experiences under the existing transparency framework. Regular reporting and review is a significant undertaking, and they learned how much time and coordination is required. Even so, their initial experiences proved to be interactive and facilitative. Countries were provided assistance in their own language, and could communicate easily with experts and staff through technology like Skype.

The co-chairs of a new working group that will develop detailed decisions implementing the Paris Agreement also took up these themes, asking parties to share their experiences and lessons learned from the existing MRV arrangements. These lessons will also inform the next session of FSV, which will take place in Marrakech, Morocco, during COP 22.

Parties hope these lessons will inform the new rulebook that must be developed for the “enhanced transparency framework” called for in the Paris Agreement. One of the key takeaways is that by learning as they go, countries significantly improve the quality of their reporting, and their own policymaking becomes more effective as a result.

 

 

California-Quebec auction hits a record low (and that's probably a good thing)

What if you held a sale and customers bought hardly any of your product? You might conclude that your product wasn’t very popular. If your product happened to be carbon allowances, essentially permission slips to emit carbon pollution, that lack of popularity sounds like a good thing for the climate.

This is essentially what happened last week when California and Quebec, who have joined their carbon markets, announced the results of their most recent auction of allowances. Companies who must buy allowances decided they didn’t need the full amount being offered, presumably because their emissions are declining.

California and Québec began their carbon markets in 2013, and the partners have held joint auctions of allowances every three months since November 2014. Each jurisdiction sets a limit on nearly all fossil fuel combustion at an amount that declines each year (the cap). Businesses responsible for that fossil fuel combustion have to buy allowances at auction to cover their emissions.

Historically, businesses have bought more than 90 percent of the allowances offered. But at the most recent auction, only about 10 percent of the allowances were sold.

This is great news. It means that carbon emissions are going down, and at a faster rate than the policy requires. If emissions were going up, prices at auction would be high. If emissions were going down at the same rate as the cap, then prices might be low but the auction would still sell out.

Market forces, like declining costs of renewable power, are part of the reason why emissions are declining. Businesses can use cost-effective alternatives to fossil fuels in their operations.

Also factoring into the results are the numerous other policies California and Québec have in place to drive down emissions, including ones aimed at increasing energy efficiency. That means businesses use less energy overall.

Is there any reason this might be considered bad news? Well, if you were counting on the money from the sale, it’s a problem.

California has anticipated generating billions in revenue through 2020 from the allowance auctions. But with few allowances sold, that state revenue source drops dramatically. California’s auction revenue is directed to various clean energy programs across the state, which means those programs could be in jeopardy if auction sales remain low.

So, is this an example of cap-and-trade working or not working? I would argue this is how cap-and-trade is supposed to work. The government sets a cap based upon its climate goals, the cap creates a price in the market, and companies incorporate the carbon price into their business decisions. If emissions are low (more accurately, if they are lower than the cap), then businesses don’t buy carbon allowances, pure and simple. Both California and Québec agreed upon rules for handling unsold allowances before their programs started, so businesses know what to expect.

A larger and more difficult question is whether this is an example of carbon pricing working. In both jurisdictions, the cap-and-trade program is only one of many policies aimed at reducing emissions. It’s unclear at the moment to what extent the carbon price is driving down emissions (and allowance demand) versus other policies. A sophisticated statistical analysis is required to answer that question, and as the cap-and-trade program continues there will be observations to enable just such an analysis. 

There is often a heated debate around implementing new policies, and it is not unusual to hear predictions that regulating carbon emissions will cause economic doom. But time and again, experience has shown that businesses adapt quickly to new conditions and keep doing what they’re good at – giving us the products and services we want to buy. That they’re doing this while keeping their carbon emissions below a set level is something to celebrate.

Moving forward with the Paris Agreement

The Bonn Conference Center, site of May 2016 UNFCCC discussions.

Climate change negotiators gathering for the first time since hammering out the Paris Agreement faced an unexpected quandary – preparing for the agreement to formally take effect so quickly.

The agreement is intended to guide climate efforts starting in 2020, and originally it was expected it would take a few years for governments to complete their ratification processes and formally bring the treaty “into force.”

But when it was ceremonially “opened for signature” last month in New York, an astounding 175 countries signed. And with the United States and China declaring they will go the next step and formally join the agreement later this year, it’s looking very likely the threshold for entry into force will be cleared next year if not sooner (55 countries representing at least 55 percent of global emissions must formally consent).

This is great news. It shows that the tremendous political momentum that produced the agreement in December is still going strong – even if it is complicating life a bit for the teams of negotiators who now must flesh out the broad Paris architecture with a set of more detailed implementing decisions.

The unanticipated issue is how to ensure that countries that aren’t able to formally join as quickly can still have a hand in shaping the implementing decisions once the agreement enters into force. The lawyers have identified potential fixes and the issue should be ironed out at COP 22 this November in Marrakech, Morocco.

Beyond that, the negotiators are just beginning to grapple with a host of technically and politically challenging design issues – for instance, the specifics of the transparency system that will keep countries accountable, and of the every-five-years cycles for assessing collective progress and updating countries’ national contributions.

The two-week meeting just wrapping up Bonn, Germany, where the United Nations climate secretariat is headquartered, was largely about getting the post-Paris process organized.

Following the frenzied rounds of talks leading up to and culminating in Paris, there were signs of negotiating fatigue. But the “Paris spirit” by and large prevailed, with parties working through their differences about the process going forward. 

The more substantive discussions during the second week foreshadowed some of the challenges ahead in fleshing out the Paris framework. One of the trickiest will be sorting out exactly how to apply Paris’ more nuanced approach to differentiating responsibilities among countries, which replaces the Kyoto Protocol’s stark divide between developed and developing countries.

However quickly the Paris Agreement formally enters into force, it will likely take until 2018 to complete the implementing decisions. Continued high-level political attention can help ensure that the negotiations stay on track – and, perhaps more importantly, that countries push forward with the domestic policies needed to deliver on their commitments.