Author: Tom

Climate bills LITE

Over Christmas, with little fanfare, two new approaches to climate legislation were introduced, perhaps in response to the possibility that Boxer-Kerry’s prospects are dimming. VentureBeat has a summary. The Kerry-Lieberman-Graham approach is just a “framework” and too vague for me to sink my teeth into. The Cantwell-Collins CLEAR act on the other hand is a real bill. Unlike the 1000-page ACES (Waxman-Markey), it’s just about cap & trade,  so it’s refreshingly brief – 39 pages. CLEAR sets targets,

CLEAR targets

Source: EPA & EIA STEO

As in Waxman-Markey and other bills, the target trajectory is  mostly linear. That actually doesn’t make much sense, because it implies a much greater proportional effort late in the game. Emissions reductions finish at >6%/year. If GDP growth is 3%/year, that implies a final intensity reduction rate of >9%/year, which is fairly delusional. Unlike Waxman-Markey, which is strictly linear, the first three years are flat, then there’s a race to the 2020 target. It’s good to harvest the low-hanging fruit quickly, but the 2015-2020 trajectory seems a little sporty.

The real emissions trajectory is unknown, because there’s a safety valve price ceiling and floor, initially set at 7 to 21 $/tonCO2eq, and rising at the real interest rate, plus and minus 0.5%, respectively. The resulting prices neatly bracket EPA’s expectations for Waxman-Markey without international offsets (Scn07 on graph):

CLEAR price corridor

Source: EPA W-M analysis.

CLEAR is upstream, covering fuels at the minemouth, wellhead, import terminal, etc. This strikes me as a big advantage administratively and improves coverage as well. Offsets, funded by a set-aside from auction revenues, play a much smaller role, which is OK, because with better coverage there won’t be as big a market. International offsets are also assumed to play a much smaller role (a few % of reductions, vs. roughly half of W-M reductions). That makes the true target trajectory much more aggressive, and raises expected permit prices a lot. Whether this is good or bad is ambiguous; one drawback is that there’s potentially less “carrot” for developing countries, and less funding for forestry.

Unlike Waxman-Markey, CLEAR allocates most (75%) permits to citizens as “shares”. That’s bad news for coal-fired electric utilities, but possibly good news for low income residents of coal-intensive areas. My guess is that the totally flat distribution of revenue would more than compensate for regional inequities for the bottom quintile, who would come out ahead. The remaining permits go to a “CERT” fund for worker, business, and community transitions, stranded assets, targeted relief for energy-intensive industries exporting to countries without emissions controls, R&D, offsets and other usual suspects. There’s room for a lot of good here, but also a lot of pork. I think it would make sense to partially phase out the fund in the future, as its revenues would likely rise beyond the need.

Like W-M, CLEAR includes a border adjustment (effectively a tariff on the embodied carbon content of imports). This, plus the potential trade measures in CERT, should make labor happy and infuriate WTO partners like China.

Strategically, CLEAR seems to leave more of the detailed design of the market and related mechanisms to the executive branch. I think that’s a good thing. It’s impossible to have a sensible debate about a piece of legislation the size of the Oxford dictionary. Add in the fact that this proposal is much closer to economic ideals for a cap & trade (upstream coverage, flat rebates, safety valves) and I’m liking this a lot better than ACES.

Climate Panic?

Grist muses over the possibility that abrupt climate change in the not-too-distant future might trigger a chaotic response.

One morning in the not too distant future, you might wake up and walk to your mailbox. The newspaper is in there and it’s covered with shocking headlines: Coal Plants Shut Down! Airline Travel Down 50 Percent! New Federal Carbon Restrictions in Place! Governor Kicked Out of Office for Climate Indolence!

…

It is exactly these economic impacts that the Glenn Becks and the Rush Limbaughs fear we’ll impose on ourselves through restrictive government regulation of energy and carbon emissions. Ironically, a “no action” approach today actually makes a climate panic much more likely over time. What we’re describing would be popularly driven, not fueled by governments or policy wonks. It would be the direct result of free will, democracy, autonomy and the information superhighway. All these forces would accelerate, not mitigate, the greatest “Aha!” moment in the history of the human species. Imagine the sub-prime mortgage bubble pop multiplied a hundred fold.

I hesitate to argue for rationality (certainly our current climate and energy policies aren’t), but I think the physics of climate and human nature do not favor this outcome. The pain of economic dislocation is immediate. At the point of abrupt climate change, on the other hand, it would be evident that we’re stuck with it for decades, because there’s no quick way to reverse the accumulation of GHGs in the atmosphere. Even lowering emissions to zero overnight would have only a gradual climatic effect. Since that would be evident to everyone, especially those with GHG-intensive assets, it seems unlikely that rapid controls would emerge, and likely that they would be reversed when their pain was felt too keenly. I suppose macroeconomic feedbacks might make the damage irreversible, or countries might start launching cruise missiles at each others’ coal-fired power plants, but those seem like long odds.

More likely, I suspect, is that panic would yield enormous pressure to pursue geoengineering options – the only real prospect for a quick reversal of radiative imbalance. If, at that point, we’ve triggered abrupt climate changes without warning, it seems likely that our understanding of geoengineering side-effects would still be half-baked. The nasty side effects that might emerge from efforts under such circumstances strikes me as the greater threat of climate panic.

Setting climate aside, another panic scenario that should concern fossil-fired asset owners is a major oil supply disruption. That could de facto shut down emissions and use through high prices, no political will power required.

COP15 Insights & Observations

A few random insights that I scribbled down during the process:

  1. Blame the system, not the people. A lot of people worked incredibly hard towards something positive. There were some screwups (late injection of the Danish text?), but on the whole, things didn’t come together because the structure wasn’t in place for them to do so.
  2. The US came to the table with nothing to offer – a tentative commitment, but no money and no headroom for bigger commitments.
  3. There’s little trust between parties. The developed world needs to demonstrate something concrete (significant emissions cuts or big $) before the developing world will budge.
  4. You can’t fix historic emissions inequity with future emissions – unless you don’t care about anything remotely like a 2C target.
  5. It’s not just about climate – development, resource management, and many other problems are intertwined.
  6. When major unstated values or mental models are in conflict, the COP process reverts to niggling over unimportant administrative details.
  7. It’s a good idea not to register more participants than you can handle.
  8. Analysis and decision support are probably not the key constraint at this time (maybe later). Negotiators need more scope from their home constituencies to be able to reach agreement.
  9. Emissions and welfare are not the same thing.
  10. Deep cuts for the world imply ~100% cuts (or more) in the developed world.
  11. It’s tough to reach 100% cuts due to fixed process emissions and activities for which it is difficult to substitute for hydrocarbon fuels.
  12. A number of industries are planning on more than their share of the remaining x% of emissions – how will it really add up?

COP15 Sound Bites

I’ve been looking over the final COP15 decision (here, for now). So far it all looks nonbinding. I was curious how some of the players are reacting.

EDF

“Today’s agreement leaves the U.S. in control of its own destiny. … As President Obama said today, strong action on climate change is in America’s national interest.” — EDF’s Fred Krupp, Dec. 18, 2009

Sierra Club

“The world’s nations have come together and concluded a historic–if incomplete–agreement to begin tackling global warming.  Tonight’s announcement is but a first step and much work remains to be done in the days and months ahead in order to seal a final international climate deal that is fair, binding, and ambitious.  It is imperative that negotiations resume as soon as possible.

…

“The agreement reached here has all the ingredients necessary to construct a final treaty–a mitigation target of 2 degrees Celsius, nationally appropriate action plans, a mechanism for international climate finance, and transparency with regard to national commitments.  President Obama has made much progress in past 11 months and it now appears that the U.S.–and the world–is ready to do the hard work necessary to finish what was started here in Copenhagen.

Greenpeace

Copenhagen a cop-out
Two years have passed since world leaders promised all of us a deal to stop climate change. After two weeks of UN negotiations, politicians breezed in, had dinner with the Queen, a three hour lunch, took some photos, and then delivered what could only be described as the 24-hour Head of State tourist brochure of Copenhagen instead of a climate treaty.

League of Conservation Voters (via email)

I’m in Copenhagen and President Obama has just wrapped up a press conference here announcing that a meaningful climate deal has been reached. While there is still much work to be done, the deal reached is a breakthrough for international climate cooperation and provides a path forward towards a binding global treaty in 2010.

Significantly, the United States and China will – for the first time – both be at the table, working to tackle the historic challenge of global climate change. Additionally, the deal allows for more transparency, as developed and developing countries have now agreed to list their national actions and commitments regarding greenhouse gas reductions.

API

“We agree with President Obama on the importance of addressing global climate change. However, Congress’s leading proposals could destroy millions of jobs, drive up fuel prices, and, by shifting much of our refining capacity abroad (along with refinery greenhouse gas emissions), substantially increase our reliance on foreign supplies of gasoline, diesel and other petroleum fuels. Worse, the president’s own EPA is poised to issue an expansive regimen of climate regulations that could cripple business growth and job creation, dimming employment hopes for 15 million now out-of-work Americans.

…

“Public support for government climate change proposals has waned. It’s time for all stakeholders to come together to craft a fair, efficient, market-based climate change strategy that minimizes the burden on consumers and jobs.”

Can’t find a final reaction yet: USCAP, WWF, ECF, and many others. Seems like the press releases haven’t all hit yet.

Update 12/22: a nice summary at Roger Peilke’s blog.

Confidential memo: off track

The headline today is that emissions pledges don’t match needs. A leaked UNFCC secretariat memo indicates that current commitments hit 3C.* A ClimateInteractive reference is scrawled in the margins. It’s interesting that this is regarded with surprise, as we said it in March, Rogelj et al. said it in Nature in June, and it was intuitively evident before that. Climatescoreboard, climateactiontracker, and others are now monitoring the possible outcome in near-real-time. Our dream, over beers in Copenhagen on Thanksgiving in 2008, was to provide fast feedback to inject some reality into negotiations. It’s working!

* Update: As Joe Romm points out, the Guardian and other coverage is just wrong. The secretariat analysis covers current commitments prior to COP15, not possible deals. The various drafts circulating (as you can see in analysis here this week) yield a wide range of outcomes, including 1.5C. There’s no way to nail down the final outcome until the contested bracketed text in the drafts is finalized.

Update 2: We at ClimateInteractive are doing lots of evaluation of draft language using C-ROADS and a simpler emissions model that I developed, but we’re not going to report on the outcome until there’s a definitive text. Some of the insights from that analysis are reported in posts here this week, but obviously it’s all hypothetical at this point.

http://en.cop15.dk/news/view+news?newsid=3044

Cumulative emissions, right and wrong

During C-ROADS development, we explored several ways of accounting for cumulative per capita emissions. One practice that seems to be widespread is to accumulate (integrate) emissions divided by population, i.e.

cumulative emissions per cap = INTEGRAL( emissions per capita(t) )
= INTEGRAL( emissions(t)/population(t) )

This is physically meaningless. Emissions per capita is an intensive variable, and you can’t average or accumulate intensive variables in this way. It’s like averaging the temperature of a duck and a supertanker without accounting for the tankers 100,000x greater mass.

A proper thing to do is integrate emissions, then divide by population:

cumulative emissions per cap = INTEGRAL( emissions per capita(t) ) / population

That yields a physically meaningful number, interpreted as cumulative emissions of a nation per current inhabitant. That’s a bit like per capita national debt.

Continue reading “Cumulative emissions, right and wrong”

What about the price of carbon?

The mysterious emissions trajectories implicit in the various draft COP15 agreements got me thinking about the economic implications of various paths. Suppose the following scenario, consistent with the Beijing draft (Copenhagen Accord) or recent KP draft actually happened:

  • deep 2020 cuts for the developed world
  • no binding commitments for the developing world
  • supported NAMAs in developing countries don’t count as offsets against developed country commitments (i.e. developed commitments are met domestically)
  • border carbon adjustments (tariffs on the greenhouse gases embodied in trade goods) are illegal
  • ongoing globalization

In that case, price of carbon would be very high in the developed world, and very low in the developing world. That creates intense pressure for leakage. Emissions-intensive industries would simply relocate to developing countries. Total emissions wouldn’t necessarily go down, except to the extent that relocated capital was newer and cleaner, and might even go up due to greater transport distance and less stringent environmental regulation.

Another consequence is that investors in the developing world, including governments investing in infrastructure, would proceed to build GHG-intensive capital that would just have to be unbuilt in a decade or two. That’s not development; it’s unsustainable lock-in to a dead-end economic, technical, and lifestyle trajectory.

Probably the first thing to happen would be for workers (aka voters) in the developed world to freak out at the resulting job losses, causing the whole agreement to unravel. So, I think you can scratch this kind of arrangement off the list of possible or attractive agreements. If we want to achieve the underlying development goals that motivate people to ask for such things, we need to find a different path.