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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…. NRDC – a national, non-profit environmental advocacy organization, with 1.2 million members nationwide, including 24,000 here in Illinois.

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Regulatory Approaches to Address U.S. Greenhouse Gas Emissions

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  1. Regulatory Approaches to Address U.S. Greenhouse Gas Emissions Rebecca Stanfield Shriver Center Climate Change Symposium September 30, 2009

  2. NRDC… • NRDC – a national, non-profit environmental advocacy organization, with 1.2 million members nationwide, including 24,000 here in Illinois.

  3. Regulatory tools to address global warming: • 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.

  4. How does cap and trade work? • Simple example – CAA Title IV Acid Rain program: • 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.

  5. Applying this approach to carbon emissions – similar, but there are some major differences: • 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.

  6. American Clean Energy and Security Act – cap and trade PLUS complementary policies Title 1: Clean Energy • Subtitle A - Combined RE/EE standards – 20% by 2020, w/ up to one-quarter met with ee; • Subtitle B – CCS incentives; • Subtitle C – Clean vehicle and fuel incentives and standards; • Subtitle D – State SEED accounts for managing allowances to be used for ee/re deployment. • Plus – policies to promote deployment of smart grid technology, upgrade transmission, and much more.

  7. ACES Continued… • Title II – Energy Efficiency • Subtitle A – Buildings – better building codes; 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;

  8. ACES Continued… • 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

  9. Allowance distribution (WRI)-

  10. If you have a cap, why do you also need programs to deploy clean energy solutions? • 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.

  11. Efficiency is cheap, but the market barriers are high…

  12. Other components of this administration’s approach - • 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.

  13. Comprehensive approach of ACES + ARRA + Auto standards yields a better outcome for America - • 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.

  14. What about a carbon tax? • 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.

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