Transcript Regulatory Approaches to Address U.S. Greenhouse Gas Emissions

Regulatory Approaches to Address U.S.
Greenhouse Gas Emissions
Rebecca Stanfield
Shriver Center Climate Change
Symposium
September 30, 2009
NRDC…
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NRDC – a national, non-profit
environmental advocacy organization,
with 1.2 million members nationwide,
including 24,000 here in Illinois.
Regulatory tools to address
global warming:
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Cap and trade;
EPA emission standards for cars and major
stationary sources;
Clean energy and energy efficiency standards
and incentives;
A combination of all three of these approaches
will achieve the best outcome.
Carbon tax is another approach, will touch on
some pros and cons.
How does cap and trade work?
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Simple example – CAA Title IV Acid Rain program:
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Problem: Sulfur and nitrogen oxides from power plants
drifting eastward and killing forests and aquatic ecosystems;
Set pollution reduction goal – (from 18.9 mt/year to 8.9
mt/year) based on best available science at the time;
Initially 110 big plants, now about 1000 plants under the
cap;
Allowed the market to determine which units were controlled
or retired;
Goal achieved in 2007, three years ahead of schedule, at
about a quarter of the estimated cost.
Applying this approach to carbon
emissions – similar, but there are
some major differences:
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A lot more kinds of sources – not just EGUs but also
refineries, manufacturing facilities, and other sources.
Scale - Volume of emissions is much greater and
therefore the value generated with the creation of
allowances is enormous – (4.6 billion tons x $15/ton is
$69 billion in early years)
• Use of allowance value to invest in adaptation, clean
energy research and deployment, training, and
protection of consumers is critical;
• Need for controls to prevent fraud and abuse is much
greater.
A much wider array of compliance strategies, including
the use of offsets in the forest and ag sectors.
American Clean Energy and Security
Act – cap and trade PLUS
complementary policies
Title 1: Clean Energy
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Subtitle A - Combined RE/EE standards – 20% by
2020, w/ up to one-quarter met with ee;
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Subtitle B – CCS incentives;
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Subtitle C – Clean vehicle and fuel incentives and
standards;
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Subtitle D – State SEED accounts for managing
allowances to be used for ee/re deployment.
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Plus – policies to promote deployment of smart grid
technology, upgrade transmission, and much more.
ACES Continued…
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Title II – Energy Efficiency
• Subtitle A – Buildings – better building codes;
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retrofit programs; building labeling;
Subtitle B – Lighting and appliance standards;
Subtitle C – Transportation efficiency –
standards for heavy-duty trucks, non-rd
engines, plus fleet incentives, etc.
Subtitle D – Industrial efficiency standards
and incentives;
ACES Continued…
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Title III – Economy wide cap covering
84% of all emissions -
• 3% below 2005 by by 2012
• 17% below 2005 by 2020
• 42% below 2005 by 2030
• 80% below 2005 by 2050
Allowance distribution (WRI)-
If you have a cap, why do you also
need programs to deploy clean
energy solutions?
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Cost of meeting the cap is much, much
lower with the complementary programs,
mainly driven by the efficiency
components.
MGA modeling - allowance price cut in
half when you add aggressive ee
standards.
Efficiency is cheap, but the
market barriers are high…
14
Levelized Cost (cents/kWh)
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10
8
6
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2
Energy
Efficiency
(a)
Wind
Biomass
Nat. Gas Pulverized Thin Film
Combined
Coal
PV
Cycle
w/o Carbon
W/ $20/Ton Carbon
Nuclear
Solar
Thermal
Coal IGCC
Other components of this
administration’s approach 
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Auto fuel-economy and emission
standards – Average 250 g/mi and 35.5
mpg for cars and light duty trucks by
2016.
American Reinvestment and Recovery
Act – roughly $70 billion for
weatherization, efficiency, transit and
clean energy investment.
Comprehensive approach of ACES +
ARRA + Auto standards yields a
better outcome for America 
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Science based emission reductions;
At a cost we can afford (14-20 cents per
day per household);
With greater economic development and
job creation benefits than BAU;
And enhanced energy security.
What about a carbon tax?
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Main problem - No certainty about how much carbon
reduction will be achieved. Set a price, and hope
that it drives reductions that are consistent with the
science.
Equally complicated to enforce and administer.
No better at creating a source of revenue to invest in
clean energy. Value of allowances in early years is
about $70 billion/year.
Political baggage even heavier;
Unlikely to be the cornerstone of a federal climate
policy, but may be used at state or municipal levels
to supplement.