Climate Compass Blog
Governments, businesses and universities are focusing increasing resources and attention on what is now our nation’s largest generation, millennials.
Generally defined as those born between 1982 and 2000, millennials now represent the largest share of the American workforce. They’re more educated than prior generations. They’re more culturally diverse. And they’re more socially conscious.
How will this millennial generation shape our climate and energy future? Consider just two observations about how millennials want to live and get around -- housing and transportation.
A study found more than 6 in 10 millennials prefer to live in mixed-use communities. They’re more interested in living where amenities and work are geographically close. More than a third of young people are choosing to live as close as 3 miles from city centers.
As for transportation, millennials drive less than other generations. They’re opting for walking, biking, car-sharing or public transit. From 2001 to 2009, vehicle-miles traveled dropped 23 percent for 16- to 34-year-olds.
These preferences point to a future that is low-carbon and more sustainable. Dense urban living and mixed modal transportation options can result in reduced greenhouse gas emissions. A 2014 report from the New Climate Economy notes that “more compact, more connected city forms allow significantly greater energy efficiency and lower emissions per unit of economic activity.”
Millennial demands are influencing other sustainability topics, too. A Rock the Vote poll earlier this year found 80 percent of millennials want the United States to transition to mostly clean or renewable energy by 2030. An earlier poll from the Clinton Global Initiative found millennials care more than their parents’ generation about the environment and would spend extra on products from companies that focus on sustainability.
These facts indicate that this generation of 75.4 million people (in just the United States) wants to live differently than previous generations. Energy policies and technology habits will need to change to keep pace.
Government is paying attention, with President Barack Obama calling on millennials to tackle the challenge of climate change. Businesses, like energy providers, are working to deliver service in a seamless and more socially connected way. And universities are offering more sustainability-focused programs than ever before. The Association for the Advancement of Sustainability in Higher Education (AASHE)’s program list is growing, and university presidents are being asked by students to join the Climate Commitment to reduce emissions and improve resilience to climate impacts.
While millennials wield huge influence, the real power of change will come from all generations working together to develop innovative solutions and implement pragmatic policies to shape a low-carbon future and environmentally stable and economically prosperous planet for all who will inherit it.
|Image courtesy Freestock.ca|
When the leaders of the United States, Canada and Mexico meet June 29 in what’s being called the “Three Amigos” summit, there will be a lot to discuss: trade, the economy, security, and repercussions from the “Brexit” vote. One topic we know will be on the agenda is climate change, whose impacts threaten residents of all three countries.
Each country submitted a pledge to reduce emissions as part of the Paris Agreement. At the North American Leaders’ Summit in Ottawa, they’ll also announce a new goal for North America, collectively, to generate half of the continent’s electricity from non-emitting sources by 2025 – a goal that’s achievable with a little more effort.
Each country has national and city/state/provincial level policies to reduce greenhouse gas emissions. But more will need to be done beyond business and policy as usual to substantially take advantage of our three countries’ clean energy potential. Closer coordination on climate and energy policy is a good place to start.
Among the policy areas where collaboration would be helpful are:
- Carbon pricing
- Addressing short-lived climate pollutants (including methane)
- Auto and truck emissions standards and technologies
- Carbon capture, use, and storage (CCUS) technology
Setting a price on carbon emissions, either through a tax or cap-and-trade system, is considered the most efficient way to reduce them. Many national or subnational pricing systems are already in place in North America:
- Quebec and California have linked their cap-and-trade programs and Ontario plans to join. Mexico has interconnected electricity with California and the state imposes a charge on imported electricity that does not meet its greenhouse gas thresholds. Mexico has interconnected electricity with California, and the state has requirements on imported electricity as part of its climate program.
- Nine U.S. states in the Northeast participate in a cap-and-trade program for electricity called the Regional Greenhouse Gas Initiative, or RGGI.
- Mexico has a carbon tax on fossil fuel (including imports) and has a law that created a market for greenhouse gas offsets.
All three nations should work to expand carbon pricing either at the national or subnational level. Because bigger markets are more efficient, they should seek to standardize measurement, reporting and verification systems (MRV) and methodologies for offset programs.
By either directly linking programs, as California and Quebec have, or by indirectly linking through the use of offsets, Canada, Mexico, and the United States should aspire to send a pricing signal as broadly as possible. By sharing technical expertise and making efforts to align MRV, we can create more efficient and effective programs.
Short-lived climate pollution
Meeting the goal of keeping the rise of global temperatures to well below 2 degrees Celsius by mid-century will require action on more than just carbon emissions. Near-term actions to reduce climate pollutants that remain in the atmosphere for shorter periods of time such as methane, black carbon, and hydrofluorocarbons (HFCs) could significantly limit peak temperature increases in the coming decades.
Canada and the United States recently announced plans to regulate both existing and new sources of methane and agreed to reduce emissions from the oil and gas sector by 40-45 percent below 2012 levels by 2025. Mexico, which has a significant oil and gas sector, is expected to join in this pledge. Similarly, it makes sense for the three countries to work together to reduce HFCs and black carbon as quickly as possible.
Light-duty vehicle greenhouse gas emissions standards have been harmonized among the three nations since 2014. Both the Canadian and Mexican governments adopted the LDV standards set forth by the U.S. National Highway Traffic Safety Administration (NHTSA). Canada will follow the vehicle standards through 2025, while Mexican standards run through the end of 2016. Mexico is also considering adopting more stringent heavy-duty vehicle emissions standards to match European regulations; Canada and the United States both follow NHTSA’s emissions standards through 2018.
States, provinces, and cities in the three countries can also lead on zero emissions vehicle adoption, such as electric vehicles (EVs). Ontario, Quebec, and British Columbia in Canada all offer financial incentives for the purchase of an EV. Likewise, California, Colorado, Massachusetts, and several other U.S. states offer EV tax credits or rebates. Mexico City has pursued electrification of its taxi fleet, offering up to $3,000 for the purchase an electric taxi.
Along the Pacific, California, Oregon, Washington and British Columbia have cooperated to promote EV purchases and the spread of EV charging infrastructure. Mexican states along the Pacific could join their northern neighbors to encourage EV deployment.
Carbon capture, use and storage (CCUS) technology has the potential to yield dramatic reductions in carbon dioxide emissions from the power and industrial sectors. The International Energy Agency (IEA) estimates that CCUS can achieve 14 percent of the global greenhouse gas emissions reductions needed by 2050 to limit global warming to 2C above preindustrial levels. In fact, without widespread use of CCUS technology, climate change mitigation costs may rise as much as 138 percent. For the industrial sector in particular, there are no practical alternatives to achieve deep emissions reduction.
Recent CCUS project milestones include the retrofit of the Boundary Dam coal-fired power plant in 2014 in Saskatchewan, Canada, and Shell’s incorporation of CCUS technology on hydrogen production at the Quest Project in Alberta, Canada, in 2015. But CCUS technology deployment is not on track to meet interim 2025 targets. Since a CCUS project can take five to 10 years from conception to operation, financial and policy support is critical now.
New and enhanced policy drivers at the national and subnational levels are needed in the U.S., Canada and in Mexico to drive research into ways to turn carbon dioxide from a waste product to a useful commodity and accelerate deployment of CCUS technology at the commercial scale.
Canada, Mexico and the United States have connected economies with significant trade in energy and other products. All three countries are major oil and gas producers, but also have portfolios of clean energy such as nuclear, hydropower and renewables. It only makes sense that we should be connected in our efforts to address climate change.
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.
Cities often lead the way on greenhouse gas reductions, even though they rarely control the operation of the power plants that supply their energy. So how can city initiatives work together with the federal Clean Power Plan to reduce carbon emissions from power plants?
One option is the Clean Energy Incentive Program (CEIP). The U.S. Environmental Protection Agency (EPA) included this early-action program as part of the Clean Power Plan and recently released program design details.
The program is voluntary. If a state chooses to participate, then certain renewable and energy efficiency projects can receive early action credits, including a federal match from EPA. These credits can be used for complying with the Clean Power Plan, so they provide additional financial incentives for clean energy projects.
While we can’t know the full value of the CEIP without knowing how many states participate and how power plants in those states comply with the Clean Power Plan, C2ES estimates the CEIP could drive up to $7.4 billion of private spending on clean energy projects across the country.
A key aspect of the CEIP is its support of project development in low-income communities. Solar and energy efficiency projects in these communities receive double credit, and a special reserve pool is created to make sure these projects can compete with large renewables for credits. This type of project development can support four key goals of city leaders:
1. Taking action to fight climate change;
2. Reducing energy bills for low-income residents;
3. Bringing jobs and investment to the community; and
4. Delivering co-benefits of renewable energy like cleaner air and water.
City leaders have the know-how to channel CEIP credits to their communities, but they will need to partner with their states and businesses to succeed.
Once states choose to participate, city leaders can help articulate the benefits of the CEIP. Cities can also provide data and support to project developers to streamline CEIP projects, especially low-income community projects that often face more hurdles. For example, they could help businesses locate communities that would host projects, work with utilities to identify potential projects, and build public-private partnerships to finance renewable energy.
How does it work?
Step 1: EPA creates a matching pool for each state. The amount of CEIP match available is limited, and EPA will divide the total pool among the states before the program gets started. If a state does not use its full share of the match, those credits will be retired. In other words, the CEIP is use it or lose it. Half of each state’s pool is reserved for low-income community projects and the other half for renewable projects like wind, solar, geothermal, or hydroelectricity.
Step 2: Interested states include the CEIP as part of their implementation approach. States must submit a plan to EPA that details how they will implement the Clean Power Plan. States that opt-in to the CEIP would have to declare that as part of their plan, and then they could receive the EPA match. If states opt out, then clean energy projects within their borders would not be eligible.
Step 3: New clean energy projects are developed in participating states. CEIP credits go only to new projects – renewable projects that start generating electricity on or after Jan. 1, 2020 or low-income energy-efficiency projects that start delivering energy savings on or after Sept. 6, 2016.
Step 4: New clean energy projects benefit the community. CEIP credits are awarded for electricity generated (renewables) or saved (energy efficiency) in 2020 and 2021. Starting in 2022, these projects are eligible for other financing opportunities under the Clean Power Plan.
Step 5: CEIP projects receive tradeable credits. States will verify how much clean energy a project is producing, then distribute the appropriate amount of CEIP credits (half from the state’s pool and half from EPA) to eligible projects. The project developers that receive the credits can sell them to power plants that need them to comply with the Clean Power Plan. CEIP projects don’t need the credits themselves because only fossil fuel-fired power plants are covered by the regulation. The value of CEIP credits will be determined by how power plants reduce their emissions.
The dates in the CEIP design details may change, depending upon the outcome of the legal challenge against the Clean Power Plan.
The CEIP will be open for public comment this summer. Once finalized, it will help promote new clean energy development in communities across the country. Its focus on low-income communities aligns it with other city priorities in addition to fighting climate change. The short timeframe of the program will make public-private collaboration a key to success in attracting CEIP projects.
C2ES, through our Alliance for a Sustainable Future with The U.S. Conference of Mayors, can be a valuable resource on climate policies like the CEIP. By communicating technical information in a meaningful way and facilitating the conversations between cities and businesses, we can advance clean and efficient energy.
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.