Managing Climate Change with Adaptation and Mitigation

Transcription

1 Managing Climate Change with Adaptation and Mitigation! Adaptation (prevent harm; deal with symptoms):! Alter human structures and practices in order to! reduce the harmful effects of climate change, e.g.: - improved health care policies for heat-stress - switch to heat-resistant crops - build dikes to deal with sea-level rise! Mitigation (prevent climate change; deal with cause): Reduce emissions of GHGs in order to reduce the amount of climate change that takes place, e.g.: - energy conservation - carbon-free energy (wind, solar, nuclear) - carbon sequestration

2 For$example:$ $ Mi#ga#on(is$trying$to$reduce$ emissions$(e.g.,$so$ temperature$changes$are$$ this(rather$than$this)$ $ Adapta#on(is$ac:on$to$avoid$ harm$for$a$given$warming$ Remember:$the$warming$itself$is$o@en$not$a$problem.$It$is$the$impacts(that$maBer.$ For$example,$sea$level$rise,$droughts,$floods,$food$produc:on,$species$loss,$etc.$

3 Mitigation: Overview of Approaches! "Stabilization Wedges""! focus on technology! divide and conquer"! no specific policy recommendations"! "Cap and Trade "! sets the maximum emission (the cap)"! let the market figure out optimal technology path"! Carbon Tax "! puts a price on emitting, rather than a cap on quantity"! revenues can be spent on technology R&D"! or returned to people as a dividend

4 Adaptation Inequities! Harm from global warming is not the same for everyone! Inequities result from! regional variability of climate responses,! sensitivity of local infrastructure to climate change and! wealth and technological readiness of the region, which affects their capability to adapt

5 Why Should We Regulate? Pollution and Tragedy of the Commons When individuals acting in their own self-interest harm a shared resource, and consequently everyone, including themselves, are harmed. Pollution is a classic example where climate is the common good. Damage to the commons is a negative externality. Optimizing behavior of individuals can produce an outcome that is bad for everybody Quote from the Cartoon Introduction to Economics by Grady Klein and Yoram Bauman (UW)

6 Tragedy of the Commons! A community shares a meadow where they graze their animals.! For an individual it is beneficial to put more animals on the commons.! If too many do this then the commons is overgrazed and everybody loses, including the individual, unless they sell out and move on.! Some sort of government of the commons is required for the benefit of all. (a cow quota, in this case) Garrett Hardin 1968 Science)

7 Tragedy of the Commons! Cartoon Guide also suggests steroid use in sports is in the same category. Why do you think so?! Consumer choice tends to not work so well when a valuable-but-limited resource is not priced.! Most economists agree that some regulation is necessary in these situations! How to regulate?! Economists prefer mechanisms that use market forces to enact changes (cap and trade or carbon tax rather than straight-out prohibition)! Think alcohol and THC (cannabis)

8 From the Cartoon Introduction to Economics by Grady Klein and Yoram Bauman (UW)

9 Cap and Trade! Cap and Trade! A cap (or limit) is set on the amount of a pollutant! Polluters are given or auctioned permits that allows a certain number of pollution allowances! The total allowances cannot exceed the cap! Polluters may trade allowances! Buyers pay to pollute, and sellers get a reward for reducing emissions more than they were required to! Monitoring, assessment and accountability are key to program success

10 Carbon Tax! Carbon Tax! Emitting carbon (or equivalent greenhouse gas) incurs a price charged as a tax! Could use global warming potential to tax or credit all greenhouse gases according to the climate benefit of reducing them (or climate damage of increasing them) Global Warming Potential useful here.! Monitoring, assessment and accountability are key to program success (again)

11 Is there really a difference between cap & trade and carbon tax?! Some have argued that cap and trade doesn t generate revenue while taxing doesn t cap "! But permits in a cap and trade can be auctioned"! And levying a tax will raise prices, which limits demand"

12 Cap and Trade! Cap & Trade (with Auctioning)! Description: The government sets a firm cap on total annual CO 2 emissions, and instead of handing out carbon credits for free it holds regularly scheduled auctions where major emitters, such as utilities or refineries, can purchase credits for their emissions. Emitters with low-cost reduction options have an incentive to reduce their emissions and sell any excess credits they may have purchased. On the other hand, emitters with higher-cost emissions reduction choices will buy additional credits rather than reducing their emissions.

13 Cap and Trade! Pros:! Real reductions: The cap, which will shrink over time, guarantees that specific emissions reductions targets will be met.! Brings in revenues: Auctioned cap and trade brings in revenues that can be used to ease the burden on those with lower incomes (thereby reducing or eliminating the program s regressivity), reduce the program s compliance costs, or finance more rapid emissions reductions.! Promotes best buys first: Auctioned cap and trade activates the power of the market to seek out the cheapest and most efficient reductions first: In this system, when reducing emissions is cheaper than the cost of the permits, emitters will choose to make reductions in their emissions.! It tips the playing field away from big historic polluters and toward leaner and cleaner companies.

14 Cap and Trade! Cons:! Price volatility: Some market-based emissions trading systems have experienced large price swings, though there are ways to reduce volatility.! Complexity and delay: Complex new rules could foster delay, political wrangling among special interests, and difficulties with enforcement.! Geographic scope The program s market efficiencies are probably better realized at a regional or national level, such as the Western Climate Initiative.

15 Carbon Tax! Carbon Tax! Description: Government levies a fee on greenhouse gas emissions, based on the amount of CO 2, or equivalent, is emitted. The fee can be phased in, ratcheted up to improve effectiveness, or reduced as needed.

16 Carbon Tax! Pros! Predictable costs: Relatively stable price signal can help businesses and consumers plan energy spending and provide greater certainty for those efficiency investments that have large upfront costs.! Fast implementation: Rules are fairly straightforward, and can be implemented using existing tax collection and enforcement infrastructure.! Full coverage: An upstream tax one that s levied where fuels enter the economy at the mine, wellhead, tanker or pipeline could cover 90 percent of CO 2 emissions from fossil fuels.! Revenue source: As with cap and auction, the program revenue (the tax receipts) could be used to ease burdens on the poor and middle class, offset unpopular taxes, reduce compliance costs, finance rapid reductions, or aid industry.

17 Carbon Tax! Cons! No guarantees: Emissions may not fall if people are willing to pay higher costs, as has been the case with gasoline and diesel. Note, however, that even a modest tax on CO 2 is likely to discourage coal-fired power.! The T Word : Taxes are thought to be toxic to voters, and it could be difficult to maintain taxes or to ratchet them upward if further emissions reductions are needed.

18 Differences in Practice! Cap and trade involves complex new rules, political wrangling among special interests, and difficulties with enforcement. (from the Climate Pricing Fact Sheet by Sightline)! The world has no experience with international cap and trade policies." "! In contrast, governments are pretty familiar with taxing. " "

19 Differences in Practice -3! Grandfathering means permits are distributed for free based on past emissions, less shock to system, but past polluters benefit."! Some argue that giving away cap and trade permits based on grandfathering is dangerous because they might be sold for profit without passing along revenue to consumer." "! Imagine that carbon permits are World Series tickets. If the government gives all World Series tickets to Exxon for free, will Exxon give them to us for nothing, or sell them for what the market will bear? - Peter Barnes

20 James Hansen on his website! "The worst thing about the present inadequate political approach is that it will generate public backlash. Taxes will increase, with no apparent benefit." " " " ""! "For this reason I strongly favor a "tax and dividend" approach. The entire carbon tax should be given back to the public, an equal amount to each person. "! "Although energy prices will rise, you can bet your bottom dollar that lower and middle income people will figure out how to reduce energy use enough that, overall, they come out ahead. And in so doing, moving to more energyefficient products, they will spur economic activity and create jobs."

21 Recent Failed Global Warming Bills! Waxman-Markey (cap & trade): passed the House! Kerry-Lieberman (cap & trade): never voted on in Senate! Ironically, the BP oil blowout may have killed this (bill included expanded offshore drilling)! Cantwell-Collins (cap & dividend): never voted on in Senate

22 Past Cap & Trade Bills Waxman-Markey (House) Cap and trade for utility, industry, and petroleum sectors. Emissions targets: 17% below 2005 by % below 2005 by 2050 $100 billion for investments in: Renewable energy & nuclear power, clean transportation & biofuels, advanced coal, & smart grid. 15% renewable energy by 2030, & greatly improved efficiency (of buildings, appliances, etc) Kerry-Liebermann (Senate) Cap and trade for utilities & industry, with a linked refinery cap Same $70B for similar investments Waxman-Markey passed the House, no bill passed the Senate Support for these programs at the state level

23 US Cap and Trade Legislature on CO2 The Waxman-Markey bill on Energy and Climate Change passed the US house in June 2009 From the NY Times Allowances are mostly free to begin with ( allocated ), & transition to mostly auctioned (proceeds go to consumers).

24 Senate Bill Carbon Limits and Energy for American s Renewal (CLEAR) (the Cantwell (D, WA) - Collins (R, ME) Act introduced Dec 2009) Cap and Dividend system with all shares auctioned by government Dividend returns ¾ of auction revenue to individuals on equal per capita basis ($1100/year per family) The remaining ¼ invested in new clean energy technologies and energy efficiency and to relieve financial stress of regulation to communities and businesses Congressional Budget Office estimates 80% of the population would end up either breaking even or making money under capand-dividend. The bill is just 40 pages (compare with page energy bills)

25 Legislation Status! Legislation to put a cost on carbon through cap and trade or tax has gone nowhere in the US Congress, although many interesting bills have been drafted and voted on.! The most likely source of action in the US near term seems likely to be the EPA through its regulatory power, but members of the US Congress are introducing bills and riders to try to stop EPA from doing anything also.

26 Obama Fuel Economy Standards: 54.5 MPG by 2025! 54.5 mpg fuel economy for cars and light-duty trucks by model year (set August 2012)! Previous standard is 35.5 mpg by 2016! Done in consort with automobile manufacturers and UAW.! Justified mostly on energy independence argument! Save consumers $1.7 trillion at the gas pump, roughly equivalent to reducing cost of gas by $1 per gallon.

27 Nissan Leaf! Has a range of miles! Charges in 21 hours on 110V, faster with special equipment.! Costs about $28K! It s a fully electric vehicle, but can still be given a mileage rating. 100 MPGe (33.7kWh = 1 gallon)

28 Chevy Volt! Plug-in electric with gas!!!!!! engine backup. EV range about 35 miles Mileage on gas mpg Blended mileage 99mpg? Costs $32K Payback period for reduced gas consumption is Long $5 gallon gas price, run EV, get back extra cost in 8 years.

29 Tesla S Model! Upscale all electric model! $49K to $100K! low end model has 40kWh battery with a range of 160 miles! top end model has 85 kwh battery with 300 mile range, and 0-60 in 4.4 sec.! Charge your Tesla off your solar array.

30 EPA Regulation of Greenhouse Gases! In Dec 2010, EPA announced timeline for regulating greenhouse gas emissions from power plants/ refineries! July 2011: Proposed new standards for new/refurbished power plants were be announced not about CO2 " Nothing much yet done on CO2! December 2011: Proposed new standards for oil refineries " May 2012 put on back burner by Obama Administration election part of refinery slowdown controversy! How strong will the standards be? How much will this cut our emissions?! Nothing is happening on CO2 for oil refineries or power plants at the present time. Stay tuned?...

31 Good News! But a little progress, nonetheless! Accelerating installations of solarand wind-power plants has led to lower equipment prices, making clean energy more competitive with coal.! Renewable energy in 2011 received $257 Billion in global investments up 17% from 2010.! Total solar investments grew 52% to $147 Billion in 2011! 65% Developed, 35% Developing! China $52B, US $51B, India $12B Plot above shows installed cost of electricity from Photo- Voltaics versus cumulative generation from PV. Extrapolation suggests solar will be cheaper than coal when production reaches 1 TeraWatt, a soon as (note gas is now cheaper than coal in US.)

32 Why Consider Cap & Trade?! Cap and trade provided the solution to the acid rain problem in the US! SO2 from coal burning -> H2SO4 = Sulfuric Acid Rain! In general there is broad bipartisan support for these type of market-based solutions! Therefore one hopes it could work again for greenhouse gas reductions.

33 U.S. Cap and Trade for Sulfur Dioxide! The George H. W. Bush (Bush I) White House sent Congress a plan for cap & trade on SO 2 (which causes acid rain)! Received broad bipartisan support (89-11 in Senate, in House)! Became an amendment to the Clean Air Act in 1990! Clean Air Act originally dates to 1963, major amendments in 1970 and 1990! Today considered one of the most successful pieces of environmental legislation: 50% reduction in SO 2 by 2000 as a direct result!! Permits allocated for free!

34 Success of the SO 2 Cap and Trade SO2 was reduced 20% below required levels Costs were significantly lower than estimates The Economist: probably the greatest green success story of the decade

35 Regional Greenhouse Gas Initiative (RGGI)! RGGI: Cap & trade program already happening in the US! Goal: reduce emissions by 10% by 2018! States sell carbon allowances during quarterly auctions (Next #18 Dec. 5, 2012)! Proceeds invested in energy efficiency projects and renewable energy! 9 States Governor Christie took NJ out. X X

36 Regional Greenhouse Gas Initiative (RGGI)! Permit auctions have generated $789 million in less than two years of operation! 52% of proceeds has gone to energy efficiency, 11% to renewable energy, 14% to energy bill payment assistance! Reinvestment into efficiency/alternatives has led to job creation! Consumers/businesses who have participated in RGGI efficiency programs have seen 15-30% reductions in energy costs ($3-4 saved per dollar invested) X X Data from RGGI Report, Feb 2011

37 Western Climate Initiative! A similar program (involving WA, OR, & 9 other member states/canadian provinces) will start in Jan 2012! Also a cap & trade w/ goals to reduce emissions by 15% by 2020! Incorporated last year

38 Mayors Climate Protection Agreement Over 1000 mayors have signed Started in Seattle Commitment to Strive to meet or beat the Kyoto Protocol targets in their own communities, through actions ranging from anti-sprawl land-use policies to urban forest restoration projects to public information campaigns;

39 California Cap and Trade! California has a history of leading the way on environmental reforms! Air pollution standards, efficiency of appliances/vehicles, etc! Passed in 2006, first Auction November 2012! Ballot initiative in 2010 tried to repeal, handily defeated (61-39%)! Some allocations to industry, and auctions to utilities/ transport! Efficiency programs, support for renewables, agriculture, transportation, industry, forests, waste/recycling are all included! November 2012 Auction sold out at $10.09 per ton of Carbon.

40 Summary so far! Cap and Trade limits emissions and establishes a market for trading emission rights.! Carbon Taxes would place a tax on CO2e emissions.! Both could work, both could be efficient, Cap and Trade seems to be more in the American Style.! Cap and Trade has worked before, for emissions of SO2 from coal plants! Cap and Trade seems dead nationally, but is going ahead regionally. State and local governments are ahead of the federal government on CO2 actions, except for subsidies for energy diversity all forms get subsidies, even renewables.