Transcript The Economics of Climate Change Policy .(English)

The Economics of Climate Change Policy
Prepared for:
Ohio Climate Change Dialogue Group
“Managing a Changing Climate:
Challenges & Opportunities for the Buckeye State”
Columbus, Ohio
May 2, 2008
By: Dr. Margo Thorning, Ph.D.
Senior Vice President and
Chief Economist
American Council for Capital Formation
Washington, D.C.
www.accf.org
Tel: 202-293-5811
[email protected]
Greenhouse Gas Emissions: Under EIA Baseline Forecast
and S. 2191 Targets
(Million Metric Tons CO2 Equivalent)
Million Metric tons CO2 equivalent
14000
12000
Covered GHG Emissions
10000
8000
Gap in 2030
5,240 MMtCO2e
6000
4000
2000
S.2191 Emissions Target
0
2015
2020
2025
2030
2035
2040
2045
2050
Per Capita Greenhouse Gas Emissions: Under EIA Baseline
Forecast and S. 2191 Targets
(Metric Tons CO2 Equivalent per Person)
Metric Tons CO2 Equivalent
30
Baseline Forecast
25
20
Gap = 58%
15
10
S.2191 Targets
5
0
2015
2020
2030
2040
2050
U.S. Per Capita Emissions: Effort Required
to Meet Lieberman / Warner Targets
Year
1990
2000
2015
2020
2030
Historical and Baseline Emissions
S. 2191 Targets (Covered GHG Emiss)
GHG Emiss. Population Per Cap GHG
(MMTCO2E) (Mil ions) Emiss (tons)
6,147 249
24.7
6,978 282
24.7
7,733 322
24.0
8,175 336
24.3
9,189 364
25.3
% S. 2191 Required Per Cap %
Change Targets GHG Emissions Change
0.1%
-2.9%
1.4%
3.8%
5,463
4,931
3,869
17.0
14.7
10.6
-13.4%
-27.5%
Impact of Lieberman-Warner Bill on the United States
Compared to Baseline Forecast
Low Cost Case
High Cost Case
2014
2020
2030
2014
2020
2030
Loss in GDP
-0.8%
-0.8%
-2.6%
-1.6%
-1.1%
-2.7%
Loss in Jobs
(millions)
-0.85
-1.22
-3.04
-1.86
-1.80
-4.05
Loss in
Household
Income
(2007$)
-$1,010 -$739 -$4,022 -$2,779 -$2,927 -$6,752
Carbon Allowance Price (2007$ / Ton CO2)
Macroeconomic Impact of Lieberman-Warner Bill:
Carbon Allowance Price (2007$/Ton CO2)
High Cost:
$271/Ton CO2
300
250
200
Low Cost:
$228/Ton CO2
150
High Cost:
$64/Ton CO2
100
50
Low Cost: $55/Ton
CO2
0
2012
2014
2016
2018
2020
Low Cost Carbon
2022
2024
2026
High Cost Carbon
2028
2030
Impact of Lieberman-Warner Bill on the United States:
Change in Energy Prices Compared to Baseline Forecast
Low Cost Case
High Cost Case
2014
2020
2030
2014
2020
2030
Rise in Gasoline
Prices
13%
20%
77%
50%
69%
145%
Rise in Residential
Electricity Prices
13%
28%
101%
14%
33%
129%
Rise in Industrial
Electricity Prices
22%
41%
142%
23%
49%
185%
Rise in Industrial
Natural Gas Prices
36%
49%
180%
40%
66%
244%
Macroeconomic Impact of Lieberman-Warner Bill:
Changes in Ohio Economy Compared to Baseline Forecast
Low Cost Case
High Cost Case
2020
2030
2020
2030
Loss in GSP
(million 2007$)
-$5,563
-$20,518
-$7,710
-$24,225
Loss in Jobs
-44,000
-107,000
-66,000
-143,000
-$902
-$3,739
-$2,924
-$6,819
Loss in
Household
Income (2007$)
Macroeconomic Impact of Lieberman-Warner Bill:
Change in Energy Prices in Ohio
Compared to Baseline Forecast
Low Cost Case
High Cost Case
2020
2030
2020
2030
Rise in Gasoline
Prices
20%
72%
68%
141%
Rise in Residential
Electricity Prices
31%
126%
38%
177%
Rise in Residential
Natural Gas Prices
29%
112%
40%
160%
Environmental Impact of Lieberman Warner Bill
U.S. EPA analysis of McCain Lieberman bill(S.280) shows :
 If U.S .adopts S.280 emission caps and no other countries
adopt emission caps, then global CO2 concentrations are 23 ppm
lower in 2095 than under reference scenario
 Global concentrations of CO2 would be 3 % less in under S.280
without international participation
Lieberman Warner(S.2191) targets are estimated to be about 25 %
tighter in the long run than McCain Lieberman
 If U.S. adopts S.2191 and no other countries adopt emission
caps, then global CO2 concentrations are about 29 ppm lower in
2095 than under the reference scenario
 Global concentrations of CO2 would be about 4% less under
S.2191 without international participation
Greenhouse Gas Emissions in the European Union:
Gap Between Projections* and Kyoto Targets in 2010
-15% -10%
-5%
0%
5%
10%
15%
20%
EU-15
UK
Sweden
Germany
France
Belgium
Netherlands
Ireland
Greece
Denmark
Portugal
Finland
Italy
Spain
Austria
Luxembourg
Target
* Projections assume existing measures already in place.
Source: European Environmental Agency, November 2007.
25%
30%
35%
40%
45%
Comparison of EU and US Energy Intensity Reduction
1992-2004
1992-1998
EU-15
US
1998-2004
EU-15
US
1992-2004
EU-15
US
0.00%
-5.00%
Percentage Change
-5.97%
-6.23%
-10.00%
-10.36%
-11.09%
-11.45%
-15.00%
-20.00%
-20.29%
-25.00%
Source: U.S. Department of Energy, EIA, International Energy Annual 2004
U.S. Capital Cost Recovery for Smart Meters
Compares Poorly with Our Trading Partners
(Percent of Nominal Capital Cost Recovered After 5 Years)
23.1%
Mexico
29.5%
United States
31.2%
Brazil
China
39.8%
45.0%
Indonesia
Japan
49.7%
Taiwan
49.7%
Rep of Korea
57.7%
Canada
63.1%
Germany
63.1%
90.0%
Malaysia
India
0.0%
100.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Capital Cost Recovered After 5 Years
Source: “International Comparison of Depreciation Rules and Tax Rates for Selected Energy Investments,” prepared for the
American Council for Capital Formation by Ernst & Young LLP, May 2007. For full report, please see www.accf.org.
World Carbon Dioxide Emissions
80
70
Non-Annex 1 Emis s ions Equal
w ith Annex 1 Emis s ions
Non-Annex 1
60
Africa
50
40
Latin America
Southeas t As ia
India
China
FSU
30
Eas tern Europe
J apan
20
10
0
1990
Middle Eas t
Korea
Annex 1
Fos s il and Indus trial CO2 Emis s ions , Gt CO2/yr
90
Aus tralia_NZ
Wes tern Europe
Canada
USA
2005
2020
2035
2050
2065
2080
2095
Source: Data derived from Global Energy Technology Strategy, Addressing Climate Change: Phase 2 Findings
from an International Public-Private Sponsored Research Program, Battelle Memorial Institute, 2007.
Greenhouse Gas Emissions Associated with Existing and
New Investment in 2001
(Million tons of Carbon per $Billion of GDP)
Million tons of Carbon per $Billion of GDP
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
China
India
U.S.
Installed Base
New Investment
Japan
Source: Promoting a Positive Climate for Investment, Economic Growth and Greenhouse Gas Reductions, W. David
Montgomery and Sugandha Tuladhar (see www.iccfglobal.org)
Practical Strategies for Reducing
Global Greenhouse Gas Growth
Use cost / benefit analysis before adopting policies
Reduce cost of U.S. energy investment through tax code
improvement and incentives for non profits
Remove barriers to developing world’s access to more energy and
cleaner technology by promoting economic freedom and market
reforms
Increase R&D for new technologies to reduce energy intensity,
capture and store carbon, and develop new energy sources
Promote nuclear power for electricity
Promote truly global solutions and consider expanding the Asia
Pacific Partnership on Development with its focus on economic growth
and technology transfer to other major emitters