Class 22: Earth--the Sequel

1. Class 22: Earth--the Sequel POLS 405 Spring 2011 Fisher

2. Earth: The Sequel The Premise: “A revolution is on the horizon: a wholesale transformation of the world economy and the way people live. This revolution will depend on industrial technology—capital-intensive, shovel-in-the-ground industries—and will almost certainly create the great fortunes of the 21st C. But this new industrial revolution holds a more important promise: securing the world against the dangers of global warming.”

3. Earth: The Sequel Why: “It is developing the political, economic, and technological equivalent of the perfect storm: worldwide concerns about the enormous threat of GHGs, growing realization that we are prisoners of petroleum—hostage to the unstable, sometimes hostile, regimes that control the supplies of crude oil and natural gas—and, finally, huge and accelerating advances in technology that make possible unprecedented breakthroughs in how we make and use energy.”

4. Renewable Energy Renewable 7% of energy (Wind, Solar, Hydro, geothermal, biomass) Nuclear 9% Since the ‘70s, the White House, Congress and the public have “feebly and inconstantly embraced renewable energy and conservation compared to the national investment in fossil fuels.”

5. “Cap & Trade” • 1990 CAA amendments (“Acid Rain Program”) • Goal: To reduce sulfur (oxide) emissions  by 2010, reduce to 8.5m tons below 1980 level • Method: Mandatory “cap” on total sulfur dioxide emissions annually (from nation’s utilities) • Cap: Each “source” (utility) is granted an annual allowance, which at end of yr, they must be below • Trade: Each source can bank, sell or carry over allowance left over • Firms may “select whatever method it chooses to control emissions” • National emissions trading market established for allowances

6. Benefits & Limitations of C&T EPA: early evidence suggests that “impressive enviro & econ results”  in first 4 yrs power plants reduced emissions “far below legal allowances” & at same time drove down costs Some studies have shown benefits, but substantially less than EPA’s assertion and less than anticipated Value added: demonstrates that it can be done without tons of lawsuits and administered with relative simplicity Qs remain: Many utilities have not expanded (yet), results? Additional emission sources will become regulated, effects? Will trading remain attractive if firms must also bear add’l costs of “new controls”. Finally, can it be used for climate change—many skeptical that it can be scaled up?

7. Main Argument • Cap & Trade – and cap emissions in US • Reduce 20% by 2020 • 80% by 2050 • No loopholes, gaps or escape valves • Need a performance based system of governance that allows the best technology to be utilized (not lobbyists) • A cap will create a cascade of private investment into these new technologies • Stories of entrepreneurs in various technologies to create an energy revolution

8. Waxman-Markey Bill Title I – Clean Energy: would set standards for conventional and renewable energy technologies and provide funds to support the development of clean energy projects and technologies. Title II – Energy Efficiency: would mandate new energy efficiency standards for appliances, buildings, transport and industry and provide funds to support energy efficiency projects and technologies. Title III – Reducing Global Warming Pollution: would create a national cap-and-trade scheme that would reduce GHG emissions from major sources by 17t by 2020 and 83% by 2050 relative to 2005 levels. Title IV – Transitioning to a Clean Energy Economy: would provide financial assistance to those industries and persons affected by the Bill’s provisions and protect consumers from increases in energy prices. Title V – Offsets from Domestic Forestry & Agriculture: would provide opportunities for domestic emissions from the forestry and agricultural sectors.

9. Key Elements

10. National Cap and Trade plan The caps would cover approximately 85% of US GHG emissions by 2016. Begins in 2012. Emissions caps would be defined relative to 2005 levels and would rise from a 3% reduction by 2012, to 17% by 2020, 42% by 2030 and 83% by 2050. To start: 15% of emission permits auctioned (to increase gradually), while 85% free to key firms and sectors. “Cap and Recycle” plan: Funds from auctioned permits will be recycled to consumers as rebates, refunds, etc. (to minimize the impact of the scheme on low- and middle-income earners).

11. Vids Krupp, Earth: the Sequel Horn, Unleashing the Future (intro) Horn, Unleashing the Future (solar) Horn, Unleashing the Future (biofuels) Krupp and Horn, Interview 2008 (54m)