Weathervane: A Climate Policy Blog from Resources for the Future

Mar11

Picking Policies to Promote Green Power

A variety of market-based policies have been adopted around the globe to reduce greenhouse gas emissions for the power sector and promote clean fuel technologies. To what extent is there a case for preferring one policy instrument over another, and are combinations of policies more efficient than one policy alone?

In a new Weekly Policy Commentary, RFF Senior Fellow Carolyn Fischer says while there is a clear policy winner when it comes to efficiently cutting emissions—a price on carbon—the best course of action to stimulate clean technology while reducing power-sector emissions may involve using a little bit of everything:

The optimal policy combines an emissions price with policies to capture spillovers in the market for knowledge—namely, a proportional R&D subsidy and a small subsidy for renewable production associated with learning-by-doing. These corrective policies provide positive benefits and allow the emissions price to fall by one-third to meet the same target. Together, they can achieve emissions reductions at significantly lower cost than any single policy alone.

Read Fischer’s Reducing Emissions While Promoting Green Power: A Look at the Options here.

Published: Mar-11-10 | 0 Comments

Feb03

Cutting Fossil Fuel Subsides to Cut Emissions

Oil, Subsidies, Renewables

President Obama’s FY 2011 budget proposal puts the kibosh on some $39 billion in tax breaks for oil and coal companies over the next 10 years. The president seems to be taking a step in the direction of making good on last year’s G20 agreement to phase out subsidies for fossil fuels.

The connection between a fossil fuel phase-out and global emissions reductions is undeniable, according to RFF Senior Fellow Ray Kopp. He explains in that in order to meet worldwide emissions reductions, fossil fuel consumption will have to be curtailed. One way to encourage using less, reducing subsidies on fossil fuel costs, he says:

Fossil energy subsidies hamper all government efforts to increase energy conservation, provide a viable market for renewable energy sources, and accelerate the transition to a low carbon economy. The OECD estimates that removal of the $300 billion of consumer subsidies would reduce carbon dioxide emissions by 13 percent in 2050.

Of course, removal of the subsidies is easier said than done. Consumer energy subsidies are very popular among the groups receiving them and therefore politically difficult to dismantle. Moreover, they are seen as government support for poor households. It is arguable whether a significant portion of these subsidies (for example gasoline) target very low-income households; but, in some countries the only link households have to the monetary based market world is through the purchase of fossil fuels. In these cases the fossil markets provide governments with a mechanism for income support—perhaps the only mechanism.

A U.S. proposal to end fossil fuel subsidies to oil, diesel and gas “in the medium term” was accepted by world leaders at a G-20 summit in Pittsburgh in September. While no deadline was set, the action by the G-20 to end subsidies is clearly a step in the right direction, but the political hurdles and issue of poor household income support must be addressed and overcome.

Read Kopp’s entire post, “Fossil Subsidies: Yet Another Call for Getting Prices Right” here. Raymond J. Kopp is a senior fellow and director of Resources for the Future’s Climate Policy Program.

Published: Feb-03-10 | 0 Comments

Feb02

2011 Energy Funding Forecast: Sunny, Breezy with a Chance of Nuclear

Obama Administration, Congress, Subsidies, Oil, Renewables

Given the scope of problems associated with climate change—economic, environmental, foreign and domestic concerns, to name a few—it seems virtually every federal department plays some part in President Barack Obama’s policy response. Here’s a look at where climate and energy issues have cropped up in the president’s FY 2011 budget proposal.

Environmental Protection Agency

Even in the absence of accounting for a federal cap and trade program—a move some see as an acknowledgement of cap and trade’s demise—the budget throws some $44 million toward the EPA’s efforts to regulate greenhouse gases under the Clean Air Act. Moreover, it seeks to help states do the same.

The Office of Management and Budget sums up the EPA’s climate change mitigation requests:

$21 million—an increase of $4 million from 2010—to implement the Mandatory Greenhouse Gas Reporting Rule and ensure the availability of high-quality emissions data.

$56 million—including $43 million in new funding—for the EPA and states to address climate change effectively through regulatory initiatives to control greenhouse gas emissions

$25 million to aid states in permitting activities for greenhouse gas (GHG) emissions under the New Source Review and Title V operating permits programs

$7 million to develop New Source Performance Standards (NSPS) to control GHG emissions from major stationary sources

$6 million in new funding to implement the 2010 light duty vehicle rule and to develop regulations for large mobile sources

$5 million to develop guidance regarding the best available practices and technologies to control GHG emissions under permitting programs

Department of Energy

The DOE’s budget requests underscore a strong political will to wean the U.S. economy off fossil sources (and make good on G20 commitments) by cutting $36 billion worth of fuel subsidies and shift renewable energy sources with requests for investment in wind and solar energy research.

But, perhaps most notably, the proposal makes a strong statement about U.S. nuclear power, guaranteeing $55 billion in loan funding to build new nuclear power plants and recording a departmental goal to “Commit (conditionally) to loan guarantees for two nuclear power facilities to add new low-carbon emission capacity of at least 3,800 megawatts during 2010.” Reaction to the news has been predictably mixed. (And—I assume since he didn’t address the budget directly—predictably satirical from Stephen Colbert.)

OMB breaks down DOE requests further:

$36 billion in new loan authority – for a total of $54.5 billion – to expand support for DOE loan guarantees for nuclear power facilities.

$500 million in credit subsidy to support $3 billion to $5 billion in loan guarantees for innovative energy efficiency and renewable energy projects.

$144 million for research, development, and demonstration activities to modernize the grid including smart-grid technologies that will spur the transition to a smarter, more efficient, secure and reliable electric system, resulting in energy- and cost-saving choices for consumers, reduced emissions, and growth of renewable energy sources.

$4.7 billion in clean energy technology investments at DOE, including:

Nearly $2.4 billion, an increase of $113 million, for energy efficiency and renewable energy programs including $302 million for solar energy, $220 million for biofuels and biomass R&D, $325 million for advanced vehicle technologies, and $231 million for energy efficient building technologies.

$545 million for advanced coal climate change technologies to focus resources to develop carbon capture technologies with broad applications to advanced coal power systems, existing power plants, and industrial sources.

$300 million for the Advanced Research Projects Agency–Energy to accelerate game-changing energy technologies in need of rapid and flexible experimentation or engineering.

$793 million for clean energy activities and civilian nuclear energy programs, including research and development and infrastructure programs. The budget includes a new cross-cutting research program to address technology needs for all aspects of nuclear energy production.

Department of State

In conjunction with U.S. Agency for International Development (USAID) and the Treasury Department, the State Department put forth a budget that will provide developing nations $1.4 billion in FY 2011 to address climate change.

A drop in the bucket toward $100 billion a year by 2020, the proposal would concentrate international efforts on adaptation, energy development, and ecosystem management programs to improve agricultural practices and support carbon sequestration and storage. Combined with last year’s final tally of about $1.0 billion, even meeting the U.S.’ share of the $30 billion by 2012 pledge in the Copenhagen Accord (likely to be about 25 percent) will require a substantial increase in FY 2012 or some creative accounting.

Other notable requests, via OMB:

The Department of Transportation: $530 million as part of the President’s Partnership for Sustainable Communities to help State and local governments invest in sustainable transportation infrastructure that integrates with housing development and other critical investments.

The Department of the Interior: $73 million—a $14 million increase—to build agency capacity to review and permit renewable energy projects on federal lands. DOI has set a goal to permit at least 9,000 megawatts of new solar, wind, and geothermal electricity generation capacity on DOI-managed lands by the end of 2011.

So where does it go from here?

The road from proposed budget to actual budget runs directly through Congress; more specifically it runs through a process outlined in this interactive graphic. (And, while we’re on the subject, NYT has this really cool graphic illustrating funding request sizes. I love alternative ways to illustrate governmental functions. I was a huge fan of School House Rock as a kid.)

The process of hearings and congressional consideration got underway in earnest today with Treasury Secretary Timothy Geithner testifying before the Senate Budget Committee and OMB Director Peter Orszag testifying before the House Budget Committee.

Tiffany Clements is managing editor of Weathervane.

Published: Feb-02-10 | 0 Comments

Dec21

Carbon’s Costly Paradox

CO2, Renewables, Oil

If the domestic and international policy debates of 2009 have taught us anything, it’s that shifting the world’s economies to energy sources that are both abundant and carbon-friendly presents countless challenges. Not the least of which is cost.

According to RFF Senior Fellow Joel Darmstadter, the following image—originally appearing in the Fall 2006 edition of Resources Magazine and updated for a forthcoming report entitled, "Toward a New National Energy Policy: Assessing the Options"—offers a useful illustration of just how costly, under present conditions, a low-carbon economy could be. Joel takes it from here:

See Larger

Imagine a downward-sloping line from the upper-left quadrant to the lower-right quadrant and you’ll appreciate the paradox conveyed by the accompanying figure: liquids that are CO₂-friendly are widely judged to be costly; those that seem competitive with crude oil are CO₂-intensive.

The vertical and horizontal ranges of each bar reflect uncertainty about, respectively, cost and emissions. (Note that, while most discussion of global warming centers on CO₂, the figure covers all greenhouse gases; these sum to about a 1.2 multiple of CO₂ alone.)

Cost and emission data for alternatives to crude oil are estimated to roughly approximate 2008-2009 conditions. The $70-$90 per barrel range of crude oil prices is intended to reflect the situation prevailing towards the end of 2009 rather than the much higher projected level and range of those inflation-adjusted prices by DOE’s Energy Information Administration for the year 2030. Emissions (for both crude oil and its alternatives) are calculated on a lifecycle (“well-to-wheel”) basis—spanning extraction or production at one end to utilization and combustion at the final-demand stage.

Technological advance that could spur a clustering of various fuel options in the “clean-and-cheap” bottom-left area is obviously a desirable, though for now, still elusive goal.

Joel Darmstadter is a senior fellow at Resources for the Future. Since joining RFF in 1966, his research has centered on energy resources and policy.

Published: Dec-21-09 | 0 Comments

Dec15

U.S. Dependence on Foreign Oil to Decline Despite Increased Consumption

Obama Administration, Renewables, Oil

Richard Newell, Administrator of the U.S. Energy Information Administration (EIA), and former Senior Fellow at RFF, released EIA’s Annual Energy Outlook 2010 Monday at the Johns Hopkins University School of Advanced International Studies, Global Energy and Environment Initiative in Washington.

The study projects that U.S. primary energy consumption will grow a moderate 14 percent by 2035, but fossil fuel use will decline from 84 percent to 78 percent. Currently, the United States consumes 19 million barrels per day of fossil and biofuels. EIA anticipates an increase to 22 million barrels per day in 2035 with all additional growth from biofuels like ethanol and not petroleum-based liquids. This bodes well for the domestic renewable energy sector. Reliance on imported foreign liquids is expected to decline from 57 percent of total U.S. consumption today to 45 percent in 2035.

The annual report builds on EIA’s statistical, economic, and analytical knowledge to create independent projections of U.S. energy consumption and production over the next 25 years. The 2010 Outlook evaluates current laws and regulations within the energy sector, technologies that are commercial or expected to become commercial in the next decade, and global supply and demand prices to support their study.

Newell says energy efficiency, alternative fuels, and higher prices, “curb energy consumption growth and shift the energy mix toward renewable fuels.” However, without new government policies which encourage a move toward alternative energy, “fossil fuels would still provide about 78 percent of all energy used in 2035.” Environmentally speaking, the report states that without new emissions reduction policies carbon dioxide from the energy sector will grow at 0.3 percent per year, mostly due to electric power and transportation.

The 2010 Outlook is released at an important moment for international energy policy negotiations. The EIA provides a view of the future where government regulations, markets, and environmental considerations can reduce the overall dependence on oil without a decrease in domestic consumption.

Aysha Ghadiali is a Research Associate at Resources for the Future.

Published: Dec-15-09 | 0 Comments

Dec14

Abundant Natural Gas: Two-Edged Sword for CO2 Emissions

Renewables, Cap and Trade, CO2, Natural Gas

As part of the ongoing debate about how best to cut carbon emissions, the buzz about natural gas is growing. Use of natural gas produces CO2 emissions that are about 45 percent lower per Btu than coal and 30 percent lower than oil, making it the cleanest fossil fuel (at least in terms of CO2 emissions). Given its lower carbon content, many see natural gas as a potential bridge fuel for electricity generation between coal and the future use of renewables and other non- or low-carbon sources.

Natural gas offers another key benefit: abundance. The United States has it in droves and can now access it more cheaply than ever thanks to recent improvements in drilling technology. Over the last two years, these improvements—by many accounts—have dramatically lowered the costs of recovering so-called “shale gas” trapped in formations under large swaths of the country. The Potential Gas Committee, which updates its natural gas resource estimates every two years, reports an unprecedented increase in potential shale gas resources between its 2006 and 2008 assessments.

What effect will this vast new supply of natural gas have on CO2 emissions and energy prices? A new Resources for the Future report highlights how more abundant natural gas supplies result in lower gas prices and greater natural gas use in most sectors of the economy, including electricity generation. And with a carbon pricing policy in place (such as a cap‐and‐trade system or a carbon tax), abundant natural gas acts an attractive bridge fuel to a low‐carbon future, lessening the economic cost of reducing CO2 emissions and offering savings of about $1 billion over the 20-year study period.

A key finding of the study, however, is that a carbon pricing policy is crucial to obtaining the benefits of abundant natural gas as a bridge fuel to a low-carbon future. Without such policy in place, increased natural gas supply can actually contribute to an increase (albeit a modest one) in CO2 emissions. Although greater natural gas resources reduce the price of natural gas and displace the use of coal and oil, they also boost overall energy consumption and reduce the use of carbon-free nuclear power and renewables.

Although the resource estimates look promising, considerable uncertainty remains about just how much shale gas the U.S. can recover, how technology will further improve, and at what cost. These uncertainties have significant policy implications. Accordingly, policymakers would be well served to design policies that are robust across different futures. Pricing policies, such as carbon taxes and cap and trade, provide market participants an incentive to seek out the most cost-effective means for reducing CO2 emissions irrespective of how the future turns out.

Kristin Hayes is a Research Associate at Resources for the Future.

Published: Dec-14-09 | 1 Comment

Oct07

Senator Warns of Energy Sprawl, Calls for Nuclear Power Expansion

Renewables, Kerry-Boxer, Congress, Waxman-Markey, Nuclear

Image courtesy Ellen Davey Sen. Lamar Alexander is calling on Congress to include nuclear power in its energy portfolio, touting it as a reliable source of low-carbon energy that consumes a small fraction of the land used by other energy sources like wind, solar, and biomass.

Speaking at an RFF Policy Leadership Forum Monday, the Tennessee Republican said building 100 new nuclear plants in the next 20 years, electrifying half the U.S. vehicle fleet, and the addition of solar panels to roofs of existing structures is “the best way to reach the necessary carbon goals for climate change with the least damage to our environment and to our economy.”

Alexander’s remarks drew heavily from a recent Nature Conservancy report. The research offered some interesting insight, which should be taken with a caveat, into the variation in land use for different energy sources. It’s a concept the paper’s authors dub “energy sprawl.”

(Chart Source)

Sen. Alexander asked event attendees “to do something that gives many conservationists a stomach ache whenever it is mentioned--and that is to rethink nuclear power, because as the Nature Conservancy’s paper details, nuclear power in several ways produces the largest amounts of carbon-free electricity with the least impact.”

But despite the senator’s strong support—and the support of numerous prominent Republicans—nuclear’s place in any domestic legislation is largely uncertain.

Draft climate legislation in the Senate seems to have given nuclear a greater push than the House’s bill, including provisions that offer funding for research and development and remove barriers to deployment. Green Grok Dr. Bill Chameides says if history is any indicator, nuclear proponents shouldn’t count their reactors before they’ve hatched:

Nuclear energy is one of those hot-button issues. For some Senate fence-sitters support for nuclear energy is critical and thus fleshing out these provisions may help to bring such folks into the fold. But for many environmentalists, support of nuclear power is a deal-killer. At least that was the case in 2005 when subsidies for nuclear were added to the McCain-Lieberman climate bill. The addition brought minimal support from the right, while losing the support of key Democratic senators (including Barbara Boxer). In the end the bill went down to a resounding defeat.

Visit RFF’s event page to watch Sen. Alexander’s address or find a link to a transcript of his remarks.

Tiffany Clements is managing editor of Weathervane.

Published: Oct-07-09 | 0 Comments

Sep17

Hear For Yourself: The Trouble with Energy ‘Sprawl’

Renewables, Congress

In today’s Wall Street Journal, Sen. Lamar Alexander (R-Tenn.) warns that efforts expand the nation’s renewable energy system may be counterproductive from an environmental standpoint since the new infrastructure could consume huge tracts of land, disrupting the natural landscape and leading to a dangerous energy “sprawl”.

Secretary of the Interior Ken Salazar recently announced plans to cover 1,000 square miles of land in Nevada, Arizona, California, Colorado, New Mexico and Utah with solar collectors to generate electricity. He's also talking about generating 20% of our electricity from wind. This would require building about 186,000 50-story wind turbines that would cover an area the size of West Virginia not to mention 19,000 new miles of high-voltage transmission lines.

He goes on to say:

The 1,000 square-mile solar project proposed by Mr. Salazar would generate, on a continuous basis, 35,000 megawatts of electricity. You could get the same output from 30 new nuclear reactors that would fit comfortably onto existing nuclear sites. And this doesn't count the thousands of miles of transmission lines that will be needed to carry the newly generated solar power to population centers.

Renewable energy is not a free lunch. It is an unprecedented assault on the American landscape. Before we find ourselves engulfed in energy sprawl, it's imperative we take a closer look at nuclear power.

Senator Alexander will share more of his thoughts on how the current push for renewable energy could consume greater expanses of land and pose a threat to some of America’s iconic landscapes and habitats at an RFF Policy Leadership Forum, Monday October 5, 2009.

If you’re in the Washington, D.C. area, reserve your space for the event by emailing events@rff.org or calling Lisa Mihalik at 202-328-5177. If you can’t make it, you can still stream the event live that day, starting at 12:45 p.m. at www.rff.org/live.

Details from the invite:

Resources for the Future cordially invites you to a Policy Leadership Forum with the Honorable Lamar Alexander U.S. Senator from Tennessee.

“The Perils of Energy Sprawl”
Monday, October 5, 2009 12:45p.m.-2 p.m.
Resources for the Future, 1616 P Street NW, Washington, DC First Floor Conference Center

Senator Alexander will discuss how the current push for renewable energy could consume greater expanses of land and pose a threat to some of America’s iconic landscapes and habitats, a challenge that is not yet widely understood. Alexander is honorary co-chair of the report Great Outdoors America, released in July, which explored how Americans engage with and value the nation’s land and water resources.

Published: Sep-17-09 | 0 Comments

Sep17

Thursday's Reads

Cap and Trade, COP-15, International, China, Renewables, Morning Reads

AFP: A week of meetings in Washington, Pittsburgh, and New York may be make or break for international climate discussions. United Nations Secretary General Ban Ki-Moon makes a plea for action in this NYT op-ed. Meanwhile, U.S. Climate Envoy Todd Stern says talks will likely trickle into 2010, meaning Copenhagen may not be the end all be all for international negotiations.

Guardian: Beijing sends some mixed messages on climate.

WSJ: Despite some hailing the potential for positive energy policy in its autocracy, Portland State University professor Bruce Gilley says the structure of the Chinese government is a great impediment for movement on a carbon cap.

WaPo: A March 2009 memo from the Treasury Department is stirring up chatter over administration estimates on the costs of cap and trade.

Reuters: A group of more than 180 investors called for a strong global climate agreement, saying such a plan would lead to a flood of growth in a low-carbon economy.

WSJ: Sen. Lamar Alexander warns of the perils of renewable energy sprawl.

Politico: Signs the climate bill may be on its last legs in the Senate.

And, what can we learn from tracking our trash?

Did we miss something today? Let us know, leave a comment or email clements@rff.org.

Published: Sep-17-09 | 0 Comments

Sep16

Wednesday's Reads

Renewables, Obama Administration, EPA, COP-15, Competitiveness, Morning Reads

NYT: Obama administration officials announced a new plan to tie auto fuel efficiency standards and the environmental impact of auto emissions. The proposal, which is open for a 60-day public comment period, would set a fuel efficiency standard of 35 MPG for cars and light trucks by 2016 and, officials project, would reduce carbon dioxide emissions by nearly a billion tons.

NYT: Senate Majority Leader Harry Reid muddied timeline waters, implying yesterday cap and trade may end up on the legislative backburner as Congress works on health care and finance reform. The delay could have far-reaching implications leading up to international talks in Copenhagen.

Grist: A look at how the EPA could step in and regulate greenhouse gas emissions under the Clean Air Act if Congress can’t get the job done.

FT: Top U.S. Climate Negotiator Todd Stern turns protectionist rhetoric up a click, warning nations like China and India that a failure to agree on a comparable emissions reductions effort could lead to border-adjustment measures from the U.S.

NYT: Tom Friedman on a Silicon Valley company that has been quietly building solar panel factories seemingly everywhere but here. Friedman says a better policy could help bring some of those factories to the U.S.

NYT: Editorial praises the EPA/DOT initiative to get moving on GHG regulation but warns against celebrating too soon, as climate seems to be stalling out in Congress ahead of international climate talks. (Weathervane thinks NYT reporters may be pretty bummed when they show up in Stockholm to cover the talks and learn they’re being held in Copenhagen.)

And EIA projections for energy use in 2009 put the U.S. on track to be halfway to the 2020 emissions reductions goals in the House climate bill. Joe Romm explains further here.

Did we miss something today? Let us know, leave a comment or email clements@rff.org.

Published: Sep-16-09 | 0 Comments

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