We should begin levying a modest carbon tax, in the range of $5 to $25/ton of CO2e.
The tax must be applied to the fossil fuels used in electricity generation (coal and natural gas). Ideally it should also be applied to gasoline, diesel, natural gas used outside the power sector, and fugitive methane emissions from the oil and gas industry, but those are less important for the moment.
New electricity generation resources must be allowed to compete economically with the operation of existing carbon-intensive facilities, and fuel costs must not be blindly passed through to consumers without either rigorous regulatory oversight, or utilities sharing fuel price risk.
Carbon tax revenues should be spent on emissions mitigation, providing reliable, low-cost financing for energy efficiency measures and a standard-offer contract with modest performance-based returns for new renewable generation.
Over time the carbon price should be increased and applied uniformly across all segments of the economy, with the eventual integration of consumption based emissions footprinting for imported goods.
A good seminar by Kevin Anderson (former head of the Tyndall Center for Climate Research in the UK), exploring the conflicts between our stated goal of keeping global warming under 2°C, and the actual energy and emissions policies that the developed world adopts:
The basic point he’s making is, the assumptions that are currently going into climate policy discussions are unrealistic, with respect to what’s required to meet a 2°C goal, even 50% of the time. They require global emissions peaks in 2015 and eventually negative emissions, in order to be able to accommodate the 3-4% annual emissions declines that the economists (which he likes to call astrologers) say is compatible with continued economic growth. But a global peak in 2015 is at this point outlandish from China or India or Brazil or South Africa’s point of view. To give them even a tiny bit of breathing room, and treat our historical emissions even somewhat equitably, the developed world has to peak roughly now, and decline at more like 10% per year for decades, and the developing world has to follow our lead shortly thereafter (maybe 2025).
None of this is compatible with exploitation of any unconventional fuels (tar sands, shale gas, etc.). And, he argues, it also isn’t likely to be compatible with reliance on market based instruments, given that we need to implement drastically non-marginal changes to the economy.
A good short profile of the city of Freiburg, Germany, and their many sustainability initiatives. Freiburg is a little more than double Boulder’s size — both in population and area, so it has a similar average population density. It’s also a university town with a strong tech sector locally. The whole city was re-built post WWII, but they chose to build it along the same lines as the old city, with a dense core, and well defined boundaries. Today about half of daily trips are done by foot or on bike, with another 20% on public transit. They have a local energy efficiency finance program, on top of the national one administered by KfW, and higher building efficiency standards than Germany as a whole. Half their electricity comes from combined heat and power facilities that also provide district heating and hot water. It seems like they’d be a good model city to compare Boulder to, and learn from.
There are a lot of voices in the climate and sustainability discussion. I’ve been thinking about where in the spectrum I fall, and why. Who are the people I’m trying to convince? What camp do opponents imagine I’m in? Even amongst those of us who agree that the energy and climate problem is enormous, there’s disagreement about whether change in our daily lives is necessary, desirable, or acceptable.
Below is a list of people I’ve personally been influenced by. Everyone here agrees that the current system has to change, that the magnitude of the required change is large, and that the direction of the change is unequivocally away from fossil energy sources. Where we differ is on what part of the system needs to change, and why. In particular, there seems to be a range of positions taken on the issue of social change. The Pessimists think that no technical solution comes close to being adequate, that large social changes are thus obligatory, and that they will be interpreted negatively by most people. The Optimists think that the best solutions include both technical and social components, and that the required social changes are relatively modest, and not necessarily negative at all. Some Optimists advocate for social change overtly, while others imply that purely technical options look implausible without it. The Cornucopians discount the need for social change, and are thus left with the technical task of supplying virtually unlimited carbon-free energy.
The NRDC has a plan that would allow the EPA to regulate GHG emissions from existing power plants, without either capitulating to the power sector, or banning coal outright immediately (which would be politically… uh, difficult). The trick is to use fleet-based target, as we do with vehicle emissions standards. The natural (regulatory) unit is the state, so each state could have its own carbon intensity targets or degression pathway, tailored to its initial generation mix. The carbon intensity would decline over time, eventually squeezing coal out of the mix, and could allow energy efficiency improvements to count toward the goal, at least initially. It really amounts to a kind of back-door cap-and-trade for the power sector, and it can be implemented by Obama, all on his lonesome, without any help from the intransigent congress. The hard part here will be setting stringent enough long term targets. 40% reduction by 2025? 90% reduction by 2050?
The Union of Concerned Scientists has gone through the catalog of America’s coal plants, and found hundreds of mostly small, old, polluting, inefficient generating units that just aren’t worth operating any more, even on a purely economic basis. They looked at several different sets of assumptions, including different natural gas prices going forward, a price on carbon, whether or not the competing natural gas fired generation would need to built new, or whether it existed already with its capital costs paid off, and whether or not the production tax credit for wind ends up being renewed. In all of the scenarios considered, they found substantial coal fired generation that should be shut down on purely economic grounds, above and beyond the 288 generating units that are already slated for retirement in the next few years. They also found that some companies — especially those in traditionally regulated monopoly utility markets in the Southeast — are particularly reluctant to retire uneconomic plants, and suggest this may be because they can effectively pass on their costs to ratepayers, who remain none the wiser.
NRDC blogs about a new study on federal use of discount rates in calculation of carbon costs, which suggests we grossly underestimate the present value of reducing emissions. Did you even know that the feds had put an internal price on CO2? They behave as if it costs $21/ton to emit. But that’s based on a discount rate of around 3%, which is the highest rate OMB suggests using for inter-generational costs. Part II of the very detailed NRDC post is here.