Climate Progress

When the normally conservative International Energy Agency (IEA) agrees with both the middle of the road IPCC and more … progressive voices like Climate Progress, it should be time for the world to get very serious, very fast on the clean energy transition. But when the media blows the story, the public and the policymakers may miss the key messages of the stunning new IEA report, “Energy Technology Perspectives, 2008″ (Exec. Sum. here).

You may not have paid much attention to this new report once you saw the media’s favorite headline for it: “$45 trillion needed to combat warming.” That would be too bad, because the real news from the global energy agency is

1. Failing to act very quickly to transform the planet’s energy system puts us on a path to catastrophic outcomes.
2. The investment required is “an average of some 1.1% of global GDP each year from now until 2050. This expenditure reflects a re-direction of economic activity and employment, and not necessarily a reduction of GDP.” In fact, this investment partly pays for itself in reduced energy costs alone (not even counting the pollution reduction benefits)!
3. The world is on the brink of a renewables (and efficiency) revolution. Click figure to enlarge.
   

I do feel vindicated that the IEA’s 450 ppm ’solution’ is quite similar to the one I proposed (here), though I do have some differences with them–they think hydrogen cars are part of the answer!

“RADICAL AND URGENT” CHANGE NEEDED TO AVOID CATASTROPHE

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Next stop $150.

Whatever the short-term price oscillations are, ultimately, the price will keep rising until global demand is seriously destroyed.

In the climate and energy debate, conservatives continue to argue that the only solution to high gasoline prices is drill, drill, drill, especially in the Arctic National Wildlife Refuge (see Eco-Gingrich says, “Drill Here. Drill Now. Pay More”). This argument is false, false, false.

The Administration’s own Energy Information Administration found differently in a 2004 Congressionally-requested “Analysis of Oil and Gas Production in ANWR” (see “Note to Bush, media: Opening ANWR cuts gas prices one penny in 2025“). I pointed out then that the 2004 analysis was based on low oil prices, and that higher oil prices would raise the savings.

A May 2008 re-analysis by EIA, “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge,” in fact found

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My analysis on nuclear power for the Center for American Progress Action Fund is finally finished and online here. I think you will find it useful because it has many links to primary sources and tries to avoid the typical discussions by nuclear proponents and opponents, focusing instead on the rapidly escalating cost of nuclear power.

My point in this paper is not to say nuclear power will play no role in the fight to stay below 450 ppm of atmospheric CO2 concentrations and avoid catastrophic climate outcomes. Indeed, I even include a full wedge of nuclear in my 14-wedges “solution” to global warming here — though as will be clear from the study, “The Self-Limiting Future of Nuclear Power,” achieving even one wedge of nuclear will be a very time-consuming and expensive proposition, probably costing $6 to $8 trillion.

Fundamentally, the large and growing risks from climate change, particularly the real danger that failure to act NOW means we will approach a horrific 1000 ppm by century’s end (see here), means two things:

1. We must seriously entertain any strategy that can significantly reduce greenhouse gas emissions.
2. We must focus on the lowest-cost options first, because we simply don’t have an unlimited amount of capital.

My primary point in this paper is to shatter the widespread myth among conservatives — and others — that nuclear power will be a dominant solution to global warming. No. It is extremely unlikely to even be 10% of the total solution. This is particularly true in the United States, where we have so many more cost-effective alternatives NOW, as I explain in the paper, including energy efficiency, wind power, solar photovoltaics, and concentrated solar power.

Here is the executive summary of the report:

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This is eco-Gingrich’s new energy strategy for America. Seriously. So much for Andy Revkin’s claim that Gingrich is part of a “move to the pragmatic center on climate and energy.”

Okay, the slogan is slightly different (see here). But I changed it so it would be factually accurate. After all, the Administration’s own Energy Information Administration explained in 2004 how ineffectual this strategy is. In a 2004 Congressional-requested “Analysis of Oil and Gas Production in ANWR“:

It is expected that the price impact of ANWR coastal plain production might reduce world oilprices by as much as 30 to 50 cents per barrel [in 2025].

Don’t spend it all in one place, American public! [Note to Gingrich: There are 42 gallons in a barrel.] EIA continues:

Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries could countermand any potential price impact of ANWR coastal plain production by reducing its exports by an equal amount.

Curses, foiled again!

But how is drilling for more oil — and exploiting shale oil and opposing the Warner-Lieberman climate Bil, both of which are part of Gingrich’s video message — and releasing more greenhouse gases part of “”entrepreneurial environmentalism,” or a call to conservatives to “embrace their inner Teddy Roosevelt”? You’ll have to ask Andy Revkin, E. O. Wilson, and the rest of the people suckered by Newt’s spin (see below). (more…)

Price does matter. So does public perception of likely future prices. As it becomes increasingly clear that high gasoline prices are not a fluke, Americans are adjusting their driving habits.

March 2008 saw “the sharpest yearly drop for any month in FHWA history” of total vehicle miles traveled (aka VMT) according to the Federal Highway Administration’s monthly report on “Traffic Volume Trends.” [Note to FHWA — you have mis-labeled the report here as a second February 2008 report.]

In March 2008, Americans drove 246 billion milles, compared to 257 billion in March 2007. Indeed, the March 2008 figure is lower than the March 2004 figure. To see just how remarkable that is, look at the annual vehicle-distance traveled data (in billions of miles) since 1983 (this is a moving 12-month total):

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I made a mistake about the Boxer substitute for the Lieberman-Warner bill. Every year, it allows into the market enough offsets to cover 30% of the total quantity of emissions allowances. I had said it was 15% (here), which was a loophole the size of the Gateway Arch. How big a loophole is 30% offsets? Wait and see.

I had said the three offsets — domestic, international, and international forestry — could make up 15% of allowances because the WRI summary (here) says that “The combination of all three of these mechanisms is limited to 15 percent of total emissions allowances” and because when I read the actual bill (here, page 23), that’s what it seemed to say. But in fact we read it wrong. My apologies! What does this all mean?

It means we have now doubled the number of offsets, which would “involve substantial issuance of credits that do not represent real emissions reductions,” according to a recent analysis by Stanford.

Now when I redo the math, it seems the most likely outcome of this bill is that U.S. energy-related CO2 emissions in 2025 would we about the same as they are now, and possibly higher. If that’s the best we can do for a piece of legislation that’s deader than a dead parrot — it is a dead parrot whose body has been given to a veterinary anatomy class for dissection and had its heart removed — why bother?

REDOING THE MATH

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The short, snarky answer is “no — Boxer-Lieberman-Warner is never going to become law.” The longer, analytical answer, which is the primary subject of this post, is “probably not, thanks to the bill’s many cost containment measures, but it would take us off the business-as-usual emissions path.”

Before explaining why, let me make clear that the vote on B-L-W is a purely symbolic one since it as DOA as a bill can be (see here). Most of the media, most of the public, and most of the world are unlikely to get much detail on bill. They will just see whether a greenhouse gas cap & trade bill can get a majority, if not 60 votes, in the U.S. Senate. So, I would recommend any Senator vote for it — after giving a floor statement explaining that it was in fact too weak. I can’t see casting a protest vote against a symbolic bill while asserting it is too weak. The protest would get lost in the noise. Finally, it would be the height of hypocrisy for a conservative senator to cite progressive critiques of the bill, including mine, as a reasons to vote against it. Anyone who votes against this bill should at least have the guts to say whether they themselves think the bill is too weak or too strong.

WHY THE BOXER BILL WOULDN’T CUT U.S. CO2 EMISSIONS BY 2020
This story begins late Friday night, when Deep ‘emissions cut’ Throat sends me the World Resources Institute’s 14-page summary of the Boxer substitute to the Lieberman-Warner bill (here), with a note, “Does this mean no emission reductions until 2028? See bottom of page 6.” Intrigued, I turned to the bottom of page 6 and read this bullet:

• If all cost containment mechanisms in the substitute are applied, the result could be almost no change in U.S. as compared to business as usual.
  

Uh-oh. When the solid analysts at WRI issue a warning, you can take it to the permit bank. I remember Deep ec Throat’s advice to me many years ago, “Follow the cost-containment money.” That’s what led to my post on McCain’s climate plan, “McCain speech, Part 2: Relying on offsets = Rearranging deck chairs on the Titanic.”

Now WRI cryptically says, “WRI intends to explore these issues further in forthcoming analyses.” But why wait for WRI’s solid detailed analysis, when I have Boxer’s full text here and my own dependable abacus? I’ll post this as a draft analysis and if any of you out there can find holes in it, let me know.

My rough calculations say that if every cost containment measure were fully used, then U.S. energy-related CO2 emissions in 2020 could be about the same as if there were no bill. Needless to say, that’s not a good thing.

Needful to say, however, some of the cost containment measures are not super-cheap (although they are probably all much cheaper than the current cost of European Union’s emissions allowances) — and a lot of auction money is used to promote energy efficiency and low carbon technologies. So if this bill were to become law — which, of course, it won’t because last week it was moved from the “morgue to anatomy class” — then I very much doubt emissions would actually follow business as usual (BAU) trends.

I do believe, though, that emissions in 2020 would probably not be much different than they are today, which is still not a good thing.

So what could happen and what would happen? And should a Senator who is concerned about human-caused global warming vote for or against the bill on this basis?

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Normally I would listen to Robert Hirsch and the legendary Charlie Maxwell, over CNBC’s “Mad” Jim Cramer. But Hirsch (here) and Maxwell (here) are making headlines for saying $12-$15 gasoline is around the corner, based on Maxwell’s projection of oil “reaching $180 a barrel in 2015 and $300 a barrel in 2020.”

Sorry guys, every extra $40 barrel is another dollar a gallon or so at the pump. Don’t quite know how they did the math, but they did it wrong.

When Mad Money’s Jim Cramer is the voice of sanity, you know the energy world is topsy-turvy, but I happened to catch him explaining to Matt Lauer on Today that such prices take us to $6 to $7 over the next few years, yes, but $12 to $15 gasoline requires a price of oil that the world is exceedingly unlikely to get to any time soon — $450 to $500 a barrel by my estimate. The world would almost certainly go into a deep global recession long before we hit those prices.

But the situation is dire, as I’ve noted many times (see below). The WSJ has a front page article today, “Energy Watchdog Warns Of Oil-Production Crunch: IEA Official Says Supplies May Plateau Below Expected Demand,” which begins ominously

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The Senate Energy & Natural Resources committee held a pointless if not counterproductive hearing today, “To receive testimony on Energy and Related Economic Effects of Global Climate Change Legislation.”

How painful a hearing was it? Before it started, the Senate’s leading global warming denier issued a release titled, “Inhofe Praises Energy Committee for Holding Hearing on Economic Impacts of Climate Bill.” Grist called it a “hearing to stoke fear about the costs of climate legislation.”

The hearing did not have any experts on the cost of inaction or on clean energy technologies, especially energy efficiency, which is the cornerstone of any strategy to minimize total costs. The witness were mostly filled with the same-old classical economists:

• Mr. Brent Yacobucci, Congressional Research Service
• Dr. Larry Parker, Congressional Research Service
• Dr. Howard Gruenspecht - Deputy Administrator, Energy Information Administration
• Dr. Brian McLean, U.S. Environmental Protection Agency
• Dr. Peter Orszag, Congressional Budget Office

I actually worked with both Gruenspecht and Orszag during the Clinton administration. They are very smart guys, but they have never been people who believed in the serious ability of energy efficiency (or other low-carbon technologies) to keep energy bills from rising much even as fuel costs inevitably rise under a major cap-and-trade bill.

The opening statements were bland. Question after question trashing even the idea of US climate legislation was answered lamely if at all. Absent any relevant experts, conservative senators were able to raise doubts about impacts on the economy, on gas and oil prices, and on US competitiveness — and even potential allies were left calling for a Manhattan project to develop new technologies, blah, blah, blah, with little pushback from the witnessses.

The hearing only came to life when Bernie Sanders (I-VT) spoke. He dismissed everything he had heard [from the witnesses] as “old think.” He wondered how you could contemplate analyzing the economic impact of climate legislation if you don’t understand what’s going on with energy efficiency in California and other states, or electric vehicles, or the new concentrated solar thermal power (!) plants now being built. He also demanded to know what the cost of inaction would be, and why none of the witnesses spoke to that.

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