Transcript How States Can Make a Difference on Climate Change

Case for Climate Action: Policies
Produce Major Co-Benefits
Ned Helme, Executive Director
Center for Clean Air Policy
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Phoenix, AZ
April 29, 2004
Center for Clean Air Policy
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Non-profit environmental think-tank, founded by
governors in 1985, to work with governments to develop
practical strategies to protect AQ and climate
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Designed emission trading and climate policy measures
for European Community and range of developing and
Eastern European countries
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Major issues currently include climate change, air quality,
transportation/smart growth
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Working with many states to take action on climate
change (including CA, CT, MA, ME, NJ, NY, WA, WI)
Projected concentrations of CO2 during the 21st
century are two to four times the pre-industrial level
Source: IPCC
Effects of Warming Climate
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Melting glaciers and ice caps
Rising sea level
Adverse impacts on water supplies
Heat waves & more severe storms
Disruption of ecological systems, shift or
loss of species
Invasive species and vector-borne illness
Changes in crop productivity
Bleaching of coral reefs
Premature deaths, lung disease (black
carbon)
Observed Evidence
of Climate Change
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Global-average surface temperature increased by about 0.6 ºC over
20th century, 0.5 ºC since 1950
1990s warmest decade and 1998 warmest year in last 1000 years in
Northern Hemisphere, 2003 3rd warmest year
Widespread retreat of mountain glaciers during 20th century
Northern Hemisphere spring and summer sea-ice extent decreased
by 10-15% since 1950s
Global-average sea level has increased by 10-20 cm during 20th
century
0.5-1% per decade increase in Northern Hemisphere mid-latitude
precipitation during 20th century
2-4% increase in frequency of heavy precipitation events in
Northern Hemisphere mid- and high-latitudes over latter half of
20th century
Policy Timeline (1)
Reduction in carbon intensity
(environmental incentives)
Creation of material new energy
sectors
(economic growth incentives)
1990
2015
Policy to support
emission constraints
2040
Policy to support economic development and
competitiveness
2100
Policy to support
technology breakthrough
Source: BP
Policy Timeline (2)
The World’s Leading Emitters of CO2
China
FSU
Japan
India
Germany
Texas
UK
Canada
Italy
Australia
France
Mexico
California
Ohio
Pennsylvania
Netherlands
Florida
Illinois
New York
Michigan
New England
New Jersey
Belgium
Wisconsin
Washington
Maryland
0
100
200
300
400
MMTCE CO2 (1998)
500
600
700
800
Co-benefits of What?
Difficult to talk about Co-benefits without
identifying which policy is primary
 Comm. Bob Shinn of New Jersey: CO2
reduction is the unifying theme for
environmental/energy policy
 If you reduce CO2, most other
pollutants are swept up in the process
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Climate Policy Touches All
Sectors of the Economy
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Smart Growth/infrastructure
Vehicles
Energy Efficiency
Renewable Energy
Energy Fuels
Consumer Products
Agriculture and Forestry
Waste
Co-Benefits of Climate
Policies
Health, Air Quality
 Energy Security
 Technological Innovation
 Enhanced Mobility
 Economic Competitiveness
 Infrastructure cost savings
 Economic Development/Jobs
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Approaches to Reducing CO2
and Achieving Co-Benefits
1. “Follow the Money” – Directing state
budget outlays toward climate-friendly
investments
2. Moving Markets - Using state financial
leverage to move new product markets
3. Regulations or Incentives – push and pull
policies to encourage reductions and
technological innovation
Shifting Funding Towards
Better Alternatives
Funding transit, biking, and walking facilities, and
encouraging in-fill and transit-oriented development. –
50% difference in VMT in dense areas vs. suburban sprawl
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New York: State Energy Plan - redirects State
funding toward energy-efficient transportation
alternatives – evaluates GHG impacts
New Jersey: Executive Order 4 - requires that
state funding be consistent with smart growth
principles
Massachusetts “fix-it-first” policy + targeting
infrastructure monies to climate-friendly projects
State Funding for
Energy Improvements
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14 states have public benefit charge (PBC)
funds to pay for renewable energy & 16 have
funds for energy efficiency
» Fee added to electricity rate to pay for projects
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California program spent $542 million over 3yr period; ~$1.35 billion over next 10 yrs.
New York spends ~$142 million per yr. on EE
from PBC
New Jersey spends ~$90 million per yr. on
EE
Moving Markets (1)
State spending can spur markets through
targeted procurement
 Ct exec order requires state RE purchases of
20% by 2010, 100% by 2050
 Many states set energy use efficiency goals
 Massachusetts – Replacement of state
vehicles with high-efficiency vehicles,
disposal of non-essential SUVs, bar SUV
purchase in future
 New York – clean fuel bus purchase program
Moving Markets (2)
State tax and grant programs can encourage particular
products:
 Indiana – 30% of project costs for fuel cells & CHP
 Maryland – up to $2,000 excise tax exemption for
purchases of hybrid vehicles, sales tax exemption for
energy star AC, heating & refrigerators
 Georgia – up to $2500 tax credit for electric & biofuel
vehicles
 Arizona – 25% tax credit for home solar and wind
 New York – grants for energy efficient industrial
process improvements
Regulation vs. Incentives
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Regulations include appliance efficiency
standards, emission caps, portfolio standards
Incentives include R&D programs, tax credits,
production credits, loan programs
Tradeoff between policy based regulation or
market incentive
» Regulation = less politically popular, less impact
on state budget, broader participation, more
certainty of achieving goal
» Incentives = more politically popular, more impact
on state budget, voluntary participation, less
certainty
Regulations/Incentives to
Encourage Renewables
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Regulation:
» CA Renewable Portfolio Standard (RPS) - 20% by 2017 equates to between 3,000 and 8,000 MW of additional RE
» Tx RPS coupled w/ robust REC trading market – 2000 MW
by 2009
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Incentive:
» MI NextEnergy program – 20-year state and local tax
exemption for alternative energy producers and system
designers
» MN Renewable Energy Production Incentive - generation
incentive payments of $0.015 per kilowatt-hour (kWh) for
qualifying renewable energy technologies
Renewable Portfolio
Standards
Renewable Energy Expected From State Standards*
20,000
18,000
12,385 MW of New Renewable Energy
7,540 MW of Existing Renewable Energy
16,000
California
Megawatts
14,000
12,000
10,000
Nevada
AZ & NM
8,000
Texas
6,000
Minnesota
IA & WI
NJ & PA
Connecticut
Massachusetts
Maine
4,000
2,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
* Projected development assuming states achieve annual RPS targets.
Source: Union of Concerned Scientists
Electricity Sector
Regulations/Incentives
Regulation:
 Mass, NH cap CO2 emissions from power
plants, RGGI developing 9 state cap and
trade strategy by April, 2005
 WI/MN – standards for electric transformers
Incentives:
» Texas – streamlined permitting for clean gen
» Ohio – Third Frontier Project –fuel cells incentives
» Illinois – R&D on geologic carbon sequestration
Curbing Automobile
Emissions
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13+ states implemented transport measures with climate
benefits
California GHG standard for automobiles
» Regulation to reduce emissions 20% by model year 2009,more by
2015
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If States that have CA stds. for LEV (MA, NY, VT, NJ, CT and
ME) and Canada follow this std.,29% of N. Amer. auto
market would be included
Minnesota mandates 2% biodiesel by 2005, numerous ag
states have ethanol requirements + sales tax redux
Strategies for Coal States: the
Real Challenge
potential adverse economic impacts of
reduced coal use block climate action
 Key lies in new technologies to remove
carbon from coal generation – IGCC
w/CCS
 State/fed action needed to
commercialize the technology, reduce
costs and improve performance
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Coal States Strategy
States can provide incentives thru utility
ratemaking, R&D programs
 Fed loan guarantees can reduce
financing costs and risk
 Coupling emphasis on IGCC/CCS w/
RPS and EE efforts can reduce
emissions w/ less impact on coal market
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“Laboratories of Democracy”
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Many environmental laws enacted by states have
charted the way for later passage of major
national legislation
State early action, in 1980’s, to address acid rain
had major impact on passage of national
legislation
» Acid rain laws initially introduced in a number of
states
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California’s air quality laws laid groundwork for
national air quality law passed in early 1970
Conclusions
Range of cost-effective opportunities for
climate policy
 Many have significant economic and
environmental co-benefits
 States have many policy options that
can be tailored to fit local conditions
 State programs can be linked thru
trading to EU, Canada and others
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Center for Clean Air Policy
www.ccap.org
[email protected]
Tel: 202-408-9260
Global mean surface temperatures have increased